Oglesby & Oglesby
[2023] FedCFamC2F 565
•19 January 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Oglesby & Oglesby [2023] FedCFamC2F 565
File number(s): PAC 1109 of 2022 Judgment of: JUDGE TURNBULL Date of judgment: 19 January 2023 Catchwords: FAMILY LAW – interim property settlement – second application for interim property orders Legislation: Family Law Act 1975 (Cth) Cases cited: Accardi & Russo [2022] FedCFamC1F 253
Black & Kellner [1992] FLC92-287
Chea & Sok [2022] FedCFamC1F 628
Gabel & Yardley [2008] FamCAFC 162
Kachmarik v Gebel[ (2019) FLC 93-927
Kyriakos & Kyriakosand Anor (2013) FLC 93-528
Langer & Langer [2021] FedCFamC1F 49
Malloy & Stopford Malloy (No.4) [2020] FamCA 995
Marchant & Marchant (2012) FLC 93-520
Massalski & Riley [2019] FamCA 1013
Medlow & Medlow (2016) FLC 93-692 at [69]
Moorcroft& Moorcroft [2018] FamCAFC 253
Reid & Lynch [2010] FamCAFC 184
Sala & Habner [2018] FCCA 2321
Re Golding [2020[ HCA 38
Strahan & Strahan (Interim Property Orders) [2009] FamCAFC 166
Watson & Watson [2013] FamCAFC 25
Division: Division 2 Family Law Number of paragraphs: 92 Date of last submission/s: 22 December 2022 Date of hearing: 9 & 22 December 2022 Place: Hobart Counsel for the Applicant Mr Williams Solicitors for the Applicant Clinch Long Woodbridge Lawyers Counsel for the Respondent Mr Wong Solicitors for the Respondent Marando Solicitors ORDERS
PAC 1109 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR OGLESBY
Applicant
AND: MS OGLESBY
Respondent
order made by:
JUDGE TURNBULL
DATE OF ORDER:
19 JANUARY 2023
THE COURT ORDERS:
1.The Husband’s Application in a Proceeding filed 25 November 2022 be dismissed.
2.That all applications for costs arising from the Husband’s Application in a Proceeding filed 25 November 2022 be reserved until the conclusion of the final hearing.
3.That the Application for Final Orders is adjourned for a final mention and directions at 10.00 a.m. on 1 March 2023 via Microsoft Teams.
4.That the time for the parties to file documentation for the final hearing, pursuant to paragraphs 1-4 of the Orders dated 7 November 2022 be extended to 4.00 p.m. on 17 March 2023.
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).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish 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 a pseudonym Oglesby & Oglesby has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX-TEMPORE REASONS FOR JUDGMENT
JUDGE TURNBULL
This is an application in a proceeding filed by Mr Oglesby (the Husband) seeking an interim property distribution of $200,000. His initial application was for a combined sum of $310,000. The amount sought was changed during the hearing to $255,000, and further reduced to $200,000 by the close of submissions. The application is opposed by Ms Oglesby (the Wife).
The Husband relied upon his application in a proceeding, an affidavit from himself, a financial statement - all filed on 25 November 2022, a further affidavit filed 16 December 2022, a tender bundle (A1), a number of letters evidencing the efforts made in relation to disclosure, three versions of a balance sheet and a case summary document.
The Wife relied upon an amended response to the application, two financial statements - the most recent being 19 December 2022, her affidavits filed 2 December 2022 and 19 December 2022, a tender bundle, some Amex card statements, a schedule showing which of the Husband’s documents have been discovered and which have not, and a case summary document.
SHORT HISTORY
The Husband is 50 years of age and the Wife is 43 years of age.
The parties were married in 2001 and separated on 20 May 2020. They lived separately under one roof until February 2021.
There are three children of the marriage X aged 17, Y aged 17 and Z aged 15.
The Wife filed initiating proceedings in this Court on 4 March 2022.
On 13 September 2022 the Husband sought an interim property order in the amount of $250,000 together with an application seeking permission to take Z out of Australia. The Husband at that time wanted to travel to the Country B so that he could attend his brother’s funeral.
On 15 September 2022 Judge Eldershaw ordered by consent that the Husband receive the sum of $125,000 by way of interim property distribution and that the same amount be paid to the Wife. An order was also made allowing Z to leave Australia for 14 days. The Husband says that the ordered trip did not occur because the Wife’s consent was received too late in the day.
As stated, the Husband filed his application in a proceedings seeking a further interim property settlement on 25 November 2022. The orders sought largely mirror his application filed on 13 September save that his application at that time was for the release of $300,000 in total when this application initially sought $310,000 by way of interim property settlement and costs. As stated the total amount now sought is $200,000.
The Wife opposes any interim distribution to the Husband but in the alternative proposes a release of $50,000 to each party.
The hearing commenced on the 5th of December 2022, continued on the 10th of December 2022 and finalised on the 22nd of December 2022.
SUBMISSIONS
The essence of Mr. William’s submission on behalf of the Husband is that a payment to his client of $200,000 will not in any way jeopardise or defeat the Wife’s claim for property division on a final basis. The Wife seeks 70% of the party’s net assets at trial. Although his client will argue at trial that the Wife’s entitlement is only 55% of the net assets, he argues that the Court can remain satisfied that even if the Wife achieves her desired result at trial a payment now to the Husband of $200,000 will at best provide him with net assets totalling approximately 25 % of the total net asset pool, which is less than the 30% figure the Wife believes the Husband is entitled.
I pause here to note that a significant component of both parties’ submissions related to the nature and value of the asset pool. Mr. Williams provided me with three versions of the balance sheet to demonstrate that a $200,000 payment now to the Husband will not defeat the Wife’s claim of 70%. The problem is that his 3 versions of the balance sheet were not accepted by the Wife and he does not accept the Wife’s version of the balance sheet.
Mr. Williams identified, at paragraph 13 of his case summary, a large number of items that the Wife seeks to include in the balance sheet that he says should not reasonably be included. These items include $350,000 being the costs of sale and Capital Gains Tax relating to the Town C property, an addback of $115,000, and the double counting of the previously mentioned interim property distribution made to the Husband. By the end of the hearing Mr Williams conceded, for the purpose of the argument, that some of those items could be included in the balance sheet – resulting in them being added to his three versions of the balance sheet. There was, however, remaining disagreement about a number of other entries sought to be added to the balance sheet by the Wife. I will come to these matters later in more detail.
Ultimately, Mr Williams’ submitted that it was just and equitable for there to be a further partial property settlement, as a reasonable view of the balance sheet should lead the Court to comfortably find that the Wife’s claim of 70% will not be defeated if the Husband is paid $200,000 now.
Mr. Williams also made significant submissions in response to a preliminary argument raised by Mr Wong, Counsel for the Wife, as to why his application should not be heard at all.
