Harris and Harris

[2012] FamCA 414

FAMILY COURT OF AUSTRALIA

HARRIS & HARRIS [2012] FamCA 414

FAMILY LAW – PROPERTY - Interlocutory hearing concerning injunctions and partial distribution of property.

Family Law Act 1975 (Cth)

APPLICANT: Mr Harris

RESPONDENT: Ms Harris

FILE NUMBER: MLC 1562 of 2012

DATE DELIVERED: 5 June 2012

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 28 May 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Bartfeld QC

SOLICITOR FOR THE APPLICANT: Mills Oakley Lawyers

COUNSEL FOR THE RESPONDENT: Ms Johns

SOLICITOR FOR THE RESPONDENT: Kennedy Partners

Orders

1. That within 30 days, the husband pay or cause to be paid to the wife the sum of $500,000 as and by way of partial property settlement or as may otherwise be characterised by the trial judge.

2. That the husband be permitted to draw up to $500,000 from the G Superannuation Fund in order to effect the payment referred to in paragraph 1 hereof.

3. That the application filed 28 May 2012 seeking interim orders by the husband and the response of the wife seeking interim orders dated 23 April 2012 are otherwise both dismissed.

4. That should any party seek costs arising out of these orders, such application be made by written submission and filed and served by no later than 28 June 2011 with such submission being endorsed with the fact that it has been so served on the other party and any recipient of such submission have until 12 July 2012 to file and serve any response and such response be endorsed with the fact that it has been so served on the other party and upon receipt of any such application for costs, it or they be determined in chambers.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Harris & Harris 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 MELBOURNE

FILE NUMBER: MLC 1562  of 2012

Mr Harris

Applicant

And

Ms Harris

Respondent

REASONS FOR JUDGMENT

1. This is an interlocutory dispute between Mr Harris (“the husband”) and Ms Harris (“the wife”) in relation to financial matters.

The husband’s issue

1. The husband sought a variation of paragraph 3 of the orders made on 16 April 2012 to give him authority to list two French real estate properties so that they could be marketed for sale and to enable him to liaise with the estate agent in France for the purposes of facilitating the sale.  As Mr Bartfeld QC on behalf of the husband put it, an order was sought that the husband be appointed as trustee for the sale.  That was opposed by the wife.

The issues for the wife

1. The wife had two issues. 

2. First, she sought injunctions restraining the husband from dealing with any property described in Order 2 made on 16 April 2012 including changing officer holders, members or trustees of the various entities named in that order. 

3. Secondly, the wife sought that the husband pay her $500,000 by way of a partial property settlement or otherwise as may be characterised by the trial judge and for such purpose, the husband be permitted to draw up to $500,000 from a self-managed superannuation fund.

4. Those two orders were opposed by the husband except that he agreed that in respect of the second, the wife could have $200,000. 

Uncontroversial facts

1. The husband is 66 years of age and retired from professional life in August 2011.  The wife is 53 years of age and engaged as a manager in the business that belonged to the parties and was run by the husband.

2. The parties commenced living together in December 2000, married in May 2001 and their six year old daughter was born in June 2005.  In respect of that daughter, orders were made by the Senior Registrar resolving the living arrangements on 22 May 2012. 

3. The parties separated under one roof on 19 November 2011. 

The substantive applications

1. On 23 February 2012, the husband filed an application seeking a property division in general terms as to 75 per cent to him and 25 per cent to the wife.

2. On 23 April 2012, the wife filed a response in which (in general terms) she sought orders that the parties divide their assets equally.

The wife’s concession

1. The wife acknowledged through her counsel that there was a contribution at the commencement of the relationship by the husband that was greater than hers.  She seemed to agree that he brought in what is now the family home, the business, a yacht and some superannuation.

2. Although it was not expressly conceded, I understand the husband also received an inheritance of $360,000 in 2007.

Agreement

1. The issues above were not the only matters in the various applications before the Court but the others were not pressed.  I propose therefore to deal only with the defined issues and otherwise dismiss all outstanding applications of an interim nature pending the final determination of the property proceedings.

The husband’s evidence

1. Before dealing with the evidence of the husband, reference should be made to the order of 16 April 2012.  The relevant order read:

   That forthwith the husband and the wife do all such acts and things and sign all such documents as may be required to list the property situate at and known as…[addresses in France] on the market for sale…

2. In his affidavit, the husband said that two days after the orders were made, he emailed a mutual friend who is to be the agent for sale in France informing him that he and the wife had separated and that court orders had been made requiring the French properties to be sold.  That email caused a flurry of activity in which the wife’s lawyers said that the husband’s comments were highly inappropriate.  They requested that he refrain from making any further contact with the French agent.  The husband replied and said he then was advised by his lawyer that contacting the agent was appropriate.  In my view, the husband’s action was not appropriate.

