Sterling and Sterling and Ors
[2010] FamCA 783
•7 September 2010
FAMILY COURT OF AUSTRALIA
| STERLING & STERLING AND ORS | [2010] FamCA 783 |
| FAMILY LAW – PROPERTY – Summary Dismissal – Whether only the respondent’s material could be relied upon – Where a case may be weak but not manifestly groundless, a proper airing of the evidence should be allowed to occur |
| Family Law Act 1975 (Cth) |
| Bain Pacific Associations & Ors v Kelly & Ors (2006) FLC 93-270 Bigg & Suzi (1998) FLC 92-799 Gelly & Gelly (No 2) (1992) FLC 92-291 General Steel Industries Inc v Commissioner for Railways (NSW) [1964] 112 CLR 125 IC & WP & Ors (2006) FLC 93-279 Lindon v The Commonwealth (No.2) (1996) 70 ALJR 541 |
| APPLICANT: | Mr Sterling |
| RESPONDENT: | Ms Sterling |
| 2nd RESPONDENT: | Mr Watson |
| 3rd RESPONDENT: | Ms Kelly |
| 4th RESPONDENT: | Mr Border |
| 5th RESPONDENT: | Ms Border |
| 6th RESPONDENT: | Ms Weston |
| 7th RESPONDENT: | P Pty Ltd |
| 8th RESPONDENT: | J Pty Ltd |
| 9th RESPONDENT: | E Pty Ltd |
| FILE NUMBER: | SYC | 738 | of | 2007 |
| DATE DELIVERED: | 7 September 2010 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Watts J |
| HEARING DATE: | 2 February 2010 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Connor |
| SOLICITOR FOR THE APPLICANT: | Argyle Lawyers |
| SOLICITOR FOR THE RESPONDENT: | Stacks the Law Firm |
| COUNSEL FOR THE 6TH RESPONDENT: | Mr Foster |
| SOLICITOR FOR THE 6TH RESPONDENT: | McDonell Milne Toltz |
Orders
The 6th to 9th Respondents’ application for summary dismissal is dismissed.
This matter is relisted for directions on 22 September 2010 at 2.15pm.
Each party’s costs of this application be reserved.
IT IS NOTED that publication of this judgment under the pseudonym Sterling & Sterling and Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 738 of 2007
| MR STERLING |
Applicant
And
| MS STERLING |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
The proceedings primarily relate to the husband’s application pursuant s 79 of the Family Law Act 1975 (Cth) (“FLA”) for alteration of property interests. The 6th Respondent, who is the wife’s mother, has applied to have the husband’s case against her summarily dismissed. After the 6th Respondent made that application, the 7th, 8th and 9th Respondents were jointed to the proceedings. An application for summary dismissal was also made on behalf of the 7th, 8th and 9th Respondents who are entities associated with the wife’s mother.
Counsel for the 6th to 9th Respondents suggested that there is no evidence to support the husband’s claims against them. Counsel for the husband suggests that there is a wealth of information available in both the husband’s and wife’s material, which support making the orders sought in the husband’s application.
APPLICATIONS
The orders sought by the Applicant husband in relation to the 6th Respondent are as follows:
3.That pursuant to s106B of the Family Law Act, the undated lease instrument (‘the Lease’) purportedly commencing for a term of three years from 1 July 2006 (‘the lease term’) and purporting to be between the applicant husband, the respondent wife, [Mr Watson] (the second respondent), [Ms Kelly] (the third respondent), [Mr Border] (the fourth Respondent), [Ms Border] (the fifth Respondent) as lessors and [Ms Weston] (the sixth respondent), as lessee, be set aside.