The basis of Mr Wong’s preliminary argument is twofold. First, this application is a rerun of the Husband’s application finalised by the orders of 15 September 2022 and there are no exceptional circumstances that have arisen since that time that permit the Husband to make a further application for an interim property order. Secondly, the Husband has failed to comply with an order for discovery and as such it would be improper for his application to be heard and determined while the he remains in breach.
Mr Wong submitted that even if I do not accept either of his preliminary arguments, I should still dismiss his application - primarily on the basis that the Court cannot be satisfied that the Wife’s claim at a final hearing will not be jeopardised if a payment of $200,000 or indeed any amount is paid to the Husband by way of an interim property order. Again, this argument largely centred upon the Wife’s position regarding the balance sheet.
THE WIFE’S PRELIMINARY APPLICATIONS
Mr Wong’s first argument is that the Husband’s application in a case is a re-agitation of the application that he filed on the 14th of September which was determined on the 15th of September by consent. It was argued that a party should not be able to continuously run interim hearings particularly when the very issue is sought to be argued has already been determined. Mr Wong submitted that the Husband needed, as a minimum, to demonstrate that there are exceptional circumstances in play before the Court should embark upon a hearing revisiting the very matters that were put before the Court in September.
Mr Wong referred me to a number of decisions including: Reid & Lynch [2010] FamCAFC 184, Accardi & Russo [2022] FedCFamC1F 253, Malloy & Stopford Malloy (No.4) [2020] FamCa 995, Sala & Habner [2018] FCCA 2321 and Re Golding [2020] HCA 38.
The Full Court in Reid & Lynch[1] confirmed that the operation of Res Judicata and Anshen estoppel does not apply to parenting matters. A consent judgment in substantive property proceedings can however give rise to an estoppel (I pause to note here that the consent order made 15 September was in relation to interim not final proceedings).
[1] Reid & Lynch [2010] FamCAFC 184.
Accardi & Russo[2] was a first instance decision of Justice McGuire. He was dealing with a Review of parenting orders. He had occasion to make comment about the number of interim applications that had been filed in the case and quoted from the decisions in Malloy[3] and Golding:[4]
It is pertinent to raise an issue aired during submissions by Counsel for the father where I questioned whether there was any change of circumstances or sufficient change of circumstances from the consent orders made by Judge Howe on 14 July 2021 confirmed by her orders of 17 September 2021 but where Counsel took exception (with the proper Courtesy) to the question. In response I borrow from the learned comments of my colleague Harper J in Malloy & Stopford Malloy (No.4)[2020] FamCA 995 where his Honour opined:
[15] At [23] of the July judgment I pointed out that where there are repeated interim applications regarding spousal maintenance the principle of finality, informed by questions of change of circumstances or the availability of fresh evidence, gains added prominence, and the discretion to set aside or vary an interim order must at some point be subject to the constraints imposed by the public interest in the finality of litigation. I repeated what I said in Joubert and Anor & Verhoeven and Anor[2020] FamCA 53 at [30] - [31]. I rely upon that statement of the law again, in particular the principles stated by Brereton J in Paris King Investments Pty Ltd & 1 Ors v Michael Normal Rayhill & 2 Ors[2006] NSWSC 578 at [14] as follows:
the general rule is that interlocutory relief is not to be reconsidered if at all that is involved is a review on the same facts as prevailed when it was originally granted or declined or on facts which ought then reasonably have been in contemplation, but that if new facts have emerged which may affect the arguability of the case for final relief or the balance of convenience, then the grant of interlocutory relief may be reconsidered.
Harper J also cited Nettle J in the High Court in Re Golding[2020] HCA 38 where the latter said:
[11] Generally speaking, an applicant for interlocutory relief is required to advance all of the grounds on which he or she relies in support of the relief sought; and, in the absence of exceptional circumstances, such as, for example, the discovery of facts of which the applicant was not aware and which the applicant could not have ascertained with reasonable diligence at the time of the first application, it will ordinarily be regarded as an abuse of process to make a second application for interlocutory relief on the same or other grounds.
I comment further only to say as a matter of policy that parties do not have a necessary right to the determination of an interim hearing and certainly not a multitude of interim hearings save in the advent of changed circumstances.
[2] Accardi & Russo [2022] FedCFamC1F 253.
[3] Malloy & Stopford Malloy (No.4) [2020] FamCa 995.
[4] Re Golding [2020] HCA 38 (“Re Golding”).
As to the meaning of exceptional circumstances, Mr Wong referred me to the child support decision of Sala & Habner [2018] FCCA 2321:
Many, although not all, of the relevant authorities were drawn together by White J in the context of part 7AA of the Migration Act in the BVZ16 v Minister for Immigration and Border Protection. Those authorities may be catalogued in the following manner-
the word “exceptional” is to be construed as an ordinary, familiar English adjective and not as a term of art, describing a circumstance that is such as to form an exception, being something out of the ordinary, something unusual, something special or uncommon yet it need not be unique, unprecedented or very rare but it cannot be something that is regularly, routinely or normally encountered (Lord Bingham of Cornhill CJ in R v Kelly (Attorney General’s Reference No 53 of 1998) and Maan v Minister for Immigration and Citizenship);
all relevant circumstances must be examined in order to determine whether exceptional circumstances exist because even though no single factor may be exceptional, in combination the circumstances may be such as reasonably to be regarded as exceptional (Brennan and Dawson JJ in Griffiths v The Queen, Baker v The Queen, Ho v Professional Services Review Committee No 295 and Hasim & Ors v Attorney General (Cth)); and
subject to the particular statutory context, circumstances will be exceptional if they are out of the ordinary or they are unusual (Keifel J in Hatcher v Cohn & Ors, Lindgren J in An v Minister for Immigration and Citizenship and my own decision in CSJ17 v Minister for Immigration and Border Protection). (citations omitted)
Mr Wong submitted that there are no exceptional circumstances in this case and that Mr Williams conceded that this was a continuation of the application that was filed in September.
Mr Williams replied that the reason why his client agreed to the property order for $125,000 in September was pragmatic as there was concern that his application may not have been reached. Further, his client is not required to demonstrate exceptional circumstances before he can prosecute his application. He submitted that Re Golding related to an interlocutory application seeking an extension of time for special leave to appeal in criminal proceedings. He submitted the case is distinguishable and that to reason otherwise would fall foul of what the Full Court said in Gabel & Yardley [2008] FamCAFC 162:[5]
The legislative framework, and the authorities to which we have been referred, suggest that the Court’s power to make orders with respect to settlement of property is not necessarily exercisable at only one time, and can properly be exercised by a succession of orders until the power to make orders with respect to property is exhausted. Logic suggests that the power to make orders for settlement of property will be exhausted or “spent” when there remains no property of the parties to the marriage or either of them with respect to which orders by way of alteration of interests of property could be or have been made. In those circumstances there can be no matrimonial cause to enliven the jurisdiction to make orders for settlement of property. It is thus potentially more instructive to focus on the nature and scope of the power conferred by section 79 of the Act and the nature and effect of orders made in the exercise of the power than upon attempts to categorise the kinds of orders which may be made pursuant to the power.
