HIRSCH & SERLE
[2014] FCCA 2247
•22 September 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HIRSCH & SERLE | [2014] FCCA 2247 |
| Catchwords: FAMILY LAW – Property – injunction – matrimonial home – proceeds of sale – evidence that amount owing to mortgagee will exceed the total proceeds of sale – injunction order futile. |
| Legislation: Family Law Act 1975 (Cth), ss.74, 77 |
| Cases cited: Chisholm, R. Australian Family Law, Lexis Nexis Butterworths, Sydney, 1987 |
| Applicant: | MS HIRSCH |
| Respondent: | MR SERLE |
| File Number: | SYC 4696 of 2014 |
| Judgment of: | Judge Scarlett |
| Hearing date: | 22 September 2014 |
| Date of Last Submission: | 22 September 2014 |
| Delivered at: | Sydney |
| Delivered on: | 22 September 2014 |
REPRESENTATION
| Solicitor for the Applicant: | Ms Wild |
| Solicitors for the Applicant: | Family Legal |
| Counsel for the Respondent: | Mr Battley |
| Solicitors for the Respondent: | Harish Prasad & Associates |
ORDERS
The Respondent Husband is to pay to the Applicant Wife by way of urgent spousal maintenance under the provisions of section 77 of Family Law Act 1975 the sum of $1,000.00 per week until 5 November 2014, the first payment to be made on or before 24 September 2014.
The Application by the Applicant Wife for an order for payment of spousal maintenance under the provisions of section 74 of the Family Law Act 1975 is listed for interim hearing at 12:00 noon on Monday 3 November 2014.
The parties may rely on a Further Amended Financial Statement and one affidavit per witness in respect of the interim hearing referred to in the immediately preceding Order, such affidavit not to exceed ten (10) pages of text.
All affidavits and Financial Statements referred to in Order (3) above must be filed and served no later than 28 October 2014 and no documents will be accepted for filing after that date without leave of the Court.
The Application for an order that the proceeds of sale of the property situate at and known as Property S in the State of New South Wales should be paid into the trust account of the solicitor for the Applicant is dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Hirsch & Serle is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 4696 of 2014
| MS HIRSCH |
Applicant
And
| MR SERLE |
Respondent
REASONS FOR JUDGMENT
Application
This is an Amended Application in a Case brought by the Wife seeking several orders, two of which were argued before the Court today.
The first order is an order (order 2):
That pursuant to s.77 Family Law Act 1975 (Cth) the husband pay to the wife or as she directs the sum of $1,000.00 per week by way of urgent spousal maintenance.
Order 5 which was also pressed today provides:
That the proceeds of sale of Property S be paid into the trust account of the solicitor for the Applicant.
A further order, which was not pressed on this occasion but will be argued on a later occasion is an application for interim spousal maintenance, which says:
That in the alternative 2 above, that pursuant to s 74 Family Law Act 1975 (Cth) the husband pay to the wife or as she directs the sum of $1,000.00 per week by way of interim spousal maintenance.
The Respondent Husband opposes both of the orders sought.
The reasons why the Applicant is seeking those orders urgently is because the parties have separated and she is still living in the former matrimonial home with the parties young child, who is still only a baby. However, the Respondent has entered into a contract to sell the former matrimonial home and settlement is imminent. Upon settlement, the Applicant and the child will need to vacate and find other accommodation.
Background
The parties’ lawyers each provided an Outline of Case and uncontroversial background information has been obtained from those documents.
The Respondent Husband was born on (omitted) 1975.
The Applicant Wife was born on (omitted) 1982.
The Applicant gave birth to a child from a previous relationship on (omitted) 2004.
The parties commenced their relationship in August 2012. They commenced to live together either on (omitted) August 2012 (according to the Respondent) or in September of that year (according to the Applicant). They were married on (omitted) 2013.
On (omitted) 2013 the parties’ child X was born.
The parties separated on 11th June 2014 when the Respondent left the matrimonial home at Property S.
The Applicant lodged a caveat against the title to the former matrimonial home on 16th July 2014.
On 24th July 2014 a Child Support Assessment issued in the sum of $270.49 per week.
On 16th August 2014 the former matrimonial home was sold at auction for $1,410,000.00.
Procedural History
The Applicant filed an Initiating Application on 28th July 2014 seeking parenting orders, orders for exclusive occupation of the former matrimonial home and a BMW motor car, and urgent spousal maintenance. The Application was supported by a Financial Statement and an affidavit. The Application was returnable on 20th October 2014.
