THORNLEY & THORNLEY

[2018] FamCA 964

FAMILY COURT OF AUSTRALIA

THORNLEY & THORNLEY [2018] FamCA 964

FAMILY LAW – PROPERTY – Interim application – Where the husband seeks orders that the sale proceeds of properties owned by the wife be deposited into a controlled monies account – Where the wife opposes that application on the basis that it is unnecessary and inconvenient to her – Where the wife asserts that the matrimonial property pool is such that it would allow for the adjustment sought by the husband at final hearing, regardless of whether the orders sought in this application were made – Where the Court finds that the husband has failed to establish that there is a real risk of the wife dissipating matrimonial funds such that the Court will be unable to make final orders as sought by him – Where the Court finds that the balance of convenience favours the wife – Application dismissed, subject to undertaking.

Family Law Act 1975 (Cth) s 114

Finn v Carelli (2007) NSWSC 261
Liu v Xiao (2018) NSWSC 1401

APPLICANT: Mr Thornley

RESPONDENT: Ms Thornley

FILE NUMBER: SYC 3738 of 2017

DATE DELIVERED: 29 October 2018

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: McClelland J

HEARING DATE: 29 October 2018

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Karras Partners Lawyers

COUNSEL FOR THE RESPONDENT: Ms Bridger

SOLICITOR FOR THE RESPONDENT: Jo-Anna F S Moy Solicitor

Orders

THE COURT ORDERS THAT:

1. NOTING THAT the wife has today given an undertaking that she will utilise the proceeds of the sale of the Suburb D property in payment of the mortgages on the Suburb A and Suburb B properties and that she will not vary or seek to vary the terms of her agreement with C Lawyers in respect to the $700,000 to be paid into the C Lawyers Trust Account, the husband’s Application in a Case filed on 26 October 2018 be dismissed.

2. The parties’ costs of today be reserved.

3. Within 28 days, each party to provide to the other an offer for settlement pursuant to rule 10.06 of the Family Law Rules 2004.

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 Thornley & Thornley 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 3738 of 2017

Mr Thornley

Applicant

And

Ms Thornley

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. This decision concerns an Application in the Case filed by the husband as a matter of urgency, seeking that the proceeds of sale of two properties, one located at Suburb D and the other at Suburb E, be held in controlled monies account, rather than being released to the wife.  The terms of the order sought by the husband are, as follows:

   1. That both parties are to forthwith do all things and sign all documents necessary to ensure that the whole of the net sale proceeds of the property at [F Street, Suburb D], and the net proceeds of sale the wife is to receive pursuant to the sale of her interest in the property at [G Street, Suburb E], are to be deposited in a controlled monies account as agreed between the parties, or failing agreement, in a joint bank account established by the parties which does not permit internet transactions.

   2. The funds are to be held in the accounts referred to above until further Order of the Court or written agreement between the parties as to the distribution of the funds.

   3. That the applicant be permitted to lodge a Caveat on the title of the property at [G Street, Suburb E], with such Caveat to be withdrawn by him to allow the settlement of any sale of the Suburb E property at market price to take place provided that:-

   3.1 The respondent has kept the applicant fully informed of all matters concerning the sale of the property including but not limited to:-

   3.1.1 The name of the selling agent.

   3.1.2 Details of the marketing campaign and any date of auction.

   3.1.3 Her proposed reserve price or the listing price if the property is listed for sale by private treaty and details of all offers submitted.

   3.1.4 A copy of the Agency Listing Agreement and exchanged contract in due course.

   3.1.5 The result of the auction or price achieved by private treaty.

   3.1.6 Seven days’ notice of the intended settlement date and copy of the Settlement Sheet in relation to the sale.

   4. That the respondent forthwith provide the applicant with the Settlement Sheet in relation to the sale of the [Suburb D] property.