[5] Gabel & Yardley [2008] FamCAFC 162 @ 57
And Strahan & Strahan (Interim Property Orders) [2009] FamCAFC 166:
In relation to the variation of an interim property order Bryant CJ and Coleman J said:
[69] As we have earlier explained, in our view the focus of our attention should be whether or not the power to make orders pursuant to s 79 has been exhausted. Unless it has, we see no basis in law or logic for concluding that further orders may not be made with respect to property the subject of earlier orders. There can be little doubt that the exercise of power under s 79 involves the exercise of discretion by reference to the provisions of Part VIII of the Act. It would be surprising if, in circumstances clearly involving less than such an exercise of discretion, orders made pursuant to the power conferred by s 79(6) of the Act could not be revisited and altered. Indeed, there may be cases where the Court could only exhaust the power conferred by s 79 in a “just and equitable” manner as required by s 79(2) of the Act by altering an earlier order with respect to the property of the parties or either of them as learned senior Counsel for the Wife submitted.
As to exceptional circumstances Mr Williams again quoted from Strahan:
[in relation to the contention that] the trial Judge “erred in principle in confining the circumstances of the discretion to order an interim property settlement to compelling circumstances rather than simply to a proper case in all the circumstances” (emphasis in original).
The first matter to observe is that the term “compelling circumstances” does not appear anywhere in the legislation. In exercising the power under s 79 of the Act a Court may make an order of the type described in s 80(1)(h). In a passage, which we have earlier referred to, the Full Court in Harris at 79,928 said that “[s]ection 80 is intended to be a wide, enabling provision and there is no justification for imposing limitations upon its normal or ordinary meaning and operation when applied to s.79”. Before us it was submitted by senior Counsel for the Wife that s 80 of the Act confers a “free standing and unfettered discretion to entertain an application for an interim property settlement” and the Court should not “circumscribe that unfettered discretion with judge-made rules”. It was submitted that it is “contrary to proper judicial practice to confine the jurisdiction ... by artificial formulae”. Senior Counsel for the Wife submitted that the only limits on the application of s 80 “are the usual limits on the exercise of a judicial discretion” and that the overreaching criterion is the justice of the case.
Mr Williams submitted that, in any event, there are changed circumstances between now and when the first application was filed in September 2022. He referred to the Husband’s affidavit which evidenced in a nutshell:
·He has largely spent the $125,000 provided to him as set out at paragraph 14(c);
·He moved out of his rental property;
·His rent has increased;
·He now has to pay the school fees for the children as the Mother refuses to do so;
·He has no income and relies on credit cards to meet expenses; and
·He needs funds to pay his legal costs for trial.
I accept the submission of Mr Williams. The ability for this court to make a succession of interim property orders is contemplated in Strahan’s case, and there is no legislative basis for the Husband to establish exceptional or compelling circumstances before he can proceed with his application. Certainly there may be strong public policy grounds to prevent successive interim or interlocutory applications, particularly where the same facts are being argued. This however is only the second time the Husband has sought an interim property/costs order. Further there are new circumstances that have arisen since the September order was made, not least of which is the Husband’s positon that he has reasonably spent the monies he received at that time – inclusive of an AMEX debt of 57,000 - and on his evidence he has no income, has growing debt and a need to pay legal expenses. I reject the Wife’s argument that the Husband’s application should be dismissed on this basis.
Mr Wong’s second argument was that the Husband should not be able to prosecute his application in circumstances where he is in continuing default of an order for discovery made 8 August 2022, which reads:
9. Within 14 days of the date of these Orders, each party must exchange with each other party a copy of each of the following documents (to the extent such documents have not already been provided):
(a) the documents mentioned in Rule 6.06 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
(b) statements for all bank or credit union accounts (including loan, mortgage and credit card accounts) in which the party has an interest for the period from 12 months before the date of separation to the date of these Orders;
(c) any documents which:
(i) support the information contained in the party’s Financial Statement / Financial Summary;
(ii) estimate the value of any vehicle in the party’s possession;
(iii) confirm the date of receipt and amount of any inheritance, gift, redundancy or compensation payment received by the party from the date of cohabitation to the date of these Orders;
(iv) detail the party’s acquisition or disposal of property for the period from 12 months prior to the date of separation to the date of these Orders;
(v) evidence any increase or reduction in the liabilities of the party for the period from 12 months prior to the date of separation to the date of these Orders;
(vi) confirm the value of any superannuation fund in which the party has an interest at the date of cohabitation, the date of separation and the date of these Orders.
10. Within 21 days of a party receiving a written request for a document from another party to these proceedings, the first-mentioned party must provide a copy of the requested document(s) to the requesting party to the extent they are within the first-mentioned party’s power, possession or control.
I was provided with various schedules created by the Wife’s solicitors showing the requests for discovery made and the compliance and non-compliance with such requests. I was also provided with a letters from the Husband’s solicitors detailing the discovery of documents that had been made.
Some effort was made to distil and deal with the discovery controversy in the Order of 9 December 2022, particularly as it referred to trade debtors for D Pty Ltd:
THE COURT ORDERS THAT:
1. Pursuant to Rule 7.26 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) leave be given for both parties to ask further questions of the single expert witness – preferably by a joint letter, but not necessarily, although such letters will need to be exchanged – as to the following:
(a) Whether or not, for the purposes of the single expert report, she had in her possession the financial statements and tax returns for D Pty Ltd for the financial period ended 30th of June 2021; and
(b) If she did, does she still hold those documents?
2. In the event that the single expert continues to hold them she is authorised to provide copies of those documents to the solicitors for the Wife and the Husband.
3. These proceedings be adjourned for further hearing in the Federal Circuit and Family Court of Australia at Launceston on 22 December 2022 at 10.00 a.m. with parties given leave to appear via teams.
4. Both parties must make, file and serve any updating affidavit material relating to disclosure issues by 4.00 p.m. on 16 December 2022.
The Court also noted:
(b) The Wife submits that the application should not be heard for the following reasons:
(i) This is effectively the re-hearing of an application filed September 2022 and no exceptional circumstances that have arisen since this time to allow the application to be heard and are effectively an abuse of process.
(ii) Secondly the Wife argues that the Husband is non-compliant with the orders for discovery and as such the Court should not hear the Husband’s application, at least until such time as the breach has been purged. In this regard, the parties are continuing to embark upon a further process of discovery and disclosure and further questions will be asked of the single expert witness.
(c) The Husband’s position is that:
(i) He is entitled to file more than 1 application for an interim property order; and
(ii) In any event, there have been significant changes since the September date that should allow the matter be heard and determined.
(d) It is the Husband’s contention that:
(i) It was the Wife who prepared the zero records dated 17 June 2021 of the balance of D Pty Ltd as at 30 June 2021.
