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.
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 Waughand Waugh (2000) FLC 93-052
APPELLANT:
M
RESPONDENT:
DB
FILE NUMBER:
SYM
3056
of
2005
APPEAL NUMBER:
EA
116
of
2006
DATE DELIVERED:
19 December…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Mullen & De Bry [2006] FamCA 1380
Case
[2006] FamCA 1380
Decision Date
CaseChat Overview and Summary
In this matter, the husband appealed a Federal Magistrate's decision to dismiss his application for an interim injunction. The husband sought to restrain the wife from dealing with the proceeds of sale of the former matrimonial home, which had been transferred to her post-separation. He argued that the wife, who was located overseas, might dissipate the sale proceeds, thereby defeating any property settlement order in his favour. The Federal Magistrate had dismissed the application, finding no evidence of a scheme by the wife to defeat judgment by asset disposition, and relying on the principles established in *Waugh*.
The legal issues before the Full Court were whether the Federal Magistrate erred in his assessment of the evidence and the applicable legal principles. Specifically, the husband contended that the Federal Magistrate failed to consider the balance of convenience, that the *Waugh* principle was incorrectly applied or interpreted, and that the facts of the present case should have been distinguished from *Waugh*. The husband argued that the *Waugh* decision did not intend to create a threshold requirement for proof of a deliberate scheme to defeat judgment before an injunction could be granted.
The Full Court found that the Federal Magistrate had erred by focusing too narrowly on the existence of a deliberate scheme by the wife to defeat judgment. The Court clarified that *Waugh* does not lay down incorrect principles but was misunderstood by the Federal Magistrate. The Federal Magistrate should have considered a broader range of factors, including the risk of an order in the substantive proceedings being defeated, the wife's failure to offer an undertaking or consent to retaining funds, and the prejudice to both parties depending on whether an injunction was granted. The wife's overseas residence was a relevant factor to the risk of dissipation, not solely to the existence of a scheme.
Consequently, the Full Court allowed the appeal. The Federal Magistrate's decision was set aside, and the matter was remitted for reconsideration of the husband's application for an interim injunction, with the Federal Magistrate to properly consider all relevant factors, including the balance of convenience and the risk of an order being defeated.
Orders
Orders of the court
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Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
…“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) 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. 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.”
Decision
Reasons for decision
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) 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.” 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) 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.” …“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)