Emerson & Reynard
[2023] FedCFamC2F 1507
•23 November 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Emerson & Reynard [2023] FedCFamC2F 1507
File number(s): PAC 4469 of 2021 Judgment of: JUDGE NEWBRUN Date of judgment: 23 November 2023 Catchwords: FAMILY LAW – INTERIM PROPERTY SETTLEMENT – Orders made. Legislation: Family Law Act 1979 (Cth) s 79 Cases cited: Fraser & Fraser [2013] FamCA 843
Strahan & Strahan (Interim property Orders) [2009] FamCAFC 166
Division: Division 2 Family Law Number of paragraphs: 43 Date of hearing: 17 November 2023 Place: Parramatta Solicitor for the Applicant: The Applicant appeared in person Counsel for the Respondent: Mr Fermanis Solicitor for the Respondent: Albion Solicitors ORDERS
PAC 4469 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS EMERSON
Applicant
AND: MR REYNARD
Respondent
ORDER MADE BY:
JUDGE NEWBRUN
DATE OF ORDER:
23 NOVEMBER 2023
PENDING FURTHER ORDER THE COURT ORDERS THAT:
1.The wife shall forthwith forward to the husband a Redraw Request Form signed by her requesting the redraw of a sum of $25,000 from B Company Offset Facility Number: …92.
2.Within seven (7) days of receipt of the above Redraw Request Form, the husband shall sign it and return it to the wife.
3.Following the husband’s compliance with Order 2 above, the wife shall be entitled to receive the above sum of $25,000 from B Company Offset Facility Number: …92 by way of interim property settlement under s 79 of the Family Law Act 1975 (Cth) (“the Act”).
4.The parties shall forthwith do all acts and things and sign all documents as may be necessary to cause the property situated at C Street, Suburb D (“the Property”) to be listed for sale and sold at the best price reasonably obtainable.
5.For the purpose of Order 4 above:
(a)The parties shall instruct Ms E of F Company to have conduct of the sale of the Property on behalf of both parties. In the event that Ms E is unable to do so, the parties shall instruct such lawyer as they agree upon to have the conduct of the sale of the Property on behalf of both parties, or in the absence of agreement being reached within 7 days of these Orders, shall instruct such lawyer as may be appointed by the President of the Law Society of Victoria (“the lawyer”), the costs of and incidental to such appointment to be borne equally by the parties as and when same fall due;
(b)The wife shall provide to the husband within 14 days a list of three proposed real estate agents for the Property with details of their proposed commission, estimated sales range and method of sale;
(c)Within 7 days of receiving the list of real estate agents from the wife, the husband shall nominate one of the real estate agents from the wife’s list to sell the Property; and
(d)In the event that the Husband fails to nominate a real estate agent within 7 days of receipt of the list, wife shall be at liberty to nominate a real estate agent from the list to sell the Property.
(e)The parties shall each co-operate with the real estate agent including (without limiting generality of the foregoing):
(i)Making the key available to the real estate agent;
(ii)Allowing inspection of the Property at all reasonable times requested by the real estate agent;
(iii)Doing or saying nothing unreasonable to hinder or prevent a sale of the Property being effected;
(iv)Ensuring that the inside of the Property is neat, tidy and presentable including that the grounds are in a neat and clean condition at the time of inspection by the real estate agent and prospective purchasers; and
(v)Signing all documents requested by the real estate agent in relation to the listing for sale of the Property except any contract or agreement for sale which has not been authorised by Ms E or, if applicable, the lawyer.
(f)The Property is to be sold by either public auction or private treaty as agreed by the parties and in the absence of agreement in a timely manner with such method to be determined by the real estate agent appointed in accordance with Orders 5(b) to 5(d) above.
Public Auction
(g)In the event that the Property is to be listed for sale by public auction, the reserve price is to be as agreed between the parties and failing agreement in a timely manner the reserve price of the Property shall be in accordance with the recommendation of the real estate agent appointed in accordance with Orders 5(b) to 5(d) above;
(h)In the event that the Property is not sold at auction, then the parties may direct the real estate agent to negotiate with the highest bidder or any other interested parties and enter into a contract for sale at the highest obtainable price above the reserve price;
(i)In the event that the Property fails to sell by negotiation pursuant to Order 5(h) above within 72 hours of the first auction, the Property shall be listed for sale by public auction every 3 months with the reserve price to be reduced by the amount of 5% for each three months thereafter until the Property is sold.
