HATTLEY & HATTLEY

[2013] FamCA 512

FAMILY COURT OF AUSTRALIA

HATTLEY & HATTLEY [2013] FamCA 512

FAMILY LAW – PROPERTY – Interim Spouse Maintenance – Interim orders for property settlement sought by husband – Relevant legal principles applied – Where an interim order may be made in the interests of justice – Where it was determined that the interim property settlement order as sought by the wife is a just and equitable order in the circumstances – Where the court could not be satisfied that the wife presently has the income available to her to meet the periodic spousal maintenance sought by the husband.

Family Law Act 1975 (Cth): ss 79; 75(2)

Strahan & Strahan [2009] FamCAFC 166

APPLICANT: Mr Hattley

RESPONDENT: Ms Hattley

FILE NUMBER: SYC 4522 of 2012

DATE DELIVERED: 13 June 2013

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Aldridge J

HEARING DATE: 7 June 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Schonell SC

SOLICITOR FOR THE APPLICANT: Armstrong Legal

COUNSEL FOR THE RESPONDENT: Mr Gould

SOLICITOR FOR THE RESPONDENT: Russell McLelland Brown

Orders

That conditional upon the husband signifying to the Wife in writing within seven (7) days his consent I make the following orders:

1. That within twenty-eight (28) days the parties do all acts and sign all documents as required to list the property, B Street, Suburb C, for sale by private treaty and the following provisions to apply:

   a)The property is to be listed with a Real Estate Agent as agreed or failing agreement with a Real Estate Agent nominated by the President of the New South Wales Real Estate Institute;

   b)The property is to be listed at a price as agreed or failing agreement at a price nominated by a Valuer nominated by the President of the New South Wales Institute; and

   c)That in the event the property fails to sell by way of private treaty within three (3) months the property is to be listed for immediate auction with a reserve price nominated by the Valuer appointed by Order 1 (b).

   d)That upon the sale of the property the proceeds are to be disbursed as follows:

   i.Payment of the selling costs including Real Estate Agent’s commission and legal fees;

   ii.Any adjustments for rates or other usual expenses;

   iii.In discharge of the ANZ home loan;

   iv.In discharge of the ANZ Equity Manager; and

   v.The balance to be paid to the Husband.

2. That this matter is listed for telephone mention at 9.30 am on Wednesday 28 August 2013 before docket Registrar Campbell.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Hattley & Hattley 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 SYDNEY

FILE NUMBER: SYC4522 of 2012

Mr Hattley

Applicant

And

Ms Hattley

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. These reasons were delivered orally.

2. In these proceedings Mr Hattley (“the husband”) seeks interim orders for property settlement and for spousal maintenance.  The husband seeks an order that within twenty-one (21) days Ms Hattley (“the wife”) pay to him a sum of $90,000.00.  That within fifty-six (56) days a further sum of $90,000.00 be paid by the wife to the husband via an interim spousal maintenance order seeks that the wife make the repayments pursuant to the ANZ Bank Limited home loan account and Equity Manager Account.

3. By way of a response the wife initially simply sought that the husband’s application be dismissed but the wife handed up in court minutes of proposed orders which proposed the sale of a property at B Street, Suburb C, that the two mortgages be repaid and, that out of the net proceeds, the parties received $100,000.00 each and the balance to be held in a controlled money account.

4. In the course of submissions that order was modified so that the wife proposed that the husband received the whole of the net proceeds of the sale.

Background facts

1. The husband was born in 1971 and is 42 years old. 

2. The wife was born in 1969 and is 43 years old.

3. The parties commenced cohabitation upon their marriage in October 1991 and separated just over 20 years later on 14 November 2011. 

4. The parties were divorced in January 2013. 

5. There are three children of the marriage who are aged 16, 15 and 13 respectively.

6. The two younger children are still at school.  The eldest child is working as an apprentice in the husband’s food supply business. 

7. At the commencement of the marriage the husband was the sole registered proprietor of the property at D Street, Suburb E which he still owns today. 

8. In 1993 the parties purchased B Street, Suburb C for the sum of $150,000.00 using a home loan from the Westpac Bank to fund the purchase.  The wife’s father paid the stamp duty and provided $10,000.00 towards the purchase.

9. After the purchase of the Suburb C property it became the family home and the Suburb E property was let out.

10. At the time of the marriage the wife was employed full time as a receptionist and remained so until the birth of their first child.  Thereafter the wife remained a homemaker and parent until 2002 when she commenced some work for her father’s business.

