ABRAMS & ABRAMS
[2010] FMCAfam 560
•3 August 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| ABRAMS & ABRAMS | [2010] FMCAfam 560 |
| FAMILY LAW – Hogan Application. – wife already received significant assets in earlier property distributions – current asset pool insufficient to enable the proposed payment of $80,000.00 to be made – wife unable to point to source of proposed funding – asset pool may be diminished completely – wife in difficult financial circumstances and husband also under financial constraints paying joint debts of the marriage – no evidence as to cost of valuations – costs out of all proportion to likely property pool – application dismissed. |
| Family Law Act 1975, ss.79, 80(1)(h) |
| Strahan v Strahan (2009) 42 Fam LR 203 Dowbell v Muscatidis [2009] FamCA 127 Dowbell v Muscatidis [2009] FamCA 1277 Zschokke and Zschokke (1996) 20 Fam LR 766 |
| Applicant: | MS ABRAMS |
| Respondent: | MR ABRAMS |
| File Number: | TVC 168 of 2010 |
| Judgment of: | Willis FM |
| Hearing date: | 14 May 2010 |
| Date of Last Submission: | 14 May 2010 |
| Delivered at: | Cairns |
| Delivered on: | 3 August 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr Moore |
| Solicitors for the Applicant: | SR Wallace & Wallace |
| Counsel for the Respondent: | Mr Betts |
| Solicitors for the Respondent: | SB Wright & Wright & Condie |
ORDERS
The Application filed on 16 February 2010 for an interim property distribution is dismissed.
The issue of costs of and incidental to the hearing will be listed for hearing on 16 September 2010 at 4:00 pm in Mackay. Each of the parties are to file a written outline 24 hours prior to the hearing. A schedule of costs being sought, pursuant to the FMC schedule should also be prepared.
The wife is to provide written notice to the husband and the Court confirming that she is proceeding with her interim spousal application being Order 4 of the interim orders sought in the initiating application filed 16 February 2010. In the event that the wife is proceeding with that application, the matter is to be listed for hearing during the September circuit of the Mackay sittings and each of the parties is to attend in person.
The parties are to attend a Financial Conference before a Registrar in Mackay on 7 October 2010 at 11:00 am.
IT IS NOTED that publication of this judgment under the pseudonym Abrams & Abrams is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MACKAY |
TVC 168 of 2010
| ms abrams |
Applicant
And
| mr abrams |
Respondent
REASONS FOR JUDGMENT
The applicant wife in this matter seeks an Order that the husband pay the sum of $80,000.00 to the trust account of her solicitors SR Wallace and Wallace to cover her legal costs and costs of a valuation she wishes to obtain in these property proceedings. The valuation to be obtained primarily relates to cattle, though the wife also makes reference to having the husband’s late mother’s house valued. The husband holds a one third interest in his late mother’s house with two other siblings.
The wife also seeks an order for $900.00 per week for spousal maintenance however this application was adjourned by agreement for hearing after the Hogan application.
The husband seeks an order dismissing the wife’s application and that the wife pay the husband’s costs of and incidental to the application.
The Law
Counsel for the wife has referred me to the Full Court decision in Strahan v Strahan (2009) 42 Fam LR 203 [2009] FamCAFC 166 as authority for the approach to adopt when power is to be exercised pursuant to s.80(1)(h) of the Family Law Act (Cth) 1975 (“the Act”). The decision in Strahan and Strahan (supra) refers to two stages of such an application. This approach recognises that although the power under s.79 should ordinarily be exercised on a once only basis, circumstances may arise before there can be a final hearing where the power is exercised. The first step is to resolve whether to exercise the power before a final hearing and if it is resolved to do so, then the second step involves the exercise of that power.
In relation to the first stage the overarching consideration is the interests of justice. It is not necessary for the applicant to establish compelling circumstances. All that is required in determining whether to exercise the wide and unfettered discretion conferred by the power to make such an order, is that in the circumstances it is appropriate to exercise the power being mindful that the usual order pursuant to s.79 is a once and for all order made after a final hearing.
When turning to the substantive step, the provisions of s.79 must be considered and applied but with limitations given that it is not the final hearing.
I have also been referred to Zschokke and Zschokke (1996) 20 Fam LR 766 and Dowbell and Muscatidis 2009 FamCA 1277.
