Markson and Markson

[2016] FCCA 925

FEDERAL CIRCUIT COURT OF AUSTRALIA

MARKSON & MARKSON [2016] FCCA 925

Catchwords:
FAMILY LAW – Property – Interim Orders – application for interim property orders – whether amounts claimed are debts arising from the parties’ marriage – res judicata – where some claims considered and rejected in earlier decision – where no appeal lodged in respect of earlier decision – a party’s legal costs incurred during the proceedings cannot be classified as a joint debt owing at separation. 

Legislation

Family Law Act 1975 (Cth), ss.75, 79, 80

Cases cited:
Markson & Markson [2014] FCCA 3040
Strahan & Strahan (Interim Property Orders) (2009) 241 FLR 1; 42 Fam LR 203; (2011) FLC 93-466; [2009] FamCAFC 166

Applicant: MS MARKSON

Respondent: MR MARKSON

File Number: SYC 3742 of 2014

Judgment of: Judge Scarlett

Hearing date: 6 July 2015

Date of Last Submission: 6 July 2015

Delivered at: Sydney

Delivered on: 18 April 2016

REPRESENTATION

Applicant: In person

Respondent: In person

ORDERS

UNTIL FURTHER ORDER

1. Within 21 days of the date of these Orders the Applicant and the Respondent are to do all acts and things and sign all such documents necessary to authorise Sage Solicitors to pay the following amounts out of the funds currently held by them in a controlled monies account on behalf of the parties:

   (a)As to the amount of $4,387.62 being an amount owing to Energy Australia for power supplied to Property C;

   (b)As to the amount of $27,676.46 owing to (omitted) Bank for (omitted) Visa Card (omitted);

   (c)As to the amount of $14,620.41 owing to (omitted) Bank for (omitted) Bank Account Number (omitted);

   (d)As to the amount of $10,317.05 owing to (omitted) Bank Credit Card Account Number (omitted);

   (e)As to the amount of $16,181.17 owing to (omitted) Bank for Account Number (omitted);

   (f)As to the amount of $1,206.00 owing to (school omitted) of (omitted) New South Wales; and

   (g)As to the amount of $21,671.01 to (omitted) Finance in respect of amounts owing on a (omitted) motor vehicle.

2. The parties are to direct Sage Solicitors to pay the above amounts to the payees on behalf of the parties within 21 days.

3. Within 21 days of the date of these Orders the Applicant and the Respondent are to do all acts and things and sign all necessary documents to authorise Sage Solicitors to pay out of the funds currently held by them in a controlled monies account on behalf of the parties the amount of $17,548.18 to Sarah Bevan Family Lawyers of Post Office Box 1159 Parramatta New South Wales 2124 such amount of $17,548.18 to be regarded as an interim property distribution to the husband.

4. Within 21 days of the date of these Orders the Applicant and the Respondent are to do all acts and things and sign all necessary documents to authorise Sage Solicitors to cause the amount of $37,500.00 to be released to the husband Mr Markson out of the funds currently held by them in a controlled monies account on behalf of the parties such amount of $37,500.00 to be regarded as an interim property distribution to the husband. 

5. The parties are to direct Sage Solicitors to pay the amounts referred to in Orders (3) and (4) above to the payees within 21 days.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYC 3742 of 2014

MS MARKSON

Applicant

And

MR MARKSON

Respondent

REASONS FOR JUDGMENT

Application in a Case

1. This is an Application in a Case brought by the Husband seeking interim property orders. There has previously been an interim hearing as a result of an Application in a Case brought by the Wife seeking interim property orders.  The Husband filed a Response seeking orders for the release of certain funds held in a controlled monies account held by Sage Solicitors (Markson & Markson[1]).

   [1] [2014] FCCA 3040

2. On 19^th December 2014 interim orders were made providing for the following sums to be paid out of the controlled monies account:

   a)The sum of $1647.12 being an amount owed to Energy Australia for power supplied to Property C;

   b)The amount of $7,071.00 being school fees owed to (school omitted); and

   c)The amount of $9,747.00 being school fees owed to (omitted) School, (omitted).

3. The Husband, by his Application in a Case filed on 18^th February 2015, now seeks a further interim property order and interim parenting orders. The parenting orders will be dealt with separately.

4. The Order sought by the Husband is:

   That the parties forthwith do all acts and things necessary to authorise Sage Solicitors to release $532,926.16 to the husband from the funds held in trust or controlled monies by them for the parties.

5. The Wife filed a Response to an Application in a Case on 10^th June 2015 seeking final parenting orders and final property orders. Clearly, the Response is misconceived, as an Application in a Case and a Response to an Application in a Case are intended to deal with interim orders, not final orders. The proper way to amend the final orders that a party seeks is to file an Amended Initiating Application or an Amended Response, as the case may be.

6. That said, the property orders sought by the Wife are:

   a)That 100% of the parties’ assets be allocated to the Wife.

   b)A superannuation splitting order;

   c)An order under section 106A of the Family Law Act 1975 (Cth) appointing a Registrar of the Family Court[2] to sign documents in the place of a party who refuses, fails or neglects to sign any document having been ordered to; and

   d)An order for costs.

   [2] Not a Registrar of this Court, curiously

7. It would appear, at least at first glance, that an application for an order that the Wife receive the entirety of the parties’ assets would be considered in the nature of an ambit claim, certainly on an interim basis.

8. It would also appear that an application for costs would be likely to produce very little, as the Wife is not legally represented in these proceedings.   

Evidence and Submissions

1. The Husband relied on his affidavits of:

   a)18^th December 2014[3];

   b)18^th February 2015; and

   c)6^th July 2015 (filed in Court on the day of the hearing).

   [3] The husband was refused leave to rely on this affidavit in the earlier proceedings, as it was filed without leave two days after the hearing on 16 December 2014.

2. The Wife relied on her affidavit of 4^th June 2015.

3. The Husband submitted that he was seeking payment of debts incurred both prior to and after the parties’ separation. He told the Court that in the previous six months he had basically lost everything. He also said that there was no tax liability for the 2010 tax year.

4. The Husband referred to paragraph 5 of his affidavit, in which he particularised the way in which the amount of $532,926.16 that he seeks is made up. The amount in paragraph 5 includes a figure of $377,500.00, which he particularises in paragraph 6 of his affidavit. Essentially, the Husband is seeking an interim property distribution in his favour of $370,000.00, and he states that he wishes to use some of that money to purchase a small motor vehicle, secure a rental property within 15 minutes of the children’s schools and use an amount of $8,000.00 for immediate living expenses and the purchase of furniture whilst he secures employment.

5. In his later affidavit of 6^th July 2015, the Husband advises that he has now obtained employment with (employer omitted). He also annexes a print-out of emails between himself and one Mr L from the Australian Taxation Office. It is on the basis of this email correspondence that the Husband bases his assertion in paragraph [4] of his affidavit that “there will be no further tax implications for the Applicant or myself”.[4]

   [4] Affidavit of Mr G 6.7.2015 at paragraph [4]

6. In her affidavit, the Wife deposes to her difficulties in coming to any arrangement with the Husband about parenting issues. She makes the point in paragraphs [7] and following that she receives no financial support from the Husband and as a result has had to purchase many items of furniture and appliances as well as items for the children. She sets out details of these expenses in paragraph [11] of her affidavit.

7. The Wife deposes that she has now commenced employment as a part-time (occupation omitted) and expects to earn approximately $50,000.00 per annum.

8. At the hearing, the Wife maintained her view that the debts claimed by the Husband were not debts arising from the marriage at all. She modified her position from seeking 100% of the remaining assets to 90%.  

Consideration

1. The parties have no legal representation. Their affidavit material is unfocused and replete with submissions and assertions rather than statements of fact.

2. The parties’ communication is seemingly non-existent, either about property or parenting issues, which remain unresolved.

3. There have been two attempts at a Conciliation Conference with a Registrar, both of which have been unsuccessful. The first Conference was appointed for 9^th April 2015. The Applicant Wife did not attend.

4. The second Conference was appointed for 15^th September 2015. Both parties attended on that occasion but the Conference was unsuccessful. The Registrar noted in a memorandum of 15^th September 2015:

   Neither party complied with the Court’s directions for the Conference. The matter did not settle.

5. It appears that the property proceedings need to be set down for a final hearing and the parties will need to provide evidence as to what the asset pool actually is. Until final parenting orders are made and the parties are entirely unable to agree about this situation, it will be well-nigh impossible for the Court to be satisfied that any final orders are just and equitable, as there will be insufficient evidence about the matters that the Court would be required to consider under s.75(2) of the Family Law Act 1975 (Cth).

Applications for Interim Property Orders

1. The decision of the Full Court of the Family Court in Strahan & Strahan (Interim Property Orders)[5] provides guidance to a trial court as to how it should deal with an application for an interim property order, particularly an application for an interim distribution to put a party in funds to meet his or her legal costs.

