Truong and Nghiem and Ors

[2012] FamCA 94

FAMILY COURT OF AUSTRALIA
AMENDED REASONS PURSUANT TO RULE 17.02
OF THE FAMILY LAW RULES 2004

TRUONG & NGHIEM AND ORS [2012] FamCA 94

FAMILY LAW – PROPERTY – removal of caveat ordered

Family Law Act 1975 (Cth)
Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008

APPLICANT: Ms Truong

1st RESPONDENT: Mr S Nghiem

2nd RESPONDENT: Ms Luong

3rd RESPONDENT: Mr D Nghiem

FILE NUMBER: MLC 4291 of 2011

DATE DELIVERED: 13 February 2012

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 13 February 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Davis

SOLICITOR FOR THE APPLICANT: Berger Kordos Lawyers

COUNSEL FOR THE 1ST RESPONDENT: Mr Serra

SOLICITOR FOR THE 1ST 

RESPONDENT:

Moores Legal

COUNSEL FOR THE 2ND 

RESPONDENT:

Ms Swain

SOLICITOR FOR THE 2ND 

RESPONDENT:

Forte Family Lawyers

THE 3RD RESPONDENT: No appearance

Orders

1. That by 4.00pm on 14 February 2012, the respondent do all things necessary to present to the solicitor for the applicant a withdrawal of caveat number … in registrable form. 

2. That if the solicitor for the applicant has not received the said withdrawal of caveat by the deadline referred to in paragraph 1 hereof, a registrar is authorised pursuant to s 106A of the Family Law Act 1975 (Cth) to sign such a withdrawal of caveat in the name of the respondent Mr S Nghiem and the affidavit of the applicant’s solicitor shall be sufficient evidence to satisfy the registrar that the respondent has not complied with paragraph 1 of these orders.

3. That the application in a case filed 10 January 2012 and the response thereto filed 31 January 2012 is otherwise dismissed.

4. That the respondent pay the applicant’s costs of and incidental to the application by agreement and failing agreement as assessed on the basis of the schedule referred to in the Family Law Rules 2004.

IT IS CERTIFIED:

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

IT IS NOTED that publication of this judgment by this Court under the pseudonym Truong & Nghiem and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Act.

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER:  MLC 4291 of 2011

Ms Truong

Applicant

And

Mr S Nghiem

Respondent

Ms Luong

2^nd Respondent

Mr D Nghiem

3^rd Respondent

REASONS FOR JUDGMENT

1. This application from which these reasons arise was filed by Ms Truong.  For my convenience, I shall refer to her as the wife.  The respondent is Mr S Nghiem, and again for my convenience, I shall refer to him as the husband.  I say “convenience” because it is common ground between the parties that they never married but did, however, live together in a de facto marriage relationship. 

2. I propose to make the orders sought by the wife in this particular case. 

3. The substantive dispute is about a property division.  The jurisdiction of the Court has always been called into question because the husband said that the parties separated after March 2009, whilst the wife said that it was a number of years before.  The jurisdictional dispute is currently listed in the weeks ahead, and just what is to happen there is as yet unknown.

4. What brought this current dispute before the Court was the application that the wife filed on 10 January 2012 to which the husband responded on 31 January 2012. 

5. The wife seeks an order that the husband remove a caveat on a commercial building development site in Suburb A, and failing its removal, an order under section 106A of the Family Law Act 1975 (Cth) (“the Act”) for the Registrar to sign the necessary document.

6. The husband’s response seeks a dismissal of the wife’s application or alternatively, an adjournment until after the jurisdictional issue just mentioned, is determined.

7. The facts which give rise to this dispute can be encapsulated in the following statement:  the husband was an undischarged bankrupt between late 1990 and early 2010.  During that period a company called G Pty Ltd was the corporate trustee of the G Unit Trust.  There are a number of units issued in relation to the unit trust. 

8. In May 2010 the company purchased a building block in Suburb A for $13.8 million for the purposes of redevelopment of the site into 19 commercial shops for lease.  It seems common ground that the development was plagued with financial problems right from the beginning.  There have been a number of financing arrangements, but the most recent is through a firm of solicitors, Firm M, under which there was a loan to the company for $13 million. 

9. It is common ground between the parties that the mortgagees are now in possession of the development site and have locked all of the parties out.  Up until some time in 2011, the husband was the project manager and primary developer of the site.  He was not an owner because of the bankruptcy.  As a result of problems associated with the redevelopment, the mortgagee moved in and removed the husband from the site, since which time, the wife has been making all of the decisions.  It seems also that it will be asserted against the husband that there had been irregularities in relation to the financing of the operation and also that the building works were not completed properly.  Those matters also do not affect the decision I have to make today. 

