HELMS & HELMS
[2016] FamCA 389
•23 May 2016
FAMILY COURT OF AUSTRALIA
| HELMS & HELMS | [2016] FamCA 389 |
| FAMILY LAW – PRACTICE AND PROCEDURE – Property Settlement – Application for deferral of property proceedings – Family Law Act 1975 (Cth) s79(5) – change in financial circumstances – Where the trial Judge’s finding that a significant change within the period of the adjournment would be more likely to do justice as between the parties than an immediate order – where case management principles and the need for expeditious justice with the opportunity for parties to properly present their best case. |
| Family Law Act 1975 (Cth) s79(5) |
| Grace & Grace (1998) FLC 92-792; 22 FamLR 442 Van Essen & Van Essen (2000) FLC 93-028 Blue & Blue [2008] FamCA 787 Pratt v Pratt (2012) 47 FamLR 234 Commonwealth v Amann Aviation (1991) 174 CLR 64 Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 Strahan & Strahan (2011) FLC 93-466 |
| APPLICANT: | Ms Helms |
| RESPONDENT: | Mr Helms |
| FILE NUMBER: | TVC | 1223 | of | 2012 |
| DATE DELIVERED: | 23 May 2016 |
| PLACE DELIVERED: | Townsville |
| PLACE HEARD: | Townsville |
| JUDGMENT OF: | Tree J |
| HEARING DATE: | 29 February 2016 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Looney QC |
| SOLICITORS FOR THE APPLICANT: | Michael Lynch Family Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Fellows |
| SOLICITOR FOR THE RESPONDENT: | McKays Family Law |
IT IS NOTED that publication of this judgment by this Court under the pseudonym Helms & Helms 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 TOWNSVILLE |
FILE NUMBER: TVC1223/2012
| Ms Helms |
Applicant
And
| Mr Helms |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
By Application in a Case filed 20 February 2016, Ms Helms (“the wife”) seeks that the current listing of these property proceedings for trial commencing 14 March 2016 be vacated, and that new trial dates not be allocated before 1 January 2017.[1] That application was founded upon s 79(5) of the Family Law Act, which I will discuss in greater detail in due course. In the event that that application was unsuccessful, then by Application in a Case filed 19 February 2016, the wife sought permission to lead evidence from an adversarial expert forensic accountant. However in the event that her application to defer the trial was successful, then she sought orders for the sale of various matrimonial property, and the division of the net proceeds of such sales equally between the parties. In the event that her application to vacate the hearing was not successful however, she did not seek such orders.
[1]This Order was modified to refer to 1 January 2017 by the wife’s proposed orders, although the application had originally specified a date of 1 March 2017.
By his Response filed 26 February 2016, Mr Helms (“the husband”) opposed both the vacation of the trial dates and the appointment of an adversarial expert, conceded that the sale of the property should proceed, but contended that the net proceeds of sale should not be distributed to the parties. That Response also agreed to a further order that the wife had sought in her Application in a Case filed 19 February appointing a single expert witness to provide a report in relation to the calculation of certain taxation incidents or liabilities.
There are also other orders sought by the wife, many of which are agreed to by the husband. There do, however, remain some points of disagreement.
I heard the wife’s Applications on 29 February 2016 and reserved my decision. Unfortunately I was unable to deliver it as soon as I had hoped, and accordingly on 2 March 2016 I further mentioned the matter and indicated that I had formed the view that the wife’s application should substantially succeed, and hence vacated the imminent trial listing. However I did not then formally make any orders on the application, or deliver any reasons. This judgment contains my decision and the reasons for it.
BACKGROUND FACTS
For much of his adult life, the husband has been employed by multinational corporations, initially with Company A, and subsequently with Company B. That employment included postings outside of Australia. However in about 2006 the parties’ established a company called C Pty Ltd, with a view to it operating Company B franchises, and it appears as though at that time the husband resigned his employment with Company B.
