RYLAN & SHELBY

[2020] FamCA 965

FAMILY COURT OF AUSTRALIA

RYLAN & SHELBY [2020] FamCA 965

FAMILY LAW – PROPERTY – Interim Application

Family Law Act 1975 (Cth)

Luadaka v Luadaka (1998) FLC 92-830
Malcher & Malcher(Security for Costs) (2017) FLC 93-803
Mullen & De Bry (2006) FLC 93-293
Norton & Locke (2013) FLC 93-567
Waugh & Waugh (2000) FLC 93-052

APPLICANT: Mr Rylan

RESPONDENT: Ms Shelby

FILE NUMBER: LEC 701 of 2018

DATE DELIVERED: 13 November 2020

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Hogan J

HEARING DATE: 13 November 2020

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Mr Wilkin, Family Law Solutions

SOLICITOR FOR THE RESPONDENT Mr Tyndall, Tyndall & Co

Orders

IT IS ORDERED THAT

1. By 4.00 pm on Friday, 20 November 2020 Ms Shelby particularise in writing those paragraphs and annexures of the affidavit filed 8 October 2020 upon which she intends to rely at the final hearing of this matter listed to commence at 10.00 am on 15 February 2020.

2. The following Orders are discharged:

   (a)       Order 2 of the Order made on 5 February 2019;  and

   (b)       Orders 5 of the Order made 8 April 2019;  and

   (c)       Order 7 of the Order made on 13 November 2019.

3. Mr Rylan be released from the Undertaking given to the effect that he cause C Pty Ltd to withhold from commencing any proceedings in respect of a Deed of Loan between Ms Shelby and C Pty Ltd dated 1 June 2017 only to enable any such proceedings to be commenced in this Court.

4. The costs of and incidental to the Application in a Case filed 14 October 2020 and the Response to an Application in a Case filed 10 November 2020 are reserved.

5. The Application in a Case filed 14 October 2020 and the Response to an Application in a Case filed 10 November 2020 are otherwise dismissed.

NOTATION

(A)The Court today raised with the legal representatives for the parties whether the issue of Ms Shelby’s asserted indebtedness to C Pty Ltd (an entity controlled by Mr Rylan) pursuant to Loan Agreement dated 1 June 2017 could be resolved by the Court if C Pty Ltd sought to intervene in the proceedings.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: LEC 701 of 2018

Mr Rylan

Applicant

And

Ms Shelby

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. I have before me today a number of matters sought by way of interim order.  The circumstances in which the Applications by way of Application in a Case and Response to Application in a Case fall to be considered differ somewhat from what, perhaps, the parties thought was originally to be the case because, when the matter was first before me this morning, the parties were told that I had determined it appropriate to expedite its final hearing – at least insofar as the determination of the issue of whether the parties were in a de facto relationship. 

2. That matter will be listed before me for determination for four days commencing on 15 February 2021.  This arises following the transfer of these proceedings from the Federal Circuit Court in October of this year in circumstances where it had previously been listed for trial in December of this year.

3. I turn then to consider the issues that remain outstanding on an interim basis noting, of course, that they are to be considered now in circumstances where, as I have said, the matter will come before me for a determination of the issue of whether the parties were in a de facto relationship.

Order sought requiring Mr Rylan to file a Financial Statement

1. The first issue is that there was an order sought that Mr Rylan file a Financial Statement and a superannuation form, if I can deal with those two together.  

2. Mr Tyndall, who appears on behalf of Ms Shelby, sought an order that Mr Rylan file and serve a Financial Statement. In so doing, he relied particularly on the fact of the existence of previous orders (including one made by consent) which imposed upon Mr Rylan a requirement to file that document. He also relied, quite appropriately, upon Rule 13.05(1) of the Family Law Rules 2004 (Cth) that require a party starting or filing a Response to a financial cause to file a Financial Statement at the same time. Mr Tyndall pressed an order requiring Mr Rylan to file a Financial Statement and superannuation form in circumstances where, to date, that has not been the case. He quite properly, though, conceded that the contents of a Financial Statement would not be relevant to the determination of the issue in dispute between the parties that is listed for determination in February: namely, the existence or non-existence of a de facto relationship between them.

