GILBERT & GILBERT
[2013] FCCA 667
•27 June 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| GILBERT & GILBERT | [2013] FCCA 667 |
| Catchwords: FAMILY LAW – Application for spousal maintenance – in the alternative application for interim or partial property settlement –wife has limited income but is currently fully employed – husband PAYG taxpayer – wife seeks orders to enable her to remain living in property registered in husband’s sole name – parties have no direct equity in property – husband continues to occupy former matrimonial home which is subject to mortgage for which he retains liability – husband asserts that when child support issues and other financial issues are considered he has no capacity to continue to pay mortgage on subject property – husband further contends that the wife has no capacity to acquire his interest in property given parties’ other liabilities – wife seeks immediate sale of motor vehicle and boat to discharge arrears in mortgage payments – husband seeks to retain these items on final settlement of matrimonial property matters – husband seeks sale of subject property which wife ultimately wishes to retain – matters to be considered – urgency – parties have not yet attended conciliation conference – nature of interim hearing – meaning of adequately – reasonableness in all the circumstances – justice and equity – interests of justice – whether appropriate to make such an order. |
| Legislation: Family Law Act 1975, ss:74; 75; 75(2); 77; 79(1) 79(2) 79(4) 80 |
| In re: Watson: ex parte Armstrong (1976) FLC 90-059 C & C (1996) FLC 92-651 Chapman & Chapman (1979) FLC 90-671 Ashton & Ashton (1982) FLC 91-285 Bevan & Bevan (1995) FLC 92-600 Redman v Redman (1987) FLC 91-805 Stanford v Stanford [2012] HCA 52 Mallet v Mallet[1984] HCA 21; (1984) 156 CLR 605 R v Watson; Ex parte Armstrong[1976] HCA 39; (1976) 136 CLR 248 Strahan v Strahan (2010) 42 Fam LR 203 Harris & Harris (1993) FLC 92-378 Wenz v Archer (2009) 40 FamLR 212 Mitchell & Mitchell (1995) FLC 92-601 Brown & Brown (2007) FLC 93-316 Benson & Benson [2012] FMCAfam 335 |
| Applicant: | MS GILBERT |
| Respondent: | MR GILBERT |
| File Number: | ADC 1244 of 2013 |
| Judgment of: | Judge Brown |
| Hearing date: | 24 June 2013 |
| Date of Last Submission: | 24 June 2013 |
| Delivered at: | Adelaide |
| Delivered on: | 27 June 2013 |
REPRESENTATION
| Counsel for the Applicant: | Ms Kari |
| Solicitors for the Applicant: | David Burrell & Co |
| Counsel for the Respondent: | Mr Howe |
| Solicitors for the Respondent: | Howe Martin & Associates |
ORDERS
That pursuant to Section 26 of the Federal Circuit Court of Australia Act1999 the parties and their legal representatives do attend a Conciliation Conference with a Registrar of the Court on 29 August 2013 at 9:15am.
Unless otherwise exempted from payment the Applicant must pay the Conciliation Conference fee of $350 in accordance with the Family Law (Fees) Regulation 2012 twenty eight (28) days prior to the Conciliation Conference.
Should the Applicant fail to comply with Order 2 herein the conciliation conference is to be vacated and the matter is to be listed for mention before the Court.
The parties exchange all appraisals or valuations of all items in dispute between them both real and personal and exchange all relevant financial documents 14 days prior to the conciliation conference.
The parties exchange informal discovery of all relevant documents as specified in Order 24 Rule 4 of the Federal Circuit Court Rules within 28 days.
The directions hearing of 8 July 2013 be vacated and the matter be listed for further directions on 3 September 2013 at 9.30 am.
By consent it is ordered
The parties take all necessary steps to place the property known as and situate at Property G, (omitted)on the market for sale at a price and on such terms and conditions and by such means as the parties agree and failing such agreement as directed by the Court.
IT IS NOTED that publication of this judgment under the pseudonym Gilbert & Gilbert is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADC 1244 of 2013
| MS GILBERT |
Applicant
And
| MR GILBERT |
Respondent
REASONS FOR JUDGMENT
Introduction
It is well recognised that one of the most stressful life events that can ever befall an individual is marital separation followed by divorce proceedings, surpassed as an emotional trauma only by the death of a spouse or other near relative.
In most cases, the implications of marital breakdown are far reaching and multi-faceted, encompassing financial considerations; changes in arrangements for the care of children; as well as obvious significant emotional ones for the parties concerned. These are challenging and life changing events.
One of the frequent and inevitable consequences of separation is a diminution in the standard of living for the spouses concerned. Two households cannot live as cheaply as one. Resources and expenses have to be duplicated across two homes. Debts and assets may have to be rationalised. Once commonly held aspirations may have to be abandoned and priorities in life reconfigured for the now separated spouses.
There is nothing easy about this process. Individuals, when placed under stress, do not always behave logically, kindly or even necessarily in ways which are objectively in their best interests. However, for obvious reasons, in the period following marital breakdown, many significant and far reaching financial decisions may have to be made, when the individuals concerned are least emotionally equipped to deal with them.
Again, for self apparent reasons, these difficulties are likely to be most extreme in the weeks and months following marital breakdown, whilst the individuals concerned are coming to terms with their now changed circumstances and making the necessary accommodations in respect of them. This is also the period during which the majority of cases are commenced in this court, which has jurisdiction under the Family Law Act.
Given the personal subject matter of family law cases, there is an emphasis, in such cases, on the court providing mechanisms to the litigants concerned to enable them to resolve any disputes arising between them consensually and in a dignified and orderly manner. Accordingly, the court must also be careful not to respond precipitately to the crisis inevitably occasioned by the breakdown of a marriage.
These strictures are particularly relevant at the interim stage, when applications have frequently been hastily prepared and not all relevant evidence is to hand. As such, the court is often ill equipped to perform a full and exhaustive survey of all relevant evidence and so is likely to find it difficult to reach a decision which is fair to both parties concerned, in all the circumstances prevailing.
In such cases, it must be particularly vigilant about the so-called “law of unintended consequences” and the perils of creating an irreversible outcome, which is later found to be unfair to one or both of the parties concerned, when all relevant evidence has been gathered and properly assessed and considered by the court at final hearing.
In such cases, it also behoves members of the legal profession to be careful in how they frame applications seeking interim financial orders, particularly applications for partial property settlement. It is not helpful if such applications are expressed as inchoate pleas for “justice” or “fairness” and demands are made for the expedition of such claims.
As was indicated by the High Court, in a case which arose in the period soon after the commencement of the Family Law Act, courts exercising jurisdiction under the Act are not entitled to do “palm tree justice” so far as the parties who come before it are concerned in cases relating to property matters.
Rather, the court’s jurisdiction, in family law property cases, must be exercised in accordance with legal principles, particularly the relevant provisions arising under the Act itself.[1] This is notwithstanding the natural sympathy the court may feel for the predicament facing the parties concerned and the natural tendency to want to do something to break the impasses, which very often arise in the difficult circumstances prevailing following marital breakdown.
[1] See In re: Watson: ex parte Armstrong (1976) FLC 90-059 at 75,270
The chief mechanism by which parties to matrimonial property proceedings are given an opportunity to resolve their case consensually is through a conciliation conference also known as a financial mediation conference. It is a process convened by the court through which one of the court’s registrars, invariably highly experienced in the legal principles germane to the division of property, oversees a process which is essentially one of assisted or informed negotiation.
