Ricci and Jones and Ors

[2014] FamCA 433

FAMILY COURT OF AUSTRALIA

RICCI & JONES AND ORS [2014] FamCA 433

FAMILY LAW – INJUNCTIONS – Urgent injunction against third parties – Injunction refused.

Family Law Act 1975 (Cth)

APPLICANT: Ms Ricci

RESPONDENT: Mr Jones

2^ND RESPONDENT: Mr Gibson

3^RD RESPONDENT: E Pty Ltd

FILE NUMBER: MLC 4426 of 2014

DATE DELIVERED: 23 May 2014

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 23 May 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Matta

SOLICITOR FOR THE APPLICANT: Lennon Mazzeo Lawyers

THE 1^ST RESPONDENT: No appearance

SOLICITOR FOR THE RESPONDENT:

COUNSEL FOR THE 2^ND AND 3^RD

RESPONDENTS:

Mr Hoult

Orders

1. That the application for interim orders filed 22 May 2014 is dismissed.

2. That the applicant pay the costs of the 2^nd and 3^rd respondents by agreement and failing agreement as assessed by the Registrar.

IT IS CERTIFIED:

1. That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.

2. That the reasons this day be transcribed.

3. That the application initiating proceedings is adjourned to a case assessment conference at 9.15am on 22 July 2014.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Ricci & Jones 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 MELBOURNE

FILE NUMBER: MLC 4426 of 2014

Ms Ricci

Applicant

And

Mr Jones and Others

Respondent

REASONS FOR JUDGMENT

1. The applicant seeks relief in this particular case under Part VIIIAA of the Family Law Act 1975 by an application filed yesterday.  I was told that it was intended to be an ex parte application as against all three respondents, but indeed the second and third respondents have attended today by counsel.  It is not disputed that the first respondent has not been served, although messages have apparently been left for him today.  Whether or not he is aware of the proceedings is not to the point.

2. The jurisdiction of this court arises out of the fact that the applicant asserts that she was in a de facto relationship with the first respondent.  She pleads that jurisdiction in her application and says that she was in a relationship with the first respondent from September 2009 to March 2014.  Absent some material from the respondent, there is clearly a prima facie case that the de facto relationship existed, for the purposes of giving rise to the jurisdiction.

3. In this case, however, the relief is sought against the second and third respondents albeit that it is not pleaded that way.  It is certainly pleaded against the first respondent, but for reasons that follow, no real consequence flows from the lack of his involvement in these proceedings.  The injunctions in this case are sought against the second and third respondent, and in particular in relation to the third respondent in its capacity as the proprietor of a property at B Street, Suburb M. 

4. The jurisdiction arises in this particular case, having regard to the authorities of such cases as the Full Court decision in Yunghanns & Yunghanns [1999] FamCA 64, that the Court has power to make use of its jurisdiction pending the determination of whether indeed it has that jurisdiction. I am satisfied here about jurisdiction.

5. The applicant proffers an undertaking as to damages and those damages must relate to anything that the second and third respondents may suffer if the applicant was so ordered to pay them.  Otherwise, the applicant relies upon two affidavits, one of which contains the undertaking as to damages, but the substantive part of her evidence lies in an affidavit that she swore on 22 May 2014.

6. The gravamen of that affidavit, so far as it relates to this application, is that she says that when she and the first respondent separated, they had an interest in properties, one of which was B Street, Suburb M.  She said that she was residing in this property with the first respondent until 23 March 2014, when the separation between them occurred.  The first respondent then changed the locks and locked her out and she had been unable to gain access.  She then said this property was registered in the name of E Proprietary Limited.  That company is indeed the third respondent.

7. She then said she lodged a caveat over the property on 31 March 2014 to protect her interest.  That caveat asserts a caveatable interest being an equitable interest arising out of a constructive trust.  The affidavit goes on to say that the director of that proprietor company is the second respondent.  She refers to the fact that after the separation from the first respondent, she contacted the second respondent and asked him whether he knew that she had been locked out of this property, and he told her that he did. 

8. He also told her that she would be served with intervention order proceedings and that he was going to put the third respondent into liquidation.  At first blush, I thought the inference to be drawn from that last statement was that it was some form of threat, but when read in the context of the affidavit to which I shall turn, it seems that it has something to do with the financial problems of the third respondent.  I certainly would not draw any adverse inference on the basis of that statement.

