MARSHALL & MARSHALL
[2015] FamCA 712
•28 August 2015
FAMILY COURT OF AUSTRALIA
| MARSHALL & MARSHALL | [2015] FamCA 712 |
| FAMILY LAW – PROPERTY – INTERIM PROCEEDINGS – Where the wife seeks a sale of an investment property and in turn a partial property settlement of $30 000 from the proceeds of sale – Where the wife is residing in the home of the maternal grandparents with the children and seeks alternate accommodation – Consideration of sections 75(2) and 79 –Where the release of funds can be readily accounted for in the final distribution of property – Where the Court finds it just and equitable to make the orders sought by the applicant. |
| Family Law Act 1975 (Cth) ss 75, 79, 80 Felice v Felice [2011] FamCA 162 |
| APPLICANT: | Ms Marshall |
| RESPONDENT: | Mr Marshall |
| FILE NUMBER: | SYC | 1221 | of | 2015 |
| DATE DELIVERED: | 28 August 2015 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | McClelland J |
| HEARING DATE: | 29 July 2015 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Jackson |
| SOLICITOR FOR THE APPLICANT: | H A Miedzinski Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Guterres |
| SOLICITOR FOR THE RESPONDENT: | MCW Lawyers |
Orders
That within twenty-eight (28) days, the parties do all acts and things and sign and/or execute all necessary documents, authorities and writings to list for sale the real property situate at and known as B Street, C Town in the State of Victoria, being the property more particularly described as the whole of the land comprising Folio Identifier … (“the Victoria property”) with a licensed Real Estate Agent (“the Agent”) trading in the relevant area and selected by the parties by agreement or failing agreement nominated by the President for the time being of the Real Estate Institute of Victoria at the best price reasonably obtainable and in the following manner:
(a) By listing the Victoria property for sale by private treaty with the Agent;
(b) By listing the Victoria property at a sale price to be agreed upon by the parties or failing agreement then at a price nominated as the fair market value by a licensed valuer nominated by the President for the time being of the Valuers’ Institute of Victoria (“the Valuer”);
In the event that the Victoria property is not sold on or before a date three (3) months from the date of these orders, then the parties shall procure a sale by public auction upon the following terms:
(a) The auctioneer shall be as agreed between the parties, and
(b)In the event that there is no agreement within three (3) months from the date of the orders as to the name of an auctioneer, an auctioneer shall be as appointed by a nominee of the President of the Real Estate Institute of Victoria.
The auction shall take place within five (5) weeks after the deadline for the sale by private treaty; and
The reserve price shall, unless otherwise agreed upon between the parties, be as proposed by the auctioneer.
That upon the sale of the Victoria property, the proceeds of sale are to be applied in order of priority:
(a)all outstanding legal costs owed by the parties, including legal costs on the sale;
(b) all real estate agent commissions relating to the sale;
(c)outstanding council and water rates, and maintenance levies associated with the Victoria property;
(d)the implementation of a discharge of the mortgage currently charged to the Victoria property;
(e) the balance to the wife of an amount up to $30 000; and
(f) should there be any remaining balance after payment to the wife as set out in Order 5(e) above, then that remaining balance to the husband.
The parties shall co-operate at all times with the Agent and meet the Agent’s requests including, but not limited to:
(a) Making keys to the Victoria property available to the Agent;
(b)Allowing inspections of the Victoria property at all reasonable times as requested by the Agent;
(c) Doing or saying nothing to hinder or prevent the sale being effected;
(d)Ensuring that the Victoria property including the grounds are in a neat, clean and presentable condition at the time of inspection by the Agent and prospective purchasers introduced by the Agent;
(e)The signing of all documents requested by the Agent (including a Selling Agency Agreement) in relation to the listing for sale of the Victoria property with the exception of a Contract or Agreement for Sale which has not been advised upon and approved by the solicitors for each of the parties.
That pending the sale of the Victoria property, the husband is to be responsible for the payment of:
(a)Any mortgage repayments charged to the Victoria property as and when they become due for payment on a periodic basis, and;
(b)Any rates, charges, maintenance costs and any other outgoings in relation to the Victoria property.
