Fletcher and Jones

[2012] FamCA 455

FAMILY COURT OF AUSTRALIA

FLETCHER & JONES [2012] FamCA 455

FAMILY LAW – PROPERTY SETTLEMENT – Interim property orders

Gabel & Yardley (2008) FLC 93-386
Poletti & Poletti (1990) (unreported)
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466
Wilson & Wilson (1989) FLC 92-033

APPLICANT: Ms Fletcher

RESPONDENT: Mr Jones

FILE NUMBER: BRC 3721 of 2011

DATE DELIVERED: 18 June 2012

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Bell J

HEARING DATE: 22 May 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Hackett of Counsel appearing for the Applicant Wife

SOLICITOR FOR THE APPLICANT: Hirst & Co

COUNSEL FOR THE RESPONDENT: Ms Jenny Hogan of Counsel appearing for the Respondent Husband

SOLICITOR FOR THE RESPONDENT: Barry Nilsson Lawyers

Orders

1. That the Wife’s Amended Application in a Case filed 12 April 2012 and Application in a Case filed 29 February 2012 be dismissed.

2. That the Husband’s cross-application as contained in his Response to an Application in a Case filed 17 February 2012 be dismissed. 

IT IS NOTED that publication of this judgment by this Court under the pseudonym Fletcher & Jones has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 3721  of 2011

Ms Fletcher

Applicant

And

Mr Jones

Respondent

REASONS FOR JUDGMENT

1. This is the Wife’s Application in a Case for interim property orders, the fruits of which the Wife would seek to apply to her legal fees in the furtherance of these proceedings for final property settlement.   

2. The Wife is also the Applicant in the substantive proceedings.  Theirs was a de facto relationship of almost seven years in length, from approximately July 2002 to 10 May 2009.  Despite the fact the parties never married, for ease of reference I will refer to them in my reasons as the Husband and the Wife. 

3. Notwithstanding their relatively short relationship, the parties nonetheless amassed considerable wealth and real property throughout its duration.  However, as is so often the nature of disputes in this court, despite both parties deposing to a capital position of somewhere between $10M and $18M, the parties now find themselves without the requisite liquidity to fund the continuation of these legal proceedings. 

4. This matter came before me on 22 May 2012 for the Wife’s application to sell three groups of commercial properties by way of an interim property settlement.  The Husband submits this application ought be dismissed and seeks by way of cross-application that the parties sell the former matrimonial home. 

5. The Wife has resided in the former matrimonial home at S Street, Brisbane Suburb L since separation and in fact now continues to reside there with her new husband and her three sons from her first marriage. 

6. The former matrimonial home is a substantial property in Brisbane Suburb L. 

7. The commercial properties which the Wife seeks to be sold are situated at Gold Coast Suburb A, Brisbane Suburb B and C Street, Brisbane Suburb D. 

The parties’ proposals

1. The Wife commenced these proceedings by way of Initiating Application filed 5 May 2011.  I note that by way of this document the Wife reserves her right to further particularise her claim for final orders, following disclosure by the Husband of his financial position at the commencement of the parties’ relationship.  However, the Wife therein articulates a number of interests she seeks to retain “as part of the Applicant’s entitlement to property adjustment”.  This draft order includes provision for the Wife to retain the former matrimonial home at S Street and she also seeks that, pending the transfer of the property to the Wife’s sole name, the Husband be solely responsible for and indemnify the Wife against any liability over the property. 

2. The Wife subsequently filed an Application in a Case for interim financial orders on 28 November 2011.  The Wife therein proposes that the parties facilitate the sale of the following properties:

   a.“The [M Street] property”, situated at […] [M] Street, [Brisbane Suburb B] in the State of Queensland being more particularly described as Lot [1] on Survey Plan […], County […], Parish of […].

   b.“The [C Street] properties”:

   i.The property at […] [C] Street, [Brisbane Suburb D] in the State of Queensland being part of that property and being more particularly described as Lot [2] on Building Unit Plan […], County […], Parish of […]; and

   ii.The property at […] [C] Street, [Brisbane Suburb D] in the State of Queensland being part of that property and being more particularly described as Lot [3] on Building Unit Plan […], County […], Parish of […]. 

   c.“The [E Street] properties”:

   i.Part of the property at […] [E] Street, [Gold Coast Suburb A] in the State of Queensland being more particularly described as Lot [4] on Building Unit Plan […], County […], Parish of […];

   ii.Part of the property at […] [E] Street, [Gold Coast Suburb A] in the State of Queensland being more particularly described as Lot [5] on Building Unit Plan […], County […], Parish of […];

   iii.Part of the property at […] [E] Street, [JGold Coast Suburb A] in the State of Queensland being more particularly described as Lot [6] on Building Unit Plan […], County […], Parish of […];

   iv.Part of the property at […] [E] Street, [Gold Coast Suburb A] in the State of Queensland being more particularly described as Lot [7] on Building Unit Plan […], County […], Parish of […];

3. This Application was subsequently amended on 12 April 2012 to remove any references to sale of these properties by auction, instead providing that the properties would be listed for sale by private treaty at a price agreed upon by the parties and, failing agreement, as nominated by the agent. 

