Prosser and Prosser & Ors

[2015] FamCA 1145

FAMILY COURT OF AUSTRALIA

PROSSER & PROSSER AND ORS [2015] FamCA 1145

FAMILY LAW – PRACTICE AND PROCEDURE – Joinder – Whether the wife’s son should be joined as a party to the proceedings.

FAMILY LAW – INJUNCTIONS – Preservation of property – Whether the wife’s son should be restrained from dealing with his interest in a real property which is in dispute in the substantive proceedings.

FAMILY LAW – COSTS – Circumstances justifying order.

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

Blueseas Investments Pty Ltd v Mitchell and McGillivray (1999) FLC 92-856

APPLICANT: Ms Prosser

FIRST RESPONDENT: Mr A Prosser

SECOND RESPONDENT: Mr B Prosser

THIRD RESPONDENT: Mr J

FILE NUMBER: BRC 1320 of 2015

DATE DELIVERED: 16 November 2015

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Forrest J

HEARING DATE: 16 November 2015

REPRESENTATION

THE APPLICANT: In Person

COUNSEL FOR THE FIRST RESPONDENT: Mr Haddrick

THE SECOND RESPONDENT: No Appearance

THE THIRD RESPONDENT: In Person

Orders

UPON THE UNDERTAKING in the usual form as to damages given to the Court this day by Mr A Prosser that will be filed with the Court within forty-eight (48) hours

IT IS ORDERED

1. That Mr J be joined to the proceedings as the Third Respondent.

IT IS ORDERED UNTIL FURTHER ORDER

1. That the third respondent, Mr J, is restrained and an injunction is hereby granted restraining him from dealing in any way with his interest in the real property situated at K Street, Suburb G in the State of Queensland, more particularly described as Lot … on Building Unit Plan …, County of M, Parish of N, Title Reference No …, including by selling, gifting, otherwise transferring, encumbering or further encumbering, without the prior written consent of the Applicant husband.

IT IS FURTHER ORDERED

1. That the wife shall pay the husband’s costs of and incidental to that part of his Application in a Case filed on 26 June 2015 in which he sought an order in paragraph 1 thereof effectively enforcing paragraph 1 of the Orders made 29 May 2015 that the wife do all things necessary to cause the caveat she caused to be registered over the D Town property to be removed, such costs to be on a party and party basis as agreed between the parties or as assessed pursuant to the Family Law Rules 2004.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Prosser & Prosser and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 1320  of 2015

Mr A Prosser

Applicant

And

Ms Prosser

First Respondent

And

Mr B Prosser

Second Respondent

And

Mr J

Third Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. In this matter I am asked to consider competing applications in respect of a number of matters arising in the disputed property adjustment proceedings between the husband and the wife that have now been before the Court many times this year. The first order that I have been asked to consider is an order as to whether or not the second son of the wife, Mr J, ought to be joined as a party to the proceedings to become the Third Respondent in the proceedings. Mr J is not the son of the husband, but is one of the sons of a former relationship of the wife.

2. The application to join Mr J was filed in the form of an Application in a Case many months ago. There were difficulties in being able to locate him to serve him and get him before the Court. It has taken until this long before he is actually here for the first time, responding to the application. He informs the Court that he consents to and is happy to become a respondent to the proceeding and does not oppose the order being made. Accordingly, I will make that order.

3. I am also asked to determine whether or not an ex parte injunction that I made in these proceedings on 24 August 2015 directed against Mr J on that day be continued today, now that he is here before the Court and a party answering the application for the injunction to be granted against him. He opposes it, his opposition to it is supported by his mother who is the wife in the proceedings.

4. In previous reasons for judgment that I gave on 24 August 2015 in support of the ex parte injunction that I granted against Mr J, I set out the factual circumstances in brief. I will repeat them here:

   ·The husband and the wife were married for 18½ years, they separated some time towards the end of last year, 2014, in or around October or November.

