Palters & Murrily
[2022] FedCFamC2F 425
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Palters & Murrily [2022] FedCFamC2F 425
File number(s): NCC 1257 of 2020 Judgment of: JUDGE BETTS Date of judgment: 25 February 2022 Catchwords: FAMILY LAW – Property – interim hearing – interim application for periodic spousal maintenance – whether the husband has capacity to pay – sale of the formal matrimonial home – partial property settlement – just and equitable. Legislation: Family Law Act 1975 (Cth), Part VIII Cases cited: Bearup & Bearup (1993) FLC 92-412
Hall & Hall (2016) 257 CLR 490
Strahan & Strahan (2011) FLC 93-466
Division: Division 2 Family Law Number of paragraphs: 79 Date of last submission/s: 25 February 2022 Date of hearing: 21 and 25 February 2022 Place: Newcastle Counsel for the Applicant: Mr Fernon SC Solicitor for the Applicant: Yates Beaggi Lawyers Counsel for the Respondent: Mr Guyder Solicitor for the Respondent: Fourtree Lawyers ORDERS
NCC 1257 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR PALTERS
Applicant
AND: MS MURRILY
Respondent
ORDER MADE BY:
JUDGE BETTS
DATE OF ORDER:
25 FEBRUARY 2022
THE COURT ORDERS THAT:
1.Pending completion of the sale referred to in the orders below, that the Husband shall pay the Wife spousal maintenance in the sum of $300.00 per month with such payment to be made on the first Monday of each month post the making of these Orders and such payments are to be paid into the Wife’s nominated bank account.
2.The parties forthwith do all acts and sign all documents necessary to cause the real property known as and situate at B Street, Suburb C in the state of New South Wales, being the whole of the land contained in certificate of title folio identifier … (“the home”), to be sold in the following manner for the best reasonably obtainable price:
(a)The parties shall cause the Home to be listed for sale by public auction with D Real Estate Agents (“the Agent”), with the date of the auction to be such date as nominated by the Agent but no later than 2 months from the date of these Orders.
(b)The conveyancer with conduct of the sale of the Home shall be Ms E or Ms F, with the Respondent Husband to choose (“the Conveyancer”).
(c)The parties shall accept the advice of the Agent as to any marketing campaign and/or work (including styling, repairs, maintenance – one off and periodic – and upkeep) required to be undertaken to the Home in preparation for sale and during the marketing campaign, and any expenses incurred in relation to such marketing campaign and/or to complete such work shall be paid by the Husband in the first instance and reimbursed at settlement provided the Wife has consented to those expenses such consent not to be unreasonably withheld and the Husband has provided sufficient evidence of incurring those expenses.
(d)The parties shall co-operate in every way with the Agent including but not limited to:
(i)Making house keys available to the Agent (noting that the Wife does not currently have any keys to the Home);
(ii)Allowing the inspection of the Home at all reasonable times requested by the Agent;
(iii)Doing or saying nothing to hinder or prevent a sale being effected;
(iv)Ensuring that the Home, including its grounds and dwellings, are maintained in a neat and presentable condition at the time of inspection by the Agent and prospective purchases.
3.The parties shall execute a contract or agreement for sale in the form approved by the Conveyancer and sign all documents requested to be signed by the Agent in relation to the listing of the sale of the Home.
4.The reserve price for the purpose of a sale of the Home by auction shall be such a reserve price as is mutually agreed upon by the parties; or in the absence of agreement reached within 7 days of the requirement that the Home be listed for auction arising, the reserve price nominated as market value thereof by Agent (“Reserve Price”).
5.In the event of the bidding at an auction for the sale of the Home does not reach the Reserve Price, the parties may negotiate with the highest bidders or any other interested person and effect a sale of the Home at a price as the parties agree upon in writing.
6.In the event that the Home remains unsold after an auction for its sale, the parties shall list the Home on the market for sale by private treaty listed at the Reserve Price for a period of three (3) months.
7.In the event the Home remains unsold after three (3) months, the parties shall immediately re-list the Home for sale at a second public auction, again on a date nominated by the Agent, and at such auction there shall be no reserve price unless otherwise agreed upon by the parties in writing.