On 26th August 2014 the Applicant filed an Application in a Case, supported by an affidavit affirmed on 22nd August 2014, seeking:
a)an order for urgent spousal maintenance under s.77 of the Family Law Act 1975 (Cth) in the sum of $1,000.00 per week;
b)an order that the Respondent provide to the Applicant’s solicitor a copy of the sales agreement, sales contract and settlement statement in respect of and prior to the settlement of Property S; and
c)an order that the proceeds of sale of Property S should be paid into the trust account of the solicitor for the Applicant.
The Application in a Case was returnable on 10th September 2014.
The Respondent filed a Response to an Application in a Case, along with an affidavit sworn on 5th September 2014 and a Financial Statement, on 5th September.
On the return date, the parties entered into Consent Orders providing that within 14 days the Respondent would:
a)file and serve a Response to the Initiating Application;
b)file and serve an affidavit addressing the interim orders sought by the Applicant; and
c)provide to the Applicant’s solicitor a copy of the realty sales agreement in respect of the former matrimonial home.
The Consent Orders also provided that the Respondent would provide a copy of the settlement/balance statement in respect of the property before 4:00 pm on 24th September.
The Application in a Case was adjourned to 16th September 2014 for an interim hearing at 2:15pm.
On 15th September, the day before the hearing, the Applicant filed electronically an Amended Application in a Case and an updated affidavit by the Applicant.
The following day, when the matter came on for hearing, Counsel for the Respondent objected to the reception of the Amended Application in a Case and the affidavit of 15th September, arguing that the Respondent had not come to meet what was effectively a different case. When the Applicant’s solicitor sought to press the amended Application and the updated affidavit, I adjourned the proceedings to 22nd September for hearing at 10:00am to allow the Respondent time to meet the Amended Application.
On 22nd September 2014, the day of the hearing, the Respondent filed an Amended Response to an application in a Case and an affidavit sworn 22nd September. The Applicant did not object to those documents. The amended Response sought the following orders:
1. The Respondent shall ensure that all proceeds of sale of the parties’ property at Property S be applied to reduce the parties’ indebtedness to (omitted) Bank.
2. The Amended Application in a Case, filed 15 September 2014, be otherwise dismissed.
3. The Applicant pay the Respondent’s costs.
The hearing proceeded.
Evidence and Submissions
The Applicant relied on the following documents:
a)her Amended Application in a Case;
b)her affidavit of 28th July 2014;
c)her affidavit of 22nd August 2014;
d)her affidavit of 15th September 2014; and
e)her Financial Statement.
The Respondent relied on:
a)his Amended Response to an Application in a Case;
b)his Amended Financial Statement; and
c)his affidavit of 22nd September 2014.
The Applicant’s solicitor, Ms Wild, submitted that this was a classic example of a section 77 application for urgent spousal maintenance. The Applicant has the parties’ young child in her care and is facing the imminent threat of the home in which she is living being sold from over her head. The Applicant was unaware as to exactly what the net proceeds of sale would be but whatever amount there is should be retained in her solicitor’s trust account until her property claim can be finalised.
Mr Battley of Counsel, who appeared for the Respondent, submitted that the two orders sought by the Applicant were fundamentally flawed. He tendered without objection the following documents:
a)a two page document headed “Mortgage Loan Payout Quote”; and
b)a photocopy of the first page of the Contract for Sale of the property at Property S, showing a sale price of $1,410,000.00.
Mr Battley submitted that the parties’ debts exceeded their assets and there would be little if anything realised from the sale once the monies owing to (omitted) Bank were paid. As to the Wife’s property claim, her contribution was as a homemaker and the primary carer for the child. Mr Battley referred the Court to the decision of the Full Court of the Family Court in Waugh & Waugh[1]in support of the proposition that there was no necessity for an injunction in order to forestall a disposal of property to defeat a property judgment. The Applicant did not contribute any of the purchase price of the home. It is clear that the parties’ debts exceed their assets. The Applicant was obliged to pay her legal costs to her solicitors because they were not confident of payment out of the final property settlement.
[1] [2000] FamCA 1183; (2000) FLC 93-052
As to the Applicant’s claim for urgent spousal maintenance, it was submitted such maintenance was only intended to be for a limited period. Mr Battley referred the Court to the following authorities – Pritchard & Pritchard[2]; Malcolm & Malcolm[3] and Williamson & Williamson[4].
[2] (1982) 8 Fam LR 805; FLC 91-286
[3] (1977) 3 Fam LN 8; FLC 90-220
[4] (1978) 4 Fam LR 355; FLC 90-505
In short, it was submitted that there was no basis for making an order for urgent spousal maintenance under s.77 of the Act.