Private Treaty
(j)In the event that the Property is to be listed for sale by private treaty, the sale price is to be as agreed between the parties and failing agreement in a timely manner the sale price of the Property shall be in accordance with the recommendation of the real estate agent appointed in accordance with Orders 5(b) to 5(d) above.
(k)In the event that the Property fails to sell by private treaty within 3 months of being listed for sale, then, if the real estate agent recommends that the Property continues to be sold by private treaty, the sale price shall be reduced by the amount of 5% each three months thereafter until the Property is sold. Otherwise, if the real estate agent recommends that the Property be listed for sale by public auction, it shall be listed for sale by public auction on the same terms as set out in Orders 5 (g), (h) and (i).
Proceeds of Sale
(l)On completion of the sale of the Property, the proceeds of sale shall be applied in the following manner and priority:
(i)the discharge of any mortgage or loan secured over the Property;
(ii)to pay all real estate agents’ commission and expenses associated with the sale of the Property;
(iii)to pay all conveyancer or legal costs and disbursements relating to the sale of the Property;
(iv)in payment of any other outgoings due in respect of the Property;
(v)the balance to be paid to the wife by way of interim property settlement under s 79 of the Act.
(m)Pending the discharge of any mortgage or loan secured over the Property, the wife shall pay, as and when they fall due, the mortgage or loan repayments, and council and water rates, in respect to the Property.
6.In order to satisfy Order 5(l)(i) above, the husband shall do all things necessary and sign all documents, including any Discharge Authority Form, required to discharge any mortgage or loan secured over the Property.
Mr Reynard Family Super Fund
7.Without admissions, the wife is to forthwith do all acts and things and sign all documents, including but not limited to financial statements and income tax returns, to facilitate, for the financial years ending 30 June 2021 and 30 June 2022, the completion and lodgment of income tax returns for the Mr Reynard Family Super Fund, in her capacity as former trustee of such Fund.
Section 106A
8.In the event that any party fails to sign any document or instrument or do any acts required or contemplated by these Orders to be done, with such failure continuing for a period of 14 days, then a Judicial Registrar of the Federal Circuit and Family Court of Australia in pursuance of the powers conferred upon him or her under Section 106A of the Act, as amended, shall have the power to execute any document or instrument in the name of the person who has refused or neglected to sign any necessary document or instrument or to do any act required or contemplated by these Orders.
AND THE COURT NOTES THAT:
A.The wife resigned as trustee of the Mr Reynard Super Fund in early 2023.
B.This matter is listed for Compliance and Readiness Hearing on 4 December 2023 at 2.15 pm before Judge Dunkley.
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 a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE NEWBRUN
This is the determination of, firstly, the wife’s Application in a Proceeding filed 26 September 2023 seeking interim property settlement.
The husband opposes such interim property settlement to the wife, albeit in the alternative, he proposes that the net proceeds of sale of a property located at C Street, Suburb D, Victoria (“the Suburb D property”), registered in the wife’s name, be divided equally between the parties by way of interim property settlement to each of them.
Secondly, this is the determination of Orders sought by the husband in respect to the wife being required to execute relevant documents relating to the husband’s super fund particularly in respect to the financial years ending 30 June 2021 and 30 June 2022.
It is common ground between the parties that the Suburb D property should be sold. There is a dispute between the parties as to whether the wife should have sole conduct of the sale of that property, including selection of a real estate agent, or whether the husband should participate in certain aspects of the sale including the selection of such agent.
The wife relied upon:
(a)Her Amended Application in a Proceeding filed 26 September 2023;
(b)Her affidavit in support filed 12 September 2023 including annexures, and the exhibits referred to in that affidavit (Exhibit B); and
(c)Her Case Outline (Interim Hearing) filed 14 November 2023.
The husband relied upon:
(a)His Response to an Application in a Proceeding filed 23 October 2023;
(b)His affidavit (including annexures) in support filed 23 October 2023;
(c)His tender bundle of documents relating to the husband’s super fund (Exhibit A);
(d)His Case Outline (Interim Hearing) filed 14 November 2023; and
(e)His Amended Proposed Minute of Order dated 21 November 2023.
As to the proposed Orders sought by the husband in relation to his self-managed superannuation fund, the Mr Reynard Family Super Fund, which are opposed by the wife, the husband relied upon certain documents in his tender bundle (Exhibit A). It is common ground between the parties that prior to early 2023 the wife was one of the trustees of the husband’s superannuation fund. The documents in Exhibit A, including correspondence from the husband’s accountant and solicitor, indicate that the wife’s signature as one of the trustees is required to enable lodgement and assessment of the husband’s super fund’s 2021 and 2022 annual taxation returns. In the view of the Court, to enable the super fund to comply with relevant statutory taxation related obligations, it is appropriate and in the interests of justice that the husband’s proposed Orders, requiring the wife to execute all relevant documents to enable these taxation returns to be completed and lodged, be made.
