Falke and Gainnes
[2010] FMCAfam 1100
•24 September 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FALKE & GAINNES | [2010] FMCAfam 1100 |
| FAMILY LAW – Interim – spousal maintenance – exclusive occupation of former matrimonial home – partial property settlement – valuation of artwork – payment of mortgage and outgoings pending final orders. |
| Family Law Act 1975, ss.72, 74, 75, 79, 80, 114, 117 Federal Magistrates Court Rules 2001 Family Law Rules 2004, r.13.04 |
| Barro & Barro (1983) FLC 91-300; 8 Fam LR 855 Bevan & Bevan (1995) FLC 92-600; 19 Fam LR 35 Breen & Breen (1990) 65 ALJR 195 Davis & Davis (1976) FLC 90-062; 1 Fam LR 11; 523 Hogan & Hogan (1986) FLC 91-704; 10 Fam LR 681 O’Dea & O’Dea (1980) FLC 90-896 Poletti & Poletti (1990) 15 Fam LR 794 Strahan & Strahan (2009) 42 Fam LR 203; [2009] Fam CAFC 166 Wilson & Wilson (1989) FLC 92-033; 13 Fam LR 205 Zschokke& Zschokke (1996) 20 Fam LR 766; FLC 92-693 |
| Applicant: | MS FALKE |
| Respondent: | MR GAINNES |
| File Number: | SYC 1931 of 2010 |
| Judgment of: | Monahan FM |
| Hearing date: | 31 August 2010 |
| Date of Last Submission: | 31 August 2010 |
| Delivered at: | Sydney |
| Delivered on: | 24 September 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr Campton |
| Solicitors for the Applicant: | Barkus Doolan Kelly |
| Counsel for the Respondent: | Ms Rees SC |
| Solicitors for the Respondent: | Abrams Turner Whelan Family Lawyers |
ORDERS
The parties attend a Conciliation Conference with a Registrar of the Family Court of Australia at the Sydney Registry on 9 December 2010 at 2:15pm AND the solicitors for each party send to the other and the Registrar at least seven (7) days before the Conciliation Conference copies of
(a)a completed Conciliation Conference document or a similar document in an agreed form in lieu;
(b)all relevant valuations obtained by the parties together or independently;
(c)the actual terms of orders required to give effect to their settlement proposal;
AND IN THE EVENT that the matter does not settle at the Conciliation Conference the matter be listed for further directions and where a party has not complied with subparagraphs (a) to (c) herein the Court may consider submissions with respect to costs.
THE COURT ORDERS UNTIL FURTHER ORDER THAT:
MS FALKE
(“the wife”) shall as and from the date the existing tenants of Property E (“the Property E property”) vacate the said property have exclusive occupation of the Property E property as against the
MR GAINNES (“the husband”) pending further order free of rent.
The husband is restrained by injunction from doing any act or thing which causes the Property E property to be leased to any person or further leased to the current tenants beyond the expiry of the fixed term of the present lease over the property, and shall do all acts and things and sign all documents necessary to cause and facilitate vacant possession of the Property E property being acquired at the end of the said fixed term being 14 October 2010.
The wife will cause the husband to receive the rental due on the property situated at Property P (“the Property P property”), being $1,090 per month, to accrue on and from the time she occupies the former matrimonial home pursuant to paragraph 2 herein, but only in the event that she continues to occupy the Property P property.
In relation to all real estate owned by the parties or either of them the husband pay or cause to be paid as and when such payments fall due all mortgage repayments, insurance premiums, maintenance costs, strata fees, council rates, water rates, and taxes pending further order.
The husband pay or cause to be paid to the wife by way of partial property settlement the sum of $100,000 within one (1) month of the date of these orders.
The husband is hereby restrained by injunction from selling, transferring, mortgaging or otherwise encumbering the property situated at and known as Property B, having folio identifier [omitted] pending further order or the wife's written consent.
In relation to home contents and artwork owned by the husband and the wife or either of them, and within 14 days of the date of the making of these Orders, the husband shall:
(a)Pay all premiums for such insurance policies as and when such premiums fall due, by way of spouse maintenance pending further order; and
(b)Not move any of the said items to any other location without the written consent of the wife, by way of injunction.
In relation to the valuation of the property of the parties or either of them, the parties shall each rely upon the opinion of their own expert as to the value of artworks owned by both or either of the parties located in the United States of America or Australia, and each party shall permit access to the artworks being held by them to the other's expert or experts for this purpose.
In accordance with his duty of disclosure the husband provide copies of such of the following documents as are in his possession and/or control to the wife within two (2) months of the date of the making of these orders:
(a)
The husband’s taxation returns for the financial years ending
30 June 1997 through 30 June 2002.
(b)The husband’s pay slips from 1 January 2009 to date (noting that the husband has already provided pay slips for December 2009, January 2010 and February 2010).
(c)
In relation to public company shares, options and investments purchased or sold by the husband, documents which tend to show the purchase and sale of such investments and where the proceeds of any sales were invested, during the financial years ending
30 June 1997 through to the current financial year, in relation to any transaction with a value of greater than $25,000.
(d)
In relation to the husband’s financial affairs for the period from
1 January 2009 to date:
(i)The husband's taxation return filed in the USA for the year 2009 or if not available within 21 days, then all source documents which go to show the husband's income from all sources during the calendar year 2009;
(ii)
The husband's taxation return in Australia for the year to
30 June 2009 and the year to 30 June 2010;
(iii)Any document showing the disposal of shares;
(iv)Any document relating to income received from the renting of real estate in Australia and expenses arising;
(v)Documentation relating to the calculation of capital gains tax arising during that period in either country; and
(vi)Any other document disclosing income from any other source received by the husband during 2009.
(e)All correspondence, statements, settlement statements in relation to the sale of real estate, interim distribution statements and, if available, final statements for the Estate of the late Ms F including final distribution statements to beneficiaries.
(f)Documents relating to the alleged distribution of the husband's beneficial entitlements in the said Estate to the husband's parents.
(g)In relation to bank account statements and credit card account statements for accounts in the name of the husband or upon which he is a signatory:
(i)For the husband’s Bank of America account [omitted] statements from the date of opening of the bank account until 3 February 2009, and from 2 February 2010 to date.
(ii)In relation to the Bank of America American Express card, for the period 25 February 2010 to date.
(iii)In relation to the husband’s Westpac account, copy statements from 1 January 2005 to date noting the statements the husband has already provided.
(h)Documents referred to in the husband's affidavit
(i)A copy of the latest Financial Statement filed by each of the parties in the proceedings between the husband and his former wife, Ms H, or if applicable, a copy of the sworn Form 11.
(ii)A copy of any balance sheet and/or schedule of effect filed in Court during the said proceedings.
(iii)Documents to support all contentions made by the husband in paragraph 8(a) including as to the funding of renovations.
(iv)All documents referred to in paragraph 15 of the husband’s affidavit, and any documents relevant to or referring to applications for jobs made by the husband, including but not limited to diary notes of meetings, email exchanges, application forms completed, and correspondence.
The husband do all acts and things and sign all documents necessary as directed by the wife, at his expense, to cause the items of furniture, artwork and effects noted in the lists annexed to the wife's affidavit sworn 24 August 2010 to arrive in Sydney on a date to be notified by the wife to the husband.
The costs of both parties today be reserved.
IT IS NOTED that publication of this judgment under the pseudonym Falke & Gainnes is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 1931 of 2010
| MS FALKE |
Applicant
And
| MR GAINNES |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an interim application filed 19 May 2010 by the wife,
MS FALKE(“the wife”), against MR GAINNES (“the husband”). More specifically, the wife is seeking orders on an interim basis that would result in the following:
·her being able to occupy free of rent, the property situated at Property P (“the Property P property”), for the purposes of operating her business; and
·that the parties give notice to terminate the existing tenancy over the property at Property E (“the former matrimonial home”), and to otherwise vacate the former matrimonial home so that the wife may exclusively occupy it; or alternatively
·if the wife is unable to occupy the former matrimonial home:
othat she receive spousal maintenance to facilitate her occupation of suitable accommodation;
othat the relevant spousal maintenance include the cost of the bond for such property;
oan amount of four weeks’ rent in advance; and
o$1,200 per week towards that rent;
·spousal maintenance in the sum of $750 per week; and
·various procedural orders in respect of valuations and disclosure by the husband.
The wife also seeks final orders to effect the following outcome:
·payment of a lump sum in an amount to be fixed;
·the transfer of all jointly owned artworks to herself;
·the transfer of the former matrimonial home and the Property P property to herself; and
·$750 per week spousal maintenance for the next five years.