The parties finally separated in June 2011, by which time they were residing in the D Town district. In total their marriage spanned something approaching 26 years, and to that relationship there were born two children, both of whom are now adults.
The principal proceedings were commenced by the wife on 2 January 2014. Apparently the matter was ready for trial in early 2015, but for reasons which are not apparent on the material, did not then proceed to hearing. However in a Trial Management Hearing conducted on 15 December 2015, I listed the matter to be heard at the sittings of the Family Court in D Town commencing 14 March 2016, with an estimated hearing time of 5 days. Various other procedural orders were made to ensure that the matter was then ready to proceed.
THE WIFE’S APPLICATION UNDER S 79(5)
Relevant facts
It does not appear to be controversial that the parties’ pool of property comprises three major assets, the first being two items of real property that are said[2] to have a value a little under $3,000,000.00, and the third is the parties’ interests in C Pty Ltd, which as at 28 February 2015, had a value attributed to them by a single expert valuer, Mr E, of $1,090,230.00.
[2]By paragraph 7 of the wife’s Outline of Submissions.
Mr E arrived at that valuation by adopting a discounted cash flow methodology. His reasoning for adopting that methodology appears to be based upon the fact that C Pty Ltd’s franchises have limited terms of operation (in a temporal sense) with no automatic right of renewal. Therefore in substance, what Mr E did in arriving at his valuation, was to individually assess each of the various franchises, and project estimated cash flows until their termination, and then discount those cash flows by a selected percentage in order to derive at a commercial present day value of that projected revenue stream. Somewhat pessimistically, Mr E’s valuation hence assumes that as at the date of the last termination of the franchise agreement, there will be no value attributable to goodwill of C Pty Ltd’s franchise businesses.
However the wife contends that there is a demonstrated history of the husband in fact being able to negotiate renewals of the franchise agreements, albeit not necessarily on terms identical to the initial agreement. Therefore she says that there is a realistic prospect of one or more of the current franchises that are due to expire within the next 12 months in fact being renewed, in consequence of which, again adopting a discounted cash flow basis of valuation, C Pty Ltd should continue to have a substantial component of goodwill attributed to the value of its assets.
Importantly, the wife emphasises the significance of the prospect of renewal by pointing out that four, or perhaps five, of the six franchises currently operated by C Pty Ltd have a franchise expiry date in 2016. In substance, her s 79(5) application seeks to defer the trial of these proceedings until after the last of the 2016 expiry dates, so that she and the Court can ascertain whether in fact a renewal of one or more of those franchises can be obtained by C Pty Ltd.
Further, the wife emphasises the significant sums potentially involved, by comparing the two most recent valuations of Mr E. The first valuation had an effective date of 31 March 2013. It valued the goodwill of the five franchises then held by C Pty Ltd at $1,946,938.00. However in his second valuation, with an effective date of 28 February 2015, he valued the goodwill of the (by then) six franchises held by C Pty Ltd at $507,173.00. Whilst there are several reasons for that dramatic decline, perhaps the most substantial is that, by virtue of using a discounted cash flow valuation methodology, and only applying that to the unexpired term of the franchise agreement, the lapse of time necessarily substantially eroded the value of the goodwill. So for instance, on 31 March 2013, Mr E attributed a goodwill value to the franchise operated at F Street in D Town at $778,377.00. That calculation was arrived at in light of the franchise expiring more than three years hence, on 4 December 2016. However by the time of the 28 February 2015 valuation, that franchise had a much shorter time to run, and Mr E attributed a goodwill value to that franchise of only $314,462.00
Of course, inevitably there were changes to the projected cash flow of each of the franchises over the period based upon updated information, but clearly a major impact upon the valuation in 2015 was the far shorter periods of franchise terms remaining.
Obviously, in the event that by 1 January 2017 one or more of the franchises which are due to expire in 2016 have been renewed, and assuming that their cash flow projections remain consistent with those in 2015, and assuming that a discounted cash flow valuation method is continued to be adopted, then the impact of those renewals could be substantial. Indeed it may increase the net value of the matrimonial pool by $1,000,000.00, or even more.
