COSTELLO & COSTELLO

[2015] FCCA 1525

FEDERAL CIRCUIT COURT OF AUSTRALIA

COSTELLO & COSTELLO [2015] FCCA 1525

Catchwords:
FAMILY LAW – Property – interim orders – where applicant seeks an interim distribution of property to cover living expenses for herself and the parties’ two children – where net non-superannuation asset pool amounts to $1,626,674.00 – where applicant seeks an amount of $221,555.00 – where amount claimed approximately 13.6% of net non-superannuation asset pool – where respondent offered to pay a deposit of $1,000.00 for a training course for the parties’ younger daughter within 7 days – where respondent consented to an order that he pay half of the school fees for the parties’ two daughters – where interim orders made.

Legislation:
Family Law Act 1975 (Cth), ss.79, 80, 106A

Cases cited:
Harris & Harris (1993) 16 Fam LR 579; FLC 92-378
Strahan & Strahan (Interim Property Orders) [2009] FamCAFC 166; (2009) 241 FLR 1; (2011) FLC 93-466
Zschokke & Zschokke (1996) 20 Fam LR 766; FLC 92-693

Applicant: MS COSTELLO

Respondent: MR COSTELLO

File Number: SYC 4810 of 2014

Judgment of: Judge Scarlett

Hearing date: 15 May 2015

Date of Last Submission: 15 May 2015

Delivered at: Sydney

Delivered on: 27 May 2015

REPRESENTATION

Solicitor for the Applicant: Mr Manning

Solicitors for the Applicant: Manning Lawyers

Solicitor for the Respondent: Mr Jay

Solicitors for the Respondent: Bruce Jay Solicitor

ORDERS

1. Within seven (7) days the Respondent is to pay to the (omitted) College of (omitted) at (omitted) in the State of New South Wales the sum of $1000.00 as deposit for a training course for the parties’ daughter X born (omitted) 2000.

2. Within fourteen days the Applicant and the Respondent are to do all things and sign all documents necessary to distribute the amount of $110,000.00 out of the funds held in the parties’ joint (omitted) Bank accounts (omitted) and (omitted) to be paid to the Applicant wife by way of partial property settlement as follows:

   (a)the sum of $9,894.25 to (omitted) School;

   (b)the sum of $5,000.00 to (omitted) College of (omitted); and

   (c)the balance to Manning Lawyers Pty Ltd or its nominee.

3. Within one (1) month from the date of these Orders the Respondent is to pay to the (omitted) School the sum of $9,894.24.

4. In the event that either party refuses or neglects to execute a Deed and/or Instrument in compliance with a provision of these Orders the Registrar or a Deputy Registrar of the Federal Circuit Court of Australia at Sydney is hereby appointed in accordance with section 106A of the Family Law Act 1975 to execute all Deeds and/or Instruments in the name of the defaulting party and do all acts and things necessary to give validity and operation to the Deed and/or Instruments.    

5. The parties are to pay their own costs.

6. The Application is adjourned to 7 September 2015 at 10am for callover before Judge Scarlett in Court 3A, level 3, Lionel Bowen Building, 99 Goulburn Street, Sydney NSW 2000. 

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA

AT SYDNEY

SYC 4810 of 2014

MS COSTELLO

Applicant

And

MR COSTELLO

Respondent

REASONS FOR JUDGMENT

1. This is an application for an interim distribution of property by the wife, who is the applicant in the substantive proceedings.  Those proceedings are still on foot.  The parties attended a Conciliation Conference before a Registrar on 2 April, but the matter did not settle.  The Registrar has advised the Court that the matter will require two to three days to hear on a final basis.  It is unlikely that this Court will have any hearing dates available until well into 2016. 

2. The applicant wife now seeks an interim distribution of property from two (omitted) Bank accounts, which contain a combined balance of $221,555.  The wife’s solicitor, Mr Manning, claims that the wife has an immediate need for the funds to meet such requirements as legal fees, the children’s school fees and a course at the (omitted) College for the parties’ daughter X are due to be paid.  The husband opposes such a distribution. 

