Selby and Coburn

[2014] FamCA 988

FAMILY COURT OF AUSTRALIA

SELBY & COBURN [2014] FamCA 988

FAMILY LAW – INJUNCTIONS – Asset protection orders – Application for relief where discovery unclear and obligations not fulfilled – No sinister motives just poor communication – Injunction not proper – Applications by both parties for injunctions refused.

Family Law Act 1975 (Cth)

APPLICANT: Mr Selby

RESPONDENT: Ms Coburn

FILE NUMBER: MLC 1523 of 2013

DATE DELIVERED: 11 November 2014

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 11 November 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Mellas

SOLICITOR FOR THE APPLICANT: Farrar Gesini & Dunn

COUNSEL FOR THE RESPONDENT: Mr Crofts

SOLICITOR FOR THE RESPONDENT: Leanne Cain & Associates

Orders

1. That the application in a case filed 3 November 2014 and the response thereto filed 11 November 2014 are both dismissed.

2. That the reasons this day be transcribed and expedited.

IT IS CERTIFIED:

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

IT IS NOTED that publication of this judgment by this Court under the pseudonym Selby & Coburn 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 1523 of 2013

Mr Selby

Applicant

And

Ms Coburn

Respondent

REASONS FOR JUDGMENT

1. The applicant and respondent were in a de facto relationship which ended after 1 March 2009. Jurisdiction to make orders in this case was not in issue. The applicant and the respondent have an extant property dispute returnable as a first day hearing before Macmillan J in February 2015. One of the orders her Honour made in September 2014 related to discovery. Even today, that discovery is controversial, with each party pointing the finger at the other about adequacy. As I discussed in the hearing, many of the disputed issues here seem to arise out of lack of attention to that primary and comprehensive obligation to make full and frank disclosure as required by chapter 13 of the Family Law Rules.

2. This application was filed by the applicant, Mr Selby, on 3 November 2014.  It was brought on urgently.  It was said to be urgent because in February 2014, two ANZ Bank term deposits, which then contained about $1.6 million, were reduced to one ANZ Bank term deposit of $500,000.  What happened to that money seems to have been largely explained by the respondent, but neither adequately nor comprehensively from the applicant’s perspective.  There is, for example, no dispute that from April through to May 2014 the respondent purchased a house. 

3. Just exactly when the applicant was told is controversial, but it would seem to be in October.  The respondent’s lawyer wrote a letter to the applicant’s lawyer in June 2014, but that was one month after the settlement of the house had taken place.  Whilst that was disclosure, it would not have enabled the applicant to prevent the purchase had he so desired.  The dilemma is that it is said that the applicant’s lawyer did not receive that June letter.  The applicant’s affidavit supports that, because in October 2014, the applicant’s lawyer asked where the respondent was living and how she was paying her rent.

4. The inference to be drawn from that is that the applicant had no knowledge of the purchase of the house.  Be that as it may, when disclosure did occur in October it was comprehensive and there is no suggestion now that any injunction should be sought against the respondent relating to that house.  The focus of the attention of the applicant is on the term deposit. 

5. In my view, unhelpful and voluminous correspondence went back and forth between the lawyers in October 2014, during which time the applicant sought the urgent relief by way of injunction over all of the respondent’s property.  That was altered during this hearing to only relate to the $500,000 term deposit. 

6. In a letter dated 7 November 2014, the respondent’s solicitor wrote to the applicant’s solicitor saying that the $500,000 term deposit had been rolled over and the respondent would give an undertaking not to touch it without giving 14 days notice.  That open offer came with conditions.  The respondent wanted the applicant to undertake in similar terms. 

7. I need to digress here, because in support of the response filed this day an affidavit by the respondent’s solicitor was relied upon.  Paragraph 7 of that affidavit reads as follows:

   Further, an issue has arisen as to the effect on the respondent of these proceedings and the manner in which they have been conducted by the applicant.  In the event that instructions received on the afternoon of 10 November 2014 are confirmed, I foreshadow that an application may need to be brought to appoint a litigation guardian for the respondent.  This matter has made my obtaining instructions that much more difficult.

8. That was said in support of an application by the respondent for an adjournment of four weeks. 

9. Returning to the injunctive application, it is questionable how the respondent could offer the undertaking four days ago when her ability to give instructions was uncertain.  The question of her ability to conduct these proceedings is therefore a vexed one. 

10. The applicant put the relief sought on the basis that this was an asset protection order. Section 114 of the Family Law Act 1975 provides a very wide power for the Court to grant any injunction relating to the property of the parties, or either of them, providing that the order is proper. To be granted that relief, the applicant needs to show what is to be protected, and what the concern is in relation to, (in this case) the money, on the assumption that if an injunction is not granted there will be insufficient funds available at trial for an alteration of interests between the parties.

11. Here, whilst there is a concern about the respondent’s use of the $500,000, no mention is made about the respondent’s newly purchased home.  Additionally I have mentioned the offer that was made by the respondent that she would give notice relating to the $500,000 if it was to be touched.