3. Noting the submissions made by Mr Wilkin, on behalf of Mr Rylan, and the reference to Norton & Locke[1] which binds me, I consider that there is no jurisdiction at this stage to make an order requiring the filing of a Financial Statement.  Jurisdiction, of course, is not something that can be conferred by the consent of the parties.  Even if I am wrong in these circumstances, which involve and require the determination of the threshold issue of whether the parties were in a de facto relationship and in fact, jurisdiction exists because declarations are sought in relation to the existence of the de facto relationship, Mr Tyndall’s very proper concession as to the absence of relevance of the contents of any Financial Statement which may be filed by Mr Rylan and regard to:

   a)Rule 1.04 of the Family Law Rules 2004 (Cth) which enunciates the purpose of the Rules – namely, to ensure that each case is resolved in a just and timely manner at a cost to the parties and the Court that is reasonable in the circumstances; and

   b)Rule 1.06 – which requires that, in applying the Rules to achieve this purpose, the Court should actively manage each case by considering whether the likely benefits of taking the step justify the costs of taking the step and in particular sub-rule (g) of that rule;  and

   c)Rule 1.07(d) – which requires that in order to achieve the main purpose the Court should apply the rules in a way that promotes the saving of costs,

   means I am not persuaded that it is appropriate to make an order that Mr Rylan, at this stage, file a Financial Statement or a superannuation document.

   [1](2013) FLC 93-567.

4. That is because, as I have said, quite properly, Mr Tyndall conceded that the contents of the same are not and would not be relevant to the determination of the threshold issue of whether these parties were in a de facto relationship or not.

5. Given that conclusion and the fact that, of course, parties themselves cannot confer jurisdiction, it seems to me appropriate that I make orders to discharge those orders previously made which imposed upon Mr Rylan the requirement to file a Financial Statement: in particular order 2 of the order made by consent on 5 February 2019, order 5 of the order made on 8 April 2019 and order 7 of the orders made on 13 November 2019. 

6. For those Reasons, then, I decline to make the order sought by Ms Shelby.

Objection to affidavit of the Ms Shelby filed 8 October 2020

1. The second issue to which I turn is the objection taken by Mr Rylan to Ms Shelby being able to rely on an affidavit filed on 8 October 2020 which was filed otherwise than pursuant to Directions made prior to that.  Whilst that was pressed, subsequent agreement, I think sensibly, between the parties’ legal representatives that Ms Shelby particularise those paragraphs and annexures of that affidavit filed 8 October 2020 on which she will rely at the hearing in February 2021 really resolves the issue.

2. The fact that the matter was transferred to this Court; the fact that it has subsequently been afforded priority and allocated trial dates and the fact that it will be before a Registrar for a Directions Hearing at 2.15 pm on 24 November 2020 for the making of Directions to facilitate that hearing in February of next year, persuades me to decline to make the orders sought by Mr Rylan in this respect. 

3. I will, though, make orders to ensure that Ms Shelby provides particularity as to the paragraphs and annexures of the affidavit that she intends to rely upon at the hearing in February of next year and that that particularity is provided prior to the Directions Hearing on 24 November 2020, so as to enable Mr Rylan to consider his position.

Order sought that Ms Shelby’s sale proceeds be held in trust

1. I turn now to a third issue that requires consideration and determination: namely, an application by Mr Rylan that Ms Shelby be required by order to pay all of the funds received by her following the sale of real property in B Town into trust and that there be a restraint imposed on the payment out of such funds. 

2. Mr Wilkin, on behalf of Mr Rylan, advanced, in summary, that the Court would be persuaded that such an order was necessary to preserve the underlying status quo to which the parties agreed as reflected in Notation A to orders made on 13 November 2019 – which refers to each of them providing certain undertakings.

3. It was advanced that the Court would be persuaded that it is appropriate to make injunctive orders in the manner sought so as to restrain Ms Shelby’s disposal, without notice, of the funds she obtained from the sale of the real property at B Town. 

4. It is clear that the Court has power to make orders of an injunctive nature.  The principles to be applied in considering whether to make such orders have been outlined in decisions such as Waugh & Waugh[2] and Mullen & De Bry[3].

   [2](2000) FLC 93-052.

   [3](2006) FLC 93-293.

5. In particular, Mr Wilkin emphasised that Ms Shelby had disposed of the B Town property without notice to Mr Rylan. This action was relied on in particular as providing a basis for the Court to be persuaded that injunctive orders are appropriate. 

