Fletcher and Jones (No 2)

[2012] FamCA 992

FAMILY COURT OF AUSTRALIA

FLETCHER & JONES (NO 2) [2012] FamCA 992

FAMILY LAW – PROPERTY – Interim orders – Where the Wife seeks interim property settlement – Where the Wife has no funds to continue litigation – Where there is an approximate property pool of $17 Million – Interim property settlement and interim costs awarded

APPLICANT: Ms Fletcher

RESPONDENT: Mr Jones

FILE NUMBER: BRC 3721 of 2011

DATE DELIVERED: 29 November 2012

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Bell J

HEARING DATE: 29 October 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Kirk of Senior Counsel appearing for the Applicant

SOLICITOR FOR THE APPLICANT: Hirst & Co Family Lawyers

COUNSEL FOR THE RESPONDENT: Mr Jordan of Counsel appearing for the Respondent

SOLICITOR FOR THE RESPONDENT: Barry.Nilsson Lawyers

Orders

IT IS ORDERED THAT:

1. The Respondent do pay the Applicant the amount of $262,338.54 as and by way of interim property settlement and interim costs.

2. Should the Respondent not pay the Applicant the sum of $262,338.54 referred to in Order (1) hereof, on or before the 5 February 2013, the aforesaid property at S Street, Brisbane Suburb be sold and the parties do all acts and sign all documents necessary forthwith to cause the property to be listed for sale as follows:

   a.the Applicant provide to the Respondent a list of three qualified real estate agents prepared to be appointed as exclusive agent to sell the property and that within seven (7) days of receiving the set list, the Respondent nominate the name of the agent he selects to be appointed as exclusive agent to sell the property;

   b.the sale price at which the property is listed, be mutually agreed to by the parties and failing agreement within seven (7) days from the appointment of the real estate agent referred to in Order (2)(a) hereof, as nominated by a valuer appointed by the President of the Real Estate Institute of Queensland with the Respondent to meet the costs of any such appointment in the first instance if necessary;

   c.the Applicant and Respondent do all things necessary to cause the agent to provide an advertising campaign for the sale of the property to include:

   i.the type and content of advertisements and the nature, frequency and choice of publications;

   ii.        the duration of any advertising;

   iii.      the costs of any advertising; and

   iv.       the wording and placement of any for sale signage;

   d.        that the Respondent meet the cost at first instance of all:

   i.         advertising costs;

   ii.        signage costs; and

   iii.      any pre-sale building or inspection reports;

   e.that the Applicant and Respondent cooperate in every way with the agent including:

   i.allowing or facilitating inspection of the property at all reasonable times; and

   ii.doing all things reasonable to assist and doing and saying nothing which would hinder or prevent a sale of the property;

   f.that if the agent certifies in writing to the parties that it is reasonably necessary for the work to be carried out to the property so as to assist in effecting a sale and provided the cost of any such work is less than $5,000, either party may cause such work to be carried out and the costs of the work be recoverable by that party from the proceeds of sale;

   g.that the parties appoint as the solicitor to represent them both for the purposes of any sale of the property, a solicitor agreed between them and failing agreement to be the firm nominated by the Applicant;

   h.that the parties each execute for sale in the form prepared by the solicitor having the conduct of the sale at a price agreed by the parties for failing agreement at or above the list price; and

   i.         that the proceeds of sale of the properties be paid as follows:

   i.         payment of any agent’s commission;

   ii.payment of any costs of sale properly incurred by the agent not already paid by the Respondent;

   iii.reimbursement to the parties of any amount paid by them pursuant to these Orders relating to the sale of the property;

   iv.in discharge of the registered mortgage number … in favour of the National Australia Bank;

   v.the amount of $262,338.54 be paid by the Applicant to the Respondent in accordance with Order (1) hereof; and

   vi.any balance be paid to the trust account of the solicitors for the Applicant, Hirst & Co Family Solicitors.

