HADDAD & HADDAD

[2019] FCCA 3196

FEDERAL CIRCUIT COURT OF AUSTRALIA

HADDAD & HADDAD [2019] FCCA 3196

Catchwords:
FAMILY LAW – Property Discharge of mortgage – spousal maintenance – transfer of funds from overseas – transfer of funds held in Israel to Wife’s solicitor’s trust account.

Legislation:

Family Law Act 1975 (Cth), ss.65, 75, 79, 80, 114

Limitation Act 1980 (UK), s.5

Cases cited:

Bevan & Bevan [2013] FamCAFC 116

Harris & Harris  (1993) FLC 92-378

Stanford v Stanford (2012) 247 CLR 108

Strahan & Strahan (2011) FLC 93-466

Applicant: MS HADDAD

Respondent: MR HADDAD

File Number: MLC 1792 of 2015

Judgment of: Judge C. E. Kirton QC

Hearing date: 30 October 2019

Date of Last Submission: 30 October 2019

Delivered at: Melbourne

Delivered on: 8 November 2019

REPRESENTATION

Counsel for the Applicant: Ms Delledis

Solicitors for the Applicant: Waterson Legal

Counsel for the Respondent: Ms Jenkins

Solicitors for the Respondent: Belleli King and Associates

THE COURT ORDERS:

1. The proceeding be adjourned for mention on 26 February 2020 at 9.30 am. 

2. The Applicant (Wife) and the Respondent (Husband) forthwith do all acts and things necessary to cause the release of $50,000 to the Wife’s solicitors by 4.00 pm Friday 15 November 2019 from the parties’ joint AMP account number #... BSB ....

3. The characterisation of the funds pursuant to Order 2 be reserved to trial, pending financial disclosure.

4. The parties forthwith do all acts necessary to cause the transfer to the Wife’s solicitor’s trust account of the entirety of the funds currently held on behalf of the parties by their Israeli solicitor, Mr C (Israeli Funds) in the approximate sum of AUD$900,000 after fees and commission.

5. Upon the transfer of the Israeli Funds to the Wife’s solicitor’s trust account pursuant to Order 4, the parties forthwith do all acts and things to authorise:

   (a)The discharge of the AMP mortgage secured over the former matrimonial home situate at Suburb E (D Street, Suburb E Property) from the Israeli Funds in the sum of approximately $634,000.

   (b)The balance of the Israeli Funds to be held in an interest bearing account on behalf of the parties, pending further order.

6. Until further order, neither party encumber the D Street, Suburb E Property without the consent in writing of the other party or prior order of the Court.

7. The Husband have leave to join as second respondent to these proceedings his Father’s company H Pty Ltd and for this purpose, the Husband within 14 days of the date of this Order, cause his Father, Mr J, and H Pty Ltd to be served with this Order and the documents filed by the parties in these proceedings.

THE COURT ORDERS BY CONSENT

1. Within 28 days from the date of this Order the Husband provide to the Wife’s solicitors:

   (a)Statements outlining all transactions since 1 January 2015 regarding the Husband’s accounts with S Bank as follows:

   (i)…

   (ii)…

   (iii)…

   (iv)…

   (b)The documents referred to paragraph 3 of the Interim Property Orders sought in the Initiating Application, filed on 27 August 2019.

2. The parties attend a private mediation with a member of the Victorian Bar to be agreed between the parties (Mediation).

3. The parties do all things necessary to jointly instruct a real estate valuer no later than 28 days prior to the Mediation, at their equal expense, to value the D Street, Suburb E Property and for this purpose, the Wife’s solicitors nominate three valuers and the Husband choose one within 7 days of the nomination. 

4. Within 14 days from the date of this Order the Wife provide full and frank disclosure of her financial circumstances including but not limited to the documents referred to in paragraphs 6(a) to (i) and (k) to (n) of the Response filed by the Husband on 28 October 2018, save that the Wife is to also provide:

   (a)In relation to paragraph 6(g), disclosure of any superannuation, pension, life insurance or other retirement benefit held in Israel or other retirement benefits; and   

   (b)Details of the Wife’s withdrawals from the joint savings of the parties subsequent to separation.

AND THE COURT NOTES THAT:

A.Pursuant to ss.65DA(2) and 62B of the Family Law Act1975 (Cth) the particulars of the obligations these orders create and the particulars of the consequences that may follow if a person contravenes these orders are set out in the Annexure and these particulars are included in these orders.

B.If in any proceedings there are allegations of family violence and the provisions of section 102NA of the Family Law Act 1975 apply (see attached Family Violence Information Sheet), any unrepresented party will not be permitted to personally cross-examine the other party/parties.

C.Affected unrepresented parties may apply to the Commonwealth Family Violence and Cross-Examination of Parties Scheme (“the Scheme”) for representation but any such application must be made at least 12 weeks prior to the final hearing.

D.Further information about the legislation and the Scheme can be found at Part 4 of the attached Family Violence Information Sheet.

E.If s102NA applies and a party becomes unrepresented after trial directions have been made, that party is required to promptly advise the Court.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 1792 of 2015

MS HADDAD

Applicant

and

MR HADDAD

Respondent

REASONS FOR JUDGMENT

Introduction

1. These are property and parenting proceedings between the applicant (Wife) and the respondent (Husband).  The parties first separated in March 2015 and the Wife issued proceedings in this Court on 6 March 2015.  The parties then reconciled and the Wife discontinued the proceedings.  The parties separated finally in December 2017.