3. The husband wrote to the agent indicating that the agent might have heard “the sad news” that the wife had “decided to leave” him.  He then went on to say to the agent that there was a court order that required the two properties to be valued and sold.  The solicitor for the wife responded indicating that the email was not reflective of the agreement or the orders made.  The point made was that there was no agreement or order for a valuation nor importantly, for a fire sale.  The letter to the agent by the husband did not suggest a fire sale but rather that he was trying to “get the ball rolling”.  It might have been more appropriate for the husband to have left all of the arrangements to his lawyer who might have been a bit more objective.  The inference that I drew from reading the correspondence was that the husband was endeavouring to push a sale quickly.

4. The wife’s response was that the properties did not need to be sold as soon as possible and she would not agree to a quick sale just to suit the husband.  That comment was also inappropriate.  The order of the Court clearly indicated that the properties were to be listed forthwith on the market for sale and the only inference to be drawn from that was that there was to be an orderly sale.

5. In his affidavit, the husband said that the wife refused to cooperate in respect of the process of selling the properties.  I would not draw that inference either.  The inference that I drew was that the wife was not going to engage in a fire sale.

6. The husband’s affidavit then went on to say that he sought cooperation from the wife about the sale by an email dated 23 May 2012 but she had failed to respond.  I note that that affidavit was sworn on 25 May 2012 and therefore the email was only two days old. 

7. Perhaps both parties and their respective lawyers should be a bit more reflective.  It was quite clear that the properties had to be sold and it was expected by the Court that there would be an orderly sale.  That is what the parties should do.

8. The submission on behalf of the husband was that the wife had refused to cooperate with the sale.  I reject that. 

9. This is an interim hearing “on the papers” and as such, the evidence remains untested.  I cannot make findings unless they are clearly and conclusively open on that evidence.  On this evidence, and because of the wording of the order which was drafted by the parties themselves, I do not find that it was impracticable to carry out nor that the wife was being obstructive.  I do not need to turn to the legal issue because of the evidence.  The onus is on the husband to prove on the balance of probabilities that his version is more persuasive than that of the wife.  The husband’s application must fail.

The wife’s issues

1. Of the two issues, first, the wife agitates for orders for a $500,000 distribution to her.

2. Both parties acknowledge that the pool of assets exceeds $5 million.  The substantive dispute is about the division and I have set out above the parameters as they currently have articulated them.

3. There was no dispute that albeit the parties disagree as to the weight to be given to it, there is evidence before me of contribution and also evidence of the parties’ respective financial positions.  The accuracy of the latter is also disputed.

The husband’s position

1. The husband’s position was that the pool of assets was about $5 million of which 50 per cent roughly was superannuation and roughly the other half was roughly real property.

2. The husband submitted that he not only had made the initial financial contribution and his inheritance to which weight must be given, but there was also an argument that he had made a significant financial contribution to the support of the wife’s children.

3. The husband submitted that as he is now retired, the capital in the self-managed superannuation fund is important for his future because it is in the payment phase.  It is not disputed that a sum such as $500,000 can be taken from that fund but if it was so taken, it could not be put back.  The significance of that affects his future security because his pension capacity would be lost forever.

The wife’s position

1. The wife’s position was that the husband wanted to retain virtually all of the assets yet acknowledged even on his own case of having to pay her about a quarter of that pool.  Counsel for the wife produced an aide memoir which showed that she would receive at least the $500,000 she was seeking and indeed more.  Counsel for the husband submitted that there was a dispute about the pool but in my view, the dispute would have to be modest.  There was no suggestion put by the husband as to how the $500,000 or thereabouts could be received by the wife if it was so ordered other than that she could wait for the net equity from the sale of the French properties.  It was the wife’s submission that she did not know how long that would take and with the vagaries of the French rural economy, she may be waiting a long time.  Her position was that she needed accommodation now because she had the primary parenting role as reflected in recent court orders and she was currently living with friends.  It was submitted she had no prospect of getting money otherwise.  In addition, it was said that she had already spent $60,000 on legal costs even at this early stage of the litigation.  Clearly, the inference to be drawn was that having regard to the nature of the litigation, much more costs were yet to be expended.

The approach

1. Both parties acknowledged that the determination of the issue was governed by the authority set out by the Full Court of this Court in Strahan and Strahan (interim property orders) (2011) FLC 93-466.

