Lacey and Lacey
[2016] FCCA 38
•19 January 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| LACEY & LACEY | [2016] FCCA 38 |
| Catchwords: FAMILY LAW – Property – application for an interim property settlement – 37 year marriage – very substantial pool – where the husband has control of the majority of the assets – where the matter has taken a long time to finalise due to matters outside the parties’ control – where the end is not yet in sight – whether the husband should pay the wife a sum of money prior to the final hearing so that she can, among other things, purchase a property and derive income and be independent of the husband and Centrelink. |
| Legislation: Family Law Act 1975 (Cth), ss.79, 80 |
| Harris & Harris (1993) FLC 92-378 Stanford & Stanford [2012] HCA 206 Strahan & Strahan (2011) FLC 93-466 Wenz & Archer [2008] FMCAfam 1119 Pierce & Pierce (1999) FLC 92-844 Williams & Williams [2007] FamCA 313 |
| Applicant: | MS LACEY |
| Respondent: | MR LACEY |
| File Number: | NCC 1128 of 2011 |
| Judgment of: | Judge Terry |
| Hearing date: | 30 April 2015 |
| Date of Last Submission: | 30 April 2015 |
| Delivered at: | Newcastle |
| Delivered on: | 19 January 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr Boyd |
| Solicitors for the Applicant: | Bell & Johnson Solicitors |
| Solicitor Advocate for the Respondent: | Mr Hargreaves |
| Solicitors for the Respondent: | Palmers Solicitors |
ORDERS
NOTING THAT the court intends to order that the wife receive $1,000,000.00 by way of further interim property settlement the matter is adjourned to 2.15pm on 29 January 2016 for submissions as to the form of the orders, with consideration to be given to including a requirement that the wife inform the husband about the use or whereabouts of the money from time to time and a requirement that upon the wife purchasing a property she consents to an injunction restraining her from encumbering or disposing of the property pending finalisation of the property settlement proceedings.
IT IS NOTED that publication of this judgment under the pseudonym Lacey & Lacey is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT NEWCASTLE |
NCC 1128 of 2011
| MS LACEY |
Applicant
And
| MR LACEY |
Respondent
REASONS FOR JUDGMENT
Introduction
Ms Lacey and Mr Lacey separated in January 2010 after a 37 year marriage. They are parties to property settlement proceedings which have been before the court since 2011 and the end is still not in sight. In November 2015 they were still arguing about processes connected with obtaining valuations.
Hopefully the valuations will be available in the relatively near future but if the matter does not settle after the valuations are obtained, and it is difficult to be optimistic that this will occur, it is likely to be another 12 months before the matter is finalised.
On current appearances the asset pool is worth well over $9m and the husband has control of the vast majority of the assets. The wife owns a modest home unit but she is dependent on Newstart allowance and on voluntary payments made by the husband to meet her living costs.
The wife would like to obtain sufficient money to among other things purchase an investment property and generate some income. It was her case that she should not have to wait until some indefinite time in the future to be able to fulfil this modest expectation when there was so much in the pool.
The wife sought an order that the husband transfer $1m to her. The precise order she sought in her interim application was that the husband direct (business omitted) Pty Ltd to pay her $1m, but during the hearing there was discussion about other means by which money could be made available to the wife.
For a variety of reasons, among them the possibility that the amount the wife received might exceed her ultimate entitlement and the risk that the wife would make poor spending decisions and diminish the pool, the husband opposed the wife’s application.
Documents relied on
The wife relied on her amended application in a case filed on 17 October 2014, an up-dated financial statement filed on 24 February 2015 and her affidavits filed on 24 February 2015 and 24 April 2015.
The husband relied on his response to the wife’s application in a case filed 9 July 2014, his affidavits filed on 26 October 2014 and 29 April 2014, paragraphs 1-13 of his affidavit filed on 19 November 2014 and the affidavits of Ms A, Mr J and Ms H filed on 17 November 2014 and Mr B filed on 18 November 2014.
