Anthony and Anthony

[2008] FamCA 243

FAMILY COURT OF AUSTRALIA

ANTHONY & ANTHONY [2008] FamCA 243

FAMILY LAW – ORDERS – Review of decision

Family Law Act 1975 (Cth)

C & M [2000] FamCA 1086
De Angelis & De Angelis (2003) FLC 93-133
Grace v Grace (1997) 22 FamLR 442
House v The King [1936] HCA 40; (1936) 55 CLR 499
R & R [2007] FMCAfam 1044

APPLICANT: Mr Anthony

RESPONDENT: Mrs Anthony

FILE NUMBER: SYF 3197 of 2005

DATE DELIVERED: 10 April 2008

PLACE DELIVERED: Parramatta

PLACE HEARD: Sydney

JUDGMENT OF: Justice Le Poer Trench

HEARING DATE: 1 April 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Livingstone

SOLICITOR FOR THE APPLICANT: Willis & Bowring

COUNSEL FOR THE RESPONDENT: Mr Campton

SOLICITOR FOR THE RESPONDENT: Benjamin & Robinson

Orders

1. The husband’s application for review filed the 3rd May 2007 is dismissed.

2. The matter be listed for mention before the docket Registrar at 11:30am on 18 April 2008 for further directions which may be required to ready the matter for hearing on the 19th May 2008 before Justice Moore.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 2318  of 2003

Mr Anthony

Applicant

And

Mrs Anthony

Respondent

REASONS FOR JUDGMENT

Introduction

1. The court is required to determine a review of the decision of Judicial Registrar Johnston filed 3^rd May 2007 by the husband. The order sought to be reviewed is that made on the 4^th April 2007 where the learned Judicial Registrar dismissed the husband’s application for an adjournment of proceedings under section 79 until the demise of the wife’s aunt Miss M.

2. The competing applications under section 79 are listed for final hearing before Justice Moore on the 19^th May 2008 for three days. The matter came before the trial judge on the 11^th February 2008 for “docket call-over”.  Her Honour stood the husband’s application over to the Judicial Duty List on 1^st April 2008 and I am told by counsel, requested that the question of the section 79(5) adjournment be dealt with as a discrete preliminary matter rather than being dealt with as part of the section 79 proceedings listed for hearing before her.

Background Facts

1. The parties married in March 1986. The husband is now 50 years of age and the wife is 47 years of age.

2. The parties separated in about October 2004 although there is an issue about this. The wife alleges a separation in about 2000.

3. There are two children of the marriage aged 18 and 16. Final parenting orders have been made.

4. The husband is a teacher.

5. Each of the parties claims substantial contributions during the course of the cohabitation. Part of the contribution made by the wife includes the gift to her by her aunt of a property at L.

6. In March 2006 the wife sold the L property for $644,503 net. She used those funds to buy a property at W.

7. The wife’s aunt Miss L was born in February 1922. She is now 86 years of age and lives in a nursing home. The wife concedes that at this time the wife’s aunt does not have capacity to change her will. It is not conceded by the wife that her aunt will not have any future capacity to change her will. This is partly because the wife does not have the expertise to make such a concession.

8. The wife’s outline of case document marked as exhibit W1 for identification and tendered by the husband as exhibit H2, says, in part, as follows:-

   “The last will of the wife’s aunt appears to have been made on 8th July 2004. By way of such document the wife is to receive a portion of her aunts estate.”

9. On page five of the transcript of the proceedings before the Judicial Registrar on the 4th April 2007 at line 24 and following, the wife conceded that the size of the divisible pool of assets of the parties was about $1.3 million “or potentially higher” and that the estimated value of the aunt’s property was $3 to $4 million.

10. In the hearing before me, counsel for the wife told me that under the current will of her aunt the wife was to receive the estate after the payment out of specific legacies. The will is not in evidence however I was invited to accept the findings of the Judicial Registrar, in relation to the will, as they appear in his judgment.

11. In his reasons the Judicial Registrar set out in paragraph 5 details of the will of the wife’s aunt. The relevant portion is as follows:-

    “The wife’s aunt has made a will, that being a will dated 8 July 2004. The wife is the major beneficiary in that will. It is common ground that in the event that there is no other will, and it is difficult to conceive a situation in which there will be a change given the current medical condition of the aunt, that as the major beneficiary the wife would be likely to inherit a property with a value of approximately $3 million.”

12. In submissions before me the concession that the value of the aunt’s property was worth between $3 million and $4 million was no longer given. Mr Campton appearing for the wife told me that “the wife says the property of the aunt is not anything like $3 million to $4 million.” He said there was a fund in AMP which had about $1 million and there are properties at P.

