Tapper and McFarlane
[2013] FCCA 732
•1 July 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| TAPPER & McFARLANE | [2013] FCCA 732 |
| Catchwords: FAMILY LAW – Contempt of court – applications – interlocutory injunction – alleged breach of order requiring notice before dealing with property – whether breach ‘flagrant’. |
| Legislation: Family Law Act 1975, s.112AP |
| A Bank & Coleiro [2011] FamCAFC 157 Bande & Cade [2011] FamCAFC 93; (2011) 45 Fam LR 376 Fauna Holdings Pty Ltd & McGillivray & Ors & Mitchell [2000] FamCA 313; (2000) 160 FLR 134; [2000] FLC 93-053; 27 Fam LR 81 Hay & Hay [1998] FamCA 95; 146 FLR 47; (1998) FLC ¶92-819; 23 Fam LR 247 (1998) FLC¶92-619 Mead v Mead [2007] HCA 25; (2007) FLC ¶93-327; (2007) 235 ALR 197; (2007) 81 ALJR 1185; (2007) 36 Fam LR 60. Wither v Holloway (1995) HCA 3 |
| Applicant: | MS TAPPER |
| Respondent: | MR MCFARLANE |
| File Number: | MLC 1290 of 2012 |
| Judgment of: | Judge Riethmuller |
| Hearing date: | 1 July 2013 |
| Date of Last Submission: | 1 July 2013 |
| Delivered at: | Melbourne |
| Delivered on: | 1 July 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr Isles |
| Solicitors for the Applicant: | Stephen Peter Byrne |
| Counsel for the Respondent: | Ms Southey |
| Solicitors for the Respondent: | Aitken Partners Pty Ltd |
ORDERS
The matter be adjourned to 2 July 2013 at 10:00 a.m. for mention.
The Respondent is hereby found to have been in contempt of orders made by Judge Burchardt on 14 May 2012, and specifically through further encumbering or otherwise dealing with the property at Property H without giving any notice in writing to the solicitors for the Applicant.
IT IS NOTED that publication of this judgment under the pseudonym Tapper & McFarlane is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 1290 of 2012
| MS TAPPER |
Applicant
And
| MR MCFARLANE |
Respondent
REASONS FOR JUDGMENT
(Revised from Transcript)
The applicant brings proceedings under s.112AP of the Family Law Act 1975, alleging that the respondent is in contempt of an order of Judge Burchardt, made on 14 May 2012.
Section 112AP(1) provides as follows:
Subject to subsection (1A), this section applies to a contempt of a court that:
(a)does not constitute a contravention of an order under this Act; or
(b)constitutes a contravention of an order under this Act and involves a flagrant challenge to the authority of the court.
The Order of his Honour relevantly provided in order 3:
3. The Respondent be restrained by injunction from further encumbering or otherwise dealing with the property at Property H without giving seven days’ notice in writing to the solicitors for the Applicant.
There is no issue taken in these proceedings that this is an Order under the Act within the meaning of s.112AP.
The Full Court of the Family Court has considered the terms of s.112AP on a number of occasions. In A Bank & Coleiro [2011] FamCAFC 157, the Chief Justice said:
[13] In dealing with contempt under s112AP which is not for breach of an order, two important issues need to be considered. The first is that where there is no breach of an order that would involve civil contempt, the contempt for which the charge is made is criminal contempt. All proceedings for contempt, whether civil or criminal, must be proved beyond reasonable doubt: Witham v Holloway (1995) 183 CLR 525; Tate & Tate [2002] FamCA 356; (2002) FLC 93-107.
[14] The contempt power should only be used sparingly and in the most extreme cases and the charge of contempt must specify the nature of the contempt: Lewis v Judge Ogden [1984] HCA 28; (1984) 153 CLR 682.
[15] The contempt must be wilful (that is, distinct from incidental) but not necessarily contumacious: Bande & Cade [2011] FamCAFC 93.
