KALE & KARMEL (NO1)

[2012] FamCA 851

FAMILY COURT OF AUSTRALIA

KALE & KARMEL (NO1) [2012] FamCA 851

FAMILY LAW – INJUNCTION – Where the Respondent seeks an interim Order for sole use and occupancy of the former home of the parties – Where the onus is upon the Respondent to establish that such an Order ought be made – Where the Respondent does not discharge that onus

FAMILY LAW – PROPERTY – Where the Respondent seeks an interim Order that she be permitted to draw down funds from the loan facility secured by the former home of the parties to fund her anticipated legal costs – Where the Respondent has already drawn down upon the loan to fund her legal costs – Where the Applicant has gone into debt to fund his legal costs – Where the asset pool is modest – Where the income of both parties is modest

Family Law Act 1975 (Cth)

Gabel & Yardley (2008) FLC 93-386
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466
Zschokke & Zschokke (1996) FLC 92-693

APPLICANT: Mr Kale

RESPONDENT: Ms Karmel

FILE NUMBER: BRC 1093 of 2011

DATE DELIVERED: 9 October 2012

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Kent J

HEARING DATE: 24 August 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Sweetapple

SOLICITOR FOR THE APPLICANT: SJP Law

COUNSEL FOR THE RESPONDENT: Mr Page

SOLICITOR FOR THE RESPONDENT: Feeney Family Law

Orders

1. The Application in a Case filed by Ms Karmel on 8 August 2012 be dismissed.

2. Each party’s costs of and incidental to this application be reserved to the trial Judge.

3. The Applicant’s application for costs in respect of the earlier adjournment of the proceedings be adjourned to the trial.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Kale & Karmel 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 BRISBANE

FILE NUMBER: BRC 1093 of 2011

Mr Kale

Applicant

And

Ms Karmel

Respondent

REASONS FOR JUDGMENT

Introduction

1. Mr Kale (“the Applicant”) filed an Initiating Application on 14 February 2011, naming Ms Karmel; (“the Respondent”) as respondent, seeking Orders pursuant to Part VIIIB of the Family Law Act 1975 (Cth) (“the Act”).

2. The Respondent has joined issue with respect to the final financial Orders to be made, and a trial of those substantive proceedings is set down to commence before me on 5 November 2012.

3. The Applicant is a health worker currently residing in a property at N Street, S Suburb, which is a focus of the current interim application. The Respondent is a professional in private practice residing in H suburb.

4. It is not in issue that the parties met in 1998, nor that they were in a de facto relationship, but the duration of that relationship is in issue. On the Applicant’s case, the parties commenced a de facto relationship upon commencing cohabitation in June 2002 and separated in July 2009. On the Respondent’s case, the de facto relationship commenced in 1998 and only ended in January or February 2010. Thus, on the Applicant’s case, their de facto relationship subsisted for about seven years, whilst on the Respondent’s case, it subsisted for some eleven years. There are no children of the relationship.

5. The substantive proceedings were instituted in the Federal Magistrates Court. At an interim hearing in that Court, Orders were made by consent on 16 May 2011. Relevant for present purposes, those consent Orders included an Order that the Applicant have the right of sole use and occupancy of the real property at N Street, S Suburb

6. Both parties gave undertakings to the Court, as recorded in that Order, and in the case of the Respondent, she provided an undertaking, inter alia, not to use a loan offset account secured over the subject property except in accordance with the history of use of that account. I note in passing that the Applicant agitates in the current proceedings that the Respondent has not complied with her undertaking in that draw-downs on the relevant account have been made at a higher level since the undertaking was given than occurred historically.

7. On 15 September 2011, further Orders were made by consent in the Federal Magistrates Court of Australia, which included an Order that the subject real property be sold by auction but not prior to delivery of judgment after trial.

8. The proceedings were set down for trial in the Federal Magistrates Court to be heard on 27 October 2011, but in the event, could not be heard and determined on that date.

9. It seems that the parties may have requested that the matter remain in the Federal Magistrates Court, however for reasons not readily apparent to me, given the modest value of property in dispute and the relative lack of complexity about the issues in dispute, Federal Magistrate Purdon-Sully made an Order in Chambers on 11 November 2011 transferring the proceedings to this Court.