   [5] (2009) 241 FLR 1; 42 Fam LR 2013; (2011) FLC 93-466; [2009] FamCAFC 166

2. The Full Court said at [132]:

   …(W)hen considering whether to exercise the power under ss 79 and 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.

3. It was submitted in Strahan that it is relevant to consider whether an order would give the applicant “more than they would be indubitably entitled to on a final hearing” or alternatively “would it give them so much that it could not be adjusted on a final hearing?”.[6]

   [6] (2009) 241 FLR 1; 42 Fam LR 203; (2011) FLC 93-466; [2009] FamCAFC 166 at [136] per Boland & O’Ryan JJ

4. Their Honours went on to say:

   We accept the submission and observe that this matter is relevant because the discretion conferred by the power in s 79 is to make such order as the Court considers appropriate provided it is just and equitable to make the order in the circumstances where the power will not be exhausted by the interim order…(T)he interim order must be “capable of alteration at any time prior to, or as part of, the final exercise of the s 79 power”.[7]

   [7] Ibid

The Asset Pool

1. There is no up to date evidence of the total asset pool. What is clear is that there have been funds placed into a controlled monies account held by the wife’s former lawyers, Sage Solicitors. The earlier decision of this Court, made on 19^th December 2014, shows that an amount of $901,557.84 was placed into that account.[8]

   [8] [2014] FCCA 3040 at [3]

2. On 18^th November 2014 the Court ordered that the sum of $191,011.95 was to be paid to the Wife from the funds held in the controlled monies account.

3. On 19^th December 2014, the Court ordered that the following amounts were to be paid out of the funds currently held by Sage Solicitors in the controlled monies account:

   (a)As to the sum of $1647.12 being an amount owing to Energy Australia for power supplied to Property C;

   (b)As to the amount of $7,071.00 being school fees owed to (school omitted); and

   (c)As to the amount of $9,747.00 to (omitted) School, (omitted).

4. There is no evidence of any further amounts having been paid from the funds in the controlled monies account. There is no evidence of the amount of interest that has accrued on the funds.

5. What can be said, however, is that a total amount of $901,557.84 was paid into the account in 2014. The following sums have been paid out:

   a)$191,011.95 by an order made on 18^th November 2014;

   b)$1,647.12 by an order made on 19^th December 2014;

   c)$7,071.00 by order made on 19^th December 2014; and

   d)$9,747.00 by order made on 19^th December 2014.

6. Thus, a total of $209,477.07 has been paid out of the funds in the controlled monies account. By subtracting this amount from the original figure of $901,557.84, it is safe to say that an amount of at least $692,080.77 remains in the controlled monies account, plus interest.

7. As I was satisfied that the amounts paid by the order of 19^th December 2014, totalling $18,465.12, were debts arising from the marriage, that figure should be deducted from the original amount of $901,557.84, bringing it back to $883,092.72.

8. The Wife has already received an amount of $191,011.95, which is slightly under 22% of $883,092.71.

9. The Husband is seeking an amount of $532,926.16, which represents a major part of the funds currently held in the controlled monies account. He claims that this amount relates to outstanding joint debts that were in existence prior to the parties’ separation but it is clear that the following amounts claimed in paragraph [6] of his affidavit are clearly in the way of an interim property distribution:

   a)Purchase of a small motor vehicle:  $10,000.00

   b)Secure a rental property:  $19,500.00

c)Immediate living expenses:  $8,000.00

$37,500.00

1. The Husband has annexed various documents to his affidavit to support his claim that the amounts sought are joint debts.

2. The amount of $4,387.62 represents an amount owing to Energy Australia for electricity supplied to the Property C property. The earlier figure of $1,647.12 was the amount owing for gas.

3. Other figures which appear to be debts are the following:

   a)(omitted) Credit Card                   $27,676.46

   b)(omitted) Bank[9]        $14,620.41

   c)(omitted) Credit Card                   $10,317.05

   d)(omitted) Bank Overdraft             $16,181.17

e)Outstanding school fees to (school omitted) $1,206.00

$70,001.09

[9] Which appears to be owing to (omitted) Bank

1. The Husband claims amounts of $41,818.26 and $21,671.01 owing to (omitted) Finance for the parties’ Mercedes and (omitted) motor vehicles respectively. The Wife states in her affidavit of 4^th June 2015:

   My car was repossessed (his Mercedes has not been returned).[10]

   [10] Affidavit of Mr V 4.6.2015 at [11]

2. While it may be arguable that the amount owing for the (omitted) car that was repossessed was a debt arising from the marriage, if the Husband still has the Mercedes motor vehicle in his possession it would be hardly just or equitable for the Wife to have to bear any share of the debt owing on that vehicle. If the Husband has the car, he should be responsible for the debt.