In Strahan and Strahan reference is made to the Full Court decision of Zschokke and the matters a court would be required to consider in making an Order under s.80 (1) (h). The Full Court in Zschokke said If the order is to be made under s 80(1)(h), it would seem that regard should be had to the requirement in s 79 that the orders be just and equitable and this would require the court to undertake at least some brief consideration of the matters in s 79(4) including those referred to in s 75(2). If on a brief consideration of those matters it seems unlikely to the court that the party who is the applicant for the interim order for an advance of funds from the other party will be likely to receive by way of property settlement a sum sufficient to cover the advance, that would seem to be sufficient to enable the order sought to be made... and...it must be an integral part of any order under s 80(1)(h) for an advance of funds from the part in possession of the bulk of the party’s[sic] assets to the other party, that such advance can then be taken in to account in the property settlement, that is, it must be capable of satisfying part of the other party’s entitlement[1].
[1] Paragraph 215 and 216 of Strahan referring to Zschokke at FLC 83,216 and FLC 83,220
When referring to an interim property settlement order that was intended for legal costs, three matters were considered relevant by the Full Court in Zschokke . They were:
a)a position of relative financial strength on the part of the respondent;
b)the respondent’s capacity to meet his own litigation costs; and
c)an inability on the part of the applicant to pay her own costs[2].
[2] Paragraph 217 of Strahan referring to Zschokke FLC 83,219.
In order to exercise my discretion I will include a consideration of the history of the marriage, the asset pool, the issues in contest and financial position of the parties amongst other issues.
History of the marriage
The wife says that the respondent and I had limited assets at the commencement of our marriage[3]. The husband, however, says he had 40 head of cattle, a vehicle, furniture and mustering gear which all totalled $43,000.00 at the commencement of the marriage.
[3] Paragraph 24.
At the time of marriage, the wife had five children from a previous relationship and the husband had three from a previous marriage. The wife’s children lived as children of this marriage during the periods that the parties were living as a married couple. All of their children from their other relationships are now over the age of 18.
There is one child of this marriage, [X], currently aged 10.
The wife says she has worked with the husband managing cattle properties and other occupations including training as a [omitted] and operating a [small business] during the marriage. The husband has worked on cattle properties his entire life and was a station manager throughout the marriage. There appears to be no challenge that the wife was the primary carer of [X] during and after the marriage and the husband was the primary income earner.
The husband and wife established a business partnership during the marriage and that partnership was the vehicle used to breed and sell cattle. The husband was able to run their cattle on properties on which he employed was station manager.
As part of the husband’s employment as station manager, he was provided with housing and the wife says that is why they did not have a “matrimonial home”. The parties do not own a rural property either.
The parties are in dispute about the length of their relationship. The wife says they commenced a de facto relationship in 1997, married in 2001 and separated in March 2009, a relationship of 12 years. The husband agrees they married in 2001 but says the marriage did not last long and that they separated in May 2003 for four years. He says it was not until December 2007 that they resumed living together and that they finally separated in January 2009. The husband therefore contends that their marriage is around 5 years.
As to the separation of four years, the wife makes no mention in her sworn material of the extent of this separation saying only that there were some difficulties during the relationship and this involved some temporary separation for a period[4] . The wife’s counsel, Mr Moore, acknowledges that the extent of the separation is not referred to in the wife’s affidavit. Mr Moore refers me instead to a letter which was attached (JEA1) to the mother’s material which reads we are instructed that in approximately 2004, you went to Western Australia and took with you all the cattle in agistment in Queensland at that time. Mr Moore submits, though, that the wife’s position is that the parties were not separated as the relationship continued in many ways. It is not contested that during the separation the wife lived in Queensland and he relocated to Western Australia for three or four years. The wife concedes also that the husband paid child support for the period the husband lived in Western Australia from 2003 until 2007, the period the husband says the parties were separated.
[4] Wife’s affidavit 16/2/10 paragraph 32.
The parties agree that they resumed living together in 2007 and separated finally [in] January 2009.