10. On 22 November 2011, his Honour Justice Murphy set aside the earlier Order made on 15 September 2011 in respect of the sale of the subject real property.

11. On 21 May 2012, the trial of the proceedings in this Court was due to take place. However, an Order made on that date by her Honour Justice O’Reilly saw the proceedings being adjourned to a subsequent callover. There is a notation on that Order to the effect that each party’s Counsel, “…agreed that the matter could not proceed for reasons including late service of material by the Wife and late disclosure of relevant financial documents by the Wife.” I note in passing that the Respondent has expressed dissatisfaction with her former representatives and the circumstances in which the matter was adjourned, but the fact is that that notation appears upon the Order.

12. On 8 August 2012, the Respondent filed an Application in a Case seeking interim financial and other Orders as follows:

    1. The orders of 16 May 2011 and the amended order 25 August 2011 made by consent be varied in that the Respondent Wife be given sole use and occupancy of the S suburb home;

    2. The Respondent Wife be excused from the undertaking made 16 May 2011;

    3. The Applicant Husband be required to remove the caveat secured over the S suburb home;

    4. The Respondent Wife be at liberty to obtain sufficient funds to continue to defend these proceedings, to the sum of $50,000, by way of extending the loan over the S suburb; and

    5. Any other Order this Honourable Court sees fit.

13. It is this application which is to be determined in advance of the forthcoming trial. Issues concerning disclosure raised by the Applicant as part of his response to this application were resolved at the hearing.

Sole Use and Occupancy

1. Section 114(2A)(a) and (b) of the Act enables the Court to make such Order or grant such injunction as it considers proper with respect to the use or occupancy of a specified residence and, if the Court makes such an Order or grants such an injunction, make such further Order or injunction as it considers proper with respect to restraining a party to the de facto relationship from entering or remaining in, inter alia, that residence.

2. The term, ‘proper’, in the section referred to, is to be understood as meaning, “…reasonable and just in the circumstances.”[1]

   [1] See Farr (1976) FLC 90-133l; Page (1981) FLC 91-025; Re C & V (1983) FLC 91-333.

3. The onus of establishing a case for exclusion rests upon the party seeking the exclusion Order.[2]

   [2] See Davis (1976) FLC 90-062.

4. Whilst an injunction or Order for exclusive occupation should not depend merely on balance of convenience or hardship, the balance of convenience may, however, properly decide the matter where there is intense disharmony between parties or where each would have an equally good case for excluding the other.[3]

   [3] Healey (1979) FLC 90-706; Deane & Deane (1977) FLC 90-213.

5. Central to the Respondent’s contention that an Order ought be made in her favour as sought is evidence she offers to the effect that the Applicant is not residing in the subject property but rather is residing with a person she says is the Applicant’s new partner.

6. The Applicant deposes that the subject property has been, and is, his home and that that remains the case. His case is that he has no ready means of housing elsewhere.

7. The evidence advanced by the Respondent on that central aspect is that of Ms A, in her affidavit filed 1 May 2012, and Mr T, whose affidavit was likewise filed 1 May 2012. Mr T’s affidavit does not advance the Respondent’s case very far, and Ms A’s affidavit, having been filed on 1 May 2012, does not provide current evidence, even if accepted, to the effect that the Applicant is not residing or mainly not residing in the subject property. Of course, on an interim hearing such as this, disputed issues of fact cannot be determined in any event.

8. On the evidence, the Respondent left the home when the parties separated and, as already noted, the Respondent consented to an Order providing for the Applicant to have sole use and occupation of the property. Whilst much of the competing affidavit material before me is in dispute, there is no unchallenged evidence to establish that the means and needs of the parties comparatively dictate a result that would see the Respondent installed in the disputed property pending the forthcoming trial of the proceedings. I am not satisfied that the case the Respondent agitates with respect to her practice renders it imperative that she base her practice at the property in the relatively short period before trial.

9. It is clear enough on the evidence before me that the subject property is in a dilapidated condition, with only one bedroom habitable. It is illusory, in my view, to conclude that, if installed in the subject property, the Respondent, via her proposed ‘working bees’ and the like, can effect any substantial rectification of the property between now and the forthcoming trial.

10. In the circumstances, I am not satisfied that the Respondent discharges the onus she bears for the Order for sole use and occupation she seeks. I am not satisfied that such an Order would be ‘proper’ within the meaning of the section.