(ii) The Wife, while employed at D Pty Ltd, imputed accounts receivable/trade debtors, imputing the amount of $418,327 which the Husband contends was incorrect.
(iii) The Husband contends the accountant for D Pty Ltd identified this error and that the records were updated to accurately reflect trade debtors of $119,121.85.
As can be seen, there was some focus by the Wife upon the purported trade debtors of D Pty Ltd. The single expert valuer of the company’s shares had worked off financial returns evidencing trade debtors of $119,121.85. The Wife contended, however, that the trade debtors were potentially higher (perhaps $418,000, or given information received during the hearing - $332,000) and if either of these figures was correct then there would be a significant increase in the value of the parties' assets for the purpose of the balance sheet. The Wife contended that there was still inadequate disclosure about this issue.
The Wife also argued that there was ongoing non-disclosure regarding the Husbands taxation returns, statements relating to various bank accounts, Amex card statements, credit card statements relating to D Pty Ltd, credit card statements relating to the company, Company E, documents relating to a loan transaction between the Husband and Company E, various documents including payroll summaries, profit and loss transaction of sales for D Pty Ltd, evidence relating to the sale of various motor vehicles and guns by the Husband, annual statements relating to the Husbands superannuation, copies of the Husbands lease agreement and various personal documents of the Husband, evidence relating to the purported liquidation of D Pty Ltd, and many other named documents.
Mr Wong referred to the decisions in Watson & Watson [2013] FamCAFC 25 and Moorcroft& Moorcroft [2018] FamCAFC 253 as authority for the proposition that disobedience of the Court’s Orders is inconsistent with a right to hear a new application in the same cause.
Moorcroft& Moorcroft was a case where the Full Court refused to entertain the Husband’s Appeal where he was in ongoing contempt of various property and costs orders depriving the Wife of over $200,000.
The Full Court concluded:
Drawing upon the discretionary features mentioned in Watson & De Gafforj, the Husband’s contempt of past orders was deliberate and is continuing, his conduct obstructed the course of justice because the breached orders seemed unlikely to ever be capable of enforcement, and there was no other reasonably feasible remedy for his default but to decline to entertain his appeal. There was no utility in adjourning the appeal and giving the Husband further time within which to rectify his defaults as there was no reasonable prospect of his rectification and an adjournment would only serve to subject the parties to more delay and expense. Just as in De Gafforj, the Husband’s multiple and continuing failures to pay significant sums of money to, or on behalf of, the Wife was sufficient to invoke the discretionary application of the Hadkinson principle. On balance, the discretionary considerations weighed more heavily in favour of refusal to entertain the Husband’s appeal.
Watson involved the non-payment of costs orders in relation to previous child support proceedings, but that did not prevent the Husband filing an application pursuant to 79A, as they were distinct proceedings.
I note that I was not pointed to any decision where a breach of an order for discovery prevented a subsequent application in the same proceedings from being heard. I did find the recent decision of Langer & Langer [2021] FedCFamC1F 49 where the Court did not permit the Husband’s application to sell the home to proceed where he was in continuous breach of an Order to meet the mortgage payments of $400 per week. There Carew J referred to the decision in Kachmarik v Gebel (2019) FLC 93-927, where the Full Court (Ainslie-Wallace, Tree and Forrest JJ) quoted with approval, the Full Court decision of Watson & Watson as follows from 86,964:
From the detailed discussion by the Full Court in Fahmi of the various authorities referred to, and the express or implicit acceptance of particular statements of principle or approach, the following propositions emerge as to the discretionary rule that a party in a contempt may not be heard when a Court is exercising jurisdiction under the Act;
(a) Procedural justice dictates that the fact that a party has disobeyed an order of the Court is not of itself a bar to the party being heard on a subsequent application brought by that party;
(b) In Courts exercising jurisdiction under the Act, the rule, when it operates, gives rise to a discretion not to permit a party being heard. That is, unlike other jurisdictions such as New South Wales and South Australia where the rule is to be applied as a strict rule subject to limited exceptions, in this jurisdiction the discretionary approach applies (as to New South Wales see Young J in Young v Jackman(1986) 7 NSWLR 97 at 102; 11 Fam LR 331 at 335 referring to the Court of Appeal decision in Permewan Wright Consolidated Pty Ltd vAttorney-General (1978) 35 NSWLR 365; and as to South Australia see per Bray CJ (with whom Mitchell and Jacobs JJ agreed) in Shortv Short (1973) 7 SASR1 at11);
(c) The rule applies where facts establish disobedience of an order, even though there has been no application for the party to be dealt with for contravention or contempt, and no determination has been made that the party is guilty of a contravention or contempt;
(d) The Court may, in its discretion, refuse to hear a party in breach of an order only if that party makes an application in the same proceedings or in the same cause in which the disobedience of an order has occurred. If the application by that party is not in the same proceedings or in the same cause of action in which the contempt has been committed, no question as to the party in alleged contempt being heard arises;
(e) The question of whether the application is in the same proceeding or in the same cause is crucial and is determined by reference to the structure and content of the definition of “matrimonial cause” in the Act, the relevant parts of the Act and the Family Law Rules 2004 (Cth) that apply and, ultimately whether the proceedings may be identified as distinct because the nature of the relief claimed in them respectively is determinative;
(f) No question as to a party being heard arises:
(i) if that party is defending, rather than bringing, an application;
(ii) on an appeal by the party to set aside the order on which the alleged contempt is unfounded;
(iii) where a party applies for the purpose of purging the party’s contempt;
(iv) where a party against whom contempt is alleged seeks to be heard on a submission that, having regard to the true meaning and intent of the order which the party is said to have disobeyed, the party’s actions did not constitute a breach of it, or having regard to all the circumstances, the party ought not to be treated as being in contempt.
(g) Where the discretion arises its exercise depends upon the balance between that parties right to procedural justice, including the right to be heard, and public policy considerations. Those public policy considerations include that if the party’s disobedience is such that, so long as it continues, it impedes the course of justice in the cause by making it more difficult for the Court to ascertain the truth, or to enforce the orders which it may make, or the party’s further application constitutes an abuse of process in the circumstances, then the Court is unlikely to exercise its discretion in favour of hearing the party or entertaining the application of the party.
Mr Williams argued that his client had not breached the order for discovery, as demonstrated by the lengthy letters of 9 December and 20 December, showing the extensive efforts made to provide documents sought by the Wife.
Mr Williams also made the point that the information relating to the trade debtors of D Pty Ltd was actually information inputted by the Wife – later found to be incorrect. He also highlighted that the value of D Pty Ltd was determined by the single expert to be ‘nil’. This conclusion is apparently not going to be challenged as the Wife’s lawyers informed Judge Dunkley that the single expert will not be required for cross-examination.
The schedule of disclosure tendered by Mr Wong reveals that a great deal of what is sought to be discovered is for 2022. Obviously the responsibility to properly disclose continues up to and during the hearing, and as such there are always likely to be documents that need to be discovered, even at the date of trial.
The letters tendered by Mr Williams evidence the efforts made by the Husband to provide documents sought by the Wife. Whether they meet all of his obligations pursuant to the August order, or generally, is difficult to tell. I expect that if either party has not fully and frankly disclosed then this will be a focus of the cross-examination of one or both of them at trial. At that time any argument relating to non-disclosure can be properly tested.
If a party fails to make full and adequate disclosure, particularly where they have been ordered to do so, then the Court can adopt the approach set out in cases like Black & Kellner [1992] FLC92-287.
Deputy Chief Justice McClelland summarised the relevant law and its rational in Massalski & Riley [2019] FamCA 1013 where he stated:
NONDISCLOSURE
The obligation of disclosure is fundamental to the effective functioning of this jurisdiction. It is an obligation that exists both at common law and pursuant to statute.
In Briese & Briese[1985] FamCA 23; (1986) FLC 91-713 at [75,181], Smithers J applied the House of Lords decision in Livesey (formerly Jenkins) and Jenkins [1984] UKHL 3; [1985] 1 All ER 106 in determining that:
... in financial proceedings between spouses each party must make a full and frank disclosure of all material facts. In that case it was made clear that full and frank disclosure was required as a matter of principle in the light of the fact that it was the duty of the Court, taking into account a number of designated criteria, to make a decision which basically involved the exercise of a discretion. [Emphasis added].
His Honour further stated at [75,181]:
In my view it is fundamental to the whole operation of the Family Law Act 1975(Cth) in financial cases that there is an obligation of the nature to which I have referred. Livesey (formerly Jenkins) v. Jenkins makes it clear that mere compliance with rules of Court or practice directions does not alter the basic principle of the need for full and frank disclosure by the parties. [Emphasis added]…….
The fact that the obligation of disclosure exists as a duty to the Court, as well as the other party, is significant. It is also significant that the obligation is in respect to the disclosure of “information relevant to the dispute,” not simply one that attaches to the production of documents.
In Graf-Salzmann & Graf[2015] FCWA 68 Walters J noted:
... a judge is entitled to take a "robust view" in relation to findings regarding a party's financial position (including a party's capacity to meet any proposed order) where that party has failed to make full and frank disclosure of his/her financial position: see Chang v Su[2002] FamCA 156; (2002) FLC 93-117 at [71] and [72].
In Efthidmiadis & Efthidmiadis[1993] FamCA 15; (1993) FLC 92-361 at [79,804], the Full Court said:
So far as the Wife is concerned, there is no doubt that she should be treated as substantially understating her income... The circumstance that the Wife had a significantly greater income that she deposed to was very damaging to her on issues of credit overall and virtually ensured that she was put out of Court so far as s75(2) factors were concerned.
In Weir & Weir[1992] FamCA 69; (1993) FLC 92-338 at [79,593], the Full Court, stated:
It seems to us that once it has been established that there has been a deliberate non-disclosure, which follows from his Honour's findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party.
I do not accept Mr Wong’s argument that the Husband’s application should not be heard because of his failure to comply with the order for discovery. It is clear that the question as to whether the Husband has made full disclosure is in dispute, and it is not possible to fully determine that question on the evidence I have before me. I acknowledge that the question will be robustly explored at trial, which is the appropriate time to determine if the Husband has been so non-compliant as to amount to a contempt as alleged. This case is not one where there has been a clear and obvious breach of the type mentioned in Langer’s case. If the Husband is ultimately found to have not disclosed then the Court can take a certain approach in relation to his evidence at trial. He is on notice about this – he can never claim he did not know.
Further, even if there is an ongoing technical breach of the August Order, this is not a case where the Husband has been sitting on his hands, such as to impede the course of justice. As stated, the Court can remedy a blatant non-disclosure at trial. He has disclosed, even if a lot of that disclosure has occurred late in the day. Perhaps he should have or should disclose further, but that is a question best left for trial. Even if he has not technically disclosed everything that he should have, I will not, in my discretion, prevent the Husband’s application for an interim property order from proceeding.
THE HUSBAND’S APPLICATION FOR AN INTERIM PROPERTY ORDER
The principles concerning a partial or interim property order are set out by the Full Court of the Family Court of Australia in the matter of Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466, Marchant & Marchant (2012) FLC 93-520 and Kyriakos & Kyriakosand anor (2013) FLC 93-528.
The principles were helpfully summarised in Chea & Sok [2022] FedCFamC1F 628:
In Strahan, the Full Court held that there is a two-stage process to applications for interim partial property settlement. Firstly, the procedural step, which is the question of whether the Court should exercise discretion to entertain and determine the application, and secondly the substantive step, namely the nature of the order which should be made.
With respect to the first step, the Full Court in Strahan approved the approach adopted in Wenz. There must exist appropriate circumstances for an interim order to be made, rather than compelling circumstances. Boland & O’Ryan JJ commented:
132. In relation to the first stage, in our view, when considering whether to exercise the power under ss 79 and 80(1)(h) of the Act to make an interim property order the “overarching consideration” is the interests of justice. It is not necessary to establish compelling circumstances. All that is required is that in the circumstances it is appropriate to exercise the power. In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.
Their Honours continued at [133] that circumstances warranting the exercise of the power at an interim stage, included where both parties consent, in urgent situations to avoid injustice, and where “one party requires funds to assist in defraying the costs of litigation without which funds an injustice may be cause.”
The second step identified in Strahan involves the exercise of the Court’s power pursuant to s 79 of the Act. Insofar as it is possible in interim proceedings, this step requires the Court to:
(a) identify “the parties’ property and of their interests in it” (Medlow & Medlow (2016) FLC 93-692 at [69]); and
(b) consider and apply the provisions of s 79 (Strahan at [135]).
Any interim property order should not exhaust the discretion in s 79 of the Act. In Strahan at [136] the Full Court said:
As to the third matter identified at 79,930 by the Full Court in Harris, in discussion before us it was described as the “adjustment issue” or “claw-back issue”. It was submitted by senior Counsel for the Wife that it is relevant to consider whether an order would give the applicant “more than they would be indubitably entitled to on a final hearing” or alternatively “would it give them so much that it could not be adjusted on a final hearing?”. As we have observed the Full Court in Zschokke at 83,220-221 stressed the importance of consideration of the “adjustment issue” if the power in s 80(1)(h) of the Act is being exercised. We accept the submission and observe that this matter is relevant because the discretion conferred by the power in s 79 is to make such order as the Court considers appropriate provided it is just and equitable to make the order in circumstances where the power will not be exhausted by the interim order. As Bryant CJ and Coleman J observed in Gabel v Yardley at [69] and [72] the interim order must be capable of variation or reversal without resort to s 79A of the Act or appeal. As Finn J said at [126] the interim order must be “capable of alteration at any time prior to, or as part of, the final exercise of the s 79 power”.