As to the acquisition of assets during the relationship, the wife says that in November 2000 just prior to marriage a house was purchased for $40,000.00 in her sole name. On the wife’s evidence this is at a time when the parties had been living together for about three years. By purchasing the house in the wife’s name, the parties were able to obtain the first home buyers grant which was used as the deposit. The entire balance of the purchase price was borrowed through a mortgage with the [A] bank and the mortgage debt became a debt of the marriage.
The husband says this house in [C] was used by the wife and children to live in during the week and that in doing so a daily drive of 56 kilometres from [H] Station to [C] where the children went to school could be avoided. Within a year of purchasing the house, the husband says it was decided to send the wife’s children to boarding school and that the wife then returned to live with the husband on [H] Station. The house in [C] was rented out and the husband contends that the wife retained the rental monies for her own use.
At their separation in May 2003, the husband says the parties entered into a proper agreement which was never formalised. He says that agreement was that the wife would retain the [C] house for her sole use debt free and the [omitted] motor vehicle. The husband retained the mortgage debt estimated at around $18,000.00 at that time and assumed sole responsibility for payments and retained the cattle.
The material facts relating to this informal property agreement in 2003 and the division of assets and liabilities at that time are not referred to at all in the wife’s sworn material. At the hearing the wife through her Counsel accepts that she retained the house and that the husband retained the mortgage debt and cattle.
In or around July 2004 the wife sold the house for $92,000.00 and solely retained the proceeds. The transfer document has been presented to the court by the husband[5]. The material facts relating to the wife selling and retaining the proceeds of sale of the former matrimonial home are not referred to at all in the wife’s sworn evidence.
[5] Husband’s affidavit Paragraph 19, annexure EOA 3
In relation to the cattle retained by the husband he says after 2003 when the parties separated he moved to Western Australia and ceased using the partnership the parties had established. He says he commenced trading as a sole trader. He says he instructed his accountant to transfer the brand name used by the partnership into his sole name, but accepts that it never happened. This has been rectified recently. The husband solely paid to move the cattle with him to Western Australia at a cost to him of around $20,000.00. When the husband returned to Queensland in 2007 he paid around $23,000.00 to return the cattle and took up a position as [omitted] at [Station N].
When the parties reconciled in 2007 a [omitted] business was purchased for the wife to operate in the town centre of [omitted]. This is where the wife moved with their daughter apparently due to the isolation of [Station N].
The parties jointly borrowed $40,000.00 from [E] to pay for stock and equipment for the [small business]. The business failed and closed down. Plant and equipment was sold for the sum of $13,761.00 which the wife solely retained.
The husband retained the debt for the borrowings for the [small business], taken out through [E] Finance. The husband has solely continued to maintain the debts of the marriage up to the date of hearing. These material facts relating to this second division of assets and liabilities do not appear in the wife’s material. At the hearing the wife’s counsel conceded that this was the position.
The husband remains a station manager at [Station N].
The wife is now a bar attendant and continues to be the primary carer of [X]. She says she is now in dire financial difficulty with minimal assets of around $8,000.00 and debts around $16,000.00. There is no explanation at all by the wife as to how the funds retained by her, some $105,000.00, have been expended.
She concedes that the husband pays $660.00 child support per month but says she does not understand why he is not paying more.
The wife’s own income is $670.00 per week and she says she has expenditure of $1,094.00. The husband’s weekly income is $1,900.00 and he has expenditure of $1,833.00 or $67.00 per week surplus as set out at paragraph 45. In addition the husband says he is solely liable for paying the return airfares for [X] to spend time with him.