9. The applicant then turned to the following evidence, which is the gravamen of her application for the injunctive relief.  She said that the Suburb M property was presently listed for sale with a real estate agent.  Unlike many applications for an injunction, there can be no doubt in this case that the applicant knows of the fact that the property is on the market for sale and there is no application for an injunction in relation to the continuation of that sale.  The evidence to support the application is that she said that the first respondent told her that the Suburb M property was purchased in June 2012 for $4.2 million, but that it was being registered in the name of the third respondent and held on trust for both she and the first respondent because he had a potential tax liability of approximately $1 million.

10. She said that she believed that she and the first respondent borrowed approximately $2.1 million on that property.  That is the basis upon which she asserts that she has an interest in the property.  Bearing in mind that that occurred in 2012, nothing occurred until the applicant went and sought legal advice only some days ago.  The applicant then lodged a caveat to, as I said, support her claim for the equitable interest.  The reasons for that caveat do not seem to me to matter.  She either has a claim for an equitable interest or she does not, and at this stage, the caveat does not seem to be problematic because the evidence shows she then withdrew it.

11. In her discussions with her lawyer, it seems that the lawyer had told her that he had requested the proposed financier of the mortgage for documents to be provided because he had become aware on the basis of the instructions he was given by the applicant, the property, which is currently mortgaged, was going to be refinanced.  That remortgaging is to occur this afternoon subject to the injunction issue before me.  The evidence of the applicant is that the financier, despite initially indicating that he would meet with the solicitor, has now refused to do so. 

12. She went on to say, that she was extremely concerned about the refinancing proceeding and therefore had requested the relief until she was at least able to properly ascertain the impact of it upon her overall financial position.  Her evidence then went on to say that she was unable to properly appreciate or understand the overall financial position and she wanted the injunction until such time as full and proper disclosure was made by the first respondent.  And then she added:

    And/or third parties associated with him.

13. I am not at all clear what that phrase is supposed to mean.  Am I to draw a conclusion that the first respondent is in some way in cahoots with the second and third respondents?  To the extent that that has been asserted, I do not draw that inference today.

14. In the circumstances where the applicant is offering an undertaking for damages there are many questions as to whether that undertaking has any substance, particularly where the applicant says she does not know what the overall financial position is.  That said, she referred in her affidavit to the fact that she had interests in other properties, one of which is at C Street, Town A.  She said she believed it was worth in the vicinity of $3 million and it may be encumbered to approximately $1.8 million.  However, she was unsure.  Why she was unsure is unclear, because the property is indeed registered to a corporate entity of which she was the sole director. 

15. I am not sure how much I can rely upon of the applicant’s evidence, but even to the extent that I do, it is clear that she believes she has an equity of $1.2 million on that property.  She then goes on to say that she also has an interest in a property in Suburb D, but that too seems to be registered in the name of some entity, and over which there is a mortgage to another corporate entity.  That property is rented out and is currently realising income of four and a half thousand dollars per calendar month.  Notwithstanding she says she has some interest in that property, the applicant says she is unsure of the level of debt.  That is the evidence of the applicant.

16. The second respondent provided an affidavit which had obviously been very well constructed anticipating this very application being made by the applicant.  He said he was authorised to make the affidavit on behalf of the company which is the registered proprietor of the property in dispute.  He went to on to say that the first respondent was a tenant and had been living with the applicant until recently.  He said that the property is encumbered by two mortgages and was also the subject of caveats.  He, like the applicant, confirmed that the property was on the market for sale and there is an asking price of $6 million.  Importantly, he said the property had been on the market for four months. 

17. One might wonder, therefore, why the applicant, who seemed to have known that, is more concerned about the refinancing rather than the sale.  Importantly, again, the second respondent said that the mortgage, which is clear from the title search that I have been provided, is presently in default and needs to be urgently refinanced, and that is what this is really all about today.  Refinancing has been organised for this afternoon and it would appear that, on the basis of the evidence before me, the current mortgage debt is proposed to be paid out, and the third respondent will borrow or obtain some further moneys which, on a very wide calculation, come to something in the vicinity of $300,000.

18. All of that, of course, counsel for the applicant quite properly said he could not give advice to his client about nor comment upon, because no discovery had taken place.  Whether that discovery can take place is another issue, depending upon whether or not the first respondent ultimately concedes that there was a de facto relationship and indeed, whether this property has anything to do with him and the applicant in any event.

19. Counsel for the second and third respondents offered, as an option for the court, that the $300,000 or thereabouts be placed in a trust pending a further hearing on Monday, at which point obviously the first respondent could be made aware of the proceedings.  That was rejected by the applicant, based on her lack of knowledge about what the refinancing was really all about.  Indeed, counsel for the applicant pointed to the fact that this anticipated settlement outcome as outlined on a piece of paper was simply a Word document containing calculations.  Be that as it may, it is the only document I have.

