COLGAN & COLGAN - [2016] FamCA 1167

FAMILY COURT OF AUSTRALIA

COLGAN & COLGAN

[2016] FamCA 1167

FAMILY LAW – PROPERTY – Settlement in relation to marriage – Interim – Application by the husband to withdraw $50 0000 from a controlled monies account – Where the wife seeks that the husband’s application be dismissed – Where each of the parties made substantial contributions – Where there is a pool of available property out of which a further order could be made – Where the husband is not employed – Where the Court is not confident that the sum sought by the husband is not going to compromise the wife’s substantive claim – Order made that the husband have leave to withdraw $25,000 from a controlled monies account with such payment to be categorised as partial property settlement.

Family Law Act 1975 (Cth) ss 75(2), 79

In the Marriage ofHarris and Harris (1993) FLC 92-378
Medlow & Medlow (2016) FLC 93 692
Strahan & Strahan (2011) FLC 93-466
Vanin & Vanin [2012] FamCA 16

APPLICANT:

Mr Colgan

RESPONDENT:

Ms Colgan

FILE NUMBER:

SYC

5091

2014

DATE DELIVERED:

21 October 2016

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Johnston J

HEARING DATE:

21 October 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Bateman

SOLICITOR FOR THE APPLICANT:

KD Holmes Solicitors

COUNSEL FOR THE RESPONDENT:

Mr Othen

SOLICITOR FOR THE RESPONDENT:

Slater & Gordon Lawyers

It is noted:

A.That in relation to the wife’s application at paragraph 2 of her Response to an Application in a Case filed on 20 October 2016 the Court notes the matter contained in the hand-written notation filed in Court today and signed by Johnston J and placed with the Court papers as set out hereunder:-
NOTATION:
That both parties use their best endeavours to cause to be removed all online references to the parties’ legal proceedings including contacting the administrators of any such websites to include “Innocence Project”, the Daily Telegraph and Google.

It is ordered:

That the husband is given leave to withdraw the sum of $25,000 from the controlled monies account in the name of his solicitor, such payment to be characterised as partial property settlement.

It is further noted:

B.That the parties shall be endeavouring to arrange for a private mediation to endeavour to facilitate a resolution of the outstanding legal issues.

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 Colgan & Colgan 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 SYDNEY

FILE NUMBER: SYC 5091 of 2014

Mr Colgan

Applicant

And

Ms Colgan

Respondent

REASONS FOR JUDGMENT

This is a partial property settlement application by Mr Colgan to whom for convenience I shall refer as “the husband”.
The order sought in the husband’s Application in a Case filed on 12 October 2016 is that he have leave to withdraw the sum of $50,000 from the controlled moneys account in the name of his solicitor, with such payment being characterised as a partial property settlement.
That application is opposed by Ms Colgan, to whom for convenience I shall refer as “the wife”. The wife seeks that such application be dismissed.
The parties are engaged in substantive property and parenting proceedings. Matters have progressed to the point where the parties recently had their first day in the Less Adversarial Trial. They were unable to resolve their differences about the substantive matters in issue. But I am informed today that it is proposed that mediation with a private mediator be arranged quite soon. Be as it may, the parties have a modest pool of available property. I shall come to that shortly.

