Full Court Finds No Error In An Interim Injunction To Preserve Assets Pending Determination Of Jurisdiction

Keywords: Interim Injunctions;  Jurisdiction, Binding Financial Agreements; Family Law Act 1975 (Cth)

Background

In Teh & Muir [2015] FamCAFC 224 (2 December 2015), the Full Court heard an appeal by a 36-year-old Ms. Tey against an interim asset prevention order that was made by Dawe J.

The appellant and her son moved to Australia in January 2010 on a temporary visa and lived with the 85-year-old respondent’s, Mr Muir’s, home. On 19 February 2014, both parties purportedly entered into a financial agreement under section 90UC of the Family Law Act 1975 (Cth) that provided that upon the breakdown of the parties’ relationship, all properties shall be divided equally regardless of whose party’s name is on the title of the assets.

The respondent subsequently moved into a nursing home and on 29 May 2014, Ms. Tey issued proceedings to enforce the financial agreement whereby the respondent filed his response by case guardian (his daughter). The respondent argued that he had never been in a de facto relationship at the time of the financial agreement and that he did not have the mental capacity at that time to make the said agreement. As such, he sought an order that the agreement be set aside and the net proceeds of the sale of his home are paid to him.

At First Instance

In the first instance, Dawe J made interim orders that half of the proceeds be paid to the respondent and the other half be held in his solicitor’s trust account. The appellant, Ms. Tey, was also to disclose statements for bank accounts in her and her son’s name and be restrained from dealing with or disposing of any funds held in any bank account except for day-to-day needs.

As a result, Ms. Tey appealed and argued that because of the binding financial agreement that was in place, the judge had no jurisdiction to make the aforementioned orders.

At the Appeal

The issue at hand on appeal was whether or not a de facto relationship ever existed between the respondent and the appellant. If there was no such relationship, there would be no jurisdiction in a court exercising jurisdiction under the Family Law Act to determine the dispute between the parties.

On the other hand, if there was a de facto relationship in existence and the respondent continued to challenge the validity of the allegedly binding financial agreement, the question for the court was whether the jurisdiction of the Court to make orders concerning the financial matters of the parties would be excluded until the status of the agreement had been determined.

Finn & Strickland JJ said that it was appropriate for the Family Court to preserve the sale of the proceeds that were in dispute by granting an interlocutory injunction while the Family Court determined whether or not it has jurisdiction to hear the matter. As such, the judge in the first instance did not err in making the order that would preserve the disputed funds pending determination of issues concerning the jurisdiction of the Court to make orders concerning those funds.

Ryan J agreed with Finn & Strickland JJ but gave different reasons for his decision.

Section 31(1)(aa) of the Family Law Act states that the Court has original jurisdiction to determine matters that arise under the Act in respect of de facto financial causes, which includes proceedings to a financial agreement. As such, the primary judge was invested with jurisdiction to determine the various challenges made by the respondent to the validity of the binding financial agreement.

Furthermore, the restriction to the applicant’s access to her accounts and the proceeds of the sale of the property are interlocutory asset preservation orders that are designed to ensure that the property in dispute is preserved pending final orders. As such, the applicant’s challenge to the interlocutory orders made by the primary judge failed.

It was held that because section 34 of the Family Law Act 1975 confers general power to the Court to make orders (including interlocutory injunctions) provided that the Court has jurisdiction (which it has as explained in the previous paragraphs), hence the appeal was dismissed with costs.