Bacchia & Bacchia
[2024] FedCFamC2F 205
•21 February 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Bacchia & Bacchia [2024] FedCFamC2F 205
File number(s): MLC 6588 of 2023 Judgment of: JUDGE SYMONS Date of judgment: 21 February 2024 Catchwords: FAMILY LAW – PROPERTY – Interim Application – where the wife seeks interim property orders for the sale of three matrimonial properties – where husband agrees to the sale of one property only and seeks to retain others on a final basis – where consent orders made for husband to meet expenses of the properties – where husband incarcerated – where wife apprehends that husband will be unable to obtain funding to retain properties so that an order for sale is inevitable - principles relevant to interim sale of property – application dismissed as premature Legislation: Family Law Act 1975 (Cth) ss 79, 80 Cases cited: Aitken & Murphy (No 2) [2012] FamCA 239.
Gabel & Yardley (2008) FLR 270; [2008] FamCAFC 162.
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466; [2009] FamCAFA 166.
Division: Division 2 Family Law Number of paragraphs: 46 Date of last submission/s: 23 October 2023 Date of hearing: 23 October 2023 Place: Melbourne Solicitor advocate for the applicant: Mr Condello of Condello Lawyers Counselforthe respondent: Ms Finemore Solicitorfortherespondent: Coulter Legal ORDERS
MLC 6588 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS BACCHIA
Applicant
AND: MR BACCHIA
Respondent
ORDER MADE BY:
JUDGE SYMONS
DATE OF ORDER:
21 FEBRUARY 2024
THE COURT ORDERS THAT:
1.The wife’s application in a proceeding filed on 16 June 2023 seeking the sale of the property located at B Street, Suburb C and the property located at D Street, Suburb E be dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE SYMONS:
INTRODUCTION
In this matter, the applicant wife seeks interim orders for the sale of the parties’ three real properties, being:
(a)B Street, Suburb C (Former Matrimonial Home)
(b)F Street, Suburb G and Car Park space (Suburb G Property);
(c)D Street, Suburb E (Suburb E Property). (collectively, the Matrimonial Properties).
The respondent husband’s position is that he agrees only to the sale of the Suburb G Property. He seeks that the Former Matrimonial Home and the Suburb E Property be retained.
BACKGROUND
The applicant wife is 43 years of age. The respondent husband is 46 years of age. The parties commenced a relationship in 2004 and were married in 2007. According to the wife, the parties separated under the same roof in June 2022. The husband claims the parties separated in December 2022. There are three children of the marriage all of whom live with the wife.
The husband has been remanded in custody since early 2023. The husband’s charges relate to incidents of family violence perpetrated against the wife. Accordingly, his participation in the interim hearing was facilitated via video-link from the correctional facility. The Court was told that the husband was in custody awaiting trial in relation to criminal matters in Victoria as well as extant criminal proceedings in Queensland. It was anticipated that the husband would remain in custody at the very least until early this year. However, given the serious nature of the charges, he would likely remain in custody beyond that date.
PROCEDURAL HISTORY
These proceedings were commenced by the wife on 16 June 2023. The wife made the interim application presently before me and sought that she be excused from particularising orders sought on a final basis until after the parties had exchanged financial disclosure.
On 4 August 2023 the matter came before a Registrar for a first return date. The husband had not filed any material responsive to the wife’s application. Orders were made by consent including that the husband file his responding material by no later than 1 September 2023, that the parties attend mediation on 24 October 2023, and that the husband be solely responsible for all mortgage repayments, insurance, council and water rates and any other statutory charges or levies in respect of the Matrimonial Properties and that he keep the wife indemnified against these payments (August orders).
On 12 September 2023, the wife’s solicitor wrote to the representatives of the husband to draw attention to the following matters[1]:
(a)Notwithstanding the August orders made by consent, outgoings in connection with the Matrimonial Properties remained unpaid since April 2023, including Council Rates for the Suburb C Property in the amount of $1,216.50 and Council Rates for the Suburb E Property in the amount of $799.55.
(b)The wife was extremely concerned about the husband’s capacity to fund the Matrimonial Properties in circumstances where he had failed to make the above payments and was yet to produce any financial disclosure or material to substantiate his financial position.
(c)In the event that the husband failed to provide confirmation that all outstanding arrears were paid, together with assurances that all future bills be paid, the wife foreshadowed an Application in a Case seeking immediate sale of the Matrimonial Properties.
