Conner and Conner & Anor

[2017] FamCA 1017

FAMILY COURT OF AUSTRALIA

CONNER & CONNER AND ANOR [2017] FamCA 1017

FAMILY LAW – PROPERTY – partial settlement – where facts are unclear although dispute is quantifiable – where an intervener has been joined but despite six months passing by, no substantive relief has been sought which makes it difficult to discern what is available for distribution – where orders should still be made.

Evidence Act 1995 (Cth)
Family Law Act 1975 (Cth)

Medlow & Medlow [2016] FamCAFC 34 Strahan & Strahan [2009] FamCAFC 166
APPLICANT:	Mr Connor

RESPONDENT: Ms A Connor

INTERVENOR: Ms B Connor

FILE NUMBER: MLC 3395 of 2015

DATE DELIVERED: 11 December 2017

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 11 December 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr McInnis

SOLICITOR FOR THE APPLICANT: Gold Stone Family Lawyers

COUNSEL FOR THE RESPONDENT: Ms Fisken

SOLICITOR FOR THE RESPONDENT: Lennon Lawyers

COUNSEL FOR THE INTERVENOR: Mr Nehmy

SOLICITOR FOR THE INTERVENOR: Lander & Rogers

Orders

1. That each of the husband and the wife give instructions to the solicitors holding the net proceeds of the sale of the property owned by them to distribute the sum of approximately $260,000 as follows:

   (a)       To the husband $130,000; and

   (b)       To the wife $130,000.

2. That the intervener’s application is dismissed.

3. That the husband, the wife and the intervener file an amended application and/or response setting out with precision the orders to be sought by no later than 1 February 2018.

4. On the basis that the parties attend a mediation prior to the final hearing, the requirement to attend a conciliation conference as provided in s 79(9) of the Family Law Act 1975 is waived.

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 Connor & Connor and Anor 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 MELBOURNE

FILE NUMBER: MLC 3395  of 2015

Mr Connor

Applicant

And

Ms A Connor

Respondent

And

Ms B Connor

Intervener

REASONS FOR JUDGMENT

1. Ms A Connor (“the wife”) issued proceedings against Mr Connor (“the husband”) on 22 April 2015 and for reasons that are unclear, but with both parties represented by lawyers, the application was struck out with a right of reinstatement on 2 November 2016. 

2. On 23 March 2017, the husband issued a fresh application.  He sought orders without any precision at all asking to be excused pending the completion of disclosure and discovery.  It is trite to say from what is apparent from the court file and upon what I was told in the court room, this dispute is modest and confined.  Despite that, it has some interesting complexities to which I shall now turn.

3. The wife did not file a response to the husband’s application until 5 October 2017 and she too did not seek orders with precision and gave no explanation for her inability to do so.

4. Neither party took exception to the imprecision of the other but that imprecision creates a difficulty for the parties in working out the parameters of the dispute.

5. Having issued a fresh application, the parties came before Johns J on 2 May 2017.  That order has never been taken out and the court file notes that the parties consented to a range of orders.  Significantly, the first of those orders was that the parties’ daughter, Ms B Connor have leave to intervene.  Having so intervened, like her parents, Ms B Connor has never filed any application for substantive relief.  Despite that, her parents seem well aware of what is pending.

6. Upon the order for intervention being made, the parties consented to an order that of the proceeds of the sale of C Street, Suburb D, $30,000 be paid to the husband and by way of part property settlement.  In addition to those orders, a variety of other orders included the sale of C Street and what was to happen upon the settlement of the sale.

7. The application before the court now is as follows.

8. The first application in time seeks that upon the settlement of the sale of C Street, the proceeds be placed in the trust account of the solicitors for the wife.  By application filed on 9 October 2017, the wife sought:

   Within 7 days of settlement of the sale (of [C Street]) $150,000 be distributed to the wife by way of part property settlement.

9. The husband’s application was that both husband and wife apply to the Westpac Bank for $265,000 “on such terms and subject to such conditions as the said bank may require”.  He sought that those funds be paid to him.  He then sought:

   [8]That the characterisation of the distribution and/or the payment pursuant to (the application above) be a matter for the determination of the Court at the trial of these proceedings.

10. It is also trite to say that with the imprecision in the final orders sought, it is difficult to know just what each party is seeking in the long run.

11. The third applicant for orders is the parties’ daughter who, still not having filed any application for substantive relief, seeks that both husband and wife be restrained from reducing the money in trust from the sale of C Street below $200,000 and that otherwise, any amount above that sum, be paid as to $10,000 to the intervener, and the balance to the wife by way of part property settlement.

12. Each of the three parties was represented by counsel all of whom did the best with the limited material they had and I have been grateful for that assistance.