4.That [Ms Weston] (the sixth respondent) and/or [E] Pty Limited (the ninth respondent) forthwith pay in respect of the lease (referred to in order 3 hereof) to the applicant husband and respondent wife and other named lessors a sum equivalent to (in the proportions to which they are entitled as owners)
4.1.All rent outstanding;
4.2.The costs of structural works and or renovations occasioned by the 6th Respondent’s use and or occupancy of the demised premises;
4.3.All other outgoings and monies referred to in the lease payable in respect of the demised premises;
and in respect of the applicant husband and respondent wife:
4.4.45/100ths of all profits derived from the operation of [X Business] and or any other business at [4 Y Street, N], since 1 July 2006.
5.That pursuant to the provisions of s106B of the Family Law Act, and or otherwise at law, the instruments of disposition purporting to transfer in or about the years 2006 or 2007, the shares held by the respondent wife in [P] Pty Limited ACN […] from the respondent wife be set aside.
7.That pursuant to the provisions of s106B of the Family Law Act, and or otherwise at law, the instruments of disposition purporting to transfer in or about the years 2006 or 2007, the shares held by the respondent wife in [J] Pty Ltd ACN […] from the respondent wife be set aside.
Orders 6 and 8 of the Applicant husband’s proposed orders cover the implementation of orders 5 and 7 should they be made.
The 6th Respondent, in her Response to an Application in a Case filed 1 May 2009, seeks at order 1(c): That the Court dismiss any Application otherwise brought by the Applicant against the 6th Respondent.
I note that joining the other Respondents into the application for summary dismissal largely deals with the previous claim by the wife’s lawyer that the transfer of shares was to the wife’s brother Mr Watson, not the 6th Respondent. I also note that this assertion appears to be contrary to both the wife’s own financial statement, and ASIC documents. It is unnecessary at this stage to determine to which Respondent the shares were transferred.
DOCUMENTS RELIED UPON
The husband relied on the following documents:
7.1.Further Amended Initiating Application filed 14 October 2009
7.2.Response to an Application in a Case filed 1 May 2009
7.3.Husband’s affidavits filed 11 September 2009 and 29 January 2008
7.4.Affidavit of Ms H filed 18 September 2009
7.5.Affidavit of Mr Q sworn 11 September 2009
7.6.Affidavit of Ms D filed 27 November 2009
7.7.Affidavit of Mr T filed 29 January 2008
7.8.Wife’s Financial Statements filed 19 April 2007 and 27 January 2008
7.9.Affidavit of Mr Watson filed 21 February 2008
7.10.Affidavit of Mr Z filed 30 January 2008
7.11.Affidavits of the wife filed 22 November 2007 and 14 February 2008
7.12.Affidavit of Ms Weston filed 1 May 2009
7.13.Orders of JR Loughnan dated 29 February 2008
SHORT HISTORY
The husband and wife commenced cohabitation in 1992 and married in 1994.
P Pty Ltd was incorporated on 14 November 2002. The sole purpose of this company was to purchase the business called ‘M Business’, which operated through P Pty Ltd, from the premises at 8 Y Street, N.
In about 2003 the husband said he suggested to his wife that they pursue local government approval to run a licensed venue.
J Pty Ltd was incorporated in July 2003.
In September 2003 the contracts were exchanged for 4 Y St, with the husband, wife, and the 2nd to 5th Respondents as purchasers.
The husband and wife separated in December 2004 and were divorced in 2007.
In July 2004 the original development application to run a licensed venue from the Y St premises was successful, with conditions.
On 8 February 2006 the development consent was modified.
The venue X Business began operating in March 2008 from the Y Street property.
THE LAW TO BE APPLIED
Part 10.3 of the Family Law Rules 2004 provide for summary decisions. Rule 10.12 provides that: A party may apply for summary orders after a response has been filed if the party claims, in relation to the application or response, that, inter alia, “(d) there is no reasonable likelihood of success”.