3. The Husband claims an amount of $17,548.18 for outstanding legal fees. The outstanding legal fees are to Sarah Bevan Family Lawyers, who acted him for him in these proceedings. This amount cannot possibly be a joint debt arising from prior to the parties’ separation or a debt for which the wife should be responsible. It is the Husband’s debt.

4. The Husband, at paragraph [6] of his affidavit of 18^th February 2015, claims amounts owing to pay outstanding debts to family members, creditors and friends:

   Ms M  $14,000.00

   Mr B  $30,000.00

   (omitted)  $25,000.00

   Mr C                $21,000.00

   Mr J                $250,000.00[11]

   [11] Affidavit of Mr G 18.2.2015 at [6]

5. The amounts claimed in respect of Mr B, (omitted) and Mr J were previously considered in the decision of 19^th December 2014[12]. The Husband is attempting to re-argue a matter that has already been decided against him. If the Husband was dissatisfied with the earlier decision, it was open to him to appeal but he did not do so.

   [12] [2014] FCCA 3040 at [39]-[40], [49]-[51]

6. The loan from Mr C of $21,000.00 is covered by an email that forms part of Annexure “H” to the husband’s affidavit of 18^th February 2015. The email clearly shows that Mr C lent the sum of $20,000.00 plus agreed interest of $1,000.00 to the Husband on 6^th February 2015. The Husband deposes in his affidavit at paragraph [17]:

   The recent loan from Mr C in paragraph 4[13] above has been used to pay for (omitted) School school fees for term 1, outstanding interest on Mr J loan and immediate living expenses. This has alleviated the immediate need to appoint a trustee in Bankruptcy.

   [13] sic

7. It is surprising, to say the least, that the Husband is apparently submitting that the Wife should be in some way liable to pay school fees for (omitted) School for Term 1 in 2015, when the parties entered into Consent Orders on 4^th August 2014 providing that the child X would remain enrolled at (omitted) School until the conclusion of 2014 but by 30^th October 2014 (or 30^th September 2014 if the school did not agree) the Father would do all things necessary to inform the school of his intention to withdraw the enrolment of the child from the school from Term 1 2015.

8. If there were fees owing to (omitted)’s for Term 1 2015 they are entirely the Husband’s responsibility. The debt to Mr C is in no way a debt owed by the parties prior to separation.

9. The Husband claims an amount of $14,000.00 owing to Ms M. I am not satisfied that this is a debt for which the Wife should be in any way liable.

10. In my view, the Husband has established that the following amounts are joint debts arising from the marriage:

    a)Energy Australia   $4,387.62

    b)(omitted) Credit Card                     $27,676.46

    c)(omitted) Bank  $14,620.41

    d)(omitted) Credit Card  $10,317.05

    e)(omitted) Bank  $16,181.17

    f)(school omitted)  $1,206.00

g)(omitted) Finance (for the (omitted) vehicle)        $21,671.01

$96059.72

1. It would appear to be appropriate in the circumstances for these amounts, which appear to represent joint debts, to be paid from the funds held in the controlled monies account.

2. The Husband is also seeking amounts totalling $37,500.00 for the purchase of a small motor vehicle, obtaining rental accommodation and immediate living expenses. Such an amount would clearly be regarded as an interim property distribution to the Husband. Similarly, he wishes to pay his former lawyers, Sarah Bevan Family Lawyers, the amount of $17,548.18 which he owes to them for previously acting for him. Whilst this is clearly the Husband’s debt and any payment should be regarded as an interim property distribution to him, it is clearly in the Husband’s interest to pay the debt owing to his former lawyers.

3. This would mean that the Husband would receive an interim property distribution amounting to $55,048.18. This figure is less than 10% of the funds currently held in the controlled monies account and the Husband would hardly be likely to receive less than that at a final hearing.

4. It would be open to each party to seek further interim amounts to cover future legal expenses if they wished to obtain further legal representation. It would appear to be in their best interests to obtain good quality legal advice from lawyers who practice in the Family Law jurisdiction, as their efforts to resolve the matters without representation have not been successful.

1. I will order accordingly. As there are no hearing dates left in my docket prior to the date of my retirement, the proceedings will be transferred to another Judge for allocation of a final hearing date.

I certify that the preceding fifty-two (52) paragraphs are a true copy of the reasons for judgment of Judge Scarlett

Date:  18 April 2016