13. The wife urged me to dismiss the husbands’ application and have the husband file a response to final orders which the wife says has never been done.

Relevant Law

1. S79  (5)  Without limiting the power of any court to grant an adjournment in proceedings under this Act, where, in property settlement proceedings, a court is of the opinion:

   (a)  that there is likely to be a significant change in the financial circumstances of the parties to the marriage or either of them and that, having regard to the time when that change is likely to take place, it is reasonable to adjourn the proceedings; and

   (b)  that an order that the court could make with respect to:

   (i)  the property of the parties to the marriage or either of them; or

   (ii)  the vested bankruptcy property in relation to a bankrupt party to the marriage;

   if that significant change in financial circumstances occurs is more likely to do justice as between the parties to the marriage than an order that the court could make immediately with respect to:

   (iii)  the property of the parties to the marriage or either of them; or

   (iv)the vested bankruptcy property in relation to a bankrupt party to the marriage;

   the court may, if so requested by either party to the marriage or the relevant bankruptcy trustee (if any), adjourn the proceedings until such time, before the expiration of a period specified by the court, as that party to the marriage or the relevant bankruptcy trustee, as the case may be, applies for the proceedings to be determined, but nothing in this subsection requires the court to adjourn any proceedings in any particular circumstances.

   S79 (6)  Where a court proposes to adjourn proceedings as provided by subsection (5), the court may, before so adjourning the proceedings, make such interim order or orders or such other order or orders (if any) as it considers appropriate with respect to:

   (a)  any of the property of the parties to the marriage or of either of them; or

   (b)  any of the vested bankruptcy property in relation to a bankrupt party to the marriage.

   S79  (7)  The court may, in forming an opinion for the purposes of subsection (5) as to whether there is likely to be a significant change in the financial circumstances of either or both of the parties to the marriage, have regard to any change in the financial circumstances of a party to the marriage that may occur by reason that the party to the marriage:

   (a)  is a contributor to a superannuation fund or scheme, or participates in any scheme or arrangement that is in the nature of a superannuation scheme; or

   (b)  may become entitled to property as the result of the exercise in his or her favour, by the trustee of a discretionary trust, of a power to distribute trust property;

   but nothing in this subsection shall be taken to limit the circumstances in which the court may form the opinion that there is likely to be a significant change in the financial circumstances of a party to the marriage.

The Relevant Case Law

Grace v Grace (1997) 22 FamLR 442

1. The Full Court (Nicholson CJ, Kay and Coleman JJ) in the matter of Grace v Grace (1997) 22 FamLR 442 held that four preconditions must be found present by the trial judge in order to exercise discretion to adjourn proceedings under s79(5) (at 448-449):

   “The discretion to adjourn proceedings is guided by the legislature. Taking the words of s 79(5) on their face, we agree with Mr Rose that there are certain preconditions which, cumulatively, must be found in order to invoke the power to order an adjournment:

   •         (a)  that there is likely to be a change in financial circumstances;

   •         (b)  that the likely change is a significant one;

   •(c)  that having regard to the likely and significant change, it is reasonable to adjourn the proceedings; and

   •(d)  that an order made if that significant change occurs is more likely to do justice as between the parties than an immediate order.

   We would add in respect of this last precondition that in light of s 79(2) we read “justice” as incorporating “justice and equity”.

   Without limiting the matters which may be taken into account in determining a claim that financial circumstances are likely to change, s 79(7) further directs the court to have regard to a party's participation in superannuation plans and whether a party may acquire property from a discretionary trust. This reflects the issues which, as recorded by the authors of Butterworths, prompted the insertion of the provision, but does not preclude other contingent interests such as inheritances from being a reason to exercise the power accorded by s 79(5).

   As a matter of principle, therefore, it is our view that an order granting or refusing an adjournment under s 79(5) is not an “adjournment” in the merely practice and procedural sense in which the term is commonly used. Such an order goes to the core subject matter of the determination to be made under s 79, thus conferring a substantive not just procedural quality to its consequences.

   Before leaving this topic, in light of discussion in recent years concerning further amendments to the provisions of the Act relating inter alia to property, we would conclude this discussion by observing that it is perhaps unfortunate that the term “adjournment” is used in s 79(5). This is because the term “adjournment” in this context may better be described as a “deferral” of the hearing of the application until the happening of one or more specified events which impact upon the capacity to conduct the property settlement determination required by s 79.