   ·The evidence is uncontroversial that in 2007, well into the marriage but several years before their separation, an apartment property situated at K Street, Suburb G in the State of Queensland was purchased.

   ·The evidence that I have read today, at least from the wife and her son, Mr J, is that the property in Suburb G was purchased when her eldest son, Mr O, began to study at the University of Q. The parties, it is to be remembered, lived in northern New South Wales, somewhere around the E Town area.

   ·Mr O came to Brisbane to commence studies, sometime in or around 2007 or thereabouts. The wife says that a decision was taken to purchase a unit in Suburb G for her son to live in so that they could be acquiring property by way of paying off a mortgage rather than paying rent, which is thought to be lost or dead money.

   ·The wife gives evidence about some of the detail surrounding the purchase. She does not say anything about how much the unit was purchased for and the husband has given no evidence about that. The wife says that the husband agreed for the apartment to be bought and to be the apartment of the boys, Mr O’s brother being younger than him and intending to study at the university commencing sometime after Mr O did. The wife says that it was the husband’s agreement to buy the property and for it to be the boys’ property. However, she says the bank would not give a loan in the name of the boys at the particular time and she says that the husband then told her to purchase the property in her name.

   ·It was purchased, she says, with a contribution of some $47,000 that came from the boys which she says they contributed to the deposit. She also says that her husband put in $10,000 towards that deposit. She asserts that was an unconditional gift on the husband’s part. I make the observation that it is interesting that a bank would say they would not loan money to the two boys to purchase the property when, at least according to the wife, they had a $47,000 deposit saved between them. Be that as it may, the bank may not have accepted that they had any repayment capacity although that in itself is also challenged by further evidence of the wife that I will refer to in a moment.

   ·The property also then had a mortgage registered against it by a bank in respect of the money that was borrowed to complete the purchase. By the time that was discharged in 2014, it was $255,000. It seems, or at least the inference from the evidence of the wife is, that she was paying the mortgage repayments on that mortgage in respect of that property using funds that the husband was paying to her from his business during the course of their relationship, which she says he was paying her as wages.

   ·At some point towards the end of the marriage it appears on the evidence that the financial circumstances of the parties have suffered or deteriorated and, at least on the wife’s evidence, it seems as if she was not able to continue to pay the mortgage repayments on the apartment. The inference that I draw from that is the husband’s business’s financial circumstances caused him to desist from paying money to the wife or allowing the wife access to funds from which she was then able to make the mortgage repayments.

   ·Her evidence is that the bank said that they were going to foreclose and that they in fact commenced proceedings in the District Court at Brisbane to foreclose on the mortgage and take repossession of the property and sell it. Her evidence is that she went to the husband and brought it to his attention, to which he said “it is the boys’ problem, it is their unit, it is their property” even though the property was registered in the wife’s name, and the mortgage was presumably in her name.

   ·The wife’s evidence is that the mortgage was then paid out in the sum of around $255,000 late last year by money sourced from her two sons. She says that was money those two sons earned and saved over the years. The wife asks the Court to accept that not only were her two young sons, who were students working part-time as I understand it, able to save $47,000 to contribute to a deposit, but also that within a very short space of years, namely seven years, they were able to save between them some $255,000 on top of paying for their own living expenses. She says the mortgage was then paid out and, subsequently, she then determined to simply transfer her legal interest in the property to her second son, Mr J. She does not really say why or how or on what basis. There is no evidence that she deposes to in her affidavit explaining that. There is no evidence as to why she transferred it to him. There is evidence that the husband did not know about it, was not told about it, was not consulted on it and certainly did not agree to it.  Indeed, to the contrary, the husband says he only found out about it subsequent to the event sometime early this year after these proceedings were well and truly underway.

