Zen and Jir

[2010] FamCA 606

FAMILY COURT OF AUSTRALIA

ZEN & JIR [2010] FamCA 606

FAMILY LAW – INJUNCTIONS – Third parties

Family Law Act 1975 (Cth)

Hunt v Hunt and Others (2006) 36 Fam LR 64
Valceski v Valceski (2007) 36 Fam LR 620

APPLICANT: Ms Zen

RESPONDENT: Mr Jir

FILE NUMBER: MLC 6223 of 2010

DATE DELIVERED: 12 JULY 2010

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: THE HONOURABLE JUSTICE CRONIN

HEARING DATE: 12 JULY 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT: MR HUTCHINS

SOLICITOR FOR THE APPLICANT: VOITIN LAWYERS

THE RESPONDENT: NO APPEARANCE

Orders

1. That the application of the wife filed 9 July 2010 be adjourned to 9.00am on 19 July 2010.

2. That until further order, Citigroup Pty Limited, Tabcorp Holdings Limited and Consolidated Media Holdings Limited be and are hereby restrained from releasing or permitting the husband to withdraw or transfer any funds by them in the husband’s name.

3. That each of the respondents referred to in paragraph 2 hereof provide to the lawyers for the applicant wife forthwith, a statement of account or accounts held by them in the name of the husband.

IT IS NOTED that publication of this judgment under the pseudonym Zen & Jir is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 6223  of 2010

MS ZEN

Applicant

And

MR JIR

Respondent

REASONS FOR JUDGMENT

1. On 9 July 2010, Ms Zen (the wife) filed an application against her husband Mr Jir (the husband) and three other respondents seeking interim injunctive orders. The matter was deemed sufficiently urgent by the registrar to put it before the Court without requirements of service being fulfilled.

2. I heard the application and made orders ex parte against the husband but having regard to the nature of the other orders against the other respondents, adjourned the application to today and required them to be put on notice.

3. This morning, no-one attended on behalf of the husband or the three other respondents. Mr Goddard, the solicitor for the wife said through his client’s counsel that he had spoken to the various respondents other than the husband and his conversations are to be recorded in the affidavit he will file. Suffice to say, the entities involved either had not had sufficient time or did not understand any requirement to attend.

4. I have adjourned the proceedings for a further week to allow those entities to be involved should they so wish but having regard to the circumstances to which I shall refer below, this is a matter in which I should make some holding orders which affect those entities. It is important to note that on Friday, I required the wife to give an undertaking as to damages which she so gave. That undertaking continues to apply to her.

5. The circumstances which give rise to this unusual application are that the husband and wife separated earlier in 2010 by the wife giving her husband notice of that separation through legal channels. The parties have interests in China and Australia. The wife deposed to the fact that after giving her husband notice, he terminated her access to financial resources.

6. The wife’s evidence is that there was about $900,000 in joint savings with Citibank. From other banking accounts, money has also been transferred without the wife having any knowledge. That includes an account in ABN AMRO in Hong Kong.

7. Of concern is the fact that the wife described the husband as a “high roller” gambler who has been enticed to play at casinos conducted by two of the named entities. The wife has presumed that the husband has placed funds there. To the extent that that is not right, the problem of these orders can be quickly rectified.

8. I made orders on Friday of last week to protect the assets of the parties. I do not need to revisit those issues.

9. These orders and reasons concern the entities and the basis upon which the orders are made.

10. The conflict between the interests of the parties to a marriage and the unwitting involvement of parties who have nothing to do with them is well-known in this Court. Leaving aside jurisdictional questions, the invasion of privacy and the involvement in litigation is well understood to be an anathema to commercial enterprise. However, all persons and commercial entities who deal with parties to a marriage and now including defacto partners, must understand that their commercial interests with their clients must to a very large degree be made subservient to the obligations of the Court to do what is just and equitable as between the parties. Any inconvenience is regrettable but may be built into the relationship between customer and commercial entity. As with jury service in the criminal law and the responses to subpoenae in litigation generally, citizens, but more often than not corporate citizens, must be prepared to be inconvenienced to enable the law of the country to be carried out. As such, it must be clear in family law proceedings that issues relating to third parties are of considerable practical importance.

