Martin & Martin
[2024] FedCFamC1F 721
•21 October 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Martin & Martin [2024] FedCFamC1F 721
File number(s): SYC 9918 of 2023 Judgment of: BAUMANN J Date of judgment: 21 October 2024 Catchwords: FAMILY LAW - REVIEW OF SENIOR JUDICIAL REGISTRAR’S DECISION – Review partially successful – Property –Order made by Senior Judicial Registrar to sell the former matrimonial home stayed – Matter to progress to Case Management Hearing with prospect of an expedited final hearing Legislation: Family Law Act 1975 (Cth) s 79
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
Division: Division 1 First Instance Number of paragraphs: 41 Date of hearing: 21 October 2024 Place: Brisbane Counsel for the Applicant: Mr Todd Solicitor for the Applicant: Edwards Moloney Family Law Counsel for the Respondent: Mr Brickwood Solicitor for the Respondent: Uther Webster & Evans ORDERS
SYC9918 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR MARTIN
Applicant
AND: MS MARTIN
Respondent
ORDER MADE BY:
BAUMANN J
DATE OF ORDER:
21 OCTOBER 2024
THE COURT ORDERS UNTIL FURTHER ORDER:
1.That the Respondent wife’s Application for Review filed 2 September 2024 be partially upheld.
2.That Orders 6, 8, 9, 10 and 11(a) of the Orders made 12 August 2024 be stayed pending trial of the substantive issues or until further order of the Court.
3.That the wife shall have exclusive occupation of the real property situated at B Street, Suburb C, New South Wales (“the Suburb C property”) pending further order and that the wife shall within thirty (30) days of the date of this Order produce evidence to the Applicant husband of any arrangements she has negotiated with the mortgagee of the Suburb C property that indicates that the mortgagee will not pursue actions in relation to recovery of interest or principal secured on the Suburb C property within the next six (6) months.
4.That these proceedings be adjourned for Case Management Hearing before the Honourable Justice Campton at 9.30am on 23 October 2024 in the Federal Circuit and Family Court of Australia (Division 1) at Sydney with a view to the Court listing the matter for an expediated trial.
5.That the issue of costs in relation to the Review Hearing on 21 October 2024 be reserved to the trial judge.
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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 Martin & Martin has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
(Settled from the oral reasons delivered)BAUMANN J:
I will allow the wife to rely on the affidavit filed 17 October 2024 and the two affidavits of Ms J filed 17 October 2024. I otherwise, for completeness, allow the husband to rely upon the further affidavits he sets out in his case outline.
Let me make it clear, this is a hearing de novo. I am not limited, of course, to the material that was before the Senior Judicial Registrar. I have read the material, and I propose to allow, on this interlocutory proceeding, those, but I do not regard the wife’s evidence about the husband’s intentions as being evidence that I give any weight to.
I am not allowing her on an interlocutory application to talk about why the husband is doing something. The facts are what the facts are. I give those assertions no weight at all.
REVIEW APPLICATION
The Application before me today involves an Application for Review filed on 2 September 2024 by the wife, Ms Martin, in a sense seeking the Court to review an Order made by Senior Judicial Registrar Osmand published on 12 August 2024. The Review is, in a sense, both opposed by the husband, Mr Martin, but he also seeks by way of his minute of order some variations to the Order made by the Senior Judicial Registrar. As both Counsel who appeared before me today and could not have said anything more in respect of their case than they did – that is, Mr Brickwood for the wife and Mr Todd for the husband – the proceedings before me today are not, in any sense, an appeal of the Senior Judicial Registrar’s decision, but a hearing de novo.
As observed earlier today, and reflected in these ex tempore Reasons and exchanges with Counsel who appeared remotely from Sydney, there is an enormous amount of material that has been relied upon by the parties in their case outlines – my estimate being approximating 1000 pages.
BRIEF CONTEXTUAL HISTORY
The context for where we are today, I think, can be simply stated. It is not particularly controversial.
These parties commenced a relationship in 2000, a relationship which bore three children: Ms D, who is now 20; Ms E, who is 18; and X who is still at school and is 12 years.
The husband works in construction. It seems to me from all the evidence that he was the person who maintained the commercial activities that caused the parties to amass their assets. The wife, on the evidence, appears to have been the primary caregiver of the three children. Although there is a dispute between the parties as to separation – the husband says it occurred in July 2021, the wife says in July 2023 – I am not required to determine that today.
