Leventis & Leventis

[2021] FedCFamC1F 46

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Leventis & Leventis [2021] FedCFamC1F 46

File number(s):

MLC 7710 of 2018

Judgment of:

WILSON J

Date of judgment:

15 September 2021

Catchwords:

FAMILY LAW – PART PROPERTY APPLICATION – reversibility a major issue – earlier part property orders made – not appropriate to make such an order now – application refused.   

Legislation:

 Family Law Act1975 ss 117(1) and 117(2A)

Cases cited:

Ashton v Pratt (2015) 88 NSWLR 281

Cao & Trong (No 2) [2019] FamCA 941

Gabel v Yardley (2008) 40 Fam LR 66

In the Marriage of Zschokke (1996) 20 Fam LR 766

Jabour v Jabour (2019) 59 Fam LR 475

Strahan v Strahan (2009) 241 FLR 1

Verdon & Verdon (2020) 62 Fam LR 573

Willians & Enmore (No 2) [2021] FamCA 340

Division:

Division 1 First Instance

Number of paragraphs:

21

Date of hearing:

3 September 2021

Place:

Melbourne

Counsel for the Applicant:

Dr E. Kelly

Solicitor for the Applicant:

Nicholes Family Lawyers

Counsel for the First Respondent:

Dr R. Ingleby

Solicitor for the First Respondent:

Vadarlis & Associates

Counsel for the Second and Third Respondents:

Mr P.Panayi

Solicitor for the Second and Third Respondents:

Pauline Madden Conveyancing & Legal

ORDERS

MLC 7710 of 2018

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS LEVENTIS

Applicant

AND:

MR LEVENTIS
First Respondent

MR B LEVENTIS

Second Respondent

MR B LEVENTIS

Third Respondent

ORDER MADE BY:	WILSON J
DATE OF ORDER:	15 SEPTEMBER 2021

THE COURT ORDERS THAT:

1.I dismiss the wife’s part property claim.

2.Each party’s costs of and incidental to this application are to be his or her costs under s 117(1) of the Family Law Act 1975.

Note:   The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

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

REASONS FOR JUDGMENT

WILSON J

1. Several applications are addressed in these reasons.  They include –

   (a)the wife’s application for part property orders;

   (b)the wife’s costs application;

   (c)the husband’s costs application; and

   (d)the second and third respondent’s costs application.

2. In this proceeding parenting issues and the alteration of property interest are fixed for trial on 22 August 2022 on an estimated duration of seven days.  The wife has foreshadowed an application to bifurcate the parenting issues from the property issues.  No such application has yet been brought. 

3. The property pool is not extensive.  The larger dollar value components consist of undeveloped real property in regional Victoria valued in mid-2020 at $2,650,000 and the remaining sum held in trust being the proceeds of a Transport Accident Commission (TAC) claim paid to the husband following an accident on 26 June 2015 in which he sustained significant injuries.

4. Two experts are yet to file their evidence. 

5. The second and third respondents maintain that funds held in trust in bank accounts and the L Street property are assets of the Leventis Trust Fund to which the second and third respondents are entitled. 

6. The husband contented that the proceeds of the TAC claim represent, effectively, the entirety of the pool and that the wife’s major claim for which she seeks funding is against the second and third respondents.

7. It was common cause that the wife has already received part property payments of $207,000. 

8. All parties brought costs claims.

   SYNOPSIS

9. For the reasons that follow –

   (a)I dismiss the wife’s part property claim; and

   (b)each party’s costs of and incidental to this application are to be his or her costs under s 117(a) of the Family Law Act 1975.

   THE WIFE’S PART PROPERTY APPLICATION

10. The wife sought an order that within 14 days she receive a further part property order of $605,248 to be paid from funds held in a trust account controlled by the husband’s solicitor.  If made, such an order would bring the total value of part property orders to $812,248.

11. The source of any property in respect of which a part property order (of any amount) may be made is the TAC money held in trust and possibly the L Street property.  I say possibly because the second and third respondents assert that the L Street property is held on trust for them.  A dispute exists about whether that parcel of land is to be sold and the proceeds thereof adjusted.  The claim in this litigation about the L Street property, especially the equitable interest asserted by the second and third respondents, will address the largest item in terms of dollar value in this case. 

12. A trial must be held to determine the second and third respondent’s claims in relation to the L Street property.  

13. The other source of funds capable of meeting a part property order is the funds held in trust in relation to the TAC claim.  The wife sought payment of $605,248.  The husband disputed that the wife could validly assert any contribution to those funds.  He may be correct in that contention, although all claims to all contributions must await a trial.  Only after a trial will it be possible to examine the myriad of contributions of which authorities such as Jabour v Jabour[1] speak, as I examined in Willians & Enmore (No 2).[2] 

    [1] (2019) 59 Fam LR 475.

