Connor and Eaton

[2016] FCCA 396

FEDERAL CIRCUIT COURT OF AUSTRALIA

CONNOR & EATON [2016] FCCA 396

Catchwords:
FAMILY LAW – Property – interim application by the husband for part property settlement – consideration of s.80(1)(h) of the Family Law Act 1975 (Cth) – whether such an order is necessary in the interests of justice – whether it is in the interests of justice to list the matter for trial instead of making an interim property order – consideration of relevant legal principles and authorities – application dismissed.

Legislation:

Family Law Act 1975 (Cth), ss.79, 80

In the Marriage of Bearup (1993) 16 Fam LR 797
Strahan & Strahan [2009] FamCAFC 166

Wenz & Archer (2008) 40 Fam LR 212
Zschokke & Zschokke (1996) FLC 92-693

Applicant: MR CONNOR

Respondent: MS EATON

File Number: MLC 9989 of 2015

Judgment of: Judge Wilson

Hearing date: 8 February 2016

Date of Last Submission: 8 February 2016

Delivered at: Melbourne

Delivered on: 11 February 2016

REPRESENTATION

Counsel for the Applicant: Ms S. Fisken

Solicitors for the Applicant: MST Lawyers

Counsel for the Respondent: Mr P. Darmos

Solicitors for the Respondent: Konstantine Darmos & Associates

ORDERS

1. All extant interim applications are dismissed.

2. The parties attend a Conciliation Conference with a Registrar of the Federal Circuit Court of Australia at the Melbourne Registry on
   19 February 2016 at 2.15 p.m. (“the Conciliation Conference”).

3. Unless otherwise exempted from payment the Applicant must pay the Conciliation Conference fee of $370.00 in accordance with the Family Law (Fees) Regulation 2012 28 days prior to the Conciliation Conference.

4. The parties ensure that no later than three days prior to the date fixed for the Conciliation Conference, each party send to the other and the nominated Registrar or organisation:

   (a)an Outline of Case document;

   (b)a copy of a market appraisal or valuation of any asset or financial resource, the value of which is in dispute;

   (c)valuations of any superannuation interests;

   (d)a copy of the actual terms of orders required to give effect to their settlement proposal; and

   (e)written confirmation by each party or their solicitor that:

   (i)all relevant documents have been exchanged between the parties; and

   (ii)the superannuation trustee of any fund that may be the subject of a splitting order has been accorded procedural fairness.

5. The matter be adjourned to this Court on 21 March 2016 at 10.00 a.m. for Final Hearing with an estimated hearing time of two (2) days
   (“the Final Hearing”).

6. The party responsible for the payment of any fee including a setting down or hearing fee do pay or cause to be paid such of the Fees as shall be payable by that party in accordance with, and within the time specified in, the Federal Circuit Court Regulations

7. The applicant make, file and serve any further Affidavit to be relied upon by 4.00 p.m. 14 days prior to the Final Hearing i.e. 7 March 2016.

8. The respondent make, file and serve any further Affidavit to be relied upon by 4.00 p.m. 7 days prior to the Final Hearing i.e. 14 March 2016.

9. On or before 4.00 p.m. 3 working days prior to the Final Hearing
   (i.e. 16 March 2016), each party must make, file and serve:

   (a)one agreed table between the parties setting out the values of all assets and liabilities to be relied on at the hearing, each to be marked ‘agreed’ or ‘in;

   (b)a list which identifies each discrete contested factual issue including the evidence upon which the parties rely, applicable to that discrete issue; and

   (c)an Outline of Case document including the following:

PROPERTY

1.      a list of the documents to be relied upon;

2.      a brief chronology;

3.      a list of all of the assets, liabilities and financial resources claimed to be part of the asset pool;

4.      a list of contributions claimed or contended for;

5.      a list of other factors relied upon (s.75(2) factors);

6.      the percentage adjustment contended for;

7.      the main contentions on disputes as to:  

        7.1. what items are to be included in the pool;   and

        7.2. the value of each asset in the pool;

8.      a statement of the precise orders sought; and

9.      (if applicable) whether the trustee of a superannuation fund has been afforded procedural fairness in relation to a proposed superannuation splitting order.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 9989 of 2015

MR CONNOR

Applicant

And

MS EATON

Respondent

REASONS FOR JUDGMENT

(As revised from transcript)

1. This proceeding, in which the husband Mr Connor (“the husband”) has sought property orders, was commenced in late October 2015[1] and has been the subject of orders three times to date[2] but has otherwise progressed very little since it was initiated. A significant volume of material in support of and in opposition to interlocutory applications has been filed to date. In the latest application, the husband sought interim property orders.[3] These reasons address that application.

   [1] Initiating Application filed 26 October 2015.

   [2]

   [3] Amended Initiating Application filed 17 December 2015.