   5. That the applicant be granted leave to serve the respondent with short service of this Application.

   6. That the Application be listed on an urgent basis.

   7. That the respondent pay the applicant's costs of this Application.

2. The husband is not pursuing orders 4, 5, 6 and 7.  They have become superfluous as a result of recent events.  Accordingly, the husband is pursuing orders 1 through to 3, although it is acknowledged that, as a result of the fact that that property is jointly owned by the wife and her sister and that the wife’s sister is not a party to these proceedings, the Court is not in a position to make an order permitting the husband to lodge a caveat against the Suburb E property.

3. The husband has indicated that, in the event of the wife wishing to access funds held in those accounts for the purpose of purchasing a property in which to live, he would, subject to being satisfied of the appropriateness of the purchase, give consent for the funds to be released for that purpose.

4. The wife opposes the making of those orders as being unreasonably intrusive on her ability to deal with the Suburb D and Suburb E properties, in circumstances where the parties’ combined property pool would allow for any adjustment to the husband at final hearing.

5. The application was filed last Friday, 26 October 2018 and served on the wife at or about 5.00 pm that day.  Despite late service, the wife has prepared material in response to that application and the Affidavit of the husband.

6. The background of this matter is set out in the husband’s Affidavit filed on 26 October 2018 and the wife’s Affidavit filed on 29 October 2018.  Relevantly, the husband is currently aged 59 years and the wife is currently aged 57 years.  They commenced cohabitation in about 2001 and married in 2002.  They separated on 31 May 2017.  There are no children of the parties’ relationship, although the wife has two children from a previous relationship. 

7. The Affidavit material of both parties sets out the property that they contend constitutes the joint matrimonial property pool.  It is fair to say that the majority of property is held in the name of the wife.  In her Affidavit, she sets out the assets owed by her, at paragraph 53.  Those assets currently include the property at F Street, Suburb D NSW …, the settlement of the sale of which will take place tomorrow.

8. At paragraph 27 of his Affidavit, the husband states that he estimates the value of the parties’ property pool to be approximately $20,000,000.  At paragraph 29, he indicates that he is seeking a distribution of approximately 35 per cent of that property, which would be equivalent to $6,000,000.

9. In her Affidavit, the wife sets out her reasons for selling the Suburb D property and her initial decision to sell the Suburb E property jointly with her sister.  However, as a result of a slowdown in the property market in Sydney, the Suburb E property has been taken off the market.

10. The wife asserts that, in circumstances where the matrimonial property pool is valued at $20,000,000, even if she was to dissipate the proceeds of the sale of the Suburb D property, there is more than enough property remaining in the pool to satisfy the husband’s application at final hearing.  The wife contends, however, that she is not dissipating the proceeds of the sale of the Suburb D property, but is disbursing those proceeds in accordance with a settlement sheet that is set out at page 43 of her tender bundle.  By way of summary, the wife intends to use the proceeds of the sale of the Suburb D property to pay off her mortgages, to reduce the indebtedness on the Suburb A and Suburb B properties and to embark on a program of investment with her solicitors.  According to paragraph 53 of her Affidavit, she will be left with a cash, from those proceeds of sale, of $3,600,000.

11. Relevantly, order 1 of the orders made by consent on 13 November 2017 provides that:

    Each party shall provide to the other party one month prior written notice if that party intends to sell, transfer or encumber any real property registered in the name of that party [or] the name of any company of which he or she may be a Director and/or shareholder, or in the name of their respective self-managed superannuation fund.

12. Leaving aside the Suburb D property, the other properties owned by the wife and impacted by that order are:

    a)A property at Suburb A, which appears to be valued at $1,400,000;

    b)A property at Suburb B, which the wife contends is valued at $1,335,000;  and

    c)A 50 per cent interest in a property at Suburb E, which appears to be valued at $3,250,000.

13. In addition, the wife’s self-managed superannuation fund is valued at $561,000.  Part of that value relates to a property, which is covered by the above consent order. 

14. The wife has also given an undertaking that she will utilise the proceeds of the sale of the Suburb D property in payment of the mortgages on the Suburb A and Suburb B properties and that she will not vary or seek to vary an agreement that she has with C Lawyers for that firm to invest $700,000 in a registered first mortgage on her behalf, which agreement is for a period of 12 months.

