Downes & Downes
[2022] FedCFamC1F 279
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Downes & Downes [2022] FedCFamC1F 279
File number(s): SYC 1793 of 2019 Judgment of: CHRISTIE J Date of judgment: 28 April 2022 Catchwords: FAMILY LAW – INTERIM PROPERTY – Where leave to file out of time was granted by consent pursuant to s 44(3) – Where the wife seeks partial property settlement– Where the husband seeks a final hearing Legislation: Family Law Act 1975 (Cth)
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 67, 68
Federal Circuit and Family Court of Australia (Family Rules) Rules 2021 (Cth) rr 5.08, 5.09
Division: Division 1 First Instance Number of paragraphs: 53 Date of hearing: 1 April 2022 Place: Sydney Counsel for the Applicant: Mr Apelbaum Solicitor for the Applicant: Ms Arnold, Doolan Wagner Solicitor for the Respondent: Mr O’Donoghue, Kenmore Mediation and Law Centre ORDERS
SYC 1793 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS DOWNES
Applicant
AND: MR DOWNES
Respondent
ORDER MADE BY:
CHRISTIE J
DATE OF ORDER:
28 APRIL 2022
THE COURT ORDERS THAT:
1.On or before 6 May 2022, Ms Downes (“the wife”), sign all necessary documents to cause the property situated at and known as H Street, Suburb J in the state of NSW being the whole of the land comprised in Certificate of Title Folio Identifier … (“the Suburb J property”) to be placed on the market for sale and upon settlement of the sale, apply the proceeds of sale in the following manner and priority:
(a)In payment of any outstanding advertising and marketing expenses, real estate agent’s fees and commissions and other expenses associated with the sale of the Suburb J property;
(b)In payment of any outstanding land tax owing on the Suburb J Property;
(c)In payment of any outstanding legal costs and disbursement of the sale of the Suburb J Property;
(d)In discharge of the registered mortgage K Bank mortgage secured against the Suburb J property;
(e)In reimbursement to the wife of any invoices paid by her in relation to improvements and maintenance in respect of the property in the year 2022;
(f)In payment of the sum of $28,750 to Doolan Wagner Family Lawyers trust account on account of anticipated monies required to be paid in relation to capital gains tax liability for the Suburb J property;
(g)In payment to the wife by way of partial property settlement of the sum of $250,000;
(h)In payment of the balance to a controlled monies account in the names of the husband and the wife.
2.The wife within seven days of engaging a real estate agent and conveyancer inform Mr Downes (“the husband”) of the details of the real estate agent and conveyancer engaged by the wife.
3.On or before 31 August 2022 the wife file and serve any Amended Initiating Application setting out with particularity the precise final orders sought.
4.On or before 14 September 2022 the husband file and serve any Amended Response setting out with particularity the precise final orders sought.
5.On or before 28 September 2022 both the husband and wife file and serve:
(a)A financial statement;
(b)A single consolidated trial affidavit by the party;
(c)A single consolidated affidavit by each lay witness;
(d)Any single expert report relied upon by one or both of the parties (in compliance with the Rules);
(e)An undertaking as to disclosure;
All affidavits are to comply with Part 8.3 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (“the Rules”);
6.No further affidavits may be relied upon at trial without leave of the court and no past affidavits shall be relied upon without leave of the Court; and
7.The matter be listed for a Case Management Hearing on 24 November 2022 at 2.30 pm with a view to allocation of hearing dates in the event the parties have complied with these directions.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Downes & Downes is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CHRISTIE J:
The application before the Federal Circuit and Family Court of Australia (Division 1) (“the Court”) was for interim orders of a financial nature.
Ms Downes (“the wife”), sought orders to permit the sale of a property at H Street, Suburb J (“the Suburb J property”) and distribution from the proceeds of sale to meet capital gains tax and land tax payable on the sale of the property and legal and other fees incurred. The wife sought an order that the balance be paid to her, after discharge of the mortgage secured against the property.
