Shipman & Shipman

Case [2021] FamCA 584

FAMILY COURT OF AUSTRALIA

Shipman & Shipman [2021] FamCA 584

File number(s): SYC 8192 of 2018
Judgment of: ALTOBELLI J
Date of judgment: 9 August 2021
Catchwords: FAMILY LAW – INTERIM PROPERTY – application seeking injunctions against third party – application to add second respondent to proceedings – whether a third party be restrained by injunction from pursuing a creditor’s petition against the husband or from seeking enforcement of a debt – consideration of s 90AF of the Family Law Act 1975 (Cth) – application allowed – injunctive relief granted.
Legislation:

Bankruptcy Act 1966 (Cth) ss 43, 116(2)(d)

Family Law Act 1975 (Cth) ss 79, 90AD, 90AF, 114

Family Law Rules 2004 r 6.02
Cases cited:

AC and Ors & VC and Anor (2013) FLC 93-540; [2013] FamCAFC 60

Allan & Allan (2009) 41 Fam LR 565; [2009] FamCA 553

AS and GW and AH; sub nom Samootin v Wagner (FLC) (2006) FLC 93-265; [2006] FamCA 432

B Pty Ltd and Ors & K and Anor (2008) FLC 93-380; [2008] FamCAFC 113;

Dowling v Colonial Mutual Life Assurance Society Ltd (1915) 20 CLR 509

F Firm & Ruane and Ors (2014) FLC 93-611; [2014] FamCAFC 189

Fencott v Muller (1983) 152 CLR 570

Hickey& Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143; [2003] FamCA 395

King v Henderson (1898) AC 720

Patton & Patton [2015] FamCA 1083

Re Maddox ex parte the debtor (1979) FLC 90-630

Rozenbes v Kronhil (1956) 95 CLR 407

Sandell v Porter (1996) 115 CLR 666
Number of paragraphs: 58
Date of last submission/s: 5 July 2021
Date of hearing: 5 July 2021  
Place: Sydney
Counsel for the Applicant: Ms Beck
Solicitor for the Applicant: Newnhams Solicitors
Counsel for the Respondent: Mr Campton SC
Solicitor for the Respondent: Barkus Doolan
Counsel for the Intervener: Mr Lethbridge SC with Ms Dart
Solicitor for the Intervener: Bundock Law
Counsel for the Independent Children’s Lawyer: Ms Neilson
Solicitor for the Independent Children’s Lawyer: Legal Aid NSW

ORDERS

SYC 8192 of 2018
BETWEEN:

MR SHIPMAN

Applicant
AND:

MS SHIPMAN

Respondent

MS DOHERTY

Intervener

INDEPENDENT CHILDREN’S LAWYER

ORDER MADE BY:

ALTOBELLI J

DATE OF ORDER:

9 AUGUST 2021

THE COURT ORDERS THAT:

1.Pending further order, Ms Doherty be restrained by way of injunction from presenting a creditor’s petition to a Court with jurisdiction under the Bankruptcy Act 1966 in relation to the judgment debt dated 31 December 2020 (‘Judgment Debt’) obtained in New South Wales District Court Proceedings … as against Mr Shipman and/or taking any further steps to enforce the Judgment Debt.

2.Ms Doherty be joined as a party to these proceedings as the Second Respondent.

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

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 17.02 Family Law…

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Details
AGLC
Shipman & Shipman [2021] FamCA 584
Case
[2021] FamCA 584
Decision Date

CaseChat Overview and Summary

In the matter of *Shipman & Shipman*, Mr Shipman (the Applicant husband) sought interim injunctive relief against Ms Doherty (the Second Respondent) and sought to join her as a party to the proceedings. The dispute concerned a significant loan made by Ms Doherty to Mr Shipman in 2012, which had resulted in a default judgment in the New South Wales District Court and subsequent bankruptcy proceedings. The primary dispute between Mr and Ms Shipman regarding property settlement was listed for a final hearing.

The legal issues before the Court were whether Ms Doherty should be restrained by injunction from presenting a creditor’s petition or taking further steps to enforce a judgment debt against Mr Shipman, and whether Ms Doherty should be joined as a party to the family law proceedings. The Court was required to consider the application of section 90AF of the *Family Law Act 1975* (Cth) in relation to the proposed injunctive relief.