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

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC3721/2011

Ms Fletcher

Applicant

And

Mr Jones

Respondent

REASONS FOR JUDGMENT

1. Ms Fletcher is the applicant for various orders sought before this Court.

2. I note in her material which she relies upon, she refers to two applications, one, being the further amended initiating application filed on 2 August 2012 and, second, the amended application in a case filed on 5 October 2012.

3. Regrettably there appears to be an extra amended application in a case filed on the 10 October 2012.  I note that the difference appears to be insofar as 1(a) of the orders sought on the first alternative and order (3) in relation to alternative (3).  I do not believe that much arises as a result of the failure of the applicant to mention the last application and it appears to me that the substantive question is whether or not I can be satisfied that the applicant has proved her requirements for interim property settlement against Mr Jones the respondent.

4. In her affidavit of 6 August 2012 which appears to me to be basically in support of her application, she sets out in her affidavit of 28 November 2011 the history of her relationship with the respondent.  She sought an order on that aforesaid date for the sale of commercial properties which are owned jointly with the respondent through trusts.  That matter came on before myself, wherein the respondent had filed an application in a case seeking the sale of the property situated at S Street, Brisbane Suburb (“the S Street property”).

5. The applicant opposed the sale of the S Street property.  She said that she lived in it and further that it was unique in its construction.

6. The respondent filed a further amended response seeking the sale of the S Street property. 

7. It was heard before me on the 22 May 2012 and I dismissed both applications. 

8. I did order on 22 May 2012 that valuers M Pty Ltd, as a single expert, do carry out valuations which is to cost at least $144,000. 

9. The applicant says that she is not in a position to meet her ongoing legal costs in these legal proceedings.  She is further unable to afford the cost of maintaining the S Street property and all of the outgoings associated with it (see paragraph 10 of the aforesaid affidavit).  She sets out in paragraph 12 her debts which totals some $260,000 (odd) and the fact that she receives by way of child support an amount of $840 per week for two of her children from a previous marriage.  These two children are twins who are currently sixteen years of age and thus child support is likely to continue for two more years.  The Mother has two other children who have now reached eighteen years of age whom she no longer receives child support for.

10. She now seeks an order that the S Street property be sold and that the respondent do pay to her sums in accordance with either alternatives (1), (2) and (3) which is set out in whichever application she is prosecuting today.  It is either the one of the 5 October 2012 or the 10 October 2012.

11. The applicant indicates that she opposed, as is quite clear, the sale of the S Street property back in May 2012, but that now it seems she is in an “impecunious” (not her words) situation.  She finds it necessary to bury her sentimental attachment to her home and to the fact that it is unique in its building, to sell it so that she may have monies.  I understand her need arises to sell the S Street property purely to pay her existing debts and to have monies to retain legal representation and to have some future support (see paragraph 18).  She says as follows:

    18.I intend to use the net proceeds of sale of the [S Street] property to pay out my various debts as set out in paragraph 11 above and to purchase a more modest home for myself.  I propose that the remaining funds remain in my Solicitors’ trust account pending the conclusion of these proceedings and that they be used to meet any ongoing legal costs.

12. She is saying that if she receives the whole of the proceeds of the sale of the S Street property there should be available to her a considerable amount, somewhere between $2 Million or $4 Million, it is based upon the enquiries which she made where she believes that it is possible for sale price of the S Street property of up to $10 Million would be achieved.  As she says this property is unique in that it composes land made up of 14 separate titles.  I would have thought that there were other reasons for it being declared unique (see paragraph 17 of her affidavit filed 6 August 2012).

13. The respondent had opposed the sale of the commercial properties in the application before me in May 2012, and proposed that the S Street property be sold.  He now has reversed his view, as has the applicant in that she is seeking its sale and the respondent is proposing that it not be sold and that the offers as contained in his affidavit, which I will touch upon subsequently, to be accepted in lieu of the sale of the S Street property.