8.That the parties shall od all acts and sign all documents necessary to disburse the proceeds of any sale of the Home in the following manner and priority:
(a)first, in payment of all agent’s commissions, expenses and conveyancing costs of the sale, including in relation to any public auction/s;
(b)second, in payment of all outstanding land tax, council rates, water rates and service charges relating to the Home;
(c)third, to discharge the mortgage in favour of G Bank (registered number …) secured over the Home;
(d)fourth, to reimburse the Husband any monies paid pursuant to order 2(c) herein;
(e)fifth, to pay:
(i)20% to the Husband (or as he may direct in writing) by way of partial property settlement:
(ii)20% to the Wife (or as she may direct in writing) by way of partial property settlement; and
(iii)The balance to be deposited into a Controlled Monies Account operated by Yates Beaggi Lawyers held on behalf of both parties pending written agreement being reached by the parties in relation to the balance or further order of this Court.
9.That pending completion of the sale of the Home:
(a)The Husband must pay the mortgage repayments, council and water rate instalments, water usage charges, and any other regular outgoings charged to the land for the Home, together with home building insurance payments and any payments for utilities servicing the Home such as electricity, gas and landline telephone, as and when they fall due, and the Husband shall indemnify and keep indemnified the Wife in respect of any liability to make such payments;
(b)Keep the dwellings and grounds of the Home tidy, clean and in good repair; and
(c)Permit inspection by agents and prospective purchasers at all reasonable times.
10.That each party shall do all acts and sign all documents necessary to give effect to these orders.
11.That in the event that either party refuses or neglects to execute any deed or instrument required to be executed by these orders within 14 days of a written request to do so, the Registrar of the Newcastle Registry of Federal Circuit & Family Court of Australia is hereby appointed pursuant to Section 106A of the Family Law Act to execute such deed or instrument on behalf of such refusing or neglecting party and to do all acts necessary to give validity to the operation of the deed or instrument upon the Registrar being provided with verification of such refusal or neglect by way of Affidavit.
12.Intentionally Omitted.
13.Within 14 days of receipt of the Court’s written reasons, the Wife is to file and serve any written submissions and any supporting evidence in support of any costs application, not exceeding 2 pages.
14.Within 28 days of receipt of the Court’s written reasons, the Husband is to file and serve any written submissions and any supporting evidence in response, not exceeding 2 pages.
15.If either party seek that the matter be listed for oral argument the Court will allocate a date.
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 the pseudonym Palters & Murrily has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE BETTS
These reasons for judgment were delivered orally. They have been corrected from the transcript so as to make them easier to read.
OVERVIEW
These are parenting and property settlement proceedings between husband and wife. They are ordinarily in the docket of her Honour Judge Kearney, however for administrative reasons related to the court calendar I have heard the present application which is listed before the court.
The matter comes before the court by way of the wife’s Application in a Proceeding filed 10 November 2021.
Essentially, by that Application she seeks interim spousal maintenance in the periodic sum of $750 per week, together with an order for the sale of the former matrimonial home at Suburb C, presently occupied by the husband and the parties’ three (3) children. After payment of various sale expenses, she seeks that the net proceeds be disbursed as to 20% to the wife, 20% to the husband, and the balance to be deposited into a controlled monies account operated by the wife’s legal representatives.
The husband opposes both applications, and seeks that they be dismissed.
THE HEARING
The matter proceeded to hearing before me on Monday this week at which time I had the benefit of Mr Fernon QC who appeared on behalf of the applicant wife, and Mr Guyder of counsel who appeared on behalf of the respondent husband.
Mr Fernon relied upon the following documents:
(a)Wife’s Outline of Case filed 19 February 2022;
(b)Wife’s Response (final orders) filed 12 June 2020;
(c)Wife’s Financial Statement filed 12 June 2020;
(d)Wife’s Application in a Proceeding (the present application) filed 10 November 2021;
(e)Wife’s affidavit filed 14 February 2022.
On behalf of the husband, Mr Guyder relied upon:
(a)Husband’s Outline of Case;
(b)Husband’s Response filed 8 December 2022;
(c)Husband’s Financial Statement filed 23 April 2020;
(d)Husband’s affidavit filed 18 January 2022.
The parties tendered various exhibits in the course of the hearing.
