Naoumova & Severijns
[2024] FedCFamC1F 580
•30 August 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Naoumova & Severijns [2024] FedCFamC1F 580
File number(s): SYC 5811 of 2022 Judgment of: BEHRENS J Date of judgment: 30 August 2024 Catchwords: FAMILY LAW – INTERIM PROPERTY – SPOUSAL MAINTENANCE – Where the Applicant seeks an interim property distribution and spousal maintenance – Where an order for interim property distribution is made – Where the Court is not satisfied that the Applicant is unable to support herself adequately – Where no order is made for spousal maintenance. Legislation: Family Law Act 1975 (Cth) ss 90SB, 90SD, 90SF, 90SM, 90SK, 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 r 5.08
Cases cited: Bevan and Bevan (1995) FLC 92-600; [1993] FamCA 95
Hall v Hall (2016) 257 CLR 490; [2016] HCA 23
Redman and Redman (1987) FLC 91-805; [1987] FamCA 2
Ruslan & Ruslan [2024] FedCFamC1F 50
Division: Division 1 First Instance Number of paragraphs: 46 Date of hearing: 13 August 2024 Place: Sydney Counsel for the Applicant: Mr Todd Solicitor for the Applicant: Broaden Legal Counsel for the Respondent: Mr Dura SC Solicitor for the Respondent: JC Legal Practice ORDERS
SYC 5811 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS NAOUMOVA
Applicant
AND: MR SEVERIJNS
Respondent
ORDER MADE BY:
BEHRENS J
DATE OF ORDER:
30 AUGUST 2024
THE COURT ORDERS THAT:
1.The Applicant’s application for maintenance contained in her Amended Application in a Proceeding filed 25 July 2024 is dismissed.
2.Within 21 days of the date of these orders, the First Respondent shall pay into the Applicant’s solicitor’s trust account the sum of $136,400 by way of interim property distribution pursuant to s 90SM of the Family Law Act 1975 (Cth) (“the Act”), with such sum to be applied only by way of legal costs and disbursements.
3.In the event either party seeks a costs order in their favour in respect of the Amended Application in a Proceeding filed 25 July 2024:
(a)That party must file and serve an Application in a Proceeding and affidavit within 14 days of the date of these orders;
(b)The other party must file a Response to Application in a Proceeding and an affidavit within 14 days thereafter;
(c)Within a further 14 days both parties shall file brief written submissions and will indicate in those written submissions whether that party agrees for the costs matter to be dealt with in chambers based on the material filed; and
(d)If there is no agreement between the parties as to the matter being dealt with in accordance with paragraph (c) then the Application in a Proceeding will be listed before Justice Behrens on a date to be advised.
4.This matter is allocated to the docket of Justice Behrens and is listed in a callover in the first half of 2025 on a date to be advised for allocation of trial dates.
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 Naoumova & Severijns has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BEHRENS J:
INTRODUCTION
These reasons for judgment deal with an Amended Application in a Proceeding filed 25 July 2024 (“the Application”).
BACKGROUND
The applicant and first respondent in these financial proceedings are Ms Naoumova and Mr Severijns. There is a dispute between them as to when their de facto relationship commenced. Ms Naoumova says that it commenced in 2014 and broke down in 2021 and therefore was of about seven years’ duration. Mr Severijns says that it commenced in 2018 and agrees that it broke down in 2021 – so a de facto relationship of about three years’ duration. Ms Naoumova and Mr Severijns were ordinarily resident in New South Wales during their de facto relationship. They do not have any children. Ms Naoumova is 35 years old and Mr Severijns is 43 years old. Ms Naoumova is employed as a finance professional. Mr Severijns operates businesses. The parties agree that the net value of their assets is a little over $6 million, although there are considerable disputes about the ownership and value of various items on the balance sheet. The balance sheet includes claimed add-backs in Ms Naoumova’s column of about $633,000 and add-backs in Mr Severijns’s column of about $700,000.