3. The wife’s solicitor tendered on 6 May a minute of proposed interim orders providing for the parties within 14 days to do all things and sign all documents necessary to distribute the funds in the (omitted) Bank accounts to be paid to the wife by way of partial property settlement as follows:

   i)the sum of $19,788.50 to the (omitted) School,

   ii)the sum of $6000 to the (omitted) College; and

   iii)the balance to Manning Lawyers Pty Ltd or its nominee.

4. There was also a section 106A order, and there was also an application for costs. As I said, this distribution is opposed by the husband, although his solicitor, Mr Jay, did obtain some instructions from his client which would involve his client making two payments for the benefit of his daughters. First, the husband offered to pay the sum of $1000 to the (omitted) College as a deposit for the training course for the parties’ younger daughter, X. Further during the course of the hearing through his solicitor the respondent offered to pay one half of the outstanding school fees for the (omitted) School for the children.

5. The husband’s solicitor was at pains to point out that his client had no intention of seeing his daughters suffer as far as their schooling was concerned and made that offer that he would in fact attend payment of one half of the school fees, which I calculate at $9894.24. 

Submissions

1. Essentially the submission in respect of the property generally from the applicant’s solicitor, who did in fact tender a balance sheet on the previous occasion, was that the total asset pool was approximately $1,700,000.  It was submitted that the amounts sought would approximate 12 per cent of the asset pool, and the submission would, therefore, follow that the applicant would be unlikely to receive less than that on a final settlement. 

2. Mr Manning submitted the parties had equal contributions at the commencement of their cohabitation.  During the marriage the applicant received the sum of $139,000 from her parents, and shortly after separation she further received an amount of $170,000 by way of inheritance.  It was submitted that the applicant has been solely responsible for all payments of the mortgage on the former matrimonial home since separation and has contributed to the redraw facility that is currently frozen. 

3. It was submitted the funds in the offset account equate to just over 12 per cent of the matrimonial pool and in accordance with existing legal principle in Harris & Harris[1] the Court would be satisfied that the remaining property would be adequate to meet the legitimate expectations of the parties at the final hearing.  As in the well-known decision in Strahan & Strahan[2], it is not necessary to establish compelling circumstances.  All that is required is that in the circumstances it is appropriate to exercise the power. 

   [1] (1993) 16 Fam LR 579; FLC 92-378

   [2] [2009] FamCAFC 166; (2009) 241 FLR 1; (2011) FLC 93-466

4. Mr Manning further submitted on the subject of a requirement for funds that although any application for interim property orders does not specifically require the party receiving the funds to specify how they will be applied, it is noted that the wife currently has $30,345.61 outstanding in legal fees.  She would also require funds for her legal fees for the preparation and appearance of this application, which was estimated to be approximately $5500. 

5. Mr Manning went on to submit that this does not include the funds required should the matter not resolve.  The wife is required to obtain funds should the matter not resolve, and she is required to obtain funds for the preparation of and attendance at a two-day hearing.  It is estimated fees for both solicitor and counsel would be between $25,000 and $35,000 with updated experts’ reports between $5500 and $11 500. 

6. The children’s private school fees are also due for the year. The children have been in private schools during the marriage, and the total of the fees for the year is $19,788.50.  Whilst it was submitted that that amount would need to be paid in full from the offset account, the development during the hearing of the offer by the respondent to pay half of that amount casts a slightly different light on the circumstances. 

7. Again it was submitted that the parties’ younger daughter X will be attending the (omitted) College which would cost $16,500.  However, she would be obtaining VET fee help for approximately $10,500.  The submission is that payment should be made for the parents in the amount of $6000, which should be shared equally, and it was submitted that that would need to be paid from the offset account.  However, events further developed, as I indicated earlier, and the husband through his solicitor indicated that he would pay the deposit of $1000 for the college, which again casts slightly different light on the circumstances. 

8. It was further submitted that the applicant receives an income from her business in the amount of approximately $1200 per week and her total income and expenses have a deficit of $242 a week. What is sought is that the applicant should have access to those funds in the offset account and the use of the funds by her was to be treated as partial interim property in accordance with s.80 of the Family Law Act 1975 (Cth).