12. The respondent sought from the applicant an acknowledgment that she would need funds for her support, the support of the children, and her own legal fees.  It is concerning that the parties have spent hundreds of thousands of dollars on legal fees so far.  What the respondent therefore sought was an acknowledgment that available money might be a problem.  Her basis for that was that it is conceivable that she would have to use the $500,000 to survive.  I have very limited evidence about what the respondent is living upon, but it would seem that she has some $90,000 in savings and is living on that whilst the $500,000 capital earns interest.  The interest is being put back into the capital fund.

13. Bearing in mind the open offer of the respondent to give an undertaking, plus the fact that there is an open acknowledgment that the $500,000 has been rolled over to at least February, and indeed the existence of the house in which the respondent now lives, I could not find that it is proper to make an asset protection order. 

14. There are assets here which could clearly be attached for the purposes of the alteration of the parties’ interests.  What is needed is discovery.  I find therefore that the application fails. 

15. Despite seeking an adjournment, which was not pressed by the respondent when the applicant indicated that he wanted the injunction anyway, the respondent then sought injunctive relief of her own by an oral application.  That injunction was of the same nature as that of the applicant.  In justifying this oral application, counsel for the respondent relied upon the affidavit of his instructing solicitor.  It was said that the application of the applicant had been brought on urgently, and without the courtesy of any joint approach or indeed any reference to her.  It was said that an adjournment was necessary to enable comprehensive instructions to be received, but also more importantly to enable a full examination of over 580 pages that were sent by the solicitors for the applicant between 27 October 2014 and 7 November 2014.  There were also a number of financial ledgers that needed to be examined, and that they had been uploaded to a portal created by the solicitors for the applicant in conjunction with the parties’ joint accountant. 

16. It was part of the applicant’s case supporting his application for the injunction, which I have already declined to make, that he had been full and frank in his disclosure.  How that could be said is uncertain, having regard to the fact that between 27 October and 7 November he provided over 580 pages. 

17. The solicitor for the respondent then went to say her client had offered the undertaking.  It was noted in the affidavit that no response had been made to the respondent’s offer of an undertaking.  That is probably not surprising either, bearing in mind it was only sent on 7 November, which was last Friday. 

18. I have already mentioned the purchase of the house by the respondent.  The letter about that purchase which was referred to as being sent in June does not seem to have arrived, notwithstanding it was sent by document exchange.  All of that was then the foundation for concern between the parties about just who was telling the other what. 

19. In the applicant’s affidavit, he complained that there had not been updated disclosure by the respondent, and that no discovery had been made since February.  The solicitor for the respondent replied that that was not correct because documents had been forwarded by the parties’ accountant to the applicant himself in relation to matters associated with the Australian Taxation Office demands. 

20. The respondent solicitor set out that the applicant had not provided comprehensive discovery either. She used the example of the number of documents that she received only some days ago. In all of this, the respondent as part of her case, had offered that if there was to be an injunction, it should be mutual. In my view, that is not a basis upon which the powers in section 114 should be exercised unless the parties consent to orders. In my view, this is a case where the problem lies in discovery.

21. On any view, each party is saying that they do not know what the financial position is of the other.  There are businesses, investments, and real property involved, and yet as late as November 2014 for a case that began in 2013, there are still outstanding issues about the valuation of a business and there are clearly moneys being transacted by one party to the ignorance of the other.

22. In my view, this is not a case where the Court should be concerned about some sinister motive of either of the parties.  It is clearly one in which each has to fulfil their obligations for full and frank disclosure.  The lawyers have an obligation to ensure that their clients fulfil those obligations.  On that basis, there is no justification for me to find that it is proper to make an order of the nature sought by the respondent. 

23. Neither party seriously pressed an application for costs arising out of these proceedings.  It was suggested by the respondent that those costs should be reserved, but if I was to make that order it would mean contemplating whether either party was justified in what they were doing.  It seems to me to be a case where there has been poor communication.

24. Neither party has been found to have been diligent in respect of their discovery obligations, and in my view by simply reserving the costs I would be leaving the question of whether there is a justification and other compliance with the matters in section 117 of the Family Law Act to a judge on another occasion. In my view, that would not be appropriate.

25. Accordingly, as the only other issue outstanding was the discovery issue, I turn back to the orders that were made by Macmillan J.  In anticipation of the first day in February 2015, her Honour has made very clear orders in relation to discovery.  Whilst the parties indicated that in relation to a draft order that I was given they were prepared to agree to those arrangements, in my view her Honour’s order is succinct, clear and unambiguous.

26. On that basis, I do not see any need for a further order for discovery. I cannot go without saying that the Court ought not have to make that order. Chapter 13 of the Rules has an ongoing obligation, and the parties in this case should comply with it.

I certify that the preceding twenty six (26) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 11 November 2014.

Associate: 

Date:  13 November 2014