BEST & VIDMA

[2015] FamCA 715

FAMILY COURT OF AUSTRALIA

BEST & VIDMA [2015] FamCA 715

FAMILY LAW – PROPERTY – Interim distribution – where the husband seeks an interim distribution from the proceeds of sale – where consideration of general principles – where significant factual issues between the parties – where order for modest distribution to both parties made – where characterisation of the payment reserved to trial.

Family Law Act 1975 (Cth) ss 75, 79, 80(1)(h), 90E, 117(2)

Harris & Harris (1993) FLC 92-378
In the Marriage of Poletti [1990] FamCA 79
Stanford v Stanford [2012] HCA 52
Strahan & Strahan [2009] FamCAFC 166
In the Marriage of Wilson (1989) FLC 92-033
In the Marriage of Zschokke [1996] FamCA 79

APPLICANT: Mr Best

RESPONDENT: Ms Vidma

FILE NUMBER: PAC 705 of 2014

DATE DELIVERED: 31 August 2015

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Foster J

HEARING DATE: 6 August 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Sansom

SOLICITOR FOR THE APPLICANT: McPhee Kelshaw

COUNSEL FOR THE RESPONDENT: Mr Cummings SC

SOLICITOR FOR THE RESPONDENT: Turner Freeman Lawyers

Orders

PENDING FURTHER ORDER, IT IS ORDERED THAT:

1. That the husband and wife do all things necessary to authorise and direct that from the net proceeds of sale of the property at Suburb B the sum of $100,000 be paid to each of them or as they may otherwise direct in writing and that otherwise the net proceeds of sale be held in an interest bearing controlled monies account in trust for the parties jointly.

2. That the characterisation of the payment of such monies be reserved to trial.

3. That the costs of the present application be reserved.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Best & Vidma has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAC 705  of 2014

Mr Best

Applicant

And

Ms Vidma

Respondent

REASONS FOR JUDGMENT

1. At the time of this interim hearing the contracts for sale of one of the properties owned by the wife in this matter at C Street, Suburb B, New South Wales have been exchanged. Settlement was imminent.

2. The husband makes application by way of Application in a Case filed on 24 July 2015 for an interim distribution of part of the proceeds of sale by way of a payment to him of $285,000 from such proceeds.

3. In support of his application the husband relies upon:

   a)his affidavit filed on 24 July 2015,

   b)his affidavit filed on 26 February 2015,

   c)the two affidavits filed by his solicitor Ann Shrale on 24 July 2015.

4. The wife opposes the orders sought by the husband in her Response to the Application in a Case filed on 5 August 2015. In support of the orders sought by her the wife relies upon her affidavit filed on 5 August 2015.

5. The husband filed his application for property settlement orders on 24 March 2015. In summary he sought orders to the following effect:

   a)that the property at Suburb B be sold and that after payment of selling costs and discharge of mortgage the then proceeds of sale be divided equally,

   b)that the properties at D Street, Suburb E be sold and after payment of selling costs and discharge of mortgage the proceeds of sale be divided equally,

   c)that otherwise he and the wife retain other assets in their respective entitlement or possession.

6. The wife in her Response filed on 30 June 2014 to the husband’s Initiating Application seeks an order that the husband’s application for property adjustment be dismissed.

7. There are no children of the marriage.

8. The existing assets of the parties as asserted by them at hearing comprised the following:

   Wife               Property at D Street, Suburb E  $600,000

   Wife               Property at Suburb B  $875,000

   Husband         Utility motor vehicle  $  25,000#

   Wife               Japanese motor vehicle  $  11,000*

   Wife               Funds at bank   $    7,785*

   $1,518,785

   Liabilities:

   Wife               Mortgage Suburb B  $376,750*

   Husband         Esanda car loan   $  26,000#

   Husband         Outstanding legal fees   $  72,879

   Husband         Alleged debt to his mother  $  53,203

   Wife               Alleged debt to her mother  $  84,104  $612,936

   Superannuation:

   Wife               Vidma Superfund  $330,489*

   Husband         CBUS Superfund  $  32,794#

   # Husband’s Affidavit

   *Wife’s Financial Statement

9. On 6 August 2015 orders were made by consent that in effect discharged the injunction restraining the wife from selling the Suburb B property and providing that the proceeds of sale of the Suburb B property be paid:

   a)in payment of any council and water rates adjustments,

   b)in payment of legal fees, real estate agents’ commissions, marketing fees and costs of sale,

   c)in discharge of the St George loan secured thereon to a maximum of $370,000,

   d)in payment of the balance to a controlled monies account in the joint names of the parties opened by the husband’s solicitors.