As to the wife’s proposed interim property settlement, the Court now refers to relevant legal principle in this context.
In Fraser & Fraser [2013] FamCA 843, Foster J stated, inter alia:
39.The circumstances in which the Court can make interim property Orders are well settled (Strahan & Strahan (Interim property Orders) [2009] FamCAFC 166).
40.In Marchant [2012] FamCAFC 181 the Full Court considered the principles in the following terms at [24]-[28]:
In Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 (“Strahan”), the Full Court (Boland, Thackray and O’Ryan JJ) undertook a comprehensive review of the authorities and identified relevant principles and guidelines to be followed in respect of interim property Orders pursuant to ss 79 and 80(1)(h) of the Act.
It follows from the joint judgment of Boland and O’Ryan JJ in Strahan that there are two stages to the hearing of such an application and that the first question on an application for such an Order is whether the Court should exercise its discretion to entertain the application. Whilst it is not necessary for an applicant to establish compelling circumstances for that question to receive an affirmative answer, it is necessary to establish that it would be appropriate for the Court to exercise the power and the, “...overarching consideration...” as to appropriateness is the interests of justice. Recognising that in the context of s 79 proceedings, the interests of justice will usually be best served by one single and final determination of property Orders, it will not be appropriate to exercise the power merely because, on such a final determination, the applicant would receive the interim property sought or in excess of that sought.
We think it is important to highlight that whilst the discussion of the first question in the joint judgment in Strahan includes examples, including by reference to other cases, where the appropriateness criteria would be met, there was no attempt to define or exhaustively identify those circumstances or categories of cases meeting that criteria. That is understandable, given the discretionary nature of the adjudication involved and the wide range and variety of circumstances presented from case to case, so that any such attempt would likely prove to be futile. Nevertheless, the joint judgment in Strahan emphasised both the importance of the interests of justice normally being served by a single and final determination of s 79 Orders and that establishing only that the applicant’s ultimate entitlement would cover or exceed the interim claim was not sufficient, on its own, to establish that the application ought be entertained.
It also follows from Strahan that if the first question is answered affirmatively, and the second or substantive stage is reached, because the jurisdiction under s 79 of the Act is being exercised, the provisions of that section must be considered and applied, but with limitations given that it is not the final hearing ([135]). As their Honours Boland and O’Ryan JJ noted at [136], because the discretion conferred by the power in s 79 is to make such Order as the Court considers appropriate, provided it is just and equitable to make the Order in circumstances where the power will not be exhausted by the interim Order, the interim Order must be capable of variation or reversal without resort to s 79A of the Act or appeal, and must be capable of alteration at any time prior to, or as part of, a final exercise of the s 79 power.
However, if it is established that it is likely that the applicant would only be receiving what he or she was entitled to receive when the power was exhausted, that would be sufficient to enable the Order sought to be made ([137]).
In the determination of the wife’s interim application for interim property settlement, and the husband’s counter proposal, in the alternative, that the net proceeds of sale of the Suburb D property should be shared equally on an interim property settlement basis, the Court has had regard to the above principles in Strahan.
The husband was prepared to accept, for the purposes of the interim hearing, that the Suburb D property was presently valued “in the ballpark” of about $590,000. It was common ground that the current mortgage loan balance was about $342,000. Accordingly, for the purposes of this interim hearing, there is an equity of about $248,000. The wife submitted that if expenses relating to the prospective sale of this property totalled about $7,000, then about $241,000 would be available for interim property settlement, at least in relation to this property.
The parties married in mid 2005 and separated in December 2019. There were two children of the relationship, X presently 17 years, and Y presently 12 years.
The husband asserts that during the relationship he worked full-time with no periods of unemployment, and the wife worked on contract basis during the relationship.
The husband asserts that the parties brought real estate assets to their relationship and substantially increased their property portfolio through their joint efforts during the relationship including the acquisition of the above property at Suburb D.
