Tapp and Talbott and Anor
[2020] FamCA 57
•10 February 2020
FAMILY COURT OF AUSTRALIA
| TAPP & TALBOTT AND ANOR | [2020] FamCA 57 |
| FAMILY LAW – PROPERTY – Interim Proceedings – Where the de facto wife seeks injunctions be ordered against the second Respondent preventing him from enforcing a judgment debt obtained the Supreme Court of New South Wales through default judgment – Where the de facto wife seeks an injunction be ordered for the second Respondent to remove a caveat lodged over the de facto parties former relationship home – Where the de facto husband acknowledges the judgment debt and accepts it has been properly obtained – Where the de facto husband and second Respondent oppose the Application of the de facto wife – Where the de facto wife and husband purchased the property from the second Respondent and entered into a mortgage agreement and side deed in respect of $1,000,000 – Where the second Respondent lodged a caveat over the property to protect his interests – Where both the de facto husband and wife signed the mortgage, side deed and also the caveat – Where the de facto wife contends that the terms of the side deed were unfair – Where the wife asserts there was a power imbalance between the de facto husband and wife at the time the transactions were entered into – Where the Court determines that the wife’s Application falls foul of s 90AF(3)(b) of the Family Law Act 1975 – Where the Court determines that the de facto wife’s Application requiring the second Respondent to remove the caveat over the property lacks merit – Orders made dismissing the Application – Leave granted for the parties to view and photocopy material produced on subpoena. |
| Family Law Act 1975 (Cth) ss. 90AF, 90AF(3)(b), 90AF(4)(h), 90SM, 114. Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW) Real Property Act 1900 (NSW) ss 74MA, 74P. |
| Buchanan v Crown & Gleeson Business Finance Pty Ltd (2006) 13 BPR 24,513. Cardile v LED Builders Pty Ltd (1999) 198 CLR 380. In the marriage of Caddy & Miller (1986) FLC 91-720. In the marriage of Smith & Saywell (1980) FLC 90-856. Kelleher & Anderson [2007] FamCA 137. Mango Boulevard Pty Ltd v Spencer [2008] QCA 274. Pegasus Leasing Ltd v Balescope Pty Ltd (1994) 63 SASR 51. Sanders v Sanders (1967) 116 CLR 366. XYZ Pty Ltd & Charisteas & Ors (2017) FLC 93-782. |
| APPLICANT: | Ms Tapp |
| RESPONDENT: | Mr Talbott |
| SECOND RESPONDENT : | Mr Cales |
| FILE NUMBER: | SYC | 2557 | of | 2017 |
| DATE DELIVERED: | 10 February 2020 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | McClelland DCJ |
| HEARING DATE: | 4 February 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Dura |
| SOLICITOR FOR THE APPLICANT: | Walter & Elliott Family Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Schonell SC |
| SOLICITOR FOR THE RESPONDENT: | Anne Einfeld Solicitor |
| COUNSEL FOR THE SECOND RESPONDENT: | Mr O'Brien |
| SOLICITOR FOR THE SECOND RESPONDENT: | Allsop Glover Lawyers |
Orders
The de facto wife’s Application in a Case filed 18 November 2019 is dismissed.
The parties have leave to access and photocopy documents produced by the Commonwealth Bank of Australia to this Court pursuant to a subpoena issued by the de facto wife.
The parties have liberty to apply in respect to the question of costs.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Tapp & Talbott has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
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 r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 2557 of 2017
| Ms Tapp |
Applicant
And
| Mr Talbott |
Respondent
And
| Mr Cales |
Second Respondent
REASONS FOR JUDGMENT
Introduction
This decision concerns an Application in a Case filed by Ms Tapp (“the de facto wife” for the purpose of these proceedings) on 18 November 2019 primarily seeking injunctions.
The de facto wife is the Respondent in the substantive proceedings, initiated by Mr Talbott (“the de facto husband” and first Respondent in the current Application before the Court), in which the parties seek orders for the adjustment of their property and for parenting arrangements following the cessation of their de facto relationship.
The first injunction sought would restrain the second Respondent, Mr Cales (“the second Respondent”), from proceeding to enforce a judgment debt which he obtained from the Supreme Court of New South Wales on 30 December 2019. The second injunction sought would require the second Respondent to remove a caveat that he has lodged over the parties’ former relationship home located at C Street, Suburb D (“the Suburb D property”).
The judgment debt obtained by the second Respondent relates to a mortgage agreement entered into by the parties in December 2011. The de facto husband acknowledges the judgment debt and accepts that it was properly obtained. This is, however, disputed by the de facto wife.
In addition, the de facto wife seeks orders for further and better disclosure on the part of both the de facto husband and the second Respondent in respect to any payments made, pursuant to the mortgage agreement, in the period since December 2011.
The orders sought by the de facto wife are opposed by both the husband and the second Respondent.
Relevant background facts
In 1969, the de facto wife was born. She is currently 50 years old.
In 1970, the de facto husband was born. He is currently 49 years old.
In October 2009, the de facto husband and wife commenced cohabitation.
In December 2011, the de facto husband and wife purchased the Suburb D property from the second Respondent and his wife. It is not in dispute that the husband is a friend of the second Respondent and his wife. Prior to that sale, as contended by the de facto husband and the second Respondent, the de facto husband and the de facto wife entered into a mortgage agreement by way of vendor finance (“the mortgage”) with the second Respondent in respect to an amount of $1 million.[1]
[1] See page 28 of the second Respondent’s tender bundle) marked ‘Exhibit C’ in the proceedings).
Part B of annexure “A” to the mortgage provides that the mortgagors, identified in the agreement as the de facto husband and wife, covenant with the mortgagee, identified to be the second Respondent, as follows:
1. The Mortgagors will pay to the Mortgagee the Principal Sum being one million dollars ($1,000,000.00) or such of it as shall remain unpaid (which is secured by this mortgage) which is lent by the Mortgagee to the Mortgagors at the date hereof (receipt of which is acknowledged by the Mortgagors) on the day which is 12 calendar months after the Mortgagee gives to the Mortgagors written notice that he requires the Principal Sum to be repaid.
2. The Mortgagors will pay interest on the Principal Sum or so much of it as shall remain outstanding at the rate to be agreed between the Mortgagee and the Mortgagor and in default of such rate being agreed then at the rate of 3% per annum greater than the Reserve Bank of Australia Cash Rate as published from time to time.
On 26 December 2011, in accordance with paragraph 2 of Part B of annexure “A”, as quoted above, a letter was prepared setting out the terms of a proposed agreement.,. That letter set out a schedule of dates that repayments were required in respect to the loan referred to in the mortgage.[2] The letter also referred to the relevant interest rate and the consequences of default. The second Respondent was also provided with a right of first refusal in respect to future sale of the Suburb D property. That document will be referred to in these proceedings as “the side deed”. The side deed was signed by both the de facto husband and wife.
