Darcy and Darcy (No. 2)

[2007] FamCA 413

FAMILY COURT OF AUSTRALIA

DARCY & DARCY (NO. 2) [2007] FamCA 413

FAMILY LAW - PROPERTY - Interim - Barro Order - Interim distribution - Trial directions

Family Law Act 1975 (Cth)

HUSBAND: Mr Darcy

WIFE: Mrs Darcy

INDEPENDENT CHILDREN’S LAWYER: Independent children's lawyer

FILE NUMBER: MLF 3110 of 2005

DATE DELIVERED: 30 March, 2007

PLACE DELIVERED: Melbourne

JUDGMENT OF: Brown J

HEARING DATE: 30 March, 2007

REPRESENTATION

COUNSEL FOR THE HUSBAND: Mr Holmes

SOLICITOR FOR THE HUSBAND: Auditore Specialist Family Lawyers

COUNSEL FOR THE WIFE: Ms Pender

INDEPENDENT CHILDREN’S LAWYER COUNSEL: Mr. Crabtree

INDEPENDENT CHILDREN’S LAWYER SOLICITOR: Donald S Lampe

Orders

1. That in addition to the times specified in paragraph (1) of the orders made herein on 31 January, 2007 the father spend time with the children of the marriage A born in February, 2000  and  T born in January, 2004 on the following occasions :

   (a)on Good Friday 2007 between 11:00 am. and 3:00 pm.;

   (b)on Easter Sunday 2007 between 11:00 am. and 3:00 pm.;

   (c)on the paternal grandfather’s birthday on 22 May, 2007 between 4:00 pm. and 7:00 pm.; 

   (d)on the paternal great-grandmother’s birthday on 9 July, 2007 between 4:00 pm. and 7:00 pm.;  and

   (e)at other times as are agreed;

   PROVIDED THAT  these times be subject to the availability of supervision as provided in paragraph (1)(a) of the orders made on 31 January, 2007.

1. That the parties and, if represented their lawyers, attend a pre-trial conference on 27 June, 2007 at 10:30 am. 

1. That the applicant file and serve any amended application for final orders by 26 April, 2007.

1. That the respondent file and serve any amended response by 4 May, 2007. 

1. That any subpoena for production of documents to be issued by any party be lodged by 26 April, 2007 and inspection of documents produced pursuant to subpoena be completed at least seven days before the pre-trial conference.

1. That each party must file and serve by 13 June, 2007 affidavits setting out :

   (a)his or her evidence in chief;  and

   (b)the evidence in chief of each lay witness the party proposes to call at the trial or notice of refusal pursuant to Rule 15.07(2) of the Family Law Rules 2004.

1. That the independent children’s lawyer file and serve by 13 June, 2007 affidavits of expert witnesses.

1. That each party provide a list of documents in accordance with Rule 13.22 by 27 April, 2007 and indicate where and when the documents under Rule 13.20(4) may be inspected if they have not previously been provided.

1. That if a party seeks answers to specific questions, he or she file and serve the specific questions by 4 May, 2007 and the party to whom the question is directed file and serve specific answers by 18 May, 2007. 

1. That the parties instruct W Valuers as a single expert witness to provide a valuation of the real property situate at B(“the [B] property”) and such valuation be filed by 27 April, 2007. 

1. That within fourteen days the parties confer for the purpose of drafting a joint letter of instructions (complying with Rule 15.54) to W Valuers and each party has permission to provide additional written instructions to W Valuers provided such instructions comply with Rule 15.54 and a copy is immediately provided to the other party.

1. That save to allow the valuer access to the B property, neither party be in attendance at the time W Valuers attend the B property for the purpose of preparing the valuation. 

1. That within fourteen days hereof the parties instruct Mr F or such other expert as is agreed to provide a report as to the valuation of the husband’s business        and in order to give force and effect to this order :

   (a)the parties must co-operate and confer for the purpose of agreeing on the person to be appointed as the single expert witness, if it is not to be Mr F;

   (b)within fourteen days hereof the parties confer for the purpose of drafting a joint letter of instructions (complying with Rule 15.54) to the expert;  

   (c)each party has permission to provide additional written instructions to the expert provided such instructions comply with Rule 15.54 and a copy is immediately provided to the other party;  and

   (d)the husband must file the report of the single expert witness by 26 April, 2007. 

1. That subject to any agreement to the contrary the costs of the two single expert witnesses appointed pursuant to this order be borne in the first instance by the husband and, subject to any other order by the trial judge, he be entitled to be reimbursed one-half of each such valuation on determination of the competing applications for final property orders. 