Background

The brief background matters are as follows. The husband was born in 1971. The wife was born in 1972. They have two children: K, who was born in 2010, and L, who was born in 2013. On my calculation, the boys are respectively six years and three years of age. The parties commenced cohabiting in approximately August 2007. They married in 2008 and separated on 9 August 2014.
They appear to differ in respect of the values of the property that they had at the commencement of cohabitation.
The wife says in her affidavit that at commencement, she had approximately $492,071 comprised in two accounts which she says included money from her property settlement with her former husband. She says that she also owned some shares, superannuation benefits of approximately $129,386, a motor vehicle, some furniture and home contents. The wife says that she had no significant liabilities. She says that she was earning approximately $315,000 per annum.
It is common ground that at this time the husband owned a home unit at Suburb G which he had purchased some little time previously, and a German motor vehicle. It was submitted today by learned solicitor on the husband’s behalf that at commencement, those assets which the husband had, had a net worth of approximately $640,000. That is clearly a matter which is in issue because my understanding is that the wife takes a different view of what the evidence would ultimately demonstrate about that matter. It was submitted on behalf of the husband that at the commencement of cohabitation, the parties each had property and superannuation with substantial value, that being perhaps in the mid-$600,000’s. That will have to remain a matter for trial.
The husband was earning an amount with X Bank, well above $500,000 per annum. The wife was retrenched in May 2009 and she received a payout of approximately $51,000. Until recently, the wife, following that retrenchment, had been out of the paid workforce and I infer that in more recent times, she has been able to obtain some part-time employment.
The husband has worked in highly paid positions with various corporations, and, ultimately, D Pty Ltd. His employment with D Pty Ltd ceased in July 2015. Since that time, the husband has been unemployed. It is submitted on his behalf, that he is finding it difficult to obtain employment. Certain things are said on his behalf about a downturn, although my understanding is that there is no material in any admissible form before the Court about any downturn in the industry in which he has experience. Furthermore, there is no material before the Court about endeavours on his part to obtain any employment since his employment with D Pty Ltd ceased.
In mid-2011, the parties arranged for some renovations to be undertaken to the Suburb G home unit. That property was sold in January 2014, some months prior to the time that the parties separated. The net proceeds of sale were in the vicinity of $618,807.
The wife says that in August 2014, the husband closed her access to her credit card with the National Australia Bank. She says, at that time, there was approximately $85,734 in that account.
On 10 September 2014, orders were made by this Court to the effect that the net proceeds of sale and funds in the wife’s Westpac Max-i Direct account be deposited to a controlled moneys account. The orders also required that the husband direct a payment of what would have been the remaining net proceeds of sale of the Suburb G property, into a controlled moneys account, and the orders were expressed in such a way that, prior to making those deposits into the controlled moneys account thereto, each of the parties were able to have the benefit of $150,000. And there is no issue that that was done.
I am told across the Bar table that in the case of the husband, out of that $150,000, $100,000 was paid to outstanding income tax, and it is clear that substantial sums have been paid by each of the parties for legal costs in these proceedings.
On 17 December 2015, the husband sought an order which would enable release to him of $100,000 from the moneys in the controlled moneys account, and Stevenson J ordered that he have $50 000. I have been referred to her Honour’s judgment in respect of that matter. Her Honour was able to satisfy herself that to make an order for payment out of the controlled moneys of $50,000 in favour of the husband, would not have the effect of preventing the Court ultimately to make a just and equitable property order pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”). Her Honour ordered that the husband be able to avail himself of $50,000 drawn down out of that controlled moneys account.

Discussion

There are a number of issues in the substantive proceedings which it is submitted on the wife’s behalf would cause the Court to be cautious indeed in ordering that the husband have further funds in addition to those funds which have already been ordered in his favour. Amongst these is what is called a Kennon factor. I am not sure what the evidence would be in respect of that matter.
There are various issues about the husband’s alleged spending. During the course of submissions, it was said on the wife’s behalf that she is concerned that the husband has spent funds on things that she would argue are inappropriate in circumstances where the family is now living in quite strained circumstances, with two children to support. Some criticism is levelled at the husband for expenditure on, I think, what was described as fine dining and overseas travel.
Another issue in the substantive proceedings is that the wife alleges that the husband spent substantial sums on lottery tickets and that there are matters of a financial nature about which she takes issue and will be running in the substantive proceedings.
It is submitted that with the overall application that, out of the limited funds, taking account of the history of the matter since the parties separated, the fact that the husband has been unemployed now for a long time, and has paid very limited child support.
Things have arrived at the point where the Court would be very concerned, given the limited nature of the property or the non-superannuation property which would be available of making orders, for any further sums to be made available to the husband. The submission being that, ultimately, the Court will not be able to turn around those orders come substantive property time.
It is submitted on behalf of the husband that that would not be the case. It is submitted that when the matter was before her Honour, the non-superannuation property then available was approximately $750,000, and of that the parties have had the sum of $350,000.
It was submitted that the husband has had $200,000 out of which he spent $100,000 on tax as I have indicated. It is submitted that if the Court extended to him a further $50,000 then the Court could be comfortable that it would not have reached a point where it would not be able to reverse the order come substantive property time.

