Jardine and Lambert

[2016] FamCA 477

FAMILY COURT OF AUSTRALIA

JARDINE & LAMBERT [2016] FamCA 477

FAMILY LAW – PROPERTY – INTERIM PROCEEDINGS – Where the applicant seeks an interim property settlement to pay outstanding debts and to obtain legal representation for the final hearing – Where the application is opposed by the respondent – Where there are numerous issues in dispute between the parties – Where the Court is not satisfied that the property pool is such that an interim property distribution can be accommodated by the Court at final hearing – Application dismissed.

Family Law Act 1975 (Cth)

Harris & Harris (1993) FLC 92-378
Medlow & Medlow (2016) FLC 93-692
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466

APPLICANT: Mr Jardine

RESPONDENT: Ms Lambert

FILE NUMBER: SYC 977 of 2014

DATE DELIVERED: 14 June 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: McClelland J

HEARING DATE: 12 May 2016

REPRESENTATION

FOR THE APPLICANT: Mr Lambert in person

COUNSEL FOR THE RESPONDENT: Mr Gould

SOLICITOR FOR THE RESPONDENT: Rowley & Ross Lawyers

Orders

(1)The Amended Application in a Case filed 17 March 2016 is dismissed.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 977 of 2014

Mr Jardine

Applicant

And

Ms Lambert

Respondent

REASONS FOR JUDGMENT

Introduction

1. Mr Jardine (“the applicant”) and Ms Lambert (“the respondent”) were in a de facto relationship during which time they had four children. The proceedings in relation to property and parenting issues are currently listed for final hearing for four days commencing on 5 September 2016 before Austin J. Pending that final hearing, however, the applicant has filed an application seeking an interim property distribution. He is also seeking the payment of $540 per week for rent from the respondent. The application is opposed by the respondent who submits that, as a result of the issues in dispute between the parties, the Court cannot be comfortable in making such an interim distribution of property to the applicant.

Background

1. The parties commenced their relationship in 2001. The applicant asserts that the relationship ended in October 2009 while the respondent asserts that the relationship continued until January 2014. The parties’ four children are B born on in 2002, C born in 2003, D born in 2007 and E born in 2010.

2. In May 2002 a property, which became the family home, at Suburb F was purchased for the sum of $499 600. The applicant asserts that he purchased the property. That is disputed by the respondent.  In October 2002 the applicant sold a property which he owned at G Street, Suburb H, for the sum of $240 000 and he applied the proceeds of that sale towards reducing the mortgage against the Suburb F property.

3. During the course of the parties’ relationship, the applicant worked as a consultant and was the primary income earner. The respondent substantially fulfilled the role as a homemaker and parent, although she was also engaged in some paid employment. The applicant also made contributions to caring for the children and maintaining the Suburb F property.  The extent of the parties’ respective initial and subsequent, direct and indirect, contributions is a matter that will be determined by the Court at final hearing.

4. In October 2010 the applicant purchased a property at Suburb I but subsequently transferred the property to his father in 2015. This transaction by the applicant resulted in extensive litigation between the parties. On 11 June 2015 Le Poer Trench J made orders setting aside the transaction under s 106B of the Family Law Act 1975 (Cth) (“the Act”). His Honour also made orders causing the Suburb I property to be sold and the net proceeds of sale to be held in a controlled monies account pending determination of the issues in dispute between the parties at final hearing. The amount currently held in that controlled monies account is approximately $431 351.24.

5. On 23 November 2015 the respondent filed a balance sheet setting out what she understood to be the respective contentions of the parties in respect to the property pool. The applicant attached a different version of the balance sheet to his Case Outline document. The respective balance sheets did not differ greatly. As I have taken a conservative approach, I have focussed on the lesser value of the assets set out in the two balance sheets and the higher calculation of the liabilities set out in the two balance sheets. Those amounts were as follows:

   ·Assets:

   o According to the applicant: $1 761 021.00

   o According to the respondent: $1 390 875.61

   ·Liabilities:

   o According to the applicant: $575 611.00

   o According to the respondent: Not known, other than outstanding council rates of “$4,501+”

6. I have therefore taken the respondent’s assessment of the assets being the lower sum of $1 390 875.61and the applicant’s assessment of the liabilities being the higher sum of $575 611.

7. The parties agreed that the value of the applicant’s superannuation is approximately $145 068 and the respondent states her superannuation entitlement as $48 000. The respondent concedes that, in the event of final property orders being made, the applicant’s superannuation should remain with applicant.

8. In addition, the respondent claims that an amount of $200 000 should be included as an add back or negative contribution in respect to the property pool, as result of what she asserts to be two unexplained transactions on the behalf of the applicant. The applicant, on the other hand, asserts that the transactions have been fully explained and that the amount of $150 000 was used to repay a business loan from his company and $50 000 was used to pay a loan to his uncle which loan, he asserted, was shortly thereafter repaid.

9. The respondent also asserts that the value of the 4WD, which she estimated to be approximately $50 000 in value, should be added back into the property pool. The applicant asserts that, as result of damage to the vehicle whilst driven by the respondent, he was forced to sell the vehicle at whatever price he could obtain. The applicant asserts that the vehicle was sold to his then business partner, Ms J, for the sum of $20 500. There appears to be an issue in the proceedings as to the nature of the applicant’s relationship with Ms J.

10. Further, the respondent asserts that the applicant is in arrears in respect to child support payments to the extent of approximately $3476.05.

11. The respondent also asserts that the applicant is subject to two costs orders in respect to the litigation concerning the Suburb I property.  She argues that the manner in which the litigation was conducted by the applicant should also be taken into account by the Court at final hearing in determining whether to make an  additional adjustment in favour of the respondent.

12. There is also a dispute between the parties as to their respective earning capacities and the extent to which they have each made efforts to exploit that capacity.

Contentions

The applicant

1. The applicant contended that at, final hearing, it is likely that he would receive a distribution in his favour of approximately 80 per cent of the property pool.

2. In so arguing, the applicant submitted that he contributed the majority of funds to the purchase of the Suburb F property. In that respect, he refers to the contribution he made to reduce the mortgage secured against the Suburb F property after he sold his property.

3. The applicant also submitted that he made substantial direct contributions to maintaining the value of the property and enhanced its value by undertaking tasks such as constructing a deck at the back of the property.

4. In addition, he submitted that recognition should be given to his contributions in terms of caring for the children, including during those periods that the respondent worked.

5. The applicant seeks orders for an interim property distribution to pay the debts referred to in his affidavit filed 3 February 2016. Leaving aside his application in respect to his anticipated legal fees, in his Amended Application in a Case, the applicant claims that those debts total approximately $123 660. He asserted that if those debts are not paid then they will continue to grow. This, he argued, will ultimately be a drain on the property pool to the detriment of both parties.

6. The applicant also submitted that he should receive recognition for the fact that there was substantial capital gain on the Suburb I property, the proceeds of sale of which are now held in a controlled monies account.

7. The applicant denied that any value should be attributed to shares he held in K Pty Ltd as his interest in that company was transferred to Ms J in November 2014.

8. The applicant also asserts that there was no irregularity in respect to payments that he made totalling the sum of $200 000. As noted, he asserts that the first payment in the sum of $150 000 was a repayment of a loan to K Pty Ltd. He asserts that the further sum of $50 000, which is of concern to the respondent, was a loan to his uncle but that loan was subsequently repaid.

9. The applicant disputes that he has ever owned Genesis shares as alleged by the respondent.

10. The applicant also submitted that, as a matter of fairness, he should be afforded the same opportunity to obtain legal representation as has been afforded to the respondent. The applicant estimates that his likely future legal expenses will be approximately $80 000.

11. He asserted that, even if the Court declined his application for an interim property distribution of $203 660 as sought in his Amended Application in a Case, the Court should nonetheless make orders for a distribution in the amount of $80 000 to him for anticipated legal fees. He asserted that it is inconceivable that, at final hearing, orders will be made distributing less than that amount to him.

The respondent

1. Counsel on the behalf of the respondent submitted that there is an absence of probative material in the applicant’s affidavit that justifies the orders he is seeking.

2. It was conceded that the applicant’s initial contributions to the property pool were greater than the respondent’s in so far as he contributed the proceeds of the sale of the Suburb H property. However, it was noted that the respondent also had shares in St George Bank at the time. Counsel further indicated that the extent of the applicant’s superior contributions is in dispute and can only be determined at final hearing when the Court considers those matters in the context of sub-section 90SM(4) of the Act.

