Evans & Watts (No 2)
[2023] FedCFamC1F 1033
•5 December 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Evans & Watts (No 2) [2023] FedCFamC1F 1033
File number(s): PAC 275 of 2021 Judgment of: HARPER J Date of judgment: 5 December 2023 Catchwords: FAMILY LAW – INTERIM PROPERTY – Interim property settlement – Parties contend property pool is between $15 and $70 million – Wife seeks payment of $750,000 – Where husband resisted interim payment – Court satisfied payment sought is conservative and in the interests of justice – Orders made for wife to receive $750,000 – Payment categorised as an interim property settlement. Legislation: Family Law Act 1975 (Cth) Pt VIII, ss 79, 80(1)(h), 117 Cases cited: Bing and Bing (2007) FLC 93-318; [2007] FamCA 418
Kyriakos & Kyriakos (2013) FLC 93-528; [2013] FamCAFC 22
Osferatu & Osferatu [2012] FamCA 408
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466; [2009] FamCAFC 166
Division: Division 1 First Instance Number of paragraphs: 24 Date of hearing: 24 November 2023 Place: Sydney Counsel for the Applicant: Mr Trout Solicitor for the Applicant: Tiyce & Lawyers Counsel for the Respondent: Mr Batey Solicitor for the Respondent: Marsdens Law Group ORDERS
PAC 275 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS EVANS
Applicant
AND: MR WATTS
Respondent
ORDER MADE BY:
HARPER J
DATE OF ORDER:
5 DECEMBER 2023
THE COURT ORDERS THAT:
1.Within 42 days of the date of these orders, the Respondent Husband pay to the Applicant Wife the sum of $750,000, as a partial property settlement.
2.There be no order as to the costs of the Applicant’s Application in a Proceeding filed on 24 November 2023.
THE COURT NOTES THAT:
A.The parties are advised that any non-compliance with orders or directions of the Court after the date of these orders may result in the dismissal of a defaulting party’s application.
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 Evans & Watts has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HARPER J:
These are property proceedings between the applicant wife (“the wife”) and the respondent husband (“the husband”) pursuant to Pt VIII of the Family Law Act 1975 (Cth) (“the Act”).
Proceedings were listed for final hearing to commence on 23 November 2023, with an estimate of three days. This listing was made on 31 March 2023 based upon a three day estimate after hearing submissions from the parties that three to four days would be sufficient to hear the matter. The proceedings were before the Court numerous times between March and November 2023, including a Compliance Hearing on 6 November 2023 when the hearing dates were confirmed and a notation was made that the proceedings would only be adjourned in exceptional circumstances. On none of the occasions when the proceedings were before the Court did either party raise an issue about the number of days allocated for the final hearing.
In the material required for final hearing on 22 November 2023, the parties provided draft balance sheets and Case Outlines, together with extensive affidavit evidence.
It was quite plain on the face of the draft balance sheets and from the Case Outlines filed by the parties that there was in truth a massive differential between the net asset values in the property pool proffered by each party, ranging from approximately $15 million to about $70 million and there were significant and factually complex issues to be resolved before the Court would be in any position to exercise a discretion to divide the properties of the parties to the marriage.
Having allowed the Court to manage the proceedings for seven months to final hearing on the basis that three or four days were sufficient, it was the joint position on the first day of trial that the proceedings were not ready to be heard and the hearing could not be completed in the time allocated. How it could have been contended by either party that the matter could be dealt with in less than six days remained unexplained satisfactorily to the Court. In the face of this unacceptable behaviour of the parties, it became apparent that the proceedings would have to be adjourned to a later date.
On 22 November 2023 the parties sought and were granted a dispensation to stand the matter in the list to carry out negotiations with a prospect of achieving resolution, rather than requiring an adjournment, having been advised that the likelihood of receiving a further hearing date before the end of 2024 was remote. However, the parties were unable to resolve the proceedings and the hearing dates were formally vacated. No fresh hearing dates have been allocated as at the date of this judgment. The description of the manner in which the parties approached the allocation of final hearing dates leaves little doubt that they failed in their duty to promote the overarching purpose set forth in s 67 of the Federal Circuit and Family Court of Australia Act 2021 (Cth). The parties have forfeited any consideration for priority. They also are now on notice that any further non-compliance or unjustified delay may result in a defaulting party’s application being dismissed.
On 24 November 2023, pursuant to directions of the Court, the wife filed an Application in a Proceeding, seeking payment of $750,000 as partial property settlement or as characterised by the trial judge.
The parties took the joint position that having filed their respective Application in a Proceeding, affidavit and responsive material, with some brief written submissions, by consent the Court should deal with the matter in chambers.
Any detailed recital of background facts is not necessary for the purposes of this judgment. It is sufficient to record that the parties commenced a relationship in about 1991 and married in 1998. They were divorced in mid-2022. The wife is 59 and the husband 57 years of age.