In this particular case, no such conference has as yet been appointed. The parties themselves are relatively recently separated. No formal valuation process of relevant property items has been inaugurated and no court mandated exchange of relevant financial documents has occurred. Nonetheless both parties seek urgent interim property orders, against a background of considerable conflict and mistrust.
These proceedings are directed towards resolving the respective interim applications of the parties. They have been expedited at the request of the parties’ respective lawyers. Each of the parties has apparently incurred significant legal costs in the proceedings to date. As will become clear, neither of them are well equipped to manage this expense.
The applications and supporting material
Ms Gilbert “the wife” and Mr Gilbert “the husband” were married on (omitted) 2002, in (omitted), after having lived in a de facto relationship for a period of around eight years beforehand. They finally separated in mid September of 2012.
The wife commenced proceedings in this court on 11 April 2013, seeking final orders for the settlement of matrimonial property between her and the husband. Her application, in this regard, is brief. It is as follows:
“1. For such orders by way of settlement of property such that the wife receives 65% of the net assts of the marriage and the husband receives 35% of the net assets of the marriage.
2. That the wife be excused from further particularising the orders that she seeks pending joint valuations being obtained.”
In the normal course of events, her application was given a return date of 8 July 2013. On 24 May 2013, the wife’s solicitors wrote to the court and requested that their clients’ application be brought forward on the basis that the mortgagee of a property located at Property S, Property S (hereinafter referred to as the “Property S property”), which is registered in the husband’s name but which has been occupied by the wife since the parties separated, had issued a notice indicating its intention to take action to foreclose on the mortgage concerned.
On this basis, the proceedings were listed before the court on 13 June 2013. This was prior to the husband filing any answering material. However, on this occasion, the husband’s solicitor indicated that he did not oppose the expedited hearing of the wife’s application, particularly as it was unlikely that the parties themselves would be able to reach a mutually satisfactory accommodation with one another, in the short to medium term.
Accordingly, the court allocated 24 June 2013 as the date on which the wife’s interim application would be ventilated. The dispute centres on the Property S property, particularly how the mortgage secured against it should be serviced in the short term.
The wife wishes to retain the Property S property. She lives in the property with the parties’ two children, X born (omitted) 1995 and Y born (omitted) 1997. In addition the wife operates a business offering (omitted) and allied services from the premises.
The husband’s position is that it is objectively impossible for the wife to retain the Property S property because she does not derive sufficient income, as currently disclosed by her in her affidavit material, to either acquire his legal interest in the property outright or to service any likely mortgage, which she would have to take out to achieve the same end. In these circumstances, he seeks the immediate sale of the property concerned, as it is his perception that the sale is inevitable and to delay it can only intensify the financial vicissitudes currently facing both of the parties.
From the wife’s perspective, she believes that the husband is refusing to honour his commitments in respect of the Property S property because he wishes to evict the wife from it, for some undisclosed but ignoble motive. On the other hand, it is the husband’s position that his current financial circumstances are severely constrained and he has no capacity to provide further funds.
Although she has recently obtained employment with another (omitted), providing her services as a PAYG taxpayer, the wife continues to be self employed, as a (omitted). The husband asserts that the wife has historically demonstrated a capacity to derive a significant level of income from her endeavours in this area.
The husband asserts that the wife has been able to earn in the vicinity of $140,000.00 per annum in this capacity, having the capacity to charge, on average, $85.00 per hour for her services. The implication of his evidence being that the wife’s level of earnings has not been properly disclosed to relevant authorities in the past.
The wife asserts that she is currently earning $55.00 gross per hour, in her employed position, and is working a fifteen hour week but hopes to work more hours soon. She rejects his assertion that her business has any where near the financial potential described by the husband.
It is her case that the business generates in the vicinity of $20,000.00 per annum and although there are benefits accruing to her from self-employment, she does not accept that these are significant in the context of this case. She categorically denies that she has retained large cash deposits from the business.
In her financial statement, the wife has ascribed a net weekly income of $380.00 for the (omitted) business and a gross salary of around $440.00 from her paid employment. It is her position that the husband is significantly more financially secure than she is currently.
X and Y have obtained partial scholarships to attend at (omitted) College and (omitted) School respectively. Both schools are situated in metropolitan Adelaide. In part at least, in order to facilitate the attendance of the children at school, the wife moved to suburban Adelaide from (omitted), where the parties previously lived as a family. This, on the wife’s case, was the motivation for the purchase of the Property S property, which has a self contained studio attached to it, which is apparently suitable for (omitted).
The plan being for the wife and children to relocate to Property S and for Ms Gilbert to establish a (omitted) practice from the home. Whether the plan eventuated before the parties’ final separation; during the process of separation; or afterwards; is unclear to me. As is whether the property was purchased during at a time when there was a prospect of the parties reconciling their relationship.
At any event, without being able to be more specific, the property was purchased around about the time the parties finally separated. It was registered in the husband’s name because, on his case, the mortgagee concerned was only willing to advance mortgage funds to him as he had proven employment record, whereas the wife did not.
In addition, it seems self apparent that the parties planned to have the husband formally lease the studio to the wife, so that there would be some tax advantage accruing. The rent to be paid was in the vicinity of $550.00 per week. There is significant controversy between the parties as to whether this agreement was to be actually operative or was nominal, particularly in the period after the parties separated.
In any event, regardless of the nature of the agreement or otherwise, the wife ceased to make this payment since December of 2012. It is her case that she cannot afford the payment, which in any event, was always intended to be an artificial payment only. The sum required to service the Property S property mortgage is $4,400.00 per month.
From the husband’s perspective, it is the wife’s responsibility to pay a sum of at least $550.00 per week, in order to be able to occupy the Property S property. He asserts that she has ample capacity to provide this sum. He is also aggrieved that the wife has applied for an administrative assessment of child support against him, which he asserts is contrary to an earlier agreement between the parties.
X and Y live with the wife in Property S. She applied for the administrative assessment of child support in February of 2013. The relevant assessment requires Mr Gilbert to pay Ms Gilbert a weekly amount of $583.63 based on an adjusted taxable income of $137,718.00 for him and nil for her.[2]
[2] See Exhibit B
Although the children have scholarships, there is still a significant level of school fees to be paid for them. The husband has deposed that the monthly amount required for the school fees is $2,868.00. The fees for the second term have not as yet been paid. The husband paid the first term’s fees.
Other issues arise between the parties regarding the servicing of other of their commitments, particularly their credit card debts; the on-going private school fees in respect of X and Y; the division of frequent flyer points; and the disposition of other pieces of real property.
In particular, the wife asserts that at separation the parties had approximately 300,000 frequent flyer points. Now the balance is 73,765. She wishes an injunction to be made restraining the husband from utilising any further points.
The husband is an (omitted), employed as a PAYG tax payer by (omitted). He discloses an annual gross income of $152,100.00. Currently, he lives in the parties’ former family home located at Property C (hereinafter referred to as “the former matrimonial home”). He wishes to retain this property at the conclusion of these proceedings.
In his response to the application for final orders, the husband seeks that the parties’ net assets be divided equally. The former matrimonial home has not been formally valued. However, the parties assess its value as being somewhere between $450,000 and $500,000.00. It is subject to a mortgage, but one which leaves a significant level of equity. The husband’s financial statement indicates that he pays $245.00 per week (or $1,055.00 per month) in order to service this mortgage.
Similarly the Property S property has not been formally valued. The husband asserts it is worth approximately $830,000.00. It is subject to a mortgage, which is likely to be in excess of this amount. The default notice issued by the relevant mortgagee, (omitted) Bank, indicates a balance of $929,508.95.[3] As previously indicated a sum of $4,400.00 per month is required to service this mortgage. It has not been paid since December of 2012.