[2] See pages 32 and 38 of ‘Exhibit A’ marked in the proceedings.
In December 2011, the de facto wife, through her counsel, contends that elements of the side deed are unfair. The second Respondent contends, however, that the document was a beneficial document insofar as interest was not payable if the de facto husband and wife complied with the timetable set out in the schedule of required payments.
It is not disputed that at or around the time that the parties entered into the mortgage in December 2011, the second Respondent lodged a caveat in respect to the mortgage (“the caveat”).
Both the de facto husband’s and the de facto wife’s signatures appear on each of the mortgage, the side deed and also on the caveat. In respect to the caveat, their signatures appear as proprietors of the subject property, being the Suburb D property and indicating their consent to the lodging of the caveat. The caveat refers to the instrument protected by the caveat as being an “equitable mortgage” which, it is not disputed, is the mortgage to which I have referred.
Despite her signature being on each document, the de facto wife states, at paragraph 28 of her Affidavit, that she cannot recall signing the mortgage document or the caveat. She further states that she cannot recall “reading the terms and conditions” of the side deed.
On 30 March 2017, the de facto wife’s solicitors at the time, E Lawyers, wrote to the second Respondent and his wife acknowledging that the side deed had been signed by both the de facto husband and wife.[3] That letter also expressed concern that the side deed contains a clause entitled “First Right of refusal to purchase” of the Suburb D property. Specifically, concern was expressed “[t]hat Clause purports to give [the second Respondent and his wife] a right to repurchase the Suburb D property from [the de facto husband and wife] for an amount comprising the purchase price paid by them for the Suburb D property (and stamp duty thereon), together with the total monies already paid at a given time under the ‘Schedule of Payments.” The reference to the ‘Schedule of Payments’ was a schedule of payments set out in the side deed.
[3] See pages 23 and 24 of ‘Exhibit B’ marked in the proceedings.
The letter expresses concern that the “First Right of refusal” clause was unjust and one that was capable of being set aside pursuant to the Contracts Review Act 1980 (NSW) and other applicable legislation. By way of example, it was noted that the clause would potentially prevent either the de facto husband or de facto wife from transferring their interest in the Suburb D property to either of themselves “without firstly offering the property” to the second Respondent and his wife. It was further contended that the clause would prevent the de facto husband and wife “from selling the Suburb D property in achieving a commercial price on sale.”
The letter, dated 30 March 2017, sought an assurance from the second Respondent and his wife that they would “not seek to enforce any purported right to acquire the Suburb D property.” The letter further sought the agreement of the second Respondent and his wife to “remove the caveat.”
On 1 April 2019, the solicitors for the second Respondent wrote to the more recently appointed solicitor for the de facto wife advising that their instructions were that:
…it is not [the second Respondent’s] intention to exercise any right of first refusal under the terms of the loan agreement. However if the [the de facto wife and husband] intend to proceed to a sale by way of private treaty rather than auction, and agree on a sale price, [the second Respondent] would appreciate being advised of the sale price, as there may be an interest in purchasing.
That letter from the second Respondent’s solicitors also indicated that, in the event of the de facto husband and wife entering into an agreement for the sale of the Suburb D property, then the second Respondent would await the settlement of the sale of the Suburb D property for the recovery of monies outstanding. That offer was made, however, subject to agreement to three (3) conditions. One condition was that “the parties agree that [the second Respondent] would be repaid all monies due under the Loan Agreement on settlement of the sale”.
The letter indicated that the second Respondent would be prepared to withdraw the caveat to facilitate the sale, but that he would not “entertain his funds being retained in a controlled monies account.” The letter concluded by indicating that, if agreement was reached in respect to those matters set out in the letter from the second respondent’s solicitors, he would agree “not to institute proceedings during the sale process.”
On 10 July 2019, the de facto husband and wife obtained consent Orders in this Court that provided for the sale of the Suburb D property and included an order that the net proceeds of sale be deposited “into the [de facto wife’s] Solicitor’s Trust Account such funds to be thereafter invested in a controlled monies account administered by the [the de facto wife’s] solicitor.”
It is agreed that the second Respondent was not a party to the proceedings at the time those consent orders were made in July 2019. The second Respondent has, however, subsequently been joined to the proceedings on the initiative of the de facto husband.
On 6 August 2019, the second Respondent’s solicitor wrote separate letters to the de facto wife’s and the de facto husband’s respective solicitor, generally expressing concern regarding the consent Orders made in this Court and noting that the second Respondent had been made aware of the potential sale of the Suburb D property. That letter indicated, in respect to the proposed sale, that “prior to withdrawing his Caveat, [the second respondent] will require full payment of the amount calculated to be owing to him under the Cales Loan as at the date of any repayment.” It was not disputed that the Cales loan referred to is the loan pursuant to the terms of the mortgage and the side deed.
On 4 September 2019, the second Respondent’s solicitor wrote to the solicitor for the de facto wife providing information in respect to the calculation of what the second Respondent contended were amounts outstanding pursuant to the terms of the mortgage and the side deed. In paragraph 4 of that letter, the request was made that “would you please, within seven days from the date of this letter let us have confirmation that the amount owing to our client will be fully repaid from the net proceeds of sale of the Suburb D property.”
On 11 October 2019, the second Respondent’s solicitors sent a further letter to the de facto wife’s solicitors indicating that, in circumstances where they had not received the confirmation required by paragraph 4 of their letter dated 4 September 2019, they had been instructed to file a Statement of Claim in the Supreme Court of New South Wales in respect to monies payable pursuant to the mortgage and the side deed. That intention was confirmed in a further letter dated 11 October 2019 to the solicitors for the de facto wife.
On 14 October 2019, the second Respondent filed a Statement of Claim in the Supreme Court seeking payment of monies payable pursuant to the terms of the mortgage and the side deed.
On 4 November 2019, the solicitors for the de facto wife wrote to the solicitors for the second Respondent expressing concern that such action had been taken by the second Respondent in circumstances where the matter was before the Family Court of Australia and indicated that, if an invitation to withdraw the Statement of Claim was not accepted, the de facto wife would proceed to:
1. File an antisuit injunction in the Family Court of Australia…; and
2. Consider engaging counsel to advise in relation to the Supreme Court proceedings…
The letter indicated that, in both instances, the de facto wife would seek costs including on an indemnity basis.
