Lavell and Lavell

[2011] FamCA 126

FAMILY COURT OF AUSTRALIA

LAVELL & LAVELL [2011] FamCA 126

FAMILY LAW – PROPERTY – Hogan Order for release of superannuation funds

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

Runae & Bachman [2010] FamCA 514
Strahan & Strahan [2009] FamCAFC 166

APPLICANT: Mr Lavell

RESPONDENT: Ms Lavell

FILE NUMBER: BRC 1571 of 2010

DATE DELIVERED: 10 January 2011

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Murphy J

HEARING DATE: 10 January 2011

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Mr C. Nichol of Small Myers Hughes

THE RESPONDENT: In person

Orders

IT IS ORDERED THAT

1. Mr Naughton, solicitor for the wife, be granted leave to withdraw from these proceedings.

2. The matter is adjourned to the Callover of matters ready for trial before Justice Murphy at 10.00am on 21 January 2011 in the Brisbane Registry of the Family Court of Australia for the allocation of a one (1) day final hearing.

3. The husband shall file and serve a Statement of Agreed Facts by 4.00pm on 14 January 2011 including therewith a copy of the parties’ Termination Agreement. The Statement shall contain a column beside each asserted fact so as to permit the wife to signify her agreement or challenge, as the case may be, to each fact.

4. The wife shall file and serve a response to the husband’s Statement of Agreed Facts by 4.00pm 18 January 2011 which shall comprise her ticking each fact with which she agrees and indicating her assertions in respect of any fact with which she disagrees.

5. The husband shall file and serve, by 4.00pm on 7 February 2011, an Affidavit which shall:

   a.include a copy of each paragraph from earlier filed material referenced to the affidavit from which it emanates;

   b.include any new or additional facts;

   being, in each case, material directly relevant to the issues to be determined at the final hearing.

6. The wife shall file and serve a Responding Affidavit in similar terms by 4.00pm on 7 March 2011.

7. A Registrar shall conduct a compliance check on a date to be advised after 7 March 2011, to ascertain that this matter is, in all respects, ready for trial, and, if possible, such hearing shall be conducted by telephone without requiring the personal attendance of any party.

IT IS FURTHER ORDERED THAT

1. In respect to the Application in a Case filed by the husband on 28 October 2010:

   a.The Applicant, Mr Lavell (“the Applicant”) be hereby authorized, and the Applicant and the Respondent do all acts and things so as to facilitate, the transfer of the sum of $55,000 from the Applicant’s members interest in the Managed Superannuation Fund to the trust account of Small Myers Hughes Lawyers and such sum be used by the Applicant towards payment of his legal and other costs of and incidental to these proceedings.

   b.Paragraphs 1 and 3 be dismissed.

2. In respect of the Response to an Application in a Case filed by the wife on 25 November 2010:

   a.The wife shall receive from her member benefit entitlement in the Superannuation Fund the sum of $25,000 in respect of paid legal fees.

   b.Paragraphs 1 and 3 be dismissed.

3. So as to give effect to paragraph 9(a) of these Orders and to ensure proper compliance with all appropriate Regulations by the said Fund;

   a.The solicitors for the husband shall, by 4.00pm on Friday 14 January 2011, draft precise minutes of orders.

   b.The said solicitor shall forward same via email to the Associate to Justice Murphy contemporaneously copied to the wife; and

   c.Thereafter, as soon as reasonably practicable, the wife shall send to the Associate to Justice Murphy her agreement to those terms, contemporaneously copied to the solicitors for the husband; and

   d.Thereafter, if considered appropriate, supplementary Orders perfecting paragraph 9(a) of these Orders shall be made in chambers.

4. The costs of the Application in a Case filed by the husband on 28 October 2010 and the Response filed by the wife on 25 November 2010 be reserved to the trial judge.

NOTATIONS:

(a)The matter is to be placed on the callover for the allocation of a one day final hearing, notwithstanding the fact that neither of the parties have filed trial affidavits, and noting that both parties will have filed their trial affidavits by 4.00pm on 7 March 2011.

(b)For the purposes of the final hearing of this matter, it is agreed today by the parties that the value of the property at L is $380,000.

(c)The wife has been advised of her right to seek independent legal advice in respect of the orders proposed as a result of paragraph 10 of these Orders prior to signifying her attitude to them.

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

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 1571 of 2010

Mr Lavell

Applicant

And

Ms Lavell

Respondent

EX TEMPORE

REASONS FOR JUDGMENT

1. This matter commenced in this Court early in 2010.  Some of the issues between the parties at that time related to the enforceability or validity of a binding financial agreement which the parties had entered, pursuant to section 90C of the Act, on 15 June 2007.  Subsequently, in about July 2010, the parties signed a termination agreement within the meaning of the Act and, as a result, consent orders were made on 30 July 2010 removing, as it were, issues relating to the validity and enforceability of the binding financial agreement from the contentions between the parties. 