15. Section 114(3) of the Family Law Act 1975 (Cth) (“the Act”) relevantly provides that:

    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.

16. The relevant law in respect to the making of preservation orders or granting of preservation injunctions is usefully summarised by Hume J in the case of Liu v Xiao (2018) NSWSC 1401 at [7], as follows:

    The principles relating to an application of this type were usefully set out in written submissions by senior and junior counsel for the plaintiff:

    The Court’s jurisdiction to grant a freezing order is contained within UCPR 25.14, as well as its inherent jurisdiction. An applicant must establish, first, a good arguable case and, second, a risk that any judgment will go unsatisfied by reason of the other party dealing with their assets to place them out of the reach of the Plaintiff (Tomasetti v Brailey [2012] NSWCA 6 at [14]–[15]; Samimi v Seyedabadi; Seyedabadi v Samimi [2013] NSWCA 279 at [72–[74]). It must be shown there is a risk, not a mere assertion, the Defendant may dispose of or deal with his her assets in such a manner as to leave any judgment unsatisfied (Frigo v Culhaci [1998] NSWCA 88 at p8). It is not necessary to prove the Defendant has a positive intention of embarking on that course (Finn v Carelli [2007] NSWSC 261 at [4]). Proof of risk of dissipation of assets may be established by evidence of a prior want of probity by the impugned person (Samimi v Seyedabadi; Seyedabadi v Samimi [2013] NSWCA 279 at [73]; Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft mbH & Co KG ‘The Niedersachsen’ [1983] 1 WLR 1412; [1984] 1 All ER 398 at p406; Frigo v Culhaci [1998] NSWCA 88 at p8.). The quantum of the freezing order ought not be fixed at a sum greater than that which the Plaintiff would potentially or likely recover (Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at 428; OXC Bidco Pty Ltd v Dickson [2016] NSWSC 968 at [14]).

17. The reference in that extract to the Court’s jurisdiction to grant a freezing order, is contained in the Uniform Civil Procedure Rules 2005 (NSW). The equivalent of that provision, for these purposes, is s 114(3) of the Act, as set out above.

18. In summary, an applicant for such an order must establish, firstly, an arguable case, and, secondly, that there is a risk that, if the order is not made, a judgment will go unsatisfied by reason of the other party having dealt with their assets to place them out of the reach of the applicant.  In terms of that second element, it must be shown that there is a real risk of that occurring, rather than a mere assertion that the defendant may dispose of, or deal with, their assets in such a manner.

19. Relevantly, in Finn v Carelli (2007) NSWSC 261 at [4], Brereton J said:

    It is not necessary for an applicant to show that the respondent has a positive intention of evading a judgment, and it is sufficient to show that the course on which the respondent proposes to embark is, objectively speaking, calculated to have that effect. But as the Court of Appeal made clear in Frigo v Culhaci, an applicant must establish, by evidence and not mere assertion, that there is a real danger that by reason of the respondent absconding or otherwise dealing with assets, the applicant will not be able to have its judgment satisfied. While acknowledging that there has been much debate as to the precise degree to which that has to be shown, the Court emphasised that mere assertion that the defendant was likely to put assets beyond the plaintiff's reach was inadequate, for which the Court cited Ninemia Maritime Corp v Trave GmbH & Co Kg (The Niedersachsen) [1984] 1 All ER 398, as well as Patterson v BTR Engineering.

20. In that regard, the husband carries the onus of establishing that there is a real risk that the wife will deal with the assets of the matrimonial property pool in such a manner, prior to final hearing, so as to defeat his ultimate claim of an adjustment of 35 per cent of that property.

21. In this case, at paragraph 31 of his Affidavit, the husband states:

    I am concerned that by selling the properties, that is, the [Suburb D] and [Suburb E] properties, the respondent may be intending to dissipate her assets and that there may be a risk that by the time that the matter proceeds to trial the asset pool to divide between us will be reduced or have been dissipated by the sale of the real estate.

