Connor and Connor

[2007] FamCA 623

FAMILY COURT OF AUSTRALIA

CONNOR & CONNOR [2007] FamCA 623

FAMILY LAW - PROPERTY SETTLEMENT - Partial settlement

APPLICANT: MRS CONNOR

RESPONDENT: MR CONNOR

FILE NUMBER: MLF 1602 of 2006

DATE DELIVERED: 6 June 2007

PLACE DELIVERED: Melbourne

JUDGMENT OF: Dessau J

HEARING DATE: 6 June 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr T. North SC

COUNSEL FOR THE RESPONDENT: Mr G. Thompson

Orders

1.That there shall be a partial property settlement of $1 million each in favour of the husband and the wife to be drawn forthwith from the bank account in the joint names of S Pty Ltd and the wife.

BY CONSENT IT IS ORDERED

2.That the Husband and the Wife personally, and the Husband in his capacity as the Director of P Pty Ltd (ACN …) ("[P]"), forthwith do all such acts and things and sign all such documents as may be required to lease the following properties:

a.E in the State of Victoria ("the [E] property");

b.V in the State of Victoria ("the [V] property"); and

c.S in the State of Victoria ("the [S] property").

3.That until further Order the Husband and the Wife personally, and the Husband in his capacity as the Director of P, shall do all such acts and things necessary to ensure that all of the properties referred to in paragraph 2 hereof are leased on a continuous basis until the final hearing of this matter.

4.That at all times until the final hearing in this matter the Husband and the Wife shall ensure that the terms and conditions of any of the leases for any of the three properties referred to in paragraph 2 hereof (such terms to include, without limiting the generality of the foregoing, the quantum of rental payable for each such property, and the duration of each such lease), shall be as follows:

a.As may be agreed between the parties;

b.In the absence of agreement, in accordance with the recommendations of the real estate agents (if any) engaged by the parties to ensure and to manage the lease of any such property or properties; and

c.In the absence of any real estate agent, or in the absence of agreement between the parties as to a real estate agent, in relation to any particular property or properties, then the terms and conditions of the lease for any such property or properties shall be in accordance with the recommendations made by the President of the Real Estate Institute of Victoria or his or her nominee.

5.That there otherwise be general liberty to either party to apply with respect to the terms and conditions of the leases of any of the three properties listed in paragraph 2 hereof.

6.That the proceeds of the rental payable in relation to the leasing of each and every one of the properties referred to in paragraph 2 hereof shall be applied and paid as follows:

a.Firstly, to pay the cost and expenses associated with the lease of the said property including any commissions or charges payable to any real estate agent managing the lease of such property;

b.Secondly, to pay the costs and expenses associated with the necessary maintenance and conservation of the said property including, without limiting the generality of the foregoing, the payment of council rates, water rates, land tax, insurance, and the payment of expenses associated with any necessary maintenance or repairs of the said property;

c.Thirdly, in the event that there is any surplus rent available after payment of the expenses referred to in sub-paragraphs (a) and (b) hereof for any particular property, such surplus shall be divided equally between the parties;

d.Fourthly, in the event that the rental obtained for any particular property is insufficient to meet the expenses referred to in sub-paragraphs (a) and (b) hereof, then the additional sum required to make the payment of such expenses shall be met by each of the parties in equal one half shares.

7.That the Husband's Form 2A Response filed on 16 January 2007, the Wife's Application filed on 21 December 2006, and the Wife's Reply filed on 6 June 2007, be otherwise dismissed.

8.That each party’s costs of these applications shall be reserved.

9.That pursuant to the Family Law Rules this matter reasonably required the attendance of counsel and Senior Counsel.

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 1602  of 2006

MRS CONNOR

Applicant

And

MR CONNOR

Respondent

REASONS FOR JUDGMENT

1. The wife seeks a partial property settlement of $1 million for both herself and for the husband.  The husband argues that it should not be paid, but, if I am against him, then he agrees that both should receive $1 million, not just the wife.  It is conceded by counsel for the husband that when there is a final property settlement the wife will receive in excess of $1 million.  In reality, it is likely that she will receive substantially more. 