Mr Looney QC, who appeared for the wife, emphasised that the key to the past successes of C Pty Ltd, and the prospect of future successes, lay in the good relationship which the husband appears to have with the relevant decision makers at Company B. He pointed to the fact that in the past the husband had been successful in re-negotiating renewals of franchises for the F Street franchise (renewal of a five year term) the G Street franchise (again renewal of a five year term) and H Town (initially a continuation of a five year term on a month to month basis, but ultimately a re-negotiation of a further three year term). Additionally he points to the fact that since the 2013 valuation, C Pty Ltd has been successful in negotiating a new franchise agreement for two years in relation to the I Town Franchise, and an 18 month franchise in relation to a franchise at J Town.
Central to his argument however, is that the following are said to be the expiry dates of the current franchises held by C Pty Ltd:
J Town 7 June 2016
K Street 4 July 2016
I Town 14 August 2016
F Street 4 December 2016
G Street 19 December 2016
H Town 19 February 2018
Relevant statutory provisions and legal principles
Relevant provisions of s 79 of the Act are as follows:
(5)Without limiting the power of any court to grant an adjournment in proceedings under this Act, where, in property settlement proceedings, a court is of the opinion:
(a) that there is likely to be a significant change in the financial circumstances of the parties to the marriage or either of them and that, having regard to the time when that change is likely to take place, it is reasonable to adjourn the proceedings; and
(b) that an order that the court could make with respect to:
(i) the property of the parties to the marriage or either of them; or
(ii) the vested bankruptcy property in relation to a bankrupt party to the marriage;
if that significant change in financial circumstances occurs is more likely to do justice as between the parties to the marriage than an order that the court could make immediately with respect to:
(iii) the property of the parties to the marriage or either of them; or
(iv) the vested bankruptcy property in relation to a bankrupt party to the marriage;
the court may, if so requested by either party to the marriage or the relevant bankruptcy trustee (if any), adjourn the proceedings until such time, before the expiration of a period specified by the court, as that party to the marriage or the relevant bankruptcy trustee, as the case may be, applies for the proceedings to be determined, but nothing in this subsection requires the court to adjourn any proceedings in any particular circumstances.
(6) Where a court proposes to adjourn proceedings as provided by subsection (5), the court may, before so adjourning the proceedings, make such interim order or orders or such other order or orders (if any) as it considers appropriate with respect to:
(a) any of the property of the parties to the marriage or of either of them; or
(b) any of the vested bankruptcy property in relation to a bankrupt party to the marriage.
(7) The court may, in forming an opinion for the purposes of subsection (5) as to whether there is likely to be a significant change in the financial circumstances of either or both of the parties to the marriage, have regard to any change in the financial circumstances of a party to the marriage that may occur by reason that the party to the marriage:
(a) is a contributor to a superannuation fund or scheme, or participates in any scheme or arrangement that is in the nature of a superannuation scheme; or
(b) may become entitled to property as the result of the exercise in his or her favour, by the trustee of a discretionary trust, of a power to distribute trust property;
but nothing in this subsection shall be taken to limit the circumstances in which the court may form the opinion that there is likely to be a significant change in the financial circumstances of a party to the marriage.
A number of authorities have considered these provisions. It is convenient to commence with an analysis of the Full Court decision of Grace & Grace (1998) FLC 92-792; 22 FamLR 442 in which, at (FLC) 84,888-9, the Full Court said as follows:
The discretion to adjourn proceedings is guided by the legislature. Taking the words of s 79(5) on their face, we agree with Mr Rose that there are certain preconditions which, cumulatively, must be found in order to invoke the power to order an adjournment:
·that there is likely to be a change in financial circumstances;
·that the likely change is a significant one;
·that having regard to the likely and significant change it is reasonable to adjourn the proceedings;[3] and
·that an order made if that significant change occurs is more likely to do justice as between the parties than an immediate order.