14. The respondent says, first of all, that the applicant has not particularised her “need”, if I may use that word, see Strahan & Strahan [2009] FamCAFC 166. That the respondent’s companies are in a negative cash flow position (see his letter 10 October 2012 being exhibit 1 to the proceedings of 29 October 2012). In this letter the respondent’s legal representatives put it most succinctly when they say:

    …The Group is in a negative cashflow situation, has minimal cash reserves, is unable to further borrow any material funds from its primary bankers and is only solvent by virtue of emergency loans provided by the client’s [the respondent’s] father and his [the respondent’s] business associates,…

15. The applicant has expressed some deal of concern in relation to this and is
    afeared, as I opine, that she will be unable to seek to get any funds to prosecute the action against the respondent. 

16. The respondent has made, what appears to me, to be a half-hearted offer to the applicant, of something approaching 50 per cent of the net value of the assets (which have not been valued at this stage), varying between $6 Million to
    $8 Million (see the respondent’s legal representative’s letter of 10 October 2012 (supra)).

17. The applicant says, if in fact the respondent has made an open offer, she has countered and that at this stage it does not appear that either of the parties are in a position to accept such offers, and I would have thought that it is reasonably clear that the parties have rejected their respective offers.

18. What does the applicant have to show?  First of all I believe, that as has fallen from Kirk SC who has put written submissions before me, it is necessary pursuant to the authority of Strahan (see paragraph 118), Boland, Thackray and O’Ryan JJ stated as follows:

    118.We agree with the submissions of senior counsel.  For the Wife in relation to the approach to be taken to the hearing of an application for an interim property settlement order.  There are two stages to the hearing of such an application where the power is to be exercised pursuant to s 80(1)(h) of the Act.  This is recognised by the fact that although the power under s 79 should ordinarily be exercised on a once only basis, “circumstances may arise before there can be a final hearing” where the power is exercised.  Thus the first step is to resolve whether to exercise the power before a final hearing and if it is resolved to do so then the second step involves the exercise of that power.

    (my underlining)

19. Why should I exercise the power?  Perhaps this is a rhetorical question. 

20. The applicant puts before me, and it is has not been cavilled with to any great extent, that she has little or no assets other than her interest in the various properties, which appear to be either tied up in trusts or owned jointly with the respondent, to fund what could be a difficult case because of the somewhat intertwined company entities and to a lesser extent, the fact that there is some $17 Million approximately in dispute between the parties.  I say in passing that it appears prima facie and I am in no way finding this as a fact, that it may be alleged that the applicant brought into the relationship considerably more than the respondent.  The applicant alleges that she brought in about
    $7 Million as and by way of a property settlement from her previous husband and that on the estimates before me the respondent, may, in her case, have brought in as little as $650,000.  The applicant says that she is virtually impecunious, that she is in debt and that it is necessary for her to expend moneys to make sure her case is properly put forward and that it would be unjustified for her to be put in a position of having to carry the case herself. 

21. I would have thought that it is quite clear that I should exercise the power of an interim partial property settlement in relation to costs.  Therefore, I have to exercise that power, which has been pointed out in Strahan.  It is an order for costs pursuant to s 117.  Where the Court says that it may not be required of a two stage approach, I have already got rid of the first approach, because the power in that provision may be exercised in any time during proceedings and what has to be established are circumstances that justify.

22. It is been suggested that the “compelling circumstances” which appear to have been one of the grounds prior to Strahan has not been accepted as being the proper test.  The test appears to me that this is a discretionary test and it is in all the circumstances of the case just and equitable to make such order, either by way of partial property settlement or some question of costs.

23. Other words have been used, “appropriate circumstances”, “proper case”.  At paragraph 126 of Strahan the Full Court appears to have discredited the “compelling circumstances” test.

24. Notwithstanding the fact that the respondent has alleged that the companies of which he appears to control, are in a difficult financial position, he has made, what appears to be an offer, of some $60,000 being payable by way of instalments of some $20,000 per month for the applicant’s costs.  He has indicated and has agreed to pay the costs of the valuations of some $144,000.

25. May I say in passing that it surprises me that an Order was made by myself for M Pty Ltd to carry out the valuations as far back as May 2012, but it appears that only in early October 2012 were any instructions given to the valuers.