[3] See annexure B to the affidavit of Samuel Cameron Burrell filed 11 June 2013
The parties own other real properties, which are also subject to mortgages in favour of the (omitted) Bank. These properties are Property T, (hereinafter referred to as the “(omitted) Studio”) and Property B, (hereinafter referred to as “the (omitted) property”).
The wife continues to operate her business, in part, from the (omitted Studio) as well as from the Property S property. The business pays the recurrent mortgage payments, secured against the (omitted) Studio. The mortgage payment on the (omitted) Studio is $1,150.00 per month. It is the wife’s case that it is self apparent that she is unable to meet the recurrent mortgage payments required for the Property S property as well.
The wife also has responsibility for paying a loan incurred by her arising from the purchase of (omitted) equipment. She calculates that the equipment is worth $20,000.00. It is her case that the business has no value apart from its plant and equipment. She is required to pay $50.00 per week to finance the loan for the equipment. It is her case that the amount owing on the loan is significantly more than the value of the equipment.
The Property B property is apparently registered in the wife’s name, as she owned the property prior to the parties' marriage. It was previously tenanted at a weekly rent of $250.00. In addition, it has recently sold for the sum of $380,000.00. It is subject to a mortgage of approximately $95,000.00. The property is due to settle on 24 October 2013. The wife hopes to utilise the proceeds to reduce the level of indebtedness arising from the Property S property. Due to the sale of the property, the rent is no longer being received.
As previously indicated, the equity in the Property B property also secures the mortgages lodged against the Property S property; the (omitted) Studio; and the former matrimonial home. Although the parties own a number of real properties, they are significantly in debt through an interconnected system of mortgages held by the (omitted) Bank.
The husband owns a half interest in a property located at Property J. The property is tenanted but subject to a mortgage. The necessary mortgage payments and the rent received are roughly equivalent. The husband owned this property prior to the parties' marriage.
The wife owns a third interest in a property located at Property D. The other proprietors of the property are her brother and sister. The property was purchased to accommodate the wife’s father, who has recently died. The property is subject to a mortgage and is tenanted. The wife receives rent of $112.00 per week but must pay mortgage repayments in a similar amount.
The parties own several motor vehicles and a boat. The wife has a VW (omitted), which she values at $38,000.00. In addition she has a Toyota (omitted), which she values at $7,000.00. This vehicle is apparently used by X.
In the husband’s case, he is the registered owner of a Toyota (omitted), which he values at $30,000.00; a Toyota (omitted), which he values at $28,000.00; and a Toyota (omitted), which he values at $6,000.00. In addition, the husband is the registered owner of a water ski boat, which he values at $25,000.00.
Considerable controversy surrounds the Toyota motor vehicle and the water ski boat. They are the subject of the wife’s interim application, as are various credit card debts. In formal terms, the wife’s application for interim orders is as follows:
“1. That forthwith the Toyota (omitted) motor vehicle and boat currently in the possession of the husband be placed on the market for sale.
2. That the net proceeds of sale be used to pay the following liabilities:
(a) (omitted) Visa/(omitted) Credit Card liability;
(b) (omitted) Credit Card liability;
(c) (omitted) Visa Card;
(d) (omitted) Bank Visa Card;
(e) Outstanding education expenses for the children;
(f)Any outstanding rates, strata payments or utility accounts for the properties owned by the husband and wife.
3. That after compliance with Orders 1 and 2 herein, the net proceeds of sale be deposited into a joint interest bearing account in the joint names of the husband and wife.
4. That the parties be at liberty to use the balance of the net proceeds of sale to pay further expenses as agreed between the parties or as ordered by this Honourable Court.
5. That when the parties’ joint credit card liabilities have been paid in full, that the parties do all such acts and things and sign all documents necessary for the credit card accounts to be closed unless otherwise agreed.
6. That both the husband and wife be restrained and an injunction granted restraining them from the following:
(a)using the joint credit card accounts for personal expenditure pending the accounts being paid and the accounts closed; and
(b)from selling, encumbering, transferring or otherwise dealing with the assets of the marriage unless agreed between the parties in writing or as Ordered by this Honourable Court.
7. That by way of spousal maintenance, the husband pay to the wife an amount of $500 per week.
8. In the alternate to Order 7 herein, the husband be responsible for the monthly repayments of the mortgage secured over the Property S Property.
9. That the husband continue to pay the following expenses:
(a)The school fees for (omitted) School and (omitted) College as and when they fall due;
(b)The repayments for the mortgage secured over the former matrimonial home as and when they fall due;
(c)The rates and outgoings for the former matrimonial home;
(d)The repayments for the mortgage secured over the Property S property as and when they fall due being a weekly amount of $1,100 per week (subject to Orders 7 and 8 herein noting that the husband currently is to pay a weekly amount of $550); and
(e)Child Support as assessed by the Child Support Agency.
10. That (omitted) property be appointed as the single experts to value the former matrimonial home and such other real estate to which the value cannot be agreed with the husband to pay the costs at first instance with the wife’s one half of the costs to be paid to the husband at settlement.
11. That within 30 days from these Orders, the husband do all such acts and things and sign all documents necessary to complete and file his taxation returns up to and including the financial year ended 30/06/2012.
12. That any tax return received by the husband be deposited into the joint interest bearing account referred to in Order 3 herein.
13. For such further or other order as this Honourable Court deems appropriate.
14. That the husband do pay the wife’s costs of and incidental to this Application.”
In his response, the husband seeks the following interim orders:
“1. That the wife’s application for interim orders filed on 11 April 2013 be dismissed.
2. That the property situated at and known as Property S, being the whole of the land comprised and described in Certificate of Title Register Book Volume (omitted) Folio (omitted) (“the Property S home”) be placed upon the market for sale forthwith, and be sold for the best available price of the Property S home.
3. That the husband do have the conduct of the sale of the Property S home.
4. That the wife do cooperate with the sale process, including cooperation with the husband’s appointed real estate agent, and do comply with all reasonable directions and request of the real estate agent.
5. That the wife do attend to payment of all costs and expenses incurred with respect of any renovations or repairs of the property at Property B, Victoria.”
To some extent, the wife’s application in respect of the Toyota and the water ski boat has been overtaken by events. The wife concedes that recently she attended at the former family home and removed the Toyota and boat. She justifies this action on the basis that the husband had occasioned damage to the Toyota and the water ski boat was not properly secured.
For his part, the husband vehemently opposes the sale of both the Toyota and the water ski boat, which he wishes to retain following the settlement of the parties competing applications. He is somewhat resentful at what he would categorise as the unilateral actions of the wife in regards to car and boat. He has deposed that he needs the Toyota to tow the water ski boat and for other purposes for which the Toyota (omitted) is unsuited.
This is by no means the end of controversy between the parties. The wife is highly critical of the husband for purchasing what she characterises as a sports car in the form of the Toyota (omitted). It was delivered on 3 December 2012. The wife categorises the vehicle in question as a “toy”, which represented an imprudent or inequitable purchase, given the straitened financial circumstances confronting the parties.
The husband asserts that the Toyota (omitted) was purchased by him prior to the parties’ separation and is no more than his commuting vehicle. He has to drive to and from work of an hour each way. As such, he refutes any suggestion that the vehicle in question was a frivolous purchase or a response to any form of personal crisis.
The vehicle was purchased for a total price of $34,500.00.[4] The vehicle has been purchased on finance. The husband is required to pay $334.00 per week in respect of the relevant loan. From the wife’s perspective, this is a sum which should be reallocated to servicing the Property S property mortgage, after the disposal of the vehicle in question.
[4] See exhibit A
On 24 December 2012, the wife withdrew $16,643.34 from an account standing in the husband’s name. It is her position that she had no alternative but to make this withdrawal in order to make future payments in respect of the parties various joint loans and credit card debts. The husband is aggrieved that there has been no apparent diminution in this regard. The wife is aggrieved at her perception that the husband’s credit card use seems to be proceeding at an unabated rate.
It is the husband’s case that, since separation, he has borne the larger proportion of the children’s recurrent expenses, particularly their school fees. He calculates that, since separation, he has allocated approximately $20,000.00 in this way.[5] Accordingly, it is the husband’s position that he has discharged more of the parties’ joint financial responsibilities than has the wife. It is also his position that the wife initially agreed to forego child support on the basis that he would contribute one half of the children’s school fees.
[5] See husband’s affidavit filed 11 June 2013 at paragraph 28
The parties have few other assets of significant value. They own approximately $5,000.00 in (omitted) shares. The wife has a modest amount of superannuation in a sum of around $4,000.00. The husband’s superannuation holdings are considerably more. He estimates around $240,000.00.
The parties have significant credit card debts. The rationale for the wife’s application to sell the water ski boat and Toyota motor vehicle is that the sums released can be used to pay out the credit cards in question and hereafter the parties can keep their credit card use separate.
The wife estimates that the parties owe approximately $8,000.00 for an (omitted) Bank visa card; $9,625.48 for a (omitted) Bank visa card; and $2,500.00 on a (omitted) card, which was utilised to purchase a laptop computer for X. The husband’s statement of financial circumstances indicates that the minimum payment for the (omitted) Bank and (omitted) Bank credit cards are each $140.00 per month.
The wife asserts that, in addition to these credit card payments, the parties have the following pressing debts:
·Property S mortgage demand $12,508.95;
·Property S water bill $419.09;
·(omitted) school fees $3,776.60;
·(omitted) netball trip $2,500.00;
·(omitted) College school fees $4,756.67; and
·(omitted) property expenses $991.05.
It is the wife’s position that all these expenses need to be paid and she has no capacity to pay them.
Essentially, the wife asserts that she is fully allocating her recurrent financial receipts as best she can. It is her assertion that the husband has essentially sat on his hands since November of 2012 and has reneged from his previous undertaking to provide regular recurrent funds to service the Property S mortgage. In these circumstances, she asserts that the husband is intent on engineering a situation to bring about the sale of the Property S property. She deposes as follows:
“I am concerned that the bank will seek to take possession of the Property S property on or before 5 June 2013. The Property S property is the home in which our son and daughter reside with me.”[6]
[6] See wife’s affidavit filed 24 May 2013 at paragraph 19
The wife estimates her recurrent living expenses for her and the children as being in an amount of approximately $1,050.00 per month. If she receives the assessed rate of child support ($583.65); and income from self-employment of $380.00 per week; and from part-time employment of $440.00; it is her case that it is self apparent that she has little, if any, capacity to meet other of the parties’ joint debts, particularly the mortgage payments on the Property S property; strata fees and other outgoings on the (omitted) Studio; and the parties’ credit card debts.
The wife acknowledges that, at around the time she instituted these proceedings, she had approximately $20,000.00 standing in her business account. It is her position that she has utilised around $7,000.00 of this sum in recurrent expenses. In addition, she estimates that she has an outstanding liability of $13,000.00 in respect of legal fees owed to her solicitor.
The husband estimates his recurrent living expenses as coming to $970.00 per week. The wife believes that this figure is artificially inflated, particularly in respect of such items as motor vehicle expenses, which she believes form part of the husband’s salary package. Necessarily, she is dubious about this total, when her expenditure for three is not much greater. This is one of many controversies, arising between the parties, which I am unable to resolve at this point.
In this context, the husband deposes as follows:
“… I do not have the capacity to pay any other liabilities over and above the Property C mortgage ($1,055 per month), assessed child support payments ($2,223 per month), one half of the children’s school fees ($1,434 per month) and general living expenses ($2,778 per month) which totals $7,490 per month, against my net available monthly income of $7,150 per month.”[7]
[7] See husband’s affidavit filed 11 June 2013 at paragraph 48
The husband’s position is that the wife should pay the children’s school fees for the next two terms, as he paid for the previous two terms. More significantly, it is his position that, as the wife has not paid the Property S property mortgage and he cannot afford to do so, “there is no possible alternative but for the home to be sold”.[8]
[8] Ibid at paragraph 20
The husband’s response to the various issues raised in the wife’s interim application is encapsulated in the following portion of his affidavit material:
“… it is not possible for me to meet the entirety of the Property S mortgage from my income … I dispute that my wife has any entitlement to spousal maintenance. She is employed on a full-time basis, and has been for many years, and has clearly demonstrated that she has the capacity to support herself from her own income.”[9]
[9] Ibid at paragraph 43
During the course of the hearing before me, on 24 June 2013, the parties agreed that the (omitted) Studio could be placed on the market. If sold quickly, this would relieve some of the financial pressure on the parties, by reducing their level of indebtedness to the (omitted) Bank. In addition, on the sale of the (omitted) property, a significant capital sum will be released.
It is the wife’s understanding that the husband has not completed his necessary taxation returns for the past four years. The husband does not dispute this assertion. In these circumstances, the wife asserts that the husband is likely to receive a significant tax refund, quite possibly in the vicinity of $50,000.00. The husband believes that this is an unrealistic expectation. This is an evidentiary issue I am unable to resolve in the context of these interim proceedings. It would appear to be to both prudent and responsible for the husband to attend to the necessary returns.
Although the level of hostility and mistrust between the parties is extreme, precipitated in my view, by such factors as the husband’s purchase of the Toyota (omitted) motor vehicle; the wife’s withdrawal of funds on Christmas Eve; and her more recent retention of the Toyota (omitted) and water ski boat; the parties are in broad agreement about the range and value of their assets and their overall level of indebtedness, which, in my view, must be regarded as extreme, given their circumstances.
The broad issues in dispute between them can be summarised as follows:
·Is the wife under estimating her income earning capacity, as a (omitted), for tactical reasons relating to these proceedings;
·Is the husband exaggerating his recurrent living expenses, with the same tactical intent;
·What were the circumstances surrounding the purchase of the Property S property, was it purchased on the basis that the wife would pay half the outgoings, including the mortgage payments, arising from it and the husband would pay the remainder;
·Was this the agreement before or after separation;
·If this was the situation, can this situation continue to prevail, given that the husband has been assessed to pay child support;
·Is it feasibly possible for the wife to retain the Property S property, on the basis that she retains up to 65% of the parties’ net assets, given the likely value of the asset pool;
·Is it imperative that the Toyota motor vehicle and water ski boat be sold immediately to pay down debt;
·Is this a fair outcome for the husband, who wants to retain these assets after the final settlement stage;
·Where are the wife and children to live, if the Property S property is to be sold;
·How quickly will such a sale happen anyway;
·Given that (omitted) has been sold and the (omitted) studio can be put on the market, cannot some representations be made to (omitted) Bank about the current situation.
In rough terms, as best as I can provisionally calculate it from the parties’ respective affidavit material, the matrimonial asset pool appears to be as follows:
Property S property $830,000 Former matrimonial home[10] $450,000 (omitted) Studio (to be sold) $300,000 (omitted) property $385,000 Property J property (husband) $75,600 Other (omitted) property (wife) $85,000 VW (omitted) (wife) $38,000 Toyota (omitted) (children) $7,000 Toyota (omitted) (disputed) $30,000 Toyota (omitted) $28,000 Toyota (omitted) $6,000 Water ski boat $25,000 (omitted) equipment $20,000 Shares $5,000 Total Assets 2,284,600 Liabilities Various (omitted) mortgages secured against Property S, former matrimonial home, (omitted) Studio and Property B $1,410,000 Property J mortgage $74,450 Other (omitted) mortgage $22,500 (omitted) loan $40,000 (omitted) card (X’s laptop) $2,536 (omitted) Bank visa card $8,000 (omitted) Bank $7,560 Unpaid school fees (approximate) $8,500 Car finance (husband) $32,900 Car finance (wife) $41,000 Total Liabilities 1,650,446 [10] This is the more conservative value ascribed by the husband. As previously noted, the wife ascribes a value of $500,000.00 to the property.
I concede that these calculations are my own. As such, at this provisional stage, they may very well be erroneous. I note however that the husband calculates the parties’ net asset pool, aside from superannuation, as being around $520,000.00. Whereas the wife calculates a far more modest sum. At any rate, it is clear to me that, given the extent of the parties’ debt, the potential asset pool must be considered a modest one.
In this context, it behoves the parties to consider closely how much of their scarce funds they are prepared to commit to litigation. Considerations of prudence dictate that there should be some level of objective proportionality between what each is likely to derive from the proceedings and what each will spend in achieving it. Such considerations are particularly germane in the period prior to the parties embarking upon the formal court inaugurated conciliation process.
Although it might appear both trite and condescending for me to point it out, the parties are currently confronting a serious mutual problem. It is their problem, not the court’s problem. In such circumstances, it is often useful for the parties concerned and their lawyers to approach the case arising as a problem solving exercise. From my perspective, very often, matrimonial property proceedings are an exercise in financial harm minimisation.
The wife’s position is that considerations of financial necessity dictate that the Toyota motor vehicle and the water ski boat be sold immediately to mollify the (omitted) Bank and reduce other aspects of the parties’ consumer debt. The sum released is likely to be in the magnitude of $55,000.00.
The wife’s counsel, Ms Kari, has not tied her client’s position to any detailed exposition of the legal principles applicable. On behalf of her client, she has expressed outrage at the purchase of the new motor vehicle, on credit, by the husband and the lack of utility in the parties retaining the luxury item of the boat and the unfairness of the husband having access to two motor vehicles.
I sympathise with the wife’s feelings of frustration. However, as I indicated in the introductory comments to these reasons for judgement, I must be careful not to respond precipitously, on the basis of untested and preliminary evidence, to inchoate pleas for fairness.
Counsel for the husband, Mr Howe, has provided a detailed written summary of submissions. It is the husband’s position that the parties currently have no equity whatsoever in the Property S property, as its entire purchase price, together with acquisition costs, was borrowed from the (omitted) Bank.
It is the implication of this submission that it was an imprudent decision for the parties to have purchased the property, in the first place, on such a basis and that the consequences of this imprudence has been intensified by their subsequent separation.
At this juncture, it is not appropriate for me to comment on the whys and wherefores of the purchase of the Property S property, nor is it appropriate for me to pass a value judgement on the husband’s choice to purchase the particular motor vehicle he did. Both purchases have been finalised. They are done and the parties’ respective legal obligation to pay the monies borrowed have crystallised.
Mr Howe submits that the husband’s net salary is fixed in an amount of $7,111.00 per month. From this sum, he must pay the mortgage on the former matrimonial home ($1,055.00); the child support assessment ($2,537.00); and school fees of ($2,537.00) leaving a small sum to fund his other recurrent living expenses and no capacity to provide for the Property S mortgage.
In these circumstances, it is Mr Howe’s submission that the wife’s application to sell the Toyota and water ski boat are “objectively without merit” as they will at best provide a “short-term amount of funds” but will not relieve the long-term systemic liquidity problems of the parties, particularly as the wife has not provided detail as to how she will achieve her desired outcome of retaining the Property S property.
In this context, Mr Howe submits that it cannot be characterised as unreasonable for Mr Gilbert to wish to retain these items, which are worth somewhere in the vicinity of $55,000.00, when he is likely to be ultimately assessed by the court as being entitled to retain capital items, well in excess of this sum, on final settlement of the parties’ respective claims for alteration of property interests.
In short, both parties assert that the other is a capricious and manipulative person, who is the author of the financial crisis about to engulf them but is blind to his or her respective responsibility for it.
The nature of an interim hearing
The controversy arising between the parties, regarding the sale of the Toyota motor vehicle and the water ski boat and how the mortgage on the Property S property is to be managed in the short term – whether through the immediate sale of the property or the provision of a regular recurrent sum by the husband – occurs at the interim hearing stage. Accordingly, the resulting hearing before me took place in a truncated or shortened form, where the only evidence available to me was in the form of the parties’ respective written affidavits.
In addition, as previously indicated, neither party currently has well delineated proposals as to how their marital property is to be divided pursuant to the applicable legislative provisions in the longer term. In particular, the wife’s case is currently lacking in detail as to the mechanics of how she proposes to retain the Property S property.
At this interim hearing stage, there is usually not sufficient time to allow additional oral evidence, particularly in the form of cross examination. Accordingly, it is difficult if not impossible, for the court to resolve issues in factual disputes between the parties as this stage.
In C & C[11] the Full Court of the Family Court indicated that the logistical issues, arising as a result of the court having to determine an ever increasing number of contentious matters, precluded it from being able to embark on lengthy hearings at the interim stage. The court said as follows:
“This court has finite resources and a limited number of judicial officers coupled with an ever increasing work load. If it was required to embark upon lengthy examinations of interlocutory issues, such as interim custody, important though they may be to the parties, this would inevitably lead to an inability to provide hearings of final determinations of custody and property within a reasonable time. In addition, other persons requiring a determination of these and similar issues would be impossibly inconvenienced.”
[11] See C & C (1996) FLC 92-651 at 82,675-6
These comments, in my view, apply with equal force to this court. For these cogent logistical reasons, there has been insufficient time available to the court to embark upon a detailed and exhaustive hearing of all the parties’ claims and counterclaims. In addition, in my view, this would have been inappropriate, at this early stage in the litigation, particularly as there has been no attempt, as yet, for the parties to achieve a conciliated outcome of the disputes arising between them.
The legal principals applicable
(a) Spousal maintenance
The provisions of section 77 of the Family Law Act 1975 deal with the making of spousal maintenance orders in circumstances of urgency. The section provides:
“Where, in proceedings with respect to the maintenance of a party to a marriage, it appears to the court that the party is in immediate need of financial assistance, but it is not practicable in the circumstances to determine immediately what order, if any, should be made, the court may order the payment, pending the disposal of the proceedings, of such periodic sum or other sums as the court considers reasonable.”
The essence of any application made pursuant to section 77 is that it is made under circumstances of urgency or extreme financial emergency. This follows as a result of the expression immediate need utilised in the section. As such, applications for urgent spousal maintenance are invariably made in circumstances where it is not possible for detailed affidavit and/or financial data to be provided by the parties concerned.
Sometimes the degree of emergency is so extreme that it is appropriate for an application pursuant to section 77 to be made on an ex parte basis or pursuant to an oral application only. By necessity, an order made pursuant to section 77, is ad hoc in nature and intended to remain in place for a period of relatively short duration. Such orders have been described as “stop-gap” orders.[12]
[12] See Chapman & Chapman (1979) FLC 90-671
They are intended to make financial provision for a party to a marriage to tide him or her over the period of emergency until such time as the court may make a more detailed examination of the prevailing circumstances, either on an interim or final basis. Accordingly, in such cases, because of their limited nature, the court’s discretion is wider.
