COSTA & COSTA

[2015] FamCA 768

FAMILY COURT OF AUSTRALIA

COSTA & COSTA [2015] FamCA 768

FAMILY LAW – PROPERTY – Interim distribution – where the wife and husband each make applications for interim property orders – consideration of applicable principles – where it is appropriate to make interim orders as sought by the husband.

FAMILY LAW – COSTS – Where the wife seeks costs for her application to overseas travel with the children which was resolved through consent orders – consideration of s 117 principles and considerations – application for costs dismissed.

Family Law Act 1975 (Cth) ss 75, 79, 117, 117A, 117AC, 118

Harris & Harris (1993) FLC 92-378

Strahan & Strahan [2009] FamCAFC 166

Penfold v Penfold (1980) 144 CLR 311

PBF as Child Representative for AF (Legal Aid Commissioner of Tasmania) & TRF & LKL (2005) 33 Fam LR 123

APPLICANT: Mr Costa

RESPONDENT: Ms Costa

FILE NUMBER: PAC 984 of 2015

DATE DELIVERED: 17 September 2015

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Foster J

HEARING DATE: 14 September 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Obradovic

SOLICITOR FOR THE APPLICANT: JAS Legal Pty Ltd

COUNSEL FOR THE RESPONDENT: Mr O'Brien

SOLICITOR FOR THE RESPONDENT: Aitken Lawyers Pty Ltd

Orders

1. That within 14 days from this date the husband do all necessary things and sign all necessary documents so as to withdraw from his CBUS Superannuation Fund entitlements $100,000 and pay those funds as follows:

   (a)       As to $50,000 to the wife being to an account nominated by her or otherwise as she may direct the husband in writing,

   (b)       As to $50,000 to the husband.

2. That pending further order the husband be restrained from withdrawing funds from his CBUS Superannuation Fund entitlements or any other superannuation fund in respect to which he has an entitlement save for compliance with the previous order.

3. That the husband pending further order pay mortgage payments and property outgoings, including council rates, water rates, utilities and insurances in respect to the property at B Street, Suburb C.

Costs

1. That the wife’s application for costs of and incidental to the Application in a Case filed by her on 31 July 2015 be dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Costa & Costa has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAC 984  of 2015

Mr Costa

Applicant

And

Ms Costa

Respondent

REASONS FOR JUDGMENT

1. On 28 July 2015 the wife in pending proceedings as to property and parenting filed a Response that for the purposes of the present determination sought interim orders as to property settlement.  She otherwise seeks an order for costs in relation to interim parenting proceedings determined by consent orders on 3 August 2015 following the filing of an Application in a Case by her on 31 July 2015. The costs issue will be considered later in these reasons.

2. As to interim property, in summary the wife seeks an order for sale of the property at B Street, Suburb C and that the net proceeds of sale after payment of agents’ commission and selling costs be paid as to $20,000 to each of the husband and wife with the balance thereafter to be held in a controlled monies account by her solicitors pending further order. Otherwise the wife seeks an order in effect restraining the husband from dealing with his interest in his CBUS Superannuation Fund.

3. The husband in a Reply filed on 14 August 2015 seeks orders that the wife’s application for interim property be dismissed and that there be an order for interim property distribution whereby the husband is permitted to withdraw from his superannuation fund $50,000 to be paid to him, $50,000 to be paid to the wife and a further $30,000 to be placed in a bank account in the parties’ joint names for the purposes of meeting mortgage payments and any arrears in relation to the Suburb C property.

4. In submissions the husband ultimately only sought the payment of $50,000 to each and agreed to orders that otherwise he be restrained from further superannuation withdrawals and be required to meet mortgage payments and property outgoings.

Discussion

1. The principles as to applications for interim property provision are well settled, (Strahan & Strahan [2009] FamCAFC 166) and require a two-step process.

2. Firstly, there must be circumstances enlivening the power to make an interim order. The test is not limited to “compelling circumstances” but whether it would be “appropriate” to make an interim order, with the “overarching consideration” being the interests of justice.

3. In Strahan (supra), the Full Court said:

   132. 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.

4. Secondly, the Court is to have regard to relevant matters in s 79 of the Family Law Act 1975 (Cth) (“the Act”).

5. It needs to be kept in mind that the final outcome of property settlement should not be compromised by an interim property order. Either the remaining property needs to be adequate to meet the legitimate expectations of both parties at the final hearing or the order that is contemplated needs to be capable of being reversed or adjusted if it is subsequently considered necessary to do so.