Mr Downes (“the husband”) sought orders as set out in Part E of his Case Outline. That document sought that the wife’s application be dismissed. It also sought procedural orders in respect of the final hearing.
BACKGROUND
The husband and wife (“the parties”) commenced cohabitation in late 1984 and were married in 1985.
The parties separated on 22 December 2013 (the husband having left Australia in late 2013). The parties’ divorce became final in 2017.
There are three adult children of the relationship: Ms B (born in 1987), Ms D (born in 1991) and Ms C (born in 1997) (“the parties’ daughters”).
The husband filed an Initiating Application seeking orders for property adjustment on 22 March 2019. The husband’s application required leave under section 44(3) of the Family Law Act 1975 (Cth) (“the Act”) as more than 12 months had passed from the date of the parties’ decree absolute.
The wife consented to leave being granted pursuant to s 44(3) of the Act and an order was made to that effect on 16 February 2022.
At the commencement of the parties’ relationship the wife had a 1/3 interest in the Suburb J property.
From the evidence which was before me at the interim hearing it was difficult to know what assets the husband had at the commencement of the parties’ relationship. However, it was submitted by the husband’s solicitor during the oral hearing that the husband owned a property at Suburb L prior to the parties’ marriage, which was later gifted to the Downes Family Trust (“the Trust”).
At the conclusion of the relationship the parties had the following assets:
(a)M Street, Suburb O (“the Suburb O property”), subject to a mortgage;
(b)The wife’s 1/3 interest in the Suburb J property; and
(c)N Street, Suburb L (“the Suburb L property”), subject to a line of credit.
At separation the husband was working overseas and the wife was not in paid employment. The parties’ youngest daughter (aged 16 at the time of separation) remained living with the wife as did another adult child. The wife’s affidavit indicates that she assumed financial responsibility for the child under the age of 18 with the assistance of her parents. It would appear as though she provided financial support to the adult children as well (absent legal obligation).
On 11 November 2014, after separation, the wife sold the Suburb O property and applied the proceeds of sale ($3,650,000) as follows:
(a)$398,000 to reduce the line of credit on the Suburb L property;
(b)$120,000 to the K Bank mortgage;
(c)$120,000 to credit cards;
(d)$126,000 in repayment to the wife’s parents of outstanding loans;
(e)$32,000 to the parties’ daughters to repay loans;
(f)$52,500 to costs of sale;
(g)$45,000 to the parties’ daughters as a gift.
That would have left a balance of about $2,756,500.
In 2015 the wife purchased P Street, Suburb Q (“the Suburb Q property”) for $1,550,000 and spent $150,000 on renovations. The wife says she used the remaining funds from the sale of the Suburb O property to purchase the Suburb Q property.
In mid-2015 the wife’s mother died, followed by her father in late 2015 and so she inherited the remaining 2/3 interest in the Suburb J property.
At the time of the interim hearing the parties assets, liabilities and superannuation were as follows (according to the wife’s financial statement – the husband did not rely on a financial statement at the hearing):
Ownership Description Wife’s value ASSETS 1. W P Street, Suburb Q $2,500,000 2. W H Street, Suburb J $900,000 3. W Motor Vehicle 1 $25,000 4. W Motor Vehicle 2 $1,000 5. W Motor Vehicle 3 $2,000 6. W R Pty Ltd (SMSF) NIL 7. W Personal effects/clothing/jewellery $10,000 8. W Household contents $10,000 9. W Funds in bank accounts $2,748 10. W E Company Investment Bond NIL 11. W Downes Family Trust
N Street, Suburb L (mortgage of $399,910)$600,090 12. W 50% share filly Nominal 13. W S Trust Account (including counsels fees for interim hearing) $13,610 14. W F Club Membership (ownership forfeited) NIL LIABILITIES 15. W Credit Cards $39,681 16.WS Trust legal fees$31,47217.WCounsel’s legal fees for interim hearingNK18. W Suburb Q mortgage $468,144 19. W Suburb J mortgage E$98,750
The wife would appear to have supported herself from the parties’ assets in the post-separation period. The husband would appear to have supported himself from his income.