Ms Naoumova commenced the substantive proceedings on 19 August 2022. She joined Mr Severijns’s parents, Mr Jelen and Ms Utkina, to the substantive proceedings by her Initiating Application. They are the second and third respondents to the substantive proceedings. Ms Naoumova seeks final orders in respect of a property which Mr Severijns transferred to the second and third respondents after separation. The second and third respondents were excused from attending in relation to the Application as no orders were sought against them.
Ms Naoumova first sought interim spousal maintenance and a partial property settlement by way of an Application in a Proceeding filed 22 September 2023. That Application was listed for interim hearing on 18 December 2023. The parties were able to reach agreement on that occasion and an order for Ms Naoumova to receive $40,000 by way of partial property settlement was made by consent. The parties also agreed to attend mediation, and that occurred in 2024, but the matter did not resolve. Ms Naoumova then filed an Amended Application in Proceeding on 25 July 2024 seeking that Mr Severijns pay her interim periodic maintenance in the sum of $1,804 per week and that he pay to her solicitor’s trust account an amount of $143,000 “as legal funding”. The Case Outline filed on her behalf on 12 August 2024 clarified that the order for “legal funding” was sought pursuant to s 90SM of the Family Law Act 1975 (Cth) (“the Act”) or, in the alternative, pursuant to s 117 of the Act.
MATERIAL BEFORE THE COURT
Case Outlines on behalf of, respectively, Ms Naoumova and Mr Severijns were filed on 12 August 2024 and relied upon.
In support of her case Ms Naoumova relied upon the following documents:
(1)Second Further Amended Initiating Application filed 25 July 2024;
(2)Amended Application in a Proceeding filed 25 July 2024;
(3)Her affidavit filed 25 July 2024 (excluding annexures);
(4)Financial Statement filed 25 July 2024;
(5)Affidavit of Mr B filed 25 July 2024;
(6)Affidavit of Ms C filed 8 February 2023; and
(7)Documents tendered during the proceedings and marked as Exhibits W1–W4.
In support of his case Mr Severijns relied upon the following documents:
(1)Response to Application in a Proceeding filed 8 August 2024;
(2)His affidavit filed 8 August 2024 (excluding annexures);
(3)Financial Statement filed 8 August 2024;
(4)Affidavit of Ms C filed 31 January 2023; and
(5)Documents tendered during the proceedings and marked as Exhibits H1–H11.
The joint balance sheet handed up at the commencement of the hearing became the Court’s Exhibit C1. There were some differences between the balance sheet filed on 12 August 2024 and the joint balance sheet which became Exhibit C1.
I have also had regard to the parties’ respective Costs Notices filed 12 August 2024.
The affidavits of the parties contained detailed evidence about the parties’ conduct towards each other. The affidavit filed by Mr Severijns was 37 pages in length and thus did not comply with the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (r 5.08). At my direction counsel conferred prior to submissions and significant passages of both parties’ affidavits were not read.
PRELIMINARY OBSERVATIONS
Counsel for Ms Naoumova confirmed that, notwithstanding the Court had previously made a notation indicating the need for an interpreter for any final hearing, she was not in need of an interpreter for the interim proceedings.
These are interim proceedings and the orders the Court is asked to make are interim orders. That has at least three significant consequences for the decision-making process the Court must engage in. The first is that the evidence is untested, and the Court must therefore proceed cautiously in making any findings of fact. The second is that “the evidence need not be so extensive and the findings not so precise” (Redman and Redman (1987) FLC 91-805 at 76,081 (“Redman”)) as would be the case in relation to the making of final orders. The third is that interim orders are “intended to be reconsidered” (Redman at 76,081) as part of the process of making final orders. Relatedly, there will be an opportunity for the terms of the interim orders to be taken into account in any agreement the parties reach about final terms of settlement and by the Court in making final orders.
It is uncontested that the “threshold requirements” for making maintenance and property orders in a de facto financial cause (ss 90SB, 90SD and 90SK of the Act) are met.