In the event that, the husband fails to make the required payments referred to in Order 7, and at the time of completion of the finalisation of the sale of the Victoria property, there is monies outstanding in relation to Order 7, and should there be any remaining balance of the proceeds of sale after payment to the wife as set out in Order 5(e), then the parties shall adjust the payments referred to in Order 5(e) and 5(f) above, by deducting from the amount of the proceeds of sale payable to the husband an amount equal to the amount unpaid by him as stated in Order 7, and that amount will be paid to the wife by way of an adjustment.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Marshall & Marshall has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 1221 of 2015
| Ms Marshall |
Applicant
And
| Mr Marshall |
Respondent
REASONS FOR JUDGMENT
Introduction
This matter concerns an application by Ms Marshall (“the wife”) for an interim distribution of property, pending determination of her application for final property orders.
The orders sought are for the sale of an investment property owned jointly by the wife and Mr Marshall (“the husband”) which is located in C Town, Victoria (“the investment property”). The primary order sought by the wife is for the first $30 000 of the net proceeds of the sale (if that can be realised) to be paid to her.
Background
The wife was born in 1968 and is now forty-seven years old. The husband was born in 1970 and is now forty-five years old. The parties commenced cohabitation in August 1997 and were married in 1999. They have two children, D, aged fourteen and E, aged nine.
The parties separated in November 2011 at which time the wife left the matrimonial home in Suburb F and moved in with her parents at their home located in the neighbouring suburb of Suburb G. The wife's evidence is that the accommodation at her parents’ home is less than satisfactory for herself and her two children and she wishes to move out when she has the funds to do so.
The parties have resolved parenting issues with consent orders being entered into on 22 June 2015. Pursuant to those orders the children spend equal time with both parents. When the children spend time with the father, they reside with him in the former matrimonial home at Suburb F. As noted, when the children spend time with their mother, they reside with her in the home of the maternal grandparents.
The wife's case is that she requires an interim or partial distribution of property in order to obtain alternative accommodation. In addition, the wife has expressed an interest in undertaking a course of educational training to enhance her attraction to potential employers.[1]
[1] Affidavit of the wife filed 26 February 2015 at paragraph 171(h).
It is common ground that the investment property was purchased in June 2010 for $210 000. Both parties accept that price is likely to be its current market value. After repayment of the mortgage on the property, the parties have equity of approximately $30 000 if the property is sold at the estimated market value.
Issues
It was common ground between the parties that the task before the Court involves a two-step process. The first step requires the Court to identify whether, on the facts before it, the interests of justice require an interim property order to be made. If the Court determines that to be the case, the second step requires the Court to ensure that any such order is both appropriate and that it is "just and equitable" by reference to the matters set out in section 79 (4) of the Family Law Act 1975 (Cth) (“the Act”) .
It was also common ground between the parties that, if the wife's application for an interim or partial property distribution succeeded, there would be sufficient property remaining to enable a $30 000 interim allocation to be offset, or accounted for, (in terms of dollar value) in the final distribution.
The issues of fundamental difference between the parties were:
·Whether the wife has sufficiently particularised her need to receive the proceeds of an interim or partial property settlement;
·Whether the order sought by the wife to effect the sale of the property is capable of variation or reversal at any time prior to, or as part of, the final exercise of power pursuant to section 79 of the Act; and
·Whether it was just and equitable for the orders to be made in light of the financial circumstances and obligations of each of the parties.
Submissions
Submissions of the wife
Counsel for the wife argued that it was unnecessary for the wife to give precise particulars as to how she intended to utilise the net proceeds of the proposed sale of the investment property. It was sufficient, if adequate information is provided, to establish that the wife's application is, on its face, one of substance.
In any event, it was argued that sufficient particularity had been provided in the wife's supporting affidavit. Counsel argued that, in order to appreciate the reasons provided by the wife for requiring an interim property distribution, it was necessary to have an appreciation of her present circumstances.