3. Counsel for the respondent also indicated that there would be a significant issue in respect to add backs including the amount of $200 000 which the respondent asserts has not been properly accounted for. It was also asserted that there will be a claim in respect to the 4WD which has been transferred to Ms J.

4. Counsel for the respondent also noted that the parties are in dispute as to when separation occurred. On the applicant’s version, the parties separated in October 2009 but the respondent asserts they separated in January 2014. Irrespective of whether it is determined that the relationship was eight to nine years or twelve and a half years, it remains the fact, counsel for the respondent asserted, that the respondent made substantial indirect contributions as homemaker and parent. She has been and continues to be, it was submitted, the primary carer for the children and there would therefore be a substantial adjustment in her favour at final hearing under section 90SF(3) of the Act.

5. In respect to sub-section 90SF(3)(r) counsel for the respondent indicated that, at final hearing, the respondent will argue that the manner in which the applicant conducted the litigation concerning the Suburb I property, will be a factor that the Court will be invited to consider. This will include noting that, despite orders being made to effect the sale of the property, it was necessary for the respondent to make a further application to the Court pursuant to section 106A of the Act to complete the transaction. It was further noted that, while the applicant has elected to be unrepresented during a substantial part of those proceedings, it was necessary for the respondent to incur considerable expense in challenging the applicant’s transfer of the Suburb I property to his father.

6. In summary, it was argued that the applicant bears the onus of establishing that at final hearing it is likely he would receive a property distribution in his favour of at least $80 000 in addition to his superannuation interest of $145 068. Counsel for the respondent submitted that, given the issues in dispute between the parties, the Court could not be satisfied, with any degree of comfort, that such orders will be made at final hearing.

The law

1. In Medlow & Medlow (2016) FLC 93-692 at [69] the Full Court said that the starting point in respect to any property application, including an application for interim property orders, is “the identification of the parties’ property and of their interests in it”.

2. In the context of an application for interim property orders, the Full Court said at [86]:

   The onus was clearly upon [the applicant] to establish that there were sufficient assets available for the interim distribution and that the effect of any interim order was capable of being reversed as part of the final hearing or at least would not defeat [the respondent]’s property claim. The onus was not on the [respondent] to adduce such evidence.

3. The applicant has failed to discharge that onus even to the extent of the lesser amount that he is seeking, being $80 000 for anticipated legal fees. That is, on the basis of the evidence presented to the Court in these interim proceedings, I am not satisfied that there will be sufficient funds available at final hearing to make an adjustment to ensure that the respondent is not deprived of property that may otherwise have been distributed to her.

4. In that context I note that, in Medlow (supra), the Full Court referred to Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 at 85,646, and the authorities referred to therein, in confirming that an interim order for the distribution of property must be “amenable to adjustment on a final hearing.”

5. The very nature of an interim hearing is such the Court is not in a position to properly evaluate the evidence and, accordingly, the Court should take a conservative approach, including in respect to determining whether there is likely to be sufficient resources of the parties available at final hearing to accommodate any “adjustment issue”.

Consideration

1. Taking a conservative approach I note that lesser of the two assessments of the parties’ assets, as set out in the balance sheet filed 23 November 2015, was the respondent’s assessment in the sum of approximately $1 390 875.61.

2. Again, taking a conservative approach, I have had regard to the higher of the parties’ asserted total sum of liabilities which is asserted by the applicant in his balance sheet annexed to his Case Outline document  to be in the sum of $575 611.  I have not included the additional debts asserted by the applicant as set out in his affidavit in the sum of $123 660.

3. This leaves a balance, after deducting the total sum of liabilities from the total sum of assets,[1] of $815 264.61

   [1] Not including the parties’ superannuation, financial resources and any addbacks that may be argued at final hearing.

4. That, however, is not the end of the matter in making an assessment as to whether there is likely to be sufficient funds in the property pool at final hearing such that the interim property distribution sought by the applicant could be adjusted or, if necessary, “clawed back” at final hearing.

5. In these interim proceedings, I have not had the benefit of detailed lay and expert evidence, observed witnesses under cross examination or heard final submissions referring to relevant evidence. Further, each of the balance sheets provided by the parties to the Court have a number of disputed and incomplete items. In those circumstances I am unable to resolve controversial factual issues. On the basis of the evidence that is before me in these interim proceedings, I am not satisfied that, at final hearing, that there will likely be a distribution to the applicant of $80 000 over and above his superannuation entitlement.

6. I have arrived at that conclusion as:

   (1)I am not in a position to identify the property pool because:

   i.I am without valuations of the Suburb F property.

   ii.I am not in a position to consider arguments as to whether the property pool should include the value of the shares the applicant allegedly had in K Pty Ltd which have now apparently been transferred to his former business partner.

   iii.I am not in a position to make an assessment as to whether the transactions totalling $200 000, which the applicant asserts were made by way of repayment of a loan to K Pty Ltd and to his uncle, should be included in the calculation of the property pool as an add back or otherwise.

   iv.I am not in a position to determine whether the sale of the 4WD by the applicant to his former business partner was an appropriate transaction at fair market value.

   v.There is a dispute between the parties as to their initial contributions to the combined property pool. The applicant refers to the contribution he made to reduce the mortgage on the Suburb F property after he sold his Suburb H property. The respondent, on the other hand, argues that recognition should be given to the fact that she had a shareholding with St George Bank at the time. The extent of these respective contributions will be a matter for determination at final hearing.

   vi.I am without the benefit of evidence and argument by the parties as to indirect contributions made by each of them during the course of their relationship. It is recognised that the applicant was the primary income earner; however, the respondent’s contributions as a homemaker and parent should be regarded as substantial and not merely token (Crawford & Crawford (1979) FLC 90-647 and also Mallet & Mallet (1984) 156 CLR 605 and Ferraro & Ferraro (1993) FLC 92-335).

   vii.I am not in a position to determine the matters referred to in sub-sections 90SM(4) and  90SF(3). I note, in that respect, that there is a substantial argument as to whether the applicant is reasonably exploiting his earning capacity. There will also be an argument as to the extent to which the respondent’s earning capacity has been impacted by parental responsibilities. I further note that the Court, at final hearing, will be asked to have regard to the fact that the applicant has allegedly failed to comply with his child support obligations.

   viii.Finally, in terms of considering sub-section 90SF(3)(r), I note that there will be an argument as to the extent to which the Court should have regard to the nature of litigation between the parties concerning the sale of the Suburb I property by the applicant to his father. That argument will include examining the course and conduct of the litigation as well as the amount of costs incurred by the respondent.

7. Accordingly, the applicant has not satisfied me that there is a likelihood that, at final hearing, there will be sufficient assets available to accommodate the interim property distribution that he seeks, even of the lesser amount of $80 000.

8. In arriving at that conclusion I note that, even if there was to be an equal distribution of the property (excluding add backs), the amount would be approximately $407 632.31 to each party. Further, if at final hearing the respondent were successful in her argument in respect to adding back the sum of $200 000 into the property pool, the property received by the applicant at final hearing would potentially by further reduced.  While an equal distribution of the property on the figures I have set out above would be higher than the amount the applicant is seeking by way of interim property settlement, it does not factor in the variables to which I have referred that may impact upon the final property orders that are made at final hearing. This uncertainty remains even if the applicant’s application is taken to be the lesser amount of $80 000 in respect to his anticipated legal fees. That is, there would be an inadequate margin for the Court to take into account the respondent’s arguments in respect to those matters that can only be determined at final hearing.

1. Accordingly, I dismiss the applicant’s application for an interim property distribution.

2. I also dismiss the applicant’s application for payment of the amount of $540 per week in respect to rent. I do so because the applicant acknowledges that he has been evicted from his current rental accommodation and there has been no evidence presented as to what his rental expenses will be. Further, the application for a weekly payment by the applicant is in the nature of an application for maintenance pursuant to section 90SE of the Act and the evidence presented to the Court by the applicant does not address the matters referred to in section 90SF.

3. Accordingly, for these reasons, I dismiss the Amended Application in a Case filed 17 March 2016.

I certify that the preceding forty-six (46) paragraphs are a true copy of the reasons for judgment of the Honourable Justice McClelland delivered on 14 June 2016.

Associate: 

Date:  14 June 2016