The principles governing summary dismissal are outlined by Kirby J in Lindon v The Commonwealth (No.2) (1996) 70 ALJR 541 and are reproduced by Finn J in IC & WP & Ors (2006) FLC 93-279 at paragraph 6:
The approach to be taken by the court to the Commonwealth's application for summary relief is not in doubt:
1. It is a serious matter to deprive a person of access to the courts of law for it is there that the rule of law is upheld, including against government and other powerful interests. This is why relief, whether under O 26, r 18 or in the inherent jurisdiction of the court, is rarely and sparingly provided.
2. To secure such relief, the party seeking it must show that it is clear, on the face of the opponent's documents, that the opponent lacks a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious.
3. An opinion of the court that a case appears weak and such that it is unlikely to succeed is not, alone, sufficient to warrant summary termination. Even a weak case is entitled to the time of a court. Experience teaches that the concentration of attention, elaborated evidence and argument and extended time for reflection will sometimes turn an apparently unpromising cause into a successful judgment.
4. Summary relief of the kind provided for by O 26, r 18, for absence of a reasonable cause of action, is not a substitute for proceeding by way of demurrer. If there is a serious legal question to be determined, it should ordinarily be determined at a trial for the proof of facts may sometimes assist the judicial mind to understand and apply the law that is invoked and to do so in circumstances more conducive to deciding a real case involving actual litigants rather than one determined on imagined or assumed facts.
5. If, notwithstanding the defects of pleadings, it appears that a party may have a reasonable cause of action which it has failed to put in proper form, a court will ordinarily allow that party to reframe its pleading. A question has arisen as to whether O 26, r 18 applies to part only of a pleading. However, it is unnecessary in this case to consider that question because the Commonwealth's attack was upon the entirety of Mr Lindon's statement of claim.
6. The guiding principle is, as stated in O 26, r 18(2), doing what is just. If it is clear that proceedings within the concept of the pleading under scrutiny are doomed to fail, the court should dismiss the action to protect the defendant from being further troubled, to save the plaintiff from further costs and disappointment and to relieve the court of the burden of further wasted time which could be devoted to the determination of claims which have legal merit. [emphasis added]
While Kirby J describes the test in the terms that on the face of their documents, “the opponent lacks a reasonable cause of action”, the test has been described in General Steel Industries [1964] 112 CLR 125 in various ways, including that the other party’s case must be: “so obviously untenable that it cannot possibly succeed”, “manifestly groundless”, “so manifestly faulty that it does not admit of argument”. However the test is phrased, it is clear that there is a high onus on the party bringing the application for summary dismissal to establish a lack of a reasonable cause of action given that proving that there is a ‘weak’ case is insufficient.
Like Kirby J, the Chief Justice in General Steel Industries, stated that ‘exceptional caution’ must be used, and that summary dismissal should be ‘sparingly employed’.
In Bigg & Suzi (1998) FLC 92-799 the court also reiterated the law as set out above by Kirby J, that if there is a serious legal question it should be determined at trial, and if pleadings are incomplete, the opportunity should be given to reframe them.
Onus of Proof and Material relied upon
The 6th to 9th Respondents submit that the husband has the onus of proof under s106B to demonstrate that the Court should exercise their jurisdiction (Gelly (No 2) (1992) FLC 92-291 at 79). The husband agreed that the onus is on the husband for an order under s106B however this onus relates to final proceedings, not the present summary dismissal proceedings. In a summary dismissal application, the onus of proof is on the party bringing that application, that is, the 6th to 9th Respondents [see General Steel Industries [1964] 112 CLR 125].
It is clear from the authorities that the case for summary dismissal must be established upon the opponent’s documents. In Kirby J’s words (set out above), “on the face of the opponent's documents, that the opponent lacks a reasonable cause of action” The applicant for summary dismissal may not rely on their own material to show that the opponent’s case lacks reasonable cause.
The Court in Bigg v Suzi similarly noted that the applicant wife “had no right to adduce any evidence at that summary hearing to contradict the evidence of the husband or to seek to contradict any inference which it might be submitted should be drawn from that evidence”. However the court in Bain Pacific Associations & Ors v Kelly & Ors (2006) FLC 93-270 noted that “the court may have regard to relevant non-contentious facts, even if raised by the applicant for summary dismissal”.