Financial circumstances

The wife’s weekly income is $336 which the wife arrives at by apportioning weekly amounts from a payout which she received from M Pty Ltd of $17,487. And she receives $1 weekly from dividends.
In addition, the wife receives $51 per week child support from the husband. She estimates, probably unsurprisingly, that her weekly personal expenditure is a very considerable amount more than those monies. She estimates her weekly personal expenditure as being $2,861, which I infer includes the children’s expenses.
The wife says that her property consists of, firstly, her interest in the controlled moneys account. She says that she has $5,830 in savings, that she still has some shares with a total value of approximately $20,000 and household contents which she estimates have a value of $9,000. The wife estimates she has superannuation accounts the total of which would be in the vicinity of $273,719. The wife estimates that her total liabilities are $128,060, including outstanding legal fees.
On the other hand, the husband’s financial circumstances are that he receives nil income. He estimates that his total weekly personal expenditure is $1,244. As was pointed out, he lives with his parents and clearly as a consequence his costs are obviously far less than if he was having to provide for his own accommodation. And that would appear to account for some differential between the parties’ costs.
He said his property consists of $7,000 in an NAB account, and that he has a superannuation benefit worth approximately $154,000. He says he has a liability to his parents of $170,000, which he says is an accumulation of subsidies which they have been giving him now for quite some time to assist him not only with his personal and perhaps children’s living costs, but also with funding the legal costs in these proceedings.
I was taken by the learned solicitor for the husband to the legal principles involved as set out in such well known authorities as Strahan & Strahan (2011) FLC 93-466 (“Strahan”) and In the Marriage ofHarris and Harris (1993) FLC 92-378 (“Harris”), and also sent to the explanation of the relevant principles set out by my colleague Watts J in the case of Vanin & Vanin [2012] FamCA 16.
The Court has power to make an interim or partial property settlement order pursuant to s 79 of the Act. Clearly the order has to be just and equitable. It has to be just and equitable to make such an order. The Court has a wide and unfettered discretion. I was taken to comments made in the judgment of Boland and O’Ryan JJ in Strahan (above) about the two stages of the hearing.
Clearly there is a pool of available property out of which a further order as part of an overall s 79 order could be made. Each of the parties has made substantial contributions by virtue of their initial contributions. Clearly the major earnings through the marriage were achieved by the husband. And the wife’s primary focus was on being homemaker and parent. This is the way that the parties’ arranged their affairs.
Clearly there are numerous relevant s 75(2) matters. Giving consideration to those matters and the fact that there will be significant s 75(2) considerations ultimately before the Court in the substantive hearing, the Court will be faced with what would appear to me to be a significant disparity in the parties’ income earning capacities. And as I have indicated, there is no proper explanation by the husband based on relevant evidence about why he continues to find himself in the position of being unemployed, whereas at the time the parties separated he was earning what I would describe as a high level of income.
That compares with the situation where the wife has been out of the full-time work force now for many years. To her credit, she has obtained some limited part-time employment. As I have said, that is going to be a significant s 75(2) matter. It is not clear what the arrangements for the children would be and my understanding of this case is there is a real issue about how those parenting responsibilities ought to be placed between the parents. But, during the course of the parties’ marriage, the arrangements between them were that primarily and for most of the marriage, the husband was the income earner and the wife was to remain home and, as I have said, focus her attentions on her responsibilities for caring for the children and caring for her husband.
Those s 75(2) matters, it seems to me, are likely in the substantive proceedings to require a set-off of available property and superannuation in favour of the wife. One does not know sufficient about the details and the sort of evidence which would be before this Court in the substantive hearing is not available before the Court at the present time.