In that respect, counsel for the wife noted that she is a forty-seven year old woman who, as a result of not being able to reside in the former matrimonial home, resides with her parents and sleeps in a converted rumpus room with one of her children. He referred to those parts of the wife's affidavit where the wife indicated that her current accommodation is inappropriate and that she intended to "leave [her] parents’ home and set about re-establishing [herself]" but that she was not "in a financial position to do so at present".[2]
[2] Affidavit of the wife filed 26 February 2015 at paragraphs 8, 160, 162 and 171(g).
Counsel further noted the wife's interest in pursuing further education "to enhance [her] attraction to potential employers"[3]
[3] Affidavit of the wife filed 26 February 2015 at paragraph 171(h).
Counsel for the wife therefore argued that the Court should determine the first procedural question in his client's favour. That is, it is in the interests of justice for the interim order to be made.
As noted, the second step then requires to the Court to consider whether making the order is both appropriate and also "just and equitable" in terms of the requirements of section 79. In that respect, counsel for the wife argued that the Court should accede to the wife's application having regard to the parties’ respective contributions to the marriage, household and property - both financial and non-financial. Counsel also argued that a consideration of the parties’ future needs and resources favoured the Court making the orders as sought by his client.
Counsel for the wife submitted that the available pool of financial resources of the marriage available for distribution to the parties at final settlement would be in the vicinity of between $861 002 to $885 000. In that respect, it was argued that, having regard to section 79 and section 75(2), the wife could reasonably expect a final property distribution of between 50 per cent to over 60 per cent. Counsel argued, however, that it was unnecessary for the Court to make a determination of those issues and noted that, even according to the husband's more conservative approach, the wife could expect a property distribution of about $259 000.
In short, counsel for the wife’s argument was that the partial property distribution sought by the wife in this application is considerably less than the wife’s conservative estimate of a likely property settlement.
Submissions of the husband
Counsel for the husband argued that the Court should not exercise its discretion to make an interim order, in this particular case, as a result of the inadequacy of material presented to the Court in support of the wife's application.
Further, it was argued the application seeks not merely an interim departure from a property settlement, but an order that, at least in part, is a final order.
Counsel for the husband did not seek to argue that the investment property was unique as result of some form of emotional attachment on the part of the husband, or that there was an opportunity for the property to substantially increase in value as result of anticipated events. He nonetheless argued that an order to sell the property, at this point in time, would be final insofar as it would remove one of the options available to the Court upon final hearing.
This was particularly significant, it was argued, because the final relief sought by the husband is for the wife to transfer her interest in both the former matrimonial home and the investment property to the husband, with a lump sum financial adjustment being made in the wife’s favour as a consequence.
If an interim order is made in these proceedings, it would occur without the Court considering the totality of evidence that would be available at a final hearing. In that context, counsel for the husband referred to authorities that it is usually in the interests of the Court and the parties for disputes regarding property to be dealt with at the one time and in a final hearing.
As noted, the husband acknowledged that, at a final hearing, it was likely that the wife would receive an amount of at least $30 000 by way of an adjustment in her favour. However, for the Court to make an interim property order, the Court requires more than mere satisfaction that there will be sufficient funds available at final hearing to account for or accommodate the interim distribution.
Counsel for the husband relied heavily on a decision of Riethmuller FM in Wenz v Archer (2008) 40 FamLR 212 at [55] which, in turn, was referred to by Thackray J in Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 at 85,656. Wenz, it was argued, supported the proposition that the Court needs to balance or weigh the identified need for interim orders as against "the benefits of having only one exercise of a s 79 power." This could not be done, counsel for the husband submitted, on the basis of material currently before the Court.
While it was acknowledged that the wife had a legitimate need to find alternative accommodation of her own, the wife did not provide sufficient detail as to the nature of that proposed alternative accommodation. In particular, it was argued that there was no detail of a proposed property if one was to be purchased, nor was there evidence of what deposit was required to purchase the property. Similarly, it was argued that, if it was proposed that the wife obtain rental accommodation, there was no evidence presented in respect to the required bond, how many rooms it would have or where it would be located.
