JAGER & JAGER

[2018] FCCA 2030

FEDERAL CIRCUIT COURT OF AUSTRALIA

JAGER & JAGER [2018] FCCA 2030

Catchwords:
FAMILY LAW – Interim property distribution – urgent need of both parties for funds – the issue is the “source” from which such distribution be paid – the choice is to sell a Motor Vehicle that remains unused and depreciating in value in the Husband’s possession or to draw down funds from an off-set account – on balance and by reference to basal principles of “justice” better to use the depreciating asset of the car – Orders made as sought by the Wife.

Legislation:

Family Law Act 1975 (Cth), ss.79, 80, 117

Cases cited:

Strahan v Strahan (Interim Property Orders) (2010) 42 Fam LR 203

Applicant: MS JAGER

Respondent: MR JAGER

File Number: CAC 1763 of 2017

Judgment of: Judge Neville

Hearing date: 19 June 2018

Date of Last Submission: 19 June 2018

Delivered at: Canberra

Delivered on: 6 July 2018

REPRESENTATION

Solicitors for the Applicant:	Neilan Stramandinoli Family Law
Solicitors for the Respondent:	Mazengarb Family Lawyers
Solicitors for the Independent Children's Lawyer:	Legal Aid ACT

UNTIL FURTHER ORDER, THE COURT ORDERS THAT:

1. The parties forthwith do all things and sign such documents as necessary to sell the Motor Vehicle registered in the Husband’s name and to divide any net sale proceeds equally. In this regard:

   (a)The Wife is authorised to deal with any sales person with respect to the sale of the vehicle and to obtain information concerning any sale process and to speak with any potential buyers;

   (b)Upon receipt of the Husband’s half share of the sale proceeds, he shall deposit the amount of $30,000 into his solicitor’s trust account, with such funds to be applied towards the Husband’s rental accommodation costs.

2. The sum of $4,225.28 be released from the offset account to pay the Husband’s rental arrears, as set out in the Notice to Vacate dated 12 June 2018,

   AND THE COURT NOTES THAT this amount has already been paid.

3. Forthwith upon the making of these Orders:

   (a)The Husband receives $10,774.72 from the offset account; and

   (b)The Wife receives $15,000 from the offset account.

4. That the Wife will use her best endeavours over a  period of 6 months to locate and make the following items available to the Husband:

   (a)The Husband’s tools located in the garage;

   (b)Some car cleaning products, equipment, compressors and generators;

   (c)The BBQ smoker;

   (d)Any boxes located by the Wife in the garage which contain the boxes of personal items the Husband has packed and stored in the garage;

   (e)The Husband’s pushbikes;

   (f)The Husband’s fishing rod collection and fishing tackle collection;

   (g)The Husband’s camping equipment including backpacks and hiking gear;

   (h)The Husband’s great grandmother’s large glass brandy bowl;

   (i)The Husband’s electric guitar, if it can be located;

   (j)The fridge located in the garage;

   (k)A reasonable share of the children’s photographs and all of the Husband’s photos from college;

   (l)The Husband’s medical records;

   (m)The Husband’s passport;

   (n)The Apple computer located in the garage and accompanying equipment save that the Husband shall first provide the Wife with the password for the computer to enable the wife to take a copy of any family photographs and necessary files;

   (o)The bike rack and tow bar to the Husband’s new car and roof rack if it can be located;

   (p)Colouring books and pencils;

   (q)Bookcase in the garage including the contents, the Husband’s collection of books relating to cars, novels, including several kept in the roof;

   (r)Collection of liquor including rare port in commemoration of the (omitted), if it can be located;

   (s)Boxes of vaping equipment and oils, if they can be located.

5. Pursuant to section 62G(2) of the Family Law Act1975 (‘the Act’) the parties and the children of the relationship attend upon a family consultant nominated by the Dispute Resolution Coordinator of this Court on a date and at times to be advised for the purposes of the preparation of a Family Report addressing the issues identified in section 60CC of the Act.

6. The matter be listed for Final Hearing for 2 days commencing on 3 December 2018 at 10:00am in CANBERRA.

7. Evidence in chief at the Hearing be by way of Affidavit. Oral evidence in chief will only be permitted by leave. Affidavits must comply with Divisions 2.1 and 15.4 of the Federal Circuit Court Rules 2001.

8. The Applicant Wife pay any hearing fee or seek a waiver of the fee by 19 November 2018.

9. Each party file and serve by 12 November 2018:

   (a)one affidavit setting out any further evidence in chief;

   (b)one affidavit of each lay witness intended to be relied upon at trial; and

   (c)one updated financial statement.

