MAIN & WALTON
[2020] FamCA 927
•4 November 2020
FAMILY COURT OF AUSTRALIA
| MAIN & WALTON | [2020] FamCA 927 |
| FAMILY LAW – INTERIM PROPERTY – Where the applicant seeks $500,000 partial property settlement and $150,000 for litigation funding under section 90SM of the Family Law Act 1975 (Cth) – Where the applicant made unchallenged contributions in the relationship – Where the applicant has an appropriate case for partial property distribution – Where the applicant, in final distribution, would receive substantially more than the $650,000 sought for interim distribution – Orders made for partial property settlement. |
| Family Law Act 1975 (Cth) s 90SM |
| Strahan & Strahan (2011) FLC 93-466 Osferatu & Osferatu [2012] FamCA 408 |
| APPLICANT: | Mr Main |
| RESPONDENT: | Ms Walton |
| FILE NUMBER: | SYC | 1467 | of | 2019 |
| DATE DELIVERED: | 4 November 2020 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Rees J |
| HEARING DATE: | 3 November 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Sweeney |
| SOLICITOR FOR THE APPLICANT: | Farrar Gesini Dunn Sydney |
| COUNSEL FOR THE RESPONDENT: | Mr Sansom SC |
| SOLICITOR FOR THE RESPONDENT: | Swaab Attorneys |
Orders
IT IS ORDERED
That each of the applicant and the respondent do all acts and things required to effect the payment to the applicant, by way of partial property settlement, of the sum of $650,000 from the funds held by Swaab Attorneys in the controlled monies account in trust for the parties being account number #…37 in D Bank.
That within 28 days of the date of these Orders, the respondent pay to the applicant the sum of $10,000 on account of the applicant’s costs of this application.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Main & Walton has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 1467 of 2019
| Mr Main |
Applicant
And
| Ms Walton |
Respondent
REASONS FOR JUDGMENT
Mr Main (“the applicant”) and Ms Walton (“the respondent”) separated in 2002 after a relationship of ten years and one child and entered into orders for property settlement in 2003.
In 2008, they commenced living together in a de facto relationship which lasted until they separated in September or November 2017. Their second child was born in 2010.
The substantive proceedings relate to the distribution of property arising out of the de facto relationship.
The application before the court is for payment of two amounts to the applicant who seeks $150,000 categorised as litigation funding and a further $500,000 by way of partial property settlement. The applications are opposed by the respondent.
It is not in dispute that the sum of $14,076,000 is held in a controlled monies account. That fund arises from the sale of the parties’ former residence.
In addition to the funds in the controlled monies account, the respondent has interests in various corporate entities (“the respondent’s assets”) which have not been valued. In her Financial Statement sworn on 17 May 2019, she estimated that the value of those entities controlled by her was then $13,514,309. She also deposed to an interest in a trust which she does not control which she valued at $3,124,730.
It was conceded in submissions that the amount sought by the applicant represents some 4.5 per cent of the controlled monies account or about 2 per cent of the total pool of assets.
It is the respondent’s contention that, in the substantive proceedings, the court will find that it is not just and equitable to make any adjustment of property in relation to the respondent’s assets. For the purpose of this determination, I propose to treat the respondent’s assets as financial resources in her hands.
The applicant deposed that, at the commencement of the de facto relationship, he had assets of some $2,500,000 made up principally of equity in an apartment of about $900,000; superannuation of some $415,000 and cash of $376,445.
The respondent deposed that, at the commencement of the de facto relationship, she had net assets of about $33,000,000, which included a house at B Street, Suburb C (“B Street”) where the parties lived together.
Whilst there is a dispute about some of the contributions made by the applicant, during the relationship, some are not disputed. The respondent swore an affidavit on 30 October 2020 in which she responded to each paragraph of the affidavit of the applicant with which she did not agree. I have therefore assumed that, where the respondent did not reply to a paragraph, the assertions are admitted for the purpose of this application.
I do not propose to deal with all of the contributions, but only some of the more significant ones.
In the financial years ended 30 Jun 2008 until 30 June 2017, the applicant earned taxable income from his professional practice totalling $3,528,368. It is the applicant’s contention that he applied his income to family purposes. That contention is not denied by the respondent although she denies that he applied his income in the exact manner for which he contends. She does not, however, assert that his income was diverted away from the family to some other purpose or enterprise.