Balance of Orders Sought

1. The effect of the other Orders sought by the Respondent is to enable her to make draw-downs on the loan facility secured over the subject real property to the extent of $50,000.00, which is expressed in paragraph 4 of the Application to be for the purpose, “…to obtain sufficient funds to continue to defend these proceedings…”

2. In short, the Respondent seeks to be permitted to increase the indebtedness over the available pool of assets by the extent of $50,000.00 for legal fees, on the face of her application.

3. However, her affidavit evidence, and the way in which the case proceeded in argument, seemed to indicate that it was not solely legal fees to which the $50,000.00 would be directed, but, on the materials provided in support of the application, it was not possible to determine what part of the $50,000.00 is said to relate to legal fees as opposed to living expenses for the Respondent. There was no detailed evidence as to the prospective budget for legal expenses.

4. It was submitted in argument that those details could be provided. However, it is for an applicant to provide in support of their application the relevant affidavit material so that both the Court and the other party know what case is being made and met. Deficiencies identified in argument ought not be readily accommodated on an interim hearing given matters of procedural fairness.

5. The provisions of Part VIIIAB of the Act, dealing with financial matters relating to de facto relationships largely mirror the provisions in Part VIII of the Act dealing with such relationships concerning parties who are or were married. Obviously, cases determining the meaning of relevant provisions in Part VIII equally have application to the mirror provisions in Part VIIIAB and the provisions referred to in those cases have their counterpart provisions in Part VIIIAB.

6. In Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 (“Strahan”), the Full Court of this Court reviewed relevant authorities in this and other Courts and provided statements of principle and guidelines both as to the juridical bases for, and the considerations relevant to, the exercise of discretion involved in determining applications of the present kind.

7. As to the sources of jurisdiction, it follows from Strahan that:

   a)Each of the maintenance power (ss 72 and 74 of the Act), the powers in property settlement proceedings (ss 79 and 81(h)) and the power to make Orders as to costs (s 117(2)) are sources of power to make an Order for interim provision of a party’s litigation expenses of pending property proceedings under s 79 (see [81] to [83]);

   b)Relevant to each such source of power to order interim provision of litigation expenses is recognition of both the desirability of legal representation for both parties and the need to ensure an equal or near-equal opportunity for each party to present a case. This assumes particular significance where one party has control of the bulk of the assets and funds of the parties ([79] to [81]);

   c)Complexity of financial affairs, or the need for expert investigation into those affairs, are not necessary pre-conditions to the exercise of any of these sources of power, but are factors, the existence of which add considerable weight in favour of the exercise of power ([90]);

   d)It is important that the relevant source of power is identified, because any necessary pre-conditions to the exercise of power, and considerations relevant to the discretion being exercised, are determined by the source of power relied upon ([84], citing Paris King Investments v Rayhill [2006] NSWSC 578 (Brereton J) and Zschokke & Zschokke (1996) FLC 92-693 (“Zschokke”));

   e)If the maintenance power (s 74) is relied upon, then the Court may make such Order as is ‘proper’; that is, “…proper for the provision of maintenance in accordance with this Part,” within the meaning of s 74(1). If the property power (ss 79 and 80(1)(h)) is relied upon, then the Court makes such an Order as it considers appropriate, provided it is satisfied that it is just and equitable to make the Order. If it is the costs power (s 117(2)), then the Court may make such Order as it considers ‘just’, provided that there are, “…justifying circumstances…” (that is, within the meaning of s 117(2)).

8. In Strahan, the Full Court emphasised that where the power is to be exercised pursuant to ss 79 and 80(1)(h), there are two stages to the hearing of such an application in recognition of the fact that the power under s 79 should ordinarily be exercised on a once-only basis. In those circumstances, the first step is to resolve whether to exercise the power before a final hearing, and if it is resolved to do so, the second step involves the exercise of that power. In the first stage referred to, the, “…overarching consideration…” is the interests of justice. It is not necessary to establish compelling circumstances, but it must be shown to be appropriate to exercise the power.

9. Once it is determined to exercise the discretion, 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, and as the jurisdiction under s 79 of the Act is being exercised, the provision is that that section must be considered and applied, albeit with limitations given that it is not the final hearing.