Counsel for the husband acknowledged that, in interim proceedings, the level of consideration is not as detailed as it would be at a final hearing. However, it was contended that the wife had not presented sufficient information as would be required to satisfy the onus, which she carries, of establishing a legitimate need to access the funds at this point in time.
Even though it was acknowledged that the evidentiary task of the Court in considering an interim application is an "imprecise exercise", the wife's case it was argued goes far beyond mere imprecision.
Counsel for the husband acknowledged that the wife had established a need to find independent accommodation for herself and the two children. He also conceded that the Court may reflect differently upon the wife's application if it is renewed and supplemented with more detailed information as to why the sum of $30 000 is needed and, specifically, how it would be applied to secure that new accommodation. However, the possibility of the evidentiary shortcomings being rectified by additional evidence did not justify the Court making the interim orders at this point in time.
If, contrary to the husband's argument, the Court forms the view that this is an appropriate case to exercise the discretion to make interim orders, then it was acknowledged that it was appropriate for the Court to move on to the second stage discussed in Strahan (supra). That stage requires the Court to consider what orders are appropriate and whether it would be “just and equitable” to make the order, pursuant to section 79 of the Act.
In undertaking that task, the Court is required to look at more than the mere fact that the husband is in a superior financial position to the wife. It was argued that the Court should take into consideration the following factors:
·The husband has been responsible for paying the mortgages and outgoings on both properties since separation.
·The Court should consider that it may place the parties in a worse financial position, if an order is made for the investment property to be sold, as there is every possibility that the tenants will move out. This would cause a loss of rental income in circumstance where the husband would remain responsible for the outgoings on the property until such time as it is sold.
·The Court should also have regard to the fact that there is an equal time arrangement in respect to the care of the children and this places its own financial burden on the husband.
·In that context, the husband is paying an amount in excess of his statutory child support obligations, particularly including in respect to therapeutic interventions for the children.
In summary, in respect to the second stage of consideration, counsel for the husband noted that the husband's income is approximately $127 000 per year and this is not a case where the husband's financial resources are so much greater than the wife’s that the Court should assume that the considerations set out section 79(4) and section 75(2) make it just and equitable for an interim partial property settlement order to be made.
The Law
The relevant case law in respect to interim property settlements was summarised by Fowler J in Sresbodan & Sresbodan and Ors [2013] FamCA 480 at [35]-[43]. Drawing upon his Honour’s analysis, and additional authorities as noted below, the following principles are relevant to the Court’s consideration of the application in this matter:
i.Together, sections 79 and s 80(1)(h) confer a power on the Court to make orders for interim property settlement.
ii.Section 79 confers a discreet power to make orders for property settlement and the Court may exercise the power conferred by section 79 through “a succession of orders until the power ... is exhausted” or until a final order dealing with all the known property of the parties is made.[4]
[4] Gabel & Yardley (2008) FLC 93-386, as cited in Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 at [113] at 85, 640.
iii.Section 80 is not in itself a source of jurisdiction for such an order to be made. Rather, the section is an “enabling provision” that provides various ways in which the general power in section 79 may be exercised in individual cases.[5] This includes, by Section 80(1)(h), making “a permanent order, an order pending the disposal of proceedings or an order for a fixed term or for a life or during joint lives or until further order”.
[5] Davidson & Davidson (No. 2) (1994) FLC 92-469; Yunghanns & Yunghanns (2000) FLC 93-029.
iv.There are two stages to the hearing of an application for interim property orders.[6]
[6] Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 at [118] at 85,641.
i)The first stage is a “procedural step” which requires an analysis of whether the circumstances of the case trigger the Court’s power to invoke s 80(1)(h) to make an order for partial property settlement before a final hearing. At this stage, the “overarching consideration” is the interests of justice.
ii)The second stage is the “substantive step” where the provisions of section 79 must be considered and applied but with limitations, given that it is not the final hearing.