2. In the course of their 26‑year marriage the parties have built very considerable wealth; on the husband's material, in the vicinity of some $25 million.   Although each has already received a little more than $1 million by way of partial property settlement, it is not surprising that the concession is still made that the further sum that the wife now seeks for each party is very well within the ambit of the respective amounts that they will receive.

3. The wife wants $1 million in order to take advantage of the one‑off opportunity to enjoy the very favourable tax implications of putting that sum into her superannuation fund before the end of the financial year in just a few weeks time.

4. The husband argues that the wife has in her possession or under her control significant assets from which she can take up the superannuation opportunity if she chooses.  He argues that there is no urgency as to her claim for capital and no compelling need to qualify for a partial property settlement, as required by the authorities.  Mr Thompson for the husband referred me to the Full Court's decisions in Harris v Harris (1993) FLC 92‑378 and Bearup v Bearup (1993) FLC 92‑412.

5. In Harris, the Full Court made it clear that a consideration of a partial property settlement is an exercise of the s 79 power, which must be performed within those legislative parameters.  In this case the concession that, on any view, the wife - and for that matter, the husband - will receive at least $1 million is a concession that it will occur taking into account all the applicable steps and principles in s 79 and s 75(2) of the Family Law Act. 

6. In Harris, the Full Court said that the power must be exercised conservatively, meaning that a judge must be satisfied that the remaining property will be adequate to meet the legitimate expectations of both parties.  In this case it will be.

7. Otherwise, Harris refers to the exercise of the power for a partial property settlement being confined to cases where the circumstances are compelling, it generally being in the parties' interests to have just one final hearing under s 79 of the Act.  The court went on to say that circumstances may arise where an order should be made.  They referred to orders made by consent and urgent situations where it may be necessary to exercise the power to avoid an injustice.  Examples then followed.  They were clearly examples and were not intended as an exhaustive list.

8. Interestingly, judgment was given by a differently‑constituted Full Court, within just two weeks of Harris, in Bearup.  In that latter case it was said that trial Judges must approach the sale of property prior to the final hearing with the utmost caution.  Baker J gave the opinion that it should be only to preserve assets or to pay spousal or child maintenance.  I note that the Full Court was there dealing with a case where the interim property orders had been made on the basis that the former matrimonial home in which the wife and the children were living needed to be sold to pay debts, when in fact that was incorrect.  It was in that context that Baker J made those observations specifically about the sale of assets pending a final hearing. 

9. This case is not about the sale of assets.  The parties have millions of dollars in cash in the bank, as well as other assets.  Mr Thompson himself described the parties as "swimming in assets, swimming in money".  He did so to emphasise that there is no urgency in this case for orders to be made, particularly as the parties have previously received some moneys.  I am told the husband spent large parts of that money on cars, the wife on investments.  Neither can or should be criticised.  They have enough money to make such choices.  In my view though, Mr Thompson has asked me to apply too narrow an interpretation to the concepts of “urgency” and “compelling circumstances”, as if only a parlous financial position can give rise to them.  Often that will be the case, but the circumstances of these parties prove to the contrary that there can be urgent and compelling circumstances in different situations, including situations of wealth.

10. I am satisfied that the benefits to the wife of putting $1 million into superannuation arise in the urgent context of the tax advantages being available only so long as the fund receives the money or assets by the end of this financial year.  Her reasoning for wanting to take advantage of that opportunity are understandable, particularly in light of not only her accountant's advice to do, so but apparently the husband's advice as well.  That being the case, it is a compelling circumstance, in my view, in favour of a partial property settlement.