(d)The husband was in breach of orders that required the filing of material responsive to the wife’s initiating application. The wife sought a “realistic indication” as to when this material would be filed.
[1] Annexure “MSB-1” to the wife’s affidavit dated 16 June 2023 and filed on 17 October 2023.
On 27 September 2023, the matter was brought on a for a directions hearing at the request of the wife’s solicitor, in response to the wife’s concerns that the husband’s failure to comply with orders for the filing of responsive material and his lack of financial disclosure would prevent the matter proceeding to the ordered mediation on 24 October 2023. Responsive to these concerns, the matter was listed for an Interim Defended Hearing before me on 23 October 2023, noting that the issue for determination was the interim sale of the parties’ three real properties. Procedural orders were made for the filing of any amended application from the wife, and consolidated affidavits and case outlines from both parties.
On 13 October 2023, the husband filed material responsive to the wife’s application. The husband indicated he was agreeable to the sale of the Suburb G Property only.
On 17 October 2023, the wife’s solicitor indicated by email to my Chambers that the wife intended to proceed with the Interim Defended Hearing on 23 October 2023 to determine her application for the sale of all three Matrimonial Properties.
MATERIAL RELIED ON
The applicant relied on the following documents:
·Her Application in a Proceeding filed on 16 June 2023;
·Her Financial Statement filed on 16 June 2023;
·Her affidavit filed on 13 October 2023 (wife’s affidavit)
The respondent relied on the following documents:
·His Response to Initiating Application filed on 13 October 2023;
·His Financial Statement filed on 13 October 2023;
·His affidavit filed on 18 October 2023 (husband’s affidavit)
THE PARTIES’ POSITIONS
The properties
The Former Matrimonial Home was purchased by the parties in 2007. Following separation, the wife left the property and has been residing in rental accommodation with the children in Suburb H. The husband seeks to retain this property on a final basis noting he considers the property to be his current residence, despite presently being held on remand.
The Suburb E Property was purchased by the parties in 2012 and is the property from which the husband conducts his business known as J Group (the business). The husband seeks to retain this property on a final basis.
In terms of the Suburb G Property, given the parties were in agreement as to the sale of this property (including the means by which this would occur), I made orders by consent to facilitate the sale of the property at the interim hearing on 23 October 2023. These orders provided that the proceeds of sale would be disbursed in payment of sale costs, to discharge the mortgage secured against the property and to make provision for an anticipated capital gains tax assessment with the balance to be divided equally between the parties and characterised as a part property settlement. There was broad agreement between the parties that a sale of the Suburb G Property would likely yield an approximate amount of $70,000 for distribution to each of the parties.
The parties’ positions, with respect to the two remaining properties, was as follows:
Property Ownership Wife’s value Husband’s value Former Matrimonial Home Wife $1,300,000.00 $1,000,000 Suburb E Property Wife $850,000 $600,000 Liabilities Mortgage for Former Matrimonial
HomeJoint $238,031.04 $245,000 Mortgage for Suburb E Property Husband Unknown $400,000 The wife’s case
The wife contends that the sale of the Former Matrimonial Home and the Suburb E Property is necessary in circumstances where neither party is able to meet the expenses of these properties. In her affidavit filed on 13 October 2023, the wife expressed her concern that the husband was not receiving any income other than the rental income he was receiving from the Suburb G Property, which would cease upon its now agreed sale.
The wife held further concerns that it was unclear how the husband’s business would continue to operate whilst he was in custody. However, at the hearing on 23 October 2023, solicitor for the wife, Mr Condello, told the Court that following the filing of affidavit material by the husband on 18 October 2023, the wife had become aware that there was now an arrangement in place, whereby the husband’s brother was operating the husband’s business whilst the husband remained incarcerated and had taken charge of making the necessary payments. The wife indicated through her lawyer that she was prepared to accept that the outgoings with respect to the Matrimonial Properties were no longer in default.[2]
[2] See transcript of proceedings dated 23 October 2023 at page 4 lines 30-35.
The wife’s ultimate position, however, was that based on the husband’s previous non‑compliance, she did not have any confidence in his ability to continue to meet his obligations to meet the expenses of the Matrimonial Properties, in circumstances where he would remain incarcerated for a period not yet known.
Mr Condello told the Court that the wife was struggling financially, in particular because she was solely responsible for the care of the children (without receipt of child support) and because her employment as a healthcare professional had become part time as of late 2023. The wife deposed that her entire income was directed at her rental payments, and the outgoings and living expenses of herself and the children and she herself could not meet any of the expenses connected with the Matrimonial Properties should the husband fail to do so.