2. The parties are citizens of Israel and now live in Australia.  The Wife seeks the interim payment of funds held jointly by the parties in Australia and the transfer of funds from Israel to Australia.

Issues to be Determined

1. The issues that fall to be considered in this case are as follows:

   a)Should $50,000 be paid to the Wife from the parties’ joint mortgage offset account held with AMP (AMP Offset Account).

   b)Should funds currently held on behalf of the parties by their Israeli solicitor, Mr C (Israeli Funds) in the approximate amount of AUD$900,000 be transferred to the Wife’s solicitors’ trust account.

   c)Should the Israeli Funds be used to discharge the mortgage held by AMP (AMP Mortgage) over the former matrimonial home at D Street Suburb E (D Street, Suburb E Property) securing borrowings in the sum of $634,000 and the balance be paid into an interest bearing account on behalf of the parties, pending further order.

Synopsis

1. I have determined that:

   a)The sum of $50,000 should be paid to the Wife from the AMP Offset Account with the characterisation of the funds to be reserved to trial.

   b)The Israeli Funds should be transferred forthwith to the Wife’s solicitors’ trust account.

   c)The Israeli Funds should be used to discharge the AMP Mortgage and the balance be held in an interest bearing account on behalf of the parties, pending further order.

Background

1. The parties met in Israel in 2001 and commenced cohabitation in 2002 in City V, Israel. The Wife was working as a professional of the Employer A and the Husband was working as a professional at Employer K.   The Wife deposes that in about 2002 the Husband purchased a 4 bedroom apartment in City W, Israel (City W Property) and rented it out[1].  The Husband deposes that he purchased the City W Property prior to the commencement of the relationship[2].   

   [1] Wife’s Affidavit, filed 27.8.19, at [9].

   [2] Husband’s Affidavit filed 28.10.19, at [15(c)].

2. The parties married on … 2003.  At the time the parties married they had $50,000 in savings[3].  In 2004 the Husband received an offer to work overseas in Country Z with Employer K with a substantially greater salary than he was earning in Israel, and in 2005 parties moved to Country Z[4].  In 2006 they returned to Israel.  The parties purchased their house in City R, Israel (City R Property)[5].  When the parties first returned to Israel they lived with the paternal grandparents for a few months and then moved to live in the City R Property.  The Husband returned to work in his previous position with Employer K.

   [3] Wife’s Affidavit, filed 27.8.19, at [11].

   [4] Husband’s Affidavit, filed 28.10.19, at [17].

   [5] Wife’s Affidavit, filed 27.8.19, at [15].

3. The parties’ first daughter X was born on … 2006.  The Wife returned to work in late 2006 as a professional at the Employer L and later at the Employer M.

4. In about 2010 the Husband received an offer from Employer K to work in Australia and later that year the family moved to Melbourne.  The parties rented out the City R Property when they moved to Australia.  In Melbourne the family moved into a rented house at Suburb E.  The parties’ second daughter Y was born on … 2011. 

5. The Husband’s employment with Employer K ceased in 2012 and the parties remained in Australia.  The Husband then commenced working as a Professional with ‘Employer AA’ as a contractor.  The family then moved to other rental accommodation at Suburb E.

6. The parties separated under one roof on 25 March 2013[6].

   [6] Wife’s Affidavit, filed 27.8.19, at [25].

7. On 15 February 2015 the Wife left the matrimonial home with the children[7]. On 24 February 2015 the Wife obtained an Interim Intervention Order from the Suburb N Magistrates' Court with the Wife and the children named as the affected family members and the Husband named as the respondent.  A Final Intervention Order was later made which expired in January 2018[8].

   [7] Wife’s Affidavit, filed 27.8.19, at [19].

   [8] Wife’s Affidavit, filed 27.8.19, at [48].

8. The Wife commenced proceedings in this Court on 6 March 2015 (First Proceeding).  After interim property and parenting orders were made on 23 March 2015, the Husband returned to Israel for a few months, returning to Australia in about mid 2015[9]. 

   [9] Wife’s Affidavit, filed 27.8.19, at [45]-[46].

9. By November 2015 the parties had reconciled and the Husband had moved into a house that the Wife was renting at F Street, Suburb G.  In November 2016 the Wife withdrew her Initiating Application and on 6 November 2015 the Court Ordered that the First Proceeding be dismissed.

10. In mid-2017 the parties sold the City W Israel Property and purchased the D Street, Suburb E Property.   The parties used funds from the sale of the City W Property and a loan from AMP (AMP Loan) secured by the AMP Mortgage to purchase the D Street, Suburb E Property.  Most of the funds from the sale of the City W Property were kept in the AMP Offset Account.  The D Street, Suburb E Property is registered in the name of both the Husband and the Wife.  The family moved into the D Street, Suburb E Property in November 2017[10].  

    [10]Wife’s Affidavit, filed 27.8.19, at [49].

11. In December 2017 the parties separated again under one roof.  The Husband left the D Street, Suburb E Property on 31 March 2019.

12. The City R Property was sold in early 2019 and the proceeds of the sale are held in trust by the parties’ Israeli solicitor Mr C, pending agreement between the parties or orders of the Court[11].      