2. What remains is an application for settlement of property pursuant to section 79 of the Act.

3. The issues live between the parties include the wife’s contention that there might be property of the husband in a country in central Europe.  The exact nature of this property is not made clear by the wife, nor does she adduce evidence from which the Court could conclude, certainly at this stage, that such money or other property as might exist in that country is “property of the husband” within the meaning of section 79 of the Act.  The suspected asset is, on the wife’s contention, some form of trust established by the husband in the 1950s at a time when he was previously married. His then wife is deceased.

4. It is not in doubt that money has been received from a source in that country into an entity called the “C Trust”; the binding financial agreement, which the parties signed and has now been terminated, records that the husband is “the appointor, trustee and primary beneficiary” of a trust known as the “C Trust”. 

5. The agreement goes on to record that the “C Trust” was loaned $US600,000 from the estate of the husband’s first wife via a structure known as a Reserve Trust which was established in that central European country.

6. The agreement records that these moneys: “were then loaned from the C Trust to the managed superannuation fund (a self-managed superannuation fund of which a corporation is the trustee whose directors and shareholders are the husband and wife).  Neither [the husband] the managed superannuation fund nor the C Trust have ever been called upon to repay any part of the loan or pay any interest on the loan.”

7. In another paragraph, the agreement also records significantly, as it seems to me, that the parties “acknowledge and agree that it is foreseeable that the loan to the C Trust from the Reserve Trust may be forgiven in the future”. 

8. The wife now represents herself. Her application in respect of disclosure, was filed on 24 March 2010.  The application occurs not only in the context just described, but also in the context of a relationship between a husband who is now aged 83 and a wife who is now aged 53 who commenced their cohabitation in March 2005, married in May 2006 and separated about three and a half years later in December 2009.  There are no children of that relationship.

9. The binding financial agreement, signed by each of the parties, records, in schedules to it, property which each of the parties had as at the date of that agreement (June 2007) – and likely, it seems to me to be a significant matter in the context of this dispute. 

10. The current dispute between the parties can be very broadly and crudely described as being the wife seeking to retain the property recorded as being her “separate property” in that agreement, which includes a unit at L valued now at about $380,000 and an interest in the self-managed superannuation fund which I have referred, added to which would be, the wife says, a motor vehicle.  That motor vehicle is recorded in the agreement as being the husband’s “separate property”, but it is a vehicle that has been in her possession apparently for some time.

11. The husband for his part, contends that, in this four or five-year relationship, he should receive, in effect, a half interest in the wife’s unit at L, together with funds within the self-managed superannuation fund which emanated, he says, by reason of a loan by him of about $200,000 that effectively established the wife’s member benefit in that fund.  The claim in respect of unit at L is, he says, based on the direct financial contributions made by him to it.

12. It seems that the husband contends then that he has made direct financial contributions of about $200,000 in respect of a home unit now valued at $380,000.

13. The issues between the parties are, then, very narrow.  It is a matter of considerable disquiet that this matter has not resolved, but, as Mr Nicol points out, the path to resolution was perhaps previously marred by issues relating to disclosure and issues relating to the validity and/or enforceability of the binding financial agreement earlier referred to. 

14. As will be clear, each of those bars to a resolution have now been removed. It needs to be said that it would be extremely disappointing – I repeat, extremely disappointing ‑ if this 83-year-old man and 53-year-old woman were not able to resolve the issues between them emanating from a brief relationship.

15. Nevertheless, it is said that resolution is not possible at this point in time and this narrow dispute (which, it is conceded, will take one day of final hearing), will be set down for trial.  Directions have today been made which will facilitate the matter appearing on a call-over to be held on 21 January 2010 and it is hoped the trial of the action, to be there set  down, will take place in late March or April.

16. Ms Lavell makes the point, quite rightly, that the Family Law Rules enshrine the obligations placed upon parties to litigation in this Court making full and frank disclosure. So much is abundantly clear from Chapter 13 of the Rules and, in particular, Rule 13.01.

17. The application of that Rule is, however, not unrestricted.  Firstly, disclosure must be related to issues that are relevant in the proceedings.  The determination of issues that are relevant in proceedings, that involve at their heart a broad-based discretion as section 79 proceedings do, makes that sometimes difficult to precisely determine, as does the fact that the Family Court is a court without formal pleadings.  However, Rule 13.01, makes it clear in terms that the obligation of full and frank disclosure is in respect of all information “relevant to the case”.

18. That requirement is also underlined by general provisions of the Rules including, for example, Rule 1.07 which requires parties to the proceedings to seek to achieve the main purpose of the rules in a way that, relevantly, “is proportionate to the issues in a case and their complexity and the likely costs of the case” and also in a way which “promotes the saving of costs”. 