On 7 November 2019, the solicitors for the second Respondent wrote to the solicitors for the de facto wife and purported to justify their action in filing the Statement of Claim on behalf of the second Respondent. Paragraph 9 of that letter states that “[they] again invite [the de facto wife] to provide [them] with a confirmation first sought by paragraph 4 of [their] letter of 4 September, 2019 and last raised with [the de facto wife’s solicitor] in [their] letter of 11 October, 2019”. As noted, that request was for confirmation that the second Respondent would be paid monies payable pursuant to the terms of the mortgage and the side deed from the net proceeds of sale of the Suburb D property.
On 12 November 2019, the de facto wife’s solicitors responded to the correspondence from the second Respondent’s solicitors, stating at paragraph 4, that: states:
Insofar as your letter dated 4 September 2019 is concerned, our client cannot be expected to concede any amount payable to your client in the absence of source documents that verify all amounts allegedly advanced by your client and those repaid by the [de facto] Husband. We note that an Order was made on 10 July 2019 for the [de facto] Husband to provide financial disclosure, however, he is in contravention of that Order. Our client invites your client to consider providing the relevant source documents to us. (Emphasis added)
At paragraph 5, the letter also states the de facto wife’s contention that the second Respondent’s action in commencing the Supreme Court proceedings is “forum non conveniens.” It is of note that the letter, while expressing doubt in respect to the amount, if any, repayable pursuant to the terms of the mortgage and the side deed, does not contain any expression of concern regarding the validity or enforceability of either the mortgage or the side deed.
On 18 November 2019, the solicitors for the de facto wife wrote to the solicitors for the de facto husband expressing concern regarding the adequacy of documentation provided to verify the amount stated to be payable to the second Respondent. The letter stated that the de facto wife was not in a position to “make an informed decision about the cause of action in the Supreme Court in the absence of disclosure from [the de facto husband].” Again, no mention was made of any potential challenge to the mortgage or side deed on the basis of information already in the possession of the de facto wife. That information necessarily included her knowledge of the parties’ relationship and their conduct during the relationship, the relationship between the de facto husband and the second Respondent and the fact that, at least since 30 March 2017, the de facto wife had been in possession of legal advice concerning the terms of the mortgage, the side deed and the caveat.
On 23 November 2019, the second Respondent filed, in the Supreme Court, a Notice of Motion for judgment together with supporting documents in respect to the Statement of Claim that had been filed.
On 18 December 2019, the solicitors for the de facto wife wrote to the solicitor for the second Respondent referring to the de facto wife’s “antisuit injunction which is listed in the Family Court of Australia on 4 February 2020” and requested that the second Respondent take no further steps in respect of the Supreme Court proceedings pending determination of that Application.
On 20 December 2019, the solicitor for the second Respondent sent an email to the solicitor for the de facto wife conveying the intention of the second Respondent to apply for judgment in respect to the Supreme Court proceedings, but stating that the second Respondent would not take steps to enforce any judgement until after 4 February 2020.
On 23 December 2019, the solicitors for the second Respondent sent an email to the solicitors for the de facto wife confirming that they had, on that day, made an Application for judgment in respect to the Supreme Court proceedings.
On 8 January 2020, the solicitors for the second Respondent advised both the solicitor for the de facto wife and that the solicitor for the de facto husband, via email, that they had been successful in obtaining the default judgment for the second Respondent in the sum of $830,302.31.
It is not disputed that the de facto wife has, to date, not filed a defence to the Statement of Claim filed by the second Respondent in the Supreme Court.
Applications
Orders sought by the de facto wife
By Application in a Case, filed 18 November 2019, the de facto wife seeks the following orders:
1. That leave be granted to serve short service of this Application.
2. That this Application be listed on an urgent basis.
3. That the Second Respondent be restrained by injunction from proceeding with his Statement of Claim filed on 14 October 2019 in the Supreme Court of New South Wales at Sydney (Case Number 2019/…) and that within 21 days he do all acts and things necessary to discontinue the proceedings.
4. That at settlement of any sale of the property at C Street, Suburb D, the Second Respondent provide a withdrawal of caveat, provided that the Applicant De Facto Wife and the Respondent De Facto Husband do all acts and things and sign all documents necessary to ensure that, on a without admissions basis, $1,000,000 of the net sales proceeds be quarantined in the controlled monies account operated by the De Facto Wife's solicitor pending written agreement between all parties, or Order of the Court.
5. That the Respondent De Facto Husband and the Second Respondent provide all source documents which show or tend to show all payments made by or on behalf of the Respondent De Facto Husband to the Second Respondent and all payments received by the Second Respondent from the Respondent De Facto Husband during the period 1 December 2011 to the date of filing this Application.
6. That the Second Respondent pay the Applicant De Facto Wife's costs of, and incidental to, this Application.
Orders sought by the de facto husband
In his Response to an Application in a Case, filed 31 January 2020, the de facto husband seeks that orders be made as follows:
1. The Application in a Case filed by the Applicant on 18 November 2019 be dismissed with costs.
2. Further to Order 1 above, Respondent 1 seeks an Order that such costs be immediately assessed by the Court and awarded in a fixed sum payable by the Applicant to the Respondent.
Orders sought by the second Respondent
The second Respondent seeks that orders be made in accordance with his Response to an Application in a Case filed 28 January 2020, as follows:
1. The Application in a Case filed by the Applicant on 18 November 2019 be dismissed with costs.
2. Further to Order 1 above, Respondent 2 seeks an order that such costs be immediately assessed by the Court and awarded in a fixed sum payable by the Applicant to the Respondent 2 upon and from the proceeds of settlement of the sale of C Street, Suburb D.
Evidence
The de facto wife relied upon the following documents:
a)Application in a Case filed 18 November 2019; and
b)Affidavit of the de facto wife filed 18 November 2019.
The de facto husband relied upon the following documents:
a)Response to Application in a Case filed 31 January 2020; and
b)Affidavit of the de facto husband filed 31 January 2020.
The second Respondent relied upon the following documents:
a)Response to Application in a Case filed 28 January 2020; and
b)Affidavit of the second Respondent filed 28 January 2020.
The following exhibits were relied upon:
a)Tender bundle of annexures to the Affidavit of the de facto wife (‘Exhibit A’);
b)Tender bundle of annexures to the Affidavit of the de facto husband (‘Exhibit B’); and
c)Tender bundle of annexures to the Affidavit of the second Respondent (‘Exhibit C’).
The law – concepts and principles
Relevant legislation
Section 90AF of the Family Law Act1975 (Cth) (“the Act”) provides:
90AF Court may make an order or injunction under section 114 binding a third party
(1) In proceedings under section 114, the court may:
(a) make an order restraining a person from repossessing property of a party to a marriage; or
(b) grant an injunction restraining a person from commencing legal proceedings against a party to a marriage.
