HADLEY & HADLEY

[2014] FamCA 831

FAMILY COURT OF AUSTRALIA

HADLEY & HADLEY [2014] FamCA 831

FAMILY LAW – PROPERTY SETTLEMENT – An application made by the wife for a payment from the husband in relation to legal costs, spousal maintenance and property settlement, such sum to be categorised and taken into account by the trial judge at the final hearing – where there have been three previous orders for payment to the wife – where there is no compelling evidence that there should be another interim adjustment of property – where in respect of spousal maintenance, there is no particular information to support the exercise of this power – where there is no order as to legal costs – where the husband has proposed a self-imposed restraint on his use of the net proceeds of sale of a property – wife’s application dismissed

Family Law Act 1975 (Cth) ss 72, 79, 80, 81, 117

In the Marriage of Waugh (2000) FLC 93-052
M & DB (2006) FLC 93-293
Pierce & Pierce (1999) FLC 92-844
Stanford & Stanford (2012) 247 CLR 108

APPLICANT: Ms Hadley

RESPONDENT: Mr Hadley

FILE NUMBER: NCC 2881 of 2011

DATE DELIVERED: 24 September 2014
Ex tempore

PLACE DELIVERED: Newcastle

PLACE HEARD: Newcastle

JUDGMENT OF: Cleary J

HEARING DATE: 23 September 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Page SC

SOLICITOR FOR THE APPLICANT: Bridge Street Lawyers

COUNSEL FOR THE RESPONDENT: Mr Bithrey

SOLICITOR FOR THE RESPONDENT: Catherine Henry Partners

Orders

1. That the Application in a Case filed by the Wife on 24 September 2014 be dismissed.

2. That the proceeds of sale of F Street, G Town (“Property F”) be applied as follows:

   (a)       in payment of the usual costs and disbursements in respect of the sale;

   (b)       in discharge of the mortgage secured against Property F;

   (c)in repayment of the loan due and payable to H Pty Limited in the amount of $176,909;

   (d)an amount of $500,000 specified by Bankwest to be held in trust pending performance of existing guarantees related to H Pty Limited;

   (e)the Respondent be at liberty to utilise the remaining capital to purchase a residential property;

   (f)after payment and/or utilisation of the net proceeds in accordance with Orders 3(a)-(f) any remaining proceed to be placed into the Trust Account of Catherine Henry Partners where such proceeds shall be held pending resolution of the property application.

3. That there be no orders as to costs.

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

FAMILY COURT OF AUSTRALIA AT NEWCASTLE

FILE NUMBER: NCC 2881 of 2011

Ms Hadley

Applicant

And

Mr Hadley

Respondent

REASONS FOR JUDGMENT

1. These are applications which were listed for case management at 9.30 am on

   
   

   23 September 2014.  Court time was particularly sought by the respondent husband to deal with his application for the wife to lift a Caveat lodged by her on a property sold and due to settle on 10 October 2014.  Time became available in a duty list to hear that application and also to hear the application of the wife for an interim payment to her and a restraint on a use of proceeds of sale of the property referred to.  Orders were made by consent for the lifting of the caveat. 

2. By her Amended Application in a Case filed 19 September 2014, the wife seeks the following orders:

   (1)That within seven days from the date of these orders the husband forthwith pay into the trust account of Bridge Street Lawyers the sum of $90,000; such sum to be categorised and taken into account by the trial judge at the final hearing. 

   (2)That the net proceeds of sale of the property, following payment of the amount owing to Bankwest, pursuant to a mortgage secured against the title to the property and after any payment to Bankwest pursuant to personal guarantees secured against the property as may be advised by Bankwest in writing to Bridge Street Lawyers, be paid into the trust account of Bridge Street Lawyers where such proceeds are to be held pending resolution of the wife’s property application filed herein. 

3. The net proceeds of sale are anticipated to be somewhere between $2 million and $2.5 million.  In support of her application, the wife relies on an affidavit by her, sworn on 26 August 2014 and a financial questionnaire filed 16 September 2014. 

4. The wife relies on three powers of the Family Law Act 1975 (Cth) for the orders sought for payment of the $90,000, namely:

   ·Section 117 as to legal costs of $50,000;

   ·Section 80(1)(a),(b) for lump sum spouse maintenance; and

   ·Section 81(h) in respect of property of $20,000.

5. The application of the wife is opposed by the husband by his Response filed 17 September 2014. 

6. The husband asks for the Application in the Case to be dismissed and for orders in relation to disbursing of the net proceeds of sale of Property F.  That order is set out as order 3 in the Response document. 

