Shuren & Fang (No 6)
[2024] FedCFamC1F 444
•14 June 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Shuren & Fang (No 6) [2024] FedCFamC1F 444
File number: MLC 3815 of 2023 Judgment of: STRUM J Date of judgment: 14 June 2024 Catchwords: FAMILY LAW – PROPERTY – Application by the husband for the removal of caveats – Where the wife lodged caveats on land owned by companies controlled by the husband – Where the husband seeks removal of the caveats so as to develop the land – Where wife sought injunctions and husband offered undertakings in lieu of the caveats – Orders for the removal of the caveats – Injunctions granted Legislation: Family Law Act 1975 (Cth) ss 79, 79A, 112AD, 112AP, 114
Federal Circuit Court and Family Court of Australia Act 2021 (Cth) s 44
Cases cited: M & DB (2006) FLC 93-293
Re Wakim; Ex parte McNally (1999) 198 CLR 511
Waugh & Waugh (2000) FLC 93-052
Division: Division 1 First Instance Number of paragraphs: 24 Date of hearing: 14 June 2024 Place: Melbourne Counsel for the Applicant: Mr Broadfoot KC and Ms Borger Solicitor for the Applicant: Australian Legal Advisory Centre Counsel for the First Respondent: Mr Clarke KC and Ms Riordan Solicitor for the First Respondent: Ascot Solicitors (Sunbury) Pty Ltd Counsel for the Second and Third Respondents: Respondents did not appear ORDERS
MLC 3815 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS SHUREN
Applicant
AND: MR FANG
First Respondent
C PTY LTD
Second Respondent
B PTY LTD
Third Respondent
ORDER MADE BY:
STRUM J
DATE OF ORDER:
14 JUNE 2024
UPON THE UNDERTAKING GIVEN TO COURT THIS DAY BY THE APPLICANT WIFE TO COMPENSATE THE RESPONDENT HUSBAND AND SPECIFIED ENTITIES FOR ANY LOSS OR DAMAGE THEY MAY SUFFER AS A RESULT OF THE INJUNCTIONS HEREIN
THE COURT ORDERS BY CONSENT THAT:
1.The Husband, both personally and his capacity as director of any corporate entity, be restrained by injunction from further dealing with, disposing of, encumbering or diminishing the value of the real property situate and known as O Street, Melbourne in the State of Victoria (“the O Street property”).
2.Within 7 days, the wife do all acts and things to remove, at her cost, the caveat she caused to be lodged against the title of the O Street property.
3.Within 7 days, the wife do all acts and things to remove, at her cost, the caveat she caused to be lodged against the title of the real property situate at GG Street, Suburb F in the State of Victoria (“the Suburb F property”).
AND THE COURT ORDERS THAT:
4.The Husband be restrained by injunction, both personally and in his capacity as a director and/or secretary and/or shareholder of HH Pty Ltd, as trustee for HH Unit Trust, from disposing of, encumbering or diminishing the value of the Suburb F property, save that he be at liberty to encumber the property in an amount of not more than $5,600,000, being the subject of an offer of funding from JJ Ltd, and provided that any amount borrowed pursuant to that encumbrance to be applied only to development costs of that property.
5.For the purpose of ensuring compliance with order [4], the husband’s solicitors report to the wife’s solicitors in writing at the end of each calendar month details of every payment made and state the purpose of each payment, and provide a copy of a tax invoice for each payment.
6.The husband comply with his obligations to file and serve a cost notice by 4.00pm this day.
7.All extant applications be otherwise adjourned to a Senior Judicial Registrar on 18 July 2024 at 10.00am (as an in-person hearing) for determination of the matters therein which are within her delegated power and otherwise for case management and relisting thereafter (if necessary) before the Honourable Justice Strum.
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 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Shuren & Fang has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
STRUM J
The sorry history of the proceedings in this Court reads like a 21st century version of Charles Dickens’ Bleak House. Final property settlement orders were made on 9 February 2016 (“2016 Orders”). In 2020, the wife applied, pursuant to s 79A of the Family Law Act 1975 (Cth) (“Act”), to set aside the 2016 orders. The husband ultimately consented thereto, and fresh property settlement orders were made on 1 October 2020 (“2020 Orders”). On 13 April 2023, the wife applied, again pursuant to s 79A of the Act, to set aside the 2020 orders.
Additionally, there have been two sets of proceedings between the husband and the wife, and/or companies controlled by them, in the Supreme Court of Victoria, both of which were transferred to this Court, under the surviving remnants of the cross-vesting scheme between the Commonwealth and the States in the aftermath of the decision of the High Court of Australia in Re Wakim; Ex parte McNally [1999] 198 CLR 511.
The wife has spent in excess of $1 million in legal fees. The husband's solicitors, in breach of their obligations under the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“Rules”), have failed to file a Costs Notice, and I shall order them to do so by 4:00pm today.
The issue before me today transpired to be a narrow one. The hearing was largely truncated, and these reasons are therefore brief. The husband seeks that certain caveats lodged by the wife over land owned by companies controlled by him be removed to enable him to develop that land. It is well settled that a claim under s 79 of Act does not, in and of itself, give rise to a caveatable interest in land, and I consider that is all the more so insofar as proceedings under s 79A of the Act are concerned.
The wife’s position is that she will remove the caveats on the proviso that she is afforded sufficient security. She has no right to security, per se, and again all the more so in s 79A proceedings. The dicta of the Full Court in Waugh & Waugh (2000) FLC 93-052, even as contextualised by a later Full Court in M & DB (2006) FLC 93-293, makes that abundantly clear.
In Waugh & Waugh, the Full Court, comprised of Lindenmayer, Coleman and Brown JJ, said as follows at [46]:
Whilst his Honour certainly seems to have considered issues of balance of convenience and hardship between the parties, it seems to us, with respect, that he did not give consideration to 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 which the wife might obtain in the substantive proceedings, or whether he merely wished to continue to trade, as he always had done, prior to and since the separation of the parties.
Their Honours continued at [52]:
Had there been some clear evidence given by the wife (even if denied by the husband) of some disposition of property by the husband, or other conduct by him from which an inference might reasonably be drawn that he had embarked, or was about to embark, upon a course of action which was designed to or, irrespective of design, would be likely to defeat any anticipated order in the substantive proceedings in the wife’s favour, then perhaps we might be persuaded to uphold his Honour’s orders notwithstanding his failure to identify the factual basis (whether attested to by the wife or inferred by his Honour) upon which he proceeded in so doing. However, in our respectful opinion, there was no such clear evidence.
However, in M & DB, a differently constituted Full Court, constituted by Kay, Warnick and Boland JJ, subsequently said at [41] that it did not consider that the Full Court in Waugh & Waugh -
… intended to prescribe as a “fundamental” or “threshold” question whether a scheme to defeat judgment exists, to be answered in the affirmative on the balance of probabilities in every case, before an order preserving property is made.
The plurality continued at [43] that they considered that the Full Court in Waugh & Waugh did lay down any new principles followed from a number of observations. In particular, at subparagraph (b) thereof, the plurality in M & DB said as follows:
The Full Court in Waugh, in relation to a submission by counsel for the husband that the interlocutory injunctions were “truly akin to a Mareva injunction”, said:
“30.Whilst we do not disagree with that submission, we think that it has limited significance in the context of this case. We consider that in seeking to apply, in proceedings under the Act, principles developed in other jurisdictions (including principles relating to grant or refusal of ``Mareva'' injunctions) care should be taken to ensure that sight is not lost of the essential differences which may exist between the proceedings in this Court to which it is being sought to apply those principles and the type of proceedings in other jurisdictions out of which those principles have sprung.”
…
The plurality also referred at subparagraph (b) of [43] to what the Full Court in Waugh & Waugh said at [32] of that earlier judgement, namely, that “it is also important to bear in mind that the jurisdiction to grant interlocutory injunctions under the Act is a statutory jurisdiction derived from s 114(3) and/or section 34(1) of the Act”.
Since then, the equivalent of s 34(1) of the Family Law Act 1975 is now to be found in s 44 of the Federal Circuit Court and Family Court of Australia Act 2021 (Cth) and is in substantially the same terms.
The plurality in M & DB concluded at subparagraph (b) of [43] as follows, in relation to the quoted passages from Waugh & Waugh:
If anything, these remarks imply a more liberal approach in applications in the Family Court for preservation of property than at general law, rather than a more restrictive one, which, if what was said in paragraph 46 of Waugh was taken as laying down a threshold question to be answered in every case, is what such an approach would constitute.
The plurality continued in M & DB at [46] - [47] as follows:
46.Finally, we think it helpful to recognise that the essential power being exercised in this case is simply described in s 114(3).
