Richards and James and Anor

[2008] FamCA 1210

FAMILY COURT OF AUSTRALIA

RICHARDS & JAMES AND ANOR [2008] FamCA 1210

FAMILY LAW – PROPERTY – Restraint

APPLICANT: Mr Richards

RESPONDENT: Ms James

SECOND RESPONDENT: Mr and Mrs James (Snr)

FILE NUMBER: BRC 6335 of 2007

DATE DELIVERED: 16 December 2008

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Dessau J

HEARING DATE: 16 December 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr D. Mellas

SOLICITOR FOR THE APPLICANT: Attwood Marshall

COUNSEL FOR THE RESPONDENT: Dr R.S. Ingleby

SOLICITOR FOR THE RESPONDENT: Nedovid & Co

COUNSEL FOR THE SECOND RESPONDENT Mr R.J. Spicer

SOLICITOR FOR THE SECOND RESPONDENT Kenna Teasdale Lawyers

Orders

1. That the order of Bell J made on 4 August 2008 shall be discharged.

2. That the first respondent and the second respondents be restrained by themselves, their servants and agents from withdrawing or dealing with in any way the deposit held with “Esanda” or any other entity representing the sum of $120,000 (plus interest) being part of the proceeds of sale of T property in the State of Queensland except as agreed by all parties in writing or as ordered by a Writ of Competent Jurisdiction in Australia.

3. That the husband’s application for interim relief filed 14 July 2008 and the second respondents’ Application in a Case filed 25 November 2008 shall be dismissed.

4. That all questions of costs shall be reserved

5. That pursuant to the Family Law Rules this matter reasonably required the attendance of counsel.

6. That a transcript of my reasons for judgment given this day shall be prepared, retained on the court file and made available to each party.

7. That all existing applications shall be adjourned to a Conciliation Conference on 19 February 2009 at 11.00am.

IT IS NOTED that publication of this judgment under the pseudonym Richards & James is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER:  BRC 6335 of 2008

MR RICHARDS

Applicant

And

MS JAMES

Respondent

MR AND MRS JAMES (SNR)

Second Respondent

REASONS FOR JUDGMENT

1. This is an interim application in which the wife's parents seek the release of funds – the proceeds of sale of a property – a property they say was largely funded by them.  They also seek an order that the husband pay security for costs for their costs in the property application brought by him against the wife and against them as the second respondents.  The wife, through her counsel, Dr Ingleby, has supported her parents' application.

2. The parties married in November 2006 and separated just over a year later on 23 December 2007.  Before that, they lived together on and off from 2001 on the wife's version, and for seven years or so on the husband's version, although he concedes there were periods when, as a Canadian national, he was overseas.

3. It is uncontradicted that in August 2003, the wife bought a house which was registered in her own name.  It cost about $362,000 plus stamp duty and costs.  She borrowed $237,000 secured by way of bank mortgage.  Her parents contributed a total of about $230,000, by way of a contribution towards the purchase and a contribution shortly thereafter to pay down the mortgage.

4. After separation, the wife sold the property, unbeknownst to the husband.  It settled on 14 May this year.  The sale price was $455,000.  After sale expenses and the mortgage being repaid, the net proceeds were $325,000.  The wife immediately paid $286,000 to her parents from the settlement monies and retained the small balance.

5. The figure of $286,000 is said by the wife and her parents to comprise the $230,000 contributed by them to the property, plus the sum of $56,000, calculated as being lent to the mother by her parents while she was studying during the relationship.

6. In July 2008 the husband filed an application to have the settlement monies received by the wife's parents held in trust.  Interim consent orders were made by Bell J in Brisbane on 4 August 2008 that until further order, the wife's parents would be restrained from dealing with the $286,000 held in an Esanda account.  The case was then by agreement transferred to Melbourne.

7. On 25 November this year, the second respondents filed an amended application seeking, amongst other things, that the restraining order I have just referred to be discharged, although they have indicated through their counsel, Mr Spicer, that they are willing to make an undertaking to meet any property order in the husband's favour. They also seek an order that the husband pay $20,000 by way of security for their costs.  They say that he lives in Canada, he has no property, and that previously he has not been working, although they acknowledge that he is now working and he says he is earning just under $CAN100,000 per annum.

8. It is the wife's parents' case that the husband made no contribution to the property or at least an insubstantial one, that he has not established any risk that they would dissipate any monies that they have received, and that he will be protected in any event by their undertaking.

9. On any view, the parents have made substantial contributions and they will impact on the share ultimately received by the husband and wife.  However, I cannot fully agree with Mr Spicer's assessment to the effect that the husband has not joined issue with the wife about contribution.  Having looked at the material, I am satisfied that he has.  He agrees that funds were provided by the wife's parents but he says as gifts and not loans.  He says he made some financial contributions to the property and other indirect financial contributions to the parties' living expenses. 

10. Dr Ingleby, for the wife, says the property increased in value by $93,000, so the husband could only claim an entitlement to a share of that sum.  In my view, that is an oversimplification.  Amongst other things, that approach fails to grapple with the dispute about whether monies advanced by the wife's parents were loans or gifts, as referred to above.

11. I was referred to the decision in Mullen v De Bry (2006) FLC 93‑293 in which the Full Court considered the principles in Waugh (2000) FLC 93-052 and the test to be applied in determining whether a party should be restrained from dealing with assets pending a property settlement.

12. The Full Court said (at para 44):

    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.

13. The Full Court added (at para 50):

    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.

14. Mr Spicer and Dr Ingleby both submitted that there is in this case no cogent evidence of any risk that monies will be dissipated.  I disagree in that what the husband raises is that at a time he was arranging for a caveat to be placed on the property, he discovered that the property had been sold, and upon the sale, as I have noted, most of the funds were transferred to the wife's parents.  On his account, monies that were gifted to the parties were repaid as a loan, and then $56,000 was paid in addition, for a purported arrangement he said he had not heard of in the course of the marriage. The small sum of monies retained by the wife was then immediately reduced by $10,000 that she paid towards her credit card. 

15. As the house proceeds are the only significant asset, I am satisfied that there is the risk of disposal of the asset to defeat an order.  I am not satisfied that the undertaking offered by the wife's parents is adequate in the circumstances.  They say only that they can afford to pay any order.  There is no detail in the material about that.  There is no financial statement, for example, and no other detail either that I could readily see in the affidavit filed by the wife's mother.  

16. In the context of a direct conflict between the parties as to whether these monies have all reasonably been paid to the parents, I am not prepared to simply accept the undertaking.  Some of the monies should be held pending the hearing.  It should not be the whole sum. I cannot pre-empt the ultimate property settlement.

17. Putting the husband's case at its highest, he would be entitled to 50 per cent of the net proceeds of the house.  At its highest again, his version would be accepted, that the $56,000 contributed by the parents to the young daughter's study was never intended as a loan of any sort.  At its highest, the husband's case would be that the $233,000 advanced by the parents was a gift, not a loan, so the weight attached to it in a short relationship might accordingly change.

18. I am satisfied that if a sum of $120,000 is retained in trust, that will adequately cover any property settlement.  Taking into account the factors described, it appropriately covers the risk to the husband whilst not otherwise locking out the other parties unfairly.

19. As to security for costs, in terms of exercising my discretion under section 117(2) of the Family Law Act, I do not propose ordering security for costs.  Not only is the husband in employment, but he does stand to gain something by way of property settlement.  I do not see the wife's parents at risk in the way outlined by Mr Spicer.

I certify that the preceding nineteen (19) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dessau

Associate: 

Date:  16 December 2008