6. It is clear from Ms Shelby’s affidavit that she sold the B Town property.  She gives evidence in her affidavit about her use of the proceeds obtained from the sale, including that she has deposited $200,000.00 into the trust account of her solicitor for her legal expenses and that she has also reserved about $60,000.00 – being an amount of at least the principal of an asserted debt which is another matter in dispute between the parties, speaking broadly.

7. I am not persuaded, applying the appropriate principles, that it is appropriate to make an order requiring that Ms Shelby pay into trust the funds received from the sale of the B Town property. 

8. I arrive at that conclusion because it is clear that, in the proceedings currently before me, Mr Rylan does not seek any property adjustment orders against Ms Shelby: an understandable position given his overarching contention that the parties were not in a de facto relationship – a consequence being that this Court would not have jurisdiction to make such orders.

9. No relief is sought by him as against property owned by Ms Shelby.  If he was successful in his primary position, then Ms Shelby would retain her property: being the sale proceeds of the B Town property, subject to any asserted indebtedness to a company which I am told is completely under the control of Mr Rylan (the company being C Pty Ltd).  That entity is not a party to the proceedings in this Court. 

10. For those Reasons, then, I am not persuaded that it is appropriate to make an injunction requiring the payment of funds received from the sale of the B Town property into trust.

11. As an alternative basis for an order requiring Ms Shelby to pay those funds into trust and that they be held there pending the hearing in February 2021, Mr Wilkin advanced that such orders should be made on the basis of the Court exercising the power accorded to it to make an order for security for costs. 

12. It is clear, again, that the Court has such power pursuant to section 117(2) of the Family Law Act 1975 (Cth). The principles relevant to applications for security for costs have helpfully been outlined by the Full Court of this Court in Malcher & Malcher(Security for Costs)[4] where there was reference also to an earlier Full Court decision of Luadaka v Luadaka[5].  Those authorities make it clear that, in determining applications for security for costs, the Court must have regard to those matters prescribed in sections 117(1), (2) and (2A) of the Act, as well as considering a number of other matters outlined and summarised, in particular, in Malcher.

    [4](2017) FLC 93-803.

    [5](1998) FLC 92-830.

13. Insofar as it is necessary that I record a conclusion, I accept that Mr Rylan’s claim for security for costs has been made on a bona fide basis.  In the circumstances in which this Application comes before this Court, I am certainly not persuaded that there has been delay in bringing such an application for an order for security for costs. 

14. As I have already raised with Mr Rylan’s legal representative, though, one of the matters to which I am required to have consideration in determining such an application is the financial circumstances of the parties.

15. The absence of any evidence from Mr Rylan about this issue – namely, his financial circumstances – means, in my view, that I am really left to consider the Application on the basis of determining whether I am persuaded that the circumstances justify the making of an order for security for costs where I have no knowledge of Mr Rylan’s financial position vis-à-vis Ms Shelby’s financial circumstances. 

16. Whilst that matter is, of course, only one of the statutory considerations, I consider it to be a particularly significant one in this case, particularly noting that for these proceedings, as for all in this jurisdiction, the general rule and starting point provided by section 117(1) of the Act is that, subject to subsection 117(2), each party to proceedings shall bear his or her own costs. 

17. On the evidence before me at this stage, I am not persuaded that the circumstances justify the making of an order for security for costs.  Consequently, for those Reasons, I decline to make such order.

Injunctive relief sought on behalf of Ms Shelby

1. I turn then to what is, I think, the final issue that requires particular determination today: namely, the injunctive relief sought on Ms Shelby’s behalf against Mr Rylan as particularised in order 8 sought in the Response to Application in a Case filed 10 November 2020.

2. Insofar as this aspect of the matters requiring determination today is concerned, I generally accept the written submissions prepared by Mr Wilkin on Mr Rylan’s behalf.  I am not persuaded on the evidence adduced by Ms Shelby at this stage that, at this time, there is an objective risk of a disposal of property by Mr Rylan such that it would mean that her entitlements, if any given the threshold question and the parameters of the dispute between these particular parties, would not otherwise be capable of being satisfied by Mr Rylan or that her claim would be defeated. 

3. For those short Reasons, then, I decline to make orders in terms of the injunctive relief sought on Ms Shelby’s behalf against Mr Rylan.

I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hogan delivered on 13 November 2020

Associate:     

Date:              13 November 2020