“A court…may grant an injunction…in any case in which it is just or convenient to do so…”
47.Ultimately, each case will involve an overall assessment of a number of factors to determine the just or convenient result. Not all cases with the same identity of factors will necessarily produce the same result because of varying weight individually and comparatively.
In conclusion, the plurality in M & DB said at [64] that they:
…saw little or no detriment to the wife if the injunction was granted, particularly if the retained sum was invested in an interest bearing account on her behalf until further order. This reservation enables the respondent to seek relief from any adverse effects of the injunction upon presentation of proper material.
In the present case, the husband’s position is, in substance, that the wife should have some comfort, by way of security, but that it should be in the form of an undertaking. As the Full Court said in M & DB, so too in this case, there would be little or no detriment to the husband if the injunction were granted, as opposed to an undertaking, as proffered by him. There was no good reason proffered by Senior Counsel for the husband as to why he would consent to an undertaking but not an order.
The terms of the undertaking proposed by the husband and of the injunction sought by the wife are before the Court. The Court has no power to require an undertaking, as opposed to the power to grant an injunction. Further, any breaches of any an injunction may be more readily enforced by resort to s 112AD of the Act, rather than proceedings for contempt pursuant to s 112AP.
Ultimately, the differences between the parties are more disputes over form, rather than of substance, in my view. The husband does not disagree with the proposition that he should be the subject of certain restraints, whether by injunction or undertaking. Given that he can point to no reason why an undertaking should be preferred over an injunction, and that there is no power in the Court to require an undertaking or to stipulate the terms thereof, I consider that, as required by s 114(3), it is just and convenient to grant an injunction, as sought by the wife.
I observe that the hearing this morning was a truncated one. The Court was ready to commence at 10:00am and I told the parties that I would require them to conclude by no later than 1:00pm, which would have given counsel more than the two hours ordinarily made available for the conduct of interlocutory applications. They would have had three hours, but they sought time to have some discussions, in an endeavour to resolve, or at least to narrow the ambit of, the dispute. Ultimately, there was some agreement reached, but judicial determination was still required.
In the course of my exchanges with Senior Counsel for both parties, I was not referred to any of the affidavit material upon which the wife sought, or the husband opposed, an injunction.
The wife seeks that the husband be restrained personally, and in his corporate capacity in relation to HH Pty Ltd as trustee for the HH Unit Trust, from disposing of, encumbering or diminishing the value of the real property at GG Street, Suburb F, in the State of Victoria, save for encumbering the property not in excess of $5.6 million as offered by a financier, which advances are to be applied to meet the development costs of that property. Again, the distinction between the substance of the terms of the restraint, whether by undertaking or injunction, is, in essence, a distinction without a difference or, at least, with very little difference. That difference, in my view, is more apparent than real.
The husband proposes to undertake only that he be so restrained without first giving to the wife 21 days written notice, which would make it incumbent upon her to return to Court if she disagreed with a transaction being proposed by him. There are already multiple other interlocutory applications pending, which I will refer to a Senior Judicial Registrar for determination, where within delegated power, and otherwise for case management. In my view, it is not appropriate to add further to the proverbial shopping list of the parties’ pending disputes, both interlocutory and final.
The husband seeks that the caveats be removed to enable him to develop the Suburb F property. There was no submission made by his Senior Counsel as to why he might need to encumber the property in excess of the offer of the financier, nor why he might need to apply the funds secured by that encumbrance other than to development costs. As the Full Court said in M & DB, to which I referred earlier, I consider that there is little or no detriment to the husband if the injunction is granted and in those terms.
The wife initially sought, but sensibly did not press for, an order that the funds raised from the proposed financier be placed into a solicitor’s trust account. She proffered no reason for seeking such an order. The husband is in business, and there is no reason why he should not be able to continue doing what he does in the ordinary course of that business. In the absence of any sufficient reason for placing the funds in a solicitor’s trust account, I would have declined to so order.
Lastly, whilst it is now agreed that the husband shall provide to the wife a monthly reporting of every payment made by him from the borrowed funds, the wife further seeks, and the husband opposes, an order for the provision to her of tax invoices in respect of each such payment. Such documents already fall within his duty of disclosure under the Rules; nevertheless, I shall order him to do so, in an endeavour (albeit possibly futile) to obviate further disputes between them and/or further interlocutory applications to the Court.
I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of the Honourable Justice Strum. Associate:
Dated: 28 June 2024
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