(2) In proceedings under section 114, the court may make any other order, or grant any other injunction that:
(a) directs a third party to do a thing in relation to the property of a party to the marriage; or
(b) alters the rights, liabilities or property interests of a third party in relation to the marriage.
(3) The court may only make an order or grant an injunction under subsection (1) or (2) if:
(a) the making of the order, or the granting of the injunction, is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage; and
(b) if the order or injunction concerns a debt of a party to the marriage--it is not foreseeable at the time that the order is made, or the injunction granted, that to make the order or grant the injunction would result in the debt not being paid in full; and
(c) the third party has been accorded procedural fairness in relation to the making of the order or injunction; and
(d) for an injunction or order under subsection 114(1)--the court is satisfied that, in all the circumstances, it is proper to make the order or grant the injunction; and
(e) for an injunction under subsection 114(3)--the court is satisfied that, in all the circumstances, it is just or convenient to grant the injunction; and
(f) the court is satisfied that the order or injunction takes into account the matters mentioned in subsection (4).
(4) The matters are as follows:
(a) the taxation effect (if any) of the order or injunction on the parties to the marriage;
(b) the taxation effect (if any) of the order or injunction on the third party;
(c) the social security effect (if any) of the order or injunction on the parties to the marriage;
(d) the third party's administrative costs in relation to the order or injunction;
(e) if the order or injunction concerns a debt of a party to the marriage--the capacity of a party to the marriage to repay the debt after the order is made or the injunction is granted;
Note: See paragraph (3)(b) for requirements for making the order or granting the injunction in these circumstances.
Example: The capacity of a party to the marriage to repay the debt would be affected by that party's ability to repay the debt without undue hardship.
(f) the economic, legal or other capacity of the third party to comply with the order or injunction;
Example: The legal capacity of the third party to comply with the order or injunction could be affected by the terms of a trust deed. However, after taking the third party's legal capacity into account, the court may make the order or grant the injunction despite the terms of the trust deed. If the court does so, the order or injunction will have effect despite those terms (see section 90AC).
(g) if, as a result of the third party being accorded procedural fairness in relation to the making of the order or the granting of the injunction, the third party raises any other matters--those matters;
Note: See paragraph (3)(c) for the requirement to accord procedural fairness to the third party .
(h) any other matter that the court considers relevant.
Section 114 of the Act relevantly provides:
…
(2A) In a de facto financial cause (other than proceedings referred to in, or relating to, paragraph (e) or (f) of the definition of de facto financial cause in subsection 4(1)) the court may:
(a) make such order or grant such injunction as it considers proper with respect to the use or occupancy of a specified residence of the parties to the de facto relationship or either of them; and
(b) if it makes an order or grants an injunction under paragraph (a)--make such order or grant such injunction as it considers proper with respect to restraining a party to the de facto relationship from entering or remaining in:
(i) that residence; or
(ii) a specified area in which that residence is situated; and
(c) make such order or grant such injunction as it considers proper with respect to the property of the parties to the de facto relationship or either of them.
Sections 90SB and 90SK apply in relation to an order or injunction under this subsection in a corresponding way to the way in which those sections apply in relation to an order under section 90SM.
Note 1: This subsection does not apply to proceedings referred to in paragraph (g) of the definition of de facto financial cause that relate to proceedings referred to in paragraph (e) or (f) of that definition.
Note 2: The same requirements in sections 90SB (length of relationship etc.) and 90SK (geographical requirements) for section 90SM orders must be satisfied for orders and injunctions under this subsection. (3) A court exercising jurisdiction under this Act in proceedings other than proceedings to which subsection (1) applies may grant an injunction, by interlocutory order or otherwise (including an injunction in aid of the enforcement of a decree), in any case in which it appears to the court to be just or convenient to do so and either unconditionally or upon such terms and conditions as the court considers appropriate.
(4) If a party to a marriage is a bankrupt, a court may, on the application of the other party to the marriage, by interlocutory order, grant an injunction under subsection (3) restraining the bankruptcy trustee from declaring and distributing dividends amongst the bankrupt's creditors.
(5) Subsection (4) does not limit subsection (3).
(6) If a party to a marriage is a debtor subject to a personal insolvency agreement, a court may, on the application of the other party to the marriage, by interlocutory order, grant an injunction under subsection (3) restraining the trustee of the agreement from disposing of (whether by sale, gift or otherwise) property subject to the agreement.
(7) Subsection (6) does not limit subsection (3).
Relevant case law
In XYZ Pty Ltd & Charisteas & Ors (2017) FLC 93-782, the Full Court stated at 77,395:
There is no doubt that a court exercising jurisdiction under ss 114 or 90SS of the Act can issue an injunction directly against a third party (Sanders v Sanders (1967) 116 CLR 366). Relevant to the issues raised in these appeals, it is apparent that pursuant to s 90AF, in proceedings under s 114, the court may make injunctions against third parties, subject to conditions which are designed to ensure the discretion is carefully linked and sufficiently connected to the subject matter of the marriage and matrimonial causes (Hunt v Hunt (2006) 36 Fam LR 64 at [119]. The third party must be afforded procedural fairness (s 90AF(3)(c)), and the order must be reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage” (s 90AF(3)(a)). And the court must be satisfied that, in all the circumstances, it is proper (s 90AF(3)(d)) and just and convenient (s 90AF(3)(e)) to make the injunction. Section 90AF(3)(f) requires that the order or injunction takes into account the matters listed in s 90AF(4).
(Emphasis added)
In the High Court decision, Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at [31], the plurality said:
…that the court may grant an injunction in all cases in which it appears to the court to be just and convenient to do so – does not confer an unlimited power to grant injunctive relief. Regard must still be had to the existence of a legal or equitable right which the injunction protects against invasion or threatened invasion, or other unconscientious conduct or exercise of legal or equitable rights.