The wife’s application is supported by the following documents:
·her first affidavit sworn 17 May 2010 and filed 19 May;
·her second affidavit sworn 24 August 2010 and filed 25 August 2010 (“the wife’s second affidavit”); and
·her financial statement filed 19 May 2010.
The husband, in his response filed 23 June 2010, opposes the interim and final orders sought by the wife. In terms of the interim orders, the husband seeks orders to the following effect that:
·the wife have exclusive occupation of the Property P property;
·the former matrimonial home be continued to be leased and that the rent flowing from that lease be put towards the mortgages covering the various properties, levies, taxes, charges and the like.
·each party pay half the cost of insurances for the artworks currently held in Australia;
·the artworks referred to in the wife’s schedule to her affidavit be retained at the Property P property; and
·various procedural orders including valuations and discovery.
In relation to the final orders sought by the husband, he seeks orders to the effect the following outcome:
·that the wife transfer the former matrimonial home to him;
·a declaration that he is the sole owner of the Property P property;
·that he be declared the sole owner of the following properties:
oProperty B being folio identifier [omitted] (“the Property B property”); and
othe garage at Lot [omitted](“the garage”).
·for the equal division of the artworks that the parties have;
·that the husband pay to the wife the sum equivalent to 20 per cent of the overall net real estate interests of the parties; and
·the dismissal of the wife’s spousal maintenance application.
The husband relies on the following documents:
·his Response filed 23 June 2010;
·his financial statement filed 23 June 2010 (“the husband’s financial statement”);
·his first affidavit filed 23 June 2010 (“the husband’s first affidavit”); and
·his second affidavit filed in Court 31 August 2010.
Furthermore, despite the guiding principle in s.117 of the Family Law Act 1975 (“the Act”), both parties are also seeking costs from the other.
Background
The parties commenced cohabitation either in early 1996, according to the wife, or late 1997, according to the husband. They agree they were married [in] 1998. The date of separation is also contentious, but divorce order was pronounced prior to the commencement of the interim hearing, that date being 31 August 2010 and the wife did not oppose that amended application filed by the husband which stated that the parties separated on 1 March 2009.
The parties, it would appear, have lived both in Australia and the United States of America (“USA”). The wife has dual United States/ Australian citizenship but now lives in Sydney. The husband is an Australian citizen but now lives in the USA.
The wife is an [occupation omitted] and conducts her own business, “[B]”, such business being conducted out of the Property P property. Her financial statement discloses a weekly income of $351 a week, together with weekly expenses totalling $2194.
The husband is a senior executive with “[D]”, an entity which is [omitted]. He is also an executive vice president of a company called “[W]”, an entity which is associated with “[D]” but which is incorporated in the USA. He is also a director of “[C]” also in the USA.
The husband’s financial statement sworn 22 June 2010 and filed
23 June 2010 discloses a weekly income of $11,546 together with weekly expenses of $11,802. The Court also notes that the husband had in excess of $100,000 held in various bank accounts at the time he swore the financial statement however as at the date of the interim hearing, this had been reduced to around $30,000.
The issues
The issues at the interim hearing were as follows:
a)whether the wife may occupy the currently leased former matrimonial home pending further order, or whether it should remain tenanted;
b)whether the husband should pay the wife periodical spousal maintenance;
c)whether the husband should pay the wife a partial property settlement and, if so, what sum, in order to assist her to further her case before this Court;
d)who should pay the mortgage repayments and other outgoings on the real estate interests of the parties and the insurance policy premiums for the jointly owned artwork;
e)whether the husband should be restrained from dealing with the Property B property; and
f)If a single joint expert or experts are to be appointed to value the artworks, who should they be and, if not, what alternative valuations process should be adopted.
Submissions
At the interim hearing Mr Campton appeared for the wife, and Ms Rees SC appeared for the husband.
At the commencement of his submissions, Mr Campton tendered two bundles of documents:
·a bundle of copied documents comprising letters, statements, the husband’s resume, payslips and the like, which was admitted in evidence and marked exhibit “AW1”; and
·a copy of the statement from the Westpac account, last four digits [omitted], in the names of the parties, for the period 26 October 2009 to 23 April 2010, which was admitted and marked as exhibit “AW2”.
Mr Campton submitted that the husband had the superior financial capacity to meet the orders sought by the wife and that the wife was in need of the financial support sought. He asked the Court to accept that the wife had sacrificed her own career to further her relationship with the husband and had assisted him in the care of his children and argued that this was in fact confirmed by the husband himself in his letter he wrote to the then Department of Immigration & Multicultural Affairs, dated 21 July 1998, being attachment “C” to the wife’s second affidavit.
