Grand and Grand
[2019] FamCA 914
•2 December 2019
FAMILY COURT OF AUSTRALIA
| GRAND & GRAND | [2019] FamCA 914 |
| FAMILY LAW – PROPERTY – Interim distribution – where the wife seeks interim property settlement of $60,000 – Where the husband opposes – Whether to make orders – Principles in relation to interim property – Order. |
| Family Law Act 1975 (Cth) ss 79, 79(2), 80, 80(1)(h) |
| Felice & Felice [2011] FamCA 162 Gabel & Yardley (2008) FLC 93-386 Medlow & Medlow (2016) FLC 92-692 Stanford v Stanford (2012) 247 CLR 108 Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 |
| APPLICANT: | Mr Grand |
| RESPONDENT: | Ms Grand |
| FILE NUMBER: | ADC | 3694 | of | 2017 |
| DATE DELIVERED: | 2 December 2019 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Berman J |
| HEARING DATE: | 23 October 2019 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr McGinn |
| SOLICITOR FOR THE APPLICANT: | Degaris Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Dillon |
| SOLICITOR FOR THE RESPONDENT: | ASW Lawyers Pty Ltd |
Orders
That the Response of the wife filed 11 October 2019 is dismissed.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Grand & Grand has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT ADELAIDE |
FILE NUMBER: ADC 3694 of 2017
| Mr Grand |
Applicant
And
| Ms Grand |
Respondent
REASONS FOR JUDGMENT
Introduction
By Amended Initiating Application filed 1 November 2019 Ms Grand (“the wife”) seeks orders for settlement of property. In summary, she seeks that contemporaneously with the payment to her of a settlement sum being $2,338,546 together with a lump sum spousal maintenance of $23,400, she will transfer her interest to Mr Grand (“the husband”) in the Grand Group of Companies comprising the following entities:-
(i)G Pty Ltd;
(ii)G Pty Ltd Trust;
(iii)E Pty Ltd;
(iv)D Pty Ltd;
(v)C Pty Ltd;
(vi)C Pty Ltd Trust;
(vii)K Pty Ltd;
(viii)H Pty Ltd;
(ix)J Pty Ltd;
(x)J Pty Ltd Trust;
(xi)F Pty Ltd; and
(xii)F Pty Ltd Trust.
The settlement sum as sought is based upon an equal division of the value of the property of the parties.
By Amended Response filed 8 November 2019 the husband proposes a settlement sum of $1,100,000 to the wife to be paid over a 24 month period.
The matter was originally listed for hearing on 18 November 2018. However, as a consequence of the application by the parties’ son Mr B to be joined as a party to the proceedings, the trial was vacated and has been relisted for hearing on 24 February 2020.
By Application in a Case filed 10 October 2019 the husband sought that [7] of the order of injunction made 22 February 2018 be varied to enable the principal farming entity J Pty Ltd to make application to increase the current level of overdraft from $598,154 to $1,063,994 upon condition that the increase be repaid by 30 June 2020.
The wife opposes any increase to the overdraft facility and by her Response filed 11 October 2019 seeks that the husband cause to be paid to the wife the sum of $60,000 by way of interim property settlement.
Submissions were heard on the outstanding interim proceedings prior to the intervention of the parties’ son. It is not clear whether the son wishes to be heard in respect of the husband’s application to increase the overdraft, however on 11 November 2019 Mr B was ordered to file and serve a response to the orders sought by each of the parties together with a document setting out the points of claim in respect of the equitable interest claimed by him in support of a constructive trust.
The applications of the husband were listed for further hearing on a date to be fixed following the filing of Mr B’s response and points of claim document.
The wife’s Response seeking an order of partial settlement of property remains outstanding.
Legal principles
There are two stages to the consideration of an application for interim property orders. The first stage is a “procedural step” which requires an analysis of whether the circumstances of the case triggers the Court’s power to invoke s80(1)(h) of the Family Law Act 1975 (Cth) (“the Act”) to make an order for interim property settlement before a final hearing. At this stage, the “overarching consideration” is the interests of justice.[1]
[1]Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 at [135].
The second stage is “the substantive step” where the provisions of s 79 must be considered and applied but with limitations, given that it is not a final hearing.[2]
[2]Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466.
In Medlow & Medlow (2016) FLC 92-692 at 81,088 the Full Court confirmed that the starting point in respect of any property application, including an application for interim property orders is “the identification of the parties’ property and of their interests in it”.
In the circumstances where a party seeks interim property orders, the Full Court said at 81,090:-
86.The onus was clearly upon [the applicant] to establish that there were sufficient assets available for the interim distribution and that the effect of any interim order was capable of being reversed as part of the final hearing, or at least would not defeat [the respondent’s] property claims. The onus was not on [the respondent] to adduce such evidence.
Accordingly, any interim order for distribution of property must be “amenable to adjustment on a final hearing”.
The Court should take a conservative approach given that it is not in a position to properly evaluate the evidence.
In Stanford v Stanford (2012) 247 CLR 108 the High Court stated:-
Under s 79(2) of the [Family Law] Act a court shall not make a property settlement order unless satisfied that it is “just and equitable” to do so.
The following principles are relevant to the court’s consideration of whether an order should be made:-
(a)Together, s 79 and s 80(1)(h) confer a power on the court to make orders for interim property settlement;
(b)Section 79 confers a discreet power to make orders for property settlement and the court may exercise the power conferred by s 79 through “a succession of orders until the power…is exhausted” or until a final order dealing with all of the known property of the parties is made.[3]
(c)Section 80 is not in itself a source of jurisdiction for such an order to be made. Rather the section is an “enabling provision” that provides various ways in which the general power in s 79 may be exercised in individual cases. [4]
[3] Gabel & Yardley (2008) FLC 93-386.
