Kay(BY Her Litigation Guardian) and Kay
[2014] FCCA 2797
•5 December 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| KAY(BY HER LITIGATION GUARDIAN) & KAY | [2014] FCCA 2797 |
| Catchwords: FAMILY LAW – Interim property orders – dispute about appointment of Litigation Guardian – Freedom of Information application. |
| Legislation: Family Law Act 1975, ss.79, 80 Federal Circuit Court Rules 2001 |
| Coffey & Coffey [2014] FCCA 2176 Harris & Harris [1993] FamCA 49 Strahan & Strahan [2011] FLC 93-466 Strahan & Strahan (interim property orders) [2009] FamCAFC 166 Theobald & Delancy (No.3) [2012] FMCAfam 96 |
| Applicant: | MS KAY |
| Respondent: | MR KAY |
| File Number: | WOC 923 of 2013 |
| Judgment of: | Judge Altobelli |
| Hearing date: | 12 November 2014 |
| Date of Last Submission: | 12 November 2014 |
| Delivered at: | Wollongong |
| Delivered on: | 5 December 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr Campton SC |
| Solicitors for the Applicant: | Kells The Lawyers |
| Solicitors for the Respondent: | Fulcrum Legal |
ORDERS
That, within 21 days, the Applicant Wife be at liberty to amend her Initiating Application to seek declarations that the parties’ son, X, holds a portion of his interests in the property at Property S in the State of New South Wales on trust for the Applicant Wife arising from contributions made to the mortgage secured upon that property between 2002 and 2004 upon the Respondent Husband disclosing his financial conduct as to the provision of fund relating to the acquisition and/or conservation of an/or improvement of the said Property S property.
The matter remain listed for final hearing on 2 April 2015 at 10:00am.
Both parties file and serve any Amended Application, Response and/or Financial Statement upon which they intend to rely by no later than 19 March 2015.
Each party is to file and serve one consolidated Affidavit in support of the orders sought by them, together with any other witness’s affidavits by no later than 19 March 2015.
Neither party may rely on any documents filed after 19 March 2015 without leave of the Court, and in the event of non-compliance with these filing directions the Court will at its discretion either vacate the trial dates or list other matters with priority.
Each party is to file and serve a Case Outline document by no later than 4:00pm on 26 March 2015, setting out:
(a)a list of documents to be read in their case;
(b)a precise Minute of Orders Sought;
(c)a list of objections to evidence and the basis for such objection;
(d)a brief summary of argument setting out:
(i)the party’s contention as to the percentage contribution based entitlement asserted and the evidence relied on;
(ii)the party’s contention as to any s.75(2) percentage adjustment sought, the factors in s.75(2) relied on and the evidence relied on;
(e)a joint balance sheet, identifying the agreed and not agreed values of the pool of assets;
(f)a draft of the order sought to give effect to the overall entitlement asserted.
The Applicant is to comply with the payment of any setting down and/or daily hearing fee in accordance with Rules 24.03 and 24.04 of the Federal Circuit Court Rules 2001 or as otherwise directed by the Registry Manager by the date of filing of further material.
Both parties are granted leave to issue such Subpoena as they consider relevant to the issues before the Court.
The matter be adjourned to 3 February 2015 at 9:30am for mention.
THE COURT NOTES THAT:
A.A party’s trial Affidavits will not be read until the Case Outline document has been filed and served in accordance with these directions, which may result in the Final Hearing dates being vacated, other matters being listed with priority, or the matter becoming part-heard.
IT IS NOTED that publication of this judgment under the pseudonym Kay (by her Litigation Guardian) & Kay is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT WOLLONGONG |
WOC 923 of 2013
| MS KAY |
(by her Litigation Guardian)
Applicant
And
| MR KAY |
Respondent
REASONS FOR JUDGMENT
Introduction
By way of an Application in a Case filed 18 August 2014, the Applicant Wife, through her Litigation Guardian, seeks a number of interim orders relating to the conduct of the substantive proceedings between the parties. She seeks an interim property order in relation to two amounts, that the Respondent Husband sign a Freedom of Information authority, and that she be granted leave to amend her Application to seek declarations against a third party, her son. The Freedom of Information issue has since been resolved by the parties.
By way of a Response to an Application in a Case filed 1 October 2014, the Respondent Husband asks the Court to dismiss the Wife’s Application in a Case and, further, to discharge the Litigation Guardian who had been appointed by the Court on behalf of the Applicant Wife.
Background
Let there be no misunderstanding, the present application is merely one battle forming part of the war that is going on between the family. The parties’ daughter was appointed Litigation Guardian for the Applicant Wife, in circumstances that will be discussed below. She is aligned with her mother’s interests. She does not get on well with her father, the Respondent. The parties’ son, sought to be joined as a third party in these proceedings, is aligned with his father, the Respondent Husband. The son does not get on well with his sister.
The substantive property proceedings between the Wife and the Husband were commenced by the Wife on 18 November 2013. She sought, in effect, orders for sale of a property at Property C, with the equal division of sale proceeds. By way of a Response filed 27 February 2014, the Respondent Husband asks for the substantive application to be dismissed and for an order to be made under s.79 of the Family Law Act 1975, which would result in the property sought by the Wife to be sold, to be declared his sole property and that they otherwise retain what is in their possession and control.
The relevant background facts appear to be as follows. The Applicant Wife is 72, the Respondent Husband 73. They married in (country omitted) in 1961 and moved to Australia later that year. Their son was born in 1962, and is currently 52 years old. Their daughter was born 1964, and is 50 years old. During the marriage, the first property was purchased at Property R, in the Husband’s sole name, in 1965. In 1977, the property at Property C, was purchased, again in the Husband’s own name. In 1983, the son purchased a vacant block of land at Property S. The significance of this will become apparent in due course.
The Husband and the Wife separated in 1993, over two decades ago. Shortly before separation, they commenced living with the son at Property S. On separation, the Husband moved out into the Property C house that had, hitherto, been rented out. The Wife remained living with her son.
In 2002, the Wife alleges that the Husband sold the Property R property without her knowledge and consent and received about $140,000 from the sale proceeds. She contends, a matter not disputed by either the Husband or the son, that the $140,000 was provided by the Husband to his son to pay down or pay off the son’s mortgage on the Property S property. The Wife alleges that this created an equitable interest in the property.
In August 2004, 11 years after separation, the Husband retired from his employment at (omitted) and received a superannuation payment of about $200,000. The Husband contends, in effect, that he spent much of this on various expenses relating to his health and living expenses. About $50,000 is still held by the Husband.
In January 2013, probably because of a falling-out between the Wife and her son, she moved out of his home. This was, initially, because of a fall that caused her to spend some time in hospital, before moving into the (omitted) Nursing Home in March 2013. She continues to reside there.
In May 2014, cash totalling $46,165 was found in the Wife’s former bedroom in the son’s residence. Other money was also found, at least, according to the Husband and his son, but disputed by the Wife and the daughter. In any event, $46,165 was placed into the Husband’s solicitor’s trust account.
On 3 March 2014, I appointed the present Litigation Guardian for the Applicant Wife. I do not have the reasons for judgment pertaining to that Court event. My note indicates that “Respondent Husband agrees the Wife needs a litigation guardian, but Husband is estranged from the daughter”. The solicitor currently representing the Husband appeared for the Husband on that date. Doing the best the Court can, the appointment of the Litigation Guardian was, therefore, either by consent or was unopposed. No appeal has been filed against that decision.
The matter has been before the Court on several occasions since 3 March 2014, including an unsuccessful Conciliation Conference. On each event, those appearing for the Wife have complained about the Respondent Husband’s lack of disclosure, and compliance with the Federal Circuit Court Rules 2001. Conversely, those appearing on behalf of the Respondent Husband have expressed frustration that, in circumstances where separation took place nearly two decades ago, and the Husband retired one decade ago, both the Respondent Husband and those representing them had done all they possibly had to provide disclosure in circumstances where financial records no longer exist.
By way of further background as to the nature and intensity of this family feud, there have been at least two unrelated proceedings between members of the family, including an unsuccessful assault charge against the son arising out of the Mother’s fall while she was living in his home, and unsuccessful proceedings in the NCAT between the children. The evidence filed before the Court, which includes Affidavits of the Husband, the son and the daughter as Litigation Guardian, contains mutual allegations of fraud, dishonesty and threats.
Having regard to this recitation of the rather colourful background to the present litigation, I will consider the applicable law.
Applicable law
Senior Counsel for the Applicant Wife, Mr Campton SC, referred the Court to the decision of Judge Monahan in Theobald & Delancy (No.3) [2012] FMCAfam 96 as an authority to demonstrate that the Court has the power to order a party to sign a Freedom of Information authority to Centrelink. The Solicitor for the Respondent Wife did not cavil with that contention. This Court respectfully adopts the decision of Judge Monahan and his discussion of the relevant issue at paragraphs 1 to 28 of his reasons for judgment. This Court clearly has authority to make the order sought.
In support of the Application for interim property orders, Mr Campton SC referred the Court to the Full Court’s decision in Strahan & Strahan [2011] FLC 93-466. Perhaps the more pertinent citation on the question before the Court is Strahan & Strahan (interim property orders) [2009] FamCAFC 166.
Another useful statement of the relevant law is contained in the decision of Judge Brown in Coffey & Coffey [2014] FCCA 2176. In this quite recent decision of His Honour’s (22 September 2014) his Honour considers the relevant applicable legal principles in paragraphs 37 to 66 of his reasons. Of particular significance in the present case is paragraphs 56 to 66, which are reproduced below:
In Strahan, the Full Court considered an earlier decision of the Full Court Harris & Harris. In this case, the Full Court delineated the relevant considerations applicable to the making of what is conveniently described as an interim property order. The Full Court, in the case, considering it unnecessary to draw a distinction, in terminology, between an interim order and a partial order.
In Harris, the Full Court, whilst affirming the preference that there be only one final hearing of property proceedings, identified three criteria applicable to the exercise of the power to make an interim property order namely:
• the exercise of the power should be confined to cases where the circumstances at the time were “compelling“;
• the exercise of the power, depending as it did on s 79 of the Act, must be exercised within the parameters provided by that section, notwithstanding the difficulty arising for any decision maker concerned in making final findings;
• the exercise of the power must be exercised “conservatively“ in the sense that any remaining property needed to be sufficient to meet the “legitimate expectations“ of both parties at final hearing, or the order being contemplated is itself capable of being reversed or adjusted at a later stage, if necessary.
In Strahan, the Full Court affirmed Harris in the sense that it accepted that an interim property application comprised a two-step process. Firstly what was described as an “adjectival stage“ and secondly what was described as the “substantive stage“. The first step being concerned with the description or particularization of the circumstances required to be established before an interim property order was made. The second step dealing with the mechanisms applicable to the making of such an order.
The controversy ventilated in Strahan centred on the phrase “compelling circumstances“ used in Harris and whether such a formulation unduly fettered the court’s power to make an interim property order, which was “appropriate“ at that stage of proceedings. This being the expression used in the enabling provision contained in s 79(1) of the Act.
In this regard, the Full Court said as follows:
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.
In reaching this conclusion, the Full Court noted the idiosyncratic nature of litigation, under the Family Law Act 1975, when compared with other civil litigation. In the former, there was often a marked imbalance in the power of the parties concerned and artificialities in how property available to be divided was legally controlled in the period leading up to final hearing.
In this context, the Full Court approved comments of Riethmuller FM in Wenz v Archer as follows:
It cannot be the case that a party who has an irresistible claim to a substantial share of the property of the parties should be held out of that property while the matter is litigated, left to rely upon applications for exclusive occupation of the matrimonial home or spousal maintenance alone, particularly where the parties are asset rich but have relatively modest incomes (such as the present case). Nor could it be appropriate that a party should be denied the ability to liquidate assets when there are real needs for those resources, such as to meet debts which may result in the party being pursued by creditors, or the need for the party to make payments for the benefit of the children, or to take advantage of other financial opportunities (for example the superannuation contribution cases).
In terms of the second or substantive phase, the Full Court in Strahan confirmed the second and third considerations delineated in Harris, namely that the relevant provisions of s 79, including s 75(2) needed to be considered and so far as any adjustment made, at this stage, it needed to be capable of reversal or to be clawed back at a later stage.
Examples of where it may be appropriate to use the power to make an interim property order include where both the parties agree to the disposal of some assets pending trial; urgent situations to avoid injustice being wreaked upon one party if the power was not exercised; and where one party requires funds to assist in the defrayal of legal costs arising from the litigation involved.
