Mullen & De Bry - [2006] FamCA 1380

FAMILY COURT OF AUSTRALIA

M & DB

[2006] FamCA 1380

APPEAL – FROM DECISION OF FEDERAL MAGISTRATE – PROPERTY SETTLEMENT – INJUNCTIONS – MAREVA – While property proceedings were pending, the husband became aware that the wife had placed the former matrimonial home (transferred to her post-separation) for sale - The husband sought an interim injunction that the wife retain an amount not less than $200,000 from the sale and invest that amount pending the finalisation of the property settlement – The husband sought such an order primarily on the basis that the wife was located overseas and that any property settlement order in his favour could be defeated by the wife disposing of the sale proceeds offshore – The Federal Magistrate dismissed the husband’s application on the basis that there was no evidence on the wife’s part of a scheme to defeat judgment by asset disposition – In doing so, the Federal Magistrate relied on the Full Court decision of Waugh (2000) FLC 93-052 – On appeal, the husband argued: (1) that the Federal Magistrate failed to consider where the balance of convenience lay; (2) that the Waugh ‘principle’ and the reasoning that supports it is ‘incorrect’; and (3) that if Waugh is correct, the decision ought to have been distinguished from the instant case on the facts – The Full Court in Waugh did not intend to prescribe as a ‘fundamental’ or ‘threshold’ question whether a scheme to defeat judgment exists, to be answered in the affirmative in every case before an injunction could be granted – As properly understood, Waugh does not lay down any incorrect principles. The Federal Magistrate erred by focussing unduly on whether the evidence established a scheme of the wife to remove assets to defeat an order in the substantive proceedings – Consequently, the Federal Magistrate failed to consider a number of necessary factors, including ultimately the risk of defeat of an order in the husband’s favour in the substantive proceedings – The Federal Magistrate should have considered the wife’s failure to proffer an undertaking or consent to the retention of funds in considering the degree of risk than an order in the substantive proceedings would be defeated – The Federal Magistrate also failed to consider prejudice arising either way, depending on whether an injunction were granted or not and the balance of convenience.

Family Law Act 1975 (Cth), s 114(3)
Federal Court of Australia Act 1976 (Cth), s 23
Federal Proceedings (Costs) Act 1981 (Cth), s 9

Cardile v LED Builders Pty Ltd (1999) 162 ALR 294
In the marriage of Aldred (1984) FLC 91-510
In the marriage of Martiniello (1981) FLC 91-050
In the marriage of Sieling (1979) 24 ALR 357
In the marriage of Wray (1981) FLC 91-059
Jackson v Stirling Industries (1987) 162 CLR 612
Stowe and Stowe (1981) FLC 91-074
Waugh and Waugh (2000) FLC 93-052

APPELLANT:

RESPONDENT:

FILE NUMBER:	SYM	3056	of	2005
APPEAL NUMBER:	EA	116	of	2006

DATE DELIVERED:

19 December 2006

PLACE DELIVERED:

Brisbane

JUDGMENT OF:

KAY, WARNICK AND BOLAND JJ

HEARING DATE:

7 DECEMBER 2006

LOWER COURT JURISDICTION:

Federal Magistrates Court

LOWER COURT JUDGMENT DATE:

12 OCTOBER 2006

LOWER COURT MNC:

[2006] FMCAfam 561

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Mr Watkins

SOLICITOR FOR THE APPELLANT:

Milne Berry Berger & Freedman, Ground Floor, 154 Elizabeth St, Sydney NSW 2000

COUNSEL FOR THE RESPONDENT:

Mr Lethbridge SC

SOLICITOR FOR THE RESPONDENT:

Etheringtons Solicitors, Ground Floor, 153 Walker St, North Sydney NSW 2060

Orders (made 7 December 2006)

The applicant husband be granted leave to appeal the orders made by Federal Magistrate Lucev on 20 October 2006.
The appeal be allowed.
The orders made by Federal Magistrate Lucev on 20 October 2006 be set aside.
That forthwith upon the making of these orders the respondent wife do all things necessary and sign all documents necessary so as to cause to be retained from the proceeds of sale of the property situate at [SH] […] an amount of not less than $150,000.00.
That the wife cause the said sum of $150,000.00 to be invested in an interest bearing account in Australia in the names of her solicitors as trustee for the wife, pending the final resolution of the proceedings in the Federal Magistrates Court No. SYM 3065 of 2005, or further order.
The applications in a case filed on 5 December 2006 and on 6 December 2006 be dismissed.
The costs of the application before Federal Magistrate Lucev be reserved to the judicial officer hearing the trial of the competing property proceedings.
The Court grants to the appellant husband a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by him in relation to the appeal.
The Court grants to the respondent wife a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent in respect of the costs incurred by her in relation to the appeal.