10. The parties cannot rely on any material filed after 12 November 2018 without the leave of the Court.

11. Each party file and serve on all other parties and the Court by 26 November 2018 a case outline, setting out:

    (d)the final orders sought;

    (e)a summary of the issues in dispute;

    (f)a list of documents intended to be relied upon;

    (g)a list of authorities intended to be relied upon; and

    (h)a statement of asserted assets and liabilities.

12. An editable Microsoft Word copy of the case outline must be emailed to [email protected] by close of business on 26 November 2018.

13. The Independent Children’s Lawyer is to prepare a chronology, to be settled with the parties, by 26 November 2018.

14. The parties are to notify any Family Consultant or other Court appointed expert required to give evidence at the trial a minimum of 6 weeks prior to trial.

15. Subpoenæ be returnable no later than 26 November 2018.

16. The matter be listed for pre-hearing directions on 27 November 2018 at 9:15am in CANBERRA.

THE COURT NOTES THAT:

(A)Failure to comply with hearing directions could result in Orders for costs (including personal costs Orders) and the possibility that the Court will not hear the matter on the scheduled dates;

(B)Should the matter settle prior to the Final Hearing, or should the Final Hearing be listed to another date, the party who put any expert on notice must notify them that they are no longer required to give evidence, at the earliest possible time. Failure to do so may result in Orders for costs (including personal costs Orders) for hearing-related expenses incurred by that expert;

(C)All parties and practitioners must attend the Final Hearing in person.

IT IS NOTED that publication of this judgment under the pseudonym Jager & Jager is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT CANBERRA

CAC 1763 of 2017

MS JAGER

Applicant

And

MR JAGER

Respondent

REASONS FOR JUDGMENT

Introduction

1. The Court is required to make further interim Orders in relation to the ongoing property dispute between the parties.  There are parenting issues also in dispute but they are not immediately relevant to the current aspects of the matter to be determined.  What follows are the oral reasons, revised from the transcript, for making Orders as sought by the Applicant Wife.

2. Put shortly, the parties are in very difficult financial circumstances.  It is not a contest, of course, as to which party is in the most financial need.  However, on the limited evidence available to the Court, by both parties, the Husband’s financial position, and more generally, is fraught and perilous.  In his most recent Affidavit, filed 15^th June 2018, and at Interim Hearing, he set out a range of matters questioning the financial position of the Wife.  Obviously, I cannot make any findings in the usual circumstances of a “he said – she said” situation.  Accordingly, I will confine my comments, as far as possible, to the material provided by the parties about their own circumstances.

3. In the Husband’s case, I note the following, as summarily as possible.

4. There is no dispute that there was an interim property distribution in September 2017, whereby, pursuant to Consent Orders, each party received $50,000.  Around December 2017 / January 2018, there was a further interim property distribution to each party, also by consent.

5. The Husband has confirmed (par.10 – affidavit of 17^th May 2018) that he has now “exhausted all of these funds.  He used these funds on a variety of things including paying [his] day to day [and some] expenses for the Wife and the children’s benefit.”  He confirmed that he currently had $102 in his savings account.  He confirmed that he had spent the funds previously advanced to him on rent, “establishment costs and legal fees” and that he had spent some money (then unspecified) on some “hobby items for his collection.”  Details of these hobbies and collections are provided in other material filed with the Court and which I need not recount here. 

6. Likewise detailed in the material filed are the Husband’s diverse and extensive medications, and the funds he has borrowed from third parties.  Given how extensive his medical and other needs are, respectfully, one might ask, I hope not unreasonably, but at this stage somewhat rhetorically: how is holding onto the “investment” Motor Vehicle going to assist him, or anyone else?

7. At this juncture, it is as well to set out the respective Orders sought by both parties as well as the helpful submissions filed on behalf of the parties.

The Wife’s Orders Sought

1. The Wife’s Minute of Interim Orders Sought was as follows:

   The Applicant Wife seeks the following Orders pending further Order, that:

   1) The sum of $4,225.28 be released from the offset account to pay the Husband’s rental arrears, as set out in the Notice to Vacate dated 12 June 2018. IT IS NOTED this amount has not been paid.

   2) Forthwith upon the making of these Orders:

   a) the Husband receives $10,774.72 from the offset account;

   b) the Wife receives $15,000 from the offset account.

   3) The parties forthwith do all things and sign such documents as are necessary to sell the Motor Vehicle registered in the Husband's name and to divide any net sale proceeds equally. In this regard:

   a) The Wife be authorised to deal with any sales person with respect to the sale and to obtain information concerning any sale process and to speak with any potential buyers;

   b) Upon receipt of the Husband's half share of the sale proceeds, he shall deposit the amount of $30,000 into his solicitor's trust account, with such funds to be applied towards the Husband's rental accommodation costs.

   2) Orders be made in accordance with proposed Order 5 of the Wife's Response filed 31 May 2018 relating to the return of certain items to the Husband.

   3) Otherwise, all interim applications be finalised and the .matter proceed to listing for final hearing.

The Husband’s Orders Sought

1. The Orders Sought by the Husband, as included in his submissions, were as follows:

   1) That the sum of $30,000.00 be released to each of the party’s, from the joint account Bank Account Number.

   2) That an Order be made in accordance with Order 2 of the Husband’s Minutes of Orders Sought filed on 31 January 2018.

   3) The Respondent Husband not dispose of the Motor Vehicle motor vehicle or his collection pending further Order of the Court.

The Wife’s Submissions

1. The Wife’s submissions, filed 18^th June 2018, were as follows:

   1) The Wife seeks to rely upon the Submissions filed on her behalf on 31 January 2018 and the Minute of Orders filed with these Submissions. The Wife was served with an Affidavit by the Husband late on Friday 15 June 2018, making allegations in relation to gambling issues. The Wife disputes these allegations and has prepared a short Affidavit in response to be filed on 18 June 2018 addressing these allegations.

   2) The Wife's position remains the same; she provides some practical solutions to address the current financial needs of the parties and proposes that otherwise, the matter should be listed for final hearing. It is submitted that it is in neither party's interests to have to keep coming back to the Court on interim financial applications. Whereas the Wife disputes the assertions made by the Husband concerning her spending, it is submitted that he Husband does not dispute the Wife's analysis of his spending. In circumstances where apart from interim payments made to the Wife of $50,000 and $12,000 from September 2017 and rent of approximately $15,000, the Husband has had access to approximately an additional $118,000 since June 2017 whereas the Wife has had access to her payments of $50,000 and $12,000 and modest government benefits. The Husband looks after himself; the Wife looks after herself and the 3 minor children (with no child support); she also pays the household expenses. The Husband needs some control of his finances and the reality is that the parties cannot afford to retain the Motor Vehicle which is the "spare" car.  As both parties need further funds to meet day to day expenses and ongoing legal fees of these proceedings, it is sensible and practical to sell this car pending final hearing. The agreed value of this car is $110,000. It has depreciated $50,000 from when it was purchased in late 2016.

   3) It is submitted that the Husband has not made out in evidence the necessity for the sale of the former matrimonial home where the Wife and the 3 minor children reside. The Property A· property maintains itself through the offset account, an arrangement the parties set up before separation as a way to preserve the property pool. There is no prejudice to the Husband of the status quo remaining whereas it is prejudicial to the Wife and disruptive to the children to force a sale in circumstances where the Wife seeks to retain the property on a final basis; it is submitted that the Wife has a prima facie case to retain the home.

   4) The Husband already has access to part of his remote collection in storage which has not been valued. If the Husband is permitted to retain the full collection, the Wife will be denied natural justice by not being able to be confident that any subsequent valuation process includes all items.

The Husband’s Submissions

1. The Husband’s submissions, also filed 18^th June 2018, were as follows (footnotes omitted):

   The Respondent Husband does not receive an income or any Centrelink benefits. He is unable to obtain such benefits until 2028. He is unable to obtain paid employment given his ill health.

   The Respondent Husband has nominal savings, has credit card debts of $11,717.00 and is indebted to family and friends. The Respondent Husband cannot afford to attend upon his general practitioner, his psychologist or pay for his medication. He has other outstanding debts. The Respondent Husband is required to pay lump sum rent to secure his accommodation. The wife and children occupy the family home. The parties have already received by consent interim distributions of $62,500.00 each. Both parties have spent this money. The proposed release of money from Bank Account will not compromise the continued payment of mortgage instalments from this account.

   The Court is referred to the decision of the Full Court of the Family Court in Strahan and Strahan (Interim Property Orders). The distribution sought by the Husband is “appropriate” and would not give to him so much that could not be adjusted on a Final Hearing. It is in “the interest of justice” to make the interim distribution.

Consideration & Disposition

1. Both parties require funds to keep living (of course).  The fundamental issue to be addressed at the current time is simply this: from where will the funds come? 

2. The Husband seeks to draw down funds from a Bank off-set account.  The Wife seeks that a rather expensive Motor Vehicle, which remains in the Husband’s possession and is not required for transportation purposes, be sold and the proceeds of sale then distributed.  Its value is currently around $110,000.  It is suggested by the Wife that it has already depreciated by approximately $50,000, since its purchase in late 2016.

3. To the Wife’s argument, the Husband basically says that a draw-down from the off-set account does not, or would not, impact negatively on the parties, and that they should keep the Motor Vehicle as an asset for the future.