10. Otherwise on 6 August 2015 the husband was required to withdraw any caveat lodged by him as against the title of the Suburb B property so as to facilitate settlement of the sale and the wife was restrained from selling or further encumbering the property at D Street, Suburb E.

11. It appears from submissions that the Suburb B property sale has been completed and $472,130 is held in trust for the parties.

The husband’s evidence

1. The husband asserts cohabitation from early 1998, marriage in 2009 and final separation in February 2013.

2. In 1999 the husband received a redundancy payment of $6,000; these funds he says were used by the wife. He says he renovated part of the wife’s Suburb E property and that he later undertook work on the wife’s property at Suburb F and the wife’s property at Suburb G.

3. In about 2003 the husband received a settlement of $16,178 in relation to his father’s estate. These funds were given to the wife.

4. In 2006 his car was written off and he says the insurance payment of $37,000 was used by the wife.

5. The husband is presently indebted to his mother for $53,204 for funds advanced to him for his legal fees since February 2013, monies paid to the Australian Taxation Office and living expenses including car loan repayments. He says he wishes to repay funds to his mother as soon as possible as she resides in Department of Housing accommodation and is not working, being the carer for her father.

6. The husband is presently in full-time employment installing fire sprinkler systems in high rise buildings, earning about $770 per week net.

7. His income, he says, was managed by the wife during cohabitation and applied to living expenses and property expenses.

8. He says that in August 2012 the wife retained $6,600 from his tax refund.

9. The husband says he was unaware of the sale of the Suburb B property for $865,000. He says had he been aware of a sale at that price he would have objected as the single expert valued the property at $1,150,000.

10. The husband is presently indebted to his solicitors and counsel for about $97,000 with significant costs estimated to a final trial of about $90,000.

The wife’s evidence

1. In April 1997 the wife purchased the property at D Street, Suburb E for $170,250. To finance the purchase the wife borrowed $153,000 by way of mortgage with the balance of purchase price comprising her funds at that time and some funds provided by her mother. The total purchase price including stamp duty and other costs was about $179,250.

2. The property at Suburb E had two dwellings erected on it known as A and B D Street. Subsequent to purchase of the property the wife rented out both of the cottages.

3. In August 1997 the wife purchased a home unit property in H Street, Suburb I “off the plan” for $231,500. A deposit was paid from the wife’s savings and partly by way of a deposit bond. The balance of the purchase price was to be secured by way of mortgage advance of $250,000. The purchase of this property was completed in July 2000. Subsequent to purchase the wife rented out the property.

4. The parties commenced a relationship in late 1997 at which time the husband was then living at his mother’s residence at Suburb J. The wife was living at her parent’s home at Suburb K.

5. The commencement of the parties’ cohabitation is a matter of dispute, with the husband contending that cohabitation commenced in early 1998 and the wife contending that it commenced in September 2001.

6. The parties married in 2009. There are no children of the relationship.

7. Final separation was in February 2013. The wife asserts that previously the parties were separated from December 2009 and did not reconcile until October 2012. The husband disputes this separation period.

8. In early 2001 the wife moved into the cottage at B D Street. The wife says at this time the husband continued to reside at his mother’s home at Suburb J.

9. In early 2001 the wife purchased a property at L Street, Suburb F for $227,500. The property comprised a cottage and granny flat. The purchase price was funded by way of a deposit bond and thereafter a mortgage advance of $193,375. The wife contends that the balance of purchase price was funded by an advance from her mother to cover the payout of the deposit bond and additional purchase costs including stamp duty.

10. On 22 October 2001 the husband and wife signed a financial agreement purporting to be an agreement under s 90E of the Family Law Act 1975 (Cth) (“the Act”). On 17 March 2015, during the currency of the present proceedings, the parties acknowledged that the agreement was not a binding financial agreement for the purposes of the Act.

