Coffey and Coffey - [2014] FCCA 2176

FEDERAL CIRCUIT COURT OF AUSTRALIA

COFFEY & COFFEY

[2014] FCCA 2176

Catchwords:
FAMILY LAW – Application for interim or partial property settlement – nature of interim hearing – justice and equity – interests of justice – whether appropriate to make such an order – costs.

Legislation:

Family Law Act 1975, ss.75(2); 79, 79(1), (2), & (4); 80

Stanford v Stanford [2012] HCA 52
Mallet v Mallet [1984] HCA 21; (1984) 156 CLR 605
R v Watson; Ex parte Armstrong[1976] HCA 39; (1976) 136 CLR 248
Strahan v Strahan (2010) 42 Fam LR 203
Harris & Harris (1993) FLC 92-378
Wenz v Archer (2009) 40 FamLR 212
Benson & Benson [2012] FMCAfam 335

Applicant:

MR COFFEY

Respondent:

MS COFFEY

File Number:

ADC 4401 of 2013

Judgment of:

Judge Brown

Hearing date:

15 September 2014

Date of Last Submission:

15 September 2014

Delivered at:

Adelaide

Delivered on:

22 September 2014

REPRESENTATION

Counsel for the Applicant:

Mr McQuade

Solicitors for the Applicant:

Stokes Legal

Counsel for the Respondent:

Mr Barr

Solicitors for the Respondent:

Norman Waterhouse

ORDERS

The application filed 25 August 2014 is dismissed.
The applicant pay the respondent’s costs fixed in the sum of seven hundred and fifty dollars ($750.00).
The net proceeds of the sale of the former matrimonial home in Property F held in the trust account of Paul Short & Associates and the net proceeds of sale of the Property C property held in the trust account of Conveyancing Matters are to be placed in an interest bearing account in the joint names of the parties at a financial institution to be agreed between the parties.
Further consideration of the matter in relation to children’s issues and if necessary to allocate a date for trial in respect of all outstanding matters is adjourned to 17 November 2014 at 9:30am.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT ADELAIDE

ADC 4401 of 2013

MR COFFEY

Applicant

And

MS COFFEY

Respondent

REASONS FOR JUDGMENT

Introduction

These proceedings relate to an application for interim or partial distribution of matrimonial property, pending final hearing. Very recently indeed, they have been significantly reconfigured, without any additional evidence, to become an application for the release of funds to fund legal costs relating to that final hearing.
Mr Coffey “the husband” and Ms Coffey “the wife” were married on (omitted) 2005 and separated on 3 October 2012. The husband commenced proceedings on 22 November 2013 seeking an equal division of marital property. More recently, he has amended his application and now seeks a 65/35 percent division of property in his favour.[1]
[1] See amended application filed 6 August 2014
The wife, in her response filed on 10 September 2014 seeks that the parties’ pool of marital assets be divided 80/20 percent in her favour. Axiomatically, the parties have very different views of the case.
The parties are also the parents of X born (omitted) 2007. Currently the parties are unable to agree on final parenting arrangements for X. This aspect of the case appears to be a long way from resolution. As such, there is a strong possibility that this aspect of the case will proceed to trial.
Currently, X lives with his mother. Ms Coffey has made significant allegations of family violence concerning the husband, which he denies. It is Mr Coffey’s position that the wife has fabricated these allegations against him.
In June of 2014, the court ordered that Mr Coffey spend time with X in a professionally supervised setting. This process has not as yet been completed and has not been without its difficulties. A family report has not as yet been ordered but would appear to be inevitable, if the matter proceeds to hearing.
On 20 August 2014, the parties attended a conciliation conference with a registrar of the court. This did not assist them to reach agreement in respect of the division of their marital properties. This is the background to the husband commencing the current proceedings, which he did so on 25 August 2014. He seeks the following orders:
“That the proceeds of sale of the property situate at Property F, held by Paul Short & Associates in the amount of $166,655.24 be paid in equal shares to the Stokes Legal Trust Account for and on behalf of the husband and to the Norman Waterhouse Trust Account for and on behalf of the wife.
That the husband and wife do all things necessary to instruct Conveyancing Matters to release funds following the sale of the Property C property to the Stokes Legal Trust Account for and on behalf of the husband and also the Norman Waterhouse Trust Account for and on behalf of the wife.”[2]
[2] See Application in a Case filed 25 August 2014
The wife responded to this application on 10 September 2014. She seeks that the application be dismissed and the husband pay her costs.