The husband asserts he is currently without income. The wife’s evidence suggests she may challenge this at trial. I cannot make a finding at this stage.
The wife has not been in paid employment since 1990. I do not understand this to be controversial.
Attached to the husband’s affidavit filed 28 January 2022 was material pertaining to mental health treatment obtained by him in the United Kingdom. The husband also attached correspondence with Westpac in which he said he hoped to have a work contract in early 2022. It is not clear whether the husband intends to submit that his health is, has or will impact on his income and earning capacity.
The wife has re-partnered. The wife says the husband has also re-partnered. I am not in a position to make a finding.
PROCEDURAL ISSUES
At the mention of this matter on 16 February 2022, the interim application was listed for interim hearing on 1 April 2022.
Rule 5.08 of the Federal Circuit and Family Court of Australia (Family Rules) Rules 2021 (Cth) (“the Rules”) provides:
(1)The following affidavits may be relied on as evidence in chief at the hearing of an application for interlocutory orders:
(a)subject to rule 5.06, one affidavit by each party;
(b)one affidavit by each witness, provided the evidence is relevant and cannot be given by a party.
(2)Unless express leave is granted by the court, an affidavit filed and served in support of or in opposition to an application for interlocutory orders must not exceed 25 pages.
(3)Unless express leave is granted by the court, an affidavit filed and served in support of or in opposition to an application for interlocutory orders must not contain more than 10 annexures.
Rule 5.09 of the Rules provides:
(1)Unless the court directs otherwise, the hearing of an application for interlocutory orders must be no longer than 2 hours.
(2)Cross‑examination will be allowed at a hearing only in exceptional circumstances.
The intention of the Rules is to provide a mechanism for timely resolution of interlocutory issues consistent with ss 67 and 68 of the Federal Circuit and Family Court of Australia Act 2021 (Cth).
The husband sought to rely on paragraphs from 19 affidavits. I permitted the husband to rely on:
(1)The affidavit of Mr Downes filed 28 January 2022;
(2)The affidavit of Mr G filed 15 December 2021;
(3)The husband’s Amended Initiating Application filed 4 October 2021; and
(4)The husband’s Reply to the wife’s Amended Response filed 8 February 2022.
THE LAW: INTERIM PROPERTY ADJUSTMENT
The parties were not at issue that the Court may make an order for interim adjustment of property interests.
As a general rule the parties are best served by one exercise of the s 79 power in the Act.
In an appropriate case it is recognised that one or both of the parties may seek an order under s 79 of the Act at an interlocutory stage of the proceedings.
A party does not have to demonstrate special circumstances in order to seek an interim order. However, it is necessary to demonstrate that:
(a)Such an order would be just and equitable;
(b)Such an order would not prejudice the relief of another party; and
(c)There are assets available to satisfy the order.
The Court is not required to undertake a detailed analysis of the matter but should understand (on the basis of the evidence) the contentions each party makes about issues relating to contributions and their respective future financial needs.
CONSIDERATION
The parties were together for 29 years. The husband made financial contributions (initial contributions and ongoing contributions from his employment). The wife made financial contributions (initial contributions and until 1990, contributions from employment). The wife made significant non-financial contributions.
There may be some issue about the assessment of post-separation contributions. The wife says she has made significant post-separation contributions but, as noted above, she has had sole use of the parties’ assets and in those circumstances (subject to any further evidence at trial) I would be inclined to take the view that both parties made contributions after separation through the wife’s utilisation of the parties’ property.
I am not required to consider in detail the parties contributions – that is a matter for the final hearing. But I find that each has made substantial contributions.
The evidence suggests that both parties may be currently without employment. I understand on the basis of the evidence that the wife may seek to establish at trial that the husband has undisclosed business interests or income. I am not in a position to determine that in this interlocutory hearing.