11. I am conscious that the wife controls other assets.  She argues, so far as they are concerned that there are reasons not to transfer them into the fund.  Her home cannot be transferred into the fund.  An investment property worth just under $2.75 million should not be transferred into the fund as it would mean tying up an asset significantly beyond the sum that attracts the tax benefits; A property in her name at V valued at $245,000, is one of the very properties the husband in his response seeks to have rented out and the lease moneys shared; An investment of $850,000 from the previous partial property settlement, is the sum on which she lives, in terms of the proceeds, and she does not want to disrupt that investment at this stage.  There are other relatively small shareholdings and savings, but they are insignificant in the overall context of this case.

12. The wife's most substantial argument is that she need not incur the expense, the uncertainty or any other disadvantage of disrupting her current holdings when millions of dollars of joint moneys are sitting in an account or accounts, largely controlled by the husband, and there is no argument that the $1 million she seeks for each party is well within their respective entitlements.  I propose ordering that each party receive a $1 million sum by way of partial property settlement.

DISCUSSION

1. The orders I shall make are as follows:

   1.That there shall be a partial property settlement of $1 million each in favour of the husband and the wife to be drawn forthwith from the bank account in the joint names of S Pty Ltd and the wife.

   BY CONSENT IT IS ORDERED

   2.That the Husband and the Wife personally, and the Husband in his capacity as the Director of P Pty Ltd (ACN …) ("[P]"), forthwith do all such acts and things and sign all such documents as may be required to lease the following properties:

   a.E in the State of Victoria ("the [E] property");

   b.V in the State of Victoria ("the [V] property"); and

   c.S in the State of Victoria ("the [S] property").

   3.That until further Order the Husband and the Wife personally, and the Husband in his capacity as the Director of P, shall do all such acts and things necessary to ensure that all of the properties referred to in paragraph 2 hereof are leased on a continuous basis until the final hearing of this matter.

   4.That at all times until the final hearing in this matter the Husband and the Wife shall ensure that the terms and conditions of any of the leases for any of the three properties referred to in paragraph 2 hereof (such terms to include, without limiting the generality of the foregoing, the quantum of rental payable for each such property, and the duration of each such lease), shall be as follows:

   a.As may be agreed between the parties;

   b.In the absence of agreement, in accordance with the recommendations of the real estate agents (if any) engaged by the parties to ensure and to manage the lease of any such property or properties; and

   c.In the absence of any real estate agent, or in the absence of agreement between the parties as to a real estate agent, in relation to any particular property or properties, then the terms and conditions of the lease for any such property or properties shall be in accordance with the recommendations made by the President of the Real Estate Institute of Victoria or his or her nominee.

   5.That there otherwise be general liberty to either party to apply with respect to the terms and conditions of the leases of any of the three properties listed in paragraph 2 hereof.

   6.That the proceeds of the rental payable in relation to the leasing of each and every one of the properties referred to in paragraph 2 hereof shall be applied and paid as follows:

   a.Firstly, to pay the cost and expenses associated with the lease of the said property including any commissions or charges payable to any real estate agent managing the lease of such property;

   b.Secondly, to pay the costs and expenses associated with the necessary maintenance and conservation of the said property including, without limiting the generality of the foregoing, the payment of council rates, water rates, land tax, insurance, and the payment of expenses associated with any necessary maintenance or repairs of the said property;

   c.Thirdly, in the event that there is any surplus rent available after payment of the expenses referred to in sub-paragraphs (a) and (b) hereof for any particular property, such surplus shall be divided equally between the parties;

   d.Fourthly, in the event that the rental obtained for any particular property is insufficient to meet the expenses referred to in sub-paragraphs (a) and (b) hereof, then the additional sum required to make the payment of such expenses shall be met by each of the parties in equal one half shares.

   7.That the Husband's Form 2A Response filed on 16 January 2007, the Wife's Application filed on 21 December 2006, and the Wife's Reply filed on 6 June 2007, be otherwise dismissed.

   8.That each party’s costs of these applications shall be reserved.

   9.That pursuant to the Family Law Rules this matter reasonably required the attendance of counsel and Senior Counsel.

I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dessau

Associate: 

Date:  6 June 2007

IT IS NOTED that this judgment for all publication and reporting purposes be referred to as CONNOR & CONNOR