Spoke and Spoke (No. 4)

[2009] FamCA 600

FAMILY COURT OF AUSTRALIA

SPOKE & SPOKE (NO. 4) [2009] FamCA 600

FAMILY LAW – INJUNCTIONS – Injunctions after final orders made but pending final settlement

Family Law Act 1975 (Cth)

APPLICANT: Mr Spoke

RESPONDENT: Ms Spoke

FILE NUMBER: MLF 1437 of 2006

DATE DELIVERED: 9 July 2009

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: THE HONOURABLE JUSTICE CRONIN

HEARING DATE: 9 July 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: MR TESTART

SOLICITOR FOR THE APPLICANT: DAWES & VARY PTY LTD

COUNSEL FOR THE RESPONDENT: MR KIERNAN

SOLICITOR FOR THE RESPONDENT: GLEESON AND CO

Orders

1. That subject to satisfaction by 1 August 2009 of the orders made on 2 February 2009, the wife is forthwith restrained from:

   (a)encumbering or similarly dealing with the real property at E (the real property); and

   (b)taking any steps to alter or likely to alter existing security arrangements concerning the real property.

2. That the wife forthwith do all things including signing any document required by the ANZ Bank to:

   (a)reinstate the Company’s current banking facility pending the implementation of the Final Orders; and

   (b)release the wife from any liability to the said bank once the other parts of the settlement orders are fulfilled.

3. Pursuant to s 106A of the Act, if the wife fails to sign and return any document referred to below to the legal practitioners of the husband within two business days of delivery to her, a Registrar of the Court is authorised to sign in the name of the wife any document required to complete settlement including but not limited to a transfer of land concerning the real property, the discharge of mortgage encumbering the real property and any other document prepared by the said bank to give effect to the orders made on 2 February 2009. For the purposes of the Registrar, proof of the wife’s failure to comply with the said orders shall be established by the husband’s practitioner providing an affidavit to that effect and which shall be sufficient to enliven the provisions of this order.

4. That the husband’s costs of this application be otherwise reserved.

5. That the application of the husband filed 2 July 2009 and the response of the wife filed 9 July 2009 be otherwise dismissed and all proceedings are removed from the list of cases awaiting a hearing.

IT IS CERTIFIED:

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

2. That the husband and his legal practitioners have liberty to provide a copy of these orders and my reasons therefore this day to the ANZ Bank.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 1437  of 2006

MR SPOKE

Applicant

And

MS SPOKE

Respondent

REASONS FOR JUDGMENT

1. On 9 July 2009 in the Judicial Duty List, I made a variety of orders and said that I would give written reasons later. These are those reasons.

2. The application before me was filed by the husband on 2 July 2009. He sought orders as follows:

   1.An injunction pending settlement on 1 August 2009 restraining the wife from dealing with the real property in any way, taking any steps to alter or likely to alter existing security arrangements concerning the real property and from communicating with any banking institution of the company involved in current or proposed security arrangements.

   2.That the wife do whatever is required to immediately request and co-operate with the ANZ Bank to reinstate the Company’s current banking facility pending the implementation of the Final Orders and to facilitate the implementation of the Final Orders.

   3.An order pursuant to s. 106A of the Family Law Act 1975 (CTH) that a Registrar of the Family Court be authorised to sign in place of the wife and give effect to any document required to complete settlement including but not limited to transfer of land; discharge of mortgage; and any other document prepared by the bank to facilitate the execution of the orders in the event that the wife fails to sign and return such document(s) within two business days of delivery to her.

3. The husband also sought costs.

4. The application was supported by an affidavit filed by the husband on 2 July 2009.

5. The husband appeared and was represented by Mr Testart of Counsel.

6. The wife was given leave to file a response and she did so on 9 July 2009.

7. The response sought the following orders:

   1.That the Applicant’s Application in a Case is dismissed or, alternatively, adjourned in order to join ANZ Banking Group Limited as a party;

   2.That the Applicant provide the Respondent with further and better particulars of the “other sources” referred to in paragraph 12 of his Affidavit sworn at [E] on 1.7.09.

   3.That the Applicant provide details as to the reduction in the bank facility since the Final Orders.

   4.Such other Order as the Court deems meet.

8. The wife relied upon an affidavit she swore. It was filed on 9 July 2009.

9. The wife was represented by Mr Kiernan of Counsel.

10. Although counsel for the husband prepared submissions in anticipation of the hearing specifically about whether the jurisdiction of the Court was exhausted, counsel for the wife said that he was not arguing the point. He agreed that the orders sought were of a machinery nature.

11. This matter arises out of a difficult property dispute in which I made final orders on 2 February 2009. I will not traverse my reasons for judgment in these reasons. However, it is important to note that the wife was unrepresented in the substantive part of the trial. Subsequently, she appealed but her appeal was deemed abandoned. She also sought a stay of my orders but did not serve the application on the husband nor attend to prosecute the application which in due course was struck out.

12. I raise the appeal issue because in the last paragraph of the wife’s current affidavit, she made the observation that she intended to seek to reinstate her appeal and proceed with it. She referred to the fact that she did not press on with the appeal because she and the husband had reached an agreement about a variety of things.