The husband asserts that he contributed equally to all the expenses of the family and all of his income went into the relationship, if not directly, then through payments towards other family expenses. He asserts that he paid for a range of family expenses including some mortgage payments. In relation to family expenses apart from mortgage repayments, he lists various asserted expenses that he paid for amounting to about $1,212 per week. He asserts that in addition to such expenses there were other items of substantial cost that he paid including childcare, nannies, clothing, education and children’s other activities and entertainment.
The husband asserts that he was responsible for household chores, in particular when the wife was working and the children were with himself.
The husband asserts that during the marriage the parties purchased property with a view to their future together. He asserts that without the general financial support of the other party during the marriage it would not have been possible for the parties to have made their respective investments. He asserts that the wife purchased the pre-marriage properties she refers to in her affidavit and this meant that the wife brought a large debt burden to the relationship that the husband helped carry. The husband asserts that his debts were much less at marriage commencement.
The husband asserts that without his contributions both financial and otherwise the wife would not have been able to enlarge the parties’ property portfolio in the way she asserts. He asserts that the wife’s ability to work in her contract roles was due to his contribution in looking after the children during times when she would work in her job, including school holidays.
The husband asserts that the parties have enough equity to adjust at final settlement for any funds released under interim Orders.
The husband asserts, by reference to the wife’s affidavit, that now that the parties are separated the wife cannot keep up with the mortgage payments and family lifestyle expenses because she no longer has access to his income in the way she did during their marriage and for this reason the wife now seeks a sale of the property.
The wife is aged 57 years, and the husband is aged 59 years.
The wife asserts that the child Y spends four nights a fortnight with the husband during school terms and half of her school holidays.
The wife asserts that the husband has not talked to her since the separation which means that the parties have both resorted to email to communicate in relation to the children.
The wife asserts that during the relationship she paid, inter alia, the full amount of the rent on each of the rental properties the parties lived in.
The wife states that the husband paid for a discrete set of household expenses during the marriage but that his financial outlay was much smaller than the wife’s. She asserts that during the marriage the husband paid for the purchase/lease of the car for family use, the electricity/gas bills, Internet mobile phone plans and family health insurance. He paid for one grocery shop per week, and both parties did household chores. She asserts that the husband abrogated responsibility to the wife for the children’s health, education and learning development during the marriage and she continues to be responsible for these areas post separation.
The wife asserts that the husband took a redundancy and has been unemployed since 2021. She asserts that he received a substantial redundancy payout from G Company, his long-term employer in 2021.
The wife asserts that during the relationship the parties kept their finances separate from each other. She asserts that during the marriage each of the parties made individual purchases of property separate from the other and without any financial contribution from the other.
The wife asserts that excluding superannuation, the husband owns five properties in his sole name and the wife owns six properties in her sole name plus a one third share of an inheritance property.
The wife asserts that the mortgage loans on all her properties are held in her sole name except for the Suburb D property. The mortgage loan for that property was in her sole name until early 2019, and after that date was in joint names. She asserts that she has been solely responsible for making mortgage repayments on all her properties including the Suburb D property. She asserts that the title for the property has always been in her sole name.
The wife asserts that she did not set out to tell the husband about the property purchases she made during the marriage. She asserts that she kept the details to herself but sometimes the husband saw or heard something in the home which prompted him to ask the wife questions about it. She asserts that she never told the husband about her SMSF property assets until June 2021.
The wife asserts various detail relating to the net worth of the parties. The husband was prepared to accept, for the purpose of the interim hearing, that the husband’s total net worth is about $2,978,879, as asserted by the wife. Similarly, he was prepared to accept that the wife’s net worth is about $4,782,869.
The property at Suburb D, asserted by the wife, was purchased in 2010. She did not tell the husband about the purchase which came to his attention later. The wife asserts that in 2018 she decided to refinance the mortgage loan on the Suburb D property. She asserts the mortgage broker recommended B Company and advised her that she would have a better chance of getting loan approval if she could get a co-borrower on the loan. She decided to ask the husband to agree to be a co-borrower on a mortgage loan with B Company on condition that she would make all the loan repayments and that he would pay nothing. She asserts that the husband’s name was listed on the mortgage documentation as a joint borrower with the wife to satisfy the borrowing requirements of the bank. She asserts that B Company approved the mortgage loan held in both the parties’ names.
The wife asserts that in early 2019 B Company advanced loan monies of about $366,000. In mid-2019 the wife asserts she instructed B Company to create an offset facility to hold the remaining loan advance money (after the discharge of the mortgage with the previous mortgagee). The wife asserts she has been solely responsible for making mortgage repayments to B Company. The wife asserts that on ten occasions between mid-2019 and early 2020 she has accessed the offset facility to withdraw separate sums between $2,000 and $9,000 mostly to put towards the children’s expenses. She asserts that the current balance of this facility is about $32,000 of which she is seeking immediate access to a sum of $25,000 to cover pressing expenses.
