Henryson and Henryson

[2019] FamCA 185

FAMILY COURT OF AUSTRALIA

HENRYSON & HENRYSON [2019] FamCA 185

FAMILY LAW – PROPERTY – Interim property settlement – Application pursuant to Section 79 and 80(1)(h) of the Family Law Act 1975 (Cth) – Consideration of the two-step approach in respect of the interim property applications – Just and equitable.

Family Law Act 1975 (Cth) ss 75(2), 79, 80(1)(h), 117(2)

Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578
Poletti & Poletti (unreported, Family Court of Australia, Nygh J, 2 March 1990)
Strahan & Strahan [2009] FamCAFC 166
Wilson & Wilson (1989) FLC 92-033
Zschokke & Zschokke (1996) FLC 92-693

APPLICANT: Mr Henryson

RESPONDENT: Ms Henryson

FILE NUMBER: PAC 4451 of 2015

DATE DELIVERED: 29 March 2019

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Hannam J

HEARING DATE: 21 January 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT:

SOLICITOR FOR THE APPLICANT: Cameron Legal

COUNSEL FOR THE RESPONDENT:

SOLICITOR FOR THE RESPONDENT:

Orders

1. That within seven (7) days from the date of these Orders the parties shall do all acts and things and sign all necessary documents as required to authorise and direct Cameron Legal to release the following amounts from the funds held on trust on behalf of both parties with such payments to be categorised by the trial judge at final hearing:

   (a)       The sum of $100,000 to the applicant husband;

   (b)       The sum of $100,000 to the respondent wife;

   (c)       The sum of $45,000 to the applicant husband for maintenance and repairs of the following properties:

   (i)B Street, Suburb D

   (ii)C Street, Suburb E

2. That within seven (7) days from the date of these Orders the Respondent wife shall provide details and all necessary documents to the applicant husband’s solicitors, Cameron Legal, and her accountants, F Accountants with respect to the rental income received by the Respondent wife on behalf of the parties for the period 1 July 2004 to 30 June 2014 for the following properties:

   (a)       B Street, Suburb D

   (b)       C Street, Suburb E

   (c)       G Street, Suburb H

3. That within seven (7) days from the date of these Orders the Respondent wife shall sign all necessary documents and authorities for J Group and forward the said documents and authorities to Cameron Legal to enable the release of funds with K Group into Cameron Legal Pty Ltd Law Practice Trust Account to be held upon trust for the parties pending written directions of both parties or Court order as to its distribution.

4. That if either party refuses or neglects to sign, within seven (7) days of a written request to do so, any documents necessary to effect the terms of these Orders, a Registrar or such other officer or person as may be appointed by the Family Court of Australia is hereby appointed pursuant to the provisions of section 106A of the Family Law Act 1975 to execute such documents on behalf of such party.

5. The application for costs in the proceedings is reserved to the final hearing

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAC 4451 of 2015

Mr Henryson

Applicant

And

Ms Henryson

Respondent

REASONS FOR JUDGMENT

Introduction

1. The Applicant husband, in proceedings with his former wife for a property settlement under s 79 of the Family Law Act 1975 (Cth) (“the Act”), seeks interim orders in an Application in a Case filed 4 December 2018 to release some funds held on trust on behalf of both parties.

2. The effect of the orders sought by the Applicant would result in both parties receiving a sum of $100,000 and the Applicant receiving a further amount of $45,000 for maintenance and repairs of two properties owned by the parties in Suburb D and Suburb E.

3. The Applicant also seeks that the court order that the wife complete necessary documents to authorise by order that an accounting firm release funds from the parties’ investment accounts into the trust account of his solicitor to be held on trust for the parties pending written directions of both parties or Court Order as to its distribution.

4. The husband further seeks that the wife provide documents by way of disclosure that have been outstanding for some time and that she pay his costs incidental to this application.

5. The husband relies on the Application in a Case filed 4 December 2018, his affidavit filed the same date, an affidavit of his solicitor filed 11 January 2019 as to notice given to the wife concerning this application and a Balance Sheet filed 15 September 2017.

6. The wife did not file a Response to the husband’s Application in a Case. The wife who was represented in the proceedings until 7 February 2018 (when her solicitor filed a Notice of Ceasing to Act) has failed to engage in these proceedings since that date.