13. Mr Kiernan agreed that that part of the evidence was irrelevant to the matter that I had to determine.

14. Further, Mr Kiernan properly conceded that there was no basis to join the ANZ Bank on the material before the Court and that the discovery-type orders sought by the wife could only be relevant if there was a s 79A application or something similar before the Court. There was not.

15. The issue in this case was modestly simple but there is no trust between the parties and I am satisfied that that has given rise to the problem. I say that notwithstanding the wife’s statement that she and the husband reached agreement about a number of things that obviated her necessity to appeal.

16. On 2 February 2009 I made the following orders:

    (1)That by 4.00pm on 1 August 2009 and by way of final settlement pursuant to s 79 of the Family Law Act 1975 (Cth), the husband pay to Ask Funding Pty Ltd for and on behalf of the wife the sum of $75,000 in part satisfaction of their entitlements from the wife under orders made on 15 January 2009.

    …

    (3)That the wife have the sole use and occupation of [the E property] until 1 August 2009 on condition that she continues to reside in the property.

    (4)That upon the payment by the husband of the sum referred to in paragraph (1) hereof but not earlier than 1 August 2009 unless the parties otherwise agree, the wife do all acts and things and sign all necessary documents to transfer to the husband at his expense, all of her interest in the property at [E].

    (5)That forthwith, and upon the request of the husband, the wife sign any necessary document to transfer to the husband all and any shareholding in her name in [N Company] Pty Ltd.

    (6)That by no later than 1 August 2009, the husband provide to the wife a document evidencing the release of the wife from any liability of [N Company] Pty Ltd including any debt personally guaranteed by the wife in relation to the said company.

    (7)That in default of the provision by the husband to the wife of the releases referred to in paragraph (6) by 10 August 2009, the husband and the wife do all things necessary to:

    (a)Sell the real property at [E]; and

    (b)Place [N Company] Pty Ltd in the hands of a liquidator for its liquidation under the Corporations Law, and upon the said disposals, the net balance (if any) from the sale of the said home be paid to the wife after all obligations of the company [N Company] Pty Ltd including the costs of liquidation are discharged.

    (8)That upon the payment by the husband to the wife of the sum referred to in paragraph (1) hereof, the wife vacate the home at [E] and the husband have exclusive occupancy and entitlement thereto, thereafter.

    …

    …

    (11)That each party otherwise retain and become the absolute owner of and the other party relinquish any interest in, any superannuation entitlement of that party as at the date of these orders.

    …

    …

    (14)That there be general liberty to apply to both parties in respect of the implementation of these orders.

17. Whatever interpretation may be sought to put on the orders, the picture was clear. The husband was to have the business and the house but he had to take over all of the liability to the company’s bankers and obtain a discharge for the wife accordingly. Failing that, there was to have been a sale of the home and the liquidation of the business.

18. The affidavit of the husband filed 2 July 2009, set out the following:

    (a)      The business was totally secured by the home;

    (b)On 24 June 2009, an ANZ Bank officer advised the husband that the company’s accounts had been suspended because the wife and an unnamed person had instructed the bank that she was withdrawing her personal guarantee of the banking facility and as a consequence, all transactions had been halted;

    (c)In a telephone conversation with the wife, she said this would enable the husband to understand what he had done to her in the previous three and a half years;

    (d)The husband was endeavouring to negotiate funds to adhere to the orders;

    (e)The wife had complied with the order to transfer the shares in the company;

    (f)The wife’s action made the husband anticipate that she would not sign the documentation to implement the settlement.

19. The affidavit of the wife filed 9 July 2009 set out:

    (a)During May 2009, she received a letter from the ANZ Bank requesting that she execute a fresh individual guarantee and indemnity for $700,000 referring to a letter that she knew nothing about;

    (b)The guarantee was to replace the existing guarantee and indemnity;

    (c)The wife thought this increased her exposure and she was concerned about some irregularity with the current guarantee or indemnity;

    (d)The bank contacted the wife and she declined to execute the documents as she was suspicious about the dealing. She was told by the bank officer that the overdraft balance was $224,000 which surprised her given the evidence in the trial. She consulted a solicitor who informed her that she was within her rights to refuse to sign the documents and to withdraw the current guarantee which she did due to the uncertainties and/or inconsistencies arising;

    (e)The wife obtained a letter of offer from the bank addressed to the company dated 20 May 2009 which had not been disclosed to her by the husband nor sent to her by the bank.

20. Neither party sought to cross-examine the other on the affidavit material filed.

21. There is a dispute on the facts here but I find it is not enormous.

22. The fundamental and glaring difficulty is that the wife did not exhibit to her affidavit, the letter from the bank referred to in paragraph 19(a) above. When the subject was raised, Mr Kiernan was not able to produce the correspondence which I suspect would have been voluminous because it included documents to execute. That would be a significant piece of evidence having regard to the husband’s position that he was negotiating with the bank to vary the loan facilities to enable the implementation of the orders. Counsel for the husband did not accept that the letter existed. Its production would have given large credence to the wife’s argument.