    [11]Wife’s Affidavit, filed 27.8.19, at [57].

Procedural History

1. The Wife commenced this proceeding by filing an Initiating Application on 27 August 2019 (Initiating Application), together with an Affidavit (Wife’s Affidavit), a Notice of Risk and a Financial Statement (Wife’s Financial Statement).  In the Initiating Application the Wife sought interim and final property and parenting orders.  The interim property orders sought are that:

   a)The Husband pay the Wife periodic spousal maintenance of $650 a week.

   b)The Husband do all things necessary to authorise the parties’ Israeli solicitor, Mr C, to transfer from the net proceeds of sale of the City R Property held by Mr C in trust for the parties, the necessary amount to discharge the AMP Loan secured by mortgage against the D Street, Suburb E Property, and that until such time, the Husband pay the loan repayments due on the AMP Loan from his income.

   c)The Husband make full and frank disclosure of his financial circumstances within 14 days, including disclosure of the documents specifically referred to in paragraph 3(a) to (k) of the Initiating Application. 

2. The Husband was served with the Initiating Application, the Wife’s Affidavit, the Notice of Risk and Financial Statement on 7 October 2019[12].

   [12] Affidavit of Service of Ms B, filed 23.10.19.

3. On 28 October 2019 the Husband filed a Response, together with an Affidavit (Husband’s Affidavit), a Notice of Risk and a Financial Statement (Husband’s Financial Statement).  In the Response the Husband sought interim and final property and parenting orders.  The interim property orders sought are that:

   a)The D Street, Suburb E Property be sold.

   b)The balance of the proceeds of sale of the D Street, Suburb E Property be held in the Husband’s solicitor’s trust account pending the resolution of the property proceeding between the parties.

   c)The Wife make full and frank disclosure of her financial circumstances within 14 days, including disclosure of the documents specifically referred to in paragraph 6(a) to (o) of the Response. 

4. The first return date of the Initiating Application was in the Duty List on 30 October 2019.  On that occasion both the Wife and the Husband were represented by Counsel.

Position of the Parties

The Wife

1. At the hearing in the Duty List on 30 October 2019 the Wife sought the following interim property orders:

   a)The parties forthwith do all acts and things necessary to cause the release of $50,000 to the Wife’s solicitors by 4.00 pm Friday 1 November 2019 from the AMP Offset Account.

   b)The characterisation of the funds pursuant to the Order referred to in sub-paragraph (a) be reserved to trial, pending financial disclosure.

   c)The parties forthwith do all acts necessary to cause the transfer to the Wife’s solicitor’s trust account the entirety of the Israeli Funds.

   d)Upon the transfer of the Israeli Funds to the Wife’s solicitor’s trust account pursuant to the Order referred to in sub-paragraph (c), the parties forthwith do all acts and things to authorise:

   i)The discharge of the AMP Mortgage from the Israeli Funds in the sum of $634,000.

   ii)The balance of the Israeli Funds to be held in an interest bearing account on behalf of the parties, pending further order.

   e)The Husband have leave to join as second respondent to these proceedings his Father’s company H Pty Ltd and for this purpose, the Husband cause to serve his Father Mr J and H Pty Ltd with this Order and the documents filed by the parties in these current proceedings.

   f)Within 28 days the Husband provide to the Wife’s solicitors:

   i)Statements outlining all transactions since 1 January 2015 regarding the Husband’s accounts with S Bank:

   a.  …

   b.  …

   c.  …

   d.  …

   ii)The documents in paragraph 3 of the Interim Orders sought in the Initiating Application.

   g)The parties do all things necessary to jointly instruct a real estate valuer no later than 28 days prior to the mediation, at their equal expense, to value the D Street, Suburb E Property and for this purpose, the Wife’s solicitors’ nominate 3 valuers and the Husband choose one within 7 days of the nomination. 

   h)The parties attend a private mediation with a member of the Victorian Bar to be agreed between the parties.

2. Counsel for the Wife submitted that the Wife’s employment by the Employer O had been terminated in August 2019 and that she had received two months termination payment for September and October 2019.  The only other income the Wife has is employment from which she can earn $5,000 a year[13].  Counsel submitted that the Wife had not had time to respond to the Husband’s Affidavit which was filed on 28 October 2019 (4.46 pm).  Counsel submitted that the Wife had made numerous applications for employment however to date she had not been successful in obtaining employment.  Counsel advised the Court that the Wife had applied for in excess of 20 positions.  The Wife has had one job interview in September, received 10 rejection letters and had not received a response from the balance of her applications[14].

   [13] Wife’s Affidavit, at [71].

   [14] Transcript T 8:18-20.

3. Counsel advised the Court that the Wife did not pursue the application for weekly spousal maintenance as sought in the Initiation Application, but sought a lump sum of $50,000 to be characterised at trial.  The Wife also sought that the AMP Mortgage be discharged so that the funds in the Mortgage Offset account not be depleted.  It was submitted that the Husband was not paying the AMP Loan and it was being paid from the AMP Offset Account that has $380,000 in it.  Counsel for the Wife submitted as follows:

   What she says is, “I will have $50,000 out of the funds that are sitting in the offset account, the … from which the mortgage is being paid, and that amount can be characterised at trial, pending financial disclosure”.  If my client gets a job, then that money will sit there, or she will pay it in legal fees.  It will be brought into account.  If she doesn’t get a job, she will have to explain why and how she didn’t get a job, and if she gets and job and still dips into that money, she will have to explain how it’s reasonable and necessary and the like[15].