In Osferatu & Osferatu[2012] FamCA 408, Watts J at [41] made clear a detailed inquiry is not required:
As was discussed in Harris and confirmed in Strahan, the second step in making an interim property order is to have regard to the usual matters in a section 79 order (ss 79(2) and 79(4) FLA). A detailed inquiry is not required, but there must be some assessment of section 79 factors. Given it is an imprecise exercise, the interim property order has to be “conservative” so that the final outcome of property settlement will not be compromised by the interim property order. Either the remaining property needs to be sufficient to meet the legitimate expectations of both parties at the final hearing, or the order that is contemplated needs to be capable of being reversed or adjusted if it is subsequently considered necessary to do so.
The Husband’s application is for an interim payment of $200,000. In his case outline Mr Williams submitted that the source of power to make the order is s 79 and s 80(1)(h) of the Act.
The Husband’s position is that the first stage of the process—whether an exercise of power under ss 79 and 80(1)(h) as identified in Strahan is warranted – can be easily satisfied. The Husband states at paragraph 6 of his 25 November affidavit, that he needs the funds to pay anticipated legal fees, to move out of his rental property, to meet the expense of moving into a new property and because D Pty Ltd Pty Ltd is in the process of being liquidated. He further explains at paragraph 14 that the $125,000 amount he received in September has been largely spent on legal fees, an Amex debt and living expenses, including $1,300 per week rent. He says at paragraph 32 that he does not receive an income from D Pty Ltd and that his other company, Company E, had a loss in 2021 financial year of $204,000. He says at paragraph 35 that he was repaid a debt of $115,102 by Company E that was used to pay legal fees and other expenses. He goes on to state that he has other pressing debts that must be paid and that he is currently living off his credit cards, causing him immense stress (paragraph 42).
He confirms at paragraph 46 that he will use the $255,000 (the amount sought at that time to):
·move out of his current property and move into a new one – $51,600;
·put aside $24,000 for Z’s school fees;
·pay $6,739 to Company F;
·pay Amex debts of $6,526, $1,861 and $28,220;
·pay anticipated living expenses; and
·pay anticipated legal expenses of $80,000.
I note that a quick calculation confirms that he anticipates $198,900 being used to pay debt school fees and legal fees and $57,000 for anticipated living expenses. It is clear that if he receives any amount it will be spent quickly. For all of these reasons Mr Williams argues that the exercise of jurisdiction is warranted.
As to the second step identified in Strahan, and although not expressly submitted, I assume that Mr Williams argues that this is clearly a case where it is just and equitable for there to be an order adjusting the parties' property interests — evidenced in no small part by the fact that both parties are seeking a property adjustment.
Mr Williams submitted that the parties' have both made significant contributions. They cohabited for nearly 19 years and have 3 children and at paragraphs 26-31 of his November affidavit, the Husband sets out the contributions made by both parties' during their long relationship – notably:
·that he had greater assets than the Wife at cohabitation;
·that both parties' contributed their income to the marriage;
·that both parties' undertook the homemaking and parenting responsibilities;
·that he renovated the properties at Suburb G, Town H, Town J and Town C; and
·that the Wife’s Father provided both parties' with a gift of $650,000, applied to the Town H property.
Mr Williams submitted (and extensive submissions went to this point) that this case really turns, not so much on whether an exercise of power is warranted, nor on whether the parties' contributions and needs warranted an exercise of discretion under the relevant identified legislation, but rather on the essential question as to whether the Husband’s application will prejudice the Wife’s application at the final hearing – that is, for 70% of the parties' net assets.
He submits in his case outline:
Even if the Wife were wholly successful on her version of the balance sheet (subject to the removal of the anticipated Capital Gains Tax, sale costs and purported loan) it is the Husband’s contention that the interim distribution …does not jeopardise nor defeat the Wife’s claim on a final basis.
I pause here to note that the Husband’s argument, at the time he filed his case outline, was already caveated by the need to exclude from the balance sheet the Capital Gains Tax and sale costs on the sale of the Town C property. This became even more of a focus at the hearing when the Wife filed an amended application on 21 December 2022 seeking final orders that the Town C property be sold. This was different to her Initiating Application where she sought an order that the Town C property be transferred to her. (I note, however, that the Wife contemplated the possibility of sale in her 2 December 2022 affidavit — paragraph 83). This did cause some consternation for Mr Williams who was then faced with the likelihood that the mentioned expenses would be included in the balance sheet as liabilities.
This led to the production by Mr Williams of 3 versions of the balance sheet, all including the Capital Gains Tax and costs of sale of the Town C property. Based on version 3 of the balance sheet (‘Version 3’), it was submitted that the Husbands claim for $200,000 provided him, at best, with 25% of the net pool. What became clear however, was that the Husband’s argument that a payment to him would not defeat the Wife’s purported claim, was dependant on me accepting Version 3. Mr Wong, of course, did not concede that any of the Husband’s versions of the balance sheet should be accepted as accurate.
Now I need to clarify at this point that the Husband’s position regarding the balance sheet did change during the hearing.
Initially, the Husband claimed that the balance sheet was that described at paragraph 19 of his affidavit of 25 November, showing a net pool valued at $2,115,153. He did, however, change his position about the balance sheet during the hearing and framed his submissions regarding the balance sheet around the Wife’s version of the balance sheet, found at annexure ‘G’ to her affidavit. That balance sheet values the net property pool at $1,926,803. He submitted however, that the balance sheet at annexure ‘G’ needed amendment and that his amendments should be readily accepted.
As stated, Mr Williams ultimately asked the Court to accept Version 3 — which set the net value of the pool at $1,784,622. Version 3 is, as stated, derived from the Wife’s version of the balance sheet as annexed to her affidavit (annexure ‘G’) of 2 December 2022, but with his amendments.
At the end of Version 3, there are calculations as to the percentage of the pool the Husband will have in his possession if he receives the amount of $200,000. That percentage is 25.70% - below the 30% proposed by the Wife – thus supporting his submission that the payment to the Husband of $200,000 will not defeat the Wife’s claim.
The amendments the Husband sought to the Wife’s version of the balance sheet also changed over time In his case outline the Husband submitted that the Wife’s version of the balance sheet contained various errors including:
·the inclusion of Capital Gains Tax and costs of sale of Town C – but this was ultimately conceded by Mr Williams, but at a lower figure;
·an addback of $115,102 – being a debt owed to the Husband by Company E. The Husband agrees that this debt was repaid to him, but disputes it should be added back to the balance sheet;
·the double counting of monies received from the earlier interim payment of $125,000 and the $11,046 held in his account derived from that payment. (Mr Wong conceded this amendment);
·The inclusion of $35,200 for guns that were sold – he said he sold them for $11,750 (I note the Husband keeps the $32,000 figure in Version 3);
·Jewellery at $46,600 – the Husband ultimately includes this figure in Version 3;
·Inclusion of $24,500 for a Motor Vehicle 1, $25,000 for a Jetski and $14,480 for a Motorcycle. – the Husband says that he doesn’t own these items and has not included them in Version 3;
·$24,000 for Amex points – not included in version 3. The Husband says that the points do not exist;
·The inclusion of paintings, coin collection, crystal watch. Those items are included in Version 3; and
·The superannuation figures are slightly different.