On the one hand, it is unfortunate that the husband has not placed before the Court an explanation based on evidence of why he continues to find himself in this unemployed situation. And that would appear to have some relevance in the context of the substantive proceedings. On the other hand, there is a limited pool of property available, particularly given the qualifications and experience and earnings of the parties during the marriage. The Court might well be faced with a situation where the major part of the available property will be directed to the wife.
As I have said, Stevenson J was ultimately satisfied that by ordering another $50,000 in favour of the husband - when I say “another” I mean “in addition to” the monies which each of the parties were permitted by the earlier Court orders to retain - that that would not be likely to bring about a situation which could not be reversed.
And I note that at [82] and at page 81,090, of the Full Court judgment in Medlow & Medlow (2016) FLC 93-692, their Honours said as follows:
82. Senior counsel for the wife referred us to the following passage in Strahan, where the Full Court said at 85,646:
136. As to the third matter identified at 79,930 by the Full Court in Harris, in discussion before us it was described as the “adjustment issue” or “claw-back issue”. It was submitted by senior counsel for the Wife that it is relevant to consider whether an order would give the applicant “more than they would be indubitably entitled to on a final hearing” or alternatively “would it give them so much that it could not be adjusted on a final hearing?” As we have observed the Full Court in Zschokke at 83,220–221 stressed the importance of consideration of the “adjustment issue” if the power in s 80(1)(h) of the Act is being exercised. We accept the submission and observe that this matter is relevant because the discretion conferred by the power in s 79 is to make such order as the Court considers appropriate provided it is just and equitable to make the order in circumstances where the power will not be exhausted by the interim order. As Bryant CJ and Coleman J observed in Gabel v Yardley at [69] and [72] the interim order must be capable of variation or reversal without resort to s 79A of the Act or appeal. As Finn J said at [126] the interim order must be “capable of alteration at any time prior to, or as part of, the final exercise of the s 79 power”.
So, clearly, amongst the matters that the Court has to consider is the question of whether it can remain confident, as Stevenson J was on the earlier occasion, that if an order is made, not only can that appropriately be taken into account, but that things have not arrived at the point where, in fact, what is left of the pool after making such an order would not be sufficient to make a just and equitable order in the substantive proceedings.
I must say my judgment in respect of that matter is at the point where I am less confident than her Honour was on the earlier occasion, in being as certain as her Honour was, that by ordering a further $50,000, of what remains would leave sufficient to be able to make a just and equitable order. I must say I think things are now starting to run to the point where the Court is starting to become considerably less confident about that.
I am concerned that the husband still finds himself in the same position that he was in before her Honour, that is, out of work and making a very limited contribution to the costs of this family, the parties have not been able to resolve their differences, each of them is becoming further indebted to their lawyers and they continue to find themselves on what appears to be a collision course with the inevitability of a lot of money having to be spent in final hearing.
I am told that the parties are planning to engage in a mediation to see whether they might be able to arrive at an accommodation and achieve a resolution of these proceedings.

So the question is, can the Court continue to be satisfied that, if it makes a further order, there would be sufficient funds available in order to do justice and equity, ultimately, to the wife in the proceedings?
In my view, it would be in the parties’ interests, and particularly in the interests of their children, for the husband to be able to continue to be represented in the proceedings at least in order to be able to put his best foot forward and best prepare and prosecute his case, not only in the parenting proceedings but also in the property proceedings. So in those circumstances, in my view, some limited funds ought to be made available to him to assist in that process. But I am not confident that to make an order for the sum that he is seeking, which is the $50,000, is not going to compromise the wife’s claim. So in all the circumstances, in my view, he can draw down another $25,000, but once we have arrived at that point, in my view, we would be crossing the threshold. So the application succeeds at least to that end.

I certify that the preceding forty two (42) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Johnston delivered on 21 October 2016.

Associate:

Date: 30 March 2017