SHOULD I MAKE AN ORDER FOR INTERIM SPOUSAL MAINTENANCE?
Legal principles
The Court’s power to make a maintenance order after a de facto relationship has broken down is found in s 90SE of the Act. Section 90SF sets out the matters to be taken into consideration in relation to maintenance as follows:
90SF Matters to be taken into consideration in relation to maintenance
(1) In exercising jurisdiction under section 90SE (after being satisfied of the matters in subsections 44(5) and (6) and sections 90SB and 90SD), the court must apply the principle that a party to a de facto relationship must maintain the other party to the de facto relationship:
(a) only to the extent that the first‑mentioned party is reasonably able to do so; and
(b) only if the second‑mentioned party is unable to support himself or herself adequately whether:
(i) by reason of having the care and control of a child of the de facto relationship who has not attained the age of 18 years; or
(ii) by reason of age or physical or mental incapacity for appropriate gainful employment; or
(iii) for any other adequate reason.
Note: For child of a de facto relationship, see section 90RB.
(2) In applying this principle, the court must take into account only the matters referred to in subsection (3).
(3) The matters to be so taken into account are:
(a) the age and state of health of each of the parties to the de facto relationship (the subject de facto relationship); and
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c) whether either party has the care or control of a child of the de facto relationship who has not attained the age of 18 years; and
(d) commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain; and
(e) the responsibilities of either party to support any other person; and
(f) subject to subsection (4), the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia; and the rate of any such pension, allowance or benefit being paid to either party; and
(g) a standard of living that in all the circumstances is reasonable; and
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(i) the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k) the duration of the de facto relationship and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l) the need to protect a party who wishes to continue that party’s role as a parent; and
(m) if either party is cohabiting with another person—the financial circumstances relating to the cohabitation; and
(n) the terms of any order made or proposed to be made under section 90SM in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
(o) the terms of any order or declaration made, or proposed to be made, under this Part in relation to:
(i) a party to the subject de facto relationship (in relation to another de facto relationship); or
(ii) a person who is a party to another de facto relationship with a party to the subject de facto relationship; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(p) the terms of any order or declaration made, or proposed to be made, under Part VIII in relation to:
(i) a party to the subject de facto relationship; or
(ii) a person who is a party to a marriage with a party to the subject de facto relationship; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(q) any child support under the Child Support (Assessment) Act 1989 that a party to the subject de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the subject de facto relationship; and
(r) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(s) the terms of any Part VIIIAB financial agreement that is binding on either or both of the parties to the subject de facto relationship; and
(t) the terms of any financial agreement that is binding on a party to the subject de facto relationship.
The High Court in Hall v Hall (2016) 257 CLR 490 (“Hall v Hall”) set out what must be established for an application for an interim maintenance order to be successful. That case was concerned with the provisions which apply in relation to parties who are or have been married (ss 72, 74 and 75(2)). The equivalent provisions for de facto relationships are almost identical and the approach to them should be as set out in Hall v Hall. The High Court stated at [8]:
Unlike a court exercising the power to make an urgent order conferred by s 77, a court exercising the power to make an interim order under s 74(1) must be satisfied of the threshold requirement in s 72(1) and must have regard to any matter referred to in s 75(2) that is relevant. No doubt, on an application for an interim order “[t]he evidence need not be so extensive and the findings not so precise” as on an application for a final order. But there is nothing to displace the applicability to an exercise of the power conferred by s 74(1) of the ordinary standard of proof in a civil proceeding now set out in s 140 of the Evidence Act 1995 (Cth). A court determining an application for an interim order under s 74(1) cannot make such an order without finding, on the balance of probabilities on the evidence before it, that the threshold requirement in s 72(1) is met having regard to any relevant matter referred to in s 75(2).
(References omitted)
Am I satisfied that Ms Naoumova is unable to support herself adequately?
It is convenient to deal first with the threshold question of whether I can be satisfied on the balance of probabilities that Ms Naoumova is unable to support herself adequately and for an “adequate reason”, having regard to the matters in s 90SF(3). The onus is on Ms Naoumova to establish this.