20. What I therefore have here is the applicant's assertion of an equitable interest in a property which she knows has been on the market for sale for some weeks, and there does not seem to be any real dispute that it is encumbered by a variety of mortgages to a variety of corporate entities, and not the traditional banks.  One might conclude, therefore, that the statement that she made about the 2^nd respondent’s threat, as I thought she was inferring to, might have had something to do with the necessity for the refinancing.

21. The prejudice to the applicant must lie in the possible damage that might arise from the extra refinancing rather than the refinancing itself.  In this case, I have the sworn evidence of the second respondent about just what that sum is, and, no doubt, that can be the subject of inquiry into the future.  The applicant refers to the assets that she and the first respondent have.  There is clearly, even on her evidence, far more equity in those assets than her concerned potential loss, if indeed the extra borrowing is in the vicinity of $300,000.

22. I also have the evidence of the second respondent about the potential loss to him, not in the sense of an immediate damage but the very loss of the finance itself.  That is set out in paragraph 14 of his affidavit.  He says the consequences of not settling the refinancing today are that there will continue to be penalty interest charged by the mortgagees for every day there is a delay, as well as additional and continuing legal costs by the mortgagees.  He then went on to talk about a discussion he had had with the proposed financier, and said that what that person had indicated was that unless settlement was completed today, the new lender would be withdrawing a loan offer and the refinance facility would no longer be available.

23. He referred to the problems that might flow.  One of the problems is the default of the mortgagor, giving rise to the mortgagee exercising its power of sale.  Thus, what I have is the balance between the applicant asserting that there is a potential risk for a loss in circumstances where there is significant equity in other assets as against the potential significant losses by the second and third respondent, or, more particularly, the third respondent. 

24. There is an additional but now largely irrelevant issue, and that is that section 90AF(4) ,requires the Court to be satisfied about evidence relating to taxation and social security effects before the legislation permits an order to be made.  It does not exist.

25. I accept counsel’s submission that, on the basis that an undertaking as to damages was offered, that might be cured, thus there is little dispute that the court has the power to make the order.  As the Full Court in Mullen & De Bry [2006] FamCA 1380 said, before a court can make an order of the Mareva injunction type, there must be some objective evidence that would lead to the applicant having her particular claim defeated in some particular way. The paragraphs of the applicant’s affidavit matched against that of the second respondent lead me to the conclusion that, on the balance of convenience, that is unlikely to be a problem.

26. The balance of convenience, which is one of the tests for a Mareva injunction, in this case, must favour the second and third respondents, particularly having regard to the statement in paragraph 14 of the affidavit of the second respondent.

27. The tantalising prospect of adjourning the proceedings to Monday and having a temporary injunction was not attractive to the applicant, and, on that basis, I could not be satisfied that it is proper to make the order.  The application is therefore dismissed.

RECORDED  :  NOT TRANSCRIBED

1. I have an application for costs arising out of the proceedings I have just dealt with. Section 117 of the Family Law Act1975 (Cth) (“the Act”) provides that, in proceedings in this court, each party shall bear their own costs unless there are circumstances that justify a departure from that principle. If the court is contemplating that there are such circumstances, the court must first contemplate the matters set out in s 117(2A) of the Act. This case seems to me to be one in which there are justifiable circumstances. The applicant, whilst bringing the proceedings at the very last moment, had an alternative remedy in the sense that there could have been some sort of curtailing of the extra sums, and certainly things have been going on for some weeks, not just some hours.

2. On that basis, it seems to me that there are justifiable circumstances to depart from the principle that each party should bear their own costs. However, I have still got to look at s 117(2A). In this case, the financial circumstances of the applicant, although she may be income poor, she is, on her evidence, relatively comfortable financially. I do not know what the financial circumstances of the second and third respondents are, but I presume that they are not impecunious. There is no suggestion of any problems about non-compliance with court orders, and certainly no Legal Aid requirements here.

3. The applicant has been wholly unsuccessful, and, on that basis, I think it is appropriate to make an order for costs.  That said, the claim for costs is $2500 for the solicitor and $3000 for counsel.  They seem to me to be in excess of what I could order under the scale, and to depart from the scale would require the court to make something of an indemnity type order, and, having regard to the authorities of this court, and, in particular, the Full Court, it would not be appropriate for me in this particular case to do that.

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 23 May 2014.

Associate: 

Date:  20 June 2014