Only the husband was required for cross-examination. Mr Guyder quite properly conceded that the wife had the requisite “need” for the purposes of the spousal maintenance application. The real issue in the case was the husband’s capacity to pay; his case was that he had no such capacity.
Mr Fernon cross-examined the husband about a number of issues. In the end, to be fair, not a lot turns on the evidence given by the husband in the course of that cross-examination.
The matter was otherwise adjourned for final submissions before me today at which time, again, Mr Fernon and Mr Guyder appeared and made submissions.
I have had regard to all of the evidence, and all of the documents to which I was referred in the course of the proceeding, including relevant pages of the exhibit material.
Before turning to each of the wife’s respective applications I should note, by way of context, that these proceedings are listed for final hearing before her Honour Judge Kearney in November of this year. Both parenting and property issues are very much in dispute. In terms of the parenting issues the wife apparently seeks that the children return to living with her. This would be a significant change because at present they are spending supervised time with her only pursuant to interim orders of August 2020. The husband seeks that the children remain living with him.
In terms of the property case, it is the common position of both parties that the former matrimonial home should be sold as part of any final order, and that the net proceeds be divided between them, albeit perhaps unsurprisingly they do not agree on what the division should be.
There are many disputed facts; this is an interim hearing. It is impossible for me to make findings about disputed facts. I simply need to do the best I can within that framework of what is necessarily an abridged hearing.
SPOUSAL MAINTENANCE
I start then with the spousal maintenance application.
Pursuant to s 74(1) of the Family Law Act 1975 (“the Act”), the court has power to make such order for spousal maintenance as it considers proper. Section 72 of the Act is the gateway provision. It provides that a party to a marriage is liable to maintain the other party to the extent that the first mentioned party is reasonably able to do so if, and only if, that other party is unable to support herself or himself adequately, whether:
(a)by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b)by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c)for any other adequate reason having regard to any relevant matter referred to in section 75(2) of the Act.
An applicant for maintenance must prove on the balance of probabilities that he / she is unable to adequately support himself or herself by reason of the matters set out in section 72(1) including, if necessary, a consideration of the matters set out in section 75(2). This could be described as a “threshold” test. In Hall & Hall (2016) 257 CLR 490 the High Court held that at an interim hearing, while the threshold test must be satisfied, “the evidence need not be so extensive, and the findings not so precise” as in the case of an application for a final spousal maintenance order.
Of course, assuming an applicant meets the threshold test, a respondent is only liable to pay maintenance to the extent that he or she is reasonably able to do so, and this was the critical issue argued before me. Reasonableness is obviously the touchstone in respect of a respondent’s living expenses. It is not always possible for parties to enjoy the same standard of living post-separation as they did pre-separation, and the court essentially has to make appropriate and reasonable allowances for living expenses that reflect reality, common sense, and life experience in terms of costs of living and the like.
I do not propose to dwell too long on the spousal maintenance issue. As Mr Guyder properly conceded, the wife is in difficult financial circumstances, at least on paper which is not challenged. The circumstances that she is in, on her own case, are rather dire. Having regard to her affidavit evidence, it appears that she is presently unemployed, and in receipt of some form of Centrelink means-tested payments (Jobseeker). She has received some financial assistance from Centrelink on a continuing basis of approximately $590 per fortnight; this is her only income.
She has also submitted an application for an “escaping violence payment” - a programme that offers financial assistance to people who have recently separated from their partners. She has not yet received a response from them. She has been referred to H Service and J Service in relation to food and financial assistance. She has applied for a private rent choice subsidy but is waiting to hear back from them. She has also applied for housing assistance through the New South Wales department of Family and Community Services.
The wife has a previous work history during the relationship but she also has health issues, including hearing loss in one of her ears and a loss of sense of smell. She claims this is because of a serious violent assault by the husband upon her which he adamantly denies. I should note for the record that the wife has been convicted of breaching an AVO in respect of the husband, and in this regard each party obviously offers a dramatically different version of events.
On the wife’s case, the husband was a coercive controlling man throughout the relationship who was regularly physically violent to her. On the husband’s case, the wife was erratic, had an alcohol problem, and was regularly violent towards him. It is not possible or appropriate for me to do more than merely recite what each party says, and to note that the present AVO protects the husband from the wife, not vice versa. It is a matter for another day.