1. That within seven days hereof the husband file and serve the undertaking required pursuant to paragraph (20) of the orders made herein on 31 January, 2007. 

1. That the husband and wife forthwith do all acts and things and sign all necessary documents to effect the sale of the following properties :

   (a)P Property (“the [P] property”);  and

   (b)T Property (“the [T] property”).

1. That by way of consequential arrangements that should be made for the purpose of effecting the sales :

   (a)the listing prices shall be as agreed between the parties and if there is no agreement they will be as advised by a valuer (who is also a practising real estate agent) appointed :

   (i)in relation to the P property, by the President of the Queensland Division of the Australian Property Institute;  and

   (ii)in relation to the T property, by the President of the Victorian Division of the Australian Property Institute;

(b)the properties shall be listed for sale by private treaty within twenty-one days hereof by an agent agreed to by the parties and if there is no agreement, with the agent nominated to advise the value pursuant to the preceding sub-paragraph;  and

(c)in the event a property has not been sold within four months of this date, the husband and wife shall make all such arrangements and do all such acts and sign all such documents to procure a sale by public auction of the unsold property without reserve, such auction to take place within a further period of one month by an agent to be agreed and failing agreement to be nominated by the wife. 

1. That upon completion of the sale of the real properties the proceeds of the sale shall be applied as follows :

   (a)first, to pay all costs, commissions and expenses of the sale and to pay any council and water rates and maintenance levies outstanding in respect of the sold property; 

   (b)second, to discharge the mortgage or mortgages affecting the sold property;

   (c)third, to pay to the wife the sum of $30,000 less a sum equivalent to any amount then due and owing on the mortgage over the B property which is in excess of the sum due and owing on that mortgage this day;

   (d)fourth, to pay to the husband the sum of $30,000 less a sum equivalent to any amount due and owing on the mortgages over the P and T properties at settlement of their respective sales which is in excess of sums due and owing on those mortgages this day;

   (e)fifth, the balance then remaining to be held in trust by the solicitor for the husband in an interest bearing account in the name of both parties, and be disbursed only with the consent in writing of both parties or pursuant to court order.

1. That until settlement of the sale of the P and T properties :

   (a)the parties hold their respective interests in those properties upon trust pursuant to these orders;  and

   (b)neither party encumber either of those properties without the consent in writing of the other party;  and

   (c)the husband pay all instalments pursuant to the mortgage or mortgages over the said properties and all rates and taxes and like apportionable outgoings as they fall due.

1. That until further order the wife has the sole right to occupy the B property and during such period of occupation :

   (a)the wife pay all instalments pursuant to the mortgage and all rates and taxes and like apportionable outgoings of the property as they fall due;

   (b)the parties hold their respective interests in the property upon trust pursuant to these orders;  and

   (c)neither party encumber the property without the consent in writing of the other party. 

1. That in the event a party refuses or neglects to comply with a provision of these orders :

   (a)the Registrar of the Family Court of Australia in Melbourne is hereby appointed to execute all deeds and documents in the name of the defaulting party and do all acts and things necessary to give validity and operation to these orders;  and

   (b)the party in default is ordered to pay any and all foreseeable damages to the other party caused by his or her default;  and

   (c)the party in default is ordered to pay all reasonable costs incurred by the other party for the purpose of enforcing this order and proving his or her damages.

1. That the Department of Human Services be provided with a copy of the following documents as soon as practicable :

   (a)Dr K’s reports (to be provided by the independent children’s lawyer);  and

   (b)Ms R’s report or reports (to be provided by the husband.

1. That all extant interim applications be otherwise dismissed.

1. That each party file a compliance certificate in accordance with the approved form by 13 June, 2007 and such certificate may be filed by facsimile to fax number … .

1. That each party file and serve an undertaking as to disclosure by 13 June, 2007. 

1. That in the event a party fails to comply with the directions made this day for the filing of affidavits or other documents, the pre-trial conference date not be vacated.

1. That pursuant to s.65DA(2) and s.62B of the Family Law Act 1975, the particulars of the obligations these orders create and the particulars of the consequences that may follow if a person contravenes these orders and details of who can assist parties adjust to and comply with an order are set out in the Fact Sheet attached hereto and these particulars are included in these orders.

2. That pursuant to Rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of counsel and a solicitor appearing as counsel.