2. To better understand these reasons, it is necessary to put certain matters in context. On 15 December 2015, I made consent orders among other things enjoining the wife Ms Eaton (“the wife”) from drawing down on the mortgage in favour of (omitted) Bank over the former matrimonial home in suburban Melbourne. Those consent orders included an entitlement for the wife to draw down the sum of $10,000.00 to be characterised as a part-property settlement. 

3. At the hearing on 15 December 2015, Ms Fisken of Counsel appeared for the husband and the wife was represented by her solicitor, Mr Darmos. Ms Fisken and Mr Darmos formulated a notation to the consent orders that read “[t]he husband shall seek to press his application for part property settlement at the next hearing”.

4. The consent orders made on 15 December 2015 also recorded that I adjourned the further hearing of the application in this case to

   
   

   8 February 2016. On 8 February 2016, by the time this application returned before me for directions, again with Ms Fisken and Mr Darmos appearing, the wife had filed her substantive affidavit in opposition on 2 February 2016. As she foreshadowed doing, Ms Fisken said she pressed the husband’s application for part-property settlement. 

5. Mr Darmos told me the wife opposed the husband’s application on two grounds. First, he said he had no notice of the application. Second, when finally articulated, Mr Darmos said no basis existed in fact or in law for the making of an interim property order in favour of the husband. As for the point of there being no notice of the application, once the notation on the 15 December 2015 consent orders was debated, Mr Darmos eventually conceded that notice had in fact been given of the husband’s intention to make the application. Mr Darmos withdrew his objection and I permitted Ms Fisken to proceed.

6. Before analysing the sufficiency of the evidence in support of the application and in the process addressing the second basis of the wife’s opposition to the making of an interim property order, let me first turn to the matters that must be established on an application such as this. The starting point is the legislative basis for the order. The power for me to make an interim property order is ss.79 and 80(1)(h) of the Family Law Act 1975 (Cth) (“the Act”). Of those, s.80 of the Act is intended to be a wide enabling provision when applied to s.79 of the Act, at least according to what the Full Court of the Family Court of Australia held in Strahan & Strahan[4] (“Strahan”).

   [4] [2009] FamCAFC 166 at [122].

7. Section 80(1)(h) of the Act confers power upon this Court to make an interim order. The test for determining whether an interim order should be made under s.80 of the Act is that the order is appropriate “in order to do justice”.[5] In the context of an application for an interim property order, the overarching consideration when applying s.80(1)(h) to s.79 of the Act “is the interests of justice”.[6] 

   [5] Strahan & Strahan [2009] FamCAFC 166 at [127].

   [6] Strahan & Strahan [2009] FamCAFC 166 at [132].

8. If the Court is satisfied the interests of justice are served in making an order pursuant to s.80(1)(h) of the Act, then the Court is required to consider the elements of s.79(4) of the Act. As the Court held in Zschokke & Zschokke,[7] a consideration of the matters in s.79(4) of the Act can be brief if it seems likely that the applicant for interim property orders will receive a sum after trial sufficient to cover the amount the applicant seeks by way of interim application.

   [7] (1996) FLC 92-693.

9. Of course, the mere fact that the party applying for interim property orders may, or even is likely to, be awarded a sum by property orders in excess of the sum sought on the interim basis is not dispositive of the interim application. The interests of justice must be served not only by the making of an interim order but also in the amount ordered on an interim basis. Despite the husband’s Amended Initiating Application[8] saying that he sought interim property orders of $110,000.00, on

   
   

   8 February 2016, Ms Fisken informed me that the husband sought a little over $28,000.00 on an interim basis. The amount was, so

   
   

   Ms Fisken said, to meet a tax debt the husband owed of $10,000.00. The purpose of the balance was not stated.

   [8] Amended Initiating Application filed 17 December 2015.

10. To better understand why I have concluded as I have in the disposition of this application, a brief recital of the facts in this case is necessary. The husband (aged 53) and the wife (aged 50) married on 21 August 2011. They separated four years later to the day on 21 August 2015. They have no children of the marriage. The former matrimonial home was acquired for $450,000.00. The wife became the registered proprietor of it. Initially, the mortgage debt secured against the property was $360,000.00. The wife was named as the borrower. 

11. Subsequently, both the husband and the wife applied funds by way of reduction of the mortgage debt. The husband sold a house he owned elsewhere and applied $110,000.00 of that amount by way of reduction of the mortgage debt on the matrimonial home. The wife applied the same, having acquired a little over $100,000.00 from an inheritance. According to the husband’s solicitor Belinda Spong, in an affidavit sworn in support of this application,[9] between September and October 2015, the wife withdrew funds totalling $18,000.00 from the facility secured by the mortgage. The husband contended those withdrawals were made after the date on which he and the wife separated.

    [9] Affidavit of Belinda Kate Spong sworn 14 December 2015.