   ·Some of what the wife says is supported by Mr J in his very short affidavit filed in his case today, namely that he and his brother contributed $47,000 towards the deposit and that they then contributed $255,000 and the mortgage was paid off. Not much more is said other than that. For example, there is no evidence given by either of them as to why the property was only transferred to the name of Mr O when it is said that both he and Mr J were the persons from whom the money was sourced and were both the persons for whom the apartment was purchased. I have heard information from the bar table today suggesting that Mr O may indeed consider he has a beneficial interest in the property. Certainly on the case presented by his mother and his brother to date one would think that prima facie he might if their case is correct, but that is inconsistent with, and is not explained in any way by, evidence that the property was transferred to the name of only one of them by the mother for natural love and affection.

5. The court has pursuant to s 114(3) of the Family Law Act1975 (Cth) (“the Family Law Act”) the power to grant injunctions in proceedings where the court is already exercising its power in respect of marital causes, particularly in respect of matrimonial property.  This court is seized with the property adjustment proceedings as between the wife and the husband.

6. Each of the husband and wife now seeks orders pursuant to s 106B of the Family Law Act setting aside dispositions and transfers that have occurred in the past that might ultimately be determined to defeat orders of this court yet to be made, or likely to defeat orders of this court already made, whether that was the deliberately intended result of such dispositions or transfers or otherwise.

7. In this particular case, as I said on the earlier occasion when I made the ex parte injunction, the evidence satisfies me that the husband has a prima facie case for the circumstances of the transfer of the property from the wife to her second son to be carefully considered and investigated in the property adjustment proceedings.  The wife has a similar case in respect of transactions, transfers and dispositions as between the husband and his son, Mr B Prosser, who is already joined as the second respondent in the proceedings.

8. The court’s power extends to making injunctions that are considered to be just or convenient in the case. In this particular case, I am satisfied that the husband’s application under s 106B, given the factual circumstances outlined, particularly the concession by the wife that the husband put $10,000 into the purchase of the property and the uncontested evidence that it was transferred for natural love and affection at around the time when the parties separated, with no notice to the husband or consent from him at the time, and that the absence of seriously relevant evidence that would have been within the scope of the wife and Mr J to put before the court raises serious questions that ultimately must be answered in these proceedings. In all, I am quite satisfied that there is a serious issue to be tried and I turn then to consideration of the balance of convenience.

9. Mr J advances essentially two reasons why the injunction should not be put in place. Firstly, he said at the outset of his submissions that no undertaking as to damages had been provided by the husband. That was readily dealt with by Mr Haddrick informing the Court that his client provided an undertaking in the usual form. Mr J responded by saying one of the things the court has to consider is that that undertaking is not worth very much in the face of the husband’s case that he is a man of parlous financial circumstances.

10. As I indicated from the bench in discussions with Mr J,  I am satisfied there is authority, including in particular the decision of the Full Court of the Family Court in Blueseas Investments Pty Ltd v Mitchell and McGillivray (1999) FLC 92-856, for the principle that even in cases where an undertaking might not ultimately have a great deal of value standing behind it such as where the person who proffers it who seeks the injunction to protect their position is in parlous financial circumstances, that it is just merely one matter to consider in determining an application for an interim injunction. The application is not necessarily to be determined against the person who seeks it, simply because they are of relatively poor financial circumstances.

11. I require and accept an undertaking as to damages from the husband in the usual form. I take into account that he is prepared to give it notwithstanding the fact that there is some question about his financial circumstances. I do not regard that fact as determinative against granting the injunction.

12. The other point that Mr J says in opposition to the injunction is that he considers it an attack on his right to be able to go and use all of the equity in the property which is now apparently available, the property being unencumbered by mortgage, as security to financial providers or mortgagees in respect of his desire to go and build his property investment portfolio. The court was told he wants to buy a home.

13. I understand that it is every property owner’s right, if they own all of the equity in their property, to be able to use that how they see fit. It is their right to sell their property if they wish, it is their right to go and use it and encumber it to obtain further borrowings to buy other property. I acknowledge and respect that right.  However, that is the very thing that the restraint seeks to prevent happening in circumstances where the husband makes application for the disposition of the property to Mr J to be set aside so that it may be able to be subject to the reach of the court’s orders in s 79 proceedings as between him and the wife.