   The term “adjournment” connotes that the hearing has commenced or is due to commence within a relatively short time. Accordingly, the property identified as forming the basis of the hearing when commenced before adjournment would usually remain the subject matter for orders. Yet, clearly, the purpose of s 79(5) is to not give rise to an expectation among the parties or the court that they are concerned with the property available for distribution at the time of the s 79(5) application. Rather, the purpose of an order under s 79(5) is to defer the step of ascertaining the property pool for distribution to a defined future point in time.”

2. The Full Court in Grace also stated the importance of the correct application of the discretion under s79(5) (at 448):

   “…the exercise of the discretion to adjourn pursuant to s 79(5) has very serious consequences for the actual subject matter of the dispute and does not just relate to the conduct of the hearing. It is therefore a different type of “`adjournment” to that which is often the subject of discussion in those authorities that suggest that appellate courts should be reluctant to interfere with the exercise of discretion by a trial judge as to whether to grant an adjournment or otherwise.”

R v R [2007] FMCAfam 1044

1. In R & R [2007] FMCAfam 1044 one of the main issues was whether the expected or anticipated inheritance by Mr R (the respondent husband) would effect the alteration of property interests. The husband’s mother was dying of pancreatic cancer and had appointed the husband as an equal beneficiary to her estate. Mrs R (the applicant wife) argued that there was a significant disparity between the pool of assets and the prospective inheritance and consideration of the factors under s75(2) would be made easier by granting adjournment. Altobelli FM accepted the principles in Grace (supra) as the preconditions that are to be considered in determining whether an adjournment is to be granted under s79(5) (at paragraph 8). After considering these principles Altobelli FM was not convinced that the fourth precondition would be any better satisfied than by an immediate order and in refusing the application for adjournment noted:

   (at paragraph 9)“The application fails on the last criterion. I am not satisfied that if I were to adjourn the case so that a prospective inheritance were to crystallise, it is more likely to do justice and equity between the parties than an immediate order. Quite frankly I think it will make no difference at all whether the prospective inheritance is crystallised or remains contingent.

   (at paragraph 10) It is obvious what this case was going to be about from the time when the wife filed her response on 1 September 2006 and sought Order 3 in her response. Order 3 seeks an order that the husband pay to the wife by way of alteration of property interests a payment of $100,000 upon the death of the husband's mother, M, from his inheritance with receipt of this inheritance deemed to have taken place within three months of the grant of probate of the estate of the husband's mother. So it explicitly refers to the prospective inheritance.

   (at paragraph 14) Ultimately the absence of prejudice to the wife is demonstrated by this fact: could I make an order in the terms sought by the wife in her response? Indeed, could I do better by ordering that she receive the entire equity in the former matrimonial home and $100,000 now, rather than on receipt of the inheritance? The answer is, yes, I could. There are funds available out of the pool of assets to do just that. So it makes no difference whether or not the inheritance is received. The order sought by the wife is capable of being made, thus she suffers no prejudice and indeed no greater justice and equity could be done by postponing these proceedings.”

The Prospective Inheritance Argument Generally

De Angelis & De Angelis [1999] FamCA 1609

1. In De Angelis & De Angelis [1999] FamCA 1609 the Full Court (Lindenmayer, Finn and Holden JJ) made a number of important general observations of s79. The issue was the prospective inheritance of property by the respondent wife from the wife’s mother and aunt. The husband argued that the prospective inheritance should have been considered by the trial judge. The Full Court opined:

   “95.    The discussion by the Full Court in White and Tulloch v. White (1995) 19 Fam LR 696 of this question of the treatment of anticipated inheritances in property settlement proceedings indicates that there is no absolute rule and that each case will depend on its own facts.  However, we think it important to remember that the Court is required in exercising the jurisdiction under s.79 of the Family Law Act 1975 to accord justice and equity to both parties.  The question therefore has to be asked whether, in the present case, it would be just and equitable to the husband for the Court to have ignored the probability that, in what could well be very short period of time (given the ages of her aunt and mother), the wife could well be the owner of two properties having a combined value of almost the same amount as the value of the parties' property currently available for distribution, and particularly in circumstances where the husband had been found to have done substantial improvement and maintenance work on both properties? 

   96.      We consider that it would have been unjust to the husband to ignore this matter even if it was categorised only as a possibility and not a probability.

   97.      Furthermore, it has to be remembered that the trial Judge made only, at the maximum, a 10% adjustment in the husband's favour on account of the wife's expected inheritances.  In other words, the husband received only about $53,000 on account of this matter (and indeed possibly less if his Honour intended that a part of that adjustment was on account of the support which the husband was giving to one of the adult children of the marriage and her family).