Mr Campton also referred the Court to exhibit “AW1” and, more specifically, the husband’s resume dated May 2010. He highlighted the extensive list of employment and committees that the husband has been involved in and indicated that in all likelihood the husband had to rely on the wife to assist in the care of his children when they lived with him or otherwise spent time with him. This would arguably rebut the assertion by the husband, in the husband’s first affidavit, that the wife had only minimal engagement with his children.
Mr Campton also submitted that the property sought to be occupied by the wife had been the former matrimonial home for much of their relationship. Indeed, the parties had resided in that property together during the period 2000 through 2008. Moreover, the wife had only left the former matrimonial home because the husband had obtained employment based in the USA.
Mr Campton also questioned whether the husband had fully disclosed his earnings to the Court. According to Mr Campton, there was little evidence currently before the Court to support the husband’s assertion that his current employment was at risk and if the Court were to give the husband the benefit of the doubt on this issue, there was no reason for the husband not to be in a position to gain suitable high paid employment given his extensive resume and experience. That said, there was considerable property under the husband’s control, as well him being the recipient of significant income.
Mr Campton also asked the Court to accept that the available evidence suggests that the husband earns a gross monthly salary of some $US37,000 and that much of the expenses are met by his employer referring to the husband’s payslip, which was tagged as number 7 in exhibit “AW1”. The husband’s financial picture was also clouded by the reality, according to Mr Campton, that the Court did not have before it the full details of the monies that the husband had in the Bank of America and that the Court also did not know the true extent of the husband’s earning overseas.
As to the claim for interim property distribution to assist the wife to further her case, Mr Campton relied on the authority of Strahan & Strahan (2009) 42 Fam LR 203; [2009] Fam CAFC 166 (“Strahan”) arguing that the Court did not have before it a clear and transparent picture of the parties’ property and resources and hence it was reasonable to seek an interim financial division to enable the wife to further her case.
It was also submitted for the wife that the husband had to answer why, as the beneficiary of his late aunt’s estate, he had disposed of some $200,000 to the advantage of his parents.
As to the exclusive occupation order, Mr Campton submitted that the Court needed to consider the balance of convenience versus the financial considerations of the wife and that available evidence supported her request.
Ms Rees, for the husband, commenced her submissions by specifically addressing the orders sought by the wife in the minute handed to the Court at the commencement of the hearing (“the wife’s minute”).
Paragraph 3 of the wife’s minute seeks exclusive occupation of the former matrimonial home. Ms Rees stated that the husband opposes this request because the property is currently tenanted by longstanding tenants who have indicated a desire to remain in occupation and that their rental payments are needed to meet the significant mortgages secured over the various properties.
In respect of paragraph 5 of the wife’s minute, that is, for the husband to meet the mortgage and related expenses over the various real estate holdings, Ms Rees asserted that the husband had always met these costs and expenses and intended to continue to do so, with the assistance of his own income, including the rental income he received from the properties.
In respect of paragraph 6 of the wife’s minute, that is, the payment of $100,000 as an interim property distribution, while Ms Rees conceded the Court had the power to make such an order or an order of that type, given authority such as Strahan, the Court also needed to be satisfied that there was a readily available fund for that payment to be taken from and the evidence is contradicated. In this respect, Ms Rees questioned whether the wife had been fully frank with her own financial disclosure, particularly in regard to her own business.
Ms Rees specifically referred to the wife’s own affidavit material, as well as her financial statement and the ‘Statement of Financial Position’ of her company namely “[B]” marked as “Annexure A” to the wife’s second affidavit. Several entries in both these documents were singled out for special mention by Ms Rees.
In the wife’s company financial statement, Ms Rees highlighted the discretionary nature of some of the expenses claimed through several examples:
·the first example referred to the donations made in the 2010 tax year of some $3657, as compared with just $85 in the previous tax year;
·the second example was the management fees paid by the company to the wife herself, in which in the 2010 tax year totalled $65,000 but were just $14,000 in the previous tax year;
·the third example was the so-called rental payments claimed in the 2010 tax year of some $13,000 and $18,000 in the previous tax year, when it was consented by both parties that such rental payments were never made; and
·the fourth example was the travel expenses claimed, being $47,599.82 in the 2010 tax year and $41,412.66 in the previous tax year. Indeed, Ms Rees questioned the logic and business sense of spending some $47,000 on travel, given the alleged income received by the business. Ms Rees also questioned the high level of expenses claimed as against the wife’s disclosed income.