14. As I said during the course of the day, if it is that ultimately a trial judge is, on the balance of probabilities, readily satisfied that Mr J and his brother in fact put in $47,000 of their hard earned money into the deposit that purchased that property, and a further $255,000 of their hard earned money into discharging the mortgage on that property, then the husband’s case certainly does not look nearly as strong or as good as it might have done. There may indeed only be a question then of what was the equity in the property at the time that the transaction sought to be set aside took place.

15. There are other questions that have to be considered by the trial judge as well in determining the ultimate disposition of that s 106B application, namely questions surrounding the alleged gifting of the $10,000 and the alleged gifting by the husband to the wife’s sons of the interest in that property even though he knew it was registered in his wife’s name.

16. Until all of those issues that are live issues are determined as between all of the parties, including Mr J, it would, in my judgment, be prejudicial to the husband’s immediate interests in the proceedings to lift the injunction in circumstances where Mr J says he wants to go and encumber the property. That would effectively defeat the purpose and would allow him to do what it is the restraint was designed to prevent him from doing in the first place.

17. There being no evidence that Mr J currently seeks to buy a property and has one in mind or that he has made some sort of approach to a bank to get a loan using the security of the property before me, I find that the balance of convenience favours continuation of the injunction until further order and I intend to order so.

18. In her Application in a Case filed by leave this morning, the wife sought further orders in respect of disclosure against the husband. She supported the application by an affidavit, also filed by leave this morning in circumstances where the husband and his legal counsel were only provided with copies of those documents this morning. The documents that she sought to have disclosed, although listed under six or seven sub-categories, could be described in two categories in my view.

19. The first category is a category of documents one might describe as documents evidencing payments by the husband to various firms of solicitors who he has previously instructed to act for him in the past. The evidence is that the wife wrote to the husband through his solicitors on 21 October 2015 asking for him to provide further documents that were within that category that I have just described.

20. Mr Haddrick tendered into evidence a bundle of documents attached to a copy of a letter, and I made this bundle and that letter Exhibit 1 in the proceedings. That evidenced that the husband’s solicitors had indeed responded to the request for disclosure and sent a letter back attaching a whole lot of documents that they said met the disclosure request.

21. The wife in her affidavit today refers to some of those documents and then simply goes on to say but there is evidence of cash payments and he has not disclosed the source of those cash payments. As I said to her during the course of discussion between bench and bar, that is different from his requirement to actually disclose documents. The requirement for him to tell her where the money came from is different from having to disclose documents and might very well be more appropriately addressed by a different form of interlocutory procedure, namely that provided for in the Rules in respect of making a specific request for answers to questions.

22. In any event, sooner or later when the matter comes to trial, the husband might very well have to answer questions about where those funds came from if he has not already been required to do that on an interlocutory basis through the appropriate procedure for them.

23. I do not intend to make an order more specific about the exact documents that the wife says would be in his possession that he has failed to disclose and I would urge her not to make such an application until she actually particularises such documents in her request to the husband through his solicitors and until he refuses to answer that in any sort of reasonable fashion.

24. That leads to the second category. The second category of documents that the wife sought an order for disclosure in respect of is a list of documents including things like bank statements for a period from earlier this year until today; a BAS statement for the September quarter of this financial year; and a document that sets out a list of assets of his business.

1. The wife accepted and conceded in response to something put to her by me that she did not even ask him for those in correspondence, and she did not say anything about them in her affidavit supporting her application for disclosure today. In other words, it is a fresh request for him to disclose those given to him for the first time today.

2. In those circumstances, where he has had no chance to respond to that or provide the documents without having been ordered to, I do not intend to make an order for disclosure in that regard either. The wife’s application for disclosure orders against the husband today will be dismissed.