The point I make is that the wife does have some injuries which potentially impact her earning capacity, and certainly at this time she is unemployed. Her financial circumstances are such that she says she had to put down what seem to be her beloved horses (paragraph 100 of her affidavit) as well as surrendering her dog and two kittens due to financial hardship and homelessness. On her evidence she had to move out of a property at Suburb K, and she has since relocated some 4 ½ hours away from the children to a little town called L Town where she claims she lives with a friend (Mr N), although the husband questions whether they are in some sort of relationship.
The fact however is that the wife is effectively reliant upon Mr N for housing, and her expenses exceed her income by a very comfortable margin indeed. Her maintenance claim of $750 per week from the husband is in fact less than the shortfall of her expenses over her income. I suspect that she has adopted it as a practical figure given what are obviously somewhat stretched financial circumstances of the husband.
On her evidence the wife has also had to borrow significant monies from her family members, and friends, and perhaps most alarmingly she has borrowed a sum of $200,000 from “M Company and O Company.” On 4 February 2022 she borrowed a sum of $200,000 from them because she says she was unable to borrow with any of the major banks.
Effectively, the interest rate is almost punitive by definition. There was prepaid interest of 15% per annum on the loan amount for six months (a sum of $15,000) which was immediately deducted from the loan at the time of the advance. The loan must be repaid by 3 August 2022; in default of repayment interest will accrue of 20% per annum.
Mr Fernon submitted to me that the wife could not approach a major bank or “first tier lender” given her financial circumstances, and that effectively, she has had to incorporate a $2 shelf company, and thereby obtain the loan in the company’s name while giving a personal guarantee as a director of the company. In this way apparently the lender avoided the requirements of the Consumer Credit legislation.
In any event, it is a significant amount of money for the wife to borrow that must be repaid, and to me it corroborates that the wife is in genuine financial difficulty, as in any event does seem to have been conceded.
Put shortly and without hesitation, I conclude that the wife has “need” and that such need exceeds the amount she claims. In the context of the parties living together for some 18 years or so (2002 to around February 2020 arguably) the wife is an applicant who comfortably fits within the statutory requirements for an applicant for this type of order. Simply put, her case is that she is effectively “broke”, living in rented accommodation a substantial distance away from the children, and that she is in dire financial need.
Mr Guyder questions to some extent whether the wife may have a borrowing capacity in the sense that she was able to obtain this loan of the $200,000. He points to the fact that there is no evidence of any loan application on her part; this is true but I’m not sure that that matter really takes me very far. It is raised perhaps most appropriately in the context of the application for sale of the home to which I will turn shortly.
In terms of the husband’s capacity to pay spousal maintenance, it is quite apparent from his affidavit that he is significantly burdened by expenditure each month. According to paragraph 68 of his affidavit, his current monthly income after tax is $12,186. He lists his expenses in detail in paragraph 69, although somewhat unhelpfully no total has been provided in the affidavit. I have calculated the figure myself as $12,146 giving him a modest surplus of $40 per month, or less than $10 per week.