11. At the time of the marriage the husband was employed as a health care worker and also worked on a casual basis with Company F as a casual driver.  The husband completed his degree in health care in 1996 and thereafter commenced full time employment as a health care professional.

12. The husband ceased that employment in 2000 and purchased a food supply business for a purchase price of about $200,000.00.  The husband’s parents gave him $50,000.00 and the remaining $150,000.00 was borrowed from the ANZ Bank.  The husband returned to work as a casual health care professional in 2006 and continued to carry out both occupations until 2010 when he leased the food supply business and commenced employment as a driver.

13. Presently the husband works as a casual part-time driver and works in the food supply business. 

PRINCIPLES TO BE APPLIED

1. The principles to be applied for an interim property settlement are set out by the Full Court in Strahan & Strahan [2009] FamCAFC 166. The usual position is there should be only one order made under s 79 although an interim order may be made in the interests of justice.

2. A well established category of cases for an interim order may be justified is where one party has an inability to meet the costs of litigation.  In that case the relative financial strength of the respondent and the respondent’s capacity to meet their own litigation costs are relevant considerations.

3. This is a two step process.  If an interim hearing under s 79 is embarked upon it is then necessary to deal with the matters raised by s 79 including s 75(2).  It is necessary to bear in mind it is an interim hearing and not a final hearing.  Care must be taken not to make an order that would unduly limit the final orders that can be made or potentially defect the parties’ claims or legitimate expectations.

4. Orders should be reversible unless for example a sale of a property is inevitable.  It may be unjust to require the sale of a matrimonial home where a party has no other assets and could not, on an interim basis, purchase another home.

5. In order to determine whether the Court should consider making an interim order it is necessary to look at the properties and assets of the parties.

Assets of the Parties

1. The husband is the registered proprietor of the Suburb E property valued at $580,000.00.  The parties own the Suburb C property also valued at $580,000.00 according to the Husband.  These properties are subject to mortgages of $146,000.00 and $251,000.00 totalling $397,000.00.  The parties are the shareholders of A Pty Ltd which is the company through which the husband’s business of food supply is carried out.  The husband values the business at $430,000.00.  The husband owns shares in Company G valued at about $31,000.00.  The husband asserts they are beneficially owned by his father but for the present they are to be sold and the proceeds to be utilised by the husband.  The parties each have a motor vehicle, furniture and effects and a small superannuation entitlement. 

2. The wife’s father died in February 2011 some eight and a half months before the parties separated.  Probate of the wife’s father’s Will was granted in May 2012.  The administration of the estate was complicated and there were issues involving the wife, her sisters and her mother.  Pursuant to the Will the wife received substantial interests in property.  The husband does not accept that those interests have been fully and completely disclosed.  The husband’s position is that the interest that had been disclosed has a significantly higher value than those asserted by the wife.  Resolution of these matters is, of course, a matter for the final hearing.

3. The wife’s present position as disclosed by her is that she owns I Street, Suburb H valued at $685,000.00.  The wife has a one third interest in J Street, Suburb K with the other two thirds being owned by her two sisters.  The wife values that property at $679,998.00 giving her interest in value as $226,666.00.  The wife owns a one third interest in L Pty Limited.  That company owns substantial number of pieces of real estate which are let out.  The wife values her interest at $2,153,333.00.  The wife has an interest in the M Unit Trust which she values at $666,666.00 and an interest in the N Family Trust which she values at $413,333.00.  Total of these assets on the wife’s values is $4,144,998.00.  The wife asserts that there is a loan to family members owing $90,000.00 and her net assets received pursuant to the inheritance is $4,054,998.00.

4. At the date of the hearing M Unit Trust had two bank accounts with balances of $14,372.00 and $90,834.00.  L Pty Limited had $60,703.00 in one of its bank accounts.  The husband is receiving $400.00 per week rent from the Suburb E property.  He works casual part-time as a driver on a regular basis.  The husband is not presently drawing a wage from A Pty Limited.  He expects to have some income from it when he commences a seasonal food supply in August.  The husband proposes to move into the Suburb E property and let out the Suburb C property instead as he is likely to receive some $150.00 per week rent more than would be received from the rent from Suburb E.