In reply, Ms Wild submitted that an order for urgent spousal maintenance can be by way of a periodic payment. She referred the Court to the decisions of Geston & Geston[5] and Celestin & Celestin[6]. Wild told the Court that the facts in Geston were on all fours with the facts in the present case.
[5] [2011] FMCAfam 1418
[6] [2011] FamCA 74
Urgent Spousal Maintenance
In the earlier decision of Grimshaw-Grieves & Grieves[7]I considered the law as it stood in respect of applications for urgent spousal maintenance under s.77 of the Family Law Act. As I noted at paragraph [3] of the decision, the procedure under section 77 is essentially a summary procedure as is clear from the wording of the section itself, which says:
Where, in proceedings with respect to the maintenance of a party to a marriage, it appears to the court that the party is in immediate need of financial assistance, but it is not practicable in the circumstances to determine immediately what order, if any, should be made, the court may order the payment, pending the disposal of the proceedings, of such periodic sum or other sums as the court considers reasonable.
[7] [2011] FMCAfam 125
I went on to consider the relevant law at paragraphs [13] to [20] of that decision, which I later followed in Geston & Geston[8], to which I have been referred by Ms Wild. I note that neither decision was the subject of an appeal and the decision in Grimshaw-Grieves[9]was followed by her Honour Judge L. Turner in Rickert & Pitt[10], a case, like Geston, where the facts were basically similar to those in the present case (see also the decision of Brown FM[11]in Bonney & Bonney[12]).
[8] supra
[9] supra
[10] [2013] FCCA 693
[11] As his Honour then was
[12] [2005] FMCAfam 546
In Grimshaw-Grieves I held at [13]-[20]:
13.I have had the benefit of considering the comments in the annotated version of the Butterworths text[13]where it is pointed out that urgent maintenance can be ordered under the section where it appears to the Court that a party to the marriage is in immediate need of financial assistance, that in the circumstances it is not practical to determine immediately what, if any, order should be made. The learned practice goes on to say that these applications have particular characteristics, in that they are intended to deal with urgent situations.
14.They are normally relevant for a defined or definable period of time. They are in the nature of “stop-gap” orders. That does not mean that they have to be “breadline” orders, and the appropriate quantum depends upon the particular circumstances of each case and the financial background and history of the parties.
15.Where the need for maintenance is urgent, the Court under this section is authorised to make an order on such evidence as may be available in a summary hearing and the application is heard at a time when all the evidence is not yet to hand…
16.It is most interesting to note that the authorities on applications of this nature go right back to the early years of the Family Law Act. There are very few recent authorities. They mainly deal with the period from 1977 through to 1982.
17.In the Marriage of Malcolm & Malcolm[14], was a decision of the late Watson SJ. His Honour stated that the court is only concerned with the question whether it appears that the party is now in immediate need of financial assistance, saying:
Whatever may have been the proper view under the superseded law, s.77 is meant to serve a different purpose – it is to provide emergency funding in those cases where the court is unable to determine immediately what order should be made.
18.The matter was further considered the following year by the Honourable Ashe SJ in Williamson & Williamson[15] and in that decision at page 77,648[16] his Honour referred with approval to the decision of Watson J in Malcolm & Malcolm, referring particularly to his Honour’s statement quoted above.
19.The question of the difference between urgent spousal maintenance under section 77 and interim maintenance applications was dealt with by Nygh J in two decisions in 1982, Ashton & Ashton[17] and Pritchard & Pritchard[18].
20.In those two decisions, His Honour made it quite clear that there was a significant difference between urgent spousal maintenance and an interim application, and indeed there is. Urgent spousal maintenance is provided for by section 77 of the Act, and interim applications are dealt with under section 80 of the Act, and different principles apply. What is clear, however, is that there is a need on a quick basis to establish an immediate need of financial assistance.[19]
[13] Chisholm, R. , Australian Family Law, Lexis Nexis Butterworths, Sydney 1987 at 1412.1-1412.2
[14] (1977) 3 Fam LN 8; FLC 90-220
[15] (1978) 4 Fam LR 355; FLC 90-505
[16] (1978) 4 Fam LR 355 at 357; FLC 90-505 at 77,648
[17] (1982) 8 Fam LR 675; FLC 91-285
[18] (1982) 8 Fam LR 805; FLC 91-286
[19] [2011] FMCAfam 125 at [13]-[20]
Conclusions
What the Applicant needs to establish is that she has an immediate need of financial assistance. Her evidence is that the former matrimonial home at Property S, in which she has been living with the child, has been sold and settlement of the sale is imminent. She will need to re-house herself and the child of the marriage, as well as her child from a previous relationship, urgently. She has seen a property for rent in the Property S area that will meet her short-term needs, but the rent is $430.00 per week. However, to secure that property, she will need to pay two weeks’ rent in advance, along with a bond of $1,720.00. She will also have to provide evidence that she will be able to meet the rental payments.[20]
[20] Affidavit of Ms Hirsch 15.9.2014 at paragraph [11]
The Applicant deposed that she now only has an amount of $884.32 left in her bank account. She had a larger amount in the bank until recently, but had to make various payments to transfer items (unspecified) to the (country omitted) and funds to her bank account in the (country omitted) to ensure that the mortgage on a property she owns in that country was met.