Mr Fernon challenged a number of the husband’s expenses set out in that paragraph, and it was evident from the husband’s evidence, and from independent exhibits that are before the court, that the husband’s numbers are somewhat inflated. In particular:
(a)the P Bank credit card: the husband said that repayments of $297 per month were required. It is quite apparent from the exhibits that the correct figure is $280 per month. I accept that that figure may vary from time to time but $280 is the best figure I have;
(b)the Q Finance credit card: the husband claimed $197 in repayments per month whereas the exhibits established that the current figure is $113 per month;
(c)R Finance: the husband claimed monthly repayments of $200. It is clear from exhibit 6 that the amount of the repayments each month is $150. Again, as with the previous two payments I accept the submission that there may be some variability but I propose to proceed on the basis of the best evidence I have which I am setting out herein;
(d)S Health Insurance: the husband claimed monthly expenses of $293 whereas exhibit 6 makes clear that the expenses are $187.70. I pause here to observe that the wife complains about what she says is an absence of evidence of the husband making any repayments, and some confusion perhaps about whether the husband is keeping his payments up to date. I propose to allow the amount of $187.70 in full as an entirely reasonable and appropriate living expense, particularly given that the husband has care of the children full-time, and that the wife does not pay child support. I see no reason to be allowing less than the $187.70 figure set out in exhibit 6;
(e)Council rates: The husband claims a monthly figure of $226. At my request there has been some clarification and the husband was able to provide a rates notice which shows that the true figure is in fact $280 per month;
(f)Husband’s gym membership: the husband claims a gym membership expense of $56. He is obviously a relatively fit and healthy man. He certainly appeared robust when I saw him on the video-link, and I accept his evidence that he has been going to the gym since he was 18. Somebody who has attended the gym as regularly as that might well consider this an entirely normal reasonable expense. My difficulty, however, is that the wife is dependent on Centrelink benefits to survive, and this is one of those expenses that does not pass the reasonableness test at this point in time so I would make no allowance for that;
(g)Husband’s mobile plan: the husband claims $70 per month. The evidence, as best I can discern from exhibit 4, establishes that the correct, accurate or reliable figure should in fact be $5 per month;
(h)Children’s mobile telephone plans: The husband claims $40 per month. Again, by reference to exhibit 4 I calculate the children’s mobile costs as $10 per month;
(i)Pool cleaning: The husband claims $65 per week. The wife challenges that figure in its entirety, and says the husband should clean the pool himself. Mr Guyder makes the submission, the force of which is unarguable, namely “pools don’t clean themselves” and somebody has to do it. I do consider that it would be necessary for the husband to pay for chemicals for the pool. But in the circumstances of this case, I also consider that the luxury of paying a third party to undertake what should be a reasonably short job is something that the husband simply cannot afford in the current circumstances and certainly not in the context of the within application. I will allow $5 per week which I will accept at the outset is somewhat arbitrary but it is entirely intended to represent the chemical costs rather than anything else.
The wife also challenges various other expenses. I reject those challenges and explain my reasons for doing so:
(a)the wife suggests that the family TV streaming bill of $30 per month, the family music streaming bill of $18 per month, and the child X’s gaming subscription of $15 per month are all unnecessary or not reasonable. I respectfully disagree with her about that. These children, and this family, require a degree of support, and they require a degree of entertainment, and particularly in the COVID times we live in, it seems to me entirely reasonable, especially where the husband is parenting the children largely on his own, that there should be these expenses allowed. They are as much for the children’s benefit as the husband’s frankly, if not more so;
(b)in relation to mowing, the wife suggested that the husband’s claimed figure of $350 per month was unreasonable, and that the husband could, instead of going to the gym, get some exercise by pushing a lawnmower around. Though I accept there was a small element of tongue in cheek in that submission, I am mindful of the fact that the property apparently comprises some 2.3 hectares, or as I understand it, over 20,000 square metres. To suggest that the husband should be using a push-mower to undertake this task, in circumstances where he doesn’t have a ride-on mower, seems rather harsh, if not mendacious. It would be an onerous job, to say the least, and unless there is an allowance for the husband to spend capital to buy a ride-on lawn-mover, which would be frankly unwise given that the parties are looking at selling this property anyway, it seems to me that this is just a necessary cost, and I allow it in full.
The wife makes various other complaints of a lesser nature in relation to expenditure but in the end, having regard to the living circumstances of the parties, and particularly to the husband’s expenses, I consider that all of the allowances I have arrived at above are reasonable.
It follows that I have calculated that the husband’s reasonable allowance for expenditure for the purposes of the within application at $11,828 per month which results in him having a surplus of around $318 per month. To summarise, his income after tax is $12,146, his expenses (as adjusted by me) come to $11,828 leaving $318 per month.
In closing submissions, Mr Fernon - no doubt appreciating that the evidence was a little “thin” in terms of the husband having a capacity to pay anything like what the wife was asking for - ultimately contended that she had an entitlement on her best case of around $1,500 per month on the basis that this was a reasonable surplus amount. Even that figure would be a modest $375 (or a bit less per week) but the husband does not even have that capacity in my assessment.