Background
The husband and wife commenced a relationship in about 1971 and married on (omitted) 1973. They separated in January 2010 and were thus married for 37 years.
They had five children, one of whom died in infancy.
When the parties married, the wife was 20 and had no assets.
The husband was 25. He said that he had a 25% shareholding in (omitted) Pty Ltd which owned a residential property at Property A and operated the (business omitted) in (omitted).
(omitted) Pty Ltd was commenced by the husband’s parents in 1960 when the husband was 13. The husband’s evidence was that the capital in the company was issued as to 25% to his father, 25% to his mother, 25% to his parents upon trust for his sister Ms J (later Ms J) and 25% to his parents upon trust for him. I have no particular reason to doubt this evidence although I cannot make any findings about issues such as this at this stage in the proceedings.
At the time of and throughout the marriage the husband was involved in running the (business omitted) and after their marriage the parties lived in the Property A property.
The wife said that was she also involved in running the (business omitted) when not occupied in home duties and parenting the children. The husband did not dispute that the wife was the children’s primary carer and agreed that the wife did some work in the (business omitted) but claimed that it was very minor. He maintained that he was more involved in their care than the wife was willing to admit.
The husband alleged that for the last 17 years of the marriage the wife had a severe alcohol problem and as a result her contributions to the family and the business during this period were either non-existent or limited. The wife admitted that she had some problems during this period but minimised their seriousness.
After separation in January 2010 the wife continued to live in the Property A property and on 6 May 2011 she filed an application for a property settlement.
The property settlement proceedings have taken a very long time to resolve. Part of the problem has been repeated disputes about obtaining valuations and some disputes about disclosure but the main problem has been that because of disputes within the husband’s family it has been impossible until recently to be sure about the asset pool.
The problems began when the husband’s father died in 2004. The husband contested the application made for probate of his father’s last will. He was successful and probate was granted of his father’s second last will but the executor then refused to get on with administering the estate. When the parties separated in January 2010 the husband’s father’s estate had still not been administered and the estate still owned a percentage of the shares in (business omitted) Pty Ltd.
On 27 April 2011 the husband commenced proceedings in the Supreme Court seeking to compel the executor to carry out his duties but these proceedings struck a snag because of further family issues.
Prior to the parties’ separation the husband’s sister Ms J had sought the winding up of (business omitted) Pty Ltd on the basis that she was an oppressed minority shareholder. This litigation was settled in 2009 and as a result when the husband and wife separated in 2010 the husband owned 33.3% of the shares in (business omitted) Pty Ltd and the remaining shares were owned by his mother as to 33.3% and his father’s estate as to 33.3%.
Settlement of this litigation involved the husband’s sister and mother assigning their interest in his deceased father’s estate to the husband in return for him paying his sister a fixed sum and agreeing to pay his mother a weekly income for the rest of her life.
In the executor’s defence to the proceedings commenced against him by the husband on 27 April 2011 the executor claimed that one of the husband’s mother’s grandson’s opposed the estate being distributed because he claimed that the husband’s mother had lacked the capacity to manage her affairs at the time of the settlement.
After a lengthy period of time, which involved this court waiting while proceedings before the Guardianship Tribunal and the Supreme Court were finalised, this litigation ended and the husband’s father’s estate has now been administered.
The husband’s mother died in (omitted) 2014 and the husband is now the beneficial owner of 100% of the shares in (business omitted) Pty Ltd.
While all this was going on in the background the litigation in this court could not progress but on 24 November 2011 the parties agreed that the husband would pay the wife the following by way of interim property settlement:
i)$375,000.00 within 7 days of the wife vacating the Property A property;
ii)$50,000.00 by instalments of $500.00 per week commencing within 7 days of the wife vacating the Property A property.
The wife used the $375,000.00 to purchase a unit at Property G and this property became her home.
The husband paid the wife $500.00 per week pursuant to the order until December 2013 and has since paid her this amount voluntarily.
The wife received some further money on 2 December 2014 when her entitlement in the (business omitted) Superannuation Fund in the amount of $106,386.00 was paid to her.