19. Here, the issues between these parties are, as I say, very narrow.  They emanate from a brief relationship which produced no children and in which the parties were mature adults at its commencement. The potential for property ‑ or a resource in the country in central Europe ‑ that has apparently existed for some 50 plus years, to have direct relevance to these proceedings in the context of this particular relationship is asserted by the wife, to be that the husband has recourse to significant funds as and when he might choose. 

20. Leaving aside for a moment the extent to which evidence might be produced by the wife substantiating that claim, it is a fact in these proceedings, acknowledged by the terms of the binding financial agreement previously in existence between the parties, that the husband was able to access about $1 million on the basis that it was a “loan”, but which had no repayment schedule, no interest attached to it and which is acknowledged in the same document as unlikely to ever be called upon to be repaid.

21. Within the very narrow compass of the issues in this case which, at the risk of repeating myself, involve an 83-year-old man and a 53-year-old woman in a five-year relationship, it seems to me that that fact is of itself sufficient to make such case as the wife may need to make in respect of overseas resources that are, or might be, directly relevant to the issues in these proceedings. 

22. Accordingly, it seems to me that this case, which has now been in this Court for 12 months, needs to be heard and determined and in a way which involves expenditure of legal costs proportionate to the issues to be decided.

23. As already mentioned, the trial will take one day and I have already indicated to each of the parties that it seems to me the issues to be decided by the Court are of very narrow compass, and I remain very surprised that this matter has not been able to be resolved between the parties.  It seems to me that this is precisely the sort of case and precisely the sort of issue in a case that the requirements of Rule 1.07 (and other provisions of the rules) seek to address. The decision to be made in respect of the specific disclosure sought by the wife must in my view be seen in the light of the issues and what I have said about them and must also be seen to be proportionate to those issues and their complexity when weighed against the likely costs.

24. When that is done, and bearing in mind specifically what I have said about evidence otherwise available to the wife in respect of the issue she seeks disclosure to support, it seems to me that her application filed on 24 March 2010 should be dismissed. 

25. In addition, the husband seeks, by way of what is commonly called “a Hogan order” or perhaps a partial property settlement, the sum of $55,000, comprising $30,000 in moneys owed to his solicitors and an estimated $25,000 so as to permit him to engage lawyers to prepare for and appear at the final trial of this matter earlier referred to. 

26. On the wife’s case, that is to say if she was entirely successful in the orders that she seeks, the husband would retain his member’s benefit entitlement currently of approximately $240,000.  It is that fund that he seeks to access for the purposes just described.

27. The so called “reversibility’ of an order of the type under discussion is an extremely important consideration as earlier authorities and the recent decision in Strahan & Strahan [2009] FamCAFC 166 makes clear.

28. Where the amount sought is sought from a fund which, on any view, the husband must receive at the end of the trial, then this factor becomes in effect moot; the husband will receive something which the wife concedes he will ultimately receive, whatever be the result of the ultimate trial. 

29. In those circumstances, it seems to me that there is a good case for the husband to receive funds so as to permit him to be legally represented in the preparation of the trial and at it.

30. Some issue might be seen to exist as to whether a component of the amount sought should include amounts already expended.  That specific issue was addressed by Cronin J in Runae & Bachman [2010] FamCA 514, where his Honour examined the then recent decision of the Full Court in Strahan.  In Runae, his Honour held that past fees could be included in an order of the type under discussion.  In the absence of complete argument in respect of the issue, I see no reason to differ from his Honour’s view in that respect. 

31. Initially, an amount was claimed for prospective legal costs that envisaged the process of disclosure sought by the wife and, consequentially, preparation for trial significantly more involved than what will result because of orders dismissing that application.

32. The sum sought, then, is significantly reduced and confined to $25,000.  It seems to me that this sum, given that it comes from a fund that the wife concedes will be the husband’s at the end of the trial, is appropriate.

33. Accordingly, I will order in accordance with paragraph 2 of the Application in a Case filed by the husband on 28 October 2010 save that the sum of $55,000 be substituted for the sum of $75,000 there appearing. 

34. In a Response filed by the wife on 25 November 2010, she sought, at paragraph 2, an order (in a document prepared by herself) whereby she acknowledged that the husband be paid the sum then sought by him, but as it were in exchange for a similar sum to be paid to her from her interest in the superannuation fund so as to fund her own legal fees. 

35. Today however, Mr Naughton who initially appeared as the solicitor for the wife sought and was granted leave to withdraw, and the wife has indicated that she has no intention of instructing lawyers in the preparation for or at the final trial of this matter. 

36. Accordingly, on her own case, she has no need of any money for the payment of legal fees, nor does she otherwise substantiate a basis upon which she should receive a partial property settlement.   Paragraph 2 of her response to an Application in a Case is dismissed.

37. I order accordingly.

I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy delivered on 10 January 2011.

Associate: 

Date:  4 March 2011