Having regard to the husband’s income and expenditure circumstances, and to the factual findings as I have set them out above, I consider that the husband’s capacity to pay spousal maintenance is no more than $318 per month, and in the exercise of discretion, I consider that it would be proper for the husband to pay the sum of $300 per month to the wife. In my view, this is the amount which he can reasonably afford, although as I indicated in the course of submissions, his budget is being trimmed to a rather lean figure, and there is certainly no “fat in the budget” if I can use that expression.
Nonetheless, to the extent that there is this very modest amount of fat in the budget, the wife ought to receive, if not all of it then at least the lion’s share, and I propose to order that the husband pay $300 to the wife on a monthly basis.
SALE OF THE HOME
I turn then to the wife’s application to sell the property.
There is some dispute about what the value of the property might be. It seems to vary somewhere between a minimum of $1.84M, perhaps around $2.5M as at September last year, and perhaps as high as $3M or $3.3M according to the advice apparently given to the wife by D Real Estate Agent. Their advice, apparently, is that now is a good time to sell, and that the parties would achieve a higher price if they were to sell quickly.
Mr Guyder, displaying some (perhaps) understandable cynicism about what a real estate agent might recommend about the timing of a sale, submits that it is unreliable evidence. Having said this, there is force in Mr Fernon’s submission in response that the parties had consulted the same real estate agency in 2020 about the possibility of selling so they are clearly agents who both parties trusted to consider the possibility of a sale, albeit that the sale did not in fact proceed.
There is no doubt that whatever the value of the home might be, it is overwhelmingly the major asset out of the matrimonial property that the parties own. As I indicated earlier, both parties seek that it be sold; it is not a case where the husband proposes or contends that it would be reasonable for him to retain the property, and to stay in it with the children as part of the final outcome in these proceedings.
Quite the contrary: the husband’s position is that the property will have to be sold, and that he hopes to use any net proceeds he receives to purchase a fresh property, noting that he apparently has a borrowing capacity of some $800,000 or $900,000. He proposes to move with the children (into a new home) just the once after the matter has been resolved.
He objects to any sale at this time. His position, quite simply, is that the children are settled in the home, and that selling it now would mean that they will end up making two moves instead of one. That is, they will move into a rental property, and they will then move into another home that the husband purchases out of his property settlement monies.
The husband contends that there is no suitable (temporary) accommodation in the T Region with his family, and that essentially he does not have people who can assist him. The wife gives evidence of rental properties that are available that would be suitable, if not ideal for the husband.
The husband adopts the value of $2.45M as the gross value for the Suburb C property, whereas the wife says the figure may be as high as $3M - $3.3M. So on the husband’s case it is clear that the net equity in the property is in the order of $1.9M out of a grand net asset figure of about $2.256M. But even that $2.256M figure includes $325,000 worth of superannuation which means that the Suburb C property comprises practically all of the net equity in terms of the non-superannuation assets.
Of course, these figures may prove to be inaccurate later on but I merely highlight the point that on the face of the husband’s own evidence, without regard to the wife’s suggested higher value, it is clear that just about all of the parties’ money is tied up in the Suburb C property.
This is a problem. The wife is in circumstances of necessity and difficulty, as set out in her material, and as already referred to by me. On her evidence, her case is that she made significant contributions during the marriage; indeed it would be surprising if this were not so. She also has evidence that significant contributions were made on her behalf by family members in the form of inheritances and the like, totalling almost $900,000 - most if not all of which she corroborates, or attempts to corroborate, through documents.
The wife is seeking 20 % of the net equity in the home upon sale. Mr Guyder properly conceded that the wife’s entitlement at trial would certainly be no less than the 20 % net equity she seeks by way of an interim property distribution now. In that sense, if I make the order sought by the wife no issue arises as to claw-back of any monies that might be released to her.
The power to make the wife’s proposed order is clear enough. The court has general power, pursuant to section 79 and 80(1)(h) of the Family Law Act to make orders until further order. The power of the court to sell the former matrimonial home, and realise the underlying cash value of the home, is well and truly there, and it is a discretionary question as to whether it should be exercised or not.
The husband contends that at this time it would not be appropriate for the court to exercise the discretion. He says this is so notwithstanding that the amount sought by the wife by way of interim property settlement represents less than her ultimate entitlement at trial.