In respect of paragraph 9 of the wife’s minute, that is, the valuations of the artworks, Ms Rees stated that the husband agrees that each party should obtain their own valuations for the artwork.
In respect of paragraph 10 of the wife’s minute, that is, in respect of financial disclosure, Ms Rees disputed that there had not been sufficient disclosure by the husband to date, nevertheless she did accept that more can be done but given that he is physically resident in an overseas country for employment purposes, the husband needed sufficient time to comply. The husband also needed time to ascertain the various artworks and effects that were currently located in the USA.
In response, Mr Campton submitted that the husband had not challenged paragraph 3.1 of the wife’s second affidavit, which asserted that the wife’s legal fees to date were in the order of some $35,912.08. Moreover, it was noteworthy that the husband was silent on his own legal fees. In addition, it was interesting, according to Mr Campton, that the husband’s own financial statement disclosed some $115,000 held by him in bank accounts, but by the time of the interim hearing two months later, the bank account had dwindled to just $30,000.
The law
Clearly the Court needs to consider the issues in light of the legislation, the authorities, and the submissions made in light of the available evidence. The issues raise the following six areas for judicial determination as to whether the Court has the power to make the orders sought and whether the evidence justifies the making of such orders:
a)the right of a party to exclusively occupy property, in particular the former matrimonial home;
b)payment by one party of mortgages and outgoings post-separation and prior to final determination;
c)an interim property distribution to assist one party or both parties to further his or her or both cases or to otherwise benefit him or her or both;
d)interim spousal maintenance to be paid by one party to the other;
e)restraining one or both parties from dealing with matrimonial property prior to final determination; and
f)procedural issues such as whether further disclosure should be ordered and whether the matter may benefit from a joint expert valuation or separate valuations in respect of items such as artwork.
Right of a party to exclusive occupation
The power to make an exclusive occupation order is found in s.114(1) of the Act. Section 114(1) has two parts, the first of which is the principal part and confers in certain circumstances a general power on Courts exercising jurisdiction under the Act to:
“Make such order or grant such injunction as it considers proper”
with respect to the matter to which the proceedings in question relate.
The second part of s.114(1) of the Act consists of a list of six inclusive purposes for which an injunction under this subsection can be used. More specifically, s.114(1)(f) covers:
“The use and occupancy of the former matrimonial home.”
The basic principle is that the Court should issue an injunction which gives the spouse exclusive occupation or exclusive use of the matrimonial home only with caution.
In O’Dea & O’Dea (1980) FLC 90-896 Murray J stated at page 75,648:
“It is a very serious matter to turn a husband or wife out of their home.”
Of course, this comment by her Honour is not relevant to the case before me.
In the case of Davis & Davis (1976) FLC 90-062; 1 Fam LR 11 (“Davis”) the Full Court referred to the matters which should be considered by any Court in deciding whether or not to give a spouse exclusive use or exclusive occupation of the matrimonial home. At page 75,309 their Honours stated:[1]
“The criteria for the exercise of the power under section 114(1) are simply that the Court may make such order as it thinks proper. The matters which should be considered include the means and needs of the parties, the needs of the children, hardship to either party or the children and, where relevant, conduct of one party which may justify the other party in leaving the home or asking for the expulsion from the home of the first party.”
[1] per Evatt CJ, Pawley and Ellis JJ
One of these matters which the Full Court said should be taken into account by a Court when deciding whether to issue an injunction giving one party exclusive use or occupation of the matrimonial home is, of course, the conduct of one party which may justify the other party leaving the home or asking for the expulsion from the home by the other party.
It must be emphasised that the conduct of the party is only one matter, albeit in some cases a very important matter, to be taken into account in applications for exclusive use or exclusive occupation of the former matrimonial home. It is immaterial, generally speaking, whether the party seeking the order had previously left the premises. In any event, in this case, the parties left the former matrimonial home some two years ago to further the husband’s career overseas.
The Full Court, in Davis, also said that an exclusive occupation order should not merely depend on the balance of convenience issues. While this statement has been subject to judicial comment over the last three decades, it does not mean that in an appropriate case the balance of convenience or the balance of hardship should not ultimately decide the issue. Rather, it means that the balance of convenience or the balance of hardship should not of itself decide the issue of the kind under consideration.