As can be seen at this point, the Husband, for the purposes of Version 3, largely conceded the Wife’s version of the asset pool as set out at annexure ‘G’ to her affidavit. But that was not the end of the matter as there were certain amounts that the Wife wanted included in the balance sheet which the Husband said should not be included:
·The amount of at least $115,000 paid to the Husband by D Pty Ltd – which the Wife wanted included as an addback; and
·Trade debtors for D Pty Ltd of approximately $220,000 being the difference between the $119,121.95 figure the single expert accepted as the trade debtors and $332,000 being a possible amount such trade debtors were in reality (I note also that the Wife did not abandon her initial contention that the trade debtors were possibly $418,000).
So to put this in full context – if the figures of $115,000 and $220,000 in round terms were included in Version 3, as sought by the Wife, then:
·The net asset pool would be $2,119,622;
·30% of that figure is $635,886.6;
·On the presumption that the Husband is credited with the $115,000 and $220,000 amounts, then he would retain assets amounting to $793,605 — the figure is higher of course if the motor vehicles and the Amex card are included.
·The Husband has, on this scenario, 37.5% of the pool — higher than the percentage the Wife proposes.
In response, Mr Williams first addressed the alleged trade debtors for D Pty Ltd. He submitted that that the Wife prepared the financial statements for D Pty Ltd that included a trade debtors figure of $418,000. The single expert regarded the information to be in error and adopted the figure of $119,121.95 as being correct. Again, I note that apparently the single expert’s evidence will not be challenged at trial. Mr Williams submitted that the Wife has been repeatedly asked to concede that she imputed the higher incorrect trade debtors figure of $418,000, but there has been no response to that request. Further, the Husband says that there were no accounts receivable by D Pty Ltd after June 21. The figure of $119,121.95 was accepted by the single expert — that should be the end of the matter.
As to the motor vehicles, Mr Williams submitted that there is no evidence that those items are owned by the Husband and they should be excluded from the balance sheet. The same applies to the Amex card figure. Those purported amounts add approximately $87,000 to the balance sheet, and he submits that they should not be there.
As to the $115,000 loan add-back — he submits that the monies have been paid to the Husband and reasonably spent (paragraph 35 his November affidavit) and they will not, therefore, be added back. As such, that figure should not be included in the balance sheet.
As can be seen, for me to accept the Husband’s position that the Wife’s claim will not be defeated if he receives $200,000, I need to be satisfied, on the untested evidence - acting cautiously and conservatively - that all or some of these mentioned amounts will not be ultimately included in the balance sheet at trial. I repeat what Justice Watts said in Osferatu:
Given it is an imprecise exercise, the interim property order has to be “conservative” so that the final outcome of property settlement will not be compromised by the interim property order. Either the remaining property needs to be sufficient to meet the legitimate expectations of both parties at the final hearing, or the order that is contemplated needs to be capable of being reversed or adjusted if it is subsequently considered necessary to do so.
Mr Williams submitted that with these various items excluded from the balance sheet, it is Version 3 that the Court should use to calculate the impact of $200,000 being provided to the Husband. The result is just over 25% of the net pool being in the Husband’s possession after the $200,000 amount is paid. This is safely under the Wife’s desired outcome.
Mr Wong first addressed the first step identified in Strahan.
He submitted that the Husband has not established a basis for the Court to exercise power under s 79 and s 80 (1) (h).
As stated, the Husband explains the exercise of power is warranted because of the matters at paragraph 46 of his affidavit:
·he has to move out of his current property and move into a new one – $51,600;
·he put aside $24,000 for Z’s school fees;
·he has to pay $6,739 to Company F;
·he has to pay Amex debts of $6,526, $1,861 and $28,220;
·he has to pay anticipated living expenses; and
·he has to pay anticipated legal expenses of $80,000.
Mr Wong submitted that the school fees payment is hard to accept when the Mother is owed money for child support. He also submitted that there is little evidence regarding the Husband’s need for monies to move to new premises. Finally, the amount he seeks for legal fees prior to trial is questionable given that the firm that represents him now is the same firm who prepared his previous interim property application and it cannot simply be accepted that he will not have ongoing representation if he cannot pay the funds up front.
The real emphasis of Mr Wong’s submissions were, however, in relation to the second step identified in Strahan - that the Court cannot be comfortably satisfied that a payment of any amount to the Husband will not defeat the Wife’s claim, in circumstances where there will be little ability to claw those monies back from the Husband once they are paid. His submissions of course went to the true nature of the balance sheet. Mr Wong submitted that the balance sheet was far from settled and there were many questions that were not capable of being answered at this time:
·the value of Town C — the Wife believes it has fallen in value from $2,000,000 due to changes to the property market. The $2,000,000 amount in the balance sheet will of course be tested by the market at sale — so to accept that figure as accurate creates risk;
·the Wife says that her positon at trial regarding the Husband receiving 30% may change at trial — particularly if there is evidence of waste or other malfeasance (paragraph 87 her affidavit);
·there is an amount of at least $115,000 that the Wife wants added back to the balance sheet. It is a loan re paid by the company known as Company E, to the Husband. The single expert, Ms K, refers to the loan in her single expert report (page 105 Wife’s tender bundle). There she states that she eliminated the loan and did not include it as an asset on the balance sheet on the basis that it was unlikely to be repaid. Mr Wong says, however, that the loan was repaid to the Husband. It was at this point that Mr Wong took me through various bank statements found in the Wife’s tender bundle:
·He demonstrated that in August and September, November and December 2021 monies went from D Pty Ltd into a Company E Westpac account;
·Those monies were then transferred into the Husband personal Bank L account;
·Mr Wong submitted that the total amounts transferred from D Pty Ltd to Company E amounted to $208,701.50 — of that amount approximately $114,000 was then transferred into the Husband’s Bank L account;
·Some of those monies transferred to his Bank L account paid a $36,000 Amex debt. (I note that a large portion of that debt relates to his payment of legal fees). The Amex statements also evidence that on 16 December 2021 the Husband purchased a motorbike for $13,000 – (remember that the Husband says he does not own a motorbike).