    [2] [2021] FamCA 340.

14. The wife submitted that her application for the provision of funds could be considered a part property settlement or as a litigation funding application.  In Verdon & Verdon[3] I canvassed both and concluded that the so-called litigation funding power must be of dubious validity.  I adhere to those views for the purpose of this application. 

    [3] (2020) 62 Fam LR 573

15. When examined under the rubric of a partial property settlement, it is relevant to address a collection of considerations.  I distilled those in Cao & Trong (No 2)[4] in the following terms –

    [4] [2019] FamCA 941 (at [34]).

    a)the majority of the court in Strahan[5] held that when consideration is being given to the appropriateness of an order being made 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;

    b)balance must be given to the risks of unduly limiting the final orders that can be made against the circumstances said to show that it is just and equitable to make interim orders;

    c)in Strahan it was held that the first stage of any consideration of an application for a partial property settlement order requires a determination of whether the interests of justice require the exercise of power under s 79 and s 80( I )(h) on an interim basis;

    d)compelling circumstances need not be shown by an applicant for a partial property settlement order, as was held in Strahan;

    e)ordinarily an order under s 79 is made once only after a final hearing, as was held in Strahan at [132];

    f)consideration must be given to the reversibility of the order, as was held in Zschokke[6] and Gabel & Yardley[7];

    g)in addition, a court entertaining an application for a partial property settlement should consider the need for and effect of interim orders weighed against the risks that the exercise of the power on an interim basis will interfere with the power of the court to make just and equitable orders on a final basis;

    h)further, a court entertaining an application for a partial property settlement order should consider whether the order is just and equitable according to at least a preliminary view of the likely range of outcomes;

    i)further, a court entertaining an application for a partial property settlement order should balance the risks by considering not only the quantum of the orders but also the risk of unduly limiting the final orders that can be made or even potentially defeating patties' claims; and

    j)a court entertaining an application for a partial property settlement should take into account that a party should not be denied the ability to liquidate assets where there are real needs for those resources such as meeting debts due to creditors.

    [5] (2009) 241 FLR 1.

    [6] (1996) 20 Fam LR 766.

    [7] (2008) 40 Fam LR 66.

16. Reversibility of any part property settlement order is a significant issue in this case, especially once the funds are applied towards legal fees.  Further, if a finding is made at trial that the L Street property is held in equity by the second and third respondents, once the TAC funds are exhausted on legal fees (if the part property order were made) a significant risk exists that the disbursement of those funds will be irreversible. 

17. But another issue emerges about the wife’s claim for funds.  She asserts that she owes her father $422,507 pursuant to a loan agreement between the two.  The relevant loan agreement was exhibited by the wife.  It is expressed to have been made by the parties with a view to creating legal relations,[8] yet no evidence of a written demand for repayment[9] was given.  In those circumstances I am unable to accept that the wife was under a pressing and binding legally enforceable obligation to repay the debt.  Accordingly, I am unable to accept that the wife must pay her father, now, the sum she asserts of $422,507.

    [8] This seems valid despite the familial nature of the relationship – Ashton v Pratt (2015) 88 NSWLR 281.

    [9] Clause 3.1 required a written demand to be given.

18. In those circumstances, if I were to make an order for a part property payment I would erroneously elevate the status of the so-called debt said to be immediately due to the father.  It must not be forgotten that the wife has already received two earlier part property payments.  If it transpires that the major asset forming the pool is the trust amount held by Vadarlis & Associates, then any erosion of that amount by part property orders makes inroads into the divisibility of those funds, possibly rendering this property application in this case hypothetical.  That is not a sensible approach for me to adopt. 

19. I decline to grant the interim property application sought by the wife.

    COSTS

20. All parties made a costs application. In the usual course of events, s 117(1) applies to the effect that each party bears his, her or its own costs. A significant focus of the costs applications was on the wife, such that orders were sought that she meet costs about which the parties agitated. The wife has deposed to her parlous financial circumstances. The husband’s financial circumstances are not markedly different. As the authorities show, any order for costs under s 117(2A) must, in all the circumstances, be just. It would not be just to make an order for costs against the wife as sought by the parties. Such an order would be crushing. The need to avoid such a result explains, at least in part, how the law of costs under the Family Law Act stands outside the rules and principles of the law relating to costs as is applied in the state Supreme Courts and in the Federal Court of Australia.

21. I decline to make any order as to costs as sought by the parties beyond ordering that the costs of and incidental to this application are to be each party’s costs under s 117(1) of the Family Law Act. 

I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wilson.

Associate:

Dated:       15 September 2021