(References omitted)
The Court must acknowledge particular considerations when an injunction is sought in respect to a third party to a marriage or de facto relationship. This is particularly so in circumstances where the injunction seeks to restrain that party from exercising rights that exist under state legislation. In that respect, in In the marriage of Smith & Saywell (1980) FLC 90-856 at 75,421, the Full Court said:
The exercise of the power to grant an injunction depends upon the facts in each particular case and the trial Judge must exercise his discretion on those facts. Whilst the fact that a third party is likely to be affected directly or indirectly by an order made under [s] 114(3) does not oust the jurisdiction of the Court to make the order that factor is an important matter to consider when the Court is required to exercise its discretion to make or refuse such an application. This is especially so in a case where the order sought would prohibit a party or a third party from exercising rights given by State legislation. The need for the order e.g. hardship to the applicant if it is not granted must be balanced against the hardship caused to the other party and any third parties likely to be affected by the order. The Court must be satisfied that the injunction sought is "in aid of the exercise of the Court's jurisdiction" (Sanders v. Sanders) and frame its order in such a way "as to impose no further restriction than is necessary to achieve the protection of the applicant's interest" (Sieling and Sieling (1979) FLC 90-627 at p.78,264). The need for caution by the Court when considering an application for an injunction restraining a party from exercising rights given by State legislation is emphasized in two Full Court decisions. In McCarney and McCarney (1977) FLC 90-200 at p. 76,058 the Full Court said:
"We would also wish to comment on the order made by the learned trial Judge restraining the wife from continuing or proceeding with her claim in the Supreme Court of South Australia. There are many forms by which an injunction can be framed to attain a specific end. But we consider it undesirable that an injunction should ever be framed to restrain a person from proceeding in another court of competent jurisdiction to seek relief to which he is entitled by law. While at all times prepared to assist applicants in proper circumstances and within the scope of the Act, this court should avoid making orders in terms which may give the impression of a jurisdictional conflict between judicial bodies”
In Tansell and Tansell (1977) FLC 90-307 at p. 76,633 the Full Court said:
“There the orders which were made were orders restraining the appellant wife from (a) transferring, assigning or otherwise disposing of her interest in the property in question and (b) continuing a claim by way of summons in the Supreme Court of South Australia in its Land and Valuation Division. As to the second of those matters, it is, of course, highly desirable that a Court ought to avoid making orders which in terms restrain a party from continuing with proceedings validly instituted in another Court since obvious embarrassments of jurisdiction would arise in that situation.”
(Emphasis added)
The Court was, helpfully, referred to more recent authority by counsel for the second Respondent. The authority indicates that, as an additional consideration, the Court may consider the potential for the party moving for injunctive relief to have made an application under the provisions of relevant cross-vesting legislation that has been implemented by the B and State governments. The relevant legislation in New South Wales is the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW).
Relevantly, in Pegasus Leasing Ltd v Balescope Pty Ltd (1994) 63 SASR 51 at [57], Perry J, with whom Bollen and Prior JJ agreed, stated that “…in considering an application for a stay, the court should now have regard to the question whether the parties have, or should have had, recourse to the cross-vesting legislation.” By analogy, that principle should equally apply to a case such as the present, where the de facto wife is seeking to restrain the second Respondent, a third party to the relationship between the de facto wife and husband, from pursuing his rights in the Supreme Court of New South Wales.
Finally, it is clear that the party moving for injunctive relief carries the onus of establishing that there is a proper basis for granting the relief as sought in their application: Kelleher & Anderson [2007] FamCA 137 at [195].
Consideration
Application to restrain the enforcement of the default judgement
Counsel for the de facto wife, essentially, contends that the Court should have regard to the assertion that the de facto wife intends to challenge the judgment debt, obtained by the second Respondent on 30 January 2019, and, in so doing, will traverse issues that are likely to be raised in the family law proceedings concerning the circumstances in which the mortgage and the side deed were entered into.
In outlining the areas of potential challenge, counsel for the de facto wife referred to:
·specific terms of the side deed which he contended were unfair;
·the fact that the purchase price for the Suburb D property, being the sum of $1.8 million as recorded on the contract for sale, was broadly consistent with two (2) separate valuations which they obtained at about the time of the purchase of the property;
·doubt as to the veracity and/or accuracy of amounts which the de facto husband and the second Respondent contend have been paid back pursuant to the terms of the mortgage and the side deed;
·the fact that there was a power imbalance between the de facto husband and wife at the time the transactions were entered into. This was asserted to be, firstly, as a result of the de facto husband’s friendship with the second Respondent and his wife and, secondly, as a result of the de facto husband’s skills and training which gave him a superior ability to understand and negotiate in respect to financial matters; and
·the dynamics of the parties’ relationship at the time the agreements were entered into involved domination by the de facto husband of the de facto wife as a result of his conduct which, the de facto wife contended through generalised allegations, constituted family violence.
I have several difficulties with the de facto wife’s submission that she has a reasonably arguable case to successfully challenge and set aside the default judgment.
Firstly, the de facto wife has not challenged the validity or enforceability of the mortgage or side deed since she received legal advice on those matters on 30 March 2017. On that date, her lawyers wrote to the second Respondent and his wife expressing concern only in respect to the clause relating to “right of first refusal.” There was no expression of any other aspect of concern, save for a general request for the caveat to be removed.
That issue appears to have been resolved by the letter of the solicitors for the second Respondent, dated 1 April 2019, in which it was stated that the second Respondent did not intend “to exercise any right of first refusal under the terms of the loan agreement.”
It concerns me that several years later, and at a point in time after default judgment has been entered, the de facto wife now raises, in a very general fashion, additional concerns with the mortgage and the side deed.
Secondly, as appropriately acknowledged by all learned counsel in this matter, I am unable to go behind the judgment debt entered on 30 December 2019. In that respect, in In the marriage of Caddy & Miller (1986) FLC 91-720, the Full Court noted, at 75,233, that the law:
…includes the rule that a party is precluded from adducing evidence in a case the object or effect of which is to dispute against another party the correctness or merits of an earlier decision in proceedings between the same parties disposing of the same cause.
In applying that rule, I note that caution is required in circumstances where the decision said to give rise to the estoppel is a default judgment. In that respect, in Mango Boulevard Pty Ltd v Spencer [2008] QCA 274, the Queensland Court of Appeal stated at [56]-[57]:
In [Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993], a decision of the Privy Council, the court was of the view that although a default judgment gave rise to a res judicata "a much more restricted operation must be given to any estoppel [so] arising" than to a judgment pronounced after a hearing on the merits. Their Lordships, by referring to New Brunswick Railway Company v British and French Trust Corporation Ltd, concluded:
"… that default judgments, though capable of giving rise to estoppels, must always be scrutinised with extreme particularity for the purpose of ascertaining the bare essentials of what they must necessarily have decided and, to use the words of Lord Maugham L.C., they can estop only for what must 'necessarily and with complete precision' have been thereby determined."
In order to ascertain what a default judgment decided, their Lordships regarded it appropriate to "notice what case it is that a plaintiff has set up in order to found the order that he claims."
In this case, and in exercising that caution, I note that the pleadings filed by the second Respondent that gave rise to the default judgment clearly indicate that the debt is in respect to the mortgage and the side deed.