   [15] Transcript T 3:L20-26.

4. The Wife also sought to have the Israeli Funds transferred to pay off the AMP Loan.  Counsel submitted that this should be ordered as the Husband asserts that he cannot afford to make the payments on the AMP Loan.  Furthermore, in the Response the Husband seeks interim orders that the D Street, Suburb E Property, where the Wife and the Children are living, be sold.  The Husband also seeks interim orders that the proceeds of sale of the D Street, Suburb E Property be kept in in trust pending the outcome of the proceeding.  This would render the Wife and children without any accommodation pending the finalisation of this proceeding.  The Husband also argues that he cannot afford to pay any spousal maintenance.

5. Counsel for the Wife provided a Balance Sheet (Balance Sheet) to the Court as follows:

Item	Wife’s Value	Husband’s Value
D Street, Suburb E Property AMP Mortgage Balance	$900,000 ($634,000) _________ $266,000	$1,100,000 ($634,000) __________ $466,000
AMP Offset Account	$380,000	$380,000
Husband’s Non-Preserved Israeli Pension Accounts	318,832 ILS or $132,678 AUD	318,832 ILS or $123,500 AUD
Sale Proceeds in Israeli Solicitor’s Trust Account	2,205,480 ILS or $916,764 AUD	2,205,480 ILS or $790,000 AUD
Husband’s Preserved Israeli Superannuation	944,978 ILS or 393,344 AUD	944,978 ILS 360,052 AUD
Purported Loan from Husband’s Father	Nil
Total Equity	$2,133,000 AUD

1. Counsel for the Wife addressed the ‘Purported Loan from Husband’s Father’ referred to in the Balance Sheet and paragraph 20 of the Husband’s Affidavit.  Counsel submitted that the information in the Husband’s Affidavit was revealed by the Husband for the first time in paragraph 20 and she described the loan agreement referred to therein as “a sham document”[16].

   [16] Transcript T 6:L-15.

2. Counsel argued that no notice was required to be given to any third party before the Israeli Funds were transferred to Australia, as the alleged loan agreement was not an arm’s length transaction.  It was a transaction between father and son.  It was also argued that the imputed claim was an in personum claim and the Husband was now resident in Australia.  Consequently the Husband’s Father could bring any claim against the Husband in Australia.         

1. Counsel for the Wife submitted that given the pool of assets was at least AUD$2 million it was appropriate for the Wife to have a partial  distribution of $50,000 at this stage in the proceeding, given her present financial circumstances.

The Husband

1. The Husband opposed the orders sought by the Wife referred to in sub-paragraphs 21(a) to (e).  Counsel for the Husband however indicated that in the event that the Court made the order referred to in sub-paragraph 21(a), the order sought in sub-paragraph 21(b) was not opposed[17].  The Husband consented to the orders sought by the Wife referred to in sub-paragraphs 21(f) to (h)[18].

   [17] Transcript T 11:L11-31.

   [18] Transcript T 18:L13-25.

2. The Husband also sought an order for discovery of financial documents in accordance with paragraphs 6(a) to (i) and (k) to (o) of the Interim Orders sought in the Response, save that:

   a)In sub-paragraph 6(g) the Husband also sought “any superannuation, pension, life insurance or other retirement benefit held in Israel or other retirement benefits”; and   

   b)The Husband also sought: “Details of the Wife’s withdrawals from the joint savings of the parties subsequent to separation”[19].

   [19] Transcript T 18:L28-28.

3. This order was not opposed by Counsel for the Wife[20].

   [20] Transcript T 18:L31-40.

4. Counsel for the Husband advised the Court that she was instructed not to pursue at that interim hearing the Husband’s interim application to sell the D Street, Suburb E Property[21].

   [21] Transcript T9:16-20.

5. Counsel submitted that the Husband opposed the orders sought in paragraph 21(a) and (c) on the basis of the matters referred to in paragraph 20 of the Husband’s Affidavit.  Counsel tendered a copy of a document entitled ‘Loan Agreement’ between H Pty Ltd and the Husband, dated 11 February 2006[22] (Loan Agreement) and a copy of a document entitled Letter from Husband to H Pty Ltd, dated 1 February 2006[23] (Request for Drawdown).  Counsel submitted that:

   [22] Exhibit R1.

   [23] Exhibit R2.

   “[…] the reality of this loan agreement is quite a substantial issue in this case”[24].

   [24] Transcript T 12:L23-24.

6. It was submitted that The Loan Agreement “corroborated” [25] what was deposed to in paragraph 20 of the Husband’s Affidavit which states:

   We purchased a home in City R, Israel for the sum of USD$269,000.000 which was financed by way of a loan facilitated from my father in the sum of USD$205,000.000 and the balance of approximately USD$64,000.000 from our then savings.  The loan was formalised by loan agreement between a company controlled by my father known as H Pty Ltd as lender and myself as borrower dated 1st February 2006 (“the loan agreement’).  The loan agreement was repayable on the 31^st day of December, 2009 with interest to be agreed upon during the period plus a margin of 2% per annum.  The interest payable pursuant to the loan agreement from the 31^st December, 2009 is 15%.  Based on my calculations there is in excess of USD$550,000.000 owed to my father but I am expecting that my father will accept a reduced amount of USD$320,000.00 in satisfaction of monies owed to him.