10. The mortgagee insisted upon the work being done in a particular way.  Because of the irregularities, the company went to the Supreme Court of Victoria to obtain access to its own books of accounts.  Despite the bankruptcy, the husband had control of the books of accounts in his capacity as an employee. 

11. In the Supreme Court proceedings, I am told that the firm of solicitors then acting for the company were directed to hand over all of the records so that the irregularities could be investigated.  Subsequent to that occurring the wife was left to make the extensive mortgage repayments.  Since then, she has paid significant sums of money but it is also clear that she has had control of the process to the exclusion of the husband. 

12. Despite the wife having continued to make the payments, the mortgagees have now taken possession and occupation of the site. 

13. It appears that in the process of seeing the difficulties with the development, the wife organised for the property to be sold.  She executed a contract of sale on 23 December 2011 with a purchaser for a price of $16.5 million.  Deposit moneys totalling 10 per cent of the purchase price were deposited into the account of her commercial solicitors.  The contract was conditional upon a number of matters.  The first was an agreement to lease and, if necessary, the lease with a commercial grocer known as Company Y being amended on terms acceptable to the purchaser, but also, that there be a withdrawal of all caveats.  One of the caveats had been lodged by the husband. 

14. The urgency that brought the matter before the Court was the husband’s caveat.  There is a dispute between the parties about how much time he was given to actually remove the caveat, but in the meantime, the mortgagee moved and indicated that unless things happened, they would simply take matters out of the wife’s hands and negotiate direct with the purchaser.  It does not take much imagination to understand that a purchaser in those circumstances might have some bargaining power.

15. The facts of this case make it clear that the wife’s application was predominantly on asset protection.  She was concerned to have control over the sale process.  The concern of the husband was that upon the payment of the deposit by the purchaser the wife might access the deposit funds.  The wife’s evidence is that there are debts to be paid.  There is no application by the husband to injunct the wife in relation to the use of the deposit funds.

16. I heard argument from both parties and reserved judgment. 

17. One question was what could be done anyway having regard to the jurisdictional issue.  In argument it was clear that the problem was not that simple.  The wife, who had previously asserted that the Court did not have jurisdiction to deal with the substantive issue, was before the Court seeking that it exercise jurisdiction on an interlocutory basis.  Mr Davis of counsel on behalf of the wife indicated that it was her intention to “opt in” under the transitional provisions of the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008.  The dilemma I have is just how that could occur. 

18. Jurisdiction is conferred on the Family Court of Australia in relation to de facto financial causes by section 39A(1)(a) of the Family Law Act.  De facto financial causes are defined in section 4(1), and particularly relevant to this application are paragraphs (c) and (g).  Section 39A(2)(c) and subsection (5) set limitations on de facto relationship financial proceedings.

19. The transitional provision which enables the Court to hear these matters is in Clause 86 of the 2008 Act.  The significant points are that most of the provisions of the amending legislation were operative after 1 March 2009, but the curious issue is the distinction in language.  Clause 86(1) refers to a relationship which “broke down” after the relevant date.  The proceedings which would normally determine the question of jurisdiction are in the declaratory provisions in section 90RD, which refers to the Court looking at when the relationship “ended”.  As I canvassed in discussion, there is clearly a distinction between a relationship which has broken down and a relation which has ended.  The parallel with the marriage situation is an obvious one.  A party in a marriage can only apply for a divorce if their relationship has broken down irretrievably.  The word “irretrievably” does not appear in the amending legislation.

20. It will be again borne in mind that the wife’s position was that the relationship came to an end in the mid-2000s.  Thus she wanted to rely on a different provision in Clause 86A.  Clause 86A is the “opt-in” provision, but it is clear from reading the draft of the legislation that it applies to both parties in circumstances where both parties agree that the relationship “broke down” before the operational provisions.

21. The bizarre situation here is that one party says the Court has jurisdiction by virtue of the relationship ending after 1 March and the other party says that that is not correct but the Court should have jurisdiction because she wants the Court to determine the matter under the opting-in provisions.  All of those matters are yet to be fully canvassed and determined at another time. 