22. That concern was amplified during the submissions made at today’s hearing.  Firstly, the husband’s solicitor stated that, in having given notice on 8 August 2018 that she intended to list the Suburb D property for sale at the end of the month, the wife failed to comply with order 1 of the consent orders made on 13 November 2017, to which I have referred.  Counsel for the wife, on the other hand, asserted that the notice given was consistent with that order, as the auction was not to occur until 8 October 2018.  The husband, in response, contends that the wife’s interpretation of that order is incorrect, and that 28 days, or a month’s notice, had to be given of her intention to list the property for sale.

23. Further, Counsel for the husband made submissions regarding correspondence between the parties, which is included in the husband’s tender bundle.  It was asserted that reasonable requests for information, including that set out in a letter dated 21 August 2018, were not complied with.  The wife, on the other hand, says that the information sought in that letter was overly intrusive and inappropriate.

24. Further, I accept that there is some substance to the submissions of the husband’s solicitor that, as a result of what appears to be less than complete disclosure by the wife, it is not possible to determine the precise value of the parties’ asset pool. 

25. In that respect, I am satisfied that there was a degree of discourtesy on the part of the legal representatives for the wife in failing to provide the requested information in a timelier manner.  Indeed, while the information before me does not enable me to conclusively determine it to be the case, I find it likely that there has been less than adequate disclosure of the wife’s proposed transactions, as referred to in that correspondence.

26. The question, therefore, becomes whether that discourtesy and lack of disclosure establishes that there is a risk of the parties’ property being dissipated by the wife prior to final hearing, such that the Court will be unable to do justice between the parties.  This question is to be answered in terms of the final orders sought by the husband, which, if made, would result in $6,000,000 being transferred to him by way of property adjustment.

27. Ultimately, no material has been provided to me that enables me to reach the conclusion, either by inference or direct evidence, that the wife has or is likely to engage in conduct that will result in the dissipation of the property pool, such that there will be insufficient funds to satisfy any decision that the Court may make at final hearing.

28. In arriving at that conclusion, I note that order 1 of the November 2017consent orders requires the parties to give 28 days’ notice of an intention to sell or deal with properties in their name.  The wife’s interest properties at Suburb A, Suburb B and Suburb E, on my calculations, is valued at $5,985,000.  It is also recognised that the wife’s superannuation interest, valued at $561,000, includes real property that is also subject to the requirement in that consent order.  Further, as I have stated, the wife undertakes that she will not vary or seek to vary her agreement with C Lawyers, as set out in paragraph 23 of her Affidavit, without giving 28 days’ notice to the husband.

29. In those circumstances, the husband now has an opportunity to clarify the disclosure issues which, he contends, remain outstanding, and to, if he believes it justified, make an application for further disclosure.  In the meantime, he can be assured that property contained in the matrimonial asset pool, the value of which exceeds $6,000,000, cannot be dealt with by the wife without her giving him 28 days’ notice, in accordance with the November 2017 consent orders. 

30. In making that determination, I have also been influenced by the balance of convenience.  On the one hand, the husband says that there is a real risk of dissipation of the assets, such that his expectations may not be satisfied.  I have addressed that by noting that at least 28 days’ notice must be given of an intention to sell the real property to which I have referred.

31. On the other hand, there would be, I believe, a real inconvenience to the wife if she was required to seek the consent of the husband before she applied the proceeds of the sale of the Suburb D property to pay off her mortgages, to reduce the indebtedness on the Suburb A and Suburb B properties and to embark on a program of investment with her solicitors.

32. Having regard to those competing contentions, I am satisfied that the inconvenience or potential risk that he husband asserts exists is adequately addressed by the notice requirement set out in the November 2017 consent orders.  As against that risk being addressed, I am satisfied the wife would suffer real inconvenience if orders were made as sought by the husband.

33. Accordingly, on the basis of the undertakings given by the wife, I dismiss the husband’s application.

I certify that the preceding thirty-three (33) paragraphs are a true copy of the ex tempore judgment of the Honourable Justice McClelland delivered on 29 October 2018.

Associate: 

Date: