Kartis and Kartis

[2009] FamCA 116

FAMILY COURT OF AUSTRALIA

KARTIS & KARTIS [2009] FamCA 116

FAMILY LAW – PROPERTY – Partial property settlement – Need to provide comprehensive facts and show compelling circumstances – Husband had signed a contract to buy a property and then sought a partial settlement to meet his expectations – Application dismissed – Costs

Family Law Act 1975 (Cth)

Harris v Harris (1993) FLC 92-378

APPLICANT: Mr Kartis

RESPONDENT: Ms Kartis

FILE NUMBER: MLC 899 of 2009

DATE DELIVERED: 20 February 2009

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: THE HONOURABLE JUSTICE CRONIN

HEARING DATE: 20 February 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: MS JENKINS

SOLICITOR FOR THE APPLICANT: JOHN PASTRO & CO

COUNSEL FOR THE RESPONDENT: MR DAVIS

SOLICITOR FOR THE RESPONDENT: WILMOTH FIELD WARNE

Orders

1. That the husband’s application in a case filed on 5 February 2009 be dismissed.

2. That the husband pay the wife’s costs in respect of the said application in a case fixed at $2400 and payment be stayed until the finalisation of the parties’ property proceedings.

IT IS ORDERED BY CONSENT

1. That the wife forthwith provide the husband’s solicitors a list of three selling agents in the K and N areas and the husband choose one selling agent in each area within 7 days and such agent be engaged to conduct the sale.

2. That the properties situated at and known as:

   (a)       N property; and
   (b)       K property

   be sold forthwith on terms and conditions to be agreed between the parties and in default of agreement on terms and conditions fixed by the selling agent.

3. The the proceeds of sales referred to in Order 3 to be applied to

   (a)       pay costs and commission of sale;

   (b)       discharge the mortgage liabilities encumbering the real properties.

   (c)The balance of proceeds be invested in an interest bearing account and not be released without the written consent of the parties or further order of the court.

4. That the requirement for a case assessment conference be dispensed with.

5. That the parties attend a conciliation conference to be held on 8 April 2009 at 2.15pm.

6. That there be liberty to apply to seek further directions as to sale referred to in Order 4 hereof.

IT IS CERTIFIED:

1. That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.

2. That pending the sales the husband be entitled to receive the rental income from the properties including retained rent, with the trial judge to characterise all rentals received by the husband.

3. That the husband’s application in a case filed 5 February 2009 is dismissed.

4. That my reasons for judgment this day be transcribed.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 899  of 2009

MR KARTIS

Applicant

And

MS KARTIS

Respondent

REASONS FOR JUDGMENT

1. On Friday 20 February 2009, I heard the application of the husband in the judicial duty list and dismissed it. I indicated to counsel that I would give reasons later because of the size of the list. These are my reasons.

2. The parties are married to each other. It is a relationship of just over 5 years. They are both mature-aged people and there are no children involved. They separated in October 2008.

3. I was told that subsequent to October, there have been various letters between practitioners but notwithstanding the apparent simplicity of the facts, no overall resolution had been reached.

4. This dispute is about whether or not I should make an order for a partial property settlement pending the ultimate resolution of the financial dispute.

5. In simple terms, the parties have three real properties. The former matrimonial home is in M. There are two investment properties which are in N and K. Both properties are tenanted although counsel for the wife produced a tenancy agreement showing that the K property is let on a month to month basis.

6. In the first week of December 2008, the husband signed a contract to purchase a house in Tasmania where he proposes to live. He said that it was a good price and he paid a deposit. The settlement of the purchase is about to occur and he needs $70,000 to complete it. His application is for me to order the wife to provide the funds from savings which will enable the transaction to be completed. For reasons which remained unexplained, he said that he contacted the wife through her lawyers in January to request the assistance and when that was not forthcoming, he issued the application before me. The reasons for delay remain puzzling.

7. The parties’ financial positions have some bearing on this. In addition to the three real properties, the parties had savings. The wife retained $88,000 from which she has drawn about $20,000 and paid the mortgage encumbering the M home. The wife has no income other than the entitlement to rental from the N and K properties. That rental which amounts to $2230.00 per month is retained by the husband and from it, he pays his own rent and his living expenses.

8. At separation, the husband retained $68,000 but he applied about $20,000 towards joint debts of the parties.

9. Thus, the wife had $88,000 but is now down to $63,500 because she has also paid her legal fees.

10. The husband is now down to $50,000.

11. Hence the impasse.

12. The M home is encumbered relating to an investment during the marriage and that mortgage is serviced at the rate of $1,000 per week.

13. The husband’s solution was that I order the sale of the two investment properties which would discharge the mortgage on the M home. Alternatively, he could retain all of the investment rental and allow the M property mortgage to drift on the basis that upon the sale of the investment properties, the bank would be paid out. I have no evidence of the consent to any such arrangement by the mortgagee.

14. Counsel for the husband also suggested the wife could access her superannuation but there is no evidence of the prospect of that being possible particularly having regard to the wife being less than retirement age. The husband did not set that out in his affidavit but his counsel said that the husband was an accountant and knew about these things. I do not accept that I can determine a case on such a basis.

15. Counsel for the wife said she was relieved and pleased that there was agreement for the investment properties to be sold.

16. As another suggestion, counsel for the wife said that there was no reason why the husband could not give notice to the tenants and then move into the K property but the husband’s counsel said that the husband maintained that that property was not suitable for him as he had dogs. Again, and there was no evidence of this, the husband said he wanted to move to Tasmania with four dogs who could not be accommodated in K but he is also currently suffering depression. I cannot take that sort of material into account without it being in proper form.