As such, an application for urgent maintenance is different in quality to an application for maintenance for a limited period. The latter type of application is made pursuant to the provisions of section 74 of the Family Law Act 1975 and demands a more thorough canvassing of the applicable evidence. It is intended to be in force for a period longer in duration than an urgent order, most usually until such time as competing applications for property settlement have been determined.
In Ashton & Ashton Nygh J said as follows:
“On an application for interim maintenance, the normal procedures relating to applications for maintenance under s. 74 must be observed and an application for maintenance can only be heard after each party has had the opportunity to adduce evidence, that is to say, the normal procedures for the filing of affidavits by both parties and the filing of financial statements must be observed.”[13]
[13] See Ashton & Ashton (1982) FLC 91-285 at 77,614
As I have already indicated, counsel for the wife did not attempt to tie her client’s application for spousal maintenance to any particular section of the Act nor did her application. The application was characterised by an inchoate appeal to the court to do something because of the nature of the demand made by the (omitted) Bank. However, the parties’ legal advisors did not approach the application in the manner envisaged by section 77. It is thus, in my view, to be regarded either as an application for interim spousal maintenance or some form of interim or partial property settlement.
Pursuant to section 74 of the Family Law Act 1975, the court may make such order as it considers “proper” for the provision of maintenance to the wife in accordance with the provisions of Part VIII of the Act.
In particular, section 72 deals with the right of a spouse to maintenance and reads as follows:
(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).
Given the factual basis of this case, the relevant matters referred to in section 75(2) are likely to be the following:
a)the age and state of health of each of the parties;
b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
d)commitments of each of the parties that are necessary to enable the party to support:
i)himself or herself;
e) the responsibility of either party to support another person;
g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;
k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration.
The Full Court of the Family Court in Bevan & Bevan[14] determined that the approach to be taken in respect of applications for spousal maintenance involved a four step process as follows:
·a threshold finding under s.72;
·consideration of s.74 and s.75(2);
·no fettering principle that a pre-separation standard of living must automatically be awarded where the respondent’s means permit;
·the discretion exercised in accordance with the provisions of s.74 with “reasonableness in the circumstances” as the guiding principle.
[14] Bevan & Bevan (1995) FLC 92-600 at 81,981-2
In Redman v Redman[15] the Full Court of the Family Court considered the procedural and evidentiary requirements which attach to interim spousal maintenance proceedings. The Full Court said as follows:
[15] Redman v Redman (1987) FLC 91-805 at 76,081
“…the very fact that the order is limited in time imports certain different considerations. One of these is that such an order is intended to be reconsidered, quite apart from a variation under section 83. …the most common purpose of an interim order is to make provision for the spouse and children pending the determination of the property settlement. …Another consequence is that on an application for interim maintenance the court conducts not as final or exhaustive a hearing as would be the case if one were hearing the matter finally. …The evidence need not be so extensive and the findings not so precise. Having regard to those factors, and the general injunction of section 97(3), the court should in such matters have a greater degree of flexibility than it possesses in applications for maintenance which are intended to last for an indefinite period and can only be varied under section 83.”
(a)Interim property proceedings
Part VIII of the Family Law Act is the part of the Act dealing with property, spousal maintenance and maintenance agreement. The major provisions relating to marital property division are contained in sections 79(1); 79(2); 79(4); & 75(2) of the Act. These provisions apply both at the interim and final stage.
Pursuant to section 79(1) the court is authorised to make such order as it considers appropriate in order to alter the interest of the parties to a marriage in relevant property.
Pursuant to section 79(2) the court is actively prevented from making such an order unless it is satisfied that it is just and equitable to do so in all the circumstances prevailing.
Section 79(4) provides the mechanics of how a court is to make an order altering marital property interests. It provides seven matters to be considered, as relevant.
Paragraphs (a); (b); and (c); categorise contributions made by marital partners, which are relevant. Paragraph (d) directs the court to take into effect of any order upon the earning capacity of either party to the marriage concerned.
Paragraph (e) directs the court to consider a list of matters contained in section 75(2), which are germane to spousal maintenance. Finally, Paragraphs (f) and (g) apply to child support and previously made parenting orders, as relevant. There is some overlap between these various provisions and not all will be applicable in every case.
In general terms, the provisions have been held to provide a process to be followed by the court, in each case, for the division of martial property. Firstly and self explicitly, it is necessary for the court to identify the extent of the property to which any order made pursuant to section 79 will apply.
Secondly, pursuant to section 79(4)(a) – (c), the court must ascertain the varying contributions, which each party has made towards the assets identified following the first step. Contributions fall into two broad categories.
The first kind is contributions to the property: financial contributions and non-financial contributions, made directly or indirectly, by or on behalf of a party to the marriage to the acquisition, conservation or improvement of any of the property.
The second kind is contributions to the welfare of the family: in the words of the section, “the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage, including any contribution made in the capacity of home maker or parent.”[16]
[16] See Family Law Act s79(4)(c)
It is clear from the authorities that this second kind of contribution must be given appropriate weight and is not to be treated as a token matter or as a contribution which is inherently less valuable or important than a financial contribution to property.
The third step involves the assessment of the parties’ prospective needs, by reference to the factors set out in section 75(2) of the Family Law Act 1975. Pursuant to section 75(2)(o), the court is entitled to take into account “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”.
The High Court has recently considered the operation of section 79 in Stanford v Stanford.[17] It said as follows:
“It will be recalled that s 79(2) provides that "[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order". Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.
The expression "just and equitable" is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition[18]. It is not possible to chart its metes and bounds.”[19]
[17] See Stanford v Stanford [2012] HCA 52
[18] Mallet v Mallet [1984] HCA 21; (1984) 156 CLR 605 at 608 per Gibbs CJ
[19] Ibid at paragraphs 35-36
Accordingly, the High Court has directed that the overriding responsibility imposed on the court by section 79, is to consider whether it is just and equitable to make any order whatsoever altering the proprietary interests of marital partners. In this context, the High Court said as follows:
“…whether making a property settlement order is "just and equitable" is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised "in accordance with legal principles, including the principles which the Act itself lays down"[20]. To conclude that making an order is "just and equitable" only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.”[21]
[20] R v Watson; Ex parte Armstrong[1976] HCA 39; (1976) 136 CLR 248 at 257
[21] Ibid at paragraph 40
Section 80 of the Act provides the court with what are described as general powers. In particular section 80(1)(h) empowers the court to make an order pending the disposal of proceedings. However, it is clear that the same principles, set out above, apply both at the interim and the final hearing stage.
In Strahan, apropos the making of an interim property order, the Full Court said as follows:
“Once a court proceeds to exercise the power in s 79 of the Act, being in the substantive phase, a court is required to undertake consideration of the matters in section 79(4) including by reference to s 79(4)(e) the matters in section 75(2) so far as they are relevant. However consideration of such matters may be brief and if it is established that ‘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 sought to be made.”[22]
[22] See Strahan v Strahan (2010) 42 Fam LR 203 at 230 [137]
In general terms, bearing in mind the limited nature of an interim hearing, the court is required to follow the process prescribed by section 79(4) in respect of both final and interim matrimonial property proceedings. Accordingly, it is necessary for the court to consider whether it is just and equitable to make such an order and whatever order is made must be referable to the criteria set out in section 79(4).