11. The wife asserts that since the commencement of cohabitation she and the husband to have kept their finances separate and that she did not consult the husband in relation to any of her investment or financial decisions.

12. In February 2003 the wife purchased a property at M Street, Suburb G for $390,000. The purchase price substantially comprised a mortgage advance of $292,500.

13. In October 2003 the wife purchased the property at Suburb B for $755,000. The purchase price substantially comprised a mortgage advance of $600,000.

14. In December 2003 the wife sold her home unit property at Suburb I for $323,000. On settlement the wife received $34,202 and it is to be inferred a further sum representing the 10 per cent deposit less agent’s commission.

15. In February 2005 the wife was involved in a serious motor vehicle accident that involved a number of hospital admissions until April 2011. During this period the wife says that she and the husband were separated for significant periods of time.

16. In August 2005 the wife made a payment to the husband’s credit card of $6,721.

17. In October 2006 the wife sold her Suburb F property with the net proceeds of sale were paid to her being $70,741. It appears that at this time the parties were separated.

18. In May 2007 the wife received a redundancy payment from N Org of $12,603 net. Thereafter the wife made various payments for overseas trips taken by her and the husband totalling about $12,000.

19. In December 2009 the parties, she says, again separated and did not reconcile until October 2012. The husband says the separation was a sham for the purposes of the wife’s motor accident claim.

20. In June 2012 the wife received a net lump sum compensation payment of $351,166 in relation to injuries received by her in the motor vehicle accident in February 2005. The wife applied the compensation funds received by her in discharge of the mortgage secured over her Suburb E property, in reduction of the mortgage secured over the Suburb B property and a payment of $150,000 into her self-managed superannuation fund.

21. In November 2012 the wife sold her Suburb G property for $510,000. The wife received from the net proceeds of sale $96,986 after having  paid a further sum of $150,000 to her self-managed superannuation fund. The wife’s self-managed super fund has invested in real estate and holds some cash on bank deposit.

22. In March 2015 the wife refinanced the Suburb B property with the St George Bank. She borrowed an additional $300,000, drawing down that sum and paying the funds into an offset account. However, in June 2015 $299,990 was paid from the offset account in reduction of the then mortgage balance.

23. The wife concedes that the husband had advanced some funds to her during cohabitation. In April 2006 he advanced $1,080 with those funds being repaid to him by July 2006. Sometime after 2002 the husband advanced to her $20,000 he received from a Family Provisions claim. The wife asserts that he was repaid a total of $36,000 in relation to this advance in July 2006.

24. The wife acknowledges the husband’s assertion that he undertook some work for her on her properties at Suburb G and Suburb E. The wife says that he was paid for this work in 2012 and 2013 a total of about $3,400.

25. The wife contends that the net value of her assets and liabilities is presently $1,405,322.

26. The wife is in full time employment earning about $65,000 per annum gross.

Discussion

1. The principles as to applications for interim property provision are well settled, (Strahan & Strahan [2009] FamCAFC 166) and require a two-step process.

2. Firstly, there must be circumstances enlivening the power to make an interim order. The test is not limited to “compelling circumstances” but whether it would be “appropriate” to make an interim order, with the “overarching consideration” being the interests of justice. In Strahan (supra), the Full Court said:

   132. In relation to the first stage, in our view, when considering whether to exercise the power under s 79 and s 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.

3. Secondly, the Court is to have regard to relevant matters in s 79 of the Act.

4. It needs to be kept in mind that the final outcome of property settlement should not be compromised by an interim property order. Either the remaining property needs to be adequate to meet the legitimate expectations of both parties at the final hearing or the order that is contemplated needs to be capable of being reversed or adjusted if it is subsequently considered necessary to do so.

5. It is important to have regard to an overall caution. In Harris & Harris (1993) FLC 92-378, the Full Court said at 79-924:

   As a generality, the interests of the parties and the Court are better served by there being one final hearing of sec 79 proceedings; …

   and in Strahan (supra), the Full Court said at [132]:

   … 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.