7. Accordingly, the husband’s application was heard undefended on the 21 January 2019.

BACKGROUND

1. The husband, who is 69, and the wife, who is 70, were married in 1974 and have two adult children.

2. The parties separated on a final basis in April 2014, after a 39 year marriage, and their divorce was finalised in 2016.

3. The husband commenced property settlement proceedings in January 2017. The final orders sought by him would see the wife transfer her interest in the Victorian Properties to him, and he would transfer his interest in a property in Brisbane to her.

4. The wife seeks final orders which would result in her transferring her interest in the higher valued Victorian property to the husband, and to have him transfer his interest in a property in Brisbane and the other Victorian property to her. The wife also seeks an order that one party pay to the other a cash amount sufficient to effect an overall division of the property, superannuation and financial resources of the parties of 55 percent to her and 45 percent to the husband.

Financial matters during the marriage

1. When the parties began living together neither of them owned any assets of significant value.

2. The parties jointly bought and sold various properties throughout their marriage, some of which served as the matrimonial home at different points in time and others were bought as investments. The funds used to purchase the various properties came from the parties’ savings, the net proceeds from the sale of the other properties, a gift from the husband’s family of $3,000 and an inheritance of $35,000 from the husband.

3. The parties’ earnt income from renting out their investments properties.

4. The husband worked in a professional capacity for the most part of the parties’ marriage with a period of unemployment from March 2012 to April 2013.

5. Much of the husband’s work was undertaken on a contract basis and was conducted overseas. He was paid on a per diem basis and much of the salary he earnt in this manner was saved and deposited into the parties joint savings account.

6. The husband’s annual salary fluctuated constantly throughout his career but between 1993 and 2012 always fell in the range of $100 000 to $200 000. The husband continued to deposit his earnings into the parties’ joint account until separation in 2014.

7. For a number of years when the husband worked overseas the wife and children travelled and lived with him abroad until around 1999 when the wife returned to Australia to live full time.

8. The wife did not work for a period of time commencing after the birth of the parties’ first child and continuing until their second child was three or four years old, a period of approximately six or seven years. Otherwise throughout the marriage including when the parties were overseas the wife worked in various part-time roles.

9. The wife also managed the parties’ finances and investments in Australia while the husband worked overseas, including the management of the rental income from various properties and a self-managed superannuation fund.

10. Prior to separation, the wife took out a loan with L bank when she engaged in a business venture and recorded the husband as a guarantor without his knowledge. The wife subsequently defaulted on this loan, leaving an outstanding sum of over $20,000.

11. The husband only became aware of the outstanding debt to L bank and his responsibility for it after separation. His own capacity to obtain a loan has been affected due to this outstanding debt for which he is responsible.

Financial matters following separation

1. In April 2014, when the parties separated, the husband was working overseas and the wife was living in the former family home in Brisbane.

2. The parties sold a property they owned in Suburb H, Victoria. It appears the husband contends that the wife alone received the funds from this sale. Another of the Victorian properties owned by the parties was retained to be used by the husband when he visited Australia for a few months each year.

3. The self-managed superannuation fund managed by the wife during the parties’ relationship was wound up following separation and the proceeds were deposited into the husband’s solicitor’s trust account.

4. The parties currently have funds held by J Group which are the proceeds of investment accounts in joint names. These funds cannot be released into the husband’s solicitor’s trust account until the wife provides the required authority.

The Asset Pool

1. The parties own three properties in joint names; the Victorian properties valued at $900,000 and $220,000 respectively and the Brisbane property valued at $545,000.

2. The parties have various other joint assets: the funds from their wound up superannuation fund to the value of $423,000; funds currently held by the J Group of $200,000; and several other shares and investment accounts with an approximate total value of $306,189. The husband is also seeking an addback to the asset pool of $106,984.80 against the wife in relation to the proceedings of sale of the Suburb H property.

3. The joint liabilities of the parties are a debt with L bank of $26,000 and an investment loan of $80,824.

4. The husband contends that the wife has other assets in her sole name: savings in an M bank account of $69,319; two cars with an estimated value of $5,000 each; and household contents of approximately $3,500 in value. The wife also has $35,491 in her superannuation account. The husband contends that the wife also has a credit card debt of $4,000.