Background

Mr Coffey is employed as a (occupation omitted). He estimates his annual income to be $35,000.00. Ms Coffey is not currently employed. She has deposed that her only source of income is a family assistance payment of $125.00. It is her position that she is currently financially dependant upon her mother, with whom she and X are presently living.
At the time the parties commenced their relationship, the husband owned a property located at Property E. During the course of their relationship, they acquired several other real properties, including their former family home. In my assessment, although the parties cannot be regarded as being wealthy, the configuration of their property affairs is complex.
The majority of the pool of matrimonial property, available to be divided between them, consists of seven pieces of real property, which have either been sold or are in the process of being sold. The properties are also subject to mortgage, in favour of the (omitted) Bank and have been rented from time to time.
In addition, according to the husband’s statement of financial affairs, other persons are registered as proprietors of the properties in question, with the husband and wife. These persons are Mr A; (omitted) Pty Ltd; and (omitted) Pty Ltd.
The wife describes Mr A as the parties’ business partner. The wife further asserts that she and the husband are the sole and equal shareholders of (omitted) Pty Ltd. The wife deposes that in the various properties, in which Mr A has an interest, he owns fifty per cent, with the parties owning the remainder.
The parties’ former matrimonial home was located at Property F. It was sold on 24 February 2014 for the sum of $370,000.00. It was subject to a mortgage in favour of the (omitted) Bank in a sum of $190,500.63.
After payment of the costs of sale, a sum of $166,655.24 was realised. This sum remains in the trust account of the conveyancer concerned. Mr Coffey seeks that this sum be disbursed, in some way, between the parties.
In his statement of financial affairs, the husband deposed that he has received rental income in the sum of $345.00 per week; and is liable for mortgage payments of $195.00 per week.
The various investment properties, which the parties own or have owned, in conjunction with the third parties identified above, are as follows: Property N, Property B, Property H, Property U, Property A, and Property C. The wife also includes Property E, but the husband does not.[3]
[3] See Wife’s affidavit filed 11 September 2014 at paragraph 9
The property located at Property C has also been sold. It sold for $300,000.00 and was subject to a mortgage in the sum of $213,862.62, in favour of the (omitted) Bank. After the payment of selling costs, a sum of $42,535.69 was ostensibly recouped. The relevant settlement statement was provided to (omitted) Pty Ltd.
None of the remaining properties have been formally valued. This is because the parties have agreed that financial necessity and their current circumstances dictate that they should be sold. In particular, the wife asserts that the relevant mortgagee had commenced repossession proceedings in respect of the Property E property.
As a consequence of this action, in October of 2013, Property E property was sold for the sum of $277,500.00. This sum was insufficient to discharge the mortgage secured against it. As a consequence, the sum of $15,688.75 was transferred from the proceeds of sale of the Property C property to ensure discharge of the mortgage, leaving a balance of $27,042.00 on my calculations.
Accordingly, with Mr A, the parties have interests in the following properties: Property B, Property N, Property H, Property A, and Property U.
As previously indicated, the parties agree that these properties should be sold. At this juncture, I am concerned that the value of the parties’ interests in these various properties is far from certain and the parties are completely at cross-purposes regarding them, particularly so far as the interest of Mr A is concerned.
I am troubled about this evidence, particularly in the context of a potential exercise of the court’s power to make an order altering the parties’ interests in property pursuant to section 79 of the Family Law Act 1975, at an interim stage. At this this stage, this evidence must be regarded as provisional and untested in nature.
In his statement of financial circumstances Mr Coffey calculates the value of his twenty-five percent interest, in the five remaining properties, to be $368,750.00, subject to mortgages amounting to $156,750.00.[4] This is at odds with his evidence provided in a later affidavit, where he values the five properties in question at $1,476,475.00 and subject to mortgages valued at $627,000.00.[5]
[4] See annexure C & D to the husband’s financial statement filed 22 November 2013
[5] See paragraph 11 of the husband’s affidavit filed 22 November 2013
For her part, in her statement of financial circumstances, Ms Coffey has valued her twenty-five percent interest in the various properties as being $365,627.00, which are subject to mortgages to the value of $323,615.00.[6] More recently, she has valued the parties’ joint interests in the various properties at $730,000.00, which are subject to an estimated mortgage liability of $328,612.00.[7]
[6] See wife’s statement of financial circumstances filed 14 March 2014 at item 36 & 47
[7] See wife’s affidavit filed 14 March 2014 at paragraph 59