9. Against this Mr Jay, for the husband, submitted that the wife had originally filed an Application in a Case back on 10 April seeking orders that she be allowed to obtain an amount not exceeding $50,000 from the (omitted) Bank accounts and that his client should be restrained from transacting or retaining in the named accounts, parties should sign all necessary superannuation documents.  He filed a Response to an Application in a Case on 6 May opposing all orders except an order the parties should sign all necessary superannuation documents. 

10. It was submitted that under the combined effects of section 79 and 80(1)(h) of the Family Law Act 1975 the Court has the power to make partial property orders.  However, that power is discretionary.  The relevant principles in exercising the power, Mr Jay submitted, were:

    a)It is preferable that there be one final hearing of section 79 proceedings, referring to Strahan & Strahan at paragraph [114];

    b)There may be circumstances that arise where such power is to be exercised, again Strahan & Strahan at [118];

    c)In order to establish an appropriate case for an interim property settlement order, more is required than the mere fact that upon a final hearing the applicant would receive the property being sought, again Strahan & Strahan at [139];

    d)How a party used matrimonial monies after separation should be taken into account as a relevant factor, Strahan & Strahan at [41];

    e)The power must be exercised only when appropriate and in the interests of justice, Strahan & Strahan at [132];

    f)The power is to be exercised where it is necessary if injustice is to be avoided.  The authority for that is the reference to Harris & Harris in Strahan & Strahan at point 50;

    g)The interim order must be capable of alterations any time prior to or as part of the final exercise of the section 79 power, Strahan & Strahan at [136];

    h)The Court must have regard to the relative financial strengths of parties, Strahan & Strahan at [138];

    i)Where such discretion is to be exercised in relation to the payment of future legal costs it has to be established:

    i)a position of relative financial strength of the respondent,

    ii)the respondent’s capacity to meet his own legal costs

    iii)an inability on the part of the applicant to pay her legal costs, (see the decision of the Full Court in Zschokke[3]); and

    j)The applicant bears the onus of proof. 

    [3] (1996) 20 Fam LR 766; FLC 92-693

11. On the facts Mr Jay submitted that whilst the applicant had claimed in her affidavit of 9 April 2015 at paragraph 20 that she required the release of an unspecified amount of funds:

    To pay my legal fees, living expenses for myself and children and to maintain the former matrimonial home

12. She had not provided any detail apart from that.  The submission is on behalf of the husband that the applicant has failed to demonstrate:

    i)her need for the release of the funds

    ii)the quantum of such needs

    iii)how the funds would be utilised

    iv)her reasonable living expenses

    v)the fact that she was already receiving child support in the sum of $388 per week from the husband and how that does not meet her needs

    vi)what expenses have been incurred on the property that are unpaid;

    vii)how she utilised other moneys received including her inheritance

    viii)that the husband is in a superior financial position to her

    ix)that she has an inability to meet her own legal costs

    x)that the husband is able to meet his legal costs and, generally, that she has creditors that are unpaid and seeking payment.

Conclusions

1. I have considered all of these matters.  It is significant that the husband during the course of the proceedings made two offers in respect of payment to go towards the welfare of the parties’ children.  I would take issue with the point made by the husband’s solicitor in his submission that the applicant wife had failed to demonstrate how the child support payments of $388 per week did not meet the wife’s needs.  Child support is just that.  It is meant to meet the ongoing costs of the upbringing of children and certainly not intended to provide an income for the party who has the primary care of the children.

2. In some ways it may be argued, which was perhaps more hinted at than directly submitted by Mr Jay for the husband, that the wife’s interim claim was somewhat in the nature of an ambit claim.  My own calculations of a percentage that was being sought of the total asset pool was slightly higher.  I note the net non-superannuation asset pool amounts to $1,626.674.  The amount of $221,555 would be approximately 13.6 per cent of the net non-superannuation asset pool.

3. I have taken all those matters into account.  I do propose to make some orders by way of an interim distribution of property.  It will not be in as large an amount as the applicant wife seeks.   I am of the view that the husband’s offer to pay the deposit for the (omitted) College is an offer made in good faith, as too was the offer by the husband to pay one half of the fees due to the (omitted) School.  That too, I am sure, was made in good faith and should be accepted.

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Judge Scarlett

Associate: 

Date:  4 June 2015