6. In the circumstances of this matter, a childless relationship of some years, the husband’s case must depend on his financial and non-financial contributions as contemplated by s 79 of the Act or significant s 75(2) factors. There are significant factual issues between the parties.

7. His interim claim is more than 20 per cent of what appears to be the available asset pool.

8. The Court needs to be mindful of not compromising the ultimate property result. A payment to the husband in the order of what is sought is to be paid substantially to his lawyers and his mother. It cannot on the present indications of the available pool be recovered, reversed or adjusted in total if the husband’s ultimate entitlement is less. 

9. A payment to the husband of a modest sum well within the likely range is indicated.

10. The financial history of the parties’ relationship will be essentially disclosed by historical documents including sale and purchase documents relating to the wife’s properties and income tax returns of the husband and wife during cohabitation. To a significant extent the wife has provided same. There is no evidence as to the husband’s income during the cohabitation, although he asserts ongoing gainful employment.

11. There are s 75(2) issues it appears for ultimate consideration, including the husband’s work skills, the parties’ income disparity, capacity for gainful work by reason of the husband’s asserted educational limitations and the likely overall financial position of each party after contribution based entitlements are assessed.  

12. On considering the wife’s evidence the husband’s claim is modest but unquantifiable at this stage on a contributions basis. The wife contends that his contributions are “modest in the extreme”. She seeks no financial adjustment to the husband.

13. The wife contends that by reason of her position, seeking no adjustive order as to property, the question of whether there is a “principled reason for interfering with the existing legal and equitable interests of the parties to the marriage” (see Stanford v Stanford [2012] HCA 52 at [41], emphasis added) remains to be answered at trial and precludes the Court from making any interim provision order.

14. It is now well settled that in property cases the Court must identify the existing legal and equitable interests of the parties in the property, the liabilities and financial resources of the parties at the time of the hearing and then whether it is just and equitable to make a property settlement order.  Such a consideration should not be guided by an assumption that the parties’ rights to, or interests in, property are, or should be, different from those that then exist. The question is whether those rights and interests should be altered.

15. There is no presumption that one or other party has the right to have the property of the parties divided between them or a right to an interest in marital property that is fixed by reference to the various matters in s 79(4). The Court needs to conclude that it would be unjust or unfair to leave property rights intact.

16. In many cases this requirement is readily satisfied where the parties are no longer in a marital or de facto relationship and, thus, for example, the common ownership or use of property by husband and wife will no longer be possible or the express or implicit assumptions that underpinned existing property arrangements such as the accumulation of assets or financial resources by one for the benefit of both have been brought to an end with the relationship.

17. It is not contended by the wife that the accumulation of assets by her during the relationship in the circumstances outlined above was for her sole use and benefit. The strong inference is that it was for the benefit of both parties had the relationship endured.

18. The wife’s argument is that on an assessment of s 79 matters there should be no order adjusting property in favour of the husband. That requires the Court to go past the threshold question posed by the wife and consider the parties’ respective claims in terms of that dictated by s 79.

19. The evidence of the parties referred to above is indicative of some adjustment in favour of the husband.

20. The overall pool including superannuation appears likely to be about $1.3 million or so. In taking a conservative approach a payment to the husband of $100,000 is less than 10 per cent.

21. As was said in Strahan (supra) at [132]:

    ...when considering whether to exercise the power under s 79 and s 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…

22. There is no reason why both parties should not receive the same payment with the characterisation of those payments reserved to trial.

23. A payment of that sum to each of the parties is appropriate in all the circumstances.

1. Otherwise the husband frames his application in the alternative as interlocutory costs. It is well settled that such an order can be made under s 117(2) of the Act or under s 80(1)(h) of the Act. Such an order can facilitate the husband having a fair opportunity to present his case in circumstances where the “matrimonial property” is under the control of the wife. It is equally open to the Court to make the order proposed on this basis (In the Marriage of Wilson (1989) FLC 92-033, In the Marriage of Poletti [1990] FamCA 79, In the Marriage of Zschokke [1996] FamCA 79).

2. Orders will be made accordingly.

I certify that the preceding seventy-two (72) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 31 August 2015.

Associate:

Date:  31 August 2015