Property Pool
As at the date of this hearing, the estimated asset pool appears to be as follows:
| Asset | Estimate Husband | Estimate Wife |
| 1/3 Interest in [Property C] | $60,000.00 | $100,000.00 |
| The cattle | $32,000.00 | $171,460.00 |
| 2004 [Motor Vehicle] | $7,000.00 | $21,000.00 |
| Contents - husband | $2,000.00 | $2,000.00 |
| Bank account - husband | $1,000.00 | $1,000.00 |
| Super - husband | $20,531.00 | $20,531.00 |
| Super - wife | $1,400.00 | $1,400.00 |
| Contents – wife | $3.000.00 | $3,000.00 |
| Car - wife | $5,000.00 | $5,000.00 |
| Total Assets | $131,931.00 | $325,391.00 |
| Liabilities: | ||
| Mortgage on [Property C] | $17,000.00 | $17,000.00 |
| [E] Bank (business “seasonal account”) | $39,081.00 | $39,081.00 |
| [A] Visa | $22,000.00 | $22,000.00 |
| [G] Lease | $2,460.00 | $2,460.00 |
| Cattle feed and accountant debt | $4,890.00 | $4,890.00 |
| Tax bill – husband | $879.00 | $879.00 |
| Car loan – wife | $6,000.00 | $6,000.00 |
| MasterCard – wife | $10,300.00 | $10,300.00 |
| Total Liabilities | $102,610.00 | $102,610.00 |
| Estimated Net Assets | $29,321.00 | $222,781.00 |
As can be seen in the above table:
a)The husband estimates the net pool to be estimated at around $30,000.00. This includes a direct contribution by him through his inheritance late in the marriage of an interest worth $60,000.00 in his late mother’s house.
b)The evidence is that the husband holds a minority interest of 1/3 in a house with his two siblings and that the husband and his siblings bought out one sibling for a total cost of $60,000.00 and the husband had to borrow his share of that sum being $20,000.00.
c)The value of the cattle is estimated at $32,000.00 by the husband and $171,460.00 by the wife.
d)Without the cattle in the asset pool, the pool is modest. Without the cattle the husband’s estimate of the net pool would be negative $2,679.00 and the wife’s estimate of the net pool would be $51,321.00.
e)Even with the cattle in the pool with a value around that estimated by the husband, the asset pool is modest and less than the amount being sought by the interim payment of $80,000.00 sought by the wife.
f)There is no real estate owned outright by either party, the only real estate being the husband’s minority interest in his mother’s house.
g)There is no cash in the pool that could satisfy an Order for $80,000.00 to be paid to the wife.
h)There are no investments that could be crystallised to raise cash.
i)The husband is currently solely responsible for payment of all of the past and current debts.
The thrust of the wife’s case and the issue about which most time was spent in submissions by Mr Moore, centred on the wish of the wife to have funds to obtain a valuation of the cattle and to trace the sales of the cattle made by the husband over the past years.
Value of the cattle – past sales
On looking at the wife’s material it seems to me that the wife has been preoccupied in establishing the number of cattle sold over the past years through her own research on the internet. She has conducted internet searches looking for results of the sales and in particular the “[DB] Sales”. The wife sets out at paragraphs 44 to 51 the results of her searches going back ten years. She says: ten cattle were sold in 2000; three bulls in 2001; three bulls in 2003; a single bull in 2004: five bulls in 2005 and four bulls in 2006. The wife has averaged out the sale prices. The wife says her internet search also reveals that their former partnership sold a stud for $4,500.00 in 2007. Other references are made to sales in March 2009 of forty three cattle under the brand of the parties’ former partnership.
The wife asks that I adopt figures estimated by her with reference to the internet sale figures as a guide as to how much the current cattle might be worth now. The wife’s own speculative calculations result in a possible value of $171,460. 00 for the cattle.
The wife’s reference to sales ten years ago, in 2000 and up to 2003 go back to the first period of their marriage prior to their first division of property. The subsequent sale of ten bulls from 2002 to 2006 are in the context of the parties living separately from 2003 until 2007, and on the husband’s evidence, the parties were separated for most of this period.
Livestock figures
The husband swears to having 86 cattle at the date of hearing. The wife says there may be horses as well. The husband had up to six horses as shown in the June 2009 livestock figures.
The wife contends that she needs to have the existing cattle valued as she does not accept the husband’s estimates. The husband however refers me to the 2009 Livestock Trading Account for the year ended 2009 as being the best evidence at this stage of past sales[6]. This document shows:
a)During the course of the year ending June 2009, 28 cattle were sold which resulted in a gross profit of $37,877.22. The opening stock of cattle was 113 and there was a natural increase of 24 cattle, bringing the total number to 137.
b)The opening stock for the same period for horses is shown at five plus one purchased. There were no sales of horses as of 30 June 2009.
c)According to the 2008 Livestock trading account twelve cattle were sold for a gross income of $13,010.83 and there were no sales of horses.
d)Perusal of the Livestock trading account for the year ended 30 June 2007 reveals there were thirteen cattle sold for a gross figure of $32,470.00 and there were no horses sold.
e)The Livestock Trading Account for 2007 shows that the sales in 2006 were eighteen cattle at a gross figure of $25,500.00.