We would add in respect of this last precondition that in light of s 79(2) we read “justice” as incorporating “justice and equity”.
[3]This casting of the precondition appears, to my mind, to overlook the language of s 79(5)(a), namely it is “the time when that change is likely to take place” to which regard must be had, but I accept I am bound by Grace.
However Mr Looney QC also relied upon the particular facts in Grace in drawing an analogy between that case and the instant case. In Grace, the bankrupt husband was one of a small number of (presumably discretionary) beneficiaries in a trust. The trust was to vest no later than 30 June 2000. It appeared to be common ground at the trial that, by virtue of him only being a discretionary beneficiary, he may receive a distribution on vesting of anything between zero percent and 100 percent of the corpus of the trust. The trust assets were said to then be valued slightly in excess of $10,000,000.00.
At 84,890, the Full Court said:
If the matter were to proceed now, it would be extremely difficult to make an assessment of the value of this resource to the husband, whereas this fact at least, will be known when the trust funds are distributed. If the husband receives nothing, then both he and the wife will be no better or worse off than they are at present, but any substantial sum received by him will have a significant effect, not only upon the wife’s claim to a property settlement as a direct result thereof, but also in relation to the prosecution of any proceedings that she may wish to pursue in relation to his remainder interest.
Later at 84,891, the Court continued:
At present the husband has a contingent interest in a trust of considerable magnitude. That interest will vest by 30 June 2000 and when it does so, he will receive anything from zero to 100 per cent. It is therefore apparent that whatever the nature of the distribution, his financial circumstances will change considerably on that trust being distributed. If the husband receives nothing, then he will no longer have the present resource constituted by his contingent interest in the trust. If he receives a distribution then he will have additional property. In either event, his circumstances will change from the present. We think that whatever the result, such change is likely to be a significant one, having regard to the size of the trust.
Based upon those passages, Mr Looney argued that the resolution of significant uncertainty in relation to the parties’ financial circumstances can itself constitute a significant change in those circumstances. I accept that submission. The two passages I have referred to, together with the facts of Grace, make such a proposition irresistible. Although reading the judgment, one does get the impression that the Full Court thought it likely that the husband would indeed receive something by way of distribution of assets from the trust, there plainly was no guarantee of it, and the Court specifically adverted to the prospect that the husband would receive absolutely nothing by way of distribution. True it is that the Full court may have been under the belief that the husband’s status as a discretionary beneficiary was a “contingent interest in the trust” but even if that be an incorrect characterisation of such an interest, it does not detract from the proposition that the Full Court plainly recognised that it could not be said to be likely that the husband in Grace would obtain anything at all. The significant change that was likely to the husband’s financial circumstances was the resolution of the then uncertainty as to what he would receive.
Mr Looney sought to augment that argument by referring to s 79(5)(b), and particularly the statutory language which provides “if that significant change in financial circumstances occurs is more likely to do justice as between the parties …” He submitted that the resolution of substantial uncertainty in relation to the financial circumstances of the parties is a change which would enable the Court to be more likely to do justice as between the parties. In Grace, if the husband had received nothing, then there would be less prospect of injustice being visited upon him by dividing the parties’ assets on an assumption that he would receive something of value; conversely, it would enable justice to the wife in the event that the husband did indeed receive a valuable benefit, as it would then be ascertained.
Grace was expressly approved by the subsequent Full Court in Vanessen & Vanessen (2000) FLC 93-028 (Ellis ACJ, Finn and O’Ryan JJ).
In Blue & Blue [2008] FamCA 787 O’Reilly J was confronted with an application under s 79(5) to defer a trial until some units that the husband was developing had been completed. Although there was an “as if completed” valuation based upon a development approval of the relevant site in evidence, the wife appeared to contend that a valuation once the development was complete was more appropriate. Having reviewed Grace (supra) and Vanessen (supra), her Honour appears to have concluded that there was likely to be a significant change in the husband’s financial circumstances, but was not satisfied that an adjournment was more likely to do justice as between the parties, partly because her Honour rejected that “as if completed” valuations were inherently unreliable at [47] and hence it was not reasonable to adjourn the proceedings at [49].