On the wife’s view, given the uncertainty surrounding the husband’s incarceration and his ability to earn an income, he would be an unlikely candidate for finance approval. The wife was therefore apprehensive about the ability of the husband to pay out her interest in each property if he was to retain them on a final basis. The wife submitted that if the Court was to make orders in the terms sought by the husband, it would be tantamount to “kicking the can down the road” by deferring the inevitable sale of the Former Matrimonial Home and the Suburb E Property. This would cause undue prejudice to the wife by virtue of the delayed distribution of assets.
The husband’s case
The husband accepted that he had encountered difficulties meeting the expenses relating to the Matrimonial Properties for a period following the making of the August orders as a result of his incarceration and being moved between facilities on three occasions. However, the arrangement he had since implemented with his brother enabled him to comply with his obligations to meet the relevant expenses as and when they fell due. The husband acknowledged that while he did not currently draw an income, what income would have been available to him was being utilised to meet the invoices provided by the wife. The husband confirmed that all payments relating to the Matrimonial Properties were now up to date and arrangements were in place for future payments to be met in a timely manner.
The husband claimed that the wife had not assisted him in meeting the parties’ expenses by choosing to leave the Former Matrimonial Home and to instead incur rental expenses, by purchasing a new car when one was provided to her by the husband’s business, and by reducing her work commitments to part time. The wife denied this assertion and said incurring these expenses was necessary.
In relation to the Former Matrimonial Home, as indicated above the husband’s position is that he wishes to retain the property. His evidence is that the Former Matrimonial Home is the residence where the children have spent most of their lives, and he has undertaken significant renovations on the property estimated at around $175,000.00. This included electrical works and significant landscaping. The husband’s brother was currently maintaining the property and it was the address which has been listed on the husband’s bail applications. The husband currently contributes approximately $2,400.00 a month to the mortgage repayments.
The Suburb E Property is the address out of which the husband’s business operates. The husband asserted that if these premises were sold, the business would have no alternative but to cease operation, meaning the husband would have no further capacity to contribute financially to the family. The husband’s evidence was that significant works have been undertaken on the property to ensure it was fitted out to contain all aspects of the husband’s business. Sale of this property would need to factor in appropriate marketing as it would not be suitable for most commercial purposes, therefore a rushed sale would fail to capitalise on the potential value of the property.
Counsel for the husband, Ms Finemore, submitted that the wife had not clearly identified a head of power which would support the making of orders for the sale of the Matrimonial Properties; for example, the wife was not seeking a distribution of the sale proceeds but instead her form of orders contemplated that the proceeds of sale would be held on trust. It was submitted that at this interim stage, any exercise of the section 79 power (if this was even available) was required to be undertaken conservatively; the Court must be satisfied that the remaining property would be adequate to meet the expectations of both parties at trial, or that the order which is contemplated is capable of being reversed or adjusted, if necessary, at trial. The primary submission was that the orders sought by the wife were not reversible. The husband should be afforded the opportunity, at a trial, to retain the properties.
The husband asserted that any issue as to his ability to refinance the Matrimonial Properties and pay out the wife’s entitlement could not be determined until after his contested criminal trial in early 2024. That being the case, an order for the sale of the Matrimonial Properties would be premature given the outcome of this trial might well be that he was released from prison and able to approach the banks and assess his capacity to refinance the existing mortgages and pay out the wife’s entitlement. The Court was not in a position to speculate as to the outcome of that hearing.
LEGAL PRINCIPLES
Section 79 of the Family Law Act 1975 (Cth) (the Act) confers on the Court a power to make orders for property settlement. While there is only a single exercise of power under s 79, the Court may exercise the power through “a succession of orders until the power ... is exhausted” or until a final order dealing with all the known property of the parties is made.[3]
[3] Gabel & Yardley [2008] FamCAFC 162.
Section 80(1)(h) of the Act confers on the Court a power to “make a permanent order, an order pending the disposal of proceedings or an order for a fixed term or for a life or during joint lives or until further order”. Together, ss 79 and 80(1)(h) confer on the Court a power to make orders for interim property settlement.
The Full Court decision of Strahan & Strahan (Interim Property Orders)[4] is the leading authority on the test to be applied when considering an interim property settlement application. The Full Court stated that there are two stages to consider when hearing an application for interim property settlement.