13. The intervener’s proposed claim has not materialised and an order has now been made that that claim be particularised by 1 February 2018.  It seems that the intervener alleges an assault was committed upon her by the husband when she was a child.  Where that claim is to be heard, remains to be said although it is now suggested by Mr Nehmy of counsel that it will most likely be brought in this court.  Apparently, although it is not entirely clear to me, arising out of the allegations of assault, the husband was charged by police and has been committed for trial in the County Court.  That court is expected to hear the trial before a judge and jury in August 2018.  In the interim however, it seems that the husband has been taken into custody on the basis that he is from New Zealand notwithstanding he was granted bail by the Magistrates’ Court.  That logistical problem compounds his capacity to participate in the proceedings but I was assisted by Mr McInnis of counsel who appeared on his behalf.

14. Despite the wife’s claim being unparticularised, her counsel Ms Fisken, sought that $150,000 be paid out of what is now the proceeds of the sale of C Street.  The intervener by affidavit said that there was nothing urgent about her mother’s claim and she did not think it was appropriate to make an order.  The intervener also said that she had been informed (although she did not say by whom) that her claim was in the vicinity of $200,000.  Counsel declined to indicate where that came from or who gave the advice.  The affidavit was not particularly helpful in that it indicated that to the extent that a claim was going to be brought, apparently it depended upon what happened in the criminal proceedings against the husband.  However, that does not make much sense as the two standards of proof are entirely different.  There is also a question about the intervener undergoing a psychiatric examination before any precise pleading is filed.  My concern however is that there is no substantive relief before the court and that needs to be rectified.

15. The injunctive relief sought by the intervener cannot succeed. There is no claim in this court notwithstanding the intervener is a party to the proceedings. There is no judgment or potential judgment to protect. The evidence is vague such that I could not be sure that a claim would even be brought in this court notwithstanding counsel’s indication that it most likely will be. To the extent therefore that the intervener seeks orders under s 114(3) of the Act, I am unsure what the proceeding is. Although it is not entirely clear, the intervener in her affidavit says that she is only seeking damages against her father but as Mr McInnis pointed out, there may be a claim for contribution.

16. For her part, the evidence of the wife was that this was a long marriage with a number of children all of whom are now adult.  No valuations have been undertaken as to the only other piece of property that the parties seem to have which is their former home.  Albeit without any apparent foundation, the wife said she thought it was worth $1.2 million but the husband, equally without foundation, said he thought $2 million.  There is a mortgage of $250,000.

17. Thus the only certain asset is the cash from the sale of C Street which is $260,000 or thereabouts.

18. On the basis that the intervener has no right to an order based on the evidence before the court at this stage, the focus of these reasons is really upon the husband and the wife.  The wife opposed the husband receiving anything. 

19. The husband’s position was that he is currently being held in detention and although he may be able to get legal aid for his August 2018 trial, he wanted to pay for it out of his entitlement.  The intervener’s opposition to that was that her potential claim may be prejudiced.  The wife’s claim was that she too might be prejudiced although it is difficult to see why.  In the wife’s affidavit, she said that she was entitled to a settlement of around 70 per cent.  No foundation for that assertion was given other than the fact that during the relationship at an unnamed time, she received an inheritance of $350,000 which was spent on renovations although no details were provided.

20. I have set out the facts above in a summary form to indicate the dilemma in trying to work out an approach to the resolution of each of the interlocutory applications bearing in mind the substantive relief in each case is hidden amongst affidavits and the affidavits in some cases, provide no evidence at all but opinion, conjecture or argument.

21. Counsel for the wife said that the jurisdictional foundation for the exercise in her client’s favour lay in both s 79 and 80 of the Family Law Act 1975 (Cth) (“the Act”). Counsel for the husband said he had some difficulty with the relevant legislative provisions but I am satisfied that the husband has the same legitimate approach here to the alteration of property interests. In reality, the main assets are:

    (a)Former home of the parties worth an unknown amount but their own guesses puts its value between $1.2 million - $2 million. That is encumbered to the extent of $250,000.

    (b)The cash in the trust from C Street $260,000.

22. There may be other assets but the focus of attention of all counsel was on these two. Having dealt with the intervener’s position, I turn to the applicable principles to be applied in an application for an interim property settlement. They were articulated in Strahan & Strahan [2009] FamCAFC 166 and discussed again in Medlow & Medlow [2016] FamCAFC 34).

23. In the various submissions of counsel, discussion occurred about the “claw back” problem; that is, if money is released in a partial distribution of property, can it be clawed back at trial if the court ultimately decides that a just and equitable division of the parties’ property cannot be achieved without that earlier payment being taken into account. It is little consolation if the distributed money has evaporated. In this case, that is a very real probability because the husband wants to spend his money on his forthcoming criminal trial and the wife desires to spend hers on these proceedings. There will be no recourse to that money if the just and equity issue is problematic at trial.