5. The wife is working as a receptionist for 3 to 8 hours four days per month at $23.00 per hour.  In 2012 the wife received $103,000.00 deposited into her bank account from the entities in which she has an interest.  In 2012 she received payments totalling $10,000.00 from those entities.  The wife says that there is no set amount that she receives from them and she does not know how the amounts are calculated. 

6. The wife has managed to pay her own legal fees to date in those circumstances. The husband does not have a ready source of funds to meet his litigation expenses.  The wife has significant financial resources available to her to fund her lawyers.  The husband asserts that there are significant areas of the wife’s disclosure of the entities that needs to be investigated.  In these circumstances it is in the interests of justice and appropriate to consider an interim property order.  I have already identified the major assets and the liabilities of the parties.

7. It is likely that at a final hearing that the property would be divided into two lists one comprising the property acquired by the parties during the marriage and the other the property inherited by the wife.  As to the second it was conceded that the husband had made no contribution to the assets on that list.  It is not likely therefore that orders for division of that property would be made.  It is, however, a valuable set of assets generating significant income. It is likely that a significant adjustment would be made under s 75(2) of the Act in favour of the husband having regard to those assets held by the wife and to the husband’s capacity for employment and the assets that are likely to be available to him after the hearing. 

8. As to the property in the other pool the husband owned the Suburb E property at the time the parties were married.  During the marriage significant funds were borrowed by the parties to purchase the Suburb C property and the food supply business.  The husband received $50,000.00 from his parents to assist in the purchase of that business.

9. The wife said that between 2008 and 2010 the wife’s father provided them with $90,000.00 which was used for medical expenses, reductions and borrowings and general expenses including land tax.  In 2011 the wife received $100,000.00 from a company associated with her father which was used to reduce the mortgages.  During the marriage the husband has been employed part-time at first whilst studying.  The wife worked full-time as a receptionist at the time of the marriage until the birth of the children and was a full-time parent thereafter. 

10. Given the length of the marriage and the above matters including the particular financial contributions made by the husband, the husband’s father and the wife’s father it is likely that the financial and non financial contributions by the parties to the property in the first pool of assets and to the welfare of the family would be somewhat in the Husband’s favour.

11. The parties are in good health and work in the limited way described above.  The husband receives the balance of the rent after the payment of the mortgages and lives in one of the properties.  The wife owns substantial assets inherited from her father.  The income, property and assets of the wife thus far exceed those of the husband and those he is likely to retain after a final hearing. 

12. Each of the parties has the care and control of children of the marriage.  The eldest lives with the father and the youngest with the wife.  The middle child lives with both parents but spends slightly more time with the wife than with the husband.

13. These factors, particularly the inequality and income property and assets of the parties, is likely to require a significant adjustment under to s 75(2) of the Act in favour of the husband if the present evidence is found to be the position at a final hearing. 

14. Thus, for present purposes, it would appear that the husband is likely to receive more than half but significantly less than all of the assets in the first list of assets and none of the assets in the second.  If the husband is to retain A Pty Limited it is likely therefore that either Suburb E or Suburb C would have to be sold having regard to what appears to be the husband’s present capacity to borrow. 

15. It is then necessary to consider what is an appropriate order.  The husband seeks two payments of $90,000.00 and opposes any sale of either Suburb C or Suburb E.  The wife submits that she has available to her the assets to meet the husband’s proposed orders and for example points to the funds held in the three bank accounts referred to above.  The wife owns but one asset in her own name that is her home and she should not be required to sell it as an interim order.  The other assets are shares and family companies, unit trusts and an interest in a property held with her sisters.  There is no evidence that the wife controls the company or the unit trust.  Thus an order to obtain from these entities she would need co-operation of others. There was no evidence they would so co-operate.  There is no evidence of the taxation or the other consequences of her taking these sums from these entities.  There is no evidence of their ability to make those payments in the times sought by the husband.  Any of these steps of course would have the potential to affect the rights of others.

16. The husband submitted that the wife could take steps under the Conveyancing Act to realise her interest in J Street, Suburb K including a forced sale if necessary.  The wife could do so.  It is not however appropriate to require her to do so because a forced sale which is a realisation of her interest in that property could not be reversed.  She said that significant sums had been spent on it to improve it for letting it in the long term.  That involves the expenditure of funds that would have otherwise been available to her and her sisters.  The wife could not be put back in to the same position after a hearing if she was now required to realise and sell her interest in that property. 