   [25] Transcript T 13:7.

1. Counsel for the Husband also submitted that the Request for Drawdown showed that there was an amount of $205,000 drawn down on 13 February 2006[26].  It was also submitted that the Loan Agreement and the Request for Drawdown demonstrated that:

   “[…] the entire loan of the amount that was drawn down was due to be paid in full by 2009[27].

   [26] Transcript T:38-39.

   [27] Transcript T:11-12.

2. It was also submitted that pursuant to Section 5 of the Loan Agreement the overdue interest rate is 15%.  It was contended that when a calculation was done of interest at 15% on US$205,000 from 2006 the amount owing by the Husband to H Pty Ltd. Ltd would exceed the amount held in Israel at the present time.  It was further submitted that H Pty Ltd should be given notice of the Wife’s claim, so that it could commence proceedings in Israel.

3. Counsel for the Husband also submitted that the Husband opposed the order referred to in paragraph 21(a) being made on the basis that it would increase the mortgage repayments.  Drawing down on the AMP Offset Account would increase the repayments on the AMP Loan.  Counsel however conceded that the Wife:

   […] would have an entitlement to of at least $50,000, and obviously substantially more […][28].  

   [28] Transcript T 18:8-9.

The Law

1. The law in relation to property settlements between married parties, whether partial or complete, is found in Part VIII of the Family Law Act 1975 (Cth) (Act).

Jurisdiction of Power to Make Order

1. Section 80 of the Act refers to the general powers that the Court has under Part VIII of the Act.

2. Section 80(1)(h) gives the Court the power to:

   make a permanent order, an order pending the disposal of proceedings or an order for a fixed term or for a life or during joint lives or until further order.

3. Section 80(1)(k) gives the Court power to:

   make any order (whether or not of the same nature as those mentioned in the preceding paragraphs of this section), which it thinks it is necessary to do to make justice.

4. Section 79(1)(a) of the Act establishes the power of the Court to alter the property interests of married parties.

5. Section 79(2) of the Act provides:

   The 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.

6. In Strahan & Strahan[29] the Full Court of the Family Court considered the provision of funding for litigation expenses and the source of the jurisdiction under the Act to make interim orders for litigation costs. The Full Court said:

   In Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578 … Brereton J observed at [29], “[t]he juridical bases for an order for preliminary provision for litigation costs in matrimonial proceedings are diverse”. As Brereton J said, an order may be made as a maintenance order under ss 72 and 74 of the Act or a property settlement or order under s 79 and s 80(1)(h) or a costs order under s 117[30].

   …

   The Full Court however was of the opinion that the decisions in Wilson[31] and Poletti[32] are authority for the proposition that where there are pending proceedings under s 79 for property settlement an order for the provision of funds may be made pursuant to s 80(1)(h) and independently of the power in s 117(2)[33].

[29] (2011) FLC 93-466; [2009] FamCAFC 166.

[30] Ibid., at [81].

[31] In the Marriage of Wilson (1989) FLC 92-033.

[32] In the Marriage of Polletti (1990) 15 Fam LR 794.

[33] (2011) FLC 93-466; [2009] FamCAFC 166, at [82].

Further considerations

1. If the source of jurisdiction is s.79 of the Act the Full Court in Strahan & Strahan[34] said that there was a two staged approach to an interim application as follows:

   [34] (2011) FLC 93-466; [2009] FamCAFC 166.

   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 section 79 is a once and for all order made after a final hearing[35].

   [35] Ibid., at [132].

   …

   In relation to the second matter, as the jurisdiction under s 79 of the Act is being exercised the provisions of that section must be considered and applied but with limitations given that it is not the final hearing. There was also no requirement of compelling circumstances in relation to the substantive step[36]. 

   [36] Ibid., at [135].

2. The Full Court in Strahan & Strahan[37] also considered the “adjustment issue” or “claw-back issue” that was discussed in Harris & Harris[38].   The Full Court said in Strahan & Strahan:

   […] the discretion conferred by the power in s 79 is to make such order as the Court considers appropriate provided it is just and equitable to make the order in circumstances where the power will not be exhausted by the interim order. As Bryant CJ and Coleman J observed in Gabel v Yardley[39] at [69] and [72] the interim order must be capable of variation or reversal without resort to s 79A of the Act or appeal. As Finn J said at [126] the interim order must be “capable of alteration at any time prior to, or as part of, the final exercise of the s 79 power”.

   Once the 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 s 79 (4) including by reference to s 79(4)(e) the matters in s 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 orders sought to be made”: Zschokke[40]; Polletti and Polletti[41] per Nygh J and Wenz v Archer[42]… In other words, in such circumstances the applicant would only be receiving what he or she was entitled to receive when the power was exhausted[43].

   [37] (2011) FLC 93-466; [2009] FamCAFC 166.

   [38] (1993) FLC 92-378, at 79, 930.

   [39] (2008) 40 Fam LR 66.

   [40] (1996) FLC 92-693.