There was no evidence before me which indicated a need to consider any of the following subsections of s 90SF(3) :(a), (c), (d)(ii), (e), (f), (h), (i), (l), (m), (o), (p), (q), (s) or (t). No submissions were made that related to those subsections. My decision turns largely on the evidence and any findings I can make about the parties’ respective income, property and financial resources (s 90SF(3)(b)) and the commitments of each of them necessary to support themselves (s 90SF(3)(d)). I also refer in these reasons to matters I have considered pursuant to subsections (g) and (j).
Ms Naoumova’s financial circumstances and necessary commitments
Ms Naoumova is employed on a full-time basis as a finance professional in work similar to the work she has previously engaged in. She earns approximately $75,000 gross per annum in that position. Counsel for Mr Severijns did not take issue with the submissions of counsel for Ms Naoumova that Ms Naoumova is “gainfully employed” and “diligently exercising her capacity” and that Ms Naoumova was previously employed during the relationship in the business in a similar role and at a commensurate salary. There was no evidence which would support a finding that Ms Naoumova’s earning capacity has been affected by the de facto relationship (a relevant factor under s 90SF(3)(k)).
On the face of Ms Naoumova’s Financial Statement filed 25 July 2024, her weekly personal expenditure ($3,876) exceeds her total average weekly income ($2,072). The amount of maintenance sought is the difference between those two figures, namely $1,804 per week. Ms Naoumova’s evidence is that her weekly income is made up of wages of $1,442 and rent of $630.
The Court was invited by counsel for Mr Severijns to find that:
·Ms Naoumova has made various “choices” about the structure of her financial affairs and that it is those choices that result in her significant expenses apparently exceeding her income; and
·Ms Naoumova has misrepresented her financial circumstances in several ways.
Those submissions were supported by the evidence set out in the paragraphs below.
Ms Naoumova’s rental income is in respect of an investment property in her sole name at Town D (“the Town D property”), which is negatively geared. The expenses associated with that property include a mortgage loan repayment of $1,028 per week. Ms Naoumova’s evidence is that she purchased the Town D property in her sole name in 2015. The parties have never lived in this property. I accept the submission of Counsel for Ms Naoumova based on the authority of Bevan and Bevan (1995) FLC 92-600 that it would not be reasonable for Ms Naoumova to be required to sell that property, which has modest equity. In any case, on 1 June 2023 by consent this Court ordered that Ms Naoumova be restrained on an interim basis from selling the Town D property. There was, however, no evidence before the Court in relation to Ms Naoumova’s decision to maintain the Town D property as an investment property, rather than, for example, living in that property. Relevant to my decision is “a standard of living that in all the circumstances is reasonable” (s 90SM(3)(g)). The Town D property is being treated in the same way as it was during the relationship and the submission was made that it is therefore reasonable for Ms Naoumova to continue to make a loss on that property, and to continue receiving the associated tax benefits. During their relationship, the parties had no need of the Town D property as a home. The circumstances now are different. In the absence of any evidence other than that renting out the Town D property was what occurred during the relationship, I am unable to find that it is reasonable for Ms Naoumova to maintain the Town D property as a rental property with the financial commitments that involves.
Ms Naoumova also owns, with her mother Ms C, a half-share in a property at Town E (“the Town E property”). Her evidence at paragraph 95 of her affidavit filed 24 July 2024 is that “[t]he [Town E] property is managed by my mother. My mother collects all rent and make all mortgage repayment for the [Town E] property. The relationship between my mother and I have broken down. My mother seldomly speak with me”. Ms Naoumova gives no evidence about the amount of rent received nor the expenses payable in respect of the Town E property. Tendered in Mr Severijns’s case were ownership statements for the Town E property for the period early 2024 to mid-2024 (Exhibit H2). They show the rent payable on the Town E property. There is no evidence as to whether the expenses (including mortgage loan payments) exceed that amount and, if so, by how much. There is also no evidence about what steps Ms Naoumova has taken to assert her entitlements to rent. I therefore find that Ms Naoumova has property and an unexploited financial resource of unknown value in her half-share of the Town E property.