6. It is important to have regard to an overall caution. In Harris & Harris (1993) FLC 92-378, the Full Court said:

   As a generality, the interests of the parties and the Court are better served by there being one final hearing of s 79 proceedings.

7. In Strahan (supra), the Full Court said at [132]:

   … 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.

8. It is now well settled that in property cases the Court must identify the existing legal and equitable interests of the parties in the property, the liabilities and financial resources of the parties at the time of the hearing and then whether it is just and equitable to make a property settlement order.  Such a consideration should not be guided by an assumption that the parties’ rights to, or interests in, property are, or should be, different from those that then exist. The question is whether those rights and interests should be altered.

9. There is no presumption that one or other party has the right to have the property of the parties divided between them or a right to an interest in marital property that is fixed by reference to the various matters in s 79(4). The Court needs to conclude that it would be unjust or unfair to leave property rights intact.

10. In many cases this requirement is readily satisfied where the parties are no longer in a marital or de facto relationship and, thus, for example, the common ownership or use of property by husband and wife will no longer be possible or the express or implicit assumptions that underpinned existing property arrangements such as the accumulation of assets or financial resources by one for the benefit of both have been brought to an end with the relationship.

11. Both parties in this matter in any event seek that the Court make adjustive orders.

Context

1. The parties married in 2002 in City D, Country E. The parties thereafter moved to live permanently in Australia in November 2002.

2. There are two children of the marriage, now aged nearly 11 and nearly seven.

3. The husband is 60 years of age and the wife is 42 years of age.

The wife’s evidence

1. The wife contends that separation occurred in October 2014 but she moved out of the home into rented premises in late March 2015.

2. The wife says that she has been solely responsible for mortgage payments in relation to the matrimonial home since 2010 until such time as she physically left the property earlier this year. She asserts that the husband has been unemployed during that period.

3. The husband and wife in November 2014 signed an agency agreement for the listing of the matrimonial home for sale with F Pty Ltd. The sale did not proceed.

4. Subsequently the wife through her solicitors wrote to the husband on 3 February 2015 seeking that the property be sold. The husband in his application initiating proceedings filed on 6 March 2015 sought interim orders for the sale of the matrimonial home. Those interim orders sought as to sale were repeated in the Amended Initiating Application filed by the husband on 2 April 2015 but omitted from his Further Amended Initiating Application filed on 17 July 2015.

5. Since March 2015 the husband has had occupation of the matrimonial home to the exclusion of the wife and children. The wife is unsure as to whether the husband has been attending to paying property outgoings.

6. Subsequent to physical separation the wife was able to arrange with the mortgagee bank for a temporary suspension of mortgage payments for a short period due to her inability to meet her own rental expenses and the mortgage payments in respect to the property occupied by the husband.

7. As at 28 July 2015 the mortgage balance was $354,312 and weekly payments on the mortgage about $517. As at that date the mortgage payments had fallen into arrears by $8,915 with the penalty interest accruing on the arrears.

8. The wife says that she has been in communication with the bank and it is the bank’s intention to take default action unless the property is placed on the market for sale or mortgage payments brought up to date.

9. The property was purchased by the parties in May 2006.

10. The wife is presently in employment earning about $50,000 per annum net after tax. She is currently paying $450 a week rent to accommodate herself and the children of the marriage. The wife has incurred significant expenses since relocating from the matrimonial home and continues to meet the expenses for herself and the children. The wife otherwise has incurred significant legal expenses in the conduct of these proceedings post separation and seeks funds in part to meet her outstanding legal fees and ongoing legal costs.

11. The wife asserts that the husband has taken money from their joint account and withdrawn funds from his superannuation entitlements subsequent to separation. The husband, she says, has provided inappropriate disclosure as to his financial dealings post separation.

The husband’s evidence

1. At the time of marriage the husband was the owner of a property at Suburb G that he asserts had a value at that time of $400,000 and subject to a mortgage of $100,000. He also asserts ownership of a motor vehicle and cash savings of approximately $60,000.

2. At the time of marriage he was employed as an industrial engineer earning a salary of about $60,000 per annum.

3. The husband asserts that in 2003 he purchased a home unit property in City H, Country I for the sum of $90,000 in the wife’s name. The purchase was funded he says by way of a draw down on the mortgage secured on the matrimonial home. He says that the wife’s mother has a power of attorney and in effect manages the rental income from the property on behalf of the parties. He and his wife, he said, visited the property in 2008 and later gave instructions in 2013 for the property to be renovated with costs being met by the ongoing rental payments. He asserts that the apartment has a current value of about $250,000 and believes that the apartment has recently been sold on the wife’s instructions.