As at the date of the interim hearing the wife was aged 63. She was in receipt of Newstart allowance of $236.00 per week and the voluntary payment of $500.00 and was living in the Property G unit. The husband was 67 and was continuing to run the (business omitted).
The assets, liabilities and superannuation
The husband’s solicitor submitted that the court had to establish the value of the asset pool by admissible evidence before it could consider the wife’s application for an interim property settlement. I do not accept that this is correct, indeed the fact that at an interim stage the court is unlikely to be able to definitively establish the value of the asset pool is the reason the court needs to be conservative in any order it makes. However I do need to form the best view I can of the parties assets liabilities and superannuation before I can properly consider the wife’s application.
The assets in the husband’s possession or control
In the affidavit he filed on 19 November 2014 the husband said that the assets of (business omitted) Pty Ltd were as follows:
Description Value Cash Deposit (omitted) Bank 2,862.00 Term Deposit (omitted) Bank 996,186.00 (omitted) Pty Ltd shares 913.00 Investment in (omitted) Diversified Trust 102,158.00 Investment in (omitted) Portfolio Services 604,386.00 Property A 290,000.00 Property O, Queensland 1,300,000.00 Property F 1,100,000.00 (business omitted) 1,975,000.00 Motor Vehicles 141,624.00 Household furniture and utensils Property O 6,463.00 Household furniture and utensils Property A 10,000.00 Property F 1,165,000.00 Total 7,694,592.00
The husband said that he had the following assets in his name:
Description Value Property Y 730,000.00[1] Bank Credits (omitted) Bank 47,609.00 Holden Utility 40,000.00 Total 817,609.00 [1] In the affidavit the husband said that this property was worth $580,000.00 but I have amended the amount to reflect the information given orally that the property had been sold for $730,000.00.
The husband’s solicitor advised the court on 30 April 2014 that the Property Y property had recently been sold by private treaty and that settlement was due to take place on 15 May 2015. There was some discussion about whether there might be a capital gains tax liability incurred as a result of the sale.
The husband said that he had the following superannuation:
Description Value (business omitted) Superannuation Fund 492,069.00 (omitted) Motor Vessel purchased by super fund 350,000.00 Total 842,069.00
During submissions on 30 April 2015 the husband’s solicitor said that the amount of $492,069.00 consisted of a cashable investment in (omitted) Bank and some cash deposited to the bank.
The husband claimed that not long before separation the parties had promised to pay their four children $100,000.00 each. He said that the children had been paid $80,000.00 each and that $20,000.00 remained owing to Ms A, Ms H and Mr B.
On its face this does not have the appearance of being an enforceable obligation and the wife disputed the liability but I will take it into account out of an abundance of caution.
The husband said that he owed his lawyers something in the vicinity of $35,000.00 to $38,000.00 but this is not a liability in which the wife should have to share, unless and until at least a costs order is made against her.
If the disputed debt of $60,000.00 is taken into account then on the husband’s estimate the assets in his possession or control as at November 2014 were worth net $9,294,270.00.
Both parties submitted that the value of the pool would be different once valuations were completed or disclosure properly completed.
The husband’s solicitor submitted that the value of one of the underlying assets, the (business omitted) in (omitted), had been impacted on by recent changes in provision of accommodation for miners. The wife’s counsel said that the wife did not agree that all of the values the husband assigned to assets were accurate or that the list he had prepared represented the entirety of his assets.
I cannot say for certain that the husband has assets to the value of $9.3m. He might have more or he might have less, but the likelihood of this estimate being substantially too high seems slim. The only value which the husband’s solicitor asserted might be suspect was the value of the (business omitted). It currently represents a little over 20% of the value of the husband’s assets but there was no suggestion that its value was likely to be reduced to zero in the valuation process, just that the value might be less than the husband’s estimate.
The assets in the wife’s control
As at 24 February 2015 the wife had the following:
Description Value Property G 320,000.00 (omitted) Bank 10,060.00 (omitted) Bank 94,000.00 Toyota Corolla 5,575.00 Household contents 2,000.00 Total 431,635.00
The wife said that the $104,000.00 in the bank was the money derived from the superannuation fund released to her in December 2014.