Counsel for Mr Severijns also tendered certain paragraphs from an affidavit of Ms Naoumova filed on 28 April 2023 (Exhibit H1). In that affidavit, Ms Naoumova gave evidence that Ms C was then holding $130,000 on her behalf, which Ms Naoumova sent to Ms C in or about 2020. Ms Naoumova gave no evidence about any efforts she has made to recover that money. Further, in her Financial Statement filed for the purpose of this Application, Ms Naoumova does not list any money owed to her by Ms C as an asset, but does claim as a liability $150,000 owed to Ms C. Tendered in Mr Severijns’s case were emails between Ms Naoumova and Ms C, in which Ms Naoumova sought the return of money to her (Exhibit H3). This included an email from Ms C to Ms Naoumova which included the words “[c]onsidering speed and convenience, I will give you the money in person on Monday evening, and I hope that you will write a receipt, and sign your name and date”. Ms C filed an affidavit on 31 January 2023 to the effect that she had returned the $130,000 to Ms Naoumova. Subsequently, on 8 February 2023 Ms C filed an affidavit to the effect that she did not understand the contents of that document when she signed it and that “[t]hese contents are not true and correct”. The evidence given by Ms C is opaque. She does not say which aspects of her evidence are not true and correct. She does not give any specific evidence in relation to the issue of the $130,000. She does not, for example, give evidence that she still holds the $130,000 for Ms Naoumova. I therefore find that either Ms Naoumova is owed $130,000 by Ms C, or Ms Naoumova has been repaid that money. In one case, that money is an unexploited financial resource available to Ms Naoumova, in the other it is a financial resource which has not been accounted for.
Tendered in Mr Severijns’s case were payslips for Ms Naoumova (Exhibit H4). These show that Ms Naoumova receives superannuation benefits in addition to her wage of $75,000 per year. Notwithstanding this, Ms Naoumova included in Part G of her Financial Statement as personal expenditure $159 per week paid to Super Fund 1 without including the superannuation contribution she receives as a benefit to her. Ms Naoumova therefore misrepresents her financial situation in this respect. No submission was made to the contrary. The misrepresentation may of course have been a mistake. I find that, in respect of superannuation, Ms Naoumova has overstated her commitments by $159 a week.
Also tendered in evidence and marked as Exhibit H5 was a residential tenancy agreement entered into by Ms Naoumova in 2023 for 12 months in respect of a one-bedroom apartment in Suburb G (“the Suburb G property”), and pursuant to which the rent was $560 per week. Tendered and marked as Exhibit H6 is a residential tenancy agreement entered into by Ms Naoumova in respect of a different property in 2024 for 12 months pursuant to which the rent is $850 per week. That copy was redacted, but the unredacted copy was tendered in Ms Naoumova’s case and marked as Exhibit W4. That property is a two-bedroom property. There was no evidence before me about why the prior lease had been terminated, nor as to why it was reasonable, having rented a one-bedroom property for $560 per week, to then rent a two‑bedroom property for one person at a cost of $850 per week. I am unable to find that rental of $850 a week is a necessary or reasonable commitment of Ms Naoumova.
Also tendered and marked as Exhibit H7 was a Statement of Account for a credit card in Ms Naoumova’s name. The statement dated 2024 shows “new debits” incurred by Ms Naoumova during a monthly period in mid-2024 on that credit card of nearly $6,167, including a significant number of transactions through what it was agreed at the hearing is an online Asian marketplace. There was no explanation in evidence for that expenditure.
Tendered and marked Exhibit H8 are transaction lists and statements for a Commonwealth Bank account in the Ms Naoumova’s name for a period in 2024. These show significant unexplained deposits to the account which appear to be in addition to rent and wages. In mid‑2024, for example, there were deposits to that account, including wages and rent, totalling over $16,000. Later in 2024 there were lump sum deposits, including wages and rent but excluding a rental bond, of nearly $16,000. There was no explanation in evidence for the fact that those deposits significantly exceed Ms Naoumova’s declared income of $8,288 a month and so no relevant submission was able to be made by counsel for Ms Naoumova.