There currently exists a default judgment against the de facto husband and wife. It has been determined that they are indebted to the second Respondent in the sum of $830,302.31, as a result of default in complying with the terms of the mortgage and the side deed. Unless and until an Application is successfully made to set aside that default judgment, its existence remains an unchallengeable fact and the de facto wife is unable to adduce evidence contrary to that which has been determined by the default judgment.
The best case that the de facto wife can present is that, as previously noted, on the basis of advice provided to the Court by counsel for the de facto wife, the de facto wife intends to apply to set aside the default judgment. In those circumstances, it is contended that, unless her proposed order 3 is made, there is a potential for an overlap in evidence that would be presented in both the Supreme Court and this Court. That is, the Court should accept that the evidence that the de facto wife intends to present on a challenge to the default judgment in the Supreme Court is evidence which would also be presented in the course of the family law proceedings. As noted, in the substantive family law proceedings, the parties are seeking an order for an adjustment of their property together with parenting orders.
As senior counsel for the de facto husband noted, it is trite that the Court can only determine matters on the basis of evidence presented. The first difficulty that I have with the de facto wife’s case is that information concerning her intention to challenge the default judgment has not been presented through sworn evidence by the de facto wife, but rather, has been communicated to the Court by her counsel. This is in the context where the Supreme Court proceedings were commenced in October 2019 and the de facto wife has not, to date, engaged in those proceedings. Specifically, she has not filed a defence. Further, and as earlier noted, while the correspondence from the de facto wife’s solicitors to the second Respondent’s solicitors indicates concern about the quantification of the debt, the correspondence does not raise an issue regarding the validity and/or enforceability of the mortgage or the side deed.
The second difficulty that I have is that the de facto wife’s evidence alluding to duress on the part of the de facto husband and potential unconscionable conduct on the part of both the de facto husband and the second Respondent is so general that it has no evidentiary weight.
Finally, on this issue, despite the assertion by counsel for the de facto wife regarding the de facto wife’s purported intention to make such an Application to set aside the default judgment, the grounds upon which that intended application is to be made remains, with respect, nebulous. The de facto wife has not set out, by way of draft pleadings or even in correspondence, the basis upon which she intends to apply for the default judgment to be set aside.
In those circumstances, the Court is unable to make an assessment of the de facto wife’s prospects of successfully applying to set aside the default judgment. In other words, as stated by counsel for the second Respondent, the de facto wife has failed to establish an “underlying basis, defence or triable issue” as between herself and the second Respondent. This is fatal to the de facto wife’s Application because, as noted by counsel for the second Respondent:
In considering whether to grant [the de facto wife] the injunctive relief she seeks, this Court must have regard to the well-known principles in American Cyanide Co v Ethicom Ltd [1975] AC 396. The party seeking such relief must show the Court that there exists a serious tribal or justifiable issue between her and [the second Respondent].
Insofar as the de facto wife argues that there is an overlap of issues which would be traversed in any Application that she may make to set aside the default judgment, senior counsel for the husband noted that, in her Amended Response to Initiating Application, filed 3 February 2020, the de facto wife does not seek an order setting aside the mortgage or the side deed. In those circumstances, and in circumstances where the de facto wife has failed to particularise the basis of her intended challenge to the default judgment, she has failed to satisfy me that there would necessarily be an overlap of issues in separate proceedings in the Supreme Court and in this Court.
Moreover, and for reasons which I have set out, in these proceedings for interim relief or even final relief, the de facto wife is unable to present evidence challenging the fact that there are funds owed by the de facto husband and wife to the second Respondent arising from their failure to fulfil their obligations pursuant to the terms of the mortgage and the side deed. This is because of what counsel for the second Respondent has identified as action estoppel arising from the default judgment dated 30 January 2019. As a result, evidence challenging the existence, validity and/or enforceability of the mortgage and/or the side deed could only be presented in the event of the de facto wife being successful in an Application to set aside the default judgment. It is, at best, speculative whether that will occur.
As a related issue, in those circumstances and in respect to the issue of the validity of the mortgage and the side deed, it cannot be said that the de facto wife’s Application to restrain the second Respondent from enforcing the default judgment is "in aid of the exercise of the Court's jurisdiction": Sanders v Sanders (1967) 116 CLR 366 at [372]. This is because, unless and until the de facto wife makes an Application to set aside the default judgment, the validity of the agreements cannot be challenged in this Court.
Insofar as it is argued that the de facto wife’s Application to restrain the second Respondent from enforcing the judgment debt is in aid of the other two aspects of the de facto wife’s Application, such Application falls foul of s 90AF(3)(b) of the Act which, as I have noted, permits the Court to grant an injunction where:
(b) if the order or injunction concerns a debt of a party to the marriage--it is not foreseeable at the time that the order is made, or the injunction granted, that to make the order or grant the injunction would result in the debt not being paid in full.
The de facto wife’s Application falls foul of that provision because it is clear that the fundamental purpose and intent of the de facto wife’s Amended Response to the substantive Application would “result in the debt [to the second Respondent] not being paid in full.” Indeed, the debt would not be paid at all.
If I am wrong on that construction of s 90AF(3)(b) of the Act, it is nonetheless a matter to which I have regard to pursuant to s 90AF(4)(h). That is, the fact that the de facto wife is seeking interim relief, pending her obtaining final relief, would result in the second Respondent not being paid any monies is a matter that I have considered to be relevant to these proceedings in evaluating the strength of the de facto wife’s claim.
In any event, also relevant to my consideration of s 90AF(3)(b) , I note that, even in circumstances where the second Respondent may be successful in defeating the de facto wife’s Application, he may nonetheless be unable to recover the totality of his debt. That is, it is foreseeable that, by the time this matter is heard and determined by way of final judgment, interest accruing at the rate of approximately $76,000 per annum, in addition to the judgment debt in the sum of approximately $830,000 may accumulate such that it exceeds the amount that would be held in the controlled monies account in accordance with proposed order 4 of the de facto wife’s Application in a Case. As noted the amount proposed is $1,000,000.
In summary on this issue, for reasons which I have set out, the de facto wife has failed to satisfy me that there is a triable issue in respect to any potential Application on her part to set aside the default judgement. Further, unless and until that occurred, the de facto wife has been unable to present evidence asserting facts contrary to the finding that underpins the default judgment, – namely, that both she and the de facto husband defaulted in their obligations pursuant to the terms of the mortgage and the side deed. Finally, I have determined that the wife’s Application falls foul of s 90AF(3)(b) of the Act.