The current application

The husband filed his application in a case on 25 August 2014. It was supported by a brief affidavit deposed by his solicitor, Nicholas Boswell on 22 August 2014. Mr Boswell deposes as follows, in respect of the sum of $166,655.24 remaining from the sale of the former family home and the sum of $26,943.29 in respect of the Property C property:
“I have taken instructions from my client to discuss the issues of release of those funds to the husband and to the wife in these proceedings in equal shares. I have also taken instructions from my client to write to the wife’s solicitors requesting the release of those funds however no agreement has yet been reached with the wife’s solicitors in regards to the release of those funds.
I say as to the date of deposing to this my affidavit there is approximately $400,000 equity in the remaining five real estate properties listed at paragraph 6 of this my affidavit.”[8]
[8] See affidavit of N S Boswell filed 25 August 2014 at paragraphs 10 & 11
The husband’s application was first listed on 27 August 2014. At this stage, the wife had not formally responded to it, but on the first directions day indicated through her solicitor that she vehemently opposed there being any such distribution, particularly because she feared there was a level of uncertainty regarding the parties liability for capital gains tax arising from the sale of the various investment properties.
Notwithstanding the wife’s opposition, the husband insisted that his application be entertained. On this basis, the wife was directed to file a response and the matter was adjourned for hearing on 15 September 2014.
In her affidavit, the wife deposes as follows:
“The net proceeds of sale of the former matrimonial home are held in the trust account f Paul Short & Associates. The net proceeds of sale of the Property C property are held in the trust account of Conveyancing Matters. The entire proceeds of sale of the Property E property and the Property H property were applied to reduce loans registered against the properties.
The husband and I will incur capital gains tax liabilities as a result of the sale of the Property C, Property E and Property H properties. We have not yet obtained accounting advice to determine the CGT payable.
The husband and I have agreed to sell the remaining investment properties. Again, these sales will trigger a CGT liability. We have not obtained any accounting advice as to what the CGT liability will be.”[9]
[9] See wife’s affidavit filed 10 September 2014 at paragraphs 11-13
More recently again, on 15 September 2014, the husband now proposes that each party receive the sum of $65,000.00, from the proceeds of sale of the former matrimonial home at Property F. It is the assertion of his counsel that this is an appropriate exercise of the court’s power given the extent of the other assets within the parties’ pool of matrimonial assets.
It is common ground that, as yet, no professional accounting advice has been obtained as to the parties’ likely capital gains tax assessments. The registrar’s note, from the unsuccessful conciliation conference is that the parties were seeking such accounting advice.

The nature of an interim hearing

The controversy arising between the parties, regarding the division of the proceeds of sale of the former family home and the other investment property, occurs at the interim hearing stage. Accordingly, the resulting hearing before me took place in a truncated or shortened form, where the only evidence available to me was in the form of the parties’ respective written affidavits.
In addition, as previously indicated, neither party currently has well delineated proposals as to how their marital property is to be divided pursuant to the applicable legislative provisions in the longer term. In particular, both parties approach the case in percentage terms only and the assessment of those percentages, the parties are an enormous distance apart – the wife seek 80/20 in her favour; the husband seeks 65/35% in his favour.
At this interim hearing stage, there is usually not sufficient time to allow additional oral evidence, particularly in the form of cross examination. Accordingly, it is difficult if not impossible, for the court to resolve issues in factual disputes between the parties as this stage.
In addition, it is not possible for the court to examine in detail issues relating to the parties’ various contributions made during their marriage and what are their likely prospective needs. At present, it is apparent to me, for all sorts of reasons that the parties do not greatly trust one another.
Although this is an interim hearing, the same legal principles must be applied as those that are applicable at the final hearing stage. The most significant difference being that the final hearing necessarily is a more thorough and exhaustive exercise.