Given the evidence summarised in paragraphs 27 and 28 I am unable to find that Ms Naoumova’s only source of funds to support herself is the income that she has declared on her Financial Statement.
If this matter does not settle these will be matters which will be explored in cross-examination with Ms Naoumova and Ms C. As it stands, given the findings I have made above, I cannot be satisfied on the balance of probabilities that Ms Naoumova is unable to support herself adequately in circumstances where I will make an order for interim property distribution which will cover her ongoing legal costs (a relevant factor under s 90SM(3)(n)). Ms Naoumova has not discharged the relevant onus on her.
The application for maintenance is dismissed.
SHOULD I MAKE AN ORDER FOR INTERIM PROPERTY DISTRIBUTION?
Legal principles
Deputy Chief Justice McClelland has recently set out the relevant principles that apply when considering whether to make an interim property order in Ruslan & Ruslan [2024] FedCFamC1F 50. His Honour references sections of the Act which apply to marriages, but the same approach is appropriate in matters involving de facto relationships. At [29] his Honour sets out as follows:
(1)The exercise of discretion: ss 79 and 80(1)(h) of the Family Law Act 1975 (Cth) (“the Act”) confer power on the Court to make orders for a partial distribution of property prior to the final hearing. That is:
(a) Section 79 confers a discrete power to make orders for property settlement and the Court may exercise that power 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…
(b) 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 s 79 of the Act may be exercised in individual cases.... This includes, by s 80(1)(h), the making of “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”.
(2)There are three stages to the hearing of an application for interim property adjustment orders:
(i)The first two stages were described in Strahan…, with the first being a “procedural step” which requires an analysis of whether the circumstances of the case triggers the Court’s power to invoke s 80(1)(h) of the Act to make an order for partial property adjustment. At this stage, the “overarching consideration” is the interests of justice: Strahan at [132].
(ii)The second stage is the “substantive step”, where the provisions of s 79 must be considered and applied, but with limitations, given that it is not the final hearing.
(iii)The third stage, although not necessarily to be considered in this order, is to assess whether the applicant for relief has discharged the persuasive burden referred to in Medlow & Medlow…, of establishing that there are sufficient assets available to satisfy the order sought without prejudicing the other party (“the Medlow onus”). In that respect, the Full Court said:
The onus was clearly upon [the applicant for relief] to establish that there were sufficient assets available for the interim distribution and that the effect of any interim order was capable of being reversed as part of the final hearing or at least would not defeat [the respondent’s] property claim. The onus was not on the [respondent] to adduce such evidence.
(iv)Moreover, the evidence required to discharge the Medlow onus is such that the Court should be “comfortably satisfied” of the sufficiency of assets to ensure that the applicant would receive, at final hearing, no less than the amount sought by way of interim property distribution….
(3)Even if there is sufficiency of evidence to discharge the Medlow onus, that is not the end of the matter. An applicant seeking orders for partial property distribution 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”...
(4)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 the circumstances.... The determination of that issue should not be approached on the basis of an assumption “that one or other party has the right to have the property of the parties divided between them”…. This applies to an application for an order for a partial distribution of property in interim proceedings as much as it does to an application for the adjustment of property at the final hearing of the matter.
(5)In applying these considerations, the exercise of the Court’s jurisdiction should be conducted 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 s 79 proceedings”….