5. The Balance Sheet relied upon by the husband indicates that he had a total of over $7,000 in two bank accounts in his name but these funds have now been used for living expenses and now only hold nominal amounts. The husband also had his own superannuation account to the value of $32,000 which he has now spent on living expenses and legal fees.

6. Thus the value of joint net assets available for distribution is approximately $2,487,365. It is unclear whether the assets and liabilities for which the parties are solely responsible will be brought to account in the property proceedings. These are of small value and are not significant in consideration of this application.

The Interim Application

1. The husband seeks orders that would result in a partial release of the funds held on trust by the husband’s solicitors to both parties by way of interim property settlement. 

2. The husband also seeks that the court order that the wife sign the necessary documents to authorise the accounting firm to release funds from one of the parties’ joint investment accounts to his solicitor’s trust account.

3. The husband deposes that he is currently unemployed and has a nominal sum of money in his bank account to support his living expenses. He is not entitled to a government benefit due to the value of assets held by the parties and has no other source of income. He has borrowed funds from family members to cover his living expenses.

4. The husband deposes that one of the Victorian properties in which he currently resides, is termite infested and in quite a serious state of disrepair. He requires access to the joint funds to repair and maintain this property and provide him with a safe living environment, and also to repair and renovate the other Victorian property so that it can be leased.

5. The funds are also sought to enable the husband to meet his living expenses of approximately $850 per week as he has no other source of income and to pay the approximately $35,000 owing in legal fees.

The Law and Discussion

1. It was observed in Paris King Investments Pty Ltd v Rayhill[1] that there are a number of juridical bases for orders of the type sought.  The Full Court in Zschokke & Zschokke[2] were of the opinion that the decisions in Wilson & Wilson[3] and Poletti & Poletti[4] established that where there are pending proceedings under s 79 of the Act for property settlement, an order for funds for litigation expenses may be made pursuant to s 80(1)(h) or s 117(2).

   [1] [2006] NSWSC 578

   [2] (1996) FLC 92-693

   [3] (1989) FLC 92-033

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

2. In Strahan & Strahan (Interim Property Orders)[5] the Full Court said at 85,633:

   86.      Once the relevant source of jurisdiction for making an order is resolved then it could be assumed that what Brereton J in Paris King Investments described as “the necessary preconditions and relevant considerations” or as the Full Court in Zschokke described as the “matters” to be taken into account should be easy to identify. If the source of jurisdiction is s 117(2) of the Act then the court may make such order as it considers just provided there are justifying circumstances. If the order is sought under s 79 of the Act then the court may make such an order as it considers appropriate provided it is satisfied that it is just and equitable to make the order. If the order is sought under s 74 of the Act then the court may make such order as is proper.

   87. If the source of jurisdiction is s 79 of the Act, in Zschokke at 83,216 the Full Court said:

   If the order is to be made under s.80(1)(h), it would seem that regard should be had to the requirement in s.79 that the orders be just and equitable and this would require the Court to undertake at least some brief consideration of the matters in s79(4) including those referred to in s.75(2). If on a brief consideration of those matters, it seems likely to the Court that the party who is the applicant for the interim order for an advance of funds from the other party will be likely to receive by way of property settlement a sum sufficient to cover the advance, that would seem to be sufficient to enable the order sought to be made (cf Wilson and Poletti).

   88.      In Paris King Investments Brereton J at [33], referring to an interim property order under s 79 and s 80(1)(h) of the Act and also Zschokke, said that “while the requirements of s 79(2) and (4) must be observed in the same manner as for any interim property order, if it appeared that the applicant would likely receive by way of property settlement a sum sufficient to cover the advance, then an interim order may be made” (citations omitted).

   [5] (2011) FLC 93-466.

3. I understand from the submissions made by the husband’s legal representative that the source of power he contends should be exercised in this application is s 79 and s 80(1)(h) of the Act and I will consider the application on that basis.