26. I would have thought that the respondent, having agreed to pay the full amount of the valuations, and having the backing of an Order, would not require the consent of the applicant for instructions to be given.  However, that is by the by.

27. The respondent further says that he cannot make an offer for interim property settlement or even to settle the whole case until such time as the valuations have been prepared.  He has indicated that the valuations will take three months and until that time the respondent through his counsel Jordan, indicates that he is unable to make any offer whatsoever other than, as I opine with difficulty, the $60,000.

28. The alternative orders sought by the applicant are:

    1.that she receives the whole of the net proceeds of the sale of the S Street property;

    2.        that she receives an amount of $1.5 Million within 45 days and;

    3.        the so-called traditional “dollar for dollar” order.

29. The applicant, as I have said, sought an order for the payment of her costs, indebtedness and for partial property settlement and in relation to those indebtedness and for further monies to enable her to prepare her case and present her case properly for the Court. I am satisfied that she has no capacity to fund her case let alone pay her debts for already expended legal costs as deposed in her affidavit filed 5 October 2012. I accept that she is without any means to fund her litigation.

30. The respondent emphasises that he really has no capacity to pay.  In Strahan, the Full Court stated that there was no doubt the financial circumstances of both parties may be relevant at the procedural stage. The Full Court agreed with the findings in Zschokke and Zschokke (1996) FLC 92‑693 that it was relevant to consider whether the respondent was in a position of financial strength and had the capacity to meet his or her own legal costs. The Full Court in Strahan found that these two matters were self-evident where the trial Judge had no issue with the Husband’s capacity. Notwithstanding the respondent states in his affidavit filed 22 October 2012 that he is struggling to meet the costs of his own solicitors, he has been able to access funds to pay such costs. As of 16 October 2012, he had unpaid legal fees of $30,411.15 and while I do take into account he is struggling to pay, he has been able to make such payment for the costs, albeit late.

31. Further, the respondent has deposed to having acquired a property in Suburb N in November 2011 for the sum of $1,530,000 with his new partner Ms O as tenants in common (see the respondent’s affidavit filed

    
    

    17 February 2012).  He does not outline how he managed to receive the funds for that purchase. He has also stated he has been on two overseas trips in Easter 2011 and December 2011/January 2012 totalling $45,000.

32. The applicant has said through her counsel, that she does not trust the respondent, and if she did trust him or if she had some evidence to show from where he could make an offer, which he has indicated between $5 Million and $6 Million to $8 Million, she would be able to desist from her insistence upon the satisfactory conclusion of the applications on her behalf.

33. I must say on the face of it, it appears to me that the applicant is unable to finance either her debts or future costs in relation to the application.  I do not believe that anybody where there is an estate of some $17 Million gross at this stage, should be in such a position.  The question that arises is in what way can I order that these amounts be paid?

34. I believe that the only way I can do this is to order the respondent do pay the debts of the applicant as they stand at present, plus some sum towards the funding of her case.  The applicant has pointed out that she has an amount of some $262,338 which includes, inter alia, amounts owing to solicitors, amounts owing to a friend in Melbourne (see paragraph 12 of her affidavit filed
    6 August 2012).

35. In those circumstances, I would order that the respondent do pay the applicant the amount of $262,338.54 as and by way of interim property settlement, interim costs, and further for the maintenance of the aforesaid matrimonial property at S Street, Brisbane Suburb.

36. Should this amount not be paid on or before the 5 February 2013, the aforesaid property at S Street, Brisbane Suburb be sold and I Order in accordance with the machinery provisions of alternative order (1) sought by the applicant in her amended application in a case filed 5 October 2012, and that the balance of the moneys after payment to the applicant of the sum of some $400,000 (odd) be paid into the applicant’s solicitor’s trust account, pending further order of the Court.

37. These payments are relevant to the trial to be taken into account when the Court finally determines the property settlement.

I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Bell delivered on 29 November 2012.

Associate: 

Date:  29 November 2012