Altobelli J reasoned that for the purposes of Part VIIIAA of the *Family Law Act*, a debt owed by a party to a marriage is to be treated as property, regardless of whether it is owed by one party or jointly. The Court noted that the husband did not dispute his liability for the judgment debt. Given the ongoing family law proceedings and the potential impact of bankruptcy proceedings on the property settlement, the Court found it appropriate to grant interim injunctive relief. The Court also determined that it was necessary to join Ms Doherty as a party to the proceedings to effectively manage the matter.

The Court ordered that Ms Doherty be restrained by injunction from presenting a creditor’s petition or taking further steps to enforce the judgment debt against Mr Shipman, pending further order. Additionally, Ms Doherty was ordered to be joined as a party to the proceedings as the Second Respondent.

Orders

Orders of the court

SYC 8192 of 2018

BETWEEN:

MR SHIPMAN

Applicant

AND:

MS SHIPMAN

Respondent

MS DOHERTY

Intervener

INDEPENDENT CHILDREN’S LAWYER

ORDER MADE BY:

ALTOBELLI J

DATE OF ORDER:

9 AUGUST 2021

THE COURT ORDERS THAT:

1. Pending further order, Ms Doherty be restrained by way of injunction from presenting a creditor’s petition to a Court with jurisdiction under the Bankruptcy Act 1966 in relation to the judgment debt dated 31 December 2020 (‘Judgment Debt’) obtained in New South Wales District Court Proceedings … as against Mr Shipman and/or taking any further steps to enforce the Judgment Debt.

2. Ms Doherty be joined as a party to these proceedings as the Second Respondent.

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

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 17.02 Family Law Rules 2004 (Cth).

Background

Background to the litigation

These reasons for judgment explain why the Court has made the orders sought by the Applicant husband.BACKGROUND The focus of this statement of background is the dispute between the Applicant husband and Second Respondent. There may be some overlap, however, as regards the dispute between the husband and wife. The dispute between the husband and wife is listed for final hearing before me commencing on 15 November 2021. On or around 6 September 2012 the Second Respondent lent to the husband $400,000 on certain terms as to the payment of interest, and repayment of principal. These terms were not what could be described as commercial. It would be an unacceptable stretch of the language to describe this as a commercial arms-length transaction. The Court notes that there is an issue raised by the husband as to whether the loan was made to him, or to the husband and wife jointly. One wonders whether that is relevant. For the purposes of Part VIIIAA of the Family Law Act 1975 (Cth) (‘Family Law Act’), a debt owed by a party to a marriage is to be treated as property: s 90AD(1). Therefore, whether it is the husband’s debt, or the wife’s debt, or a joint debt, it is a debt that must be taken into account in any alteration of property interests between the parties: Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at [39]. In the Response that she filed to the husband’s Initiating Application, the wife expressly recognises that repayment of this debt must be made as part of the final orders. Whilst the husband’s application does not explicitly refer to this loan, it is implicit in his evidence that the balance of the loan in question is to be repaid as part of that alteration of property interests. I have not been able to ascertain what the purpose of this loan was at the time it was made. None of the affidavits read in the present application address this issue. It probably makes no difference, for present purposes. Even if it were, for example, for a commercial purpose, it would not necessarily make it a commercial arms-length transaction. Over the years between 2012 – 2000, payments of principal and interest were made. In November 2020 the Second Respondent filed a Statement of Claim in the District Court of New South Wales seeking judgment in the sum of $133,841. Default judgment was entered in the Second Respondent’s favour in December 2020. The Applicant husband does not dispute his liability to pay this amount. Applications that he made to set aside the default judgment, and to pay by instalments, have been unsuccessful. He was issued with an examination notice. In May 2021, the Second Respondent caused the husband to be served with a bankruptcy notice. The husband is contesting the bankruptcy notice in the Federal Circuit Court of Australia. Those proceedings have not concluded. On 21 June 2021 a learned Registrar of the said Court ordered the time for compliance with the bankruptcy notice to be extended up to and including 29 June 2021. The Second Respondent has agreed not to cause a creditor’s petition to be presented pending receipt of these reasons for judgment.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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