v.There is no barrier or threshold requiring an applicant to establish “compelling circumstances” at either the first or second stages of the Court’s consideration.[7]
[7] Ibid at [135] at85,645.
vi.Given that the party is effectively seeking access to their own funds, it is unnecessary for there to be “any detailed inquiry as to the purpose for which the funds are to used.”[8]
[8] Felice v Felice [2011] FamCA 162 at [12].
vii.Sufficient particulars must nonetheless be provided to enable the Court to determine:
i)that the application is “genuine,”[9]
[9] Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 at [227] at 85,657.
ii)to “identify the circumstances that make it appropriate to give consideration to exercising its power”,[10] and;
[10] Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 at [227] at 85,657 and see Sresbodan & Sresbodan and Ors [2013] FamCA 480 at [51].
iii)to sufficiently weigh the identified need “against the benefit of having only one exercise of a s.79A power”.[11]
[11] Ibid at 85-656 citing with approval of Reithmuller FM in Wenz v Archer (2008) 40 FamLR 212.
viii.While the usual section 79 considerations apply to the second stage of the process, a detailed analysis of those considerations is not required in an interim hearing.
ix.Nevertheless, because the very nature of an interim hearing is such the Court is not in a position to properly evaluate the evidence, the Court should take a conservative approach including in respect to determining whether there are likely to be sufficient resources of the parties available at final hearing to accommodate any “adjustment issue”.[12]
[12] Harris & Harris (1993) FLC 92-378 at 79,929-79,930.
x.After completion of the first two stages, it is then necessary to focus on that “adjustment issue”. In terms of quantum, it is necessary to consider “whether an interim property order would give a party so much that it could not be adjusted on a final hearing.”[13]
[13] Harris & Harris (1993) FLC 92-378 at 79,930 and its importance was also stressed by the Full Court in Zschokke &Zschokke (1996) FLC 92-693.
xi.In terms of form, such an order must be of a nature that it is “capable of alteration at any time prior to, or as part of, the final exercise of the s 79 power.”[14]
[14] Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 at 85,646 citing Finn J in Gabel v Yardley (2008) FLC 93-386.
xii.In that respect, the interim order “must be capable of variation or reversal without resort to s 79A of the Act or appeal”.[15]
[15] Ibid at 85,646 citing Bryant CJ and Coleman J in Gabel vYardley (2008) FLC 93-386.
xiii.An applicant is required to show more “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”.[16]
[16] Ibid at 85,646.
xiv.The exercise of the jurisdiction should be conducted in the context of and with an appreciation that “as a generality, the interests of the parties and the Court are better served by there being one final hearing of section 79 proceedings.”[17]
[17] Ibid at [223] at 85,656 citing Harris & Harris (1993) FLC 92-378.
xv.The overriding consideration at all stages of the process is that the Court is satisfied that it is “just and equitable” to make the order in circumstances before the Court.[18]
[18] Stanford & Stanford (2012) 93-518 at 86,640 – 86,642.
xvi.In evaluating the competing contentions, it is necessary to have some regard to the fact that, in family law proceedings, one party may have the predominance of resources.[19]
[19] Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 at 85,643 quoting Wenz v Archer (2008) 40 FamLR 212.
xvii.Perhaps the most common situation in which the Court will be prepared to entertain an application for interim property orders is when the party with access to the least resources requires funds to conduct their own litigation, that is, to effectively even out the legal playing field.[20]
[20] Ibid at 85,631 and cases referred to therein.
While the majority of cases in which interim property orders have been made relate to applications to obtain funds to conduct litigation, that is by no means the only instance where such orders of been made. Other instances include:
i)situations where a party may need access to resources “to meet debts which may result in the party being pursued by creditors”,[21] or
ii)the “need for the party to make payments to the benefit of the children”,[22] or
iii)to “take advantage of other financial opportunities (for example superannuation contribution case)”,[23] or
iv)where the parties consent,[24] or
v)where there are “urgent situations” such as;
(i)“where it is necessary to exercise this power if injustice to be avoided. Examples include cases where it is necessary to do so to avoid an asset being eroded or lost in the intervening period, and
(ii)cases (beyond the maintenance power) where an order in favour of one party is necessary to preserve or obtain a home for or is otherwise necessary for the welfare of the children.”[25](Emphasis added)
[21] Strahan at 85,643 quoting Wenz v Archer (2008) 40 FamLR 212
[22] Ibid.