What I do know is that, at least, in October 2023, the conflict between the parties resulted in criminal charges against the husband and an actual manifestation of the conflict. The conflict is clear. The material of the parties is rife with accusations, innuendo, threats, and justifications for actions. Sadly, it can be said that there has been very little disclosure, perhaps, and a lot of heat in this post separation period, whenever it occurred in the relationship.
Of some significance however is that in 2021, when the parties were still, in my view, an intact couple, proceedings were commenced by one of the parties’ entities, F1 Pty Ltd, and/or the husband in the Supreme Court of New South Wales, seeking, amongst other relief, damages in relation to a transaction relating to a building. There is some material before the Court as to those proceedings. They are ongoing. They have been expensive. They have embroiled the wife as a cross-applicant and/or defendant, and they are pending in the Supreme Court and not likely to have a final trial (if there is a mediation which fails) until late 2025 or perhaps even 2026.
Mr Todd of Counsel for the husband did not err with the fact that the parties have incurred, but it does not seem fully paid, legal expenses in respect of Supreme Court proceedings upwards of $600,000 combined. That is some of the debts which they say they now owe to their lawyers.
The proceedings in this jurisdiction were commenced by the husband in December 2023, less than 12 months ago. Since that time, the Court has been seized of a number of applications and interlocutory events and the parties have, on the evidence they have provided to the Court, again incurred significant legal expenses, most of which has not been paid. No doubt, the lawyers who have been engaged by the parties in these proceedings, including Counsel today, have made arrangements suitable in a commercial way with their client. But the costs incurred, both in the Supreme Court and in this Court, must now total well over $1 million.
Concerned with the financial difficulties that the husband says the parties’ commercial activities were in, noting that the primary vehicle for wealth creation was F2 Pty Ltd, the husband in February 2024 made an Application seeking interim relief, including the sale of a former matrimonial home in a delightful suburb called Suburb C. That house, according to Exhibit 1, which was a balance sheet produced to the Senior Judicial Registrar on 14 May 2024, had an estimated value at that stage between $3.5 million (husband) or $3 million (wife). Again, perhaps reflective of the conflict between these parties and their inability to agree on anything, they are even $500,000 apart in their estimates of the value of the home.
Be that as it may, it seems that the Application in the Proceeding was dealt with initially in some ways on 5 April 2024, when a Senior Judicial Registrar made Orders that related to a range of things, including: filing directions; return of items to the husband; transfer to Division 1; sale of assets mostly being things like various vehicles and the like; dealing with Motor Vehicle 1 and applying monies from a controlled moneys account. There is evidence before the Court that those Orders may not have been totally complied with to date. When the matter came back before the Senior Judicial Registrar on 14 May 2024, a hearing as to effectively the issue of whether the home should be sold or not was conducted.
Further evidence was taken by the Senior Judicial Registrar when a limited reopening took place and the interim Judgment was reserved.
At least part of the re-opening of evidence included the wife seeking to rely upon, and she was allowed to rely upon, an affidavit filed on or about 24 May 2024 that brought to the Court’s attention and possibly for the first time the husband, the fact that the wife has been diagnosed with a medical condition and was receiving treatment. She also gave further information about the Supreme Court proceedings.
An interesting aspect of the Order made by the Senior Judicial Registrar on 17 June 2024 was the notation that F2 Pty Ltd was in voluntary administration as and from mid-2024. What we now know, of course, is that that situation changed. It seems to me, in the absence of evidence that full disclosure is made about this (it is reasonable in terms of the lack of trust and conflict between these parties that the husband did not explain to the wife why) on or about mid-2024 the husband entered into a Deed of Company Arrangement (“DOCA”) with the voluntary administrators. He has, in the DOCA, which is part of the husband’s tender bundle today, agreed at paragraph 8.1 of the DOCA to pay to the Deed administrator, “For contributions to the deed fund an amount of $100,000 to be paid by 12 instalments”. They were not equal instalments. They started at a low level with the last instalment in 12 months’ time to be $34,000.
It seems to me, bearing in mind how quickly the payment was made or agreed to be made, that again probably nearly all of those funds were to be used by the administrator for their costs.
After the decision was made by the Senior Judicial Registrar, the wife, as required in the timetable set by the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), and as the wife was entitled to do so, sought to review the Orders made by the Senior Judicial Registrar. Even if there had been reasons for the Senior Judicial Registrar making those Orders – and I think there may have been oral reasons – I would not have read them. This is, as I say, a hearing de novo.
THE ORDERS BEING REVIEWED?
