CAPIROLA & CAPIROLA - [2018] FamCA 490

FAMILY COURT OF AUSTRALIA

CAPIROLA & CAPIROLA

[2018] FamCA 490

FAMILY LAW – PRACTICE AND PROCEDURE – STAY – Where the wife seeks that previous orders for the sale of the parties’ properties be stayed – Where a stay does not prejudice either party – Orders made staying previous orders for sale.

FAMILY LAW – SPOUSAL MAINTENANCE – Where the wife seeks that the husband pay her spousal maintenance – Where the husband claims he does not have the funds to make such payments – Where each party cares for the youngest child of the relationship to some extent – Where such care of the child does not preclude either party from working – Where the wife has produced no evidence as to why she cannot work – Where it is not proven that the wife cannot support herself – Application for spousal maintenance dismissed.

FAMILY LAW – INTERIM PROPERTY – Where the husband seeks interim property payment be made to each party – Where the amount sought represents a small percentage of the net asset pool as it stands and can be reversed at trial from the remaining assets if necessary – Orders made for each party to receive an interim property payment.

Family Law Act 1975 (Cth) ss 72, 74, 75(2)
Family Law Rules 2004 (Cth) r 17.02

Bevan & Bevan (1995) FLC 92-600
Harris & Harris (1993) FLC 92-378
In the Marriage of J U and T Poletti (1990) 15 FamLR 794
Moroni & Moroni [2014] FamCA 664
Redman and Redman [1987] FamCA 2; (1987) FLC 91-805
Strahan & Strahan [2009] FamCAFC 166

APPLICANT:

Ms Capirola

RESPONDENT:

Mr Capirola

FILE NUMBER:

PAC

1171

2017

DATE DELIVERED:

29 June 2018

PLACE DELIVERED:

Parramatta

PLACE HEARD:	Parramatta
JUDGMENT OF:	Foster J
HEARING DATE:	21 May 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Givney

SOLICITOR FOR THE APPLICANT:

KPL Lawyers

COUNSEL FOR THE RESPONDENT:

Mr Blank

SOLICITOR FOR THE RESPONDENT:

Voros Lawyers

Orders

That the wife’s application for interim spousal maintenance be dismissed.
That the husband and wife do all necessary things and sign all necessary documents so as to authorise and direct that from the funds presently held in trust for them in a controlled monies account the sum of $100,000 be paid to the husband within seven days from this date and that the sum of $100,000 be paid to the wife within seven days from this date with the characterisation of such payments reserved to final trial or agreement between the parties.
That the operation of Orders made on 20 February 2018 insofar as they require a sale of the former matrimonial home at Suburb C be stayed pending further order or agreement in writing between the parties.
That otherwise all pending interim applications are dismissed.
That each of the parties’ costs of and incidental to these interim proceedings are reserved to final trial.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAC 1171 of 2017

Ms Capirola

Applicant

And

Mr Capirola

Respondent

REASONS FOR JUDGMENT

In the context of ongoing financial proceedings the wife, the applicant in the primary proceedings, filed an Application a Case on 5 April 2018.
Regrettably, in her Amended Initiating Application filed 7 July 2017 the wife seeks a final adjusting property order in the following terms “an order that the husband within 14 days of order pay to the wife the lump sum”.
In her Application a Case as amended on 16 May 2018 the wife in summary sought particular orders as to disclosure and relevantly the following orders:
a)that the wife be paid the sum of $100,000 by way of lump sum spouse maintenance from funds presently held in a controlled monies account by the wife’s solicitors in trust for the parties;
b)that in the alternative to the preceding order the husband pay to the wife by way of interim spouse maintenance the sum of $1,000 per week pending further order;
c)…
d)that Orders 3(a) and 5 made on 20 February 2018 be discharged; and
e)costs.
The wife in support of her Amended Application a Case relied upon the following documents:
a)her Amended Financial Statement filed 16 April 2018;
b)her affidavit filed 5 April 2018; and
c)her further affidavit filed 21 May 2018.
The husband in his Response to the wife’s Initiating Application as to property sought in summary the following orders:
a)that the parties’ property at Suburb C be sold and that the net proceeds of sale be paid equally to the parties;
b)that the parties’ property at D Town be sold and that the net proceeds of sale be paid equally to the parties;
c)that the husband transfer motor vehicle to the wife unencumbered;
d)that within two months the husband pay to the wife an amount equivalent to 50 per cent of the value of E Pty Ltd and 25 per cent of the value of F Pty Ltd (FPL) and thereafter the wife do all things necessary to transfer her interest in the said entities to the husband; and
e)that the husband do all things necessary to ensure that the wife continues to receive a wage from E Pty Ltd of $550 per week until the transfer of her interest in that entity to the husband.
In his Response filed 1 May 2018 to the wife’s Application a Case the husband relevantly sought an order that the parties do all things necessary to authorise and direct a payment, by way of advance property settlement, of $100,000 to the wife and $100,000 to the husband from funds presently held in a controlled monies account by the wife’s solicitors.