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 3110  of 2005

MR DARCY

Husband

And

MRS DARCY

Wife

REASONS FOR JUDGMENT

1. The applications before me relating to financial proceedings are highly contested.  This morning I dealt with interim applications for parenting orders;  the case is in the Magellan List as the wife alleges the husband has sexually abused their daughter, allegations denied by the husband.  No doubt the temperature of the financial dispute has been raised by the allegations in the children’s matters. 

1. That said, the Court must do what it can to get cases on for trial and in my judgment this case needs some robust case management.  The Family Law Rules 2004 make it clear that judges have an obligation to ensure that each case is resolved in a just and timely manner at a cost to the parties (and the Court) that is reasonable in the circumstances of the case. The Court must do what it can to set realistic timetables and monitor and control the progress of each case, while ensuring procedural fairness is accorded to all parties.

1. It is said that the financial position of the parties in this matter is complex but complexity is relative.  The parties have two investment properties, in P and T.  The husband runs a legal practice.  The former matrimonial home in B is presently occupied by the wife and children.  They had shares but there has been some significant re-financing since separation and there are disputes about post-separation expenditure.  While that summary may be simplistic, the parties’ assets and financial circumstances are not at the complex end of the scale of cases seen by this Court. 

1. There is a dispute as to the provision of financial information and disclosure.  The water has been muddied by the fact the husband has sworn that he is one of a number of discretionary beneficiaries under a trust, but has asserted he has no interest in the trust.  Today his counsel has said that he has no interest, and is not a beneficiary, under any family trust;  that matter will have to be determined in due course. 

1. There is no doubt, even on the scant information available to the Court now, that there has been some mingling of business and personal expenses;  that is not uncommon in a solo business.  By way of illustration, I doubt the legal practice is buying items from Toys R Us.  The extent of the mingling may be minor;  it may be more significant.  The determination of that issue does not require a deal of expert analysis;  it requires focussed cross-examination. 

1. The husband’s evidence is that his financial position is dire.  He has been receiving rental from the two investment properties but meeting the mortgage payments and other outgoings.  If the mortgage on one of those properties has blown out by some $80,000 (which, on the face of it, looks probable) that will have to be brought back into account in some way in due course.  The wife has been paying the mortgage on the B property.

1. The wife's application is for a Barro order.  She seeks $30,000.  I noted when I delivered a judgment in this matter on an earlier occasion that there was no evidence from a solicitor of her anticipated costs;  the wife – the client – swore to her understanding of those costs.   I do not underestimate the problems the wife faces in this respect;  she is represented by New South Wales counsel, directly briefed, and thus has no instructing solicitor.  I am comfortable in accepting counsel’s advice that her appearance in this Court is consistent with the rules of the New South Wales Bar.  She does not have a trust account;  that has been clear from the beginning.  So funds from any source cannot be paid to her to be held in trust. 

1. It is now clear that the parties agree on the necessity for the sale of the two investment properties, which are apparently running at a significant loss and consume a disproportionate part of the husband’s income.  Whatever orders each originally sought, both now seek the sale of these properties.  There is no point in expending funds on valuations (and the parties have struggled to effect earlier orders for valuation of assets) in those circumstances.  The process leading to sale should commence.  When both agree to the sale, that can prejudice neither.

1. The husband seeks that the B property, too, be sold now.  As put by his counsel, the wife initially sought its sale.  However, this is a more complex issue.  First, she is no longer committed to that course so, unlike the investment properties, they are not in agreement about a sale.  Second, the outgoings are being funded by her (with family help) and it provides a home for her and the children.  If it is sold rental accommodation will have to be found for them prior to the determination of the financial applications, and that may mean no financial relief is achieved by the sale. 

1. The father pays minimal child support but is paying private school fees, presumably for A, who is seven. 

1. In their respective applications each seeks, as is usual, for the Court to make such other orders as it deem fit. 

1. In my judgment, and having regard to the fairly high threshold for Barro orders, the Court could be satisfied on the current evidence that the husband has had control of the parties’ assets and income (I refer to the investment properties, shares and his business) since separation.  The wife has been dependent upon the husband for support in the past.  She is now dependent on Centrelink, plus the support he provides for the children.

1. It is difficult to make an assessment of their eventual financial entitlements.  On one analysis, there will be a very small pool to divide;  with a very small pool, a division that might be appropriate for a large pool may be found to be inequitable, having regard to matters such as child care obligations and earning capacity.  It would be premature to make a finding about that.

1. The evidence adduced by the wife about probable costs is inadequate.

1. I do not propose to make a Barro order, as I am not satisfied such an order is supported by the evidence advanced.  I do propose to make a partial property order in both parties' favour.  I propose to order that the two investment properties be sold, as sought by both, as soon as practicable.  Until that occurs, the husband will retain the obligation to meet the mortgage payments and outgoings on them.  The wife will retain the obligation to meet the mortgage payments and outgoings on the former matrimonial home.  Each has been making those payments to date.    

1. Mr Holmes is right that in discussion with counsel I included a property at half its value, rather than the whole of its value.  On the current figures there is some equity in the investment properties.  Orders will, as far as is practicable, freeze the mortgages at their current figures.  Clearly the Court cannot actually freeze the mortgages but it can order that capital sums above the amounts now due become the responsibility, in the short term, of the party who has the obligation for that mortgage.

1. From the net proceeds of sale of the investment properties, the sum of $30,000 will first be paid to the wife.  The sum of $30,000 will then be paid to the husband.  Each asserts dire financial need;  this should be of assistance to both.  From each of those amounts will be deducted any rise in the mortgage liabilities over and above today’s figures.  The trial judge will determine the ultimate responsibility but this should help to ensure the parties meet their respective commitments until the properties are sold and settled. 

1. There is a dispute as to who is responsible for past failures to comply with orders for valuation of assets.  I will order a valuation of the former matrimonial home, to be undertaken by W Valuers.  They are to provide a valuation report by 27 April 2007.  I will order that the parties cooperate and confer and draft a joint letter of instructions;  if that has already been done, so much the better.

1. I will make the usual order for permission to provide additional written instructions, provided they comply with rule 15.54 and provided a copy is immediately provided to the other party.  Save to allow the valuer access to the home, neither party is to be present during the valuation;  the wife will have to be present to let the valuer in. 

1. I do not propose to make any other specific orders about the provision of other documentation, save for compliance with rules 13.22 and 13.20(4).  I realise, as I said earlier, that the temperature of the dispute has been raised by the problems about the children.  But the parties must stop point-scouring and dancing on the head of a pin, and concentrate on determining what are the relevant assets and what are the relevant liabilities.  If there is not going to be much money left over at the end of the day, it is in neither’s interests for all of it to end up in the lawyers’ pockets, which is highly likely if the parties continue to conduct the litigation as they have to date.  I say that with no disrespect to the lawyers.  I appreciate that each party believes the other side is responsible for delay and obstruction and unrealistic demands.  But I commend a quantum leap in the way the case is being managed and prepared. 

1. Orders will provide for affidavits and form 13s in relation to financial matters to be filed in accordance with the timetable I earlier formulated for the parenting applications.  The PTC can relate to both financial and children's matters.  I will order that if there is no compliance with these financial orders, the PTC not be vacated;  I am not going to have you lose the trial date for the children's matters through more financial skirmishing.  

1. If it looks as if the financial matters will add no more than two days to the trial, I will do my best to have all applications listed together.  If two separate trials are held it will be much more expensive and the matters are inextricably linked in some ways, as counsel will know.  If the financial aspects are likely to add more than two days to the Magellan trial, two trials will be inevitable.   

1. The balance of the proceeds of sale of the investment properties will go to the husband's solicitor's trust account, to be held in an interest‑bearing account in the names of the parties, and not be disbursed, save with the consent in writing of both parties or by order of the court. 

1. I do appreciate these orders may not generate money swiftly.  I remain unconvinced, on the evidence before me, of the necessity for complex accounting evidence, but if the wife cannot prepare her case in time, due to financial constraints, the Court will then hear the children’s matter and decide what to do about the financial aspects.

1. The last issue I want to visit in this trial notice is the question of valuation of the husband's business.  It has not been valued and needs to be valued. 

1. I will order that Mr F, or such other valuer as is agreed within 14 days, be instructed;  you can make other inquiries if you want a valuer other than Mr F.  His name has come from me, not from a party.  I have no vested interest in Mr F’s appointment, but he does a deal of work for solicitors who practise in the Court.  His offices are in the city.  In my experience,  he can swiftly consider an updated report, if necessary.  His firm does work on instruction from husbands and from wives.  I offer the name only in the hope it may assist.

1. Now, I hand back that document to Mr Holmes, this document to Ms Pender.  The Court will take out the orders.  The next court event is the pre-trial conference on 27 June, 2007.  I make it clear that I will be asking the Magellan registrar, who will be conducting that conference, to do everything possible to get the children’s case to trial, whatever has to happen to the financial applications.  The stakes for the children are too high to do otherwise. 

I certify that the preceding
27 paragraphs
are a true copy of the reasons for
judgment herein of the
Honourable Justice Brown AM.

Dated the          day of           2007.

…………………………………………
Associate.

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