Pejic & Pejic (No 2)
[2022] FedCFamC1F 513
Federal Circuit and Family Court of Australia
(DIVISION 1)
Pejic & Pejic (No 2) [2022] FedCFamC1F 513
File number(s): CAC 559 of 2022 Judgment of: AUSTIN J Date of judgment: 4 July 2022 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Review of Decision – Property – Injunctions – Where the second, third, fourth and fifth respondents seek review of interim orders granting the wife sole occupation of a property and restraining them from disposing of or encumbering it – Where the property is owned by the third and fifth respondents – Where the wife failed to advance any good reason for why the third and fifth respondents should be impeded from exercising their legal rights in respect of the property – Where the wife could not establish the grounds for an interim injunction – Orders of the senior judicial registrar set aside – Interim order made by consent restraining the third and fifth respondents from dissipating the net proceeds of the property if and when it is sold – Costs ordered in a fixed sum. Legislation: Family Law Act 1975 (Cth) Pt VIII, s 79 Cases cited: Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249
Blue Seas Investments Pty Ltd & Mitchell (1999) FLC 92-856
Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148
Re Ross-Jones; Ex parte Green (1984) 156 CLR 185
Division: Division 1 First Instance Number of paragraphs: 43 Date of hearing: 4 July 2022 Place: Newcastle (via video link) Counsel for the Applicant: Dr Leslie Solicitor for the Applicant: Andrew Warren Associates Solicitor for the First Respondent: Santo Family Lawyers Counsel for the Second, Third, Fourth and Fifth Respondents: Mr May Solicitor for the Second, Third, Fourth and Fifth Respondents: York Law ORDERS
CAC 559 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS PEJIC
Applicant
AND: MR PEJIC
First Respondent
MS PEJIC SNR
Second Respondent
PEJIC HOLDINGS PTY LTD
(and others named in the Schedule)Third Respondent
order made by:
AUSTIN J
DATE OF ORDER:
4 jULY 2022
BY CONSENT, IT IS ORDERED THAT:
1.Order 3 made on 9 May 2022 is discharged.
2.Upon sale of the “Property F” property (comprising at least Lot … in DP … and Lots …, … and … in DP …) the Third and Fifth Respondents are restrained from dealing with the proceeds of sale other than as follows:
(a)To the discharge of agent’s fees and costs of sale;
(b)To the discharge of any registered mortgage secured against the property;
(c)To the payment of any Capital Gains Tax liability arising upon sale and payable to the Commissioner of Taxation; and
(d)The balance of the proceeds are to be deposited into the self-managed superfund account with the Third and Fifth respondents restrained from withdrawing or transferring those funds without the prior written consent of all parties, or further Order of the Court.
IT IS FURTHER ORDERED THAT
3.Orders 1 and 4 made on 9 May 2022 are discharged.
4.Otherwise, save as to costs:
(a)The Application for Review filed on 24 May 2022 is dismissed; and
(b)Any and all other outstanding applications for interim financial relief are dismissed.
5.The applicant wife shall pay the party/party costs of the Second, Third, Fourth and Fifth Respondents in respect of the review application, fixed in the sum of $7,500.00, payment of which is postponed until final determination of the cause between the applicant wife and the respondent husband pursuant to Part VIII of the Act.
NOTATION
A.The parties do not require the publication of Reasons for Order 5 hereof.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Pejic & Pejic has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
AUSTIN J:
The applicant wife and first respondent husband are engaged in litigation to divide their property under Pt VIII of the Family Law Act 1975 (Cth) (“the Act”).
The wife has joined four other parties to the proceedings for the purpose of making equitable claims upon property owned by them, but in which neither spouse presently enjoys any legal proprietary interest.
The second respondent is the husband’s mother.
The third, fourth and fifth respondents are corporations controlled by the second respondent and other members of the paternal family.
Interim orders were made between the parties by a Senior Judicial Registrar on 29 April 2022 and 9 May 2022.
Currently before the Court for determination is an application brought by the second, third, fourth and fifth respondents to review three orders made on 9 May 2022, being:
(1)Order 1, which restrains the second, third and fifth respondents from disposing of or encumbering the farming property known as “Property F”;
(2)Order 4, which grants the wife sole occupation of Property F; and
(3)Order 3, which restrains the second, third and fifth respondents from dealing with herd animals, plant and equipment situated upon Property F and two other associated farming properties.
The wife agrees to the discharge of Order 3, so only Orders 1 and 4 remain in issue.