Application for mandatory injunction seeking removal of caveat
In considering the de facto wife’s Application for a mandatory injunction compelling the second Respondent to remove the caveat over the Suburb D property, I note that, pursuant to s 90AF(4)(h) of the Act, I am empowered to have regard to “any other matter that the court considers relevant.” In that context, I have had regard to the principles adumbrated by the Supreme Court in considering Applications for withdrawal of caveat pursuant to s 74MA of the Real Property Act 1900 (NSW) (“the Real Property Act”). Those principles include, as noted by Brereton J in Buchanan v Crown & Gleeson Business Finance Pty Ltd (2006) 13 BPR 24-513 (“Buchanan”) at 24,515:
A highly relevant consideration is whether the removal of the caveat will derogate from the caveator's claim. There is great force in the submission made by Mr Bransgrove that if the removal of the caveat would have the practical effect of deferring the priority of the caveator's equitable mortgage, its removal ought not be countenanced. That view is supported by authority which indicates that it is a rare case where a valid caveat will be removed for reasons of the balance of convenience. Thus in Custom Credit Corp Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42, Owen J said (at 50):
However it seems to me interlocutory removal of a caveat where an arguable case as to the existence of a caveatable interest has been demonstrated would be unusual. It is important to bear in mind the nature and purpose of a caveat under the Torrens system. By its very nature the caveatable interest must be a proprietary interest in the land. The purpose of the caveat is to restrain the registered proprietor from dealing with the land in a way which will defeat or derogate from the incidents attaching to that proprietary interest until the respective rights of the parties have been honoured (if there is agreement) or to determine if there is disagreement. In many cases, removal of the caveat will have the effect of destroying for all practical purposes, the benefit of the proprietary interest. For example, a creditor, having a specific security interest in land will rank as an unsecured creditor once the property, the subject of the specific security, no longer exists. This will often be the result of removal of a caveat which permits the registered proprietor to sell the property free from any practical obligation to recount to the secured creditor for the proceeds of sale.
(Emphasis added)
It is to be noted that the de facto wife is, in interlocutory proceedings, seeking removal of the caveat lodged by the second Respondent to which both she and the de facto husband consented. As noted in Buchanan (supra), that would be an unusual course for the Court to take. As I will explain, the case presented by the de facto wife has not satisfied me that such a step should be taken in these proceedings.
At paragraph 28 of her Affidavit, the de facto wife acknowledges that both she and the de facto husband entered into the mortgage with the second Respondent. As I have earlier noted, the de facto wife has not articulated a case as to why the mortgage is invalid or should otherwise be set aside or declared to be unenforceable. As further noted, the de facto wife and husband are recorded as indicating their consent to the lodgement of the caveat confirming the second Respondent’s interest in the Suburb D property arising from the mortgage. Specifically they acknowledged the second Respondent’s interest to be an “equitable mortgage”.
Insofar as I have determined that the de facto wife has failed to establish grounds for the injunctive relief she seeks restraining the second Respondent from enforcing the default judgment (proposed order 3 of the de facto wife’s Application in a Case), those findings are also relevant to my consideration of the de facto wife’s Application for orders requiring the second Respondent to remove the caveat that has been lodged to secure his interest arising from the mortgage and the side deed (proposed order 4 of the de facto wife’s Application in a Case). In other words, as the de facto wife has failed to satisfy me that there is a triable issue challenging the default judgment, which is based on the provisions of the mortgage and the side deed, she has also failed to satisfy me that the caveat lodged by the second Respondent is without merit or has otherwise occurred as a result of an impropriety on the part of either or both the de facto husband and/or the second Respondent.
In terms of identifying the interest protected by the caveat, it is accepted that the mortgage has never been registered. Nevertheless, the face of the mortgage makes it clear that the fundamental provision is that the mortgagors, identified as the de facto husband and wife:
…mortgages to the mortgagee, [identified as the second Respondent] all the mortgagor’s estate and interest in the [Suburb D property] land and covenants with the mortgagee that the provisions set out in the annexure and/or memorandum specified below are incorporated in the mortgage.
One such document so annexed to the mortgage is identified as “memorandum Q860000.” That memorandum refers to the mortgagee, being the second Respondent, having “security” over the subject property. The memorandum also gives the mortgagee extensive rights, including the power of sale of the property in the event of there being a default.
It is of further relevance that the Application for the caveat, lodged by the second Respondent, as earlier noted, included the signatures of the registered proprietors of the property, being both the de facto husband and wife, consenting to the lodgement of the caveat over the Suburb D property. That document recorded the “nature of the estate or interest in the abovementioned land” as being an “equitable mortgage.” It is not disputed that the mortgage so referred to was the mortgage signed by the parties in December 2011.
The de facto wife states that she “cannot recall reading the terms and conditions” of what she described in paragraph 29 of her Affidavit as “the Side Letter”, which is accepted to be the same document as that to which I have referred to as the “side deed.” That is, it is the letter signed by the de facto husband and wife and the second Respondent and his wife as contemplated in paragraph 2 of part B of Annexure “A” to the mortgage. That “side letter” or “side deed” dated 26 December 2011 sets out a schedule of required repayments, interest rate and terms of repayment of the amount referred to in paragraph 1 of part B of annexure “A” to the mortgage. That amount is, in turn, referred to as being “the principal sum of one million dollars ($1,000,000) or so much of it as shall remain unpaid (which is secured by this mortgage) which is lent by the Mortgagee to the Mortgagors as at the date hereof”.
Despite the de facto wife’s assertion that she “cannot recall reading the terms and conditions” of the side deed dated 26 December 2011, by letter dated 30 March 2017, the de facto wife’s then solicitors, E Lawyers, wrote to the second Respondent and his wife acknowledging that the letter dated 26 December 2011 was signed by the de facto husband and wife. In those circumstances, I respectfully agree with the submission of senior counsel for the de facto husband that the existence of that letter from E Lawyers raises an issue regarding the veracity of the de facto wife’s assertion set out at paragraph 29 of her Affidavit that she “cannot recall reading the terms and conditions of that letter”. It is, however, unnecessary to determine that issue. What is clear is that the terms and conditions of the side deed had, at the very least, been read by the de facto wife’s legal advisers as at 30 March 2017.
The de facto wife also contends that she signed the relevant documentation without the benefit of legal advice. That is disputed by the de facto husband. Again, it is unnecessary to determine that issue as it is clear she has had such legal advice in respect to the mortgage, the side deed and the caveat, at least as of and from 30 March 2017.
It is also significant that the letter from E Lawyers, dated 30 March 2017, sought the agreement of both the second Respondent and his wife to remove the caveat. Despite that request not being acceded to, no action has been taken by the de facto wife, since 30 March 2017, to pursue such rights as she has, including the potential to make an Application pursuant to s 74MA of the Real Property Act, to which I have earlier referred. The de facto wife’s unexplained failure to take such action within the intervening period is also a matter that I consider to be relevant to the exercise of my discretion in this matter.