Accordingly, the balance of convenience may properly decide the matter where there is intense disharmony between spouses and where each would have an equally good case for excluding the other. This, of course, is not relevant to the case before me because the husband is not seeking to remain in or even return to the former matrimonial home but rather he seeks that it remain a rental property.
Of course, there is arguable hardship in the form of a loss of rental income to assist in meeting the mortgage obligations over the various properties relevant to this dispute. This needs to be balanced by the wife’s need for suitable accommodation and her desire to return to the former matrimonial home that she shared with the husband for some eight years.
Payment of mortgages and outgoings
The next issue is the payment of mortgages and outgoings. The Court has the power under ss.79 and 80 of the Act to make a property order on an interim basis, pending final determination, provided it considers it to be both appropriate in the circumstances or necessary to do justice between the parties.[2] The characterisation of the payment orders made or consented to by the parties can be determined at the final hearing.
[2] Refer in particular to s.80(1)(k) of the Act.
In the alternative, the Court may make an injunction by s.114(3) of the Act for such payments to be made or an award of spousal maintenance under its powers under ss.74 and 80 in appropriate cases, with the aim of assisting a party to meet all relevant necessary expenditure and outgoings in respect of property.
Given the benefit to the matrimonial property pool of ensuring that the properties are maintained and conserved, characterising such payments as a post-separation contribution is not uncommon. Regardless, the Court would need to be convinced, in the absence of consent, that a party being ordered to meet such obligations had the financial capacity to do so.
Interim property distribution
As stated, the Court has the power to make an interim property distribution pursuant to ss.79 and 80 of the Act in appropriate circumstances to facilitate sufficient funds for immediate use. The alternative to using an interim property distribution is to make what has been described as a “Barro Order”.
A Barro Order is an order for the provision of funds by a party to either spouse to enable that party to continue to further his or her claim and to defray the costs of litigation. It arises from an unreported 1980 decision of Strauss J and a subsequent decision by the Full Court of Barro & Barro (1983) FLC 91-300; 8 Fam LR 855.
The sources to make such orders arise from ss.117(2), 80(1)(h) or 74 of the Act, although it would appear that the preferred approach is s.117(2). Under s.117(2), in proceedings under the Act, if the Court is of the opinion that there are circumstances that justify it in doing so, the Court may, subject to ss.117(2A), 117(4) and 117(5) and the applicable rules of the Court, make such order as to costs and security for costs whether by way of interlocutory order or otherwise as the Court considers just.
In the case of Zschokke& Zschokke (1996) 20 Fam LR 766; FLC 92-693 (“Zschokke”), the Full Court identified two potential heads of power, being s.117(2) and, pending property proceedings, ss.79(1) and 80(1)(h) as the source of power. In Zschokke the Court left open the question of whether the power could be found in ss.74 or 114 of the Act. Regardless, the Court confirmed there is a power.
There have been a number of other cases in which the exercise of that power to make an interim costs order has been seen to be appropriate. These include Wilson & Wilson (1989) FLC 92-033; 13 Fam LR 205 (“Wilson”), Hogan & Hogan (1986) FLC 91-704; 10 Fam LR 681, Poletti & Poletti (1990) 15 Fam LR 794 and Breen & Breen (1990) 65 ALJR 195. The common thread of each of these cases appears to be that:
·the husband had control of the assets and income;
·the wife had no means of adequately presenting her case to the Court;
·there had been some complexity to the parties’ financial affairs, requiring expert evidence;
·the parties had substantial wealth and the wife had been dependent upon the husband for her support; and
·the wife had a strong prima facie case.
In Zschokke the Full Court in considering the merits to which the Court should have regard to the exercise of its discretion stated:[3]
“If an order is to made under section 80(1)(h), it would seem that regard should be had to the requirement in section 79 that the orders be just and equitable and this would require the Court to undertake at least some brief consideration of the matters in section 79(4), including those referred to in section 75(2). If it seems likely to the Court that the applicant will be likely to receive by way of property settlement a sum sufficient to cover the advance, that would seem to be sufficient to enable the order to be made.”[4]
[3] Per Baker, Finn and Hannon JJ
[4] In the Marriage of Zschokke (1996) 20 Fam LR 766 at 781-2; FLC 92-693 at 83, 216
Later, the Court said at page 83,217:
“It may be necessary for the Court, in deciding whether to make an interim order, to consider whether, in the circumstances of the case, it would be possible to take into account in the final property proceedings any sum that might be payable under the interim order.”[5]
[5] Ibid, 20 Fam LR 766 at 783; FLC 92-693 at 83, 217
Thus, the Full Court has identified three criteria that are relevant to the making of this type of order being:
a)a position of financial strength by one of the parties;
b)the other party’s capacity to meet his or her own legal litigation expenses; and
c)the inability of the applicant to meet her or his litigation expenses in the case before the Court.