The evidence establishes an asset pool consisting substantially of three parcels of real estate. The husband seeks an order that the Suburb L property be transferred to him. The wife for her part lists the Suburb L property as property of the Trust (in her financial statement) although I note that she lists the Trust as an asset of herself in the schedule which appears at paragraph 33 of her affidavit. She identifies that she is the trustee of the Trust.
I note the email from the parties’ daughters to their father concerning the Trust. It is not clear yet whether or not the wife concedes that the assets of the Trust are effectively (or for the purpose of the application for property adjustment) beneficially her assets or whether there is a legitimate claim available to other beneficiaries of the trust. This may impact on the size of the asset pool (and certainly on the husband’s application for in specie transfer of that asset).
The wife submitted that she should be permitted to sell an asset to which she has made the sole contribution, namely the Suburb J property.
A party should not, generally, be prevented from dealing with his or her assets, unless it is necessary to preserve them so as to ensure that the Court is able to do justice and equity as between the parties.
The husband seeks final orders as set out in his Amended Initiating Application dated 4 October 2021. Those orders include:
(a)Sale of the Suburb Q property with payment from the proceeds to be made to discharge the mortgage secured on title, the mortgage secured over the Suburb J property, the mortgage secured over the Suburb L property and the parties’ outstanding legal fees and associated costs of the sale. The husband sought the balance then remaining be divided equally between the parties (taking into account any amounts the wife may have drawn down on mortgages in the period between the husband filing his application and the making of final orders);
(b)Transfer of the Suburb L property to the husband free of encumbrance; and
(c)The parties to otherwise each retain their own assets (and importantly, for the wife to retain the Suburb J property).
The wife’s interim relief would result in sale of the Suburb J property. The husband does not seek to retain that property by way of final order.
The sale prejudices the husband’s application that the wife receive the Suburb J property (but how the wife is to receive her entitlements is a matter for her and/or the Court in the circumstances where the husband does not seek that he receive that property).
I am required to ensure that the division of the parties’ assets is just and equitable not that they receive specific items of property.
I cannot see that sale of the Suburb J property prejudices the husband’s final relief (in dollar terms) and accordingly I intend to make orders providing for its sale.
The only question that then remains is whether or not the wife should have released to her the whole of the proceeds of sale, after payment of the debts secured against the title and the costs of sale.
The wife does need to pay her legal fees. It is of no moment that she has managed to obtain a litigation loan since she argues that she should be permitted to meet these from capital as opposed to being charged interest and fees. I accept this submission as it has the effect of increasing the assets available for division.
Because the extent of the asset pool is not yet clear, I cannot be comfortably satisfied that the whole of the net proceeds of the Suburb J property should be released to the wife.
If the wife is provided with $250,000 from the proceeds of sale, this should allow her to pay her legal fees (past and future), fees of any accountant engaged by her in the proceedings and credit card debt. It should also provide her with funds for living if required. It will explicitly be a payment by way of interim or partial property settlement. The remainder of the proceeds should be preserved by being held in a controlled monies account.
The husband sought that the matter be listed for final hearing. I intend to make directions for the parties to file their material for final hearing. When they have complied, I will allocate a hearing date.
If there is an issue which requires expert evidence, the Rules require such evidence to be given by a single expert.
In this case to date, the husband has engaged persons to provide evidence of a financial nature. The husband is at liberty to obtain advice from any person of his choosing but, if the Court is required to adjudicate a dispute between the parties about an issue (and the resolution requires expert evidence), such evidence is to be given by a single expert. If the parties cannot agree on a consent order for appointment of the single expert then either party is at liberty to bring an application for appointment of a single expert.
Much of the affidavit material relied upon by the husband (and some of the affidavit material of the wife) suggested that one or other of the parties has not made full and frank financial disclosure. I cannot determine at this stage whether one or other of the parties has been derelict in his or her duties. I am ordering the filing of undertakings as to disclosure. I will hear the parties in respect of any application for issue of subpoena when the matter is listed for case management. The Court expects both parties to comply with their disclosure obligations.
I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Christie. Associate:
Dated: 28 April 2022
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