4. By way of his Response to an Application in a Case, filed 17 February 2012, the Husband seeks the Wife’s Application in a Case be dismissed. 

5. The Husband’s Response document also encompasses a cross-application for the sale of the former matrimonial home in order to liquidate some of the parties’ assets. 

6. Counsel for the Wife submits that the Husband’s proposed order is inappropriate, given that the Wife has already provided that she seeks to retain the former matrimonial home by way of final property settlement.  Mr Hackett goes on to submit that neither party seeks to retain the commercial properties on a final basis.  I note that at the time this matter came before me it did not appear from the Wife’s Initiating Application that she had fully articulated the final orders sought by her.

7. Mr Hackett for the Wife submits that the property pool consists of three tranches of property: residential property; commercial property owned by the Husband and Wife alone, or their respective trusts; and commercial property in which third parties have an interest. 

8. The parties’ property, including those properties in relation to which orders are now sought, have not yet been valued by an agreed expert.  I note in passing that the question of whom will fund such valuations remains in dispute, as the Wife submits the funding of a valuer was one of the precipitating factors for this application.  Mr Hackett submits that the Husband has continually revised the value of the property pool, citing the “significant deterioration in the current financial position” of the Jones Group deposed to by the Group’s Chief Financial Officer, Mr F (filed 17 May 2012).  In his affidavit, Mr F provides the most recent estimated adjusted nett worth of the parties to be $17,754,939 (the Husband with a net worth of $8,441,271 and the Wife with $9,313,668). 

9. On the parties’ respective preliminary valuations, the Wife has valued the former matrimonial home at $7M and the Husband at $10M.  Ms Hogan provided by way of written submissions that the property is indebted to a value of some $5M, specifically:

   a.$1,450,472 – mortgage in the name of the Jones Trust; and

   b.$3,562,226 – Suburb L overdraft (used by the Respondent in recent years to provide the Jones Group with additional loan funds secured against the equity in his half interest in the former matrimonial home) which itself compromised of:

   i.$2,570,000 – Mr Jones & Ms Fletcher overdraft; and

   ii.$992,226 – G & H housing loans. 

10. Mr Hackett asks me to accept the Wife’s proposed order on the basis that it would only diminish the nett pool by $650,000, leaving, on his submission, some $18M available to adjust at trial. 

11. Ms Hogan, Counsel for the Husband, instead proposes that the sale of the former matrimonial home would be more profitable, as it would effectively liquidate at least $2M upon either party’s estimations of the property’s value. 

Interim property orders

1. It is now well established that, to give effect to the principle that only one such order may be made within the exercise of s 79 (see Harris and Harris (1993) FLC 92-378 per Nicholson CJ, Fogarty and Moore JJ), any interim property order must be capable of variance at a later date.

2. In the course of their oral submissions, Counsel for both parties referred extensively to the Full Court’s decision of Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466. In their joint reasons in Strahan, Boland and O’Ryan JJ extrapolated this point with reference to a previous decision of the Full Court, Gabel & Yardley (2008) FLC 93-386 (at paras 105 – 113). I find it useful to include a quote from Strahan, citing Gabel & Yardley, below:

   111.In relation to the variation of an interim property order Bryant CJ and Coleman J said:

   [69] As we have earlier explained, in our view the focus of our attention should be whether or not the power to make orders pursuant to s 79 has been exhausted.  Unless it has, we see no basis in law or logic for concluding that further orders may not be made with respect to property the subject of earlier orders.  There can be little doubt that the exercise of power under s 79 involves the exercise of discretion by reference to the provisions of Part VIII of the Act.  It would be surprising if, in circumstance clearly involving less than such an exercise of discretion, orders made pursuant to the power conferred by s 79(6) of the Act could not be revisited and altered.  Indeed, there may be cases where the court could only exhaust the power conferred by s 79 in a “just and equitable” manner as required by s 79(2) of the Act by altering an earlier order with respect to the property of the parties or either of them as learned senior counsel for the wife submitted.  If the court could not do so, there may     be cases where the court was precluded by s 79(2) from making orders which exhausted the power conferred by s 79 of the Act.  To so construe s 79 of the Act would in our view be to prefer a construction “that would not promote” the “purpose or object underlying” that provision of the Act to one that would promote that purpose or object, contrary to the principle of statutory construction expressed in section 15AA of the Acts Interpretation Act 1901 (Cth).