[4] Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466.
The first stage is what was said to be “the procedural step”. It was described by Justices Boland and O’Ryan at [132]:
In relation to the first stage, in our view, when considering whether to exercise the power under s 79 and 80(1)(h) of the Act to make an interim property order the “overarching consideration” is the interests of justice. It is not necessary to establish compelling circumstances. All that is required is that in the circumstances it is appropriate to exercise the power. In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.
The second stage of the process for considering interim property applications is the “substantive step”. With respect to the second stage of the process, their Honours said at [135]:
In relation to the second matter, as the jurisdiction under s 79 of the Act is being exercised the provision of that section must be considered and applied but with limitations given that it is not the final hearing. There is also no requirement of compelling circumstances in relation to the substantive step.
In exercising the power under s 79 of the Act, it is important for the Court to ensure that it is just and equitable to make the order sought in circumstances where the power will not be exhausted by an interim order.[5]
[5] Ibid at [136].
The Full Court decision of Gabel v Yardley confirmed that “the interim order must be capable of variation or reversal without resort to s 79A of the Act or appeal”[6].
CONSIDERATION
[6] Gabel & Yardley [2008] FamCAFC 162 at [72].
Should an order be made for the sale of the Former Matrimonial Home and/or the Suburb E Property?
The wife carries the persuasive onus of satisfying the Court that a sale of one or both of the Former Matrimonial Home and the Suburb E Property should take place.
In Aitken & Murphy (No 2) [2012] FamCA 239, in the context of an application for orders for the partial distribution of property, pursuant to ss 79 and 80 of the Act, Young J said at [158] that, in considering whether to make such an order “care must be taken not to potentially defeat any parties’ claim or legitimate expectations in a final hearing” and, accordingly, a party should not be required to liquidate an asset reasonably sought to be retained in the final hearing”.
The wife’s proposal cuts across this principle. She justifies it by reference to the following two arguments:
·First – an order for the sale of the two properties would be an inevitability at final hearing;
·Second – the husband has defaulted on the payment of mortgage and related payments on the properties.
The first argument is premised on the Court accepting that the ability (or rather inability) of the husband to secure financing to retain one or both of the properties is a fait accompli. I do not accept this argument.
Whether the husband is able, in the future and despite his current difficult circumstances, to borrow some funds from some source, if he wishes to retain one or both properties as part of whatever entitlement to property it is found to be just and equitable that he receives on a final basis remains to be seen. The wife’s argument is speculative and made prematurely. I cannot definitely conclude that at a trial, the only order which would be just and equitable would be one requiring the sale of the properties (as opposed to orders permitting the husband the opportunity to attempt to raise the funds necessary to acquire them).
The second argument essentially fell away during the hearing when the wife (through her lawyer) indicated that she was prepared to accept that the outgoings with respect to the Matrimonial Properties were no longer in default.
There are further reasons why I am not persuaded that it is just and equitable to order the sale of the Former Matrimonial Home and the Suburb E Property.
First and fundamentally, I share the disquiet of the husband that the wife has not identified a source of power for the making of sale orders in the terms proposed. The wife simply invites the Court to compel a sale with the proceeds to be held on trust pending a future distribution of some kind.
Second, again fundamentally, neither of the parties has in this proceeding provided sufficient evidence to enable the Court to make an assessment as to the likely adjustment of the parties’ property pool. This was a marriage of 15 years that produced three children. It is highly likely that there are many and varied contributions and other matters to be considered in determining on a final basis, those orders which are just and equitable.
Third, the sale of either property would not be capable of being remedied, in the sense that, obviously, an order of this kind would operate to deny either party the opportunity to seek to receive the property in specie as part of whatever orders are found to be just and equitable and appropriate to determine the property settlement proceedings between them.
Further, to the extent that the wife’s application was actuated by her financial circumstances this was not reflected in the form of orders sought. In any case, some of the financial pressure on the wife will be alleviated by the distribution of proceeds from the sale of the Suburb G property, a matter that was conceded by the wife’s lawyer at hearing.[7]
[7] Transcript of proceedings dated 23 October 2023, page 7 lines 34-40.
Accordingly, I will order that the wife’s application in a proceeding filed on 16 June 2023, insofar as it seeks orders for the sale of the Former Matrimonial Home and the Suburb E Property, be dismissed.
I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Symons. Associate:
Dated: 21 February 2024
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