In addition, she had to pay an amount of $10,000.00 to her solicitors to meet three invoices totalling $9,990.00. The Applicant deposed that:
In respect of my legal fees, I was advised by Thexton Lawyers/Family Legal, that due to representations made by the Husband that there is no equity in the former matrimonial home, I would be required to pay my legal fees when they fall due and not on final settlement.[21]
[21] Ibid at [7]
Mr Battley adverted to this evidence in his submission about the Application for an injunctive order in respect of the balance of proceeds of sale of the former matrimonial home.
It is the Applicant’s evidence from her (Amended) Financial Statement filed on 16th September that her weekly income amounts to $$520.49, made up as follows:
a)Rent on the property she owns in the (country omitted) $250.00. and
b)Child support payments from the Respondent: $270.49.
The Respondent, in his Amended Financial Statement filed on 16th September, estimates his total average weekly income at $10,100.00 and his total expenditure at $9,900.00, which would leave him only $200.00 per week to live on. He estimates that he pays $750.00 per week by way of child support for the parties’ child and his two daughters from a previous relationship and that he pays an estimated $300.00 per week for electricity, water rates, land rates and landline (presumably telephone) for the benefit of the Applicant, the child, and the Applicant’s other child. Obviously, this liability will cease when the sale of the property at Property S is settled, which will be within days.
The Respondent also claims in his Amended Financial Statement that he is paying the sum of $2,300.00 per week to (omitted) Bank by way of mortgage payments. Again, this liability will cease on the settlement of the sale of the property.
I am satisfied that the Applicant has established an immediate need for financial assistance but that it is not practicable in the circumstances to determine immediately what order, if any, should be made. The Applicant seeks an amount of $1,000.00 per week, which I consider to be reasonable.
There is power under s.77 to order the payment of a periodic sum pending the disposal of the proceedings. The Applicant seeks an order for interim spousal maintenance and I propose to hear that Application at the first available opportunity, which will be on 3rd November 2014. Obviously, the amount of $1,000.00 per week ordered today will need to continue until that matter is finalised, so I will order that it should continue until 5th November.
However, the application for an injunctive order requiring the net proceeds of sale of the property to be paid into the Applicant’s solicitor’s trust account will not succeed.
The Applicant’s property claim does not appear to be a substantial one, as the marriage was a short marriage, of less than two years in duration. There does not appear to be any evidence of any direct financial contribution, so the Applicant’s claim will be that of homemaker and primary carer of the child of the marriage.
Moreover, the evidence suggests that the asset pool may not be a large one. In his Amended Financial Statement the Respondent estimates the total value of the property which he owns at $2,435,000.00 and the total of his liabilities at $2,592,932.00, leaving a negative equity of $157,932.00. He also estimates that he has superannuation with a gross value of $235,000.00.
Turning to the immediate issue of the balance of purchase price of the Property S property, the Respondent has provided two mortgage loan payout quotes from (omitted) Bank, in respect of a loan solely in his name and another loan in the names of himself and Ms S.
The first quote shows a total payout figure of $1,182,341.55 and the second shows a total payout figure of $298,544.58. The total of those two figures amounts to $1,480,886.13.
The sale price of the property, according to the contract, is $1,410,000.00. On those figures, there will be a shortfall of $70,886.13. That does not take into account auctioneer’s commission, conveyancing costs or rate adjustments. Clearly, the order sought by the Applicant that the net proceeds of sale should be paid into her solicitor’s trust account would be futile.
That Application will be dismissed.
I certify that the preceding fifty-four (54) paragraphs are a true copy of the reasons for judgment of Judge Scarlett
Associate:
Date: 22 September 2014
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
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Civil Procedure
Legal Concepts
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Injunction
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Remedies
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Jurisdiction
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Procedural Fairness
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Costs
0
6
2