   [41] (Unreported, Family Court of Australia, Nygh J, 2 March 1990).

   [42] (2008) 40 Fam LR 212.

   [43] (2011) FLC 93-466; [2009] FamCAFC 166, at [136]-[137].

3. As discussed above in paragraph 28, it was submitted by Counsel for the Wife, that the property pool could well accommodate the payment sought by the Wife without prejudicing the Husband’s claim.  Furthermore Counsel for the Husband conceded that the Wife was obviously entitled to substantially more than the $50,000 distribution sought[44].

   [44] Transcript T 18:8-9.

4. The Full Court in Strahan & Strahan[45] said the following:

   We also emphasis 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[46].  

   [45] (2011) FLC 93-466; [2009] FamCAFC 166.

   [46] Ibid., at [139].

Property Adjustment Section 79(1)

1. In Stanford v Stanford[47] the High Court said that before making any orders for the adjustment of the parties’ property interests, the Court must first determine whether it is just and equitable to make any property orders, or to alter the parties’ interests in property.  The High Court stated:

   First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property…. The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order[48].

   [47] (2012) 247 CLR 108.

   [48] Ibid., at [37].

2. The High Court further stated:

   In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end.  Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4)[49].

   [49] Ibid., at [42].

3. In Bevan & Bevan[50] the Full Court said that the circumstances described in the above passage of the Stanford v Stanford judgment “encapsulate the vast majority of cases”[51] .  Therefore in most proceedings for the alteration of matrimonial property interests, the decision as to whether or not it is just and equitable for the Court to make property orders is resolved by the breakdown of the marital relationship and the mutual applications of the parties to the Court for orders altering their respective property interests.  There is nothing in the present case to distinguish it from “the vast majority of cases”[52].

   [50] Bevan & Bevan [2013] FamCAFC 116.

   [51] Ibid., at [70].

   [52] Loc.Cit.

Consideration – Property Distribution of $50,000

1. In Strahan & Strahan[53] the Full Court said that when considering to exercise the power under ss.79 and 80(1)(h) of the Act to make an interim property order, that the “overarching consideration” is the interests of justice[54]. 

   [53] (2011) FLC 934-66; [2009] FamCAFC 166.

   [54] Ibid., at [132].

2. Further the Full Court in Strahan & Strahan[55]  accepted that:

   […] an inability on the part of an applicant for an interim property order to defray the costs of litigation to meet his or her litigation costs would be a relevant matter to take into account at the procedural or first stage[56].   

   [55] (2011) FLC 934-66; [2009] FamCAFC 166.

   [56] Ibid.,at [138].

3. Both the Wife and the Husband have filed Financial Statements.  Disclosure has not yet taken place.  The Wife has deposed that she presently has an income of $100 a week as a cantor and total weekly expenditure of $1,299.  Apart from joint savings she does not have access to funds to pay for her legal expenses.  The Husband claims that the Wife is working however he has produced no evidence to the Court, apart from his own assertions.  The children live with the Wife nine nights and the Husband five nights in a fortnight[57].

   [57] Transcript T 2:16-19.

4. The Husband has deposed that he earns $3,852 a week, which is some $200,304 per annum.   The Husband claims in his Financial Statement that he is paying the AMP Loan at $395 a week[58] and yet it was conceded by his Counsel that this payment was being made from the AMP Offset Account.  The Husband has argued that he cannot afford to pay the AMP Loan or any spousal maintenance.   

   [58] Husband’s Financial Statement, at Item [21].

5. In all the circumstances of this case, where the Wife has no access to funds with which to pay for living expenses or to conduct these proceedings, I find that it is in the interests of justice to exercise the power under ss.79 and 80(1)(h) of the Act to make the orders for an interim property settlement between the parties pending final orders.

6. I turn now to the second stage of the consideration and consider the provisions of s.79 of the Act.

Section 79

1. Section 79 of the Act regulates the alteration of property interests of parties to a marriage. Section 79(1)(a) of the Act provides that the Court may make such orders as it considers appropriate altering the interests of the parties in the property. Section 79(2) provides that the Court may not make an order pursuant to s.79 unless in all the circumstances “it is just and equitable”.

2. In this matter the parties have separated and both parties have made an application to the Court seeking orders altering their respective property interests.  The parties are no longer living in a marital relationship and consequently there will not “thereafter be the common use of property by the husband and the wife”[59].

   [59] Stanford v Stanford (2012) 247 CLR 108, at [42].

3. I am therefore satisfied that it would be just and equitable to alter the parties’ property interests under s.79(2). I will now consider the law in relation to the alteration of property interests under s.79.

4. Section 79(4) sets out the matters that the Court must take into account when deciding which orders (if any) should be made.

5. Section 79(4) provides:

   In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:

   (a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in      relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and

   (b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether     or not that last-mentioned property has,     since the making of the contribution, ceased   to be the property of the parties to the    marriage or either of them; and

   (c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and

   (d)the effect of any proposed order upon the earning capacity of either party to the marriage; and

   (e)the matters referred to in subsection 75(2) so far as they are relevant; and

   (f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and

   (g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.

6. Both the Wife and the Husband say that they have made direct financial contributions and indirect contributions to the assets of the marriage.  The Husband deposed that he owned the City R Israel Property prior to the commencement of the relationship.  He says that he purchased it for approximately USD$140,000.  The Husband deposes that he financed the purchase price using his savings and a loan of approximately USD$100,000 from P Bank in Israel, secured by a mortgage over the property[60]: s.79(4)(a) and (b).