Accordingly, the court must make some assessment of the parties’ various contributions to the pool of assets in question and importantly must have regards to any applicable factor arising under section 75(2). Necessarily, any interim order must be referable to the final order made in the case concerned, as both depend on the exercise of the same power.
Given these circumstances, the Full Court of the Family Court has pointed out that, as there can be only one exercise of the power under section 79 of the Act, it is usually preferable that there be only one final hearing of section 79 proceedings, rather than a succession of subsidiary provisional hearings.[23]
[23] See Strahan v Strahan (2010) 42 Fam LR 203 at 230 [114]
In Strahan, the Full Court considered an earlier decision of the Full Court Harris & Harris.[24] In this case, the Full Court delineated the relevant considerations applicable to the making of what is conveniently described as an interim property order. The Full Court, in the case, considering it unnecessary to draw a distinction, in terminology, between an interim order and a partial order.
[24] See Harris & Harris (1993) FLC 92-378 at 79,930
In Harris, the Full Court, whilst affirming the preference that there be only one final hearing of property proceedings, identified three criteria applicable to the exercise of the power to make an interim property order namely:
·the exercise of the power should be confined to cases where the circumstances at the time were “compelling”;
·the exercise of the power, depending as it did on section 79 of the Act, must be exercised within the parameters provided by that section, notwithstanding the difficulty arising for any decision maker concerned in making final findings;
·the exercise of the power must be exercised “conservatively” in the sense that any remaining property needed to be sufficient to meet the “legitimate expectations” of both parties at final hearing, or the order being contemplated is itself capable of being reversed or adjusted at a later stage, if necessary.
In Strahan, the Full Court affirmed Harris in the sense that it accepted that an interim property application comprised a two-step process. Firstly what was described as an “adjectival stage” and secondly what was described as the “substantive stage”. The first step being concerned with the description or particularization of the circumstances required to be established before an interim property order was made. The second step dealing with the mechanisms applicable to the making of such an order.
The controversy ventilated in Strahan centred on the phrase “compelling circumstances” used in Harris and whether such a formulation unduly fettered the court’s power to make an interim property order, which was “appropriate” at that stage of proceedings. This being the expression used in the enabling provision contained in section 79(1) of the Act.
In this regard, the Full Court said as follows:
“In relation to the first stage, in our view, when considering whether to exercise the power under s 79 and s 80(1)(h) of the Act to make an interim property order the “overarching consideration” is the interests of justice. It is not necessary to establish compelling circumstances. All that is required is that in the circumstances it is appropriate to exercise the power. In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.”[25]
[25] Strahan v Strahan (2010) 42 Fam LR 203 at 236 [132]
In reaching this conclusion, the Full Court noted the idiosyncratic nature of litigation, under the Family Law Act, when compared with other civil litigation. In the former, there was often a marked imbalance in the power of the parties concerned and artificialities in how property available to be divided was legally controlled in the period leading up to final hearing.
In this context, the Full Court approved comments of Riethmuller FM in Wenz v Archer[26] as follows:
“It cannot be the case that a party who has an irresistible claim to a substantial share of the property of the parties should be held out of that property while the matter is litigated, left to rely upon applications for exclusive occupation of the matrimonial home or spousal maintenance alone, particularly where the parties are asset rich but have relatively modest incomes (such as the present case). Nor could it be appropriate that a party should be denied the ability to liquidate assets when there are real needs for those resources, such as to meet debts which may result in the party being pursued by creditors, or the need for the party to make payments for the benefit of the children, or to take advantage of other financial opportunities (for example the superannuation contribution cases).”
[26] See Wenz v Archer (2009) 40 FamLR 212 at 223 [53]
In terms of the second or substantive phase, the Full Court in Strahan confirmed the second and third considerations delineated in Harris, namely that the relevant provisions of section 79, including section 75(2) needed to be considered and so far as any adjustment made, at this stage, it needed to be capable of reversal or to be clawed back at a later stage.
Examples of where it may be appropriate to use the power to make an interim property order include where both the parties agree to the disposal of some assets pending trial; urgent situations to avoid injustice being wreaked upon one party if the power was not exercised; and where one party requires funds to assist in the defrayal of legal costs arising from the litigation involved.[27]
[27] See Strahan (ibid) at [133]
The discretion to make an interim property order must be closely considered, bearing in mind the different nature of an interim, as opposed to a final hearing, which nonetheless involves the exercise of the same power. Riethmuller FM expressed the dilemma arising in this way:
“…Because the orders under s.79 are the exercise of such a broad and complex discretion, generally the interests of the parties are better served by there being one final hearing under s.79. If the s.79 proceedings are not completed in one decision various options may not be left open and therefore the Court may not be able to ensure that a ‘just and equitable’ outcome overall is achieved. However, there will be cases where it would not be ‘appropriate’ to deny interim relief, as this would not permit a ‘just and equitable’ result in the interim.”[28]
[28] See Wenz v Archer (ibid) at [54
Considerations of this type led the Full Court in Strahan to say as follows:
“We also emphasise that in order to establish an appropriate case for an interim property settlement order more is required than the mere fact that upon a final hearing the applicant would receive the property being sought (or an amount in excess of the funds being sought) from the other party. [29]
[29] See Strahan (ibid) at [139]
Conclusions
The husband is only legally obliged to maintain the wife financially, if she herself is unable to maintain herself for an adequate reason. If this condition precedent is satisfied, she is then only entitled to be maintained by him to an adequate degree.
The wife is currently employed, on a part-time basis, with a (omitted) studio. In addition, she continues her own (omitted) practice, at both the Property S property and the (omitted) Studio. Accordingly, the wife has a regular source of income.
The wife’s evidence is that she envisages her hour of paid employment will be increased shortly, from 15 hours to 21 hours per week. She receives a sum of $55.00 per hour for her services.
There is significant controversy, between the parties, regarding how lucrative is the wife’s private (omitted) practice. I am not able to resolve this issue, at this stage. However, in my view, the evidence clearly indicates that the wife is not bereft of the means to provide for herself through her own endeavours.
In addition, as a result of the wife’s application for an administrative assessment of child support, Mr Gilbert has been assessed to pay a recurrent amount of child support. This assessment is based on a realistic appraisal of his income.
These are not child support proceedings. There is no application for a departure from the administrative assessment. In any event, both parties have administrative avenues, which they can pursue, in respect of child support issues. These avenues may be relevant in respect of issues arriving from the children’s private school fees.
In my view, the wife’s application for spousal maintenance is directly related to her need for the recurrent mortgage, on the Property S property, to be met so that she and the children can have accommodation. I can well understand why Ms Gilbert would want Mr Gilbert to pay the mortgage, particularly as it is likely to be both stressful and difficult for her to find alternative accommodation.
Given the structure of section 72, one of the central issues for the court is whether the payment of the mortgage in question is required to be made, on the basis that the wife is unable to adequately support herself, either because of her responsibilities for the children; her lack of capacity to engage in work; or for any other reason.
In Mitchell & Mitchell[30] the Full Court said:
“… the question whether the applicant can support herself ‘adequately’ is not to be determined by reference to any fixed or absolute standard but having regard to the matters referred to in section 75(2) and more specifically the paragraphs of that subsection identified above.” (these paragraphs were sub-paragraphs (a), (b), (g), (j), (k) and (n)).
In the case, the Full Court rejected that the threshold question was to be determined by reference to a subsistence level of financial support.
[30] See Mitchell & Mitchell (1995) FLC 92-601 at 81,995
In Brown & Brown[31] the Full Court summarised the following propositions, as emerging from the applicable authorities.