Strickland and Finn JJ agreed with her Honour in this regard.
In Bande & Cade [2011] FamCAFC 93; (2011) 45 Fam LR 376, Coleman, Ainslie-Wallace and Johnston JJ said at paras.118 to 120:
[118] Section 112AP of the Family Law Act 1975 (Cth) (“the Act”) provides that a Court may punish a person for contempt of court where the matter concerns a breach of an order which “constitutes a contravention of an order under this Act and involves a flagrant challenge to the authority of the court” (section 112AP(1)(b)).
[119] The concept of a “flagrant challenge” involves conduct of an exceptional, striking or repeated nature. In Ibbotson and Wincen [1994] FamCA 103; (1994) FLC 92-496 the Full Court held (at 81,162): “The use of the term ‘flagrant challenge’ ... is intended to underline the exceptional or striking nature of the contravention in question and thus to differentiate it from what might be described as the general run of breaches which are intended to be dealt with under section 112AD ... it is a question of fact and degree whether the stringent terms of the section are satisfied ...”
[120] The breach in question must be wilful (that is, deliberate, as distinct from inadvertent) but not necessarily contumacious. In English & English (1986) FLC 91-729 the Full Court held (at 75,294): “In our opinion, the line of authorities...demonstrate that in proceedings for civil contempt, it must be established that the respondent knew of the undertaking or order and that his act or omission in breach of that order or undertaking was a wilful, that is, a deliberate, act by him as distinct from accidental or inadvertent. It is not necessary in addition to establish that the conduct was contumacious; that is, it is unnecessary to show that the act or omission was done with a deliberate intention to break or disregard the undertaking or order.”
The issues have also been discussed in Fauna Holdings Pty Ltd & McGillivray & Ors & Mitchell [2000] FamCA 313; (2000) 160 FLR 134; (2000) FLC¶93-053; 27 Fam LR 81, and Hay & Hay [1998] FamCA 95; 146 FLR 47; (1998) FLC ¶92-819; 23 Fam LR 247 (1998) FLC¶92-619.
The appropriate standard of proof is beyond reasonable doubt: see Wither v Holloway (1995) HCA 3.
In the proceedings before me there is no question that the respondent was in court when the orders were pronounced. As a result, it is certainly not necessary to prove that the written orders were served upon him: see Mead v Mead [2007] HCA 25; (2007) FLC ¶93-327; (2007) 235 ALR 197; (2007) 81 ALJR 1185; (2007) 36 Fam LR 60.
Subsequent to the orders being pronounced, the respondent mortgaged the property in order to borrow approximately $400,000. The solicitors for the applicant received no notice, nor did the applicant, as was contemplated by the orders. The husband’s own affidavit sets out as much, where he says:
116. On 15 June 2012, I purchased the property at Property B, (“the Property B property”) for the sum of $323,000 plus GST and stamp duty. The total purchase price was approximately $370,000. I funded the purchase by way of a mortgage from (omitted) in the amount of approximately $400,000.
117. The mortgage for the Property B property is secured over the business premises. I had approximately $30,000 remaining from the funds I received from the loan, and I applied those funds towards making improvements over the Property B property.
118. The Property B property is a large warehouse which had three rooms that could be used as bedrooms, two existing toilets and a sink. I used the balance of the mortgage monies towards the installation of two bathrooms, a kitchen with a commercial gas oven and dishwasher, a fireplace.
119. I purchased the Property B property because I needed a property big enough to house all of the (omitted). In the event that I rented a property, I would have had to rent a very large property for that purpose. When I located the Property B property, I felt that the investment made more sense than paying a large amount of rent for a big property.
120. At the time of my purchase of the Property B property, I was not aware that the Orders made by this Honourable Court on 14 May 2012 required that I provide Ms Tapper’s solicitor with seven days written notice in the event that I was to further encumber or deal with the Property H property. I do not recall being provided with any legal advice by my former solicitor in relation to this issue. If I had have been aware of the existence of the order, I would have complied with it.