4. To the Husband’s argument, again summarised, the Wife notes that (a) the Husband has no dependants to look after, while she has the three young children of the relationship, she receives no child support, and continues to live in the former marital residence, and (b) the Husband continues to maintain his various collections, which are worth significant amounts.

5. The Husband points to the decision of the Full Court in Strahan v Strahan (Interim Property Orders).[1]  Unfortunately, no specific references were given as to which particular sections of that judgment were relied upon.  For my part, the following sections from the Full Court’s judgment seem relevant to the current matter.  Thus, at [118], [132] and [135] – [137] the Full Court said:

   [1] Strahan v Strahan (Interim Property Orders) (2010) 42 Fam LR 203.

   [118] We agree with the submissions of senior counsel for the Wife in relation to the approach to be taken to the hearing of an application for an interim property settlement order. There are two stages to the hearing of such an application where the power is to be exercised pursuant to s 80(1)(h) of the Act. 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.

   …

   [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.

   …

   [135] In relation to the second matter, as the jurisdiction under s 79 of the Act is being exercised the provisions of that section must be considered and applied but with limitations given that it is not the final hearing. There is also no requirement of compelling circumstances in relation to the substantive step.

   [136] As to the third matter identified at 79,930 by the Full Court in Harris, in discussion before us it was described as the “adjustment issue” or “claw-back issue”. It was submitted by senior counsel for the Wife that it is relevant to consider whether an order would give the applicant “more than they would be indubitably entitled to on a final hearing” or alternatively “would it give them so much that it could not be adjusted on a final hearing?” As we have observed the Full Court in Zschokke at 83,220-221 stressed the importance of consideration of the “adjustment issue” if the power in s 80(1)(h) of the Act is being exercised. We accept the submission and observe that this matter is relevant because the discretion conferred by the power in s 79 is to make such order as the Court considers appropriate provided it is just and equitable to make the order in circumstances where the power will not be exhausted by the interim order. As Bryant CJ and Coleman J observed in Gabel v Yardley at [69] and [72] the interim order must be capable of variation or reversal without resort to s 79A of the Act or appeal. As Finn J said at [126] the interim order must be “capable of alteration at any time prior to, or as part of, the final exercise of the s 79 power”.

   [137] Once a court proceeds to exercise the power in s 79 of the Act, being in the substantive phase, a court is required to undertake consideration of the matters in s 79(4) including by reference to s 79(4)(e) the matters in s 75(2) so far as they are relevant. However 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 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”: Zschokke; Pollettiand Polletti per Nygh J and Wenz v Archer. As senior counsel for the Wife submitted, “provided scope can be found within the assets of the parties for an order of the size sought ... then that should be the end of the matter”. In other words, in such circumstances the applicant would only be receiving what he or she was entitled to receive when the power was exhausted.

1. In these parts of the Full Court’s decision, it is regularly referred to that there is no need to establish compelling circumstances in making Orders, either under s.80, or under s.79, or for that matter, by reference to s.117 of the FLA.

2. The Full Court also noted the importance of the Court to ensure that its overarching consideration be “the interests of justice” when exercising its discretion regarding an interim property settlement.

3. I might also note that in Strahan, on appeal, the Full Court actually increased, very significantly, the interim property distribution.

4. I accept that the submissions on both sides have merit.  Both seek that the Court exercise its discretion to provide funds to both parties.  The Husband assures the Court that to draw down funds from the off-set account would not compromise the position of the parties, especially in relation to the former marital residence where the Wife and children reside.

5. On the other hand, the Wife stresses that the depreciating asset of the Motor Vehicle remains an idle asset in the hands of the Husband.  Because it is idle, and depreciating, it should be sold and the net proceeds divided.

6. For my part, and accepting that there will be a trial at the end of the year, the parties’ dire financial circumstances require urgent action.  Even accepting the argument of the Husband regarding there being no risk in utilising the off-set account, there remains the considerable certainty on the other side, that the Motor Vehicle will continue to depreciate, even if only to a modest degree. 

7. On balance, the Motor Vehicle should be sold.  Respectfully, an asset of significance, simply and literally “parked” in effect for some rainy day should now be sold.  That rainy day has well and truly come.  For it to remain in the Husband’s possession, and to depreciate further in value, assists no one.  Both parties need funds; the Motor Vehicle is to be sold in accordance with the Orders sought by the Wife.  Her other Orders should also be made, which I accept are designed to assist both parties. 

8. Trial directions for the Final Hearing, which is now set, are also to be made, together with an Order for a s.62G Report.

I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of Judge Neville

Date: 30 July 2018