I do not accept the submission by the Respondents that I should have regard to only the husband’s filed material. I acknowledge an order by me on 7 August 2009 that the husband file all material that is to be relied upon, however this direction was not intended to preclude the reliance on other material of the wife. The husband relied on a number of Affidavits filed by the Respondents including the wife, and on the authorities he is able to do that. In IC & WP & Ors the Respondents based their case for summary dismissal against the wife not just on her own affidavit material, but that of the husband. Counsel for the wife submitted that all material before the Court could be relied upon to oppose the application for summary dismissal. This submission was not challenged and Finn J noted at paragraph 14 and 15 that:
[14] Certainly it is necessary to have regard to some of the affidavit material filed by the husband in order to understand certain of the orders and declarations which are sought by the wife and which are the subject of the summary dismissal application. It is also necessary to have regard to parts of the husband’s affidavit material to understand the wife's affidavit material.
[15] It was of course accepted that in this jurisdiction in which there are no pleadings, it is necessary to have resort to the affidavit material in order to understand the substance of the claim which is sought to be summarily dismissed.
EVIDENCE
Order 3 – Setting aside the July 2006 lease
The husband claimed that the lease entered into between the owners of the property and his mother-in-law for the N property was intended to defeat a later order for the division of property between the husband and wife. In addition, the husband says it was made in contravention of the Wife’s undertakings that she would not make any dealings that would affect the husband’s interests. These undertakings are pursuant to Order 4 of orders dated 29 February 2008, referring to the undertakings in paragraph 5 of the wife’s Affidavit sworn 13 February 2008.
The first issue which had to be addressed in relation to the order to set aside the lease was whether the lease of 1 July 2006 is still in operation. That lease was for a three year term, expiring in 30 June 2009. There was however an option to renew that lease for a further three years. The husband, in his affidavit material, said he had no evidence as to whether the option to renew had been taken up and had therefore proceeded on the assumption that it may still be in operation.
Counsel for the 6th to 9th Respondents explained that there was a second lease entered into, in the absence of the husband, who at the time of the new lease, had no interest in the property pursuant to Court orders. This new lease was referred to in the proceedings before me on 2 November 2009 but I have not seen it.
Counsel for the 6th to 9th Respondents assert that the husband adduces no evidence to suggest that the lease was intended to, or is likely to undermine property orders, noting that:
29.1.The premises had already been commercially leased, in the 2004/2005 financial year;
29.2.The 6th Respondent was always involved in the development application for the property;
29.3.The husband has no interest in the business conducted on the property, and neither he nor the wife made any financial contribution to it;
29.4.The husband had no role in the development application; and
29.5.In any case, the existence or non-existence of a lease does not alter the value of the property pool.
In response the husband suggested that the information available from the evidence before the Court is extensive. He referred to the available evidence (Husband’s affidavits of September 2009 and January 2008, and the wife’s affidavit of November 2007) and made the following submissions:
30.1.Responding to the claim that the property had already been leased, the husband asserted that the lease between 22 October 2003 and 31 July 2005 to S Company was not for the whole of the property, and the property had not been leased since that time. I am unable to locate any evidence which would support that assertion.
30.2.Regarding the development application, the husband says that the 6th Respondent had no role in the development, other than being the Applicant in name only. On the 6th Respondent’s own evidence she was only named as the applicant from 29 July 2004, after the first application was in Mr Watson’s name. The 6th Respondent claims that Mr Watson held a Power of Attorney for her. Affidavit material from Ms H, the solicitor that handled the development application, demonstrates that the 6th Respondent was involved in name only and never gave any instructions to the solicitor. Ms H says she only met the 6th Respondent once. She gave details explaining the professional interactions she had primarily with the husband, and also with Mr Watson. The husband and Mr Watson were personally billed for this work.