In respect of Order 4, the wife agrees to submit to the contraction of the injunction so her sole occupation of Property F is confined to the homestead rather than the whole property. That is the fall-back position of the second, third, fourth and fifth respondents, but they maintain objection to an injunction in any form.
Evidence
The wife relies upon:
(a)her affidavit filed on 30 June 2022, the exhibits to which were separately tendered (Exhibit A); and
(b)her financial statement filed on 29 March 2022.
The second, third, fourth and fifth respondents rely upon:
(a)the affidavit of the second respondent filed on 26 April 2022;
(b)the affidavit of Mr B filed on 27 June 2022; and
(c)the affidavit of Mr C filed on 27 June 2022.
Neither party objected to the evidence adduced by the other.
The interim dispute as between the spouses was settled by the orders made on 29 April 2022 with their consent, which orders are not the subject of the review application. The husband did not seek to be heard in the dispute between the wife and the other respondents.
Legal Principles
The wife is seeking interim injunctions against third parties. The fact that the second respondent is the husband’s mother and the third, fourth and fifth respondents are corporations controlled by other members of the paternal family does not expand the power of the Court over the respondents (Re Ross-Jones; Ex parte Green (1984) 156 CLR 185 at 202 and 204).
Accordingly, to obtain the interlocutory relief she seeks, the wife must demonstrate these things: there is a serious question to be tried and so the claim for substantive relief should be protected by interlocutory injunction; irremediable prejudice would be caused if the injunction were not granted; and the balance of convenience favours the injunction being granted (Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 at 153). The wife did not cavil with the application of these principles.
In addition, it is well accepted that the applicant for the interim injunction must proffer an undertaking as to damages (Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249 at 311 and 312). The wife sought to contend it is not strictly necessary to give an undertaking as to damages in matrimonial proceedings such as these, in support of which contention she cited Blue Seas Investments Pty Ltd & Mitchell (1999) FLC 92-856 (“Blue Seas”), in which the Full Court said this:
54.It should be noted that these principles in relation to undertakings as to damages are principles of equity derived from civil litigation. There is, we think, an additional highly relevant matter that distinguishes litigation under the Family Law Act from ordinary civil litigation: that is the fact that very often the wealth of the parties is controlled by one rather than both of them. This in turn means that it is not uncommon for one of the parties to have no means of meeting any liability that may be incurred pursuant to an undertaking as to damages.
…
57.No doubt in ordinary civil litigation the impecuniosity of a party is a matter that may be relevant to the issue of balance of convenience. For the reasons already stated however, we consider that family law cases must be looked at in a different light. In our view it would be unconscionable to accept a broad principle that the impecuniosity of a party in family law proceedings would be given such weight as to prevent an injunction being granted where all the other requirements for the grant of such an injunction are present. Indeed, it may even be doubtful whether the impecuniosity of one of the parties to family law proceedings would usually be a factor militating against a grant of interim or interlocutory injunctions if the other tests for the grant of the same were otherwise satisfied. This is not to say that such a factor would never be relevant but in the present circumstances at least, where the injunction may have the effect of preserving the only piece of property to which the wife might have recourse, it would be unreasonable in the extreme for her impecuniosity to operate to prevent an injunction being granted.
(Emphasis added)
However, that case concerned an appeal from an interlocutory injunction made against a corporation which was effectively controlled by the husband, to which corporation the husband had transferred assets in an attempt to put them beyond the reach of the Court in any exercise of power between the spouses under s 79 of the Act. That is not the situation at hand. Neither the wife nor the husband has ever enjoyed any legal proprietary interest in the assets of the second, third, fourth and fifth respondents, including Property F. Contrary to the wife’s implied submission, Blue Seas is not authority for the unconditional abandonment of the need for an undertaking as to damages in all financial litigation under the Act.
Factual Background
Property F has always been owned by the third and fifth respondents.
The spouses have conducted farming enterprises on Property F for the last decade or so. One farming enterprise was their own partnership and the other was a pastoral business formerly owned by the second respondent (but apparently now owned by the fifth respondent).
The wife has lived in a homestead at Property F since about April 2021.
There is substantial factual conflict about the financial transactions between the parties in respect of Property F and the two farming enterprises. The wife contends she and/or the husband made financial and non-financial contributions to Property F’s improvement, which should sound in her equitable proprietary interest in the property, which proposition the respondents deny.
On her best case, the wife contends for relevant financial contributions which would reflect in only a very small proportional proprietary interest in Property F, given its apparent current value – perhaps more than five per cent but almost certainly less than 10 per cent.