   …

   [72] It follows in our view that when the court finally determined the proceedings which had been adjourned, whether categorised as “partial”, “interim”, or otherwise, earlier orders altering property interests could be varied or reversed without resort to section 79A of the Act or an       appeal, the power to make such orders not having been “spent” or “exhausted”. 

   112.In separate reasons, Finn J, after referring to Hickey, said:

   [125] In [48] of the above-cited passage from Hickey, the Full Court by      its reference to s 79(6), can be seen as recognising the potential application of the principle that there can be only one exercise of the   power under s 79 to a case (such as the present) where the proceedings           have been adjourned under s 79(5) pending some anticipated financial      event, with some orders being made under s 79(6).  The Full Court can   also be seen as holding that in such a case (that is, a s 79(5) case) it is           only the final order, which deals on a final basis with all known property        of the parties, which completes the one single exercise of the s 79    power. 

   [126] On the basis of this analysis, any earlier order made for the transfer of an asset or payment of money during the course of the property settlement proceedings would have to be regarded, or characterised, as an order pending the disposal of the proceedings or an order until further order (made under the power contained in s 80(1)(h)), in other words, an “interim” order, and thus be capable of alteration at any time prior to, or as part of, the final exercise of the s 79 power.  This   is because an alteration of an earlier order may be necessary to ensure that the final order or final exercise of the s 79 power is just and equitable.  If such an earlier order was not altered by the final order, it would become in effect (in its unaltered form) a paragraph or clause of the final single order (as it would if it was the subject of alteration). 

   (My underlining)

3. Mr Hackett of Counsel was clear in his submissions that this is not an application for costs, but rather an application for interim property settlement with the funds sought to be applied to the Wife’s legal fees. 

4. Again, in Strahan, the Full Court provided that “the need for a party to proceedings under the Act to seek an order for the provision of funds to enable the payment of his or her legal costs of participating in the proceedings has been recognised for many years.”  This is of course due to the likelihood that in marriage, or a de facto relationship such as that before me, one party will often control the wealth of both parties.  In such circumstances, “an order may be made to ensure that the other party, who does not have the fortune of controlling those funds, at least has an equal or near equal opportunity to present his or her case”: per Nygh J in Poletti & Poletti (unreported), citing Wilson & Wilson (1989) FLC 92-033.

5. Where then am I left, in circumstances where neither party submits that I lack the power to make an order for interim property settlement, yet both party’s proposed orders would be incapable of variation in the final exercise of the s 79 power?

6. Mr Hackett submits that without the sale of a property and the provision of funds to the Wife, the Wife will be unable to fund this litigation.  He made oral submissions before me that the Wife had very little to no borrowing capacity.  See paragraphs 81 to 88 of the Wife’s affidavit filed 28 November 2011; see also paragraphs 15 and 16 of the Wife’s affidavit filed 15 May 2012.   

7. Despite the submissions of both parties I must conclude that I remain unconvinced and unable to accede to either of their applications.  I refer particularly to the fact that regardless of the fact it is the Wife’s current residence, the former matrimonial home is a substantial property and the sale of such would quite clearly be incapable of variance and/or restitution. 

8. Insofar as the commercial properties are concerned, I consider that the sale of properties of their nature and location would also be incapable of variance, if, at trial and upon the final exercise of s 79 power, the trial judge had to alter the interim order to effect a just and equitable final order. 

9. Accordingly, I will dismiss both the Wife’s Amended Application in a Case filed 12 April 2012 and the orders sought by the Husband as contained in his Response to an Application in a Case filed 17 February 2012. 

10. I note in passing that this matter was listed to 1 March 2012 on the duty list, a time at which the jurisdiction of this Court to make orders with respect to de facto couples was somewhat in dispute.  On 29 February 2012 the Wife’s solicitor wrote to the Registrar, advising of the following:

    As a precaution, and to ensure that the Court has jurisdiction to deal   with both our client’s Initiating Application and Application in a Case   returnable tomorrow, we enclose for filing an Initiating Application and   Application in a Case both signed by our client today. 

    We advise that both Applications are identical to those previously filed   by our client on 5 May 2011 and 28 November 2011.

11. Accordingly, as an overabundance of caution I will also dismiss the Wife’s Application in a Case filed 29 February 2012. 

I certify that the preceding twenty-nine (29) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Bell delivered on 18 June 2012.

Associate: 

Date:  18 June 2012