7. The husband anticipated purchasing a replacement property and putting the expected residual proceeds of about $280,000 into his solicitor’s trust account.[1]  The court was advised there would likely be no or minimal residual funds.  The wife opposes this course.  She asks for the whole of the net proceeds to be paid into her solicitor’s trust account pending the trial.  The matter has now been set down for trial for five days commencing 23 March 2015.

   [1]Affidavit of husband  filed 17/09/2014, Annexure ‘JH1’

Short history

1. The parties met in January 2006 when the wife was employed to work on the husband’s property, F.  The wife was a farm worker.  The wife is 57, the husband is 67.  The relationship changed after about three months and the parties began living together on the property. 

2. In 2006 the parties married. 

3. On 3 May 2011 they separated.  Accordingly, there was a relevant relationship of five years.  The wife says, and the husband disputes, that the relationship ended as a result of a violent assault on her by the husband.  That may be an issue in the final hearing. 

4. The wife left the F property and moved away taking animals; some owned initially by her, others bred during the course of the marriage.  The wife had 12 animals at the commencement of the relationship, 36 by the date of separation. 

5. On behalf of the wife, it is submitted that the husband has, by consenting to previous interim payments in July 2012 and March 2013, forgone his right to assert that there should be no adjustment of current interests.  The decision of the High Court in Stanford & Stanford (2012) 247 CLR 108 was relied on. Senior counsel for the wife agreed that he meant by that that the husband could only have filed a Response for dismissal and done no more in order to maintain that position. I do not agree.

6. Although speculating, it appears that the husband himself may have agreed with that proposition, at least initially.  The husband has an obligation under the legislation to make full and frank disclosure of his financial position once an application is made.  It certainly was the case that the husband was reluctant to provide information and engage with court processes after the application of the wife was first made in 2011.   The wife was obliged to instruct her lawyers to press for information.  There was delay.  The earlier two payments, made by consent and left for categorisation at trial, probably reflect those difficulties. 

7. There have been three previous orders for payment to the wife, namely:

   a)$90,000 on 27 July 2012 by consent and uncategorised; 

   b)$40,000 on 7 May 2013 (Orders 12 and 7) by consent and uncategorised; and

   c)$40,000 on 25 February 2014 by order of the Court; $15,000 of which was to be allocated to mediation. 

8. The question for the Court is, whether in all the circumstances, this is a proper case for a further interim order to be made?  In answering that question it is necessary to analyse the asset pool and the respective claims on it. 

9. From the filing of her first application on 7 November 2011, the wife has sought orders to the effect that 35 per cent of the net assets held by the husband in his name should be allocated to her, and that the wife should retain those assets in her own name.  That continues to be her position. 

10. The response of the husband filed 9 February 2012 was for each party to retain all assets in their respective names, effectively, for each to retain the assets and bear the liabilities which were brought into the marriage without adjustment.  That position is confirmed in his Amended Response filed 17 September 2014. 

11. The parties are very far apart in their assessment of respective entitlements.  The husband asserts that his initial contribution, particularly the provision of the property, which provided a home for the wife and accommodation for her animals on the property, overwhelms the contribution of the wife.  Authority of Pierce & Pierce (1999) FLC 92-844 was relied on. Counsel for the husband described “a five-year marriage later in life.” It is an accurate reflection; a short marriage with no children. The husband’s position is no further adjustment of interests. His position is that any further interim payment to the wife will exceed the range of adjustments open to the court.

12. The asset pool is identified in a joint Balance Sheet.[2]  The parties agree that there is a net asset pool of not less than $4 million, with the value of various corporate assets being items 4 to 8 inclusive on that balance sheet, not yet known as to value to be added.  Of the known pool, the value of assets in the name of the wife, are between one to two per cent.  The wife asserts an appropriate adjustment to her would be about $1.4 million of the known assets, and in addition, the retention of her own assets including animals and the $170,000 of payments already made.

    [2]Exhibit 3

13. There is only one exercise of the power under s 79 of the Act to adjust interests in the matrimonial property. However, the power may be exercised by a succession of orders until the power is exhausted. That is, until there is no property with respect to which orders could be relevantly made.

14. The question is, whether it is appropriate to exercise the discretion to make an order?  In this particular case, the order sought is divided into three: costs, spousal maintenance and property settlement. 