   [60] Husband’s Affidavit, filed 28.10.19, at [15(c)].

7. Both parties say that they have contributed to the welfare of the family by caring for the children both during the marriage and after separation: s.79(4)(c).

8. The order proposed in paragraph 21(a) will not affect the income earning capacity of the parties: s.79(4)(d).

9. There are no orders made under the Act affecting the parties or the children: s.79(4)(f).

10. The Husband has deposed that he is paying child support of $207 a week[61]: s.79(4)(g).

    [61] Husband’s Financial Statement, at Item [31].

11. The Court must also consider the matters referred to in s.75(2) so far as they are relevant: s.79(4)(e). Section 75(2) sets out the matters the Court must take into account when deciding to make any order for spousal maintenance. I now consider the matters referred to in s.75(2).

12. In relation to s. 75(2)(a): The Wife was born on … 1975 and is aged 44. There is no evidence before the Court in relation to the Wife’s state of health. The Husband was born on … 1971 and is aged 48. The Husband says that he is in reasonably good health, although he is anxious and “[…] goes through periods of being depressed”[62].   The Husband says that:

    It is my intention to cease working in my current position and seek alternative employment involving less pressure which I believe will involve a reduction in my earnings[63].

    [62] Husband’s Affidavit, at [6].

    [63] Husband’s Affidavit, at [6].

1. There is no independent medical evidence before the Court of any health or medical condition suffered by the Husband.

2. In relation to s.75(2)(b): As to the income of the parties, I refer to the discussion in paragraphs 54 and 55. In relation to the property of the parties I refer to the Balance Sheet. The Wife’s Financial Statement otherwise discloses the following assets:

   a)An AMP account No #… in the parties’ joint names with a total balance of $54,700.

   b)     Ownership of a Motor Vehicle T valued at $15,500.

   c)     Household contents valued at $1,200.

   d)     AMP Superannuation valued at $4,837.

3. The Husband’s Financial Statement otherwise discloses the following assets:

   a)A National Australia Bank account in the Husband’s name with a balance of $9,102.

   b)An AMP account No #… in the parties’ joint names with a total balance of $48,692.

   c)Ownership of a Motor Vehicle U valued at $13,000.

4. In relation to s.75(2)(c): The children live with the Wife nine nights in a fortnight and the Husband five nights[64].  The Initiating Application and the Response both seek this regime as interim orders.

   [64] Transcript T 2:16-19.

5. In relation to s.75(2)(d): Both parties relied on their Financial Statements. Neither party has disclosed a commitment to support any other child or person.

6. In relation to s.75(2)(g): The Wife presently only has an income of $100 a week. This does not support a standard of living that in all of the circumstances is reasonable where the parties have separated.

7. I have considered the other subsections in s.75(2) and do not consider them to be relevant in the present case.

8. Having reviewed the evidence, it is apparent that the Wife will receive by way of a property settlement, a sum sufficient to cover the order proposed by the wife as stated in paragraph 21(a). Having considered the law and the evidence under s.79 in the context of this hearing being an interim hearing and not a final hearing, I must now decide whether to make the order in paragraph 21(a).

Conclusion – Property Distribution of $50,000

1. I have determined to make an order in accordance with paragraph 21(a) for the release of $50,000 to the Wife’s solicitors from the AMP Offset Account.  I have also determined to make an order in accordance with paragraph 21(b), that the characterisation of the funds shall be reserved until trial.  This second order is not opposed by the Husband.  In any event there has not been disclosure between the parties and there is insufficient information before the Court at present that would permit a characterisation of the property distribution.   

2. The Wife seeks $50,000 for living expenses and/or litigation costs. An order for litigation costs may be made as a maintenance order under ss.72 and 74 of the Act or a property settlement or order under ss.79 and 80(1)(h) or a costs order under s.117[65]. I make the order referred to in paragraph 21(a) by way of part property settlement under ss.79 and 80(1)(h) of the Act.

   [65] Ibid., at [81].

3. I have therefore made orders in accordance paragraphs 21(a) and (b).

Consideration - Transfer of Israeli Funds

1. The Wife seeks the orders in paragraph 21(c) and (d) and the Husband opposes these order on the basis of the matters deposed to by the Husband in paragraph 20 of the Husband’s Affidavit.  Notwithstanding Counsel for the Husband describing the existence of the Loan Agreement as being “quite a substantial issue”[66] in this case, the Husband has not produced the Loan Agreement on oath in his affidavit.  It was left to Counsel for the Husband to simply tender the Loan Agreement during submissions, as with the Request for Drawdown.

   [66] Transcript T 12:L23-24.

2. Contrary to the submissions of Counsel for the Husband, the Request for Drawdown does not show that an amount of $205,000 was drawn down on 13 February 2006.  No documentary evidence at all has been produced to demonstrate that any funds have ever been transferred from any account held by H Pty Ltd to the account specified in the Request for Drawdown or any other account held  by the Husband.