A two-step process

1. According to Strahan (supra) where the power is to be exercised pursuant to s 80(1)(h) a two-stage approach is to be taken to the hearing of an application. The Full Court said at [118]:

   … This is recognised by the fact that although the power under s 79 should ordinarily be exercised on a once only basis, “circumstances may arise before there can be a final hearing” where the power is exercised. Thus the first step is to resolve whether to exercise the power before a final hearing and if it is resolved to do so then the second step involves the exercise of that power.

The first step

1. So far as the first step is concerned, it is settled in Strahan (supra) that the Applicant is not required to establish that there are compelling circumstances at the time for making an order for interim property settlement. The Full Court in Strahan at paragraph [132] observed:

   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…

2. The test in light of the High Court decision in Stanford v Stanford[6] is whether it is just and equitable to exercise the power.

   [6] [2012] HCA 52.

3. The husband’s application comes about in circumstances where the wife who was initially engaged in the proceedings and was taking the necessary practical steps to resolve the outstanding property dispute has now disengaged. She has failed to provide the necessary documents to the parties’ accountant and sign necessary authorities to allow the parties to come to a final settlement. The husband requires some funds to pay the costs of litigation, cover his weekly living expenses (as he has no income) and renovate properties to provide him with a safe living environment and earn a rental income. These matters all appear to be undisputed by the wife when she was engaged in the proceedings. As she has not engaged in this application she can be taken to maintain this position.

4. Further, it is important to note that as observed in the matter of Strahan (supra), any interim order “must be capable of variation or reversal without resort to s 79A of the Act or appeal”.

5. The orders sought by the husband would see him receive $145,000 in total. Based on the value of the assets and liabilities provided by the husband, this represents approximately six percent of the value of the joint net assets. Given that the wife has sought an order to effect an overall division of all the property of the parties in a way that gives 55 percent to herself and 45 percent to the husband, it could not be said that the interim orders sought by the husband would result in him receiving “more than he would be indubitably entitled to on a final hearing”.[7]

   [7]Strahan & Strahan [2009] FamCAFC 166

6. On the basis of each of these undisputed facts, in my view, it is appropriate for the power to be exercised so that a just and equitable result may be achieved before the final hearing of the matter.

The second step

1. Having determined that the jurisdiction under s 79 should be exercised, I am required to undertake a consideration of the matters in s 79(4), including the s 75(2) matters. However, in Strahan (supra) it was observed at [137] that:

   … consideration of such matters may be brief and if it is established that “it seems likely to the Court that … the applicant … will be likely receive (sic) by way of property settlement a sum sufficient to cover the advance, that would seem to be sufficient to enable the order sought to be made”. …

2. In this matter, it has been the wife’s contention that the husband is entitled to 45 percent of the net assets including superannuation. It appears beyond dispute that each of the parties made significant contributions to the family finances and that the wife also contributed as a homemaker. The s 75(2) matters are not able to be considered in any clear way but it is noted that the parties’ children are adults, and each of the parties will to have some financial resources when the joint funds are released and may have some capacity for future employment.

1. Taking the wife’s case at its highest, the husband’s share would exceed by a long way the sum he seeks by way of interim payment. 

2. In circumstances where the husband needs the funds to pay legal expenses and commence the much needed repairs and maintenance of the properties, it is just and equitable to make the interim orders for a partial distribution sought by the husband.

3. Further, in circumstances where the parties agreed to orders in relation to the completion of taxation returns in November 2017 and where a Registrar previously made orders in May 2018 for the wife to deliver all documents to the appointed accountant within 7 days to enable the tax return to be completed, the order sought by the husband in relation to the provision of documents with respect to rental income is proper in the circumstances.

4. Finally, the annexures to the husband’s affidavit of correspondence sent from his solicitor’s to the self-represented wife demonstrate that the parties agreed some time ago to have the funds from their investment account deposited into the husband’s solicitor’s trust account. It is evident that the wife initially cooperated by providing some of the necessary documents and identification to effect the transfer, however due to her delays in providing those document a further authority is now required to release the funds, which she has not executed. In such circumstances, an order requiring the wife to sign all necessary documents to effect the transfer is also a proper order.

5. Accordingly, the orders I make are those set out at the forefront of these reasons for Judgment.

I certify that the preceding fifty-four (54) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hannam delivered on 29 March 2019.

Associate: 

Date:  29 March 2019