(6)Additionally…the Court, the parties and their legal advisers are required to have regard to the “overarching purpose” set out in s 67 of the FCFCOA Act, which includes the public interest of ensuring that disputes are resolved “as quickly, inexpensively and efficiently as possible”. …it will usually be the case those principles are best served by one rather than a multiplicity of hearings…
(7)As a related issue, the manner in which the party seeking a partial property distribution has conducted the proceedings will also be relevant. Most relevantly, that includes the extent to which the party and or their legal advisers have complied with their obligations pursuant to ss 67 and 68 of the FCFCOA Act to promote the overarching purpose by keeping costs to a reasonable and proportionate amount. To do otherwise, simply provides additional resources to the party to engage in ongoing “lawfare” at a likely disproportionate cost to the parties and to taxpayers.
(8)The party seeking the relief carries the persuasive burden of satisfying the Court that the circumstances of the case are such that the Court should exercise its discretion in their favour…
(9)Circumstances in which the Court has made an order for partial property distribution include, but are not necessarily limited to, where one of the parties has a monopoly in terms of access to the finances and resources of the parties such that they have a significant advantage in the litigation and, conversely, the other party is significantly disadvantaged.
(10) It is unlikely that the Court would grant such relief in circumstances where to do so would “potentially defeat any party’s claim or legitimate expectations in a final hearing”.
…
(12)Finally, among the matters that the Court may take into consideration in the exercise of its discretion is the proximity of the final hearing dates and the complexity of the issues involved in determining the likely ability of the Court to, if necessary, ‘claw back’ the funds released by way of interim property settlement...
(References omitted)
Application to this case
It is convenient in this matter to deal first with the question of whether there are sufficient assets available to satisfy the order sought without prejudicing the other party. As the summary above reveals, there are two questions involved in this inquiry. First, are there sufficient assets available for the interim distribution? Second, am I comfortably satisfied that Ms Naoumova would receive at final hearing no less than the amount of the interim distribution?
The joint balance sheet (Exhibit C1) reveals that there are assets of at least $6 million available to the parties.
Mr Severijns operates a business through Severijns Projects Pty Ltd which had gross income of approximately $7.4 million in the 2023–24 financial year, although with total expenses of $7.2 million (Exhibit H11).
Mr Severijns’s evidence is that he holds $294,190 in an account which is offset against the mortgage loan secured over a property he owns at Suburb H (“the Suburb H property”). Mr Severijns’s evidence is that he took this money out of the business and that “[w]hen [Severijns Renovations Pty Ltd] needs cash flow to pay for GST or company expenses, I will transfer the money back to the company’s bank account” (Mr Severijns’s affidavit filed 8 August 2024, paragraph 124). Mr Severijns does not give the evidence necessary to close this loop – namely as to the current balances in his business accounts and whether they are sufficient to meet the upcoming expenses about which he gives evidence. Neither the joint balance sheet nor Mr Severijns’s Financial Statement have balances for business accounts (which according to Ms Naoumova’s affidavit are accounts ending in numbers #94, #25 and #47), but rather list values for the shares in the businesses. That evidence was important in the context of the Application, and Mr Severijns could easily have given it. In those circumstances I infer that it would not have assisted him.
Given the gross income of the business, what I assume is some flexibility in relation to payment of expenses (including payment of Mr Severijns’s expenses), and the availability of funds in the offset account for the Suburb H property, I am satisfied that there are funds available to satisfy the interim property order sought without prejudicing Mr Severijns.
I turn now to whether I am satisfied that Ms Naoumova will receive at final hearing no less than the amount of the interim distribution sought. There is really no question that she will, even on Mr Severijns’s case. Dealing only with the assets which are uncontroversially owned by Ms Naoumova, on Mr Severijns’s case, she is to retain her interests in the Town D property, which has equity of at least $266,000 and her 50 per cent share of the $357,378 equity in the Town E property at approximately $178,689. Those are properties which she purchased in 2015 and 2016 respectively. On Mr Severijns’s case, that is before the parties’ de facto relationship commenced. If this is all she would otherwise receive, then an adjustment to take account of $143,000 as well as the $40,000 already received could readily be made, although that may require the sale of one of those properties.