It has long been the husband’s contention that the wife may have an interest in a motor home owned by Mr C who the wife has been seeing for some years. That seems somewhat unlikely on the current state of the evidence but even if it is true, and the husband’s claim is yet to be tested, there was no evidence that the motor home was of significant value.
Conclusion about the asset pool
On the above figures the parties have net assets and superannuation of $9,725,905.00. A little less than 4.5% of this is in the wife’s possession and a little over 95.5% is in the husband’s possession.
Whether it is just and equitable to make property settlement orders
In light of Stanford & Stanford it is prudent at this stage to consider whether the court is likely to make property settlement orders, as opposed to leaving the parties with the property in their possession. [2]
[2][2] Stanford & Stanford [2012] HCA 206
The husband controls 95% of the asset pool, indeed during submissions his solicitor conceded that the wife had “bits and pieces really.” The husband and wife had a very long marriage and brought up four children. The husband brought assets in and has inherited assets but the parties made the running of the (business omitted) owned by (business omitted) Pty Ltd their life’s work and did not strike out on their own and acquire significant assets.
I am more than satisfied that it is just and equitable for the court to consider making property settlement orders in this case; the following passage in Stanford is clearly relevant:
In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship and the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s.79 (4).
The power to make an interim property settlement order
Usually the court makes only one order pursuant to s.79. However s.80 (1) (h) of the Family Law Act 1975 provides that in exercising its powers under Part V111 of the Act the court may make an order pending the disposal of the proceedings, and numerous reported decisions have recognised that it was possible for more than one order disposing of property to make in proceedings for s.79 property settlement orders and indeed that the s.79 power may “be exercised by a succession of orders until the power …..is exhausted.”[3]
[3] Strahan & Strahan (2011) FLC 93-466, Gabel & Yardley (2008) FLC 93-286
In Strahan & Strahan the Full Court said that when the court intended to rely on s.80 (1)(h) power to make an interim property settlement order it needed to take two steps: first, resolve whether the s.79 power should be exercised before a final hearing and second, exercise the power and determine the quantum and terms of the order.[4]
[4] Strahan & Strahan (2011) FLC 93-466 paragraphs 117, 118
As to the first step, the Full Court in Strahan & Strahan partially overruled a previous decision of Harris & Harris[5] and said that it was not necessary for a party to demonstrate that there were compelling circumstances justifying an interim property settlement order. Boland & May JJ 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. [6]
[5] Harris & Harris (1993) FLC 92-378
[6] Strahan & Strahan (supra) paragraph 132
Thackray J put the matter this way:
In my view, the two step approach advocated by senior counsel for the Wife aptly encapsulates the way the Court should approach an application for interim property settlement. The Court must first identify circumstances that make it appropriate to give consideration to exercising its power to make an interim order. It is at this stage that the Court has regard to the policy consideration that it is generally in the interest of the parties and the Court for there to be only one exercise of the s 79 power. However, once the Court has determined that the interests of justice require it to exercise the power, the conditions on which the power is to be exercised are governed only by the obligation to make an order that is “appropriate” and to ensure that the proposed order is “just and equitable” by reference to the matters set out in s 79(4).
In relation to the second step, the Full Court in Strahan & Strahan adopted the following passage from Harris & Harris:
(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. It is for this reason that we doubt whether the distinction which Nygh J drew between interim and partial orders is necessary or desirable.[7]
[7] Harris & Harris (1993) FLC 92-378
The wife’s case
The wife’s counsel submitted that this was a case in which it was not only appropriate to make a further interim property order, the arguments in favour of making one were compelling.
He pointed to the fact that the wife had waited patiently for all of the issues in respect of (omitted) Pty Ltd to be resolved and had done everything in her power to try and get the valuations completed. It was not her fault that the litigation had taken so painfully long.
