In hostile property settlements, one partner may seek to dispose of property or other assets to prevent them from being included in the asset pool and distributed. This only adds to the existing emotional and financial burden parties experience during separation. If your former partner is seeking to dispose of assets prior to a property settlement, there are legal avenues you can take to protect your property for the duration of legal proceedings. The most common way to do this is through an injunction.

What is an injunction?

An injunction is a court order that requires a party perform a particular action (e.g. pay someone), or refrain from doing a particular action (e.g. stopping a party from paying someone). Conduct regulated by injunctions can include restraining a person from selling property, entering a residence or making contact with a child. Failure to comply with an injunction can result in civil or criminal penalties, which could include a prison sentence.

A party can apply for an injunction regarding property matters under section 114 of the Family Law Act 1975 (Cth). Courts have broad discretionary power to grant an injunction which can have the effect of preventing a party from selling or disposing of an asset of the relationship. An asset of the relationship can include any jointly owned asset, such as a family home, or assets contributed to the relationship by the parties individually.

There are two main factors the court will consider regarding the unique circumstances of the case, when determining the outcome of an injunction application.

1. The applicant (who is the person applying for the injunction) will often be required to give an undertaking to the court. This is a legal binding promise which requires the applicant to take responsibility for any damages (or foreseen losses) that may arise as a direct result of the injunction’s enforcement in the event that it is decided that the injunction was incorrectly granted.
2. Courts will consider whether the injunction is necessary to protect the asset entitlements of the applicant party on the balance of convenience between the parties. This means that the inconvenience sustained by one party cannot be outweighed by the convenience granted to the party seeking the injunction as this would cause substantial injustice.

Intention to dispose of property: M v DB (2006) 36 FamLR 454

In the Marriage of Waugh (1999), the Court narrowly interpreted section 114 and invalidated an injunction on the basis that there was a lack of evidence of an intention of the husband to dispose of marital assets. In M v DB, the Court demonstrated a shift away from this narrow interpretation and held that whilst an enquiry into the risk of disposal is relevant, intention is only one of the factors the Court may consider under their broad discretion when granting injunctions. In this case, the fact that the wife lived overseas and had placed the property up for sale were relevant considerations when determining the risk of her disposing of marital assets.

Other discretionary factors which the court may consider when granting injunctions include:

• The urgency of the matter being considered;
• Whether damages would be an adequate remedy if the applicant suffered loss in circumstances where the injunction was not granted;
• How long the applicant has waited before seeking the injunction; or
• Whether the parties have made a full and fair disclosure of all the relevant material facts known to them relating to the matter.

Injunctions and de facto relationships: Dunworth v Faletti [2020] FamCA 178

Injunctions are not exclusive to proceedings involving the formal dissolution of marriage. In Dunworth v Faletti, the Court granted the applicant an injunction preventing her purported de facto partner from selling his property. Even though the nature of their relationship was yet to be determined, the Court held that this issue was a serious matter to be tried and that the applicant would likely suffer a loss which would be unable to be remedied by damages if the injunction was not granted and the property was sold. The Court later found in favour of the relationship.

How Etheringtons Solicitors can help

A solicitor at Etheringtons Solicitors can provide you with clarification of the relevant law on property injunctions and its application to your individual circumstances. Furthermore, Etheringtons Solicitors can assist with resolving your separation, divorce or property settlement with the best outcome for you. If you would like more information on how we can advise you on matter, do not hesitate to contact us on 9963 9800 or via our contact form here.