30.3.The husband sets out a body of material in his 11 September 2009 affidavit about his involvement in the purchase of the 4 Y St property and the development application for the licensed business, both of which were preconditions for the establishment of the business. This included obtaining advice, engaging accountants and lawyers, lodging an application, and attending hearings. The husband submitted he expended over 100 hours in such pursuits, and puts the success of the development application down to these efforts. His accountant, Ms D, has sworn an affidavit about her professional involvement with the husband and his involvement as the primary negotiator in the purchase of the property, and generally agrees with the husband’s assertions outlined above.
30.4.The husband’s material asserts that he also made contributions to the Y Street property once the development application was approved. He claims he researched possible refurbishment options, attended meetings with architects, builders and a draftsman. He says he also purchased televisions, fridges and other goods for the property. The involvement of the husband in the refurbishments is outlined in Mr Q’s affidavit, and also that of Ms D.
30.5.Although the business name X Business was registered without the husband’s knowledge, he asserts his part ownership of the business, saying that he always believed he was a part owner and had exerted a lot of effort to build the business. Mr Q also outlined his interactions with Mr Watson and the husband and how it appeared they represented the total ownership of the business. The affidavit of Ms D outlines the time that the husband spent researching such a business and his ideas about how and where it could be run.
30.6.As a part owner of the premises, the husband poses the question, why would the owners spend in excess of $1 million on renovations and refurbishments to assist the business, when the tenant is paying little to no rent? Moreover, on the wife’s evidence, the money sought by refinance for the refurbishments was purportedly for the benefit of the owners of the property. The husband submits that although the 6th Respondent was under a lease from 1 July 2006 she says her business only started operating in March 2008. Given these circumstances, the husband argues it is an untenable proposition that the 6th Respondent is the only person with an interest in the business, and that the property holders have no interest.
The husband, based on the above information, suggests that there is ample evidence that the lease was entered into with a view to frustrate property settlement, at least enough to resist summary dismissal. In addition to the above evidence, the husband states that the signature on the lease is not that of the husband. He says he does know the witness to that signature. He also says he was unaware of the lease until the wife’s affidavit sworn 22 November 2007.
I am unable to conclude that the husband, based on all or any of the above evidence, if it is accepted, would not succeed in obtaining an order in the terms of order 3 as sought in his application. Whilst the utility of setting aside a lease that may or may not continue in operation and its effect on the overall alteration of property interests between the husband and wife is still very unclear to me, it has not been demonstrated by the Respondents that such an order, if it was made, would not have utility.
Order 4 – rent and other payments due under the lease and by virtue of interest in the business operating under the lease
The 6th to 9th Respondents submit that the husband adduces no evidence to suggest that any payments of rent or cost outgoings are payable by the Respondents, or that they are outstanding. Counsel for the Respondents contends that the husband does not even set out what the terms of the lease are or were. The Respondents submit that there is also no evidence to suggest that the husband or wife have any interest in the business operating at that address and therefore any rights to profits. It is submitted that the 6th Respondent is the only shareholder and office bearer of the company ‘E Pty Ltd’ which operated the business.
The husband asserts that there is ample evidence to show that funds are owed to the owners of the property. Counsel for the husband relies upon much of the evidence outlined in relation to the discussion about order three, especially the assertion that spending in excess of $1 million on refurbishments that would benefit the 6th Respondent (who was paying little to no rent) was untenable. There is also the evidence that the loan documents explain the refurbishments were for the benefit of the owners.
In response to the submission that the husband does not set out the terms of the lease, the original lease exists in the wife’s material and is referred to directly in the husband’s January 2008 affidavit. Rental under the lease was set out in the husband’s 2009 affidavit as $137,000 per annum.