Applicable legal principles

Part VIII of the Family Law Act 1975 is the part of the Act dealing with property, spousal maintenance and maintenance agreement. The major provisions relating to marital property division are contained in sections 79(1); 79(2); 79(4); & 75(2) of the Act. These provisions apply both at the interim and final stage.
Pursuant to section 79(1) the court is authorised to make such order as it considers appropriate in order to alter the interest of the parties to a marriage in relevant property.
Pursuant to section 79(2) the court is actively prevented from making such an order unless it is satisfied that it is just and equitable to do so in all the circumstances prevailing.
Section 79(4) provides the mechanics of how a court is to make an order altering marital property interests. It provides seven matters to be considered, as relevant.
Paragraphs (a); (b); and (c); categorise contributions made by marital partners, which are relevant. Paragraph (d) directs the court to take into effect of any order upon the earning capacity of either party to the marriage concerned.
Paragraph (e) directs the court to consider a list of matters contained in section 75(2), which are germane to spousal maintenance. Finally, Paragraphs (f) and (g) apply to child support and previously made parenting orders, as relevant. There is some overlap between these various provisions and not all will be applicable in every case.
In general terms, the provisions have been held to provide a process to be followed by the court, in each case, for the division of martial property. Firstly and self explicitly, it is necessary for the court to identify the extent of the property to which any order made pursuant to section 79 will apply.
Secondly, pursuant to section 79(4)(a) – (c), the court must ascertain the varying contributions, which each party has made towards the assets identified following the first step. Contributions fall into two broad categories.
The first kind is contributions to the property: financial contributions and non-financial contributions, made directly or indirectly, by or on behalf of a party to the marriage to the acquisition, conservation or improvement of any of the property.
The second kind is contributions to the welfare of the family: in the words of the section, “the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage, including any contribution made in the capacity of home maker or parent.”[10]
[10] See Family Law Act 1975, s.79(4)(c)
It is clear from the authorities that this second kind of contribution must be given appropriate weight and is not to be treated as a token matter or as a contribution which is inherently less valuable or important than a financial contribution to property.
The third step involves the assessment of the parties’ prospective needs, by reference to the factors set out in section 75(2) of the Family Law Act 1975. Pursuant to section 75(2)(o), the court is entitled to take into account “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”.
The High Court has recently considered the operation of section 79 in Stanford v Stanford.[11] It said as follows:
“It will be recalled that s 79(2) provides that "[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order". Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.
The expression "just and equitable" is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition[12]. It is not possible to chart its metes and bounds.”[13]
[11] See Stanford v Stanford [2012] HCA 52
[12] Mallet v Mallet [1984] HCA 21; (1984) 156 CLR 605 at 608 per Gibbs CJ
[13] Ibid at paragraphs 35-36
Accordingly, the High Court has directed that the overriding responsibility imposed on the court by section 79, is to consider whether it is just and equitable to make any order whatsoever altering the proprietary interests of marital partners. In this context, the High Court said as follows:
“…whether making a property settlement order is "just and equitable" is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised ‘in accordance with legal principles, including the principles which the Act itself lays down’[14]. To conclude that making an order is ‘just and equitable’ only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.”[15]
[14] R v Watson; Ex parte Armstrong[1976] HCA 39; (1976) 136 CLR 248 at 257
[15] Ibid at paragraph 40