Undertaking as to Damages
The wife declined to give an undertaking as to damages to secure the proposed interim injunction. She sought to justify that on the basis that she is impecunious.
The settled law requires the undertaking, without which she cannot sustain an entitlement to the injunction. I accept the respondents’ submissions in that regard.
The separate issue about the enforceability of any such undertaking is an argument for another day, depending upon the need to invoke the undertaking and the extent to which it should or can be enforced.
The Property F property is one of three farming properties which the respondents wish to sell. The other two properties can be sold, since Order 2 made by the Senior Judicial Registrar on 9 May 2022 permits it. One of the other two properties adjoins Property F. The respondents fear that their restraint from selling the properties soon might diminish their realisable value. That problem is compounded if they cannot sell Property F and the adjoining property in one line. The properties have a real chance of realising a higher price if sold together. The absence of any undertaking as to damages is fatal to the wife’s application, given the circumstances of the respondents’ prospective losses if the injunction is imposed.
Nonetheless, the wife would be hard pressed to demonstrate the residual elements of her application.
Risk of Dissipation
The wife contended there is an “imminent risk” Property F will be dissipated, which submission is rejected. There is an imminent risk that Property F will be sold, but no risk at all that the net proceeds of sale will be dissipated.
The respondents agreed to be bound by an injunction concerning Property F in the same terms as the injunction which binds their retention of the net proceeds of sale of the other two farming properties (under Order 2 made on 9 May 2022). An order will therefore be made in those same terms with the parties’ consent.
Although the wife contended she now wishes to pursue a case which will ultimately enable her to retain Property F in specie, no aspect of the evidence adduced by her formed the basis of any reasonable chance of her doing so.
Balance of Convenience
The wife lives on Property F rent free but she need not. She now has no hand in running the pastoral business owned by the fifth respondent (but formerly the second respondent). Nor does she derive any benefit from the farming enterprise she formerly ran in partnership with the husband. She deposed the partnership is worthless and she receives no income from it.
With the husband, the wife is the joint legal owner of the formal matrimonial home at Town D, NSW, which is apparently occupied by one of the spouses’ adult sons. The wife could reside in that property as of right if she chooses. Alternatively, she could force its sale and use her one-half of the net proceeds to accommodate herself elsewhere if she likes.
The third and fifth respondents, as the joint owners of Property F, wish to sell it along with the other two farming properties. The evidence led by the respondents suggests it is inconvenient and expensive for them to maintain Property F, which inconvenience and expense they must bear if they are to maintain its value. No good reason is advanced by the wife for why the third and fifth respondents should be impeded from ordinarily exercising their legal rights in respect of Property F.
No Prima Facie Case
As already noted, the wife’s substantive property claim is for a relatively small percentage share of Property F at best. More likely on the available evidence is that the wife’s claims against the respondents, even if established, will sound in equitable compensation, damages or declaration of debt, rather than a declaration of equitable proprietary interest in Property F.
The respondents are anxious to understand the intricacies of the wife’s claims against them, and not just rely on the vague factual allegations made within her affidavit. To that end, in June 2022, the respondents sought that the wife file and serve points of claim against them, which reasonable request the wife refused. The currently nebulous and vague premise for the existence of the equitable proprietary right which the wife now asserts was a problem for her to resolve in this interlocutory dispute. She failed to do so.
If the wife does have such an equitable right, the extent of the right is not such as to warrant an interlocutory injunction of anything like the breadth she proposed. That problem was not cured by the suggestion that the injunction should only apply until the parties mediate the dispute in the next couple of months. She either demonstrates grounds for the interim injunction or she does not.
Conclusion
The wife fails to establish entitlement to the interim injunction.
Order 1 made on 9 May 2022 will be set aside.
Similarly, the wife has no entitlement to the allied order for sole and exclusive use of Property F or any part of that property.
Order 4 made on 9 May 2022 will also be set aside. The wife admitted the two forms of relief necessarily “travel together”.
The respondents placed on record that they will allow the wife 30 days to vacate Property F.
Order 3 made on 9 May 2022 will be set aside by consent, as I have already mentioned.
A further interim order will be made by consent restraining the third and fifth respondents, as the owners of Property F, from dissipating the net proceeds of the property if and when it is sold.
Any and all other applications for interim financial relief sought by the parties will be dismissed.
I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of the Honourable Justice Austin. Associate:
Dated: 21 July 2022
SCHEDULE OF PARTIES
CAC 559 of 2022 Respondents
Fourth Respondent: PEJIC NOMINEES PTY LIMITED Fifth Respondent: E PTY LTD
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