Chronis and Sencher

[2014] FamCA 359

FAMILY COURT OF AUSTRALIA

CHRONIS & SENCHER [2014] FamCA 359

FAMILY LAW – BINDING FINANCIAL AGREEMENT – Where matter fixed for hearing to determine threshold issues.

Family Court 1975 (Cth) ss 90SM, 90UM, 90SA

APPLICANT: Mr Chronis

RESPONDENT: Ms Sencher

FILE NUMBER: SYC 1705 of 2013

DATE DELIVERED: 29 April 2014

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Aldridge J

HEARING DATE: 29 April 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr White

SOLICITOR FOR THE APPLICANT: Jodhi Coady Lawyer

COUNSEL FOR THE RESPONDENT: Ms Winfield

SOLICITOR FOR THE RESPONDENT: Fitzpatrick Solicitors Pty Ltd

Orders

1. That in relation to the Application in a Case filed on 6 May 2013 the following issues shall be determined separately and in advance of the other issues in the proceedings:

   (a)       The issue raised by paragraph 8 of the Amended Initiating Application;

   (b)In the event that the Binding Financial Agreement is not set aside, whether or not the parties were in a de facto relationship for the purposes of the Family Law Act; and

   (c)In the event that the Binding Financial Agreement is not set aside, what on the true construction of the Binding Financial Agreement is payable to the applicant.

2. That I fix this matter, before myself for hearing, for three (3) days commencing at 10am on Monday 11 August 2014.

3. That each party shall file and serve an updated case outline document which shall incorporate an outline of submissions by no later than close of business on 5 August 2014.

4. That the issue of both parties’ costs of today shall be reserved to the hearing.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Chronis & Sencher 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 SYDNEY

FILE NUMBER: SYC 1705 of 2013

Mr Chronis

Applicant

And

Ms Sencher

Respondent

REASONS FOR JUDGMENT

Introduction

1. This matter was listed today for hearing pursuant to an Application in a Case filed by the applicant on 6 May 2013.  I had understood, and apparently the applicant had understood that, notwithstanding an order had not been made under that application in a case, the court was today to hear the preliminary issue as to whether or not there was a binding financial agreement.

2. The Amended Initiating Application seeks, in orders 1 to 7, what might be described as unremarkable property orders sought by a party under section 90SM of the Family Law Act1975 (Cth) (‘the Act’). Such orders would need to follow a finding that the parties were in a de facto relationship for the purposes of the Act.

3. A declaration to that effect was sought in paragraph 10 of the Amended Initiating Application. Paragraph 9 sought an order pursuant to section 90UM of the Act that a Binding Financial Agreement dated 30 June 2010 be set aside for fraud or unconscionable conduct. The applicant in the Application in a Case had understood that that was to be heard today. The respondent was of the view it was the Application in a Case itself that was to be heard. Nothing particularly turns on this because it is agreed by the parties, and seems quite obvious, that the issue as to whether there is a binding financial agreement will take two to three days to hear.

4. As essentially it appears to be the applicant’s word against the respondent’s, the case will turn significantly on issues of credit.  In those circumstances, it would not be desirable and would be unfair to the litigants if the case was started today and one party gave their evidence and then there would be a gap of some months before the case was resumed.  So therefore it is appropriate not to commence the hearing today.

5. Discussion then ensued as to the best way to proceed with the hearing.  Ms Winfield, appearing for the applicant, submits that orders for hearing of preliminary issues should not be made, because although there are two threshold issues to be determined before any alteration of property interests could be considered, those two threshold issues and the property alteration proceedings themselves are all significantly coloured by issues of credit. 

6. The two threshold issues are these: firstly, if there is a binding financial agreement by virtue of section 90SA of the Act, the court has no jurisdiction to proceed to alter property interests. Secondly, if there is no such binding financial agreement, the court may only proceed to make orders altering the property of the parties if the parties were in a de facto relationship.

7. In order to determine what would be an appropriate order in relation to the parties’ property, assuming those two threshold issues were decided in the applicants favour, would involve the parties providing complete financial disclosure and the valuation of a piece of real estate and a trust. 

8. The valuation of the real estate would appear to be reasonably straightforward, it being a unit at Suburb C, but the trust may not be as straightforward.  The issues of disclosure that will arise will include, it is foreshadowed, issues as to whether or not the respondent has properly disclosed his income and whether his income can be verified.  Those steps are likely to involve the parties in some further expense and delay.  Given that the other issues are essentially ready for hearing and given that there are jurisdictional thresholds involved, it seems to be the balance is in favour of proceeding to hear as much of the case as is possible, including the two preliminary thresholds. 

9. If the court has no jurisdiction to embark on property alteration proceedings, generally speaking, then it should not be ordering people to provide financial disclosure and valuations of property.   On the basis that there was to be a preliminary hearing, there seemed to be no real issue as to the issues that should be heard.  The first issue is whether or not the binding financial agreement should be set aside for fraud or unconscionable conduct.  If it is set aside for those reasons, the next step is to consider whether or not there is a de facto relationship.  There is a dispute about that, and it is appropriate that that be determined as a preliminary issue. 

10. It is also relevant to the next issue, which is the true construction of clause 33.3 of the Binding Financial Agreement.  That clause requires the payment to the applicant of differing sums of money depending on the length of the relationship from the date of cohabitation.  There is an issue as to the construction of that clause, but that construction needs to be based upon a factual finding as to what, in fact, was the period from the date of cohabitation for the purposes of that clause.  Those three issues seem to resolve most of the issues between the parties.  Their resolution would determine whether or not there is one remaining issue, which is should there be an order altering the property interests of the party, and if so, what that order should be.

Conclusion

1. Accordingly, having regard to the jurisdictional thresholds in the case, the fact that the parties are presently ready to deal with those threshold issues, and the desirability of avoiding unnecessary expense and preparation of a case that the court may not have jurisdiction to hear, it is appropriate to deal with those issues as threshold issues. 

I certify that the preceding eleven (11) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Aldridge delivered on 29 April 2014.

Legal Associate: 

Date:  29 May 2014