It is not in dispute that the funds were used to purchase the Property B property, and subsequently a charge was registered over the Property B property by the husband’s current solicitors for fees. That agreement appears to have been entered into on 4 April, and registered on 1 May.
It also appears clear from the evidence that the contract for the purchase of the Property B property was entered into in April 2012. A finance application appears to have been made in late March 2012, and an acceptance of an offer of finance made in mid-April of 2012. These things took place before the Orders made by Judge Burchardt in mid-May. Settlement, which was scheduled for early June, took place in mid-June 2012. There is no evidence before me that there was any disclosure to the court, at the time that Judge Burchardt made the Orders, of the contract with respect to Property B, nor the finance application, nor the acceptance of the offer of finance. All of these things bear squarely upon the issues that his Honour was dealing with when making the injunction set out above.
At no time does it appear that any notice was given to the wife’s solicitors, or the wife. After the caveat was lodged, the wife’s solicitors wrote to the solicitors for the husband seeking, in substance, some confirmation that she would be protected given that there had been a prima facie contempt by the dealing with the property in order to facilitate the purchase of the Property B property. The applicant obviously wanted to ensure that she was protected with respect to any potential judgments she might receive in the court, and not subject to the priority of the charge supported by the caveat of the husband’s current solicitors. On the evidence there was no response to that letter.
The respondent gave evidence. He said that on the day that the orders were made he was in a bit of a daze, and was not certain of what had happened in court. He presented as a well-spoken and capable man in the witness box. It does not appear to me that there is any doubt that he, at the very least, understands the concept of dealings even if, as he said, he did not understand the word, “encumbering”. There was no evidence given by him, or on his behalf, of any letters from either his own solicitors, or between his solicitors and the applicant’s solicitors. His previous solicitor was not called to give evidence.
Upon seeing the respondent in the witness box, and hearing his cross-examination, I do not accept that he did not know what the order meant. He was present in court when it was made. I find that he would have been aware of the terms of the order, and what it meant. I also accept that he would have been aware that the case for the applicant was based on concerns about assets not being available to meet any judgment of the court by the time that the judgment was given in the proceedings.
Obviously the applicant’s concerns with respect to asset protection were discussed in court before his Honour made the orders. The orders provided the applicant with a degree of protection by requiring the respondent to give her notice before any dealings, which was no doubt for the purpose of enabling an urgent application to be made by her if she thought that that was necessary given the nature of the dealings that were proposed.
In the circumstances I therefore find that the order of his Honour Judge Burchardt of 14 May 2012 at paragraph 3 was breached by the respondent. I find that the respondent was aware of the terms of the order, and I find that the respondent disregarded the terms of the order in circumstances where he knew at the time that the orders were made that he had a commercial obligation to purchase land, and that he intended to finance that through dealings with the particular property. The respondent did not disclose those dealings, nor proposed dealings, to the court at the time. The respondent did not give any notice as contemplated by the Orders, either strictly in accordance with the orders, or in any sense a practical form of notice to the applicant’s solicitors.
The proceeds of the dealing in this land was the purchase of the land at Property B, and those proceeds, being the land at Property B, were subsequently encumbered in order to support a security for ongoing legal costs by him.
There was not a meaningful response to the letter by the applicant’s solicitors seeking some explanation and arrangement to assure her interest was protected.
I also note that, during the course of the hearing when it became apparent that the solicitors, at least, would consent to the applicant’s interests as a result of any orders having priority over their charge (and I should add an appropriate concession by the solicitors), the respondent nonetheless stated that he would rather see his solicitors paid before the applicant in the proceedings.
When I consider the circumstances of the case as a whole it seems to me that this case does involve a flagrant challenge to the authority of the court. I therefore find that the respondent is guilty of a contempt under s.112AP.
I certify that the preceding twenty-one (21) paragraphs are a true copy of the reasons for judgment of Judge Riethmuller
Date: 29 July 2013
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