3. The Husband asserts that he has calculated that an amount in excess of $550,000 is owing to his Father.  No information is provided as to how this calculation was arrived at other than specifying the rate of the default interest pursuant to the Loan Agreement.  No information is provided as to the “mutually agreed” interest rate (if any) that is purported to be pursuant to section 4 of the Loan Agreement.

4. It was contended by Counsel for the Husband that any dispute concerning the Israeli Funds between the H Pty Ltd and the Husband would have to be litigated in Israel because the contract was made in Israel and the funds were being held in Israel[67].  There is no evidence before me as to where the Loan Agreement was entered into.  The Husband’s solicitors were unable to provide any information as to where the registered office of H Pty Ltd is presently located or was located at the time the Loan Agreement was purportedly entered into.  It would seem from the Loan Agreement that as at … 2006 the registered office was in the Country Q.  There is no evidence before the Court as to the circumstances of the Loan Agreement being entered into other than paragraph 20 of the Husband’s Affidavit.

   [67] Transcript T 15:45-16:25.

5. It was also submitted by Counsel for the Husband that another reason that the dispute over the Israeli Funds needed to be litigated in Israel was because the Loan Agreement was subject to Israeli law[68].  However the Loan Agreement commences with:

   THIS AGREEMENT, Contract number … (hereinafter referred to as “the Contract”) is concluded pursuant to the provisions of the laws of England and under the jurisdiction of the English court is made by and between the following parties […]

   Section 7 of the Loan Agreement states:

   The credit relationship pursuant to this Contract is to be governed by and construed in accordance with the laws of England and each of the parties submits to the non-exclusive jurisdiction of the High Court in London.

   [68] Transcript T 16:13-25.

6. Therefore Israeli law does not apply to the Loan Agreement, English law applies.  A Court needs to apply English law to any dispute involving the Loan Agreement.

7. The Loan Agreement specifies in section 5 that the Repayment Date is 31 December 2009.  There is no evidence of any discussions that the Husband has had with his Father in relation to this alleged debt, although it is inferred by the following in paragraph 20:

   [..] but I am expecting that my father will accept a reduced amount of USD$320,000 in satisfaction of monies owed to me.

1. There is no evidence of any demands for repayment of the alleged debt.  The Husband has deposed that the debt was due on 31 December 2009, now nearly ten years ago.  I note that s.5 of the Limitation Act 1980 (UK) provides that an action founded on a simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued.  Therefore it would seem that under English law any claim that H Pty Ltd may have is statue barred, as the cause action accrued when the debt became due.  On the basis of the Husband’s evidence the cause of action accrued on 31 December 2009 when the debt became due.  Therefore any claim became statute barred on 1 January 2016.  

2. I note further that any claim that H Pty Ltd may have against the Husband is an in personum claim, a right of action specifically against the Husband.  The Husband is now resident in Australia.

Conclusion - Transfer of Israeli Funds

1. The Loan Agreement is a non-arm’s length transaction between H Pty Ltd, a company apparently controlled by the Husband’s Father.  There is presently no independent evidence before the Court whatsoever that any funds have ever been advanced to the Husband as described in paragraph 20 of the Husband’s Affidavit. 

2. The Husband had three weeks after being served with the Initiating Application and the Wife’s supporting documents to prepare his responding material and yet he did not even annex the Loan Agreement or the Request for Drawdown to his Affidavit.

3. For the reasons discussed above I am not persuaded on the evidence presently before me that any funds have been advanced by H Pty Ltd pursuant to the Loan Agreement.  Even if funds were advanced pursuant the Loan Agreement if any amount is owing, on the evidence presently before me the Husband may raise a defence of limitation of actions.

4. Even some funds were advanced by H Pty Ltd am also wholly unpersuaded that the sum of USD$550,000 is owing and I regard this claim to be speculative, given its wholly unparticularised nature.

5. The weight of the evidence is that the Israeli Funds are the property of the Husband and the Wife and therefore should be transferred to Australia.  

6. In my view there is no necessity to give the Husband’s Father prior notice of the transfer of Israeli Funds.  As I have noted above, this is a non-arms’ length transaction and H Pty Ltd is not an independent third party.  I intend to make the order sought by the Wife in paragraph 21(e), giving the Husband leave to join H Pty Ltd to this proceeding and to serve the Court documents on his Father and the company.

7. The Israeli Funds should be used to pay off the AMP Loan.  This will enable the Wife and the children to live in the D Street, Suburb E Property pending the resolution of this proceeding.  I am also mindful that the Husband has not abandoned his interim application to sell the D Street, Suburb E Property.  The Wife and the children should not have the worry of the Husband revisiting this application during the course of this proceeding.  In making this order I also take into account the Husband’s claims that he is unable to pay the AMP Loan and spousal maintenance. 

8. I make the orders referred to in paragraphs 21(c) and (d) pursuant to s.80(k) of the Act as I consider it necessary to do justice between the parties.

9. I intend to make an order pursuant to s.114(1)(e) of the Act restraining either party from encumbering the D Street, Suburb E Property pending the resolution of this proceeding or the agreement of the parties. The Israeli Funds are to be secured pending the resolution of this proceeding by being invested in either the D Street, Suburb E Property or by the balance of the Israeli Funds being held in the Wife’s solicitors trust account.

I certify that the preceding ninety-eight (98) paragraphs are a true copy of the reasons for judgment of Judge C. E.  Kirton QC

Date: 8 November 2019