The wife makes various assertions relating to her contended change in financial circumstances (see paragraph 103 of her affidavit) to the effect that she is experiencing significant financial strain as a result of a number of matters set out in paragraph 103 of her affidavit and which the Court refers. For example, she needs to repay a sibling over $80,000 relating to a special levy on a Suburb H property she owns, she is struggling to keep up with mortgage repayments due to interest rate rises, her income from employment has decreased, she is required to pay private school fees for the children and she is behind in paying X’s school fees, she is required to pay child support to the husband, X requires private tutoring to complete his HSC, and the wife needs to purchase a car as she does not presently own a car and regularly incurs expenses on car hire services.
By reference to the above legal principles, the wife has persuaded the Court that it should exercise its discretion to entertain her application for interim property settlement. Taking into account the wife’s asserted financial needs and related financial strain, it will be appropriate and in the interests of justice that the interim property settlement that she seeks be ordered. Having regard to the evidence before the Court, it will not be appropriate and in the interests of justice that any interim property settlement be made for the husband; inter alia, the wife’s affidavit refers to the balance of the husband’s redundancy payout in the sum of about $270,000 as referred to in his affidavit filed 19 April 2022.
The Court has had regard to s 79 of the Family Law Act 1975 (Cth) (“the Act”) by reference to the parties’ respective contribution assertions; it is apparent that by reference to this approximate 14 year relationship, with two children now aged 17 years and 12 years, that each party asserts they have made significant contributions towards the accumulation of property acquired by each of them during the relationship. Based on these as yet untested assertions by the parties, it is apparent that, for the purposes of this interim hearing only, each party is likely to obtain the benefit of significant property Orders ultimately at a final property hearing.
It was conceded by the husband, at this interim hearing, that he could not point to any significant prejudice that he would incur at a final property hearing, by reference to the final property Orders he seeks, if the interim property settlement sought by the wife was made.
Accordingly, it is appropriate and in the interests of justice that the interim property settlement sought by the wife be made, with the Court being of the view, for the purposes only of this interim hearing, that such Orders are just and equitable by reference to s 79 of the Act. Again, the Court is satisfied that the s 79 power of the Court will not be exhausted by the making of the interim property settlement sought by the wife.
As to the contested issue as to whether the wife should be able to make all relevant decisions relating to the sale of the Suburb D property or whether the husband should be permitted to participate in the making of certain decisions relating to that sale, the Court is of the view that it will be appropriate and in the interests of justice that the husband’s proposed Orders in this regard (subject to some relatively minor amendments) be made in preference to the wife’s proposed Orders in this context.
In this regard, the Court has taken into account the husband’s assertions, taking his assertions at their highest for the purpose of this interim hearing, inter alia, that during the parties’ relationship he, in effect, indirectly contributed to the wife’s ability to make mortgage repayments on the Suburb D property through his regular payment of the family’s living expenses, the Suburb D property was purchased during the parties’ relationship, and in about 2019, when the wife caused the Suburb D property to be refinanced through B Company, the husband agreed to become a joint borrower on the relevant mortgage loan documents with B Company and which apparently assisted the wife to obtain the loan from B Company.
The wife asserts that she cannot effectively communicate with the husband, however the Court observes that the parties are able to carry out some communications relating to the children and that they communicate by email. The Court would further observe that by reference to the husband’s proposed Orders relating to the mechanics of selling the Suburb D property, there are only discrete matters to be agreed upon with certain related default provisions in the absence of agreement.
Lastly, the Court has determined that any capital gains tax (CGT) liability assessed to the wife by reason of the sale of the Suburb D property should be paid by the wife after she receives the net proceeds of sale (by way of interim property settlement), as opposed to any such CGT liability being paid from the sale proceeds and thereafter the wife receiving the net balance of proceeds of sale. This is because at this interim stage the Court cannot clearly determine whether any CGT liability should be categorised as a liability arising out of the parties’ relationship or is the wife’s liability alone. The Court observes that the wife, at any final property hearing, could contend (without the Court predicting the determination of such contention) that any CGT liability paid by her after she receives the net proceeds of sale should be taken into account in her favour.
Having regard to all the above discussions, the Court will make Orders accordingly.
I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Newbrun. Associate:
Dated: 23 November 2023
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