Annexed to the husband’s affidavit is a document entitled ‘Minutes of Meeting’. Attending at this meeting was apparently the husband, the wife and the 2nd and 3rd Respondent. The agreement was reached to forego rent payable by the 6th Respondent while refurbishments were being undertaken on the Y Street property. The husband says he did not attend this meeting nor participate in this agreement. The wife claimed the building work had been suspended due to lack of funds. In response, the husband refers to an affidavit by Mr T who, after viewing the property in January 2008, opined that ‘all major works have been completed’ and that all that remained to complete was the security system.
Counsel for the husband says evidence showing that upwards of $1,000,000 was expended on refurbishments and renovations is sourced from:
37.1.The wife’s November 2007 and January 2008 affidavits that detail the further $350,000 refinancing that is needed to complete refurbishments;
37.2.The wife’s January 2008 affidavit which refers to the $430,000 quotation from Building and Maintenance Services;
37.3.Mr Z’s January 2008 affidavit which details that Building and Maintenance Services had received $600,000 to date, and is owed a further $163,949.59; and
37.4.Mr Watson’s February 2008 affidavit which details the $625,000 of payments to Building and Maintenance Services.
The husband asserts that the wife does have a claim to the profits of the company that runs the business. He asserts that the 6th Respondent’s ownership is only a ‘front’ for the wife.
Again, I make no comment about the strength of the husband’s case. I am unable however, in the context of a summary dismissal application, to conclude that the husband’s case in relation to accounting for profits from the business known as X Business is so manifestly faulty that it does not admit of argument.
Order 5 – Setting aside transfer of P Pty Ltd shares
The 6th to 9th Respondents submit that the husband adduces no evidence besides the existence of the transfers, to suggest that the P Pty Ltd share transfers were intended to, or are likely to defeat property orders. They say the husband does not show the business and therefore the shares to have any value. The husband has provided information about the wife’s loan to the company but has failed to show what impact this has upon her shareholding.
The ASIC Company Extract at Annexure 1 of the husband’s September 2009 Affidavit shows the transfer occurred on 19 February 2007. The wife’s 2007 Financial Statement also shows the transfer of 90 ordinary shares in P Pty Ltd worth $1/share. I suggested to Counsel for the Respondents that this was suspicious enough to warrant further investigation.
The husband’s counsel submitted that the small amount of evidence presented thus far is a result of non-disclosure. The documents about the transfer were said by the wife to be in possession of her lawyer. He relied on inferences from other documents to suggest that the business and therefore the shares did hold value.
The first inference is sourced from the fact that the company was guarantor for a financial loan. The wife’s Affidavit of November 2007 shows the loan for the N property of $1.425 million was guaranteed by P Pty Ltd. The loan approval was received on 16 February 2007, three days before the share transfer. The implication is that the company must have had value to be guarantor for this sum.
The wife and Mr Watson had also taken a loan from P Pty Ltd of $17,500. This was noted in the wife’s 2007 Financial Statement.
The second inference is based on the loans by the wife to the business. The wife’s 2008 financial statement shows a personal loan of $287,200 to P Pty Ltd with repayments of $810/week (or $800/week as per 2007 statement, with a loan balance of $300,000). This information is also set out in the husband’s September 2009 affidavit.
The last inference is based upon the evidence that the wife had transferred P Pty Ltd shares previously for a significant sum of money. The wife’s 2008 financial statement shows the share transfer of 90 ordinary shares in P Pty Ltd in November 2006 to be worth $98,000.
It may be at the end of the day, the Respondents will be able to establish that setting aside this particular transaction would not be necessary in order to produce a just and equitable outcome in the husband’s favour when altering property between the husband and wife pursuant to s79 FLA. The matters referred to above provide some prima facie basis for order 5 as sought by the husband and I am unable to conclude that that application should be summarily dismissed without the testing of the evidence.
Order 7 – Setting aside share transfer of J Pty Ltd
The 6th to 9th Respondents again submit that the husband adduces no evidence besides the existence of the transfers, to suggest that the J Pty Ltd share transfers were intended to, or are likely to defeat property orders. They again say the husband does not show the business and therefore the shares to have any value. The husband has provided information about the wife’s loan to the company but has failed to show what impact this has upon her shareholding.