Context

The wife is presently 50 years of age as is the husband.
The parties commenced cohabitation in late September 1989 and separated on 8 June 2016.
There are three children of the parties’ marriage presently aged 23, 19 and 14.
Following separation the children remained with the wife in the former matrimonial home at Suburb C. On 4 February 2018 the eldest child commenced to live independently and in March 2018 the youngest child elected to live between the households of the wife and the husband.

The wife’s evidence

The wife says that on 6 July 2017 she became aware at the case assessment conference conducted on that day that the husband had sold his interest in F Pty Ltd (“FPL”).
On 17 July 2017 orders were made that provided relevantly as follows:
(1)That within two (2) days of the date of these Orders the husband shall do all things and acts necessary to cause his share of the net proceeds of the sale of [F Pty Ltd] to be paid in the following manner and priority:
(a)       In payment of the amount required to discharge the mortgage secured over the former matrimonial home at [G Street, Suburb C];
(b)       In payment of the amount of $150,000.00 to the wife’s solicitors, [L] Lawyers, by way of interim costs for the wife’s legal costs and disbursements;
(c)       In payment of the amount of $75,000.00 to the wife by way of lump sum such sum to be characterised at final hearing; and
(d)       In payment of the balance other than $3,600.00, into an interest-bearing controlled monies account operated by the wife’s solicitors as trustee for the parties.
The wife asserts that the husband has failed to provide financial disclosure as to the FPL sale.
The wife says that she holds no professional qualifications. She has employment experience in administration.
The husband commenced the business FPL trading as “H Pty Ltd in 1991 with a Mr J.
The wife worked in the business until it had the financial capacity to hire staff to undertake the administrative work in about 1992/1993. At this time the wife had commenced full-time employment with K Ltd.
Subsequent to the birth of the parties’ first child the wife took maternity leave for 12 months, thereafter returning for some part-time work until she ceased her employment with K Ltd in April 1996. Thereafter she devoted her time and attention to the children and the household but continue to undertake some work in the husband’s business.
The wife asserts that during cohabitation she was the primary caregiver for the children and homemaker within the household.
Subsequent to the wife commencing maternity leave after the birth of the parties; first child the wife was paid an allowance from the business with which she was to run the household. The allowance would vary depending on what other work the wife undertook.
At present the wife says that she works as a voice coach from the Suburb C property and estimates that her income from such in the current financial year would be about $340 per week.
Otherwise, at the commencement of these proceedings in March 2017 the wife was receiving $600 per week from the husband funded by a salary paid to her by E Pty Ltd of $68,210 per annum with the balance being applied by the husband to mortgage payments on the Suburb C property and its outgoings.
The payment to the wife through salary ceased in July 2017 when the wife was to be paid a lump sum of $75,000. The wife asserts that she has expended $75,000 in payment of personal expenses, costs for the children and outgoings in relation to the Suburb C property and the D Town property. Over the last 10 months the wife’s expenditure of that sum is equivalent to about $1,700 per week in addition to which she has had her own income of about $340 per week.
The wife says that she is unable to find alternative employment or increase her working hours because of her care for the two younger children, particularly the youngest child who she drops to school and takes to youth group and dancing classes during the week.
The wife says that the husband had previously received an income of $175,000 per annum from FPL but has recently asserted that he has assumed a different managerial role, works only part-time for 22.8 hours per week and has had his salary reduced to $98,800 per annum plus superannuation.
The wife says that the husband also receives income from a business venture and is also working in casual employment for which he received about $10,000 in income in the three months prior to February 2018.

FPL sale

On 6 July 2017 the husband provided details of the sale of his interest in FPL at the scheduled case assessment conference. He received $1.5 million on 3 July 2017. Pursuant to the sale agreement he was to receive further funds on 10 July 2017 and a further adjustment payment three months from the date of sale. From those funds received he paid his solicitor $150,000 on account of his family law legal costs.
Orders were made in relation to the net proceeds of sale of the husband’s share in FPL on 17 July 2017 as referred to above with the $150,000 the husband had already paid to his solicitor to be considered his interim disbursement for legal costs.
The wife says that she has sought particulars as to the balance of funds payable to the husband as a consequence of his FPL sale. On 19 February 2018 the husband disclosed that the total funds received by him were in fact $1,918,376. The husband retained further sum of $50,000 for himself to pay off his personal credit card. He also made payments towards a personal loan, a car loan and the ATO totalling $347,023. The wife asserts that these payments were in breach of Court orders made 17 July 2017 as referred to above.
On 18 July 2017 the husband made a payment in respect of the mortgage secured over the Suburb C property of $621,915.
From the FPL sale funds the husband has remitted a total of $677,169 to the wife’s solicitors. The wife complains that the husband has continued in his failure to disclose documents evidencing the receipt and disposition by him of the totality of the FPL sale funds and that the husband’s sale of his interest in FPL was made at an undervalue.
Orders 3(a) and 5 made on 20 February 2018
These interlocutory orders provide for the sale of the parties’ two real estate properties including Suburb C. Yet the sale proceeds pursuant to the orders are not to be distributed but to be paid into a controlled monies account held by the wife’s solicitors pending further order.
The wife says that she now wishes to retain the matrimonial home that is presently occupied by her and two of the parties’ children and the premises from which she operates her small vocal coaching business.
Her ability to retain the property will of course depend upon the ultimate distribution of the matrimonial asset pool determined at the time of trial or by agreement.
As the effect of the orders made on 20 February 2018 is simply to convert a real estate asset into cash then neither party is prejudiced by the sale being delayed until final hearing if necessary. The property is unencumbered.
Rule 17.02 of the Family Law Rules 2004 (Cth) (“the Rules”) provides:
(1) The court may at any time vary or set aside an order, if:
(a) it was made in the absence of a party; or
(b) it was obtained by fraud; or
(c) it is interlocutory; or
(d) it is an injunction or for the appointment of a receiver; or
(e) it does not reflect the intention of the court; or
(f) the party in whose favour it was made consents ; or
(g) there is a clerical mistake in the order; or
(h) there is an error arising in the order from an accidental slip or omission.
(2) Subrule (1) does not affect the power of the court to vary or terminate the operation of an order by a further order.
In the circumstances it would appear appropriate that the orders facilitating a sale of the matrimonial home at Suburb C be stayed pending further order or agreement between the parties.

The husband’s evidence

The husband rejects the wife’s assertion that he has failed to disclose the receipt and disposition by him of the proceeds of sale of FPL.
The husband says that the remuneration paid to the wife from E Pty Ltd stopped when that company ceased trading about 2 July 2017.
The husband complains as to the wife’s level of expenditure and the nature of the expenditure by her from the lump sum of $75,000 paid to her pursuant to interim orders. He asserts that otherwise he has paid significant monies between June 2016 and July 2017 for mortgage repayments and outgoings on the Suburb C property, motor vehicle expenses, insurances, school fees and other family related expenses.
The husband says that his changed role in employment has been as a consequence of him struggling with his professional commitments and personal circumstances and stresses relating to the current litigation.
He discloses that as at 30 April 2018 he commenced different employment working five days a week on a salary of 98,500 per annum plus superannuation. He asserts that this allows him to work from home and provide care for the youngest child when she is residing with him. He says he also works part-time for M Pty Ltd. He says he ceased working as in the casual employment on 24 April 2018.
The husband presently pays rent of about $500 a week for his apartment noting that the wife resides rent free in the former matrimonial home at Suburb C. He has an obligation of $240 a month for storage for some of his personal effects. He asserts that his expenses are such that he is unable to make periodic payments for spouse maintenance.