Finally in Pratt v Pratt [2012] 47 FamLR 234 the Full Court allowed an appeal on the basis that a “hope” of a significant change in the value of a rural property did not satisfy the requirement that there is likely to be a significant change in the financial circumstances of the parties. At [42] the Full Court said:
We find force in the husband’s argument. Taken at its highest, the report of Mr R posited an improvement in the market for rural properties if a number of events occurred, none of which was expressed as a certainty or even a possibility. It could not of itself provide the basis for the finding of a significant change. Further, by not taking into account the costs of maintaining the property and the debt in the adjourned period, his Honour could not properly evaluate the factors necessary to determine whether any change would be significant.
There appears to be nothing in that passage inconsistent with Grace.
Applying the law to the facts
It is convenient to discuss the wife’s application by reference to the four preconditions established by the Full Court in Grace, and then, it they are met, turn to a consideration of the exercise of the discretion.
There is likely to be a change in financial circumstances
It is incontestable that by 1 January 2016, the by then lapsed franchises will have either been renewed, or not. Therefore either they will have no goodwill attaching to them, or the goodwill on the renewed franchises will potentially be significant.
I am therefore satisfied that, by 1 January 2017, there is likely to be a change in the parties’ financial circumstances.
The likely change is a significant one
I have already concluded that in Grace, the Full Court was satisfied that the resolution of the uncertainty as to what the husband would obtain upon vesting of the trust, was itself likely to be a significant change in his financial circumstances. Even accepting that in Grace the sum in question could be as high as $10,000,000.00, and there is no reason to think that is a likely figure here, nonetheless the resolution of the uncertainty about the prospect of renewal of one or more of the franchise agreements due to terminate in 2016 is a matter that could have significant impact upon the net asset position of these parties. Precisely as in Grace, there is some prospect that none of the franchises will be renewed, and hence the change in the net asset position of the parties will be slight. However there is the historical fact of renewal of all but one (L Town) of the previously held franchises, and the fact that the husband via C Pty Ltd has in recent years has managed to obtain two fresh franchises from Company B.
I do not overlook the argument by Mr Fellows, counsel for the husband, that the evidence points to substantial upfront fees being required of the franchisee, and further the prospect that, given Company B itself only leases the sites from owners, there is the possibility of some dispute between Company B and the owner, which would preclude the renegotiation of a franchise at all.
As I raised with counsel during the course of argument, the business of C Pty Ltd appears to be the operation of Company B franchises generally. It is analogous to a discount retailer who has a relationship with the management of a shopping centre, which sees them regularly operating “pop-up” stores at temporarily untenanted locations within the shopping centre, when the relevant shop would otherwise be vacant. At any given time, it has no security of tenure, but that is the nature of its business. I accept Mr Looney’s submission, that in C Pty Ltd’s case, the key to its business is the husband’s apparent good relationship with relevant Company B managers and decision makers. On the evidence there is little reason to think that relationship has been fractured, or that the fruits of that relationship are unlikely to continue to be enjoyed, as they have on occasion in the past.
Having regard to the likely and significant change it is reasonable to defer the proceedings
The period for the wife seeks to defer the hearing is less than 12 months, even accepting that ultimately the trial is unlikely to commence in under 12 months. That said, at the time the application was heard by me, the matter was listed for trial in less than two weeks. However the wife correctly points to a number of deficiencies in the current and most recent valuation, including:
·That it was only undertaken as at the date of 28 February 2015, and hence would at the time of a trial in March 2016, likely to be well over a year out of date;
·The most recent valuation was made on management accounts, rather than end of year financials or audited accounts, and hence the room for error is more considerable;
·There is presently no evidence which would assist the Court in ascertaining what, if any, value should be attributed to the relationship between the husband and Company B which seems capable of generating franchise renewals, whether it be viewed as a financial resource or some other factor which the court may take into account under s 75(2)(o).