I turn to consider whether it is just and equitable that an interim property order be made. I am conscious that, by consent, an order for interim property settlement has already been made in this matter. The amount received by way of order made 18 December 2023 was $40,000. No evidence was given by Ms Naoumova as to the use she has made of those funds, but her filed Costs Notice records that some of her legal fees have been paid from at least some of those funds. The fact that there has been a previous interim property adjustment does not exclude a further one, provided I am satisfied, as I am, that the total amount received will not exceed what Ms Naoumova will receive or retain on a final basis. While multiple interim proceedings increase cost and create delay, it is not uncommon, nor inherently undesirable, for parties to reach an agreement about a relatively modest payment which will enable them to attend at mediation and then to come back to the Court if the matter does not settle. That is what has occurred here.
This is a very finely balanced case. I have significant concerns about the way in which the matter is being litigated, including as to the quality of the evidence which is before me and what appear on the face of the matter to be inconsistencies between the evidence of Ms Naoumova and documents tendered in Mr Severijns’s case. Ms Naoumova’s Costs Notice reveals that she has expended $207,195 already, with an estimate of a further $143,000 to the conclusion of a final hearing. Ms Naoumova’s Costs Notice is defective in that it indicates legal costs and disbursements invoiced to date of $207,195 but does not indicate how much, if any, of that has been paid and from what source. Reference is made to costs being paid from “interim property settlement” but the only previous interim property order, made on 18 December 2023, was for $40,000 only. Ms Naoumova gives evidence that her father deposited $10,000 to her solicitor’s trust account on 14 July 2024, but this is not recorded as a source of funds on the Costs Notice. If the balance of the legal fees has been paid it is not clear how that has occurred. Ms Naoumova’s legal fees to date have been significantly greater than Mr Severijns’s legal fees of $138,389, of which $93,459 remains unpaid. I note that these matters were not addressed in submissions.
Ultimately, and notwithstanding what I have said above, the matters which have led me to find that it is just and equitable to make a further interim property order are:
·The size of the property pool;
·The ability to “clawback” the funds distributed by way of interim property order, at least from property Ms Naoumova would otherwise retain on a final basis;
·That Mr Severijns has the sole use and occupation of two properties jointly owned by the parties and without accounting to Ms Naoumova for her interest in those properties;
·That one of those properties is used as the premises from which Mr Severijns operates businesses;
·That Mr Severijns has the sole benefit of the income from businesses operated by him and without accounting to Ms Naoumova for her interest in two of the companies which operate those businesses;
·That Ms Naoumova worked in the businesses during the relationship and jointly owns the property from which the businesses operated; and
·That while Ms Naoumova does have access to some income and assets, Mr Severijns controls the bulk of them and the income from them, creating a significant disadvantage to Ms Naoumova over Mr Severijns in this litigation.
I am simply unable to assess the merits of the parties’ respective cases beyond what I have said above, because there are more than the usual and significant factual disputes between them.
Given the matters set out in paragraph 41 above, I am satisfied that the making of an order for interim property distribution pursuant to s 90SM of the Act, and to be applied solely to legal costs and disbursements, is just and equitable.
At paragraph 6 of his affidavit filed 25 July 2024, Mr B, Ms Naoumova’s solicitor, estimates legal costs until and including the final hearing of “about $143,000 including GST for the applicant”. Mr Severijns’s filed Costs Notice contains an estimate of $156,200 to the conclusion of the final hearing. The table at paragraph 7 of Mr B’s affidavit contains the error that the estimate of counsel’s fees includes GST and GST is then added on to the total. In fact, the total including GST using the daily fees set out in the affidavit is $136,400 and it is that amount that I order be paid.
NEXT STEPS
The parties recently attended a private mediation and were unable to resolve this matter. It is appropriate that the matter now be listed for final hearing.
The parties initially requested early trial dates with an estimate of six days. They were offered 1–9 October or 9–17 December 2024. The parties then advised that the steps that need to be taken in respect of the City F property mean that the matter is unlikely to be ready before early June 2025. The matter will be listed in a callover in the first half of 2025 for allocation of trial dates.
I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Behrens. Associate:
Dated: 30 August 2024
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