[6] Exhibit W1.
As at 30 June 2009 the 2009 the livestock trading figures of the husband indicate the existence of 137 cattle and 6 horses owned by the husband. The number of cattle in existence as at 22 April 2010 is 86 as deposed to by the father consisting of 50 cows, 12 calves, 8 heifers, 16 bulls.
I note also that security given for the lending facility of $40,000.00 from [E] facility is livestock shown on the annexure to the document as “45 cows, 32 heifers, 32 bulls”. The document is dated 24 June 2008[7].
[7] Exhibit W2.
In relation to the likely past sales and the funds received from those sales, for the purpose of this application I am satisfied that the sales figures as shown in the Livestock Trading Account are the best evidence of the past sales made by the husband.
A perusal of the financial records of sales in the years 2006 through to 2009 shows the selling of cattle has been done at modest levels. The annual turnover for the years 2006 to 2009 shows sales at figures such as $25,500 in 2006, $32,470 in 2007 and $13,010 in 2008. I consider the trading figures to be the most reliable figures for my purposes at this stage.
I accept the submission of Mr Betts of Counsel for the father, that the speculations of the wife to the current value of the cattle at over $200,000.00 bears no resemblance to the apparent wealth of these parties in the past or to their current asset pool.
The wife’s internet searches are random and without any context. I do not accept the wife’s speculations coupled with her inferences as being a reliable guide as to what the current value of the existing cattle might be.
Valuing “the business”
The wife also contends that funds from the proposed payment of $80,000.00 ought to be spent valuing “the business”. I have evidence of its profitability or rather lack of it.
The profit and loss statement of the husband as a sole trader for the year ending 30 June 2009[8] shows sales of $37,569.00 from which expenditure of $39,771.05 is deducted resulting in an operating loss of $2,201.42. On that same document I am able to observe that the position in 2008 was sales of $34,803.05 and expenditure of $39,606.67, resulting in a net loss of $4,803.17.
[8][8] Exhibit W3.
The Balance Sheet showing the husband as a sole trader for the year ending 30 June 2009 shows total proprietor’s funds $16,277.13; total assets $27,108.65 and net assets $16,277.13.
The figures shown in the financial records paint a picture of a sole trader spending more on expenses than is achieved in sales. The husband is conducting this activity from the property of his employer and it seems through the good grace of his employer. The financial records do not reveal any agistment fees for the cattle nor do they show that the husband had paid himself or anybody else wages for performing the work involved in grazing and selling the cattle.
Adding agistment fees or an allowance to pay for the time spent in this activity would add to the losses already incurred. The husband contends that there is no value in his activity of selling cattle. On the evidence before me, this may well be correct. I query the commercial reality in spending any significant funds on valuing this failing business.
The wife provides no evidence to the court from a valuer as to the likely costs of valuing the cattle, the business or the husband’s late mother’s property.
Where would the funds come from?
In determining whether to exercise my discretion to Order a partial payment to the wife prior to the final settlement, consideration of where the funds would be drawn from is, in my view, a relevant matter in this case. The authorities suggest that an interim order may be appropriate where the respondent is in a financial strong and superior position to the applicant and in control of the bulk of the assets or wealth of the parties.
At the outset I note that the wife makes no submissions at all nor is there any evidence from the wife as to where the funds she requests be paid to her might materialise from. It is clear that there is no readily available source of cash that the wife can point to.
As to the husband’s financial standing, in my view the husband is not in a strong financial position. He does not appear to have any significant funds from which he can pay his own litigation costs. He earns a higher income that the wife, however, he is also paying off the parties outstanding debts. He has $67.00 a week available as surplus after meeting the payments for the parties’ joint debts, his child support, tax and basic and modest living expenses as shown in his material.
As to the husband’s assets and liabilities as shown on his Financial Statement, he has property estimated at $102,900.00 and debts at $86,310.00. The asset which primarily constitutes his property is the inherited interest, received in the last 2 years of the relationship, from his late mother. Does the wife suggest that the husband sell his inherited interest to raise funds to pay to her by way of an interim payment? The husband’s 1/3 interest would in any event most likely have little attraction to any buyer other than his own siblings. There is no indication that the wife has considered the future difficulties the husband may encounter if he attempted to sell his 1/3 interest, or the ramifications that a minority interest may have on the value of the husband’s interest.
The wife says, and I accept, that she does not have the ability to pay $80,000.00 for legal costs and valuations. The husband, however, is also in a similarly precarious financial position.
Looking at the asset pool, the only other remaining asset of any possible value apart from the husband’s inherited 1/3 interest in his late mother’s house, is the cattle. Does the wife suggest that the cattle be sold in order to raise funds to pay to her lawyers and to pay valuers to value the cattle? If the husband is correct in his estimated value of the cattle at around $32,000.00, even after sale there will still be insufficient funds to satisfy the wife’s interim order. Similarly if the husband is correct in the value of his 1/3 interest in his mother’s home, even if his siblings could afford to pay him out, the funds raised would be insufficient to satisfy the wife’s application.
The failure of the wife to address the issue of where the proposed payment of $80,000.00 is to be drawn from is in my view a fundamental flaw in this application.
Issues in contest in the proposed final orders
It seems to me that even on a brief view, there are various issues in contest relevant for consideration in an s.79 property application and the section 75 (2) factors in this matter. Those issues include:
a)The greater assets that the husband brought in initially to the marriage and the effect of the offsetting contributions of the wife;
b)The dispute as to the length of the marriage and the impact of that on the overall position of each party.
c)Whether there was a separation for four years as the husband says or whether the parties remained in a marriage as suggested by the wife.
d)The relevance of the contributions of the husband to the support of the wife’s five children who were under 18 and lived as children of the relationship.
e)The relevance and treatment of the wife receiving earlier distributions of property being worth in excess of $100,000.00 and the relevance and treatment of the assets and debts retained by the husband and his sole payment of joint losses from 2003 onwards.
f)The size of the asset pool as estimated by each party.
g)The future division of property noting that the husband’s interest in his mother’s house is one of the largest assets in the pool.
h)The evidence of the past sales, the number of cattle, the cost of raising the cattle as shown in the financial records as opposed to the wife’s speculations, inferences and internet searches.
i)The treatment of the current debts of the wife and the husband.
Discussion
I consider that there are many factors in this property matter which could significantly alter the proposed entitlement of the parties, and in particular the wife. The wife’s application seeks 60% however her Counsel conceded that this percentage may not be pressed.
In my view, it is within the range of likely outcomes at the final trial that the proposed payment by the husband to the wife of $80,000.00 could well exceed the wife’s entitlement at a final trial. There are a range of variables and uncertainties that could lead to a variety of results at a final trial.
I am not satisfied that if the proposed Order was made now, that the wife will likely receive a sum sufficient to cover this advance at a final hearing. I am equally troubled by the prospect there may not be sufficient property remaining to meet any property entitlement that the husband has at a final trial. Indeed such a payment to the wife now may well exhaust the funds available for any further property division.
In Zschokke reference is made to the Full Court decision in Harris (1993) FLC 92-378 and endorsed by their .Honours in Zschokke. In noting that the exercise of power to make an interim property order should be confined to circumstances presented at the time which are compelling, such as where both parties agree to an early partial distribution, or urgent circumstances where an order is necessary to avoid an asset being eroded or lost in the intervening period, their Honours also stated that the power must be exercised within the parameters of s.79 and:
Of necessity it is likely to be a somewhat imprecise exercise. Consequently, it must be exercised conservatively and the Judge must be satisfied that the remaining property will be adequate to meet the legitimate expectations of both parties at the final hearing, or that the order which is contemplated is capable of being reversed or adjusted if it is subsequently considered necessary to do so[9].
[9] Paragraph 71 Zschokke
In my view, given the financial position of the parties and the extent and nature of their assets and liabilities, I am not satisfied that it would ever be possible to reverse or adjust the effect of the proposed order at any final hearing.
Even if there were funds available to make such a payment, an Order to do so would in my view result in an injustice to the husband. To date he has been left with all of the debts and the wife has had the advantage of the sale of assets. The only asset that the husband did not relinquish to the wife back in 2004 was the cattle and the wife now makes a claim on them. An order for a further $80,000.00 paid by the husband to the wife would simply compound this apparent historical imbalance of the wife retaining the assets and the husband retaining the debts.
My impression is that the wife is somewhat oblivious to the debts of the marriage, either past or current. I note that the wife in her material makes no reference to the past liabilities for which the husband has assumed responsibility or his current liabilities he is still repaying. Her description of the “assets of the parties” at paragraph 70 lists out assets of herself and the husband. I consider it entirely artificial to simply list one side of the equation in what is supposed to be evidence relating to the proposed asset pool. The wife’s request for an interim Order of $80,000.00 cash for herself to pay her lawyers and valuers also prioritises her interests over any interests of the husband pursuant to s.79 and it ignores the parties’ joint liabilities.
The wife’s hopes of justifying an amount of $80,000.00 being paid to her out of this property pool appear to be pinned to her speculations about how the much the cattle might be worth.
On the evidence placed before me at this point in time including the previous sales, the amount of cattle which were required for security of a $40,000.00 facility and the previous trading figures for the past years, and the size of this asset pool, I consider on an interim basis that there is more likelihood of the cattle being valued more modestly and in the range of the husband’s estimates than the speculations and inferences of the wife.
Ms Elms, Solicitor for the wife, estimates the wife’s legal fees at $18,099.71 for past work. The future fees asked for of $80,000.00 make a total expenditure on legal fees and valuations at almost $100,000.00.
No evidence at all has been obtained by the wife as to the likely cost of valuing the cattle, the house or business. There is no evidence in this matter that there is any complicated corporate structure, family trust or set of entities or involvement of third parties that requires in depth forensic accountancy work or as I have said, an estimate of such work if it was required.
In the standard case management procedures in this Court it is routine for a direction to be made at the first return date in relation to valuations. Typically, if the parties are unable to agree upon the value of an asset, the parties appoint a single expert with the costs to be shared, or paid for by one party initially with the issue of the cost reserved for the trial. This application for interim property distribution has been lodged prior to this opportunity occurring. I do not consider it necessary for anything other than a standard order for a valuation to be made in order to resolve the issue of valuing the cattle.
This is a matter where if there is to be a future property settlement, the cattle may end up being divided between the parties. I consider that there has been little to no real attention paid by the wife to the logistics of her interim application or the future proposed final division other than a proposal to spend $100,000.00 on legal fees and valuations.
I consider that a financial conference or “without prejudice” dispute resolution meeting is required prior to any further steps being taken.
Mr Moore refers me to Dowbell v Muscatidis [2009] FamCA 1277 a decision of Justice Cronin of 31 December 2009 in which His Honour made an Order for the payment of $80,000.00 to the wife. I note that in that matter, the estimated size of the asset pool was $24,000,000.00 and there were debts alleged at about the same value. I note also that there was valuation evidence about the cost of the valuation which was estimated at $100,000.00. The solicitor’s expenses were estimated at between $80,000.00 and $90,000.00. The husband in that matter volunteered to pay the cost of the valuation.
I note also in Dowbell that there were other distinguishing features such as a number of corporate entities conducted by the respondent, various businesses, along with boats, a boat berth, number plates, expensive cars, fishing equipment and various kiosks. The respondent estimated the assets at $24.8 million. The husband in that matter was in a position of considerable financial strength and had control of the bulk of the assets. There was no suggestion in that matter that the wife was proposing possibly spending the entire asset pool on legal fees and valuations.
In this matter it seems to me that the remaining assets would have to be liquidated to generate funds for a payment of $80,000.00 and that if that occurred and the money was spent on legal fees and valuations, the asset pool would be seriously diminished such that it would create a prejudice for the husband’s entitlement and likely exceed any property entitlement of the wife to be made on a final basis.
These parties have not engaged in a mediation or financial conference. The spending of $80,000.00 by one party on a valuation and legal fees seems to me to be out of all proportion to the apparent size of this asset pool. It seems to me neither of these parties could afford to pay $80,000.00 on their legal costs and valuations given their modest circumstances
Having had regard to all of the circumstances surrounding this application, I do not consider that this is a situation where the court ought to exercise its discretion to order an interim payment by the husband to the wife for her legal costs, valuations or any other purpose.
I therefore dismiss the application of the wife for an interim property distribution.
Disclosure
The wife complains that she has been hampered in the preparation of her case as the husband has been obstructionist in relation to progress of this matter. The wife points to a letter dated 9 June 2009 requesting disclosure of certain documents. The wife says the respondent did not respond to that correspondence. The wife however, then makes reference to a letter from S.B. Wright & Wright & Condie of 10 July 2009 which advises that their firm is now representing the husband.
The letter reads in part we note your previous correspondence dated 9 June 2009 in which you, amongst other things, requested from our client documents in relation to the current financial position and we also wish to inform you that our client is currently obtaining such documents, and they will be provided to you in due course. I would consider that letter to be a response to the wife’s correspondence.
By 11 August 2009 the wife’s solicitors have again written to the husband’s solicitor threatening a Hogan application and a spousal maintenance order and stating that they are urgently awaiting a response to their letter of 9 June 2009.
This response to my mind shows little understanding of how long would be required to obtain all of the documents requested by the wife as set out on page 3 of the wife’s solicitor’s original letter of 9 June 2009.
On 9 June 2009 the wife’s solicitors told the husband that he is to also obtain documents under his control, not just in his possession. The documents requested on 9 June 2009 are voluminous and cover documents going back seven years including tax returns, details of all partnerships, businesses, companies and trusts that the husband has an interest in currently or that he has had an interest in over the past seven or eight years, statements for all bank accounts for the past seven years in his name, any entity in which he has a controlling interest including partnerships, trusts and companies, copies of all other documentation relating to stud cattle breeding business including documentation from primary industry agents, documents confirming cattle sold, auction notes, tax invoices for the past seven years, recent superannuation, share documentation and copies of all correspondence the husband or his agent have entered into with the Department of Primary Industries related to the brand, including changes in whose name the brand is registered: A voluminous list of documents indeed.
The wife says in her affidavit that the husband has provided some documents but the documents requested have not been forthcoming. On 15 October 2009 the husband through his solicitor made disclosure of 50 separately identified documents. The letter concluded should you require any further information please do not hesitate to contact this office. There is no evidence before me of any further requests for disclosure.
The wife’s claim is for $80,000.00, to be paid in advance. On 16 October 2009 the wife’s own solicitors wrote to the wife (annexure JEA 4) in relation to payment of their future costs and stating that given the complexity of the matters involved and the discovery that will be necessary, it was unlikely that the wife’s costs would be less than $50,000.00 and could be as much as $90,000.00. The sum of $20,000.00 is requested to be paid in the immediate future to cover costs incurred in the past.
The wife’s application in this matter was not filed until four months later on 16 February 2010. An initiating application, financial statement and one affidavit were filed.
As to the allegations that the wife has been hampered in progressing her litigation by the husband’s obstructionist attitude, I am not at all satisfied that there has been the failure to supply documents as alleged by the wife. I consider the request for documents made by the wife was exhaustive, casting the widest possible net and the time given for such production for documents over a seven year period was unrealistic.
I do not consider that any order other than a standard order typically made at the first return date is warranted in this matter and I do not accept that the husband has been obstructionist in this regard.
Spousal Maintenance
It was agreed at the interim hearing that the spousal maintenance would be heard on a later date noting that cross examination may be required for the spousal maintenance and that the wife was not available in person on the day of the hearing.
I have made a brief reference in these reasons to the husband’s sworn evidence as to his ability to pay any other payments over and above paying the parties joint debts which he is currently paying, child support and his own living expenses. The husband has $67.00 per week surplus out of his current salary. I note the wife’s application is for $900.00 net per week which is $46,800.00 net per annum.
I direct that the wife provide written notice to the husband and the Court within seven days of the date of this Order as to whether or not she intends to continue with her application. If so, I will hear the matter on my next circuit to Mackay.
In relation to costs of and incidental to the Hogan application, I will set the matter down to be heard during my next Mackay circuit in September and direct each party to file submissions of no greater than two pages 24 hours prior to the hearing.
In the meantime, I will Order that the parties attend a Financial Conference on a date to be allocated in Mackay.
I certify that the preceding ninety-five (95) paragraphs are a true copy of the reasons for judgment of Willis FM
Date: 3/08/2010
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