After a 37 year marriage the wife was clearly entitled to a considerably greater percentage of the pool than she currently had. An outcome in the vicinity of 30 to 40% was far more likely than an outcome in the vicinity of 4.5%. If the husband paid the wife $1m she would then have in her possession something under 15% of the pool as it was currently estimated to be. There was no risk that the wife might be receiving more than her entitlement.
The wife was currently in receipt of $736.00 per week tax free and was living in an unencumbered flat. She was clearly not starving but part of her income derived from Centrelink and the wife was obliged to meet the work test in order to receive it and part was a voluntary payment made by the husband. Given the size of the pool there was absolutely no valid reason why the wife should not be given a share of the assets in the husband’s possession so that she could become self-sufficient.
The wife was keen to have $1m transferred to her so that she could start generating some income which would be hers. She would then not be dependent on Centrelink or the husband’s goodwill. Her preference was to purchase an investment property.
The wife said that she would also like to re-establish a superannuation fund.
The wife said that she might need to use some of the money now in her bank account to pay legal fees including counsel’s fees and valuation fees and that if she obtained the interim property settlement she also intended to use some of the money she had in the bank to upgrade her car which was 10 years old and to install heating and air-conditioning in her flat.
The wife’s counsel pointed out that it was not suggested that the wife had a gambling problem or was otherwise likely to be profligate with the money she received; she had preserved most of the $375,000.00 previously paid to her by buying a flat.
The wife’s counsel submitted that there was no real risk that a substantial part of the money paid to the wife would be lost but the wife offered to consent to an order that once she purchased a real property she be restricted from disposing of or encumbering it until the final hearing. The wife’s counsel suggested that at least half of the money paid to the wife could be preserved in this way.
The husband’s case
The husband’s solicitor did not suggest that the husband lacked the capacity to make the payment the wife sought, indeed his solicitor discussed various ways in which this could occur.
The husband’s solicitor said that if the company paid the wife $1m it may be treated as income in her hands which would have taxation consequences and that if the amount was paid to the husband by the company for payment out to the wife it would be treated as income in his hands which would have taxation consequences. However the husband was about to sell the property at Property Y and would receive net $710,000.00 and the amount of $492,069.00 in the superannuation fund was liquid and the husband was 67 years old so there were other avenues to make a lump sum payment to the wife besides drawing on funds in the company.
The husband did not suggest that if he transferred $1m to the wife it would affect his income. He was drawing a modest wage of $800.00 per week from the company but conceded that this was his choice.
However the husband’s solicitor submitted that notwithstanding that the husband had the capacity to comply with the order the court should not make it because this was a case in which the husband had made a very substantial contribution by way of initial contributions, inheritances and post separation contributions and it was highly likely that he would receive a considerably greater share of the pool than the wife. In his affidavit filed on 26 October 2014 the husband expounded at great length and in great detail on the history of the acquisition of property and his contributions to the acquisition conservation and improvement of that property.
The husband’s solicitor was at pains to point out that there was a live issue about the wife’s contributions during the last 17 years of the marriage when on the husband’s case she was an alcoholic. He was also at pains to stress that the husband had spent about $1m on litigation to ensure that his father’s estate was administered and the claim by a grandson seen off.
He also submitted that the wife would need to account for the $50,000.00 she received by way of $500.00 weekly payments between December 2011 and December 2013 and the amount the husband had paid her voluntarily since ($23,000.00 as at April 2015); this total of $83,000.00 was not reflected in any asset in the pool.
The husband’s solicitor also submitted that the wife might be brought to account for $531,000.00 which she had allegedly dissipated from the parties’ bank account prior to separation. However as the wife’s counsel pointed out the husband in his 26 October 2014 simply referred to this amount as being the total of money which was paid into the parties’ joint bank account from 2000. There was no foundation for a submission that the wife might be required to account for such a sum.
Leaving that side however I accept that there are strong arguments open to the husband for why he should receive a greater share of the pool than the wife.
The husband’s solicitor submitted that this being so and in circumstances where the court could not make precise findings about the value of the pool it was highly undesirable for the court to make an order which might turn out to have unjustifiably shifted property from the husband to the wife.