Section 80 of the Act provides the court with what are described as general powers. In particular section 80(1)(h) empowers the court to make an order pending the disposal of proceedings. However, it is clear that the same principles, set out above, apply both at the interim and the final hearing stage.
In Strahan, apropos the making of an interim property order, the Full Court said as follows:
“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 section 79(4) including by reference to s 79(4)(e) the matters in section 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 to 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.”[16]
[16] See Strahan v Strahan (2010) 42 Fam LR 203 at 230 [137]
In general terms, bearing in mind the limited nature of an interim hearing, the court is required to follow the process prescribed by section 79(4) in respect of both final and interim matrimonial property proceedings. Accordingly, it is necessary for the court to consider whether it is just and equitable to make such an order and whatever order is made must be referrable to the criteria set out in section 79(4).
Accordingly, the court must make some assessment of the parties’ various contributions to the pool of assets in question and importantly must have regards to any applicable factor arising under section 75(2). Necessarily, any interim order must be referrable to the final order made in the case concerned, as both depend on the exercise of the same power.
Given these circumstances, the Full Court of the Family Court has pointed out that, as there can be only one exercise of the power under section 79 of the Act, it is usually preferable that there be only one final hearing of section 79 proceedings, rather than a succession of subsidiary provisional hearings.[17]
[17] See Strahan v Strahan (2010) 42 Fam LR 203 at 230 [114]
In Strahan, the Full Court considered an earlier decision of the Full Court Harris & Harris.[18] In this case, the Full Court delineated the relevant considerations applicable to the making of what is conveniently described as an interim property order. The Full Court, in the case, considering it unnecessary to draw a distinction, in terminology, between an interim order and a partial order.
[18] See Harris & Harris (1993) FLC 92-378 at 79,930
In Harris, the Full Court, whilst affirming the preference that there be only one final hearing of property proceedings, identified three criteria applicable to the exercise of the power to make an interim property order namely:
·the exercise of the power should be confined to cases where the circumstances at the time were “compelling”;
·the exercise of the power, depending as it did on section 79 of the Act, must be exercised within the parameters provided by that section, notwithstanding the difficulty arising for any decision maker concerned in making final findings;
·the exercise of the power must be exercised “conservatively” in the sense that any remaining property needed to be sufficient to meet the “legitimate expectations” of both parties at final hearing, or the order being contemplated is itself capable of being reversed or adjusted at a later stage, if necessary.
In Strahan, the Full Court affirmed Harris in the sense that it accepted that an interim property application comprised a two-step process. Firstly what was described as an “adjectival stage” and secondly what was described as the “substantive stage”. The first step being concerned with the description or particularization of the circumstances required to be established before an interim property order was made. The second step dealing with the mechanisms applicable to the making of such an order.
The controversy ventilated in Strahan centred on the phrase “compelling circumstances” used in Harris and whether such a formulation unduly fettered the court’s power to make an interim property order, which was “appropriate” at that stage of proceedings. This being the expression used in the enabling provision contained in section 79(1) of the Act.
In this regard, the Full Court said as follows:
“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.”[19]
[19] Strahan v Strahan (2010) 42 Fam LR 203 at 236 [132]
In reaching this conclusion, the Full Court noted the idiosyncratic nature of litigation, under the Family Law Act 1975, when compared with other civil litigation. In the former, there was often a marked imbalance in the power of the parties concerned and artificialities in how property available to be divided was legally controlled in the period leading up to final hearing.
In this context, the Full Court approved comments of Riethmuller FM in Wenz v Archer[20] as follows:
“It cannot be the case that a party who has an irresistible claim to a substantial share of the property of the parties should be held out of that property while the matter is litigated, left to rely upon applications for exclusive occupation of the matrimonial home or spousal maintenance alone, particularly where the parties are asset rich but have relatively modest incomes (such as the present case). Nor could it be appropriate that a party should be denied the ability to liquidate assets when there are real needs for those resources, such as to meet debts which may result in the party being pursued by creditors, or the need for the party to make payments for the benefit of the children, or to take advantage of other financial opportunities (for example the superannuation contribution cases).”
[20] See Wenz v Archer (2009) 40 FamLR 212 at 223 [53]
In terms of the second or substantive phase, the Full Court in Strahan confirmed the second and third considerations delineated in Harris, namely that the relevant provisions of section 79, including section 75(2) needed to be considered and so far as any adjustment made, at this stage, it needed to be capable of reversal or to be clawed back at a later stage.
Examples of where it may be appropriate to use the power to make an interim property order include where both the parties agree to the disposal of some assets pending trial; urgent situations to avoid injustice being wreaked upon one party if the power was not exercised; and where one party requires funds to assist in the defrayal of legal costs arising from the litigation involved.[21]
[21] See Strahan (ibid) at [133]
The discretion to make an interim property order must be closely considered, bearing in mind the different nature of an interim, as opposed to a final hearing, which nonetheless involves the exercise of the same power. Riethmuller FM expressed the dilemma arising in this way:
“…Because the orders under s.79 are the exercise of such a broad and complex discretion, generally the interests of the parties are better served by there being one final hearing under s.79. If the s.79 proceedings are not completed in one decision various options may not be left open and therefore the Court may not be able to ensure that a ‘just and equitable’ outcome overall is achieved. However, there will be cases where it would not be ‘appropriate’ to deny interim relief, as this would not permit a ‘just and equitable’ result in the interim.”[22]
[22] See Wenz v Archer (ibid) at [54]
Considerations of this type led the Full Court in Strahan to say as follows:
“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. [23]
[23] See Strahan (ibid) at [139]