As noted above, the wife asks for a payment of $750,000 to be characterised by the trial judge. The possible jurisdictional bases are s 79 and s 80(1)(h), or s 117 of the Act. However, it has been pointed out many times that identifying the relevant jurisdiction will determine the preconditions and considerations for making the proposed order (Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 (“Strahan & Strahan”); Kyriakos & Kyriakos (2013) FLC 93-528). I consider it appropriate to determine the wife’s application as an application for interim property settlement.
The principles applicable to an exercise of the interim or partial property discretion pursuant to s 79 and s 80(1)(h) of the Act are set out in Strahan & Strahan. It is a two-stage process. Firstly, the procedural step, which is the question of whether the Court should exercise discretion to entertain and determine the application, and secondly the substantive step, namely the nature of the order which should be made.
For the first step, although an applicant is not required to demonstrate compelling circumstances, the overarching consideration as to the appropriateness of an exercise of interim power must be answered in the affirmative and the Court must be satisfied it is in the interests of justice to exercise the power (Strahan & Strahan at [132]).
For the second step, the Court must have regard to the matters required by s 79. In Osferatu & Osferatu [2012] FamCA 408, Watts J at made clear a detailed inquiry is not required:
41. … the second step in making an interim property order is to have regard to the usual matters in a section 79 order (ss 79(2) and 79(4) FLA). A detailed inquiry is not required, but there must be some assessment of section 79 factors. Given it is an imprecise exercise, the interim property order has to be “conservative” so that the final outcome of property settlement will not be compromised by the interim property order. Either the remaining property needs to be sufficient 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.
There was no dispute that on a final basis it would be just and equitable to adjust the parties’ property interests. At a broad level there was also no dispute that both parties made financial contributions during the marriage. The assessment of contributions and the percentage adjustment remain to be determined.
The wife in support of her application gave evidence that she has liabilities to a litigation funder in the amount of $332,061, together with outstanding billed but unpaid legal fees totalling approximately $193,818. Consequently, a payment of $750,000 would leave her with approximately $230,000 for further expenditure.
The husband resisted the payment of any interim property settlement to the wife on the basis that she has not established any need for such payment. He pointed out that the wife has already received a payment of $350,000 pursuant to orders made on 9 December 2022.
The wife in her evidence contended that the husband has had access, through his various bank accounts, to in excess of $750,000 during the course of the proceedings. She also contended that the husband has an earning capacity significantly greater than hers and generally has access to a number of business bank accounts.
The husband does not deny that he has had access to liquid assets of that amount, which he has applied to a range of expenses.
The husband’s evidence set out in some detail the current state of his bank accounts. He presently has access to an amount of $6,099,480 in a NAB Classic banking account #...65. He gave evidence that he is subject to an assessment for income tax, requiring him to pay $6,246,069 by 24 April 2024. He says that he wants to preserve the cash in account #...65 for the purpose of discharging his tax liabilities.
He argued that there are several properties available for sale, including his property at Q Street, Suburb R, which alone would raise in the region of $800,000 less any liability for capital gains tax. The wife contended that she may wish to retain that property at final hearing, although she did not explain why, or proffer any cogent reason why the husband should not be able to sell the property to help fund any partial property settlement in her favour.
There appears to be no doubt that the husband controls a substantial proportion of the assets on the balance sheet. The Full Court in Bing and Bing (2007) FLC 93-318 held that in circumstances where one party has control of a vast pool of assets, ambiguity as to the potential source of funds to satisfy an interim property order is not an impediment to such an order being made. The Full Court said:
23. … [t]he mere assertion that there are no immediately available funds to provide to the applicant to enable him or her to continue on with the proceeding cannot simply be accepted at face value. If it is apparent that one of the parties controls a vast pool of assets (irrespective of whether those assets are rendered incapable of liquidation) then the Court has a broad enough discretion to enable an order to be made for the provision of funds by the holder of those assets to enable the other party to continue on with the litigation …
In my view, it is appropriate to make an order for the payment to the wife of $750,000 within 42 days, to be characterised as a partial property settlement, which can be subject of submissions at final hearing. I consider this to be a very conservative outcome in light of the enormous asset pool and represents a modest percentage of any likely order for property adjustment in the wife’s favour. The remaining property is clearly sufficient to meet the legitimate expectation of both parties at final hearing and such an order is capable of being adjusted if it is subsequently necessary to do so.
There is unlikely to be a further final hearing in these proceeds for a considerable time, owing in part to the conduct of the parties. I am satisfied that the evidence of the wife indicates she has some pressing liabilities, including ongoing litigation expenses and legal fees, which are not readily met from her present resources by reason of their illiquid nature. I am satisfied the wife’s proposed interim order is just and equitable. I am not persuaded that any of the matters raised by the husband are sufficient to justify refusal of the order. I find, for the purposes of this interim judgment, that the husband has sufficient financial resources to fund a payment to the wife of $750,000 and manage the discharge of his taxation obligations. In those circumstances an interim property adjustment order of $750,000 in favour of the wife is appropriate, just and equitable.
In the circumstances I see no basis for an order for costs in favour of either party.
I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Harper. Associate:
Dated: 5 December 2023