The Orders made by the Senior Judicial Registrar in essence provided for the sale of the Suburb C property. I say that because the Review by the wife and, to the extent that the husband engages in that Review, by the husband did not seek to review Orders 1 to 5 of the Orders made by the Senior Judicial Registrar on 12 August 2024.
Orders 6 to 12 effectively deal with what the Senior Judicial Registrar ordered to be a sale of the Suburb C property. It provided that no later than 15 November 2024, the parties shall sign all such documents necessary to list and thereafter sell the Suburb C property “for the best price reasonably obtainable”, in a manner prescribed by the Order.
The first Order was to list Suburb C property for sale within two months by way of private treaty, and if it did not sell as agreed by the parties in writing, there were other provisions. Order 7 provided in the event that the Suburb C property is not sold by private treaty, within three months from the date it is first listed for sale (and let me stop there by saying, I do not think I have got any evidence that it has actually being listed for sale at the moment) and so even under that Order, there would be three months from now for it to be sold by private treaty – then if not sold by private treaty, a provision is made for it to be sold by auction. Other machinery provisions in relation to the sale of property were made. An important part of the Order of the Senior Judicial Registrar, and this is an order which the husband, by reason of the minute of order he now seeks the Court to make today, determined how those proceeds of sale were to be distributed. As I say, it is the wife’s application that, in fact, the property not be sold.
The husband now, by way of his minute of order, which I will mark as Exhibit 2, provides that after the usual expenses are paid, including the mortgage to the bank, that there be the following payments:
(a)Husband – $150,000 by way of partial property settlement;
(b)Wife – $150,000 by way of partial property settlement;
(c)The sum of $50,000 to the joint account to be allocated and applied towards payment of costs invoiced to the parties by G School in respect of the children’s schooling;
(d)The sum of $280,000 to Uther Webster & Evans’ trust account in respect of costs which have been incurred by the wife in the Supreme Court proceedings;
(e)The sum of $250,000 to H Lawyers Trust Account on account of costs of the Supreme Court proceedings incurred and/or to be incurred by the husband;
(f)The sum of $50,000 to the trust account of Edwards Maloney Family Law in respect of family law proceedings;
(g)The sum of $96,000 to the husband to be applied in satisfaction of all payments to be made in accordance with the deed of company arrangement between F2 Pty Ltd and the administrator; and
(h)The sum of $209,962 in payment of the husband’s income tax and Australian Taxation Office liabilities, with the balance to be held pending Court order.
In my view, the husband’s request for payment of these expenses is relevant to the exercise of my discretion today.
PRINCIPLES
The principles in relation to interim property orders or partial property orders as sometimes called, are well-known. The authorities make it clear that primarily, the power under s 79 of the Family Law Act 1975 (Cth) (“the Act”), these parties having been married, should ideally only be exercised once. It should be exercised in circumstances where the Court has had the benefit of all the evidence, had it tested, and able to determine what orders do justice and equity.
Even if the proceedings before me today are to be described as a form of application under s 114 of the Act, for a mandatory injunction, even that must follow the test of it being just and convenient to do so.
In these ex-tempore Reasons, delivered in the midst of a busy duty day and trial in Brisbane, I do not propose to go through the authorities which Counsel have kindly directed me to. I am familiar with them. They are not controversial.
When this matter commenced this morning, I threw somewhat of a curve ball to the parties. Having read the significant amount of material that I was asked to consider, and now even this morning having ruled on some material which Mr Todd was instructed to oppose, which I did not agree with, I indicated that as a result of discussions with the Case Management Judge for the Sydney Registry where this matter resides, it was indicated that the urgency of this matter would enable the Court to consider, if appropriate, to list the matter for trial in February or March 2025.
That date is important for a couple of reasons, not the least because the Supreme Court proceedings which these parties have been engaged in since 2021 are not going to get a trial until the end of 2025, whereas the proceedings that are now in this Court, having only been commenced in December last year, will have a trial in less than 18 months. That should make it absolutely apparent to the parties that if a trial is given, it has been given priority.
I am satisfied that there are enormous debts that have been created either before or since separation by the parties, either consensually or individually. It is fair to at least observe that the balance sheet, apart from the property at B Street, Suburb C, is an amalgamation of things which might be said almost to be lifestyle assets – cars, including Motor Vehicle 2 which is being sold now; paintings; memorabilia; modest bank accounts, and the like perhaps reflective of parties who may have had at one time a great cash flow, but with very little eye to the financial future of their business.
The levels of superannuation of these parties’ total no more than $44,000, which at their age is a very modest sum. Mr Todd of Counsel says in the exercise of discretion whether to make orders as his client now seeks, it is important to preserve what seems to be, on his client’s position, the major asset, being the interest in the litigation in the Supreme Court that could create a chose in action by way of damages, which could be allegedly as much as $14 million.