4. The wife’s mother seems to assert that the sum of $90,000 provided to her in 2003 was in part repayment of a loan owing to her by the husband and/or the wife in respect to which there remains a further $50,000 outstanding.

5. At about the time of marriage the husband sold his Suburb G property for $400,000 and the present matrimonial home was purchased in the joint names of the parties for $580,000. The husband says he contributed $320,000 from the proceeds of the Suburb G property and the balance was secured by way of mortgage.

6. The parties, he says, undertook renovations to the property subsequent to purchase in part, the husband says, funded by borrowings from his parents. The husband asserts that in late 2011 there was an agreement between he and the wife that he would cease employment and remained at home to care for the children while the wife continued to work full time and completed her law degree.

7. The husband acknowledges that from late 2011 to date the wife has been the sole financial provider for the family.

8. The husband asserts that on separation the wife removed various items of personalty and cash from the matrimonial home including Persian rugs, he says to a value of $15,000, gold and jewellery to a value of about $35,000 and cash.

9. Initially it was his intention once the matrimonial home was sold to purchase a to a three-bedroom apartment in Suburb J.

10. Since separation the husband has been meeting some mortgage payments, property outgoings and his living expenses by way of withdrawals from his superannuation fund. He makes no financial contribution to the cost of the children. As at 31 July 2015 the husband asserts that the balance of his superannuation entitlements was $193,870.

The asset pool

1. As best can be determined the contended asset pool at the time of final separation from the parties’ Financial Statements is as follows:

   Joint               Home at Suburb C   $1,100,000

   Wife               Property in Country I  $   180,000

   Wife               CBA account   $      1,300

   Wife               two cars   $     32,000

   Wife               Contents   $         500

   Husband         ANZ account   $     30,000

   Husband         ACIRT Account   $     18,045

   Husband         AMP shares   $      1,200

   Husband         Contents   $      5,000

   Joint               Jewellery and rugs  $          NK

   Husband         CBUS  Superannuation  $   181,000

   Wife               CBUS superannuation  $     50,000

   Liabilities:

   Joint               Mortgage Suburb C   $   350,000

   Husband         Debt to parents   $     15,000

   Wife               Personal loan   $     30,000

2. The husband had a strong initial contribution from the net proceeds of sale of the property owned by him at about the time of marriage. Thereafter there appears little to distinguish between the contributions of the parties. Ultimately the Court will have regard to the parties’ post separation contributions until trial. However the wife will have a significant claim to the matrimonial pool. The sums sought to be distributed total only $100,000 of the mooted pool above.

3. There are significant issues in relation to the makeup of the matrimonial asset pool, particularly as to the husband’s assertion of a property in Country H.

4. The parties are at odds in relation to the future living circumstances for the children with the husband seeking final orders that the children reside with him and the wife seeking final orders that the children reside with her. Thus the outcome of relevant s 75(2) considerations is at present indeterminate.

5. The husband seeks to retain the home, he asserts with perhaps funds made available to him by his father.

6. The husband says that he has reached an age where he is able to access his superannuation benefits where he has retired from the workforce. In such a circumstance there are funds readily available to each of the parties to meet interim property claims.

7. The Court needs to be mindful of not compromising the ultimate property result. A payment to the parties in the order of what is sought by the husband is to be paid substantially to lawyers and to meet living expenses and debt. It can, on the present indications of the available pool, clearly be recovered, reversed or adjusted in total if the parties’ ultimate entitlements are less.  A payment to the parties of modest sums sought by the husband is appropriate.

8. The wife seeks a sale that may take months to implement. The husband has funds readily available in his superannuation fund. Funds of $100,000 should come from the husband’s superannuation entitlements.

9. The husband having occupation of the property, it is appropriate that he shall be required to meet mortgage payments and property outgoings as they fall due and payable and in default the wife may seek a sale.

10. Orders will be made accordingly.

Costs: The context

1. The wife seeks an order for costs against the husband arising from her Application in a Case filed on 31 July 2015. The wife’s application was supported by an affidavit filed by her on 31 July 2015.

2. In that application the wife sought an interim hearing to determine whether the children be permitted to travel to the Country K on 7 August 2015. Due to the impending overseas travel the wife’s Application a Case was listed on short notice on 3 August 2015.