These issues were recently restated by the Full Court in Strahan which was referred to by both counsel in their submissions and has been cited above. In that case, the Full Court[6], held that the trial Judge had erred in limiting a wife’s claim to $1 million by way of interim property distribution to help her inter alia prosecute her a case and decided to
re-exercise the discretion in her favour to the tune of $5 million. The Full Court confirmed that applications of this type require the Court to consider the so-called “three stage test” or the three (3) factors outlined by the Court in the earlier decision of Zschokke as to whether it should make the relief sought.
[6] Per Boland, O’Ryan, and Thackray JJ in a separate judgment, but giving similar reasons
In Strahan, the Full Court found that the trial Judge had erred by going beyond the Zschokke factors by embarking on an analysis of the funds that the wife would need to prepare for trial. In other words, the Court must consider the Zschokke factors and, thereafter, find that should the relief be granted, there would still be sufficient property remaining to meet the competing claims of the parties.
The Full Court’s decision in Strahan also makes it clear that there is no requirement to go beyond the Zschokke factors and that they should not be read narrowly. Ultimately, the discretion rests with the Court.
Interim spousal maintenance
The relevant provisions with respect to spousal maintenance are found in Part VIII of the Act. With respect to spousal maintenance, the right of a spouse being maintained by the other one is quite clearly a right enunciated in s.72(1) of the Act which reads:
“(1) A party to a marriage is liable to maintain the other party, to the extent that the first‑mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a) by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b) by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c) for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).”
Clearly the spousal maintenance right is a conditional one. The general right is subject to the party in need being unable to support himself or herself and the other party being reasonably able, financially speaking, to provide that support. The Court, in doing so, can take into account a party’s ability or reasonable efforts to obtain employment to counter-claim for spousal maintenance. This is an issue in these proceedings.
The Court has the power to make a spousal maintenance order as it considers proper under s.74 of the Act, subject to considering the relevant matters set out in s.75 of the Act. The power referred to in s.74 of the Act, has been the subject of numerous decisions and comments by the Court, in particular in cases such as Wilson previously referred to, and Bevan & Bevan (1995) FLC 92-600; 19 Fam LR 35 (“Bevan”). In Bevan, the Full Court, comprising Nicholson CJ, Lindenmeyer, and McGovern JJ, went on to provide the following checklist in considering the exercise of its power under s.74 of the Act:
“1. The Court must make a threshold finding under section 72.
2. It must consider the provisions set out in section 75(2).
3. Their Honours said that there is no fitting principle that the pre-separation standard of living must automatically be awarded when the respondent’s needs permit.
4. The discretion is to be exercised in accordance with the provision of section 74, the reasonableness in all the circumstances being the guiding principle.”[7]
[7] 19 Fam LR at 42; FLC 92-600 at 81, 982
As stated, s.75(1) of the Act is relevant in these proceedings, and it states that in exercising its jurisdiction under s.74 of the Act, the Court shall take into account the matters referred to in s.75(2) which provides an exhaustive list of factors which, as stated, must be taken into account if applicable. Some of the relevant factors in this case may include matters such as:
·the age and health of each of the parties;
·the income, property and financial resources of each of the parties and the physical and mental health of each of them for appropriate gainful employment;
·commitments of each of the parties necessary to enable that party to support himself or herself;
·where the parties have separated or divorced, a standard of living in all the circumstances that is reasonable;
·the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as the effect is relevant;
·the extent to which a party whose maintenance is under consideration has contributed to the income earning capacity, property and financial resources of the party;
·the duration of the marriage and the extent to which it affected the earning capacity of the party whose maintenance is under consideration;
·the terms of any order made or proposed to be made under s.79 in relation to the property of the parties; and
·any fact or circumstance which, in the opinion of the Court, the justice of the case requires to be taken into account.
In making a spousal maintenance order, the Court must disregard the entitlement of a party to an income tested pension or benefit. This does not appear to be relevant in this case.
With respect to the general powers of the Court and financial proceedings s.80(1)(b) of the Act is of relevance as it allows the Court to make the payment weekly, monthly, yearly or as another periodic sum.