12. The wife swore in opposition to this application that she contributed over 50 per cent to the acquisition of the former matrimonial home and that the husband contributed less than 25 per cent.[10] Of course, this proceeding has not yet advanced far enough to verify that assertion about proportionate contributions. 

    [10] Affidavit of Ms Eaton sworn 2 February 2016.

13. The wife swore that she also suffers from an array of chronic mental conditions and that she receives $260.00 per week from social welfare benefits, that being her only source of income, so she said. Her medical history, to which she swore in her 2 February 2016 affidavit, tells of the likelihood of significant future medical expenditures. The wife also swore that the former matrimonial home is in a dilapidated state and is in desperate need of repair. She said her income is insufficient to cover her living expenses.

14. According to the wife, the husband currently earns in the vicinity of $2,000.00 per week, estimated to be $75,000.00 annually. The husband swore that he has not lived at the former matrimonial home since

    
    

    21 August 2015. He also swore that the debt currently due to (omitted) Bank stands at $70,000.00. None of the financial information in this case concerning earnings, savings, net asset position or liabilities has been tested. Some aspects of the evidence adduced so far is less persuasive than other aspects. 

15. The fact of the wife’s withdrawals totalling $18,000.00 was admitted. What she did with the money was not explained. Be that as it may, the amounts of each withdrawal are modest - four separate events when $3,000.00 was withdrawn, one withdrawal of $4,000.00 and one withdrawal of $2,000.00. Those withdrawals pre-dated the orders made by consent on 15 December 2015 restraining the wife from further drawing down funds from the facility secured by the mortgage.

16. The husband asserted that he needs $10,000.00 to pay a tax bill. He adduced no meaningful evidence to support that assertion. The husband swore that his accountant has told him on a verbal estimate that the sum of $10,000.00 in tax is payable. That accountant did not give evidence whether to verify the tax liability or at all. In addition to there being no evidence about the actual amount due to the Australian Tax Office, the date on which the amount is allegedly due was not given in evidence. Accordingly, I am unable to make any sensible assessment about the husband’s alleged tax debt, when it is payable, nor even whether the husband can meet it when it falls due from another source. In short, I am not satisfied that an interim property order should be made in relation to the husband’s alleged tax liability of $10,000.00.

17. Let me now turn to the balance of the sum sought by the husband, namely $18,000.00. The husband did not articulate how he calculated the sum he sought nor did he adduce meaningful evidence to support why he sought the property orders on an interim basis, still less did he say why he needed the money. True, sufficient equity in the former matrimonial home exists to support the making of an interim property order. 

18. In other words, if I were minded to make orders on the interim basis in favour of the husband for $18,000.00, that sum could be funded by a draw down on the (omitted) Bank mortgage. But any such draw down will increase the wife’s liability to (omitted) Bank. It will self-evidently proportionately erode the existing equity in the former matrimonial home and it will increase the amount the wife is obliged to pay to (omitted) Bank. 

19. According to the Full Court’s observations in Strahan,[11] the test to be applied in determining issues of the sort that confront me in this application is whether the making of an order in favour of the husband is appropriate to do justice. The evidence is presently uncertain. No trial date has yet been set for the hearing of this case. The Full Court in the Family Court of Australia has held that a court, when invited to make an interim property order, must exercise the utmost caution. That was so held in In the Marriage of Bearup.[12] That accords with my sense. 

    [11] [2009] FamCAFC 166 at [122].

    [12] (1993) 16 Fam LR 797.

20. It also accords with the observations of this Court in Wenz & Archer.[13] That decision has been expressly approved by the Full Court of the Family Court in Strahan. [14] To my mind, it would be wholly antithetical to the exhibition of ‘utmost caution’ to accede to the husband’s request in this application. The financial information is untested and largely unverified and the case is in its infancy. The wife is now enjoined from making any further withdrawals, except in accordance with orders previously made or by leave. The asset pool in this case is remarkably small.

    [13] [2008] 40 Fam LR 212 at 218.

    [14] [2009] FamCAFC 166 at [122].

21. In my view, the interests of justice are better served in getting this case on for trial as expeditiously as possible. In the circumstances, I propose to do two things. The first is to dismiss the husband’s application for property orders. The second is to fix this case for trial on a two-day estimate for 21 March 2016. In so doing, that accords with the justice of the circumstances of advancing this case as expeditiously as it may be done to get it to trial, thereby ameliorating what might be seen on one view to be the hardship of the decision to dismiss the husband’s application. In all other respects, it advances the overall justice of the case in getting this matter heard at trial.

I certify that the preceding twenty-one (21) paragraphs are a true copy of the reasons for judgment of Judge Wilson

Date: 3 March 2016

Interim Orders of his Honour Judge Wilson made 15 December 2015, 29 January 2016 and
8 February 2016.