The discretion to make an interim property order must be closely considered, bearing in mind the different nature of an interim, as opposed to a final hearing, which nonetheless involves the exercise of the same power. Riethmuller FM expressed the dilemma arising in this way:
… Because the orders under s 79 are the exercise of such a broad and complex discretion, generally the interests of the parties are better served by there being one final hearing under s 79. If the s 79 proceedings are not completed in one decision various options may not be left open and therefore the Court may not be able to ensure that a “just and equitable“ outcome overall is achieved. However, there will be cases where it would not be “appropriate“ to deny interim relief, as this would not permit a “just and equitable“ result in the interim.
Considerations of this type led the Full Court in Strahan to say as follows:
We also emphasise that in order to establish an appropriate case for an interim property settlement order more is required than the mere fact that upon a final hearing the applicant would receive the property being sought (or an amount in excess of the funds being sought) from the other party.
Application of law to the facts
There was little, if unenthusiastic, opposition to the Application to sign a Freedom of Information authority. At most, the Respondent Husband’s case appeared to be that there was a better way to obtain this information. In circumstances where separation took place such a long time ago and, at least according to the Husband, there is such a paucity of documentation relating to the parties’ finances, it may well be that Centrelink will become the best source of historical information relating to the parties’ financial affairs. Accordingly, that order is appropriate.
The order seeking leave to join the son as a third party on the basis of the benefit that he received from the sale proceeds of the Property R property was an order that was also opposed with little enthusiasm. Even the son’s evidence concedes that he received the sale proceeds of the Property R property and applied it towards his property at Property S. It may well be that he will contend that the application of funds was pursuant to some sort of agreement with, and between, his parents, but that is ultimately for evidence and the making of findings. There appears no reason, on the evidence before the Court at the moment, that would preclude him being so joined.
The real focus of attention was in relation to the interim property orders. The Wife seeks not just the $46,165 presently held in the Husband’s solicitor’s trust account, but also the approximately $50,000 that he has standing to his name in a (omitted) Bank term deposit.
As it turns out, the Wife’s case fails, albeit on a technicality. It may well be that, in a future application, the Wife may be able to address the perceived deficiencies in her present application, but that remains to be seen. Who knows, perhaps these feuding family members may come to the realisation that they are not going to be the beneficiaries of the funds in question if they continue in what has been protracted, and no doubt expensive, litigation about these funds.
The Wife’s application for interim property orders fails on one point and one point only. At paragraph 139 of its decision in Strahan (interim property orders), the Full Court stated:
We also emphasise that in order to establish an appropriate case for an interim property settlement order more is required than the mere fact that, upon a final hearing, the applicant would receive the property being sought (or an amount in excess of the funds being sought) from the other party.
When that passage is viewed in context, the Full Court was saying that it is not possible to make a determination, even on an interim basis, for an interim property order unless there is some reason that is advanced for the making of the order, that goes beyond merely asserting the likelihood of recovering more than that amount at a final hearing. In this regard, there is no doubt that in Strahan the Full Court rejected any need to establish “compelling circumstances”, a concept that seemed to have gained ascendancy in an earlier Full Court decision of Harris & Harris [1993] FamCA 49.
In Judge Brown’s recent decision in Coffey & Coffey, at paragraph 64, when considering the present issue, His Honour said:
Examples of where it may be appropriate to use the power to make an interim property order include where both the parties agree to the disposal of some assets pending trial; urgent situations to avoid injustice being wreaked upon one party if the power was not exercised; and where one party requires funds to assist in the defrayal of legal costs arising from the litigation involved.
Indeed, His Honour’s discussion of the present issue is apposite, at paragraphs 77 to 82.
Mr McQuade, counsel for the husband, on the occasion of the hearing of the application, indicated that his client had need of funds to finance the on-going proceedings. However, that was not a matter alluded to in Mr B's affidavit, which was drafted in the context of an application for a more ambitious division of property.
I am concerned that not a great deal of thought was applied to the application in question, prior to its instigation. Rather, it seems to have been assumed that just because there were monies standing to the parties’ credit in a trust account, it would be incumbent on the court to divide them. That is not the case.
The High Court in Stanford has reaffirmed the centrality of s 79(2) in the making of any order resulting in the alteration of marital property interests. At both the interim and final stage, the court must be satisfied that it is just and equitable to make the order sought. In this case, I am concerned that I do not know all of the relevant circumstances pertaining to the matter and so cannot properly acquit my responsibilities under s 79(2).