24. This case therefore focuses on the right of the parties to do what they wish with their own money knowing that it will no longer be available and in circumstances where the only other asset is a house which, on present evidence, would have to be sold to meet any claims.

25. As identified in Strahan, there are two steps. First, what jurisdiction is being invoked? Secondly, is there sufficient evidence to enable a consideration of the relevant factors under section 79 of the Act? Added to that question is whether or not it would be just and equitable to alter the existing interests of the parties anyway. Here, all parties seem to agree that the house is jointly owned so there will be a need to deal with their respective interests on the basis that each wants a determination.

26. In Strahan, Boland and O’Ryan JJ said of those two matters at [132]:

    In relation to the first stage, in our view, when considering whether to exercise the power under ss 79 and 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.

27. As indicated, their Honours said that an order under section 79 is usually a “once and for all order”. That concept can be seen at [113]:

    There is only one exercise of the power under s 79 of the Act. However, this power may “be exercised by a succession of orders until the power … is exhausted” and the power is exhausted “when there remains no property … with respect to which orders by way of alteration of interests in property could be or have been made”: Gabel per Bryant CJ and Coleman J at [57] . As Finn J in Gabel at [125] said: “it is only the final order, which deals on a final basis with all known property of the parties, which completes the one single exercise of the s 79 power”. Further, an earlier order whether made under s 79(6) or s 80(1)(h) is capable of alteration at any time prior to, or as part of the final exercise of the s 79 power: Gabel per Bryant CJ and Coleman J at [69]–[73] and Finn J at [126] .(citations omitted)

28. This case is a good example of the court being cautious. I do not know many of the things that a court should know when it is being asked to deal with the alteration of property interests in an environment where normally the exercise of that power is done once only.

29. It is unknown what the parameters of the dispute are and that is compounded by the fact that despite being a party since May 2017, no claim for relief has been filed by the intervener. No valuations have been undertaken such that the gulf between the guesses of the parties is huge. Every dollar in this case will be important. There is no evidence of whether the wife can buy out the husband or whether the property will ultimately be sold. The evidence relied upon by the parties would be doubtful if tested by reference to ss 55 and 56 of the Evidence Act 1995 (Cth).

30. As Mr McInnis submitted, the Court has to do the best it can from the affidavits such as they are.

31. The first question is whether it is appropriate to exercise the power. That depends upon the court being satisfied that justice requires a distribution to the parties of what is effectively their own property on a common ground basis. In other words, is it likely that an order will be made and why is it not just and equitable to make it now?

32. The unsatisfactory nature of the evidence is still such that the parties agree that the mathematics will show certain outcomes. The two assets for division are valued at somewhere between $1.2 m and $2.1 m (net). Of that, $260,000 is in trust.

33. The wife says that the husband should get 30 per cent. That is a concession that his net interest is between $360,000 and $600,000.

34. The intervener who is aligned with the wife says that her potential claim is $200,000.

35. Thus, on the scenario of the wife and the intervener, after paying the latter, the husband should get somewhere between $160,000 and $400,000.

36. The husband’s claim is unclear but on the basis of the evidence above being used as some form of admission against interest, it is hard to see why the husband should not (like the wife) have his money now. Although Strahan makes it clear that the applicant does not have to show compelling reasons, the wife says she wants to spend her money on legal fees. The husband goes one step further and seeks to avoid having to rely upon legal aid for his forthcoming trial. He says that if granted legal aid, he would be obliged to use a “panel” lawyer rather than that of his choice. I do not know whether the husband is eligible for legal aid but one might imagine if he had an interest in the parties’ former home, he might be required to charge his interest anyway and that would seem to ultimately cause its sale.

37. If the matter is examined from the wife’s perspective, she considers she will receive between $840,000 and $1.4 million. There is therefore no logical reason why she should not have some of her own money at the moment provided it can be “clawed back” if necessary. With the potential interests as the parties see them, that should not be a problem even factoring in the intervener’s claim against the husband and even considering any contribution argument that the husband might endeavour to bring against the wife.

38. I am satisfied that there is sufficient evidence to justify the exercise of the discretion here. All agree that the house should not be touched at present. That leaves me with $260,000. I see no reason why each should not have half of that sum bearing in mind two things. First, all of it is going to be spent on legal fees and therefore cannot be recovered. Secondly, each will still have sufficient equity in the house to cover any money otherwise to be met.

I certify that the preceding Thirty-eight (38) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 11 December 2017.

Associate: 

Date: