Chong and Chong

[2016] FCCA 1559

FEDERAL CIRCUIT COURT OF AUSTRALIA

CHONG & CHONG [2016] FCCA 1559

Catchwords:
FAMILY LAW – Property – characterisation of payment to parties from monies held in trust.

Legislation:

Federal Circuit Court of Australia Act1999, s.39
Family Law Act 1975, s.117

Cases cited:
Strahan & Strahan [2009] FamCAFC 166

Applicant: MR CHONG

Respondent: MS CHONG

File Number: MLC 11660 of 2015

Judgment of: Judge Small

Hearing date: 30 May 2016

Date of Last Submission: 30 May 2016

Delivered at: Melbourne

Delivered on: 30 May 2016

REPRESENTATION

Counsel for the Applicant: Ms R. Teicher

Solicitors for the Applicant: Jeanne Gorman

Counsel for the Respondent: Ms R.L. Wheeler

Solicitors for the Respondent: Kennedy Partners

ORDERS

1. $80,000.00 of the monies from the sale of the property at Property M in the state of Victoria be forthwith released to the Husband by the Wife’s solicitors, such sum to be characterised as a partial property settlement.

2. $150,000.00 of the monies from the sale of the property at Property M in the state of Victoria be forthwith released to the Wife by the Wife’s solicitors, such sum to be characterised as a partial property settlement.

3. Pursuant to section 39 of the Federal Circuit Court of Australia Act1999, these proceedings shall be transferred to the Melbourne Registry of the Family Court of Australia to be listed with such priority as that Court deems appropriate.

4. The Conciliation Conference date of 14 September 2016 at 11:00am shall be vacated.

5. The Final Hearing dates of 30 March 2017 and 31 March 2017 shall be vacated.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 11660 of 2015

MR CHONG

Applicant

And

MS CHONG

Respondent

REASONS FOR JUDGMENT

(Revised from Transcript)

1. These reasons for judgment were delivered orally.  They have been corrected from the transcript.  Grammatical errors have been corrected and an attempt has been made to render the orally delivered reasons amenable to being read.

2. The matter of Chong comes before me today for interim hearing, having been adjourned from the duty list last week.  The only matter that is before the Court today is whether the husband ought to be paid the sum of $80,000 from the proceeds of sale of the parties’ former matrimonial home at Property M.  That amount sits in a solicitor’s trust account and it is now said to be in the sum of $269,195. 

3. The wife’s response to the application for $80,000 from that sum is to seek the sum of $150,000 from the same monies and for all of that to be considered partial property settlement on the side of each party or to the benefit of each party.

4. The husband’s application is contained in his Amended Application in a Case which was filed on 10 May 2016.  After the original Application in a Case was filed in March 2016 he then filed an Amended Application.  The Amended Application – and both sought the same amount – the amount of $80,000, was put in these terms:

   To be characterised as litigation funding, interim costs order or pursuant to sections 114, 74, 79 or 80 of the Family Law Act 1975.

1. So it is the characterisation is it seems to be a bit in dispute.  But what I am told today is that the characterisation of any monies I were to award the husband today should be characterised as interim property settlement. 

2. The husband asks for $80,000.  He says he needs that for litigation funding.  There is an Affidavit by his solicitor, Ms Jeannie Gorman, which is in a sense hearsay in that it talks about what the husband has done and much of it cannot be described as anything other than hearsay.

3. But nevertheless it does say this – that the costs or the outstanding counsel’s fees owed by the husband are $21,160.  She says that there are outstanding fees and work-in-progress of $9912.87.  In addition to that, Ms Gorman sets out a table of estimated fees to the end of trial.  Those estimated fees come to a total of $68,950, so that plus $9,912 using my rough maths brings that to $78,862, which would account for the $80,000 and give him a little bit over.

4. The matters that are set out by the husband in support of his application include that some of it would be for medical expenses and he has – or at least Ms Gorman has – set out a list of expenses which she says that the husband says are his expenses.  Those lists are simply that – lists of expenses.  They are not from a bank statement.  There is no real evidence about them at all except these lists that Ms Gorman says were provided by her client.  Properly speaking of course those lists should have been sourced properly and they should have been on affidavit from the husband. 

5. So the husband’s position today is that he ought to get $40,000 from the $269,195 sitting in the controlled monies account I think of Kennedy and Partners – that that is what he should get. The wife says that the husband should get $40,000 of those monies and that she herself should get a further $150,000, all of which is to be categorised as partial property settlement as an interim property settlement. So the issue about whether there is a partial property settlement or whether the extra amounts are for security for costs under section 117, I think is unresolved but it would seem to me that whether it is claimed under section 117 or not, it would have to be a partial property settlement.

6. That is the only place that it can come from.  And the source of the funds sought if I can say that is capital – the parties’ capital.  So it is certainly not interim spousal maintenance.  This matter in its larger form and its substantive proceedings is very complex.  The parties were married for a long time.  They bought and sold properties and operated companies over considerable timespans and their evidence in relation to the history of both the marriage and of their financial relationship is disputed.

7. I suspect – and I will bring this matter up after I have given judgment - but I suspect that this matter might even be complex enough to be sent off to the Family Court.  There are forensic issues which if they are not settled will take up a considerable amount of court time.  And as Ms Wheeler for the wife said today this is a case which will be decided on the documents and not just on what the parties say.  Well, that is the case in any property case but nevertheless she is right.  The documents will be complex.  Both parties accept that. And it is overall a very complex matter.  But the issue today is not that complex. 

8. The test for deciding whether I make an interim property order says Ms Wheeler is the test set out in the matter of Strahan.[1]  And I think she is referring to the Full Court’s decision in Strahan [2].  And she says that the proper test is whether it is proper in the circumstances to make an interim property.  Well, she accepts that it is okay to make an interim property order.  It is the amount that she equivocates about or that she quibbles about.

   [1] Strahan & Strahan [2009] FamCAFC 166

   [2] Ibid

9. Strahan[3] says I must identify the source of power but she accepts that I have the power to order a $40,000 partial property order.  In fact she says it is very difficult to oppose the making of a $40,000 partial property order.  In those circumstances I am not going to go into at this late hour on this day the intricate legalities of the matter.  The issue is the sum the husband might receive and the husband says, “There is plenty of money in my claim to satisfy that sum.” 

   [3] Ibid

10. That is certainly something that the Court needs to take into account and I think I that that was, what the Full Court in Strahan [4] had said in much more shall I say liquid prose.  And that the issue is really, in the overall property settlement whether there is enough money to satisfy the husband’s current claim for a partial settlement.  And I think the answer to that is in dispute. 

    [4] Ibid

11. The wife says, “Well, there is enough in there to satisfy a claim of his of $40,000 because that is what he actually says is sought for litigation funding.”

12. But the part of Ms Gorman’s affidavit that I think is admissible is the part that says, “This is how much he has spent, this is how much I have been paid so far and this is how much I think it will cost in the future.”  That is evidence of the husband’s potential litigation funds although Ms Wheeler would say, “Well, am I making an order for the security for costs or am I making an order for a partial property settlement?” and I am saying I am not sure to be perfectly honest.  But both parties accept that this could be a partial property settlement. 

13. Ms Wheeler says it must be.  Ms Teicher says it can be.  And so I intend to treat it like that.  The question is whether the claim of the husband over the entire property would amount to a figure of $80,000 plus the $50,000 that he has already received.  In other words is it likely that the husband might receive the sum of $130,000 from the whole property settlement?  That of course is a very vexed question but I note that even on the wife’s figures which the husband says ought to be higher – even on the wife’s figures the property pool is worth something like $1.75 million.

14. In those circumstances, one would have to say that even at a very minimal amount of contribution that the husband has made to that property pool that he would be entitled to $80,000 or $130,000, which is less than 10 per cent of the over pool.  So in those circumstances I think that case had been made out. 

15. I think the husband’s case has not been well pleaded on the documents.  I do not criticise counsel for that.  She did not file those documents but it has not been well pleaded on the documents and the affidavit of Ms Gorman deposes to some behaviour which as well is possibly going to be an issue in these proceedings. I do not know. 

16. But, nevertheless what I can say is that Ms Gorman’s evidence which is uncontroverted is that it is likely to cost $78,862 for the husband to proceed to trial and to the end of trial.  He does not have that money.  He says that he did have.  He spent the $50,000 that he obtained last year on medical and personal expenses although the personal expenses – things like computer equipment – seem to outweigh the medical expenses in the list provided but as I have said, I cannot rely on the list provided.

17. So he has not said how he has spent that $50,000 but, in any event, it would not cover the 78,862.  What Ms Gorman does say is that the 23,000 that was left after he had paid all of those expenses has been put towards or is intended to be put towards the debt and even after that 23,000 is paid the amount of 78,862 would remain to the end of trial.  I note that the husband has received a total of $50,000 in part property settlement in these proceedings.  The wife has retained $215,000.  That is what the husband says.  There was an order that she retain I think or that she obtain $20,000.

18. So I did make an order that she could draw on the funds up to a matter of $40,000 but $20,000 was already owed so in fact she only got $20,000 at that time.  Nevertheless, as I said to the parties this is not a tit for tat issue.  It is a matter of whether the parties need it.  I need to take into account whether it is proper in all the circumstances for such an order to be made. 

19. The husband deposes that he is on a Commonwealth pension, that he has a debt owed to him I think by the parties’ son.  The wife also deposes to having a debt owed by the son.

20. In terms of the husband’s financial situation, I take that from the sworn financial statement that he has filed.  I do not take it from the list of expenses that is annexed to his solicitor’s affidavit which does not source the figures on those documents anyway.  It just says, “This is what I have spent.”  What is very clear though is that it will cost $80,000 or just less than that for the husband to run these proceedings. 

21. The wife is working, albeit at three part-time jobs.  However, she says that her bank accounts have been frozen and that they have been frozen by the husband’s solicitor.

22. What appears to have happened is that the husband’s solicitor must – well, I cannot say what has happened.  I am sorry.  I am not going to make a finding of fact of what has happened to that because I cannot say.  I do not know.  All I know is that the wife says that her accounts have been frozen and that is not denied by the husband.  So it seems that the accounts have been frozen. 

23. Well, the indication of the email sent or the file note sent by Ms Gorman to the other side would seem to indicate that the bank has frozen the funds.  The funds are frozen and the husband says that the bank froze the funds because it found it too difficult to keep track of the wife’s withdrawals.  That is what I took from that file note – that in a conversation with the bank that is what the bank had told Ms Gorman.  Nevertheless, she is seeking a part property settlement of $150,000.  That would take her partial property settlement to at least $170,000 and perhaps more.

24. And the issue is, is there enough in the pool to allow for those monies?  And even on the wife’s figures the answer is yes, there is.  She says that it would be a risk for me to make an $80,000 payment to the husband but with both the $50,000 and the $80,000, it is only $130,000 they are talking about and the money in trust is $269,000 so it does not exhaust those monies.  So I think that it is proper in the circumstances to make a partial property settlement to the husband in the sum of $80,000.

25. And that is simply on the basis of what is deposed and not challenged in fact by the wife in terms of his current and future legal costs in running this litigation. 

26. Then I come to the question of whether the wife should get her $150,000 from the same pool.  The husband says that his worst case scenario is half of the pool.  The wife says she needs the money because in the ordinary course of business she needs to pay that.  There is not a lot of totally corroborative evidence about that but the wife says that she needs the money for business that her funds have been frozen.  She is living on her money from her employment and she says that her son is not paying her the interest on the loan that he owes her and it is very difficult to prove that something does not happen.

27. And the husband certainly is not in a position to prove that it has.  The husband’s counsel has estimated that she receives an extensive amount of money per month from her jobs and from other sources but there is no evidence before the Court of that.  The question is whether it is proper in the circumstances for the wife to take that amount of money out of the pool, given the dispute between the parties.  However, what I can say is that it is very clear that the wife, if she is successful, will get at least 50 per cent of the pool and that there is plenty of money to allow for that.

28. If she wishes to take part of her property settlement now rather than later and there is plenty of capital to allow that to happen then I do not see why she should not. 

I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of Judge Small

Date: 24 June 2016