In summary, in respect to this issue, I have determined that the de facto wife’s Application requiring the second Respondent to remove the caveat over the Suburb D property lacks merit. This is because the de facto wife’s mere assertion, as communicated to the Court through her counsel, that she intends to challenge the default judgment, in circumstances where the basis of that challenge has not been particularised, has failed to satisfy me that the caveat was otherwise than properly lodged by the second Respondent to protect a legitimate interest.
While it is acknowledged that I have the power to require a third party to a marriage or de facto relationship to remove a caveat, even in circumstances where it has been properly lodged and protects a legitimate interest, the authorities to which I have referred confirm that such a step would be unusual. I am not satisfied that such a step is justified in this case. This is as a result of the circumstances to which I have referred, including the de facto wife’s consent to the lodging of the caveat and the fact that she has had advice in respect to issues arising from the caveat and has failed to take action to challenge the caveat in the period since that advice was obtained in March 2017.
Balance of convenience
As I have determined that the de facto wife’s Application, as set out in proposed orders 3 and 4 of her Application in a Case, are without merit, it is unnecessary to consider balance of convenience considerations.
For completeness and in the event that I am wrong in determining that to be the case, I will nonetheless address those balance of convenience considerations. Those considerations apply equally in respect to both proposed orders 3 and 4 of the de facto wife’s Application.
The de facto wife contends that the terms of proposed order 4 of her Application will preserve the interests of the second Respondent because it will require the amount of $1,000,000 of the net sales proceeds of the Suburb D property to “be quarantined in the controlled monies account operated by the De Facto Wife's solicitor pending written agreement between all parties, or Order of the Court.”
Such an order would not address the fact that the second Respondent would not have access to funds payable pursuant to the terms of the mortgage for a period of time pending the resolution of these proceedings. No challenge was made to the estimate made by senior counsel for the de facto husband that this is likely to be for a period of approximately two (2) years.
In that context, it did not appear to be disputed that interest would continue to accrue but remain unpaid at the rate of approximately $76,000 per annum. The difference between the judgment debt of $830,302.31 and the $1,000,000 to be held in the de facto wife’s solicitor’s controlled monies account would quickly evaporate in the event of there being a delay in the trial. This could include any delays associated with the trial judge preparing written reasons for judgment. It is, therefore, foreseeable that, even if he is successful in opposing the de facto wife’s Application, the second Respondent would not be able to recover the totality of monies payable to him pursuant to the judgment debt, assessed on a capital plus interest basis from the controlled monies account. This, as I have earlier noted, is also a relevant consideration pursuant to s 90AF(3)(b) of the Act.
The monies held in the controlled monies account would be a significant change in the nature and priority of the second Respondent’s security, being an equitable mortgage in respect to the Suburb D property. As noted by Brereton J in Buchanan (supra), “In many cases, removal of the caveat will have the effect of destroying for all practical purposes, the benefit of the proprietary interest.” I am satisfied that this would be the situation in the present case if the Court were to make the orders sought by the de facto wife. One significant detriment that the second Respondent would suffer would be to lose his priority as against other unsecured creditors of the de facto husband and wife. The mere fact that monies where held in a controlled monies account would not give the second Respondent any greater priority to those monies ahead of any other unsecured creditor.
As against those detriments that would be suffered by the second Respondent, declining to grant the relief sought by the de facto wife would not prevent her from arguing that the circumstances in which the mortgage and the side deed were entered into are such that, in the exercise of the Courts discretion pursuant to s 90SM of the Act, the Court should order that the de facto husband be solely and/or substantially responsible for repaying monies payable to the second Respondent.
Further, insofar as the de facto wife may potentially suffer loss as a result of the second Respondent’s failure to remove the caveat, despite the request she has made for that to take place, the de facto wife has a potential remedy pursuant to the provisions of s 74P of the Real Property Act to seek compensation in respect to any such loss. This is on contrast to the fact that she has made this Application in circumstances where she has not provided an undertaking as to damages to protect the interests of the second Respondent.
Accordingly, I determine that the balance of interest considerations, in respect to the de facto wife’s Application, favour the second Respondent.
Application for further and better disclosure
In her proposed order 5, the de facto wife seeks, in effect, an order for further and better disclosure on the part of both the de facto husband and the second Respondent. The de facto husband contends that the documents sought by the de facto wife are contained in documents produced by the Commonwealth Bank of Australia pursuant to a subpoena issued by the de facto wife. Accordingly, the de facto husband contends that the de facto wife’s Application for further and better disclosure against himself is premature, at least until such time as she has inspected those documents and satisfied herself, personally, or through her legal advisers, that those documents do or do not fulfil her request for the information she has sought. That information primarily relates to payments made by the de facto husband to the second Respondent pursuant to the terms of the mortgage and the side deed.
There is, with respect, merit in that submission by senior counsel for the de facto husband. In that respect, I note that r 1.04 and 1.07(d) of the Family Law Rules 2004 require the Court, in exercising its jurisdiction, to have regard to the potential cost of the proceedings on litigants. I accept that it would be unreasonable to require the de facto husband’s legal advisers to attend the Court to uplift and photocopy documents produced by the Commonwealth Bank of Australia in circumstances where they are available to the de facto wife pursuant to a subpoena that has been issued by her. In any event, to avoid doubt, I will make an order that the parties have photocopy access to any documents produced to the Court by the Commonwealth Bank of Australia.
In respect to the de facto wife’s proposed order for further and better disclosure by the second Respondent, the second Respondent refers to an email sent by his solicitor to the legal representatives for the other parties. The email attaches Westpac statements for the account ending in …72 in respect to the period September 2014 to 21 September 2019, as well as St George bank statements for the account ending in …30 in respect to the period January 2012 to December 2014. The second Respondent contends that those documents satisfy the de facto wife’s request for disclosure as they evidence payments that the second Respondent has received from the de facto husband and wife in satisfaction of the mortgage. The de facto wife has not satisfied me that those documents so produced by the second Respondent are inadequate to satisfy her request for the additional documentation set out in proposed order 5 in respect to the second Respondent.
Conclusion
For the reasons above, I dismiss the de facto wife’s Application filed 18 November 2019. As noted, I will, however, make an order that all parties have photocopy access to documents produced to the Court by the Commonwealth Bank of Australia.
I will also give the parties liberty to apply in respect to the question of costs.
I certify that the preceding one hundred and three (103) paragraphs are a true copy of the reasons for judgment of the Honourable Deputy Chief Justice McClelland delivered on 10 February 2020.
Associate:
Date: 10 February 2020
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