17. The issue therefore is whether there is something compelling about this case where the parties do not agree, such that I could manipulate a situation which pleased everyone. The major stumbling block is that the husband needs $70,000 and there is just not that sum of money available.

18. Notwithstanding the sympathy I may have for both parties, the fact is that I am obliged to determine the matter according to the principles well known to this court.

19. This is an application in which I am asked to exercise the power in s 79 of the Family Law Act 1975 (Cth) (“the Act”). It has been said many times that the power is a “once only” power and once exercised, the Court’s jurisdiction is exhausted. However, it does not follow that in appropriate circumstances the Court, in the course of s 79 proceedings, may not make orders which are, and are intended to be, interim or partial.

20. The Full Court decision in Harris v Harris FLC (1993) 92-378 set down the principles clearly. The Full Court said:

    We do not doubt that the Court has power in a proper case in s. 79 proceedings to make what may be conveniently described as an interim order, that is an order dealing with some of the property of the parties prior to the final hearing. We do not consider that it is necessary to draw a distinction in terminology between an ''interim'' order and a ''partial'' order.

    But in the exercise of that power the following matters need to be considered: --

    (1) The exercise of the power should be confined to cases where the circumstances presented at that time are compelling. As a generality, the interests of the parties and the Court are better served by there being one final hearing of s. 79 proceedings. However, circumstances may arise before there can be a final hearing which dictate that some part of the property of the parties should be the subject of orders. A common example is where both parties agree to the disposal of some assets pending the trial. However, we do not consider that it is confined to cases where the parties consent. Urgent situations may arise where it is necessary to exercise this power if injustice is to be avoided. Examples include cases where it is necessary to do so to avoid an asset being eroded or lost in the intervening period, and cases (beyond the maintenance power) where an order in favour of one party is necessary to preserve or obtain a home for or is otherwise necessary for the welfare of the children.

    …

    (2) It is an exercise of the s. 79 power. Consequently it must be performed within those parameters. Since it is not the final hearing the Judge is unlikely to have the final findings, but the exercise must fall within that general framework and the material available at that time.

    (3) Of necessity it is likely to be a somewhat imprecise exercise. Consequently, it must be exercised conservatively and the Judge must be satisfied that the remaining property will be adequate to meet the legitimate expectations of both parties at the final hearing, or that the order which is contemplated is capable of being reversed or adjusted if it is subsequently considered necessary to do so. (My emphasis added)

21. Of the three tasks, I find that there is nothing compelling about the husband’s application. I appreciate he may want to move on with his life and buy a house elsewhere that would inevitably become part of the pool of assets for division. However, the circumstances must be compelling and here the husband has been offered an alternative which would obviate the necessity to rearrange assets as he would have them.

22. To do what the husband wants also requires me to contemplate each of the four steps in a property division and whilst it is not necessary to be precise, it is important that there be sufficient evidence to enable me to be satisfied about whether the final property orders sought by both parties could be realistically met from what is being sought to be done. Here, the husband did not seek in his application for final orders the sort of detail that is required under the rules of the Court. It is a little difficult for me to then work out on his counsel’s submissions whether or not the next step below could be achieved. The husband’s counsel said that there would be ample assets for division after the husband’s proposal was met and fulfilled but I do not feel there is anywhere near the evidence for me to be satisfied about that.

23. The third step which is very much connected with the second step that I have just addressed warns that the Court’s contemplation should be exercised conservatively. There are too many variations and issues not covered in the material of the husband that would enable me to say that the legitimate expectations of the parties will be met at the final hearing.

24. In turn, all of this may give the parties the impetus to start seriously endeavouring to sort out just what legitimate expectation each really has if they take into account the fact that there is little dispute on the evidence about what each brought in. I do not understand what the future holds for each party such that I could say with any confidence what factors under s 75(2) are relevant. For example, the husband’s counsel raised his health but that material has not been presented to the court.

25. In the circumstances, the onus being on the husband, his application must fail.

26. I was also asked to make an order for costs against the husband. The wife’s position was that any costs could be quantified and await the determination of the final division.

27. In respect of costs, s 117 of the Act sets out the principle that each party shall pay their own costs. The exception to that rule is where the court finds that there is a justification for departing from the principle. Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order.

28. Mr Davis for the wife said that the husband’s application was doomed to fail. I do not think it could be said to be that dramatic but I have regard to the unilateral action of the husband making his own difficulties obvious without contemplating that a court would be obliged to take the path that I have set out above. In those circumstances, there is a justification for departure from the principle that each party pays their own costs.

29. It is also important to point out that costs are not intended as some form of punishment for litigating but rather to act as a compensation for the party who has had to participate when they probably ought not to have been there.

30. In determining what (if any) order should then be made for costs, a court must take into account the matters set out in s 117(2A). That provides:

    In considering what order (if any) should be made under subsection (2), the court shall have regard to:

    (a)the financial circumstances of each of the parties to the proceedings;

    (b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;

    (c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;

    (d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;

    (e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;

    (f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and

    such other matters as the court considers relevant.

31. Although the husband says that his financial circumstances are not good at the moment, he has funds and will be much better off financially upon the settlement. I find that the husband and the wife both have reasonable financial circumstances such that a costs order would be reasonable.

32. I have not been told of any legal aid issues involving the parties.

33. There are no conduct issues relating to the proceedings themselves but I do take into account that the husband took what was, I think, a rather courageous step to sign the contract without agreement with the wife.

34. I take into account that the husband has been wholly unsuccessful and also that the wife has been resistant to his proposal.

35. I have also been told that the parties had agreed on quantum and looking at what was set out in their ultimate minute, I think the order is reasonable.

I certify that the preceding Thirty Five (35) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate:

Date:  23 February 2009