On the other hand the husband points to the following as showing that it is unreasonable to defer the trial:
·The issue raised by the wife’s application to adjourn has never been previously ventilated, and there is a long history of valuations, disputes about instructions to valuers, questions to valuers and the like between the parties;
·From at least the time that the first instructions were drafted to Mr E, the wife has been aware that the scenario upon which the valuation was to be undertaken did not include one on which there was renewal of the franchises;
·The husband’s solicitor is due to go on maternity leave for 12 months, which would see him bear the costs of another solicitor having to come up to her level of familiarity with the matter during her absence.
Commercial courts not infrequently are obliged to assess the prospects of the chance of renewal of a contract, as a basis for assessing damages in cases involving breach of contract: Commonwealth v Amann Aviation (1991) 174 CLR 64. However that said, here it does not appear as though either of the parties have presently directed their evidence gathering attention to the sorts of material which would assist the court in undertaking that consideration. Therefore even though Courts may undertake such an inquiry in appropriate circumstances, there is little reason, on the material before me, to conclude that the Court would be properly equipped with appropriate evidence to in fact safely embark upon that endeavour in this case.
Weighing those factors in the balance I am satisfied that this is a case where it is reasonable to adjourn the proceedings.
Deferred order more likely to do justice and equity
It is no exaggeration to say that, if a trial were conducted in March 2016, and thereafter if it transpires that one or more of the franchises due to expire during 2016 are renewed, and if the cost of that renewal is not excessive, and if those businesses continue to perform as they have historically, then the husband will have obtained (assuming as seems to be agreed, that he will take the parties’ interest in C Pty Ltd) something in the nature of a windfall, and the wife will receive nothing in relation to it or from it. Moreover, absent the husband paying too much for the franchise renewal, there is no risk to him in that course, because the current valuation is formulated upon the most pessimistic outcome from his perspective, ie, that none of the relevant franchises are renewed.
If the Court were to proceed on the present valuations and state of the evidence, it would likely have to undertake a necessarily imprecise assessment as to the prospects of renewal of the franchises, and worse, some assessment as to the value of any renewal to the husband in the event that was to occur. Those assessments – as indeed with most assessments of damages – will likely prove to be either too high or too low; and indeed could be wildly wrong. That is particularly so, given that the most recent accounting figures that have been relied upon in the valuations were only management accounts, and in any event are now more than 12 months out of date.
I am satisfied that the resolution of the uncertainty in relation to the renewal of the franchises would make an order made after the franchises due to expire in 2016 have in fact done so, would more likely to do justice and equity as between the parties than an order which would be made consequent upon a trial now.
Exercise of the discretion
The satisfaction of the foregoing conditions by the wife does not inevitably lead to the conclusion that the discretion should be exercised in her favour. They are but preconditions to the discretion being susceptible of exercise.
As to the exercise of the discretion, I identify the following as factors in favour of the wife’s contention:
·By deferring the trial, the Court is more likely to be able to achieve a just and equitable result between the parties;
·That neither party identifies any positive prejudice beyond that which inevitably flows from delay if the adjournment is granted.
On the other hand the following points weigh against the exercise of the discretion in favour of the wife:
·At the time of the applications hearing, the trial was less than two weeks away;
·The point has only been raised in February 2016, and was never alluded to prior to then;
·The husband has expended costs in preparing for trial, which may potentially be substantially wasted in the event that the trial does not proceed;
·If the trial were to commence only in 2017, the proceedings would have been on foot for more than three years.
I should acknowledge that in Aon Risk v ANU (2009) 239 CLR 175, the High Court considered the tension between case management principles and the need for expeditious justice on the one hand, with the opportunity for parties to properly present their best case on the other. It may be fairly said that in that case the Court weighed in favour of the prompt and efficient disposition of litigation, although it did not lay down any inflexible, and invariable rule in that respect. However I do not see that Aon Risk is particularly informative in relation to the exercise of a statutory discretion in the somewhat unusual circumstances contemplated by s 79(5).