The husband’s solicitor said that there were also other things which could impact on the wife’s ultimate entitlement and he referred to the following observation by Thackray J in Strahan & Strahan:
In every defended case one of the parties will claim they are entitled to a payment or transfer of property from the other party. In many cases the other party will acknowledge they are likely to be ordered to transfer property or make a payment. That, however, could not of itself be sufficient to make it appropriate for the Court to make an interim order. Circumstances may change radically during the course of proceedings, as has been seen with recent severe fluctuations in the market. The personal circumstances of the parties may change dramatically. Furthermore, although a party may anticipate ultimately being ordered to transfer property or make a payment, they may legitimately expect to obtain an order for costs against the other party which will be satisfied from funds or property that would otherwise have been transferred.[8]
[8] Strahan & Strahan (supra) paragraph 224
There was an element in the husband’s solicitor’s submissions of the husband wanting to remain in control. His solicitor said that the husband’s response might have been different if the wife had come to him with a proposition to purchase a particular property and the husband had been able to investigate it and satisfy himself that it was a satisfactory purchase.
Ironically given his concern about the money being lost, the husband’s solicitor said that the husband might have been more receptive to a proposition that $750,000.00 worth of (omitted) shares be purchased and the income directed to the wife. On 30 April 2015 (omitted) shares were worth about $32.00. They are currently worth under $16.00. The shares may rally of course but as at today if (omitted) shares had been purchased the parties would be staring down a substantial capital loss.
Discussion
The property proceedings have taken a very long time to finalise through no fault of the wife’s. During submissions on 30 April 2015 the parties’ legal representatives expressed the hope that the proceedings might be finalised by the end of 2015 or early 2016 but that has not happened. As recently as November 2015 there was further dispute about the preparation of the valuations of (business omitted) Pty Ltd and the superannuation fund and I was required to make further procedural orders about the valuations. The matter is currently adjourned to 16 February 2016 for mention.
Even if the valuations are completed by then, if the matter does not settle after the valuations are received the parties will not get a trial before well into the second half of 2016 and possibly in the early part of 2017, and the history of this matter to date does not inspire optimism that the matter will settle.
It is impossible to be sure how matters will play themselves out in terms of the parties’ entitlements after evidence is given at trial. I cannot be certain at present what the asset pool is worth and I cannot be sure how contributions or s.75 (2) matters will be assessed. The weight to be given to the husband’s initial contributions, his contribution from inheritances and his post separation contributions are all live issues as is the weight to be given to the wife’s contributions.
However while the husband’s initial contributions, contributions by way of inheritances and post-separation contributions will all need to be taken into account it is important to bear in mind that the parties chose during their marriage to focus on conserving and developing the assets the husband brought into the marriage and perhaps expected to build on through inheritance rather than striking out on their own and building up assets solely in their own name, and they had a long marriage and brought up four children. Cases like Pierce and Pierce[9] and Williams and Williams[10] emphasise that weight must be given to initial contributions and other cases refer to the recognition that must be given to gifts from family and inheritances but all of the cases emphasise that the contributions of all kinds by the parties over the course of the relationship must be weighed and balanced to arrive at a final outcome.
[9] Pierce & Pierce [1999] FLC 92-844.
[10] Williams & Williams [2007] FamCA 313.
If nothing else the wife was the primary parent and homemaker and if the husband was a chronic workaholic as his solicitor submitted on 30 April 2015 the flip side of this is that a heavy burden may have been cast on her in that regard. It was not suggested by the husband’s solicitor that alcoholism impacted on the wife’s carrying out of that role for the first 20 years of the marriage nor was it clearly articulated why any issues she laboured under during the last 17 years of the marriage would reduce to zero her financial and non-financial contributions during that period.