[4]Stanford & Stanford (2012) 247 CLR 108 at 112.
There are two stages to the hearing of any application for interim property settlement:-
(1)That the first stage is a procedural step which requires an analysis of whether the circumstances of the case triggers the Court’s power to invoke s 80(1)(h) to make an order for partial property settlement; and
(2)The second stage is the “substantive step” where the provisions of s 79 must be considered and applied but with limitations, given that it is not a final hearing.
Given that an applicant is effectively seeking access to their own funds, it is unnecessary for a “detailed inquiry as to the purpose for which the funds are to be used”.[5]
[5]Felice & Felice [2011] FamCA 162 at [12].
Sufficient particulars must nonetheless be provided to enable the Court to determine:-
(i)That the application is genuine;
(ii)To identify the circumstances that make it appropriate to give consideration to exercising its power; and
(iii)To sufficiently weigh the identified need “against the benefit of having only one exercise of s 79 power”.
An applicant is required to show more “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”.[6]
[6]Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 at 85,646.
The exercise of the jurisdiction should be conducted with an appreciation that “as a generality, the interests of parties and the Court are better served by there being one final hearing of s 79 proceedings”.
Wife’s application
The wife’s application is supported by her Affidavit filed 11 October 2019.
Her legal costs to prepare and participate in a five day trial will be between $40,000 and $50,000. In addition, she anticipates she will incur costs relating to unpaid leave from work and sourcing accommodation in Adelaide during the trial in addition to the cost of court fees to be $3,480.
She also anticipates that there will be the need to update valuations in respect of land, plant and equipment with her half share of the cost being between $3,000 and $6,000.
The proceedings have had an unfortunate history. The original trial date of May 2019 was vacated as a consequence of the transfer of the proceedings to this Court and was listed for hearing in November 2019. As discussed, the intervention by Mr B has caused the trial to again be adjourned.
The wife highlights that she has used all of the funds that she had set aside in ongoing legal fees and is unable to afford to proceed without a further interim settlement.
The wife does not set out the attitude of her current solicitors, although it is recognised that if a party seeks an order to enable both outstanding, or anticipated legal fees to be paid, it is not a prerequisite that the solicitors involved have made it clear that they will cease acting unless they are placed in funds. The wife does not frame her application in terms of litigation funding. She does not set out the basis of her application pursuant to s 117 of the Act, nor does she present an itemised list of anticipated legal fees and disbursements.
As to the latter, it is reasonable to assume that the costs to be incurred by each of the parties up to the conclusion of the proceedings will be significant.
The husband opposes the payment of any interim sum to the wife on the basis that she has not identified the source of such payment.
The parties are significantly apart in terms of the settlement sum that the wife is to receive.
The husband concedes that even taking into account that the wife has received the total sum of $264,584 by way of partial property settlement, she would be entitled to a sum significantly greater than that which she now seeks.
In preparation for the November trial, the husband filed a Trial Affidavit on 11 November 2019. He considers that the net assets of the parties based on a market value of plant and equipment is in the amount of $4,637,403.[7] If there was a requirement to sell the farming enterprise together with its plant and equipment then a liquidation value should be applied resulting in net assets of $3,731,971.[8]
[7] Husband’s trial affidavit filed 11 November 2019 at [94].
[8] Husband’s trial affidavit filed 11 November 2019 at [95].
The most significant asset is the market value of the Grand Group valued at $3,837,505 together with the husband’s personal shares and crypto currency at $145,976.
In his Affidavit filed 22 October 2019 the husband refers to his personal shares and crypto currency as having a value of $195,250 of which $112,000 relates to shares pertaining to suspended entities. Those shares cannot be bought, sold or traded and the balance therefore is $83,000. The husband has sold down the balance of the share portfolio to enable money to be made available to the Grand Group to assist in the payment of day to day expenses necessary to enable the farm to operate.
If the matters raised by the husband in support of his application to extend the overdraft property reflect the financial circumstances of the Grand Group, then it is reasonable to assume that without farm income, the ongoing expenses will need to be met.
Conclusion
I find that but for the lack of a source of funds that it would be in the interests of justice for the Court to exercise its power pursuant to s 80(1)(h) for an order to be made notwithstanding that it is not a final hearing.
The property of the parties and their separate legal and equitable interests are the subject of challenge by reference to the anticipated claim of Mr B. However, it is likely that the wife will be entitled to a settlement sum significantly in addition to those monies already received if they are the subject of addback.
The Court is required to consider the source of funds necessary to satisfy the order and on the evidence as provided, until the husband’s application seeking to extend the overdraft facility to the Grand Group is heard and determined, I am not able to identify the source from which any order of partial settlement of property can be satisfied.
Whilst it is noted that the husband holds an interest in the following assets:-
·Motor Vehicle 1 $ 35,000
·Motor Vehicle 2 $ 20,000
·Motor Vehicle 3 $ 17,000
·Jet Ski $ 6,000
·Silver bullion $ 10,000
·Debt due to husband from C Pty Ltd $170,421
·Debt due to husband from J Pty Ltd $ 36,885;
I am not told whether those assets represent a possible source of funds available to the husband.
Given my finding that but for a source of funds that would be readily available to the husband the wife should receive the settlement sum she seeks, I am unable to make the order at this time.
I make orders as appear at the commencement of these reasons.
I certify that the preceding forty one (41) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 2 December 2019.
Associate:
Date: 2 December 2019
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