3. The wife also sought orders against Mr B Prosser in the Response filed today. Mr B Prosser has not been here today because there was no live application against him when the matter was listed for today and he could not be expected to have to be here when he was not answering any application or making one. The wife had not even served him with her application and supporting affidavit and she agreed that that could not proceed to any hearing today.

4. Finally, the husband has an application for costs before the Court. Asking that the wife pay his costs of and incidental to the applications that have been heard since May this year. I am told by his solicitor that he is willing to have the bulk of those costs applications simply reserved for determination by the trial judge. But he does press for an order that certain of those costs be paid in these circumstances.

5. On 29 May 2015, the first order that I made was in contested proceedings as between the husband and the wife. I made this order:

   The wife shall, and an injunction is hereby granted requiring her to, forthwith take all steps that are necessary, including signing and filing all necessary documents, to cause a caveat registered over the real property situated at [C Street, D Town] in the State of New South Wales, to be removed from the title of that property as soon as possible.

6. It might be asked why the wife was ordered to remove a caveat whereas the husband is not. The significant difference in the factual circumstances, as the wife would remember, is there was clear evidence that I accepted that the bank was moving in to sell not only the husband’s property that was encumbered by a caveat that the wife had caused to be registered but also a property of his elderly mother that she had mortgaged for security to the bank.

7. The bank was going to act and was going to sell both of those properties and the husband and his brother proposed what I considered was a reasonable solution in the circumstances which was the sale of that property at D Street, D Town to his brother to avoid the bank taking it and to avoid the bank taking his mother’s property. I made that order on 29 May 2015.

8. I was in no doubt that the wife understood her obligation under that and that was confirmed effectively by the fact that subsequently, when she was asked to comply with the order by the solicitors acting for the husband, she said she was appealing my decision and that she pointed out that she had time within which to appeal it and that she was also going to make an application for a stay of my order.

9. The husband through his solicitor waited and on 26 June 2015, at the expiration of the appeal period, filed the application in which he sought an order enforcing my previous order requiring the wife to do what I had ordered her to do.  In the meantime, in the period within which the wife was to file an appeal she did not do so and the matter came back before me on 6 July 2015, just over a week and a half after the Application in a Case was filed in which the husband sought an order that the wife remove the caveat as previously ordered. The wife did not take any steps between the filing of the application or being served with it and the day on which it was being heard before the Court to tell the husband that she had decided not to appeal and comply with the order.

10. The husband was, in the circumstances, wanting the previous order complied with, so that the bank would not act to foreclose on his property and his mother’s property. He had to bring the matter back before the Court and instruct his solicitor and barrister to come before the Court to seek another order that forced the wife or the registrar in her place to cause the caveat to be removed.

11. At court on 6 July 2015, the wife readily told the Court she would agree to removing the caveat. It is in these circumstances that the husband asked for his costs of and incidental to that part of his application for that day and he asked for them to be paid on a party and party basis to be agreed between the parties or as assessed in accordance with the Rules.

12. The wife in opposition to that says that the orders only required her to do it as soon as possible and that some reasonable interpretation of that gave her a period of time. With all due respect to her I do not accept that argument at all. As soon as possible means as soon as it can be done subject of course to her clear right to apply to me for a stay of that order on the basis that she had lodged an appeal, in which circumstances the application for a stay would have been heard and determined on its merits. She simply told the other side she was going to appeal and apply for a stay which she did not do.  

13. When she decided she was not going to appeal she took no steps to comply with my order until she was before the Court and it was clear to her she was going to be expected to comply with it.

14. The other thing she asked me to consider is the financial circumstances. She says she is earning an income of some $36,000 a year. I appreciate that is not a huge income. However, whilst I do take that into account and consider it appropriate to take it into account under s 117 of the Family Law Act, that fact does not in itself persuade me not to make a costs order against her.

15. In the factual circumstances just outlined, I am quite satisfied that the circumstances justify me in making a costs orders and that the costs orders sought today by the husband is an order that I consider to be just, and I will so order.

I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Forrest delivered on 16 November 2015.

Associate:

Date:  18 December 2015