Weighing these factors in the balance, I am persuaded that it is appropriate to exercise the discretion in favour of the wife. Particularly significant to my mind is the fact that the adjournment is likely to lead to a more just and equitable result as between the parties, and absent any significant prejudice to the parties, does not come at any great expense to them.
THE ADVERSARIAL EXPERT APPLICATION
Given that I propose to rule in favour of the wife’s application under s 79(5) it is unnecessary to consider the wife’s application for an adversarial expert.
WIFE’S ORDERS IN RELATION TO RELEASE FROM GUARANTEES
The wife seeks to be released from any guarantees she has provided in respect of the accounts of the company. The husband opposes that.
The wife says, in substance, that the husband has the sole control of C Pty Ltd on a day to day basis, and hence it is his activities which generate the risks which would see her guarantees liable to be called upon.
On the other hand the husband says that the wife continues to receive income from the company by way of salary, and further, has access to monies from the company which she takes by way of director’s loan. In effect he says that she is getting the benefit of the operation of the company, and hence should not be released from the risks associated with it.
I accept the submissions of the husband in this respect. I decline to make an order releasing the wife from the relevant guarantees at this time.
EXPENSES OF PROPERTIES PENDING SALE
The parties are agreed that all outgoings in relation to the wife’s N Town property should be paid equally by the parties pending sale, but are not agreed in relation to the M Town property in which the wife presently resides. Essentially the husband says that since the wife has occupation of the former matrimonial home, she should be responsible for the costs associated with that occupation. On the other hand the wife says that there are costs associated with preparing the property for sale – which both parties are agreed should occur – and that stands to benefit both parties, and should not be at her exclusive cost.
I am satisfied that the parties should be jointly responsible for the outgoings in relation to both properties until their sale. Questions of an occupation rent for the wife, or alternatively whether she should be regarded as having already had the benefit of property paid by way of C Pty Ltd’s servicing the mortgage over M Town, can await the trial. There is no need to make such an order now.
RETENTION OR RELEASE OF NET PROCEEDS OF SALE OF M TOWN AND
The wife seeks to have the net proceeds of sale divided equally between the parties by way of interim property settlement (albeit in the case of the sale of the N Town property, taking into account an agreed redraw of $74,000.00 in her favour). The husband opposes that on the basis that those funds should be kept preserved to cover the eventuality that indeed renewal of one or more of the franchises can occur, in which event the potentially significant franchise fee will need to be sourced.
It appears as though the net proceeds of the sales are likely to be about $3,000,000.00. Neither party asserts a present need to one half of that capital sum, but on the other hand, it is of course their joint property.
In Strahan & Strahan (2011) FLC 93-466, the Full Court said:
[132] 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 s 79 is a once and for all order made after a final hearing.
…
[139] We also emphasise 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.
I am not persuaded that it is presently appropriate that there should be an interim partial property settlement comprising the equal division of the net proceeds of sale of the two items of real property. Particularly I am mindful in the event that the husband is able to negotiate the prospective renewals of franchises, that there is good reason to require both parties to equally contribute to that cost, if it be that the wife wishes to thereafter assert that those renewed franchises should fall within the one pool of matrimonial property, and be divided by reference to, amongst other things, one general contribution assessment.
I am therefore not presently persuaded that the interests of justice favour an order for the division of the net proceeds of sale at this point in time. That should not be taken as foreclosing the renewal of an application if circumstances subsequently arise which justify the revisiting of this question.
CONCLUSION
I will direct the solicitors for the wife to bring in orders consistent with these reasons within seven days.
I certify that the preceding fifty eight (58) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Tree delivered on 23 May 2016.
Associate:
Date: 23 May 2016
0
3
1