2. In Strahan, the Full Court said the determination was based on a two step process.  The first step was to determine whether to embark upon the making of the order at all.  If that determination was made, the second of the two steps was to require evidence that would satisfy all of the criteria in a s 79 determination.

3. The Full Court made it clear that an applicant must be able to show more than just that at the final hearing they would be ultimately receiving more than they were seeking.  The Court emphasised that it is preferable to use s 79 as a once only exercise of power but at the same time, there will be clearly situations in which the power remains extant until such time as it is fully exhausted.

4. Another of the issues that was canvassed by the Full Court was the need to ensure that there was sufficient capacity to claw back any money that might have been paid as part of an interim distribution.  On this point, senior counsel for the husband submitted that payment out of the superannuation fund now of the sum sought by the wife could never be clawed back because of the husband’s retirement.  The husband can no longer make contributions to the superannuation fund and he has taken the fund as a pension.  In my view, “claw-back” refers to the asset rather than the benefit.  Here, a claw-back could occur even if the advantage or benefit to the husband is lost.  That loss can be ameliorated by an adjustment in favour of the husband under s 75(2). 

5. The husband should have the opportunity to retain that benefit but if he cannot because of the need to do justice and equity to the wife, the Court must look at whether or not a just and equitable result can be achieved on an interim basis.

6. In my view, the two step process is fulfilled here.  The evidence is sufficient to warrant the making of an order.  In my view it is also just and equitable to make an order for $500,000 factoring in the disputed contributions and the claw-back issue.  The wife has access to some other property and bearing in mind what she proposes to spend her money on, the claw-back of assets could be achieved.

7. I am satisfied that there is sufficient evidence to justify the Court making an order for $500,000.  It is a matter more for the husband where that money is paid from.

The second issue

1. The second of the two issues agitated by the wife related to an injunction against the husband.  The wife relied upon three things.  First, superannuation documents relating to a decision made last year by the husband showed the removal of the trustee and thereby removed control of observation by the wife.  They are concerning.  Secondly, the husband’s financial statement did not properly reflect his true financial position because he did not disclose the rental that he was receiving notwithstanding it was clearly coming into a bank account over which he had control.  The third issue related to bank statements obtained by the wife which showed large movements of money.

2. The facts which the wife relied upon concerning the superannuation documents are matters about which I cannot make any finding of fact.  The wife’s position was that the husband orchestrated documents that enabled the removal of the trustee of the superannuation fund and the replacement with another corporate entity.  The recorded documents show that a meeting was held and that the husband and wife were both present.  The wife denies any such meeting occurred.  The wife submits that I ought to draw an adverse inference against the husband such as would justify being concerned about his conduct and making proper an injunctive order. 

3. The husband’s position was that the exercise was undertaken with the assistance of accounting advice.  To that end, the husband attached to his affidavit a letter by the fund’s accountant, albeit vague, indicating that the exercise was undertaken upon accounting advice.  The wife raises significant doubts about the truthfulness of that letter.

4. The husband further submitted that the wife had been aware of this situation for some weeks even though she only received the documentation as late as a day or so prior to the hearing.  The wife complained about the husband’s silence on that question and particularly about a share movement transaction but the husband’s response was to similarly complain of the wife’s unilateral action in taking money in circumstances where she had control of the banking accounts.

5. As I have earlier pointed out, this was an interlocutory hearing dealt with on the papers.  I am not in a position to make any findings unless the issue is clear.  I have no idea what the truth of the matter is about how the trustee position was altered nor whether the movement of monies has some illicit or surreptitious purpose nor that the wife was not in a position to see all of those things over the very many months since problems arose in her role as a manager.

6. The power to grant an order restraining a party from going about their lawful business and accessing various rights to property can only be granted if the Court is satisfied that it is proper to make such an order.  That order must look carefully at the evidence.  I am not at all confident that I know exactly what happened and more importantly, do not find that either party acted inappropriately.

7. Once the existence of a genuine dispute about legal or equitable rights is apparent, the discretion should be exercised on the balance of convenience presuming that any financial or other injustice can be rectified at trial.

8. Consideration must be given to how any advantage could be rectified at trial.  Importantly, the balance of convenience must not lead to injustice.

9. When all of the factors to which I have earlier referred are balanced, convenience favours the respondent.  Accordingly, I am not satisfied that it is proper to make an order restraining the husband as asserted by the wife.

I certify that the preceding Forty Six (46) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 5 June 2012.

Associate: 

Date:  5 June 2012