Conclusions

I do not consider that it would be in the interests of justice to make the orders sought by the husband at this stage. In my view, the evidence available to me, on the basis of which I am asked to exercise the power arising under section 79(4), is scant indeed.
I acknowledge that, at an interim stage, the court’s consideration of the various considerations arising under section 79(4) can be brief. However, in my view, on the basis of the evidence currently available to me, I am unable to undertake even the most cursory evaluation of the parties’ respective contributions to their matrimonial property or assessment of the factors which are likely to be relevant pursuant to section 75(2). In any event, as is axiomatic, the parties have vastly different views in respect of the matter.
The husband approaches the case on the basis that he is destined to receive property of a value greater than $65,000.00 and therefore the interim distribution sought by him should be made. This may ultimately prove to be the case, but I feel unable to ascribe it as being a matter of absolutely certainty.
$65,000.00 is a significant sum of money, but not a huge one, given what each party asserts is the value of the remaining investment properties and given the approximate sum currently held by the conveyancers, namely around $193,000.00.
The sum represents around 34% of the liquidated assets. Accordingly, if what is anticipated in respect of the remaining properties does not in fact materialise and the wife’s view of her entitlements proves to be correct, there will be problems accruing from the proposed interim distribution.
In any event, as the Full Court pointed out in Strahan, an applicant needs to establish more than that he or she will ultimately receive the sum in question or more than it. Rather an applicant needs to establish that it is in the interests of justice that such an order be made.
In my view, an air of uncertainty surrounds the parties’ current financial affairs. Recently, the wife asserts that a mortgagee compelled the sale of a property owned by the parties, which when realised resulted in a shortfall of equity to clear the mortgage concerned. I am uncertain of the views of Mr A, in respect of these matters.
If I take Mr Boswell’s evidence at its face value and assume that the parties’ level of equity in the remaining investment properties is $400,000.00, this sum when coupled with the sum liquidated from the former family home and Property C comes to around $600,000.00. 80% of this sum is around $480,000.00 and 20% is $120,000.00, which latter sum of course is about double the sum sought by Mr Coffey, and in Mr McQuade’s submission, such as to provide a more than ample margin for error.
Fundamentally however, I am unable to delineate, with precision, what the exact extant of the parties liabilities, particularly in respect of capital gains tax and also any other costs arising from the sale of the various properties in question.
Given the level of both complexity and uncertainty surrounding the parties’ financial affairs, it seems all the more appropriate that any exercise of the section 79 discretion should be exercised very carefully indeed and, if possible, be confined to one use at the final hearing stage.
Mr McQuade, counsel for the husband, on the occasion of the hearing of the application, indicated that his client had need of funds to finance the on-going proceedings. However, that was not a matter alluded to in Mr Boswell’s affidavit, which was drafted in the context of an application for a more ambitious division of property.
I am concerned that not a great deal of thought was applied to the application in question, prior to its instigation. Rather, it seems to have been assumed that just because there were monies standing to the parties’ credit in a trust account, it would be incumbent on the court to divide them. That is not the case.
The High Court in Stanford has reaffirmed the centrality of section 79(2) in the making of any order resulting in the alteration of marital property interests. At both the interim and final stage, the court must be satisfied that it is just and equitable to make the order sought. In this case, I am concerned that I do not know all of the relevant circumstances pertaining to the matter and so cannot properly acquit my responsibilities under section 79(2).
In Strahan the Full Court has disavowed any notion that there must be compelling circumstances before an interim property order is made. The sole determinative factor being the interest of justice.