The evidence suggests that the husband’s current view of the wife’s entitlement to a share in the assets might have been influenced by the separation. In the affidavit of Ms A, the parties daughter, on which the husband relied, Ms A gave the following evidence:
Prior to my parent’s separation, I recall my mother speaking to me about financial matters. She said to me words to the effect ‘We [my emphasis] have decided to pay $100,000.00 to each of you children. The money will come out of the Superannuation Fund. We need to speak to the Accountants before any payments will be made to be sure there are no taxation problems.’[11]
[11] Paragraph 3 of the affidavit sworn by Ms A on 17 November 2014 and filed on 19 November 2014.
The wife is 63 and not employed and depending on the findings about contributions she may be entitled to an adjustment for s.75 (2) matters. The husband raised the issue of the wife having formed a new relationship with Mr C but whether that will impact on an entitlement to an s.75 (2) adjustment has to be open to question.
Long experience suggests that it has to be rated extremely unlikely that the wife will not receive more than 4.5% of the pool or even more than the 15 or 20% of the pool which a conservative estimate suggests she would have if $1m was transferred to her.
That is not of course in itself sufficient reason to make an interim order. The Full Court in Strahan & Strahan[12] stressed that something more was required to justify an interim order than that a party was likely to receive a certain amount at the end of proceedings. However in my view there is something more in this case.
[12] Strahan & Strahan [2011] FLC 93-466.
While waiting for the proceedings to finalise the wife is living on Centrelink benefits and a modest voluntary payment by the husband. There is no good reason why she should be required to continue to be beholden to the husband five years after the marriage has ended when there is ample property which could be transferred to her and used to generate an income over which she has control and when this can be done at minimal risk that it will somehow impinge on the husband’s entitlement to a property settlement.
The husband’s solicitor said that other things might come into play such as costs orders but given the size of the pool I do not consider that there is any risk that if a costs order was made against the wife that could not be accommodated.
There is considerable force in the context of this case the following observation by Riethmuller FM as he then was in Wenz & Archer:[13]
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 whilst 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).
[13] Wenz & Archer [2008] FMCAfam 1119
In some respects indeed the wife’s application in this case favours the husband because the wife is not seeking spouse maintenance which would not be taken into account in determining a final property settlement but is seeking an interim property settlement which will be.
I am satisfied I should exercise my discretion to make a further interim property settlement order and having determined to exercise this discretion I must then consider what orders are appropriate.
The wife did not attempt to explain precisely how she had arrived at the figure of $1m, but absent the wife going out and selecting a property to purchase and then filing an application for an interim property settlement and hoping that it would be dealt with quickly it is difficult to see how she could put forward a precise figure.
Giving the wife $1m on the current figures will result in her receiving under 15% of the pool as the husband believed it to be when he swore his affidavit in November 2014. It will allow the wife to purchase a property and also give her the freedom to pay her lawyers and pay for valuations and will allow her to purchase a car and make some improvements to her unit. It will give her control over her own life and her own future.
It intuitively seems unlikely given the information currently available that the wife will not receive more than the $1.4m after a 37 year marriage but any risk that she might be overpaid if she receives $1m can be alleviated to a considerable extent by an order that she preserves at least half of the amount she receives until a final hearing of the matter.
The husband’s solicitor suggested that $700,000.00 might be more the mark if the court decided to make an interim property order but he had no rationale for this other than that this amount would be available from the sale of the Property Y property.
In all the circumstances I consider it both appropriate and just and equitable to make an order that the wife receive $1m by way of interim property settlement.
Orders
It is almost nine months since I heard the interim application. Issues were raised during submissions on 30 April 2015 about the source of the funds the husband might use to meet any order that he transfer money to the wife and consideration also needs to be given to how to best draft orders to ensure that as much as possible of the $1m capital transferred to the wife is secured pending the final hearing.
It therefore seems to me prudent to list the matter at 9.30am on 29 January 2016 in order to hear submissions as to the form of the orders.
If the parties can agree on orders prior to 29 January 2016 that will be good, but if they cannot agree they will each need to be prepared to put forward a proposed form of order and to make submissions in support of it on 29 January 2016.
I certify that the preceding ninety eight (98) paragraphs are a true copy of the reasons for judgment of Judge Terry
Associate:
Date: 19 January 2016
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Injunction
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Remedies
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