15. There is no compelling evidence before me that there should be an adjustment of property.   The wife is living on a rented property with her animals, which she has retained, although some have recently been sold.  She is clearly awaiting the outcome of the final hearing.  So, purely in terms of an interim property order, I decline to make that order. 

16. In respect of spousal maintenance, there is no particular information to support the exercise of this power.  A specific application for spousal maintenance, with the consequential breakdown of expenses, was not filed.  However, in her affidavit, there were two paragraphs which set out her expenses.[3]  The wife has not worked since separation.  That is, of course, her choice.  She worked prior to separation on the property, and that is at the heart of the contributions that she sets out in her material that she asserts that she made, mainly farm work, but also domestic work in the home.  However, her capacity to work is also established by those contributions, including diverse farm work and animal-breeding.  The wife has chosen to continue to keep her animals, feed and maintain them. 

    [3]Affidavit of wife filed 03/09/2014, pars 36 and 37

17. On behalf of the husband, it is submitted that there is insufficient evidence for the Court to conclude that the wife is unable to support herself adequately, as is required by s 72 of the Act.

18. There is no evidence to suggest that the wife is generating income from the animals or any other source, other than sale of animals, which would offset the cost of feeding and maintaining the animals.  Although the husband has the capacity to pay lump sum maintenance, I am not satisfied, in circumstances where the wife was working both before and during the marriage, that she is unable to adequately support herself. 

19. The wife has a war widow’s pension of $862.40 per fortnight.  She rents a rural property for $550 per week.  She left the marriage with 36 animals, some of which have been sold.  On behalf of the wife it is submitted that:

    … she came with a [group] of [animals], she developed the [group], the husband must take the wife as he found her.  Why shouldn’t she maintain her [animals]?  

20. I do not accept that submission.  The wish of the wife to feed and maintain her animals, and pay rent for a property of sufficient size to enable her to do so, whilst understandable, is not the basis for a spousal maintenance payment. 

Costs

1. The wife has had some uncategorised funds.  She has been represented by senior counsel on each occasion where costs orders have been made.  In the third payment of February 2014, $15,000 was allocated to the cost of a mediation that did not take place. 

2. As I have said, whilst the earlier interim payments were arguably attributable to legal costs incurred by the wife encouraging the husband to engage with the process, the bulk of the work since has been undertaken by the legal representatives for the husband for understandable reasons. 

3. The husband has retained the assets of the marriage, most of which were his when the relationship commenced.  Accordingly, the work associated with having them valued and, in the case of the most significant asset, sold, has fallen on him, and to that extent, his lawyers. 

4. In all of the relevant circumstances of this case, I decline to exercise the relevant powers to make a further interim order as to costs. 

The restraint on use of proceeds of sale

1. The question for the Court in respect of this matter is whether an injunction is necessary.  I must be satisfied that a risk of disposal of property in order to defeat a judgment is evident before making such an order.  In the Marriage of Waugh (2000) FLC 93-052 is the authority for that proposition. Further, I must ensure that any injunction imposed goes no further than necessary to prevent abuse or frustration of the Court’s processes with respect to the substantive proceedings.

2. I also take into account the authority in M & DB (2006) FLC 93-293, which enjoins the Court to consider all relevant factors, not just the issue of whether there is any scheme to dispose of assets. In this matter, it seems to me, in recognition of the Court’s obligation to balance possible injustice against preservation of assets for a final hearing, the husband has proposed a self-imposed restraint on his use of the net proceeds of sale of Property F.

3. He has negotiated a contract which became Exhibit 1, which permits him to occupy the property for six months post-settlement.  His plan is to purchase a smaller rural property and to continue farming.  The arrangement permits him to avoid the expense and dislocation of adjustment and transportation.  I consider that it would work a substantial injustice on the husband if relevant funds for the implementation of this scheme were simply held in the trust account of the solicitors for the wife, pending the hearing and determination of this matter. 

4. The husband takes upon himself the risk that an adjustment is made in favour of the wife which requires him to sell the second property if he acquires it in order to meet an order made.  In circumstances where he has disclosed his financial intentions and submitted to the Court, I do not consider that the restraint sought by the wife is necessary to preserve assets or, in the circumstances, just.

5. Accordingly, I make an order in terms of order 3 of the Response filed by the husband, modified by updating information from the bar table in respect of subparagraphs (d) and (e).  The application of the wife is otherwise dismissed.  No order as to costs.

I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cleary delivered ex-tempore on 23 September 2014.

Associate: 

Date:  30 September 2014