17. Whilst the other entities in which the wife has an interest have significant assets and at least one generates significant gross rentals the evidence does not disclose the net position, financial positions of the entity, how they might affect the transfer of $180,000.00 to the wife or the consequences thereof.  None of these assets is likely to be the subject of an order for division at a final hearing.  For these reasons it is not a proper order to require the wife to take the steps to realise this sum from the assets inherited from her father.

18. The wife proposed orders that the property at Suburb C be sold, the mortgage to be paid and that the husband receive the balance.  On the husband’s figures he would receive $183,000.00 less the costs associated with the sale.  On the wife’s figures he would receive $253,000.00 less the costs of sale.

19. These proposed orders have a considerable advantage of repaying the mortgage thus also satisfying the husband’s claim for spousal maintenance which is for the wife to pay the periodic sums due under both mortgages.  The husband opposed this order because it was not reversible.  It is not reversible in the sense that if the property is sold it would not be available to be transferred to the husband as part of final property orders.  The husband has indicated that he would wish to retain that property so that he could live in one property and let the other out in order to supplement his income thereby.  It is reversible in the sense that there are sufficient funds and assets available to make an appropriate adjustment to reflect its sale if that becomes necessary.  If one of the two properties is sold the husband would be able to reside in the other.  The husband would therefore have available to him a home in which to live.  The burden of the mortgages will be removed.  It will provide the husband with the funds that he says are necessary to provide his case.  There are sufficient other funds available to make an appropriate adjustment in his favour if necessary at the time of the hearing. 

20. I am satisfied it is a proper order to make as an interim order it is a just and equitable order in the circumstances.

21. I note there was no suggestion that it is not just and equitable within the meaning of s 79(2) to make an interim property order.  The manner in which the parties have held their property in the breakdown of the marriage indicates that that is so.

22. The husband did not indicate whether in the event I refused his proposal for an interim property order he would accept as an alternative the orders proposed by the wife.  As they are for his benefit I would not make them unless he consented to that course.

Conclusion

1. I therefore make the orders proposed by the wife for interim property settlement conditional upon the husband indicating his consent to those orders within seven (7) days.

The husband’s application for interim spousal maintenance

1. The husband also sought an order for interim spousal maintenance.  He sought an order that the wife pay the regular mortgage payments  If the interim property order I make takes effect the mortgages are repaid and the husband’s claim for spousal maintenance is thus satisfied.

2. The husband has said that his weekly expenses including the mortgages are the sum of $1,559.00 per week.  This includes some food and clothing for himself and the children and thus must slightly overstate his own expenses.  It includes repairs to the properties of $173.00 per week, gifts $150.00 per week and children’s activities and gifts of $32.00 per week.  Excluding these sums provides a weekly expense of the husband of the sum of $1,204.00.  The monthly repayments of the mortgages are $1,435.00 and $1,118.00 making a total of $2,523.00 per month or a weekly expense of approximately $630.00.  The husband’s total expenses per week are thus $1,834.00.  The wife did not submit that these were not proper and reasonable needs and I so find.   The husband receives $400.00 a week rent which the husband describes as gross but lists as an expense rates and management fees.  It is therefore appropriate to take the full amount as income as the expenses have already been taken into account. 

1. The husband earns some $88.00 - $176.00 per week as a driver.  He is not presently earning an income from A Pty Ltd it having sold its rights to supply the seasonal food for the month of July for some $10,000.00.  A Pty Ltd will resume that business in August.  On any view of the husband’s income there is a shortfall. 

2. The wife earns some $66.00 - $184.00 per week as a receptionist.  The wife says this year she has received $10,000.00 from the entities in which she has an interest.  Up to 4 June 2013 L Pty Ltd has paid her lawyers $55,000.00.  At that time the sum of $10,000.00 remained outstanding.  The wife therefore has access to funds although this would seem to require the co-operation of others.  As I have said whilst the wife owns assets of considerable value she does not of herself save for the property in her name control the entities that own them.  I have discussed already the difficulties of her forcing these entities to provide funds to her.  The only source of spousal maintenance would be these companies.  I am not satisfied that the wife presently has the income available to her to meet the periodic spousal maintenance sought by the husband.

Conclusion

1. The appropriate way to deal with the difficulties created by the mortgage and the shortfall in the husband’s income is to make the orders foreshadowed earlier.

I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Aldridge delivered on 13 June 2013.

Associate: 

Date:  13 June 2013