3. The husband filed an affidavit in response on 31 July 2015.

4. Ultimately following discussions between the parties the matter was resolved by consent orders later in the day on 3 August 2015. Those consent orders provided in summary:

   a)That the wife be permitted to travel with the children on their Australian passports to the Country K departing Friday, 7 August and returning 29 August 2015,

   b)That following the children’s return the children spend additional time with the husband by way of “make up time”,

   c)That in the event that the wife does not return to Australia by 5 September 2015 the husband be appointed trustee for sale of the matrimonial home at Suburb C and have access to $50,000 from the proceeds of sale for the purposes of seeking the return of the children to Australia,

   d)That the wife surrender to the Court her expired Country I passport prior to her departure with the children,

   e)That an Independent Children’s Lawyer be appointed to represent the interests of the children.

5. It was common ground between the parties that the proposed trip to the Country K had been planned when the parties were still living under the same roof prior to final separation. The husband asserts that clearly subsequent to separation there were significant changes in that the children thereafter remained in the primary care of the wife notwithstanding the husband’s significant role in their lives prior to physical separation.

6. The husband asserts that he became aware of the wife’s proposal to proceed with the original trip with the children and without him on or about 7 July 2015 and upon becoming aware immediately communicated his objection in correspondence from his solicitors. The father expressed concern about the interruption of his supervised time with the children should they permitted to travel overseas.

7. The mother had disclosed her intention to travel to the Country K with the children in accordance with the original plans in her affidavit sworn in these proceedings on 23 April 2015. That affidavit was before the Court in circumstances where ultimately orders were made for the husband to have supervised time with the children.

8. However clearly the consent orders entered into by the parties cover a wide range of issues relating to the overseas travel and the husband’s concern to ensure that the children are returned to Australia in circumstances where the wife has family connections in Country I.

Discussion

1. Section 117 of the Act provides that each party to the proceedings shall bear his or her own costs.

2. That principle is, however, subject to the provisions of ss 117(2), 117AA, 117AC and 118 of the Act.

3. Relevantly for the present application, the discretion afforded to the trial judge in s 117(2) provides that if the Court is of the opinion that there are circumstances that justify it in doing so, the Court may, subject to further subsections thereof and the applicable Rules of the Court, make such order as to costs as the Court considers just.

1. Although s 117(2) requires a finding of justifiable circumstances as an essential preliminary to making an order for costs, there is no additional or special onus on an applicant who seeks an order for costs: see Penfold v Penfold (1980) 144 CLR 311.

2. The matters relevant to determining what order, if any, should be made for costs are set out in subsection (2A) of that section. They relevantly, in these proceedings, relate to the following:

   a)The financial circumstances of each of the parties to the proceedings;

   b)Whether any party has legal aid and the terms of any grant of aid;

   c)The conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answers, questions, admissions of facts, production of documents and similar matters;

   d)Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court;

   e)Whether any party to the proceedings has been wholly unsuccessful in the proceedings;

   f)Whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and

   g)Such other matters as the Court considers relevant.

3. There is nothing to prevent any one factor being the sole determinant for an order for costs: see PBF as Child Representative for AF (Legal Aid Commissioner of Tasmania) & TRF & LKL (2005) 33 Fam LR 123.

4. Financial circumstances: Property issues between the parties are unresolved as discussed above. There is nothing in the financial circumstances of the parties that would contraindicate any order for costs.

5. Legal aid: This is not a relevant consideration.

6. The conduct of the parties to the proceedings in relation to the proceedings: This relates more to the interlocutory conduct of the parties and is not a relevant consideration.

7. The failure of a party to the proceedings to comply with previous orders of the Court: This is not a relevant consideration.

8. Wholly unsuccessful: The husband initially opposed any order for travel, he contended for good reason. The matter was ultimately resolved by consent orders addressing significantly his concerns.

9. An offer in writing: The wife made an offer of sorts by letter dated 16 July 2015 from her solicitor. It did not canvass all issues that were ultimately the subject of consent orders and is of little utility.

10. Any other relevant matter: It is not contended that there are any other relevant matters.

11. In all of the circumstances the general rule provided for in s 117(1) is not displaced by any consideration set out in s 117(2A).

12. The wife’s application for costs is to be dismissed.

I certify that the preceding seventy-two (72) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 17 September 2015.

Associate: 

Date:  17 September 2015