Thus this question does not turn solely on the perceived inevitability that a property order will be made as a consequence of an assessment of the applicable considerations arising from section 79(4). The exercise is a more nuanced one and the court must be cautious not to homogenise the two considerations – that is the considerations of justice and equity arising under section 79(2) and the mechanical considerations provided by section 79(4).
It also seems to me that it will be necessarily more problematic to properly address the section 79(2) issue in the context of a limited interim hearing. Essentially, on the basis of untested and provisional evidence, it may be difficult for the court to assess the overall justice of any outcome sought.
In a recent decision, regarding an application for property distribution made at the interim stage, I said as follows:
“The discretion to make an interim property order is one which is to be conservatively exercised. Issues which are inchoate, at this stage, may become more apparent to me at the final hearing stage and may considerably change the topography of the dispute between the parties, at this later stage. To use the terminology of the former US Secretary of Defence, Mr Rumsfeld, these are the “known unknowns”.
In addition and more significantly, as the final hearing unfolds, “unknown unknowns” may arise which will even more significantly change the issues in dispute the parties and how their property is to be distributed between them.” [24]
[24] Benson & Benson [2012] FMCAfam 335 at [91] – [92]
What unknown unknowns may materialise, at the final hearing stage, cannot, for obvious reasons, be currently identified by me. The discretion to make an interim or partial property settlement is not one which is to be mechanically or routinely performed. Ideally, the power arising under section 79 should be exercised by the court once only.
One known unknown is the fact that the parties will be assessed to pay capital gains tax. However, I do not know what the likely quantum of this tax is, particularly how it will impact upon the bottom line of the parties’ asset pool. In addition, I do not know how easily or otherwise the remaining investment properties will sale or what impact this will have on the parties’ liquidity, particularly if there are problems with renting the properties.
In all these circumstances, I have come to the conclusion that it would not be just and equitable to make the orders sought by the husband at this stage. Accordingly, his application is dismissed.
It seems appropriate that the monies standing in the respective trust accounts of the two conveyancers concerned should be invested in an interest bearing account. I will make an order to this effect. I will adjourn the proceedings to a date in November, when it is anticipated that the process of supervised time between the husband and X will be completed.
The wife seeks costs in respect of the application. She has been totally successful in her opposition to the husband’s application, which I have characterised as being imprecise. The wife’s solicitor indicated clearly, at the first mention of the application that his client strongly opposed the release of funds because of uncertainty about the capital gains tax position.
Notwithstanding this early and unequivocal indication, the husband chose to persist with the application, although at the last minute it was recast as an application for litigation funding, albeit no further particulars were provided.
In my view, applications for partial or interim property settlement should be the exception rather than the rule, particularly in cases where the property available for distribution is of modest value. For obvious reasons, where the pool is small, the margin for error in any provisional distribution of property is much reduced.
This is a case where the pool is modest, but the manner in which the parties’ property is held is complex. For the reasons provided, the court has declined to make the orders sought by the husband. In all these circumstances, I have come to the view that it is justified to make an award of costs in the wife’s favour, which I fix at $750.00.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.

I certify that the preceding ninety-two (92) paragraphs are a true copy of the reasons for judgment of Judge Brown

Associate:

Date: 22 September 2014