22. The dilemma is the urgency. 

23. In the course of considering what to do, I had occasion to look at how the transitional provisions were incorporated into the Act. That gave rise to an examination of section 40. As is now known to the parties because I indicated it to them some days ago, a proclamation was not signed for the purposes of the operation of the legislation until 9 February 2012, which makes it operative from 11 February 2012. That will give rise to issues about the validity of orders that have been made in the last two years, but that is not relevant to here. I do not consider that there is a problem with the extant proceedings themselves because the Court has been given the jurisdiction by the parliament but because of the proclamation problem, that jurisdiction is not operative. It is only orders made which have a validity problem. As the proclamation has been signed, the jurisdiction is now operative.

24. Clause 86A cannot apply because the statutory requirements have not been fulfilled. Clause 86, which gives rise to the operation of the Act from 1 March 2009 is yet to be operative. Accordingly, the Court has to determine whether it has jurisdiction. In determining whether it has jurisdiction, the Court is entitled to make orders that will protect property to enable the Court ultimately to make orders if it finds it has jurisdiction. (Re Ross-Jones; ex parte Green (1984) FLC 91-555 and particularly the statements of Dawson and Wilson JJ). In Re Ross-Jones, Brennan J said that the Court had to look at the documents and see whether on their face there was jurisdiction.  I interpret that to mean that one looks at the documents of at least one party to see whether it is pleaded that there is jurisdiction and whether there is evidence to support that pleading in some form of evidentiary way.  Although in this case the wife pleads that there is no jurisdiction by virtue of the 1 March 2009 start-up date, it is clearly pleaded by the husband to the contrary, and he gave evidence which no doubt will be contested.  On the face of the pleading, however, I am satisfied that there is an issue to be tried. 

25. The Court has power to preserve the status quo.  I do, therefore, consider I have jurisdiction to make interim orders which if not made, would otherwise render the proceedings nugatory upon the determination of the jurisdictional question. 

26. In this case, the issue is then whether or not it is proper to make an injunctive order having regard to the urgency of the situation.  There is clearly a dispute between the parties as to whether the motivation of the wife is to simply get hold of the deposit moneys or whether it is a protective order.  Having regard to the fact that I have only very limited evidence from the husband, he having filed an affidavit of his solicitor which does not address any of the primary issues in the matter, I am satisfied on the evidence of the wife that there is urgency about the matter, that it does relate to the protection of property and that in the circumstances it is proper to make the order.

27. I consider the Court has jurisdiction to determine its jurisdiction and consequently to make interlocutory orders. I am satisfied it is proper in the circumstances to make the orders sought by the wife. I propose, therefore, to make orders in terms of paragraph 1 of the orders sought and to now raise the question of whether or not from the husband’s perspective I need to make an order in relation to the second issue which the wife raises, which is the order under section 106A.

RECORDED:  NOT TRANSCRIBED

ORDERS DELIVERED

RECORDED:  NOT TRANSCRIBED

1. This is an application arising out of the reasons I have just given for the husband to pay the wife’s costs. 

2. Section 117 of the Act provides that each party shall bear their own costs unless the Court is satisfied that there are circumstances to justify a departure from that principle.

3. If the Court is contemplating that, then the Court must take into account the matters set out in section 117(2A) of the Act. Section 117(2A) provides an array of possibilities, all of which I could not determine on the facts before me.

4. The critical question is whether or not there is a circumstance that would justify the Court departing from the principle here. In my view, there is. The circumstances here are that there was sufficient time for the husband to respond to the material in comprehensive form if not also attend Australia for the purposes of sorting out the matter. For there to be a suggestion that there was no urgency about the matter defies what I have understood to be the circumstances. There is a justification for an order for costs and a departure from the principle in section 117, but in making that determination, I take into account section 117(2A).

5. I do not know what the financial position of the parties or either of them is in this case.  As Mr Serra properly points out, I do not have a financial statement from the wife, but then on the other hand, I have allegations against the husband of fraud and irregularity in relation to the operation of the business.  Those are matters upon which I cannot make any determination.  What is very unusual in this case is that the parties are dealing with the disposal of a property worth $16.5 million, which on its face is a large amount of money, but as the evidence unfolds, it may be that there is virtually nothing left.  The issue in this case that entitles the wife to her costs is that there was little assistance provided by the husband to sort the matter out, requiring her to take steps which would otherwise have meant that the mortgagee might have removed all control from the parties.  I find in the circumstances it is appropriate to make an order for costs.

ORDER DELIVERED

I certify that the preceding thirty two (32) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 13 February 2012.

Associate: 

Date:  27 February 2012