FAMILY COURT OF AUSTRALIA AT

Appeal Number: EA 116 of 2006
File Number: SYM3056 of 2005

Appellant

And

Respondent

REASONS FOR JUDGMENT

The Full Court of this Court said in Waugh (citation below), addressing the topic of interlocutory orders for the preservation of property pending final orders in property settlement proceedings:
“46.Whilst his Honour certainly seems to have considered issues of balance of convenience and hardship between the parties, it seems to us, with respect, that he did not give consideration to the fundamental question whether there was any evidence of any intention by the husband to dispose of any assets pursuant to any scheme to defeat any judgment which the wife might obtain in the substantive proceedings, or whether he merely wished to continue to trade, as he always had done, prior to and since the separation of the parties.” (emphasis added) (In the marriage of Waugh (2000) FLC 93-052 at 87,810)
This passage has excited some criticism. In an article entitled “Family Law: Family Law Act injunctions stymied” (2001) 39(11) LSJ 78 Michael Brown, Accredited Specialist in Family Law, wrote:
“…The ‘good old days’ when one could expect to get an injunction in family law proceedings to preserve assets almost as a matter of course are indeed over.
The decision of the Full Court in Waugh v Waugh makes that statement forcefully. Every family law practitioner ought to understand what Waugh means. In my opinion, every Family Court judge ought to consider whether what it said was correct and the extent to which the decision has shifted the balance of power in property cases decisively towards the party with the control of assets.
…
According to the Full Court, the following four principles are established in Waugh:
“1. It is necessary, for an injunction of this kind to be granted, for there to be sufficient evidence of an intention to dispose of assets;
2. It appears to be implied that this evidence needs to show that the respondent has in fact disposed of some assets.… It is alarming if that is what the court meant because it would severely restrict the court’s ability to make quia timet style injunctions.
…”
Michael Kearney, barrister, in a paper delivered at the 11^th National Family Law Conference in 2004, wrote:
“In Waugh and Waugh…the Full Court reviewed the relevant authorities and attempted to authoritatively set out the principles to be applied in the determination of applications for such injunctive relieve. The decision has attracted much comment and criticism and does not appear to be universally applied in “the trenches”.”
…
The Full Court took the opportunity to revisit the principles to be applied in applications for injunctive relief in the nature of ‘asset preservation orders’. The principle enunciated by the Court (in a joint judgment of Lindenmayer, Coleman and Brown JJ at 87,810), and subsequently applied as the authoritative determination by the Court, is that the Court was and is required to consider:
“…whether the injunctions … were necessary, and went no further than necessary, to prevent abuse or frustration of the court’s process in relation to the matter within its jurisdiction …
… the fundamental question [is] whether there was any evidence of any intention by the husband to dispose of any assets pursuant to any scheme to defeat any judgment which the wife might obtain in the substantive proceedings, or whether he merely wished to continue to trade, as he always had one, prior to and since the separation of the parties.”
Unsurprisingly, the statement in paragraph 46 of the judgment in Waugh was central to the approach taken by Lucev FM in an application of the nature under discussion, when his Honour dismissed the application. The statement again loomed large before us in the appeal from that dismissal, which appeal we allowed before granting an injunction, for the reasons that follow.

Background

The husband, the applicant before the Federal Magistrate, had in May 2006 commenced proceedings for property settlement between himself and the wife in the Federal Magistrates Court. The husband sought the sale of a house at “SH” and the equal division of net proceeds. The wife, the registered owner of the property, sought dismissal of the husband’s application. Those proceedings have not yet been determined.
In October 2006, the husband sought an interim injunction that the wife cause from the proceeds of sale of the SH property an amount of not less than $200,000 to be retained and invested in an interest bearing bank account in the joint names of the parties, pending the finalisation of the property settlement proceedings. On 20 October 2006, as seen, that application was dismissed by Lucev FM.
As the order challenged was interlocutory in character, leave was necessary and the application for that was argued with the appeal. In the event, there was really no issue about leave separately from the merits of the proposed appeal.
The husband also applied for leave to put further evidence before us. We rejected that application and will give our reasons for that decision later in these reasons.
An application by the wife for security for costs of the appeal was not pressed.

The appeal

The draft Notice of Appeal raised these issues:
(i)that the learned Magistrate failed to consider where the “balance of convenience” lay, in particular the absence of prejudice to the wife if the orders were made;
(ii)that the Federal Magistrate applied “the principle” enunciated in Waugh, and the reasoning in Waugh is “incorrect”; and
(iii)that if the reasoning in Waugh is correct, the decision ought have been distinguished from the instant case on the facts.

that the learned Magistrate failed to consider where the “balance of convenience” lay, in particular the absence of prejudice to the wife if the orders were made

This issue emerges from proposed grounds 1 and 2 which read:
“1.His Honour failed to have regard to the prejudice to the wife in determining whether an order was just and convenient.
2.His Honour failed to consider the balance of convenience as between the wife and the husband by the imposition of the orders sought.”

Some further background

To address this issue (and as a preliminary to discussion of issue (ii) above) it is helpful to set out briefly the case presented to Lucev FM and his Honour’s findings of fact.
Lucev FM recorded the evidence relied upon by the husband as comprising financial statements filed in the substantive proceedings by each of the husband and wife, an affidavit by the husband’s solicitor and an exchange of letters between respective solicitors.
Though the wife was legally represented on the application, no evidence was put forward by her. She simply alleged failure of the husband to prove a case.
The husband’s material disclosed that originally (from 1994) the parties resided in a property owned by the wife, subject to mortgage. That property was sold and the SH property was purchased using the sale proceeds and borrowings. The husband allegedly contributed to improvement of the property and to mortgage repayments from joint accounts.
Though it was not in evidence before Lucev FM, submissions to him placed separation in 2001 (or on another interpretation, 2002).
The last four paragraphs of the affidavit of the husband’s solicitor read:
“25.Following the breakdown of the marriage the parties entered into negotiations to attempt to resolve their financial matters. The Applicant husband was not represented nor did he obtain any legal advice with respect to what his financial entitlements in a property settlement following the break down of a marriage would be.
26.The Applicant husband transferred his interest in the property to the Respondent wife without receiving any consideration.
27.The Respondent wife has proposed a financial settlement in the terms of a payment to me $40,000.00. The Respondent wife refuses to retain an amount of $200,000.00 from the proceeds of sale and it is concerning that she resides overseas and she has no other substantial assets in Australia.
28.I believe that the Applicant husband will be entitled to an award for the division of property in an amount greater than the $40,000.00 being offered by the Respondent wife.”
From the husband’s material, it seemed that on 5 September 2006 he had noticed an internet advertisement for the sale of the SH property. The correspondence between solicitors commenced with a letter on 5 September 2006 on the husband’s behalf, indicating that, as the husband had been given no notice of a sale and the wife was overseas, the husband had grave concerns that she might transfer all the funds from a sale offshore. The husband sought an undertaking from the wife to retain $200,000 and advised that if that was not forthcoming, an application would be made. No response came and after about a month, the husband’s solicitor wrote again, advising that an application was being filed. After the application was filed, the wife’s solicitors wrote, seeking a one week adjournment so that instructions could be sought. They also advised that the property had been sold on 7 October for $680,000. The husband’s solicitors pressed on with the application.
In submissions, Lucev FM was told that the assets were about $778,018 net.

The Federal Magistrate’s judgment

In his judgment, Lucev FM, after addressing factual matters, discussed legal principles and then turned to the application of those principles to the facts, under headings replicated below. From the footnotes provided, it is apparent that the headings derived entirely or mainly from his Honour’s consideration of the decision of the Full Court in Waugh, and in particular the statement in paragraph 46 earlier set out.

“Pursuant to any scheme”

The learned Magistrate discussed the meaning of words in the phrase and then posed the question:
“What is a scheme?”
He noted authorities that variously observed that “scheme” was a “vague and elastic word” and could “be constituted by a single act”. He then moved to consider:

“Evidence of a scheme to defeat judgment by asset disposition”

Under this heading Lucev FM noted the husband’s reliance on the fact of residence of the wife overseas. The Federal Magistrate said:
“Marrying and moving overseas is not evidence, without more of a scheme or part of a scheme, to defeat judgment by asset dissipation.”

“Moving money overseas”

Lucev FM noted that there was no evidence of the wife evincing an intention to move the sale proceeds overseas. He compared this absence of evidence with the evidence in Waugh of a statement by the husband that the wife would “get none of it, it can all go to tax and the bank” and noted that even so, that was held insufficient to support an inference of asset dissipation.
He referred to several cases, in some of which injunctions had been granted and, in a decision of his own, not. He concluded that there was nothing from which he could “legitimately infer that that [moving money overseas] might be the wife’s intention”.
The Federal Magistrate then turned to address the evidence of the:

“Sale and notice of sale”

There was no evidence of whether the property had been put on the market before or after “the application” (presumably the application for property settlement) was made, or of any enquiries about that.
The lack of consultation by the wife about a sale afforded “no real basis to come to a conclusion that there was a scheme to defeat judgment by asset dissipation”. Lucev FM then said:
“75.What then of the sale itself? The [SH] property sold for substantially more than either Husband or Wife estimated as its value. Once the mortgage is discharged, there will be a substantial sum remaining. Whilst there might potentially be risk of asset dissipation in these circumstances, in my view the Husband has not demonstrated, either expressly or inferentially on the available evidence, that by reason of the sale and non notification to him of the sale there is a real risk of asset dissipation, and certainly not that there is a scheme to defeat judgment by asset dissipation. The sale of the [SH] property seems just that: the sale of property.” (emphasis added)

“Refusal to give an undertaking”

Of this, Lucev FM said:
“80.The failure to give an undertaking upon request might demonstrate a potential risk of asset dissipation. Equally, however, it might in the circumstances of this case, demonstrate a reluctance to give anything away until an application for interim orders was actually filed. In this case, the latter might be more likely by reason of the Wife’s Solicitors 11 October 2006 Letter which seeks a reasonable opportunity to obtain proper instructions from the Wife, resident overseas, and a very short adjournment. Had an adjournment been sought for a much longer period it might have been easier to infer a risk of asset dissipation.
“81.I do not consider that the failure to give an undertaking, in the circumstances I have outlined, is sufficient, without more, to warrant a finding, either expressly or by inference, that the failure demonstrates a real risk of asset dissipation, or a scheme to defeat judgment by asset dissipation.”

“Concerns”

The learned Magistrate said:
“84.I do not think it appropriate to place any weight on the self-serving hearsay remarks of the Husband’s solicitors. In any event, feelings of mistrust and anxiety, likewise concern, do not suffice to warrant injunctive intervention.
“85.I therefore consider that the “concerns” manifested on the Husband’s behalf by his solicitor do not constitute evidence of a scheme to defeat judgment by asset dissipation.” (emphasis added)

“Delay”

Referring to the time that elapsed between the first and second letters from the husband’s solicitors, the Federal Magistrate said:
“87.…I think I am entitled to form the view that if there was perceived to be a real risk of asset dissipation, the Husband through his solicitors, would have acted with more haste, or taken more or other steps within that month. The delay weighs against the Husband’s Interim Orders Application.”

“Conclusion”

…
“88.I have endeavoured to analyse, examine and weigh the evidence concerning the possibility of asset dissipation pursuant to a scheme to defeat any judgment which might ultimately issue in these proceedings.
89.Having done so I have concluded that the sale of the [SH] property is just that: a sale of property. There is no, or no sufficient, evidence of a scheme to defeat judgment attaching to the sale of the [SH] property, or the Sale Proceeds whenever they might become available to the Wife.” (emphasis added)

Discussion

It can thus be seen that the learned Magistrate:
•did not consider the degree of prejudice to the wife if an order was made;
•did not consider the residence outside the jurisdiction of the wife as a factor going to risk that an order in the substantive proceedings would be defeated, but only addressed that residence as a factor going to the existence of a “scheme”;
•did not consider, as relevant to risk, the fact that the wife’s position in the substantive proceedings was that the husband receive nothing from the sale proceeds; and
•considered “delay” only as evidence going to the husband’s subjective view of risk, and (presumably) therefore to an objective view of risk, without addressing whether any prejudice to the wife resulted from the delay.
Of course, whether Lucev FM ought have addressed all or any of these matters depends much on the applicable principles.

What principles did Lucev FM apply and, if some or all derived from Waugh, is Waugh incorrect?

Ground 3 of the draft Notice of Appeal reads:
“3.His Honour applied the principles from Waugh v Waugh (2000) 158 FLR 152, [2000] FamCA 1183 (“Waugh”), the reasoning in Waugh is incorrect in that the decision is at odds with common law principles for the following reason:
It formulated a requirement for an injunction, that the applicant adduce evidence of an intention to dispose of assets pursuant to any scheme to defeat any judgment. The test is a broader test as to whether there is a danger of the assets being removed and thus defeating any judgment that may be obtained.”
Lucev FM said (using footnotes to refer to authority):
“32.Section 114(3) of the Family Law Act, on the preponderance of authority, provides for the Court to make Mareva type orders to preserve assets.
33.The general principles applicable in determining whether a Mareva type order ought issue are:
a)that the applicant show an arguable case that judgment against the other party or parties will be obtained;
b)that the applicant demonstrate by real evidence, and not mere assertion, that a refusal to make the order involves a real risk that judgment in the applicant’s favour would remain unsatisfied because of concealment or dissipation of assets; and
c)that the balance of convenience requires the making of an order.
34.In relation to the principles applicable to Mareva type orders I further note that the orders are:
a)discretionary;
b)a drastic remedy not to be granted lightly and therefore requiring close scrutiny of the available evidence; and
c)if granted, only granted to the minimum extent necessary.”
He then turned to the decision in Waugh and said:
“38.Having considered the leading authorities the Full Court of the Family Court identified “the fundamental question” as being “whether there was any evidence of an intention … to dispose of any assets pursuant to any scheme to defeat any judgment which … might [be] obtain[ed] in the substantive proceedings”.” (emphasis added)
Lucev FM then set out the effect of the evidence in Waugh and noted that it was not sufficient for the Full Court there to conclude that it supported an inference that the husband was likely to dissipate assets to defeat the wife’s claim.
The learned Magistrate concluded:
“44.In my view it seems that in determining whether to grant an “injunction” under s.114(3) of the Family Law Act the general principles applicable in relation to issuing Mareva type orders are applied, but so as to focus on the “fundamental question” formulated in Waugh…” (emphasis added) (footnotes omitted)
We think that the parts of Lucev FM’s judgment already discussed show that the learned Magistrate carefully and cogently applied the principles as he identified them.
However, we do not consider that the Full Court in Waugh intended to prescribe as a “fundamental” or “threshold” question whether a scheme to defeat judgment exists, to be answered in the affirmative on the balance of probabilities in every case, before an order preserving property is made.
Although arguably the learned Magistrate did not express the “test” as we have just formulated it, we are satisfied that, in effect, that is the test he applied.
That the Full Court in Waugh did not lay down a principle as described, we consider follows from these observations:
(a)Nowhere in Waugh did the Court indicate that it was conscious of making “new” law, or formulating “new” guidelines. There was no discussion of any earlier Family Court decisions in terms that indicated departure from them, or even development of them.
Indeed, in paragraph 50, their Honours referred to the Full Court decision in Stowe and Stowe (1981) FLC 91-074 without any suggestion of disagreement with the expression there of the test in applications for orders for preservation of property, as follows:
“50.The reference by counsel, in that passage, to Stowe's case, we take to be a reference to Stowe and Stowe (1981) FLC 91-027 in which (at 76,273-4) the Full Court held that to found an interlocutory injunction for the preservation of property, an objective risk of disposal must be established.”
Their Honours did not refer to the decisions in In the marriage of Sieling (1979) 24 ALR 357; In the Marriage of Wray (1981) FLC 91-059, In the Marriage of Martiniello (1981) FLC 91-050 or In the Marriage of Aldred (1984) FLC 91-510, all relevant authorities to which one would expect reference if their Honours in Waugh were laying down a fresh statement of principle.