Mr Wong submitted that these transactions support the argument that $115,000, or perhaps as much as $208,000, should be added back to the balance sheet. He submitted that there is currently insufficient information as to why these monies were paid to Company E, and then to the Husband, and it is difficult to understand how D Pty Ltd could afford to pay Company E $208,000 when the Husband claims that D Pty Ltd is insolvent; and
·There are also unanswered questions regarding the trade debtors for D Pty Ltd. As stated, the single expert regarded them as amounting to $119,121.95. The Husband’s tender bundle, however, includes an email exchange dated 21 September 2021 that brings the accuracy of this figure into doubt: (emphasis added)
On Wed, 29 Sept 2021 at 09:16, [Mr M] wrote:
Hi [Mr N],
I’ve had a look at the [O] file, and the balances have changed from when we ran the reports to prepare the
financial statements:
Originally Now
Sales $764,653.32 $762,330.33
Rebate $942,512.41 $720,971.00
Recycling $1,108.14 $1,108.14
Trade Debtors $332,093.23 $119,121.85
Looking at the trade debtors, the debtor to [Company P] has decreased from $231,238.61 to
$35,142.95. There has been some movement with other debtors, but not to the same amount.
Our office wouldn’t have made any changes to the [O] file. Its been changed by someone else.
Regards
[Mr M]
Director
Q Pty Ltd
PH: …
FAX: …
Liability limited
The Husband replies:
On Wed, 29 Sept 2021 at 11:37, [Mr Oglesby] wrote:
Talk to me re this please
Trade Debtors $332,093.23 $119,121.85
Regards
[Mr Oglesby]
CEO [Company R]
Mr Wong submits that this email exchange leaves a real question as to the extent of the trade debtors and the potential for a further amount — perhaps $220,000 — to be added to the balance sheet on the Husband’s side of the ledger.
The essence of Mr Wong’s submission is that there are too many unknowns for the Court to be satisfied as to the value of the parties' net assets. As such, to make a further distribution to the Husband creates real risk that the Wife’s claim will be defeated, without any way of clawing those monies back — the Husband makes it clear that he will quickly spend any monies allocated to him.
DETERMINATION
I can quickly deal with the first step identified in Strahan.
The source of power relied upon by Mr Williams is s79 and s 80(1)(h). Taking the Husband’s evidence at its highest there is proper basis warranting an exercise of power under those sections. I refer in particular to paragraphs 35 and 46 of the Husband’s affidavit, and the financial stress he says he is under. In the interests of justice, an exercise of power under the stated sections is warranted.
The second step involves the exercise of the Court’s power pursuant to s 79 of the Act. Insofar as it is possible in interim proceedings, this step requires the Court to:
(a) identify “the parties’ property and of their interests in it” (Medlow & Medlow (2016) FLC 93-692 at [69][6]); and
(b) consider and apply the provisions of s 79 Strahan at [135].
[6] Medlow & Medlow (2016) FLC 93-692 at [69]
Both parties' clearly agree that it is just and equitable for a property order to be made. This was a long marriage where both parties' made significant contributions and they no longer desire to hold property jointly. It is just and equitable for a property order to be made.
There is a real question as to the final makeup of the balance sheet and I will come to that. The nature of the assets and liabilities that might be included in that balance sheet can, however, be identified.
I also accept, as submitted by Mr Williams, that both parties' made significant financial and non-financial contributions throughout 19 years of cohabitation, but there is obviously a real contention as to how the Court should treat the monies advanced by the Wife’s Father. They each say that their incomes are poor and each cares for children. The Wife has re-partnered. On the face of it, both parties' positions set out in their applications, are possible outcomes at trial.
The real question, however, as identified by both Mr Wong and Mr Williams, is whether the Wife’s claim will be defeated if there is a payment to the Husband of $200,000.
Based upon the untested evidence I have set out in these Reasons, and considering the extensive submissions of Mr Wong and Mr Williams, I am not, at this time, confident that the remaining property of the parties' is sufficient to meet the legitimate expectations of both parties at the final hearing if any payment is made to the Husband. This includes the $50,000 to each party, proposed as an alternative by the Wife. I am also not confident that any amount paid to the Husband is capable of being reversed or adjusted if it is subsequently considered necessary to do so. It seems clear that the Husband will quickly spend an amount provided to him.
As detailed in Mr Wong’s submissions, there are many unknowns about the final makeup of the balance sheet, including:
(a)whether the trade debtors of D Pty Ltd are $119,121.95, as relied upon the single expert when she valued the shares of the company, or $332,000 - as referred to in the emails of September 2021, or indeed $418,000 as allegedly inputted by the Wife into the company’s financial statements. This is clearly a matter to be explored at trial. If the trade debtors are more than $119,121.95 then it raises a question as to whether the value of D Pty Ltd’s shares are actually ‘nil’ or some higher amount. Mr Wong says it is simpler than that — if the figure is higher than $119,121.95 it will result in a simple new line entry in the balance sheet (on the Husband’s side) for D Pty Ltd’s trade debtors — perhaps as high as $220,000. I am not sure if he is right, but again the ultimate outcome is unknown, and it is a matter to be explored at trial.
(b)There remains a question about the inclusion of the motorbike, Motor Vehicle 1 and Motorcycle. As shown, the Husband purchased a motorbike with his Amex card. Whether these items should be included in the balance sheet is unclear, but this will be explored at trial.
(c)Whether there should be an add-back of $115,000 to the balance sheet or perhaps as much as $208,000 for monies paid by D Pty Ltd to Company E and then partly to the Husband. The Husband says he did receive $115,000 but spent those monies legitimately and reasonably, but there was no proper examination as to whether these monies were, in fact, spent reasonably. Whether any amount like the figures stated should be added back to the balance sheet is again a matter for trial. I cannot determine the issue on the evidence I have before me.
(d)There is also the amount of the potential Capital Gains Tax and the cost of selling the Town C property. Mr Wong says the Capital Gains Tax is $300,000 — the Husband says it will be $245,000. The Wife says the costs of sale are $50,000 — the Husband says $34,000. It is impossible for me to know what the correct figures are, particularly when the sale price is unknown.
(e)There is also the value of the property of $2,000,000. The valuation was obtained in June 2022. Whether the sale price is less or more or the same is again unknown.
Acting conservatively, I am concerned that the Wife’s current claim of 70% of the net assets will be jeopardised if I make an interim payment of any amount to the Husband. There are too many unanswered questions regarding the final makeup of the balance sheet. Ultimately, all of the matters that I have mentioned will be explored at trial. It may be that they come to nothing and the Husband will, in retrospect, have been justified in seeking the payment of $200,000, with reference to Version 3 of the balance sheet. It may be, however, that a forensic testing of the evidence will result in the Court finding that the property pool for division at trial is far different to that contained in Version 3. For this reason, I will not, at this time, entertain the Wife’s application for costs relating to this application, and all questions of costs will be reserved to the end of the trial.
Further, given the Husband so quickly spent the previous payment to him — and he details how he will quickly spend the $200,000 if distributed to him — I cannot be confident that any amount paid to the Husband now can be clawed back from him, if it were eventually determined that he received too much.
The Husband’s application for an interim property order must therefore be dismissed.
I certify that the preceding ninety-two (92) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Turnbull. Associate:
Dated: 19 January 2023
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