· The word “adequately” is not to be determined according to any fixed or absolute standard.
· The idea that “adequate” means a subsistence level has been firmly rejected.
· Where possible both spouses should continue to live after separation at the level which they previously enjoyed if this is reasonable, although the parties’ standard of living may have to be lower if financial resources are insufficient to maintain that standard.
· In some circumstances it may be reasonable for the parties to live at a higher standard than previously enjoyed.
· It is not necessary for an applicant for maintenance to use up all capital in order to satisfy the requirement that he/she is unable to support himself/herself adequately.
· However, an applicant is not entitled to live at a level of considerable luxury or comfort merely because the other party is very wealthy.
[31] See Brown & Brown (2007) FLC 93-316 at 81,455 [161]
In this case, it cannot be said that the husband is living, in comfortable circumstances, merely because he continues to occupy the former matrimonial home. The difficulty in this case has arisen because the wife and children are living in a property which is relatively expensive, when compared to the parties’ joint means, and in which they have no equity whatsoever. In my view, it is in this context that the question of adequacy must be judged.
Given that the husband is providing child support; continues to pay the recurrent mortgage expenses on the former matrimonial home; has made some provision for the payment of the children’s school fees for at least term 1 of this year; and the wife is in paid employment; in my view, it would not be reasonable, in all the circumstances of this case, to make an award of spousal maintenance, which equates to the regular mortgage payments on the Property S property.
The evidence available to me indicates that, although the husband receives a comfortable level of income, he cannot be considered a wealthy person. In addition and more importantly, the evidence indicates that his income is largely earmarked for objectively reasonable purposes, which cannot be deferred. Regardless of the rights and wrongs of the decision to purchase the Property S property in the first place, I cannot find a means by which the husband can find any where near the sum required to service the mortgage.
The wife has a clear and established income earning capacity. What that equates to in dollar terms is unclear. She asserts that she can earn $55.00 gross per hour. If she works a 38 hour week and 48 week year, this equates to a salary in excess of $100,000.00 per annum.
In all these circumstances, I do not accept that Ms Gilbert has satisfied the threshold conditions stipulated by section 72 of the Family Law Act. Having said this, I accept that she and the husband are currently in a parlous financial position, but this fact, of itself, is not sufficient, in my view, to ground an application for spousal maintenance.
The High Court in Stanford has reaffirmed the centrality of section 79(2) in the making of any order resulting in the alteration of marital property interests. At both the interim and final stage, the court must be satisfied that it is just and equitable to make the order sought.
In Strahan the Full Court has disavowed any notion that there must be compelling circumstances before an interim property order is made. The sole determinative factor being the interest of justice.
Thus this question does not turn solely on the perceived inevitability that a property order will be made as a consequence of an assessment of the applicable considerations arising from section 79(4). The exercise is a more nuanced one and the court must be cautious not to homogenise the two considerations – that is the considerations of justice and equity arising under section 79(2) and the mechanical considerations provided by section 79(4).
It also seems to me that it will be necessarily more problematic to properly address the section 79(2) issue in the context of a limited interim hearing. Essentially, on the basis of untested and provisional evidence, it may be difficult for the court to assess the overall justice of any outcome sought.
In this case, the husband asserts that he wishes to retain the Toyota motor vehicle and the water ski boat. The value of these items is likely to be in the vicinity of around $55,000.00. The wife concedes that the husband has an entitlement to at least thirty-five percent of the marital estate. This would be a sum in excess of $55,000.00.
It is not, in my view, appropriate for me to pass judgment, at this stage, on whether it is proper for Mr Gilbert to aspire to retaining items of his own property, in the circumstances currently prevailing. Rather, considerations of justice and equity demand that I should recognise his aspirations, in this regard.
Accordingly, notwithstanding the moment of the financial crisis surrounding the parties, in my view, it would be neither just nor equitable and not in the interests of justice for the court to compel the sale of these items of property, at this interim stage. Essentially, Mr Gilbert is entitled to proceed with his application to retain these items. He does not specifically have to justify his desire to retain them, in my view.
In my view, the same type of considerations apply to the Property S property. At this stage, the wife and children require accommodation for themselves. The wife’s preference is to acquire the husband’s interest in the property. She has not as yet delineated a clear path as to how this object will be achieved.
However, clearly she will receive some distribution of marital capital in her favour from these proceedings. Steps have already been put in place to realise the Property B property. Shortly, the (omitted) Studio can be put on the market. For all I know, the wife may have other sources of potential capital available to her, either from some financial institution undisclosed to me or some other source, such as a family member.
In addition, at this stage, it is unclear to me what attempts, if any, have been made to reach some short term accommodation with the (omitted) Bank, in the difficult circumstances currently prevailing for the parties. In this case, it cannot be said, that the parties have not embarked upon the process of separating their financial interests. However, in my perception, they are at an early stage in this difficult process.
In another recent decision, regarding an application for property distribution made at the interim stage, I said as follows:
“The discretion to make an interim property order is one which is to be conservatively exercised. Issues which are inchoate, at this stage, may become more apparent to me at the final hearing stage and may considerably change the topography of the dispute between the parties, at this later stage. To use the terminology of the former US Secretary of Defence, Mr Rumsfeld, these are the “known unknowns”.
In addition and more significantly, as the final hearing unfolds, “unknown unknowns” may arise which will even more significantly change the issues in dispute the parties and how their property is to be distributed between them.” [32]
[32] Benson & Benson [2012] FMCAfam 335 at [91] – [92]
At this stage, although it may appear improbable, I do not think that I can entirely rule out the probability that Ms Gilbert will be in a position to retain the Property S property, following the court’s exercise of the section 79 discretion. In these circumstances, I have come to the conclusion that I must treat the husband’s assertion that the sale of the property is inevitable with some caution.
In addition, as I have already indicated, the discretion to make an interim property settlement does not turn on the mechanical operation of section 79(4) alone. It must be just and equitable to make any order altering property interests. I am not convinced that it would be just and equitable, at this stage, for the court to compel the sale of either the Toyota and boat or the Property S property, given the aspirations of each of the parties in regard to these items of matrimonial property.
What unknown unknowns may materialise, at the final hearing stage, cannot, for obvious reasons, be currently identified by me. The discretion to make an interim or partial property settlement is not one which is to be mechanically or routinely performed. Ideally, the power arising under section 79 should be exercised by the court once only.
In all these circumstances, I have come to the conclusion that it would not be just and equitable to make the orders sought by the husband at this stage. Accordingly, his application is dismissed.
In addition, in my assessment, it would not be proper for the court to make an order for spousal maintenance in the wife’s favour. In my assessment, in his current circumstances, Mr Gilbert does not have the means available to him to be able to reasonably maintain Ms Gilbert, who in any event has resources available, particularly given her employment capacity, to maintain herself adequately.
For these reasons, both parties’ interim applications will be largely dismissed. At the end of the day, I do not consider that it is the interest of justice for the court to commence a piecemeal rationalisation of some of the parties’ proprietary interests at this early stage, against a background of incomplete and untested evidence.
In these circumstances, the focus of the court and of the parties must turn to the hope that a conciliated outcome can be achieved. I will refer the parties to a financial mediation conference and make the necessary directions to ensure that such a conference has the best prospect of being successful.
With the mutual acquiescence of the parties, I will also make orders placing the (omitted) Studio on the market, at a price and through mechanism to be agreed by the parties or as nominated by the court.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding one hundred and sixty nine (169) paragraphs are a true copy of the reasons for judgment of Judge Brown
Date: 27 June 2013
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