(b)The Full Court in Waugh, in relation to a submission by counsel for the husband that the interlocutory injunctions were “truly akin to a Mareva injunction”, said:
“30.Whilst we do not disagree with that submission, we think that it has limited significance in the context of this case. We consider that in seeking to apply, in proceedings under the Act, principles developed in other jurisdictions (including principles relating to grant or refusal of ``Mareva'' injunctions) care should be taken to ensure that sight is not lost of the essential differences which may exist between the proceedings in this Court to which it is being sought to apply those principles and the type of proceedings in other jurisdictions out of which those principles have sprung.
31.For example, we think that it is important to bear in mind that there may be a distinction to be drawn between proceedings at law for a debt or damages in which the plaintiff seeks a ”Mareva” injunction to restrain the defendant from dissipating assets to which it is expected that resort might ultimately be had to enforce a judgment obtained in the proceedings, and proceedings under s 79 of the Act in which one spouse seeks an interlocutory injunction to restrain the other from dissipating assets which, although not the subject of a specific claim under s 79, represents property of the parties to the marriage, or one of them, to which the applicant spouse claims to have made a relevant contribution, under s 79(4)(a), (b) or (c) of the Act. In the latter case, there is an essential connection between the substantive proceedings and the relevant property, notwithstanding that the applicant spouse may not seek an order altering the parties' interests in that property in his or her favour, but only the payment of a lump sum of money as a ”settlement”. That essential connection between the property and the proceedings may not, and usually does not exist in the case of proceedings for a ”Mareva” injunction in other jurisdictions.
32.We think it is also important to bear in mind that the jurisdiction to grant interlocutory injunctions under the Act is a statutory jurisdiction derived from s 114(3) and/or s 34(1) of the Act. [As to the latter, compare s 23 of the Federal Court of Australia Act 1976 as applied by the High Court in Cardile LED Builders Pty Ltd (1999) 162 ALR 294.] Those two subsections provide:—
”34(1) The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, and to issue, or direct the issue of, writs of such kinds, as the Court considers appropriate.
114(3) A court exercising jurisdiction under this Act in proceedings other than proceedings to which subsection (1) applies may grant an injunction, by interlocutory order or otherwise (including an injunction in aid of the enforcement of a decree), in any case in which it appears to the court to be just or convenient to do so and either unconditionally or upon such terms and conditions as the court considers appropriate.””
If anything, these remarks imply a more liberal approach in applications in the Family Court for preservation of property than at general law, rather than a more restrictive one, which, if what was said in paragraph 46 of Waugh was taken as laying down a threshold question to be answered in every case, is what such an approach would constitute.
(c)Having commented that care should be taken to address the Family Law context of such applications, their Honours nonetheless remarked:
“…we think it is constructive, in the context of this case, to have regard to the principles which have developed in other jurisdictions, in relation to the grant or refusal of “Mareva” injunctions or orders, particularly as enunciated and explained by the High Court in the context of consideration of the power granted to the Federal Court by s 23 of the Federal Court of Australia Act 1976 … which section bears a striking resemblance to s 34(1) of the Act…”
Their Honours then reviewed the High Court decision in Jackson v Stirling Industries (1987) 162 CLR 612 and in particular the judgment of Deane J, where his Honour referred to the basis of the initial order in that case as being plainly adequate and as indicating that the party subject to the order “was likely to dispose of those assets pursuant to an overall scheme to defeat any judgment…”. In our view, that Deane J so observed was not to lay down any principle of invariable application.