[23]Ibid.
[24] Harris & Harris (1993) FLC 92-378 at 79,929 –79-930.
[25]Ibid.
Consideration
It is to the credit of counsel for the husband that he acknowledged, on behalf of his client, that the wife’s current accommodation at her parent's home is unsatisfactory.
There was no real issue taken with the wife’s statement that:
I would describe my standard of living in all the circumstances, as average. I sleep in the converted rumpus room in the [Suburb G] home. I share a room with [E] during the times when he is living with me. Almost everything in the [Suburb G] home belongs to my parents. The overwhelming majority by furniture and possessions remain in the former matrimonial home.[26]
[26]Affidavit of the wife filed 26 February 2015 at paragraph 171(g).
In his affidavit filed 17 June 2015, the husband also expressed some concern regarding the appropriateness of the wife's accommodation at those times when she has care of their children. At paragraph 33, he states:
[Ms Marshall] lives in her parents three-bedroom home with her parents. [D] has a room of her own when she stays there. [E] shares the rumpus room with [Ms Marshall]. [E] often complains to me: "Mum wakes me up during the night she snores a lot."
And:
"I don't like going into my room when Mum and [Mr H] are laying on the bed together."
The reference to Mr H is a reference to the wife's current partner, who lives at a separate residence but visits the wife and children from time to time at the wife's parents’ home.
In her affidavit filed 23rd February 2015, the wife states that:
I do not intend to remain living at the [Suburb G] home. I intend, when I can afford to do so, to move into a place of my own.[27]
[27] Ibid at paragraph 8.
The Court finds that the wife has established the need for alternative accommodation. She is a forty-seven year old woman with responsibility for sharing the care of her two children. She is also in a new relationship and is entitled to a level of privacy that is not available in her parents’ home.
The wife is entitled to make plans to readjust her life following separation from the husband. In circumstances where it is acknowledged there is sufficient property available, she is entitled to obtain a distribution to enable her to obtain her own accommodation to do that.
Having established a genuine need for funds to obtain alternative accommodation, it is unnecessary for the wife to provide the degree of particularity suggested by counsel for the husband.
It is noted the husband has indicated a desire to retain the investment property in any final settlement orders. Sale of the property now would necessarily prevent that from occurring. However, while it is the case that the sale of the investment property will necessarily be final, it has not been established that there is any particular significance to the property in terms of emotional connection or some unique potential advantage that has not yet materialised. Indeed it appears that the property has not increased in value over the last five years and there was no evidence that this will materially change in the future.
The funds so released by the sale of the property can readily be accommodated and accounted for in orders distributing the property of the marriage after final hearing. An event which both parties acknowledge should occur and which will result in a distribution in favour of the wife that is considerably in excess of the amount of $30 000 which is the subject of the interim order.
In addressing the second stage referred to in Strahan (supra), the Court has considered sections 79(4) and 75(2). In that respect the Court notes, in particular, the higher income and earning capacity of the husband (section 75(2)(b)) as well as the wife’s responsibilities for the shared care of the children (section 75(2)(c)). In all the circumstances, the Court finds the justice of this case requires the wife to have access to funds to enable her to obtain her own accommodation (section 75(2)(o)).
Having regard to the facts and circumstances, which are outlined in the parties’ affidavits and which have been addressed by counsel in submissions, the Court is satisfied that it is just and equitable to make the orders sought by the applicant wife in this matter.
I certify that the preceding forty-five (45) paragraphs are a true copy of the reasons for judgment of the Honourable Justice McClelland delivered on 28 August 2015.
Associate:
Date: 27.08.2015
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