Apart from all the legal expenses and other debts which are no doubt piling on the husband (some of which he has created very recently, including the obligation to pay $100,000 to the administrators under the DOCA), the husband says it is absolutely critical that the litigation of the Supreme Court continue, and that can only occur if he can control the litigation. I infer that is if he is not bankrupt because he has a bankruptcy notice apparently issued against him because the Australian Taxation Office wants to pursue him for a debt, some of which on the evidence seems to go back to as far as 2020. The value of the potential claim in the Supreme Court is significantly more than the equity in the home of $2 million.
The wife comes to the argument from a totally different perspective, and in many ways, a personal perspective. As I read her material, it is her position that she says she has really relied upon the husband and his business acumen to manage their affairs for much of the relationship. I do not at this stage enter into the argument about whether or not the relationship was shaped by family violence, coercive control or other behaviour. They are triable matters. But what I do understand is that, and I think it is reasonable to accept, to a large degree, during the course of these parties’ reasonably long relationship, the husband, who worked in construction and a commercially orientated person, developed commercial interests and contracts which created wealth and cashflow to the family.
With so much now either in liquidation or the subject of litigation, it is probably not surprising that the wife who has resided in the home with the children, only one of whom is under the age of 18 now, that she wishes to retain her family home. Mr Todd says it is “inevitable” that the family home will need to be sold. On the current balance sheet, that may well be true, however the wife challenges the current balance sheet. She challenges some of the husband’s business operations and debts created. She says that, in fact, justice and equity will, in her view, enable her to retain the home. That is what a trial will be ultimately about.
As I sit here today, and with the likelihood that, unless Campton J is otherwise persuaded, this matter cannot get a trial in February or March, I am not persuaded, notwithstanding the pressure it will put on the husband who is keen to pay his debts, that it is just and equitable to cause the home to be sold now. I appreciate that that may be something that needs to be dealt with at trial.
I have been concerned that in the midst of these proceedings, the husband has unilaterally created further debts, for example the debt to the administrators under the DOCA and requires that it be paid. I understand the wife raises issues about use of funds prior to separation, as does the husband in relation to loans that might be owed by the parties to the now out of administration entity F2 Pty Ltd. I simply do not have enough evidence to be satisfied that all these debts are true and genuine debts, which will need to be taken into account in accordance with the authorities. I accept that the litigation of the Supreme Court was commenced during the course of the marriage and therefore, at least to some degree, the Court is entitled to infer that was a joint decision. That is, to obtain a reward for efforts done commercially for which they did not receive appropriate payment.
When the relationship broke down, the factors which may have encouraged the parties to pursue litigation, including an understanding that they had the funds from their commercial activities to pay for the litigation, have all changed. Although it is not a determinative factor in this case, the orders of the Senior Judicial Registrar permitted the wife to remain in occupation of the home. I do not understand that to be challenged by the husband so far as her right to occupy the home until it is sold, even on his case, however, the evidence produced by the wife about her recent diagnosis and her desire to run her argument, which although difficult, cannot be said to be fanciful in my view on the evidence at the moment, that she be able to retain the home in some form, persuades me that I will not make an order today that the house be sold.
The wife shall, within 30 days from today, produce evidence to the husband of any arrangement she has negotiated with the mortgagee of the Suburb C property that indicates that the mortgagee will not pursue actions in relation to recovery of interest or principal secured on the Suburb C property within six months. The Reason I will make that order is that, in my view, although interest on the loan will accrue, the equity in the Suburb C property is pretty well-preserved until trial. I do not even begin to conjecture as to whether the property market at Suburb C will see that property increase in value or reduce in value, but at least the interest on the mortgage of about $1.1 million in terms of the equity will not be disproportionate.
So what I propose to do is order, by way of review, is that the operation of Orders 6, 8, 9 and 10 of the Order made 12 August 2024 be stayed pending trial of the substantive issues or further order of the Court.
The wife shall have exclusive occupation of the Suburb C property pending further order.
I will reserve the costs of the Application today to the trial judge. I propose to order that the parties attend a Case Management Hearing before the Honourable Justice Campton in person at 9.30am on Wednesday, 23 October 2024 with a view to the Court considering listing the matter for an expedited trial. I do not think I need to order anything further, but I am happy to hear if anyone thinks I should.
I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of the Honourable Justice Baumann. Associate:
Dated: 11 November 2024
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