Of particular relevance to the appeal before their Honours in Waugh was a subsequent statement by Deane J that the purpose of a “Mareva injunction” was “…not to create security for the plaintiff” (emphasis added.)
The court in Waugh also considered some of the judgments in the High Court decision of Cardile v LED Builders Pty Ltd (1999) 162 ALR 294 and quoted a passage from the judgment of Kirby J (concurring with the result reached by Gaudron, McHugh, Gummow and Callinan JJ), “The plaintiff must establish a real risk of assets being disposed of…” (emphasis added)
We see nothing in the examination in Waugh of these High Court decisions which amounts to the formulation of a principle that it must be established in all such cases that there is a scheme to defeat a judgment in substantive proceedings.
After considering the High Court decisions, their Honours in Waugh turned to the approach of the trial Judge whose orders were under appeal.
In the paragraph in Waugh immediately preceding that containing the reference to the “fundamental question”, their Honours said:
“45.With respect to the trial Judge, it appears to us that he did not have in mind any of the principles enunciated by their Honours of the High Court in the cases to which we have referred when he came to determine the proceedings before him or, if he did, he did not consider or apply them to the facts of the case as disclosed by the evidence in those proceedings. In particular, we are unable to perceive, from anything said by his Honour in his reasons for judgment delivered on 9 September, 1999, or from anything which he said in the course of the hearing on 22 and 25 June, 1999, that he considered whether the injunctions which he ultimately granted were necessary, and went no further than necessary, to prevent the abuse or frustration of the court's process in relation to the matter within its jurisdiction, particularly having regard to the nature of the wife's claim in the property proceedings. Rather, in his approach to the proceedings before him, his Honour seems to have started from the position that the wife was entitled to have ”proper security in relation to [ the husband's] property which of course will all be on the table in the case…”
That is the context in which their Honours then said:
“46.Whilst his Honour certainly seems to have considered issues of balance of convenience and hardship between the parties, it seems to us, with respect, that he did not give consideration to the fundamental question whether there was any evidence of any intention by the husband to dispose of any assets pursuant to any scheme to defeat any judgment which the wife might obtain in the substantive proceedings, or whether he merely wished to continue to trade, as he always had done, prior to and since the separation of the parties.”
Significantly, in our view, all that was said in Waugh in paragraph 46 was that the trial Judge did not consider “…the fundamental question whether there was any evidence of any intention by the husband to dispose of any assets pursuant to any scheme to defeat any judgment.”
Their Honours did not say that the trial Judge had to find on the balance of probabilities, as a matter fundamental to success, that there was such a scheme.
Put another way, all that the Court said in Waugh was that the trial Judge had taken a fundamentally flawed approach and ought have addressed the question of whether there was any evidence of intention, as part of an enquiry into the risk of disposal of assets to defeat judgment.
We acknowledge that the words emphasised were not included in the statement in paragraph 46 in Waugh. But for the reasons we have already given, and which follow, we do not think that the Court there meant what was said in paragraph 46 to be a complete statement of the test, but rather as descriptive of the error made in that case by the trial Judge.
In his written submissions senior counsel for the wife did not contend that the authorities laid down any test such as some have taken from Waugh. He said:
“58.…The authorities make clear that the test to be applied have various, but no fixed formulation. However, in all cases, there is a need to establish by objective evidence a danger of the removal of assets from the jurisdiction with the intention of defeating the Court’s process.” (emphasis added)

Conclusion in respect of this proposed ground

Finally, we think it helpful to recognise that the essential power being exercised in this case is simply described in s 114(3).
“A court…may grant an injunction…in any case in which it is just or convenient to do so…”
Ultimately, each case will involve an overall assessment of a number of factors to determine the just or convenient result. Not all cases with the same identity of factors will necessarily produce the same result because of varying weight individually and comparatively.
We perceive that a real, though perhaps subtle, difference exists between, on the one hand, establishing on the balance of probabilities a risk or danger of a disposal of property intended to defeat an order and, on the other hand, proving to the civil standard and as an independent issue that a scheme to defeat an order exists.
In some cases, the possibility (based on some evidence) of an intention or scheme may, with other factors, be sufficient to establish the probability of an objective risk of disposal with intent to defeat an order.
It follows that we do not say that, in addressing the question of whether there is a risk of disposal of assets to defeat an order, it is unnecessary to enquire whether there is any evidence of an intention, plan or scheme to dispose of assets. But in an enquiry into the risk of disposal, the question of intention or scheme is but one of a number of factors relevant to the objective risk of disposition to defeat an order.
Moreover, while ultimately a particular factor may overwhelm others, it is generally unwise to commence with a rigid focus on finding, to a particular standard of proof, one or more of a number of factors relevant only at a discretionary level and subsidiary to the ultimate question.
In conclusion, we do not think that Waugh, properly understood, lays down any incorrect principles. However, we consider that Lucev FM erred by focussing unduly on whether the evidence established a scheme of the wife to remove assets to defeat an order in the substantive proceedings. His Honour related most aspects of the evidence back to that question. The fact of the wife’s residence overseas is a prime example. While his Honour rejected that as evidence of a scheme to remove the assets overseas, his Honour did not consider the fact of the wife’s residence overseas and the prospect that she might remove the money as relevant to the degree of risk that an ultimate order in the property settlement proceedings would be defeated. When a respondent is within the jurisdiction, relevant to the risk of defeat of an ultimate order is the presence of a legislative scheme which enables a tracing and, in appropriate cases, a reversion of transactions. The absence of power and jurisdiction to unpick the likely result of any scheme that may exist, where a respondent resides offshore, is pertinent to the risk.
Again, while the failure of the wife to proffer an undertaking or consent to the retention of funds might not of itself constitute proof of a scheme, the absence of response, given appropriate opportunity, may well be relevant to the degree of risk.
Because his Honour did not find a scheme, he did not, as the grounds of appeal assert, move to consider the inconvenience or prejudice to the wife if an injunction was granted, yet that factor ought have been part of the overall assessment as to where the balance of convenience or justice lay.
Again, the constitution of the assets, which on the husband’s case, saw the sale proceeds constitute at least 87per cent of the assets of the parties, was relevant.
In our view, his Honour erred in principle and consequently failed to consider all relevant factors.

that if the reasoning in Waugh is correct, it ought have been distinguished from the instant case on the facts.

This issue arises from the fourth and final ground in the Notice of Appeal, which reads:
“4.If the decision in Waugh is correct, his Honour erred in failing to distinguish the facts from Waugh, in that this was a case where an asset was being converted to cash in circumstances where the wife lived overseas and had little other connection with Australia and Waugh was a case where the husband required his assets for trading.”
We think it unnecessary to say much of this ground. The decision in Waugh was correct, but was wrongly applied in the instant case.
Clearly, Waugh was distinguishable on the facts from the instant case, but that seems of no significance here, for the learned Magistrate did not consider the cases comparable factually.

The further evidence

The further evidence put forward by the husband was an affidavit by his solicitor. That affidavit deposed to an agreement in October 2002 between the husband and wife that the husband transfer to the wife his interest in the SH property for $40,000, which the wife had not paid.
We think such evidence, even if accepted, would add little strength to the husband’s case. We do not think it ought be accepted for that reason and, in particular, because it was available prior to the hearing before the Federal Magistrate.

Conclusion on the application for leave to appeal

Following upon our conclusions in respect of proposed grounds 1 to 3, we considered that leave should be granted and the discretion of the learned Magistrate re-exercised.

Re-exercise of discretion

It was conceded by senior counsel for the husband that the husband had an arguable claim in the substantive proceedings. We have in the course of the preceding discussion identified the other factors which we considered relevant. These are:
•the wife’s response to the husband’s application, asserting he should receive no property settlement;
•the wife’s residence overseas;
•the sale without notice to the husband of by far the greatest asset of either party;
•the consequent conversion of real property within the jurisdiction to cash;
•the wife’s silence as to her intentions, notwithstanding the husband’s request; and
•the unavailability of enforcement procedures if the money was transferred out of the jurisdiction.

In our view, all of these factors established a real risk of the sale proceeds being taken out of the jurisdiction. We saw little or no detriment to the wife if the injunction was granted, particularly if the retained sum was invested in an interest bearing account on her behalf until further order. This reservation enables the respondent to seek relief from any adverse effects of the injunction upon presentation of proper material. .
Senior counsel for the husband also acknowledged that the quantification of that claim was difficult. In our view on the evidence before us it was unlikely that the husband’s award would exceed 25 per cent of the assets of the parties. He already has some assets, albeit modest, and is in receipt of a good income. We considered an appropriate amount for retention $150,000.
Accordingly, we concluded that the appeal should be allowed and orders made in the form accompanying these reasons.

I certify that the preceding sixty-six (66) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court

Associate:

Date: 19 December 2006