11. There can no longer be any doubt that the Court has power in relation to third parties (see Valceski v Valceski (2007) 36 Fam LR 620 and Hunt v Hunt and Others (2006) 36 Fam LR 64). The validity of section 90AF of the Family Law Act 1975 (Cth) (“the Act”) is beyond doubt in that orders made under it, bind third parties. In Hunt, O’Ryan J said:

    (i)t has always been the case that courts having jurisdiction under the Family Law Act can make orders which have an effect on a third party and in some circumstances may make orders directly against third parties. The court has always, to some extent, had power to bind third parties, for example by injunction on an interlocutory basis: Sanders v Sanders (1967) 116 CLR 366; [1968] ALR 43; Antonarkis v Delly (1976) 10 ALR 251; 1 Fam LR 11,334 and R v Dovey; Ex parte Ross (1979) 141 CLR 526; 23 ALR 531; 5 Fam LR 1.

12. Before looking at the extent of the jurisdiction, it is important to acknowledge that the requirements of natural justice apply to third parties as much as they do to the parties to the dispute. Natural justice requires not so much service of documents, as notice of the prospect that orders may be made which affect the persons or entities involved. There are circumstances where urgency must outweigh those natural justice requirements and that usually arises in a situation such as this where there is every possibility that the husband may take flight with funds under the control of third party entities.

13. Having regard to the evidence of the wife, flight is a serious risk in this case.

14. It is important however to also recognise that an order against a third party not only binds them but also puts them in a position of facing consequences for contempt for ignoring the orders. That too heightens the need to have the entities receive notice before the orders are made. I have taken that into account in this case as well because of the nature of the relationship of the husband with the respondents and also their significant size. Those are problems that the entities, as good corporate citizens, have to factor in when they engage in a relationship of the nature asserted by the wife.

15. In relation to any injunction arising out of the powers of the Court under the Act, the requirements are that the order must be proper in all the circumstances. What assists in that determination is whether there is a need for a protective response by the order but also whether convenience requires the order be made. In this case, both of those requirements are met.

16. Before making the order however, despite the extent of the jurisdiction to which I have referred, it also important to emphasise the legislative requirements in s 90AF(3)(a) limit the circumstances in which orders directed to third parties can be made.

17. Section 90AF enables orders to be made under s 114 of the Act and that provision can only be exercised as part of the exercise as between the husband and wife under s 114.

18. In this case, the first point to recognize is that there are extant proceedings between the husband and wife and it is the wife who relies on s 114.

19. The object of Part VIIIAA of the Act is said to allow the Court, in relation to the property of a party to a marriage, to grant an injunction under section 114 that is directed to, or alters the rights, liabilities or property interests of a third party. Here the property of the party to the marriage is said to be the funds held by the various entities. The injunction against the entity is directed to alter its rights to simply do with the husband’s money whatever he may direct them to do and what they would otherwise be legally required to do because of their contractual relations with him. The power and extent of the order is therefore clear.

20. However, s 90AF(3) is a rider on the extensive power. It permits the court only to grant an injunction under the subsection if 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. (my emphasis). I turn then to the remaining consideration in the Part.

21. Section 90AF(3) requires the Court to consider whether the order concerns a debt due by the husband. In this case, that does not apply.

22. I have already set out the procedural fairness question above together with my view that an injunction is proper as against the husband and therefore in the circumstances, it must be proper as against the entities involved.

23. Section 90AF(4) requires the Court to consider and take into account a number of matters. They are principally revenue-related issues. Although on these limited facts, there is hardly any likelihood of any taxation effect on the husband or third parties nor for that matter any social security effect on the parties. Those matters are therefore unlikely to have any impact on the interim injunction.

24. Section 90AF(4) requires the Court to consider the administrative costs on the entities. In this case, I do not consider that to be an immediate issue of concern because I have the undertaking as to damages of the wife. On the other hand, I have also the wife’s evidence of the reaction of the husband so to the extent that the entities incur any costs, it may be a matter that can easily be resolved on the return date.

25. Even on the limited evidence provided by the wife, it is clear that it is reasonably necessary to stop the husband doing what he may with funds that may ultimately be part of a pool for division between them. The husband’s reaction to the wife’s request for a resolution of their financial affairs would suggest, if accurate, that he has no respect for any entitlements that she may have. The fact that he is a “high roller” gambler, if true, would add to the complexity of the problem because one could reasonably conclude that he is a risk taker with significant sums of money. That risk may prejudice the entitlements of the wife and as such, it is appropriate to grant the injunction so that effect can eventually be given to the division of property between the parties to the marriage.

26. In the circumstances, I agree that orders should be made albeit that the evidence is vague as to what interests (if any) the husband has with two out of the three entities.

27. On the basis of the wife’s undertaking, I adjourn the proceedings to hear what funds are held by the entities and in the meantime to restrain them allowing the husband access to any funds under their control despite any commercial arrangement he may have with them or any demand he may make of them.

I certify that the preceding Twenty Seven (27) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate: 

Date:  13 July 2010