   98.      Most of the s.75(2) matters, and thus the adjustments made on account of them, are concerned with events in the future, and thus are by their nature speculative.  These considerations are particularly relevant to the matter here under discussion.  It is true that the wife's mother may change her will again (particularly bearing in mind her history in this regard); it is true that the parties' son may challenge, and successfully challenge, the will of the aunt; it is true that changes in social security law, or the costs of maintaining the aunt and the mother and/or their properties may ultimately erode the significant equity which they both currently have in their properties; it is also true that the appraisals of the value of the two properties in question relied on by the trial Judge may ultimately be shown to be unduly optimistic.  But it is also true that within the very near future, the wife may own two properties totalling in value close to half a million dollars.  Against the background of all these considerations, a payment to the husband of only $53,000 would have to be regarded, in our view, as a reasonable exercise of the discretion.  And it is one which, on the re-exercise of the discretion, we would also make.

   99.      It will be clear, from what we have said, that we consider that it was open to his Honour, and in fact it was appropriate, to have regard to such estimates of value of the two properties which were available to him, and also, in the circumstances of this case, to place some weight on the work which the husband had done on the properties which the wife currently expects to inherit.”

C & M [2000] FamCA 1086

1. In C & M [2000] FamCA 1086 Moore J highlighted some concerns Her Honour had regarding the prospective inheritance argument:

   “84…This argument about prospective inheritances is becoming a feature of matters being litigated in more recent times, no doubt as a result of this decision being given some prominence in professional writings, and evidence is being sought to support it - particularly the production of the Will of a relative of one or other of the parties.  In my experience more often than not when it has been raised in a particular case, there has been a misunderstanding of the basis upon which De Angelis proceeded.  On my reading, it is confined to a rather narrow band of circumstances and is not an invitation to intrude and offend by a ghoulish pursuit of the current Will of a parent of one party, merely because that parent may be of advanced years, or of concessions about the value of their property.” 

Conclusion

1. I turn to consider the four preconditions referred to in the decision of Grace (supra).

(a)      That there is likely to be a change in financial circumstances

1. The first thing to note under this heading is the changed circumstances in the hearing before me from that determined by the learned Judicial Registrar. In the hearing before the Judicial Registrar there was a concession that the amount of the benefit to be potentially received by the wife upon the demise of her aunt was $3 to $4 million.  That concession is not given in the case before me. I have not been given any detailed explanation for the change of position on the part of the wife. Thus it is not possible for me to be able to determine if there is likely to be a change in the financial circumstances of the wife. As best I can see there is no evidence of the value of the aunts’ estate and the husband has to this point in time relied upon concessions. As those concessions are no longer given there may have to be some expert evidence of value commissioned.

1. Further, as I have referred to earlier, the wife makes no concession that her aunt will not at some future time have the requisite capacity to make a new will. This last position taken by the wife, in fairness to her, is said to be based on insufficient expertise on her part to be able to make such concession. Again it may be that some expert evidence will need to be commissioned in relation to that matter.

2. Given the matters set out under this heading I conclude that it is not possible for me to determine this matter and so I reluctantly reach the position of having to dismiss the application for adjournment.

Further Comment

1. In a case such as this where there are substantial assets to be divided between the parties, without including any potential inheritance, I cannot see that in most cases it is possible or appropriate to consider section 79(5) as a preliminary matter. The section is directly connected to subsection 79(6). As stated earlier that sub-section allows the court to make an interim order in relation to the property of the parties if the court proposes to grant an adjournment as permitted under sub-section 79(5). I cannot see how that would be able to be properly determined where there are other issues at play between the parties such as the division of assets to be made to reflect the contributions of the parties. It seems to me that consideration of any application under section 79(5) should in cases such as the present be made as part of the final hearing.

2. In the hearing before me I was invited to read the decision of the learned Judicial Registrar whose decision was delivered ex-tempore on the 4th April 2007. In that judgement the following extract appears:

   8. I must say, as I have indicated to learned counsel for the husband, in my view, quite a distinction can be drawn between Grace's case and the present case. The difficulty, as I recall, in Grace's case was that there was not any property which would enable the Court if it did not adjourn the substantive property proceedings to do justice between the parties. That is not the situation in my view in respect of the present proceedings. In all the circumstances I am not persuaded that the matters which the husband is required to make out pursuant to s.79(5) have been made out in this case. Accordingly, in my view his application for an adjournment of the hearing in the substantive proceedings should be dismissed.”

3. Grace (supra) was a case in which Justice Moore heard as a preliminary matter a section 79(5) application for adjournment. The facts of that case, in my opinion, lent themselves to such a process in a manner which the subject case does not. It was that aspect of the case to which the learned Judicial Registrar referred in the above quote and I agree with his view on the matter.

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Le Poer Trench.

Associate: 

Date:  10 April 2008