Spouse maintenance

Section 72 of the Family Law Act 1975 (Cth) (“the Act”) sets out the relevant provisions in relation to the right to spouse maintenance. The Court can make such order as it considers proper (s 74).
Section 72 provides that a party to a marriage is liable to maintain the other party to the extent that the first mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
a)by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
b)by reason of age or a physical or mental incapacity for appropriate gainful employment; or
c)for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2) of the Act.
In Redman and Redman [1987] FamCA 2; (1987) FLC 91-805 at 76,081 the Full Court (Evatt CJ, Lindenmayer and Nygh JJ) said:
As Nygh J. said in Ashton, the most common purpose of an interim order is to make provision for the spouse and children pending the determination of the property settlement. If a so-called permanent order is made on that occasion, that is not a variation under sec. 83 and does not have to be justified as such, but it is a fresh order made upon the termination of the interim order. Another consequence is that on an application for interim maintenance the court conducts “not as final or exhaustive a hearing as would be the case if one were hearing the matter finally”: Williamson and Williamson [1978] FamCA 57; (1978) FLC 90-505; (1978) 4 Fam. L.R. 355 at FLC p. 77,650; Fam. L.R. p. 359 per Fogarty J. The evidence need not be so extensive and the findings not so precise. Having regard to those factors, and the general injunction of sec. 97(3), the court should in such matters have a greater degree of flexibility than it possesses in applications for maintenance which are intended to last for an indefinite period and can only be varied under sec. 83.
There is no fettering principle that the pre-separation standard of living must automatically be awarded and reasonableness in the circumstances is the guiding principle (see Bevan & Bevan (1995) FLC 92-600).
The relevant matters in s 75(2) need to be considered.
Both parties are 50 years of age. Neither party asserts ill health such as they are not able to work.
The income at present of both parties is referred to above. They retain two real estate properties with estimated total unencumbered values of about $2.3m and significant funds on controlled money deposit as referred to above. The wife asserts her superannuation as at about $145,000 and the husband his at about $131,000.
Both parties have the care at times of their youngest child, who is 14 years of age, in circumstances that do not seem to preclude gainful employment.
The wife seems to assert that she is not capable of obtaining employment due to her care from time to time of the youngest child and her lack of work experience. She adduces no evidence of any attempts to obtain employment beyond her vocal coaching business even on a part time basis when she is living in the parties’ matrimonial home having significant value and unencumbered.
She has not satisfied the court that she cannot support herself adequately by reason of the matters in s 72 of the Act.
Her application for spouse maintenance by way of lump sum or otherwise will be dismissed.

Interim Property

Otherwise the husband has sought an order that he and the wife receive a distribution of $100,000 each from the controlled money account by way of interim property adjustment.
Leaving aside the issues as to the small balance of the FPL sale funds not accounted for, the parties’ assets otherwise have an estimated value of about $3m. Previous distributions add a further $375,000 to that figure.
A further distribution to the parties of a total of $200,000 would represent about six per cent of the discernible pool.
The principles as to applications for interim property provision are well settled, (Strahan & Strahan [2009] FamCAFC 166) and require a two-step process.
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.

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.
Secondly, the Court is to have regard to relevant matters in s 79 of the Act. The Court 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.
A detailed inquiry is not required, but there must be some assessment of s 79 factors.
In Strahan the Full Court went on to say:
137. Once a court proceeds to exercise the power in s 79 of the Act, being in the substantive phase, a court is required to undertake consideration of the matters in s 79(4) including by reference to s 79(4)(e) the matters in s 75(2) so far as they are relevant. However consideration of such matters may be brief and if it is established that “it seems likely to the Court that ... the applicant ... will be likely 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”: Zschokke; Polletti and Polletti per Nygh J and Wenz v Archer. As senior counsel for the Wife submitted, “provided scope can be found within the assets of the parties for an order of the size sought ... then that should be the end of the matter”. In other words, in such circumstances the applicant would only be receiving what he or she was entitled to receive when the power was exhausted.
138. The legislation does not prescribe what the Full Court in Zschokke at 83,218 described as “preconditions” and nor would we seek to exhaustively prescribe matters that may be relevant to take into account in the exercise of the discretion under s 80(1)(h) of the Act. As to the three “criteria” identified by the Full Court in Zschokke, we accept that an inability on the part of an applicant for an interim property order to defray the costs of litigation to meet his or her litigation costs would be a relevant matter to take into account at the procedural or first stage. Senior counsel for the Wife submitted that it may be relevant at the substantive or second phase in reviewing the “necessarily limited and impressionistic budget for costs” to ensure that the application is bona fide. We are of the view that it may be that any issue about the bona fides of an application is relevant at the procedural phase in the context of considering if in the interests of justice it is appropriate to make an order before the final hearing.
139. We also emphasise that in order to establish an appropriate case for an interim property settlement order more is required than the mere fact that upon a final hearing the applicant would receive the property being sought (or an amount in excess of the funds being sought) from the other party.
140. As to the other matters being a position of relative financial strength on the part of the respondent to an application and the capacity of the respondent to meet his or her own litigation costs, there is no doubt that the financial circumstances of both parties are relevant at the substantive stage and may also be relevant at the procedural stage. Senior counsel for the Wife submitted that all of the matters discussed by the Full Court in Zschokke are self-evident and we accept that this is so in relation to at least two of the matters being the need for funds and the financial circumstances of both parties.
141. …As to the various matters discussed by Brereton J in Paris King Investments which we have discussed above, we do not propose to deal with all of what his Honour said, however we make the following observations about some of the matters. Obviously the applicant should have “at least an arguable case for substantive relief which deserves to be heard”. Further, in determining at the procedural stage whether to exercise the jurisdiction there may need to be evidence of the applicant’s “likely costs of the litigation” given that the need for funds to defray litigation costs and expenses is the circumstance propounded as to why it is appropriate that an order be made. We also accept that “it is not an essential precondition” that the applicant’s legal representatives will not continue to act unless the costs are paid or secured on an ongoing basis.
It is important to have regard to an overall caution. In Harris & Harris (1993) FLC 92-378, the Full Court said:
As a generality, the interests of the parties and the Court are better served by there being one final hearing of s 79 proceedings.
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.
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.
Yet in this matter both parties seek final adjustive orders as to property.
As has been said oft before: The notion of a “level playing field” is one which almost axiomatically is in the interests of justice and an important matter to consider when deciding whether it would be appropriate to make an interim property order (see Moroni & Moroni [2014] FamCA 664 (Watts J)).
In In the Marriage of J U and T Poletti (1990) 15 FamLR 794, Ellis, Strauss and Butler JJ quoted Ngyh J with approval at [796]:
…It is rather, as it certainly was in Wilson and Wilson [(1989) 13 Fam LR 205], a situation where one party to the marriage controls almost exclusively what might be described as the patrimony of the parties and has control of the bulk of the assets and funds of the parties, where an order may be made to ensure that the other party, who does not have the fortune of controlling those funds, at least has an equal or near equal opportunity to present his or her case...
This is a long marriage with little on the evidence to differentiate the parties’ contributions. Such a distribution is well within the expectancy of both the husband and wife and if necessary can be reversed from the remaining assets.
It is appropriate that orders be made as sought by the husband save that the characterisation of such sums shall be reserved to final trial.
Orders will be made accordingly.

I certify that the preceding seventy-one (71) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 29 June 2018.

Legal Associate:

Date: 29 June 2018