10. In Strahan, the Full Court also endorsed the approach set out in Zschokke at 83,220-82,221, in which the Full Court stressed the importance of consideration of the, “…adjustment issue…” or, “…claw-back issue…” if the interim property power is being exercised. In Gabel & Yardley (2008) FLC 93-386, approved of in Strahan, Bryant CJ and Coleman J observed that an interim Order must be capable of variation or reversal without resort to s 79A of the Act or appeal.

11. In the manner in which the case was argued before me, it was less than clear as to which source of power was relied upon. Indeed, it seemed that Senior Counsel for the Respondent who appeared on the application advanced propositions to the effect that the Court need not overly concern itself as to which source of power was relied upon. In my view, that approach would be contrary to the guidelines expressed in Strahan.

12. On any view, the net non-superannuation assets of the parties or either of them is exceedingly modest. Indeed, on the Applicant’s Financial Statement filed 22 August 2012, his liabilities incurred for legal fees exceed, by a wide margin, the value of any property owned by him, and whilst he has superannuation of about $250,000, he is not yet of an age that would enable him to access that superannuation.

13. On the Respondent’s case, as per her Financial Statement filed 8 August 2012, she has net equity in property, including the subject real property, which is in her sole name, and including her modest superannuation of about $22,000, of overall less than $400,000.

14. From an income perspective, neither party is in particularly successful circumstances. The Applicant earns modest income working as a health specialist, and it seems that in her current circumstances, the Respondent does not generate sufficient income from private practice as a barrister to meet her accommodation and living costs. The Applicant agitates as an issue that it has long been the case that the Respondent has not been financially successful in private practice, and that she could remedy her circumstances by obtaining employment as a lawyer rather than practising unsuccessfully in private practice. Clearly, such issues cannot be determined at an interim stage, but are relevant to consideration of the case being agitated for trial.

15. Notably, in terms of a level playing field so far as legal costs are concerned, it would seem that the Respondent has been able to draw down relatively substantial amounts on loan facilities secured against the subject property for her legal fees or part of her legal fees to date, whilst at the same time the Applicant has resorted to incurring debts for his legal fees in excess of $100,000, which remain owing, he deposes.

16. Fundamentally, it is the Applicant’s contention that if the Respondent were to receive a further $50,000.00 drawn in reduction of the net value of the asset pool, the position would obtain that the Respondent receives more than her overall entitlement is likely to be at the conclusion of the substantive proceedings. In short, the Applicant mounts the case that the ‘adjustment issue’ or ‘claw-back issue’ precludes an interim property Order being made in the terms sought by the Respondent on an interim basis.

17. I find that the Orders sought by the Respondent could not be validly made on the evidence before me pursuant to the maintenance power within Part VIIIAB as such an Order would not be ‘proper’ within the meaning of the provision, and it was not contended before me specifically that reliance was placed upon the maintenance power.

18. So far as the costs power is concerned, I am not satisfied that there are ‘justifying circumstances’ or that an Order would be ‘just’ within the meaning of the provision, given what I have referred to as each party’s funding of legal expenses to date and the modest pool of property available and the prospect, at least, if the Applicant’s case is made out (a prospect I must allow for at this interim stage without in any way determining it), that it would not be just to exercise the power under the costs provision because of the ‘claw-back’ issue.

19. So far as the interim property power is concerned, applying the overarching consideration of the interests of justice, I am not satisfied that it would be in the interests of justice to exercise the power to make an interim property Order given the respective circumstances of the parties referred to, the modest quantum of the pool, the funding of legal expenses to date, and the imminence of the final trial of the proceedings.

1. Even if I were satisfied as to the ‘first stage’ referred to earlier, consideration of the second and substantive stage and the desirability to have a once and for all final property Order preferably, would lead me to conclude that I would decline to make an Order at this stage in favour of the Respondent having regard to the same circumstances referred to in the preceding paragraph.

2. For these reasons, the interim application of the Respondent is dismissed. I will reserve any questions of costs of this application to the forthcoming trial of the proceedings and the Applicant’s application for costs in respect of the earlier adjournment will likewise be determined at trial.

I certify that the preceding forty-four (44) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Kent delivered on 9 October 2012.

Associate: 

Date:  9 October 2012