In 2011, the applicant sold his apartment and applied $900,000 from the proceeds of sale to the purchase of a house at F Street, Suburb C (“F Street”).
The applicant paid $268,772 towards the renovation of F Street in 2012.
In 2016 and 2017 the applicant received an inheritance of $1,049,214. Of that amount, $520,000 was applied to the purchase of an interest in a yacht. That interest was sold after separation and the proceeds retained by the applicant.
There were further renovations of F Street in 2016, the respondent agrees that the applicant made financial contributions towards those renovations. The applicant asserts that he paid $764,134 which came from his inheritance. The respondent does not agree that he paid that amount. She does not, however, dispute that he paid $141,706 to the builder or that he made other payments to a tiler, painters, electrical contractors, plumbers and air conditioning contractors.
The money in the controlled monies account is the balance of the proceeds of sale of F Street.
It is not in dispute that the contributions of the respondent far outweigh those of the applicant, but that fact alone does not justify her position, set out in her substantive response filed 17 May 2019, that his application for an adjustment of property should be dismissed. This is particularly so having regard to his unchallenged financial contributions and her very significant financial resources.
Senior counsel for the respondent, in his case outline document, stated the applicable law in the following terms:
2.The guideline decision of the Full Court in Strahan & Strahan (2011) FLC 93-466 outlined the requirements in relation to an interim or partial property settlement pursuant to s79 of the Family Law Act which by analogy would apply under s 90SM subject to its terms, and it was noted that “the interests of the parties and the Court are better served by there being one final hearing of s79 proceedings”.
3. The Full Court said:
“[132] 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.
And ...
[139] 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.”
6.In relation to the second step in making an interim property order, as Justice Watts observed in Osferatu & Osferatu [2012] FamCA 408 (31 May 2012):
“41. As was discussed in Harris and confirmed in Strahan, the second step in making an interim property order is to have regard to the usual matters in a section 79 order (ss 79(2) and 79(4) FLA). A detailed inquiry is not required, but there must be some assessment of section 79 factors. Given it is an imprecise exercise, the interim property order has to be “conservative” so that the final outcome of property settlement will not be compromised by the interim property order. Either the remaining property needs to be sufficient to meet the legitimate expectations of both parties at the final hearing, or the order that is contemplated needs to be capable of being reversed or adjusted if it is subsequently considered necessary to do so.” (Emphasis added)
I accept that formulation.
The applicant has unpaid legal costs exceeding the sum of $150,000. His solicitors estimate that the total costs of the proceedings will be some $415,000 of which the applicant has paid $40,650, leaving him to fund the balance of $374,350.
I am satisfied that he does not have funds to pay those costs and that he has established “an appropriate case” for making a partial distribution.
Having regard to the unchallenged contributions set out in these reasons, I am satisfied that the husband would, in the final determination, receive substantially more than the amount of $650,000 which he seeks by way of interim distribution.
I propose to make the orders sought by the applicant.
COSTS
Each party seeks an order that the other pay the costs of this application on an indemnity basis.
Neither counsel for the applicant nor senior counsel for the respondent submitted that there was any basis for costs to be awarded on an indemnity basis.
Both conceded that costs should follow the event.
There will be an order that the respondent pay the applicant’s costs of this application.
The applicant’s estimate of costs at scale on a party and party basis, was $39,078.
The respondent’s assessment was $20,000.
Because the applicant’s estimate was provided after the submissions had been completed, there was no opportunity given to the respondent’s counsel to comment on its reasonableness. I note, for example, that the applicant has been charged for 80 hours of conference, or $20,080, to settle his affidavit.
The order will provide that the respondent pay the applicant’s costs in the sum of $10,000.
In preparation for the hearing of the interim application, each party was directed to prepare and lodge an electronic bundle of the documents to be tendered.
The applicant’s tender bundle was 1,327 pages. The respondent’s tender bundle was 2,603 pages.
Of those documents, the applicant tendered four and the respondent tendered four. The cost of the preparation of the tender bundles was $8,973 for the applicant and $2,090 for the respondent. The applicant was charged for 15 hours of solicitor’s time for the collating and indexing of the tender bundle. The respondent was charged for five hours.
It is notable that in this matter, which commenced in March 2019, and in which this is the first time on which an interlocutory application has been determined, the applicant has incurred costs to date of $228,524 and the respondent $211,836.
I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 4 November 2020.
Associate:
Date: 04/11/2020
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