Restraints on dealing with matrimonial property
Comments have already been made above in relation to the Court’s power under s.114 of the Act, in particular to s.114(3), which states:
“(3) A Court exercising jurisdiction under this Act in proceedings other than proceedings to which subsection (1) applies may grant an injunction, by interlocutory order or otherwise (including an injunction in aid of the enforcement of a decree), in any case in which it appears to the Court to be just or convenient to do so and either unconditionally or upon such terms and conditions as the Court considers appropriate.”
Procedural issues
Clearly the Court has the power under the Act, and more specifically, the Federal Magistrates Court Rules 2001 and, by application, the Family Law Rules 2004 (collectively “the Rules”), to facilitate the matter for final hearing. For example, Chapter 13 of the Family Law Rules 2004 provides for financial disclosure between the parties, and in particular, r.13.04 provides for full and frank financial disclosure. In addition, Chapter 15, Part 15.5 of the Family Law Rules 2004 deals with expert evidence and, more specifically, Division 15.5.2 deals with the Court’s power to order single experts and Division 15.5.7 deals with evidence from two or more expert witnesses.
Conclusion
Having considered the parties’ submissions in light of the Act, the Rules and the available evidence, the Court has come to the following decision.
Firstly, with respect of paragraph 3 of the wife’s minute (i.e. her claim for exclusive occupation of the former matrimonial home) the Court is satisfied that the order sought by the wife is reasonable and would not cause the husband undue hardship.
That said, given that the parties agree that the wife may continue to occupy the Property P property as her business premises, the Court sees no reason why occupation of the Property P property should be on a rent-free basis. The parties appear to agree that the annual rent to be paid by the wife’s business for the Property P property is $1,090 a month, or approximately $13,000 per annum. Consequently, there will be orders to that effect today.
In addition, the wife will ensure that, as from the date she gains occupation of the former matrimonial home, that she causes her business to account to the husband for the rentals due on and from that date for the Property P property or, alternatively, should she not wish to use the Property P property as her business address, give notice to the husband to vacate those premises upon her occupation of the former matrimonial home or serve notice at some subsequent date, subject to accounting for any rents due on and from the date she enters occupation of the former matrimonial home.
The matrimonial property that is currently stored in the garage can continue to remain in those premises.
Secondly, in respect of paragraph 5 of wife’s minute in relation to the husband continuing to meet the mortgage payments and outgoings in respect of the various properties, the Court has noted that this has occurred to date and sees no undue hardship upon the husband for this to continue to apply until further order.
Thirdly, in relation paragraph 6 of the wife’s minute, or the interim distribution sought by the wife, the Court is satisfied that the order is appropriate and that such sum should be paid within the next month. The husband is in a superior financial position to that of the wife and has the capacity to meet his own litigation costs. Indeed, the recent significant fall in his savings may indicate that he has utilised such funds to date for that purpose. By contrast, the wife’s ability to meet her own litigation costs is far more strained on the present evidence before the Court.
Fourthly, given the wife will re-occupy the former matrimonial home and will be the beneficiary of a partial property settlement, there is no necessity for an interim spousal maintenance order to be made in her favour at this time.
Fifthly, in relation to paragraph 7 and paragraph 8 sought by the wife in her minute, paragraphs 8.1 and 8.2 are found to be reasonable in the circumstances. The Court does not consider it necessary to deal with paragraph 8.3 on an interim basis.
Sixthly, in relation to paragraphs 10 and 13 of the wife’s minute, the Court is satisfied that such orders should be made, but that the husband be given two months to provide the necessary disclosure.
Seventhly, in respect of paragraph 9 of the wife’s minute, I note that both parties consider there may be merit in each organising their own valuations of the respective artwork. While the Court has some reservations, it will make the order sought in paragraph 9.1 today. However, despite this last order being made today, should there be issues to test in respect of such valuations, the Court may need to transfer these proceedings to the Family Court of Australia, given the complexity and likely hearing time that such an exercise would require. That is not something that the Court will do today, except with the consent of the parties, but that reality needs to be made aware to the parties, given that this Court is a high volume Court with limited resources to devote to complex and lengthy hearings.
There will now be orders of the Court to reflect this decision.
I reserve the right to settle the reasons for this interim decision.
I certify that the preceding seventy-eight (78) paragraphs are a true copy of the reasons for judgment of Monahan FM
Date: 22 October 2010
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