In Strahan the Full Court has disavowed any notion that there must be compelling circumstances before an interim property order is made. The sole determinative factor being the interest of justice.
Thus this question does not turn solely on the perceived inevitability that a property order will be made as a consequence of an assessment of the applicable considerations arising from s 79(4). The exercise is a more nuanced one and the court must be cautious not to homogenise the two considerations — that is the considerations of justice and equity arising under s 79(2) and the mechanical considerations provided by s 79(4).
It also seems to me that it will be necessarily more problematic to properly address the s 79(2) issue in the context of a limited interim hearing. Essentially, on the basis of untested and provisional evidence, it may be difficult for the court to assess the overall justice of any outcome sought.
What is the evidence in the Applicant Wife’s application that supports the conclusion that it is just and equitable to make the orders that she seeks? That evidence is scant. There are two paragraphs in the Litigation Guardian’s Affidavit sworn 13 August 2014 that might be relevant:
Ms Kay is currently aged 72 years. Since January 2013 Ms Kay has resided at (omitted) Nursing Home in the high care department. Since residing at (omitted) after the incident at my brother X’s home where she sustained a fractured hip, Ms Kay’s health has improved. Ms Kay is no longer dependent on the high care facilities available at (omitted) but at present has no alternative to these living arrangements as she has nowhere to go.
It is hoped that my husband Mr L and I will be able to assist Ms Kay in purchasing her own independent accommodation in close proximity to our home in Property S so that we can regularly visit her and assist her where required. Such a location would also be in close proximity to her young grandchildren who ate reluctant to visit her at (omitted) due to the nature and setting of the nursing home and the other unwell patients that reside at the premises.
The Court could not find any other evidence to support the application in this Affidavit or, indeed, any earlier Affidavit. The Applicant’s need is very much left to inference. If the question were hypothetically asked “What would the applicant do with the money that she seeks in the interim property order?” there is no clear answer. The best guess the Court could make is that it would, somehow, be used to purchase accommodation close to her Litigation Guardian’s home. Quite apart from any perceived issues of lack of wisdom in doing this, the answer to the questions “Where, when, how, with whom is this property to be purchased?” are unanswered.
All the Applicant Wife had to do was to say that she needed the funds for legal costs. That is not said by her or on her behalf. Her need, which of course does not need to be in any way compelling, is simply left to inference and guesswork. The Court’s discretion under s.79 in making an interim order under s.80 cannot be exercised by reference to inference and guesswork. The Wife’s Application for interim orders fails on the basis of the evidence presently before the Court.
As for the Respondent Husband’s Application for the Litigation Guardian to be discharged, it is not entirely clear what is the basis of the same. In the circumstances, particularly the Court’s note that the Respondent Husband either consented to, or at least did not oppose, the appointment of the Litigation Guardian, he cannot be complaining about circumstances that existed at that time. Doing the best the Court can, it seems that his concern may be based on subsequent events and the escalation in the conflict that has occurred, but even that is left to inference and guesswork. The Affidavits of both the Husband and the son allege impropriety on behalf of the Litigation Guardian arising out of the circumstances of the discovery of cash at the son’s home and the alleged removal of other moneys. Even if the event in question occurred after the appointment of the Litigation Guardian, the allegations against the Litigation Guardian are expressed in the most general of terms and are no more than mere allegations. For example, at paragraph 20 of the son’s Affidavit sworn 30 September 2014, which is in curiously similar terms to the Affidavit of his father, the Husband in these proceedings, contains an allegation about the removal of a handbag containing cash and coins which was collected by the Wife, her daughter and the daughter’s husband. It is not even a specific allegation against the Litigation Guardian! The Application to discharge the Litigation Guardian is misconceived, and is dismissed.
Orders
Orders will be made in accordance with Order 7 of her Application in a Case filed 18 August 2014.
The matter has been set down for hearing on 2 April 2015 at 10:00am. The final evidence in the case must be filed no less than 14 days before that date and, in addition, the usual directions will be made as set out in the orders.
The matter will come back before the Court early February for further possible directions necessitated by any response that is filed on behalf of the third party sought to be joined.
In circumstances where there is such lack of clarity about the evidence and the substantive merits or otherwise of the competing applications, the Court will reserve the costs of all parties.
I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of Judge Altobelli
Date: 5 December 2014
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