23. Mr Kiernan was also unable to tell me whether the solicitor referred to by the wife in paragraph 19(d) above whom I point out was not his current instructor, had had access to the court orders wherein the position of the wife and in particular her protection, was evident.

24. The whole of the wife’s argument was about uncertainties but the reality is that she transferred the shares in the company as she was required to do and there was nothing exceptional about the husband seeking finance to discharge the existing debt as he was required to do to provide the wife with a release from that liability.

25. The absence of the correspondence with the bank is a glaring omission but in any event, just what was motivating the wife to thwart the activities of the business is not clear.

26. Whilst there is some doubt in my mind about the wife’s assertion that there was a request by the bank for the execution of fresh documents, there is no dispute that the wife told the bank that she was withdrawing her current guarantee. There was in effect, no basis for her to do that having regard to the orders that I made.

27. It is conceivable that if the husband extended the debt level unreasonably, the wife might be “exposed” to a financial risk to the extent of bankruptcy but there is no evidence that he had done that nor that there was any suggestion he intended to take such a risk. The wife’s own annexures show that the husband was endeavouring to obtain finance which on any logical view was designed to enable him to implement the obligations under the final orders.

28. The wife’s withdrawal of the consent to the guarantee was unreasonable and certainly not in keeping with the intentions of the final orders.

29. The withdrawal however may have created a situation in which “the horse had bolted” but I agree with counsel for the husband that the horse has not left the paddock.

30. The wife must in those circumstances alter her position of withdrawing from the guarantee and advise the bank accordingly. I intend that the bank have a copy of my orders and these reasons. I am satisfied that the wife is protected appropriately.

31. The wife’s vague and unexplained concerns seem to have arisen from the advice she received and if so, that was unfortunate and should not have happened because on any view, it would have appeared to any adviser that the withdrawal of the consent to the guarantee would have thwarted the settlement due to take place on 1 August. The question about new guarantees and future commitments is a different issue.

32. The husband set out in paragraphs 9 and 10 of his affidavit that he spoke to the wife and far from being concerned about something untoward going on, the wife was clearly being destructive. In her affidavit, the wife did not respond to those paragraphs. The affidavit was drawn by a legal practitioner so I am entitled to conclude that what the husband said was correct. That being so, I find that the wife’s action was not simply one of concern for the financial position. Whether the formal withdrawal of her consent to the bank was then given impetus by the advice she received is hard to say but it certainly appears that way.

33. The husband’s evidence was also that the wife’s conduct with financial institutions was being done or could be done to damage his prospects to obtain a loan. There is no evidence that the wife has done that. It is noted however that the wife sought orders that she have details that might give rise to such approaches but I am not satisfied on the husband’s evidence that the wife’s approaches to the bank were for any destructive purpose. If that became apparent in the foreseeable future, the position might change significantly.

34. Neither party argued that there was a problem about jurisdiction to make injunctive orders of the type sought by the husband.

35. The power to make such an order lies in s 114 of the Act. That provision says that the court is entitled to make such order or grant such injunction as it considers proper with respect to the property of a party to a marriage.  The purpose of an interlocutory injunction is to preserve the status quo until trial or in this case, until the settlement of the orders. 

36. The court is required to find that the balance of convenience supports the making of the order and the restraint ought to only be reasonably necessary in the sense that if the orders are not made there would be a real risk of the defeat of the applicant's claimed interest. 

37. The court may grant an injunction in any case in which it is just or convenient to do so.  Ultimately, each case will involve an overall assessment of a number of factors to determine a just or convenient result.  In this case, those factors are that there will be a serious consequence if the wife is not restrained from thwarting the orders. Under the orders, the husband has the right to the corporate structure provided he obtains by 1 August the discharge of the wife’s liability. To discontinue the existing status quo would most probably mean that there will be no prospect of the bank restructuring or even if there was, the business would suffer financially because of the absence of credit facilities which it had previously enjoyed. The balance of convenience therefore supports the making of the orders.

38. I turn then to the question of s 106A of the Act. The provision is in the legislation to ensure that orders of the court can be given effect regardless of enforcement issues. The starting point is that the court is entitled to expect that its orders will be carried out. An aggrieved party has a right of appeal and if not so exercised, the court is entitled to assume compliance. I indicated that this was such a case where I would have applied that presumption because the wife transferred the shares as she was directed. The current behaviour has given rise to some doubt and having regard to the delicate timing, I think this is an appropriate case in which to make such an order. The wife needs to understand that the making of the order does not mean that she does not have to sign documents. Her failure to do so may have other consequences.

39. At the conclusion of the case, the husband sought costs. I indicated that on the basis of the material of a financial nature with which I was familiar, I doubted whether there was any justification for departing from the rule that each party pays their own costs. I have earlier expressed some reservation about the advice upon which the wife was operating and about which she has waived legal professional privilege and that may give rise to a separate issue associated with costs. Counsel for the husband wisely indicated that he did not think there was much point in pursuing an order against the wife simpliciter. I agree but I will reserve the ultimate question for any future application.

I certify that the preceding Thirty Nine (39) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate: 

Date:  9 July 2009