The share transfer is recorded in the wife’s 2007 Financial Statement as 105 ordinary shares at $1 each and is recorded as such in the husband’s material. The ASIC search at annexure 2 of the husband’s September 2009 affidavit shows the transfer occurred on 15 February 2007 and those shares in the 6th Respondent’s name are held for the K Trust. The wife’s 33.3% interest in the K trust was said to be worth an amount that was ‘not known’ in the wife’s 2007 Financial Statement and worth ‘nil’ in her 2008 Financial Statement.
Counsel for the husband submitted that evidence in the wife’s affidavits demonstrates that the business and therefore the shares had value. Like P Pty Ltd, the wife had extended a loan to J Pty Ltd. Based on her 2007 Financial Statement, this loan is actually the same as was extended to P Pty Ltd. In the 2007 statement the wife records that $300,000 is owing to her from P Pty Ltd and J Pty Ltd, however her 2008 statement simply records P Pty Ltd as the recipient of the loan.
The husband also asserts that J Pty Ltd commissioned the refurbishment of the Y Street property.
Again, it may be the Respondents will at the end of the day, establish the setting aside of this transaction is not necessary to enable the court to provide a just and equitable outcome to the husband. However, at this stage, I am not prepared to summarily dismiss the application.
Other
Counsel for the husband asserts that there is a substantial financial relationship between all parties to the proceedings. This assertion is based on the loans between the parties and entities, including the purported $800,000 loan from the 6th Respondent to the wife, and the claim by the wife that she owns shares on behalf of the K Trust, which features little in the evidence. Considering such an interconnected financial situation, the Husband submits it would be premature to summarily dismiss his orders without a proper investigation.
CONCLUSIONS
The onus of proof is on the 6th to 9th Respondents to prove the husband’s case is manifestly groundless.
It was submitted by counsel for the husband, and I am inclined to agree, that the financial position of the 6th to 9th Respondents, the wife and the businesses are intricately linked. The evidence before me demonstrates that a full investigation of these matters is necessary. While the case may not be strong at its present status, it is by no means ‘manifestly groundless’. There are clearly areas which require proper consideration and the husband should be given the chance to air them properly at trial.
Any discovery relating to the value of shares or business expenses will have a significant effect on the financial pool. The Husband’s 2008 Financial Questionnaire shows few assets and a meagre income of $150/week.
Leaving aside the issue of whether the original lease still exists, the husband does present evidence which suggest the lease was entered into with an aim of defeating property orders. He suggests that the lease was fraudulently entered into, and the rent was under-market. However, evidence must be analysed to assess whether the option to renew was taken up, or whether it was replaced by a more recent contract.
There is prima facie evidence that a significant amount of money was spent on improving the premises by the owners, and that the 6th Respondent may be benefiting from this refurbishment in the running of the business, on less than commercial terms.
I accept that there is evidence the husband had a part to play in establishing the business. Whether this level of involvement establishes an equitable claim or not is a matter for final hearing, however the evidence suggests this is a possibility.
There is enough evidence before the Court to warrant an investigation into the matter of business profits and liabilities. The 6th Respondent has not demonstrated the husband’s claim is manifestly groundless.
It is an accepted fact that the wife transferred her shares in P Pty Ltd and J Pty Ltd soon after separation. It seems to me that this evidence is prima facie sufficient to base a case which claims these may be transactions which defeat the husband’s claim.
Accordingly I will dismiss the application by the 6th to 9th Respondents for summary dismissal of the application which seeks orders against their interests.
I certify that the preceding sixty-two (62) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 7 September 2010.
Associate:
Date: 7.9.2010
Key Legal Topics
Areas of Law
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Civil Procedure
Legal Concepts
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Summary Judgment
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