The practical effect of no order being made is that the wife is reliant upon extremely harsh (if I can use that word) lending arrangements from a third party, repayment of which will be due in about six (6) months’ time, as well as Centrelink payments, and support from other family members or friends. There is a mendacity about that approach, just as much as there is a mendacity in the wife’s suggestion that the husband push a mower around the home.
Mr Guyder referred me to the decision of the Full Court of the Family Court in Bearup & Bearup (1993) FLC 92-412. In that case the trial Judge, upon review of a Registrar’s decision, made orders for the sale of a matrimonial home which the wife and children were living in. In that sense there is some factual similarity with this case.
His Honour the trial Judge apparently made the order for sale because of a significant factual error, namely that the parties were in fairly desperate financial circumstances. In truth, it was open to the trial Judge to have instead order the sale of a different real property to meet the parties’ then debt requirements. Against that background, and noting the facts of that particular decision, the Full Court observed that:
Trial Judges must approach the sale of matrimonial property prior to the hearing of substantive applications for settlement of property with the utmost caution. Such orders, in my opinion, should only be made for the purpose of preserving assets or in the payment of either spousal or child maintenance. There was no justification, in my view, having regard to the facts of the case in an interlocutory application to require the sale of the former matrimonial home, albeit to satisfy debts, when the sale of the vacant land could have achieved the same result, and leave money to spare.
The Full Court’s reference in that decision to trial Judges approaching these sorts of applications with the utmost caution does also need to be read in light of the Full Court’s later decision in Strahan & Strahan (2011) FLC 93-466. In that particular case the Full Court overturned previous authority to the effect that an applicant seeking an interim property division needed to demonstrate “compelling circumstances”.
The Full Court said that in relation to an application for the exercise of the court’s interim property jurisdiction that the court needed to consider: firstly, whether or not to exercise the jurisdiction at all; and secondly, if the jurisdiction was going to be exercised then it was necessary for the court to undertake some preliminary assessment of the strength of an applicant’s case. (This is linked with the “claw-back” issue to which I have referred earlier).
In my view, Strahan & Strahan (supra) has somewhat “loosened” the earlier case law in relation to the flexibility or otherwise that should be displayed by Judges at first instance determining these types of applications. However I also make clear that ordinarily the making of a property settlement order by a court is a once and for all exercise; that is the ordinary position.
Hence the onus is upon the applicant to demonstrate that the discretion should be exercised at all, and that it should be exercised in the applicant’s favour. In that regard I accept, as a general proposition, that courts should be slow to order the sale of a matrimonial home occupied by a parent of children, particularly where the parent is solely raising them without any regular financial support from the other parent. I interpose here that the wife in fact owes arrears of child support to the husband, and the evidence is that while she is in fact making repayments they are fairly modest in nature.
The facts of this matter however are that in this particular case the husband is not seeking to retain the home; he accepts that it is not realistic for him to do so. A sale is inevitable on either party’s case. It is a question of stalling the inevitable and waiting until a final hearing, or ordering a sale now. If the court waits until a final hearing to order a sale, the value of the home may or may not be agreed. But in any event as the property will sell after trial, a Judge will likely be obliged to arrive at a percentage-based division.
A percentage-based division is certainly an adequate way for the court to make decisions in these sorts of cases, but far better in my view is to have a dollar figure sitting in a solicitor’s trust account, invested, where there can be no debate about what the actual figure is. But this is a minor consideration in the grand scheme. The much bigger consideration for me is the wife’s parlous financial circumstances, her manifestly significant contributions to the assets, and her totally impoverished financial position.
The effect of the husband’s proposed order that the wife’s application be dismissed is that between now and November 2022 he will continue to live in this home, which is seemingly rather palatial, with a relatively modest mortgage, and effectively he will have his hands on just about all of the assets. This is rather unjust, and certainly does not strike me as being a just and equitable situation in the interim.
Mr Guyder says that the wife has already accessed her equity in the home by borrowing money from this third party lender. In one sense there is force in that submission but overall I do not give it any significant weight because the fact is that the money did not in fact come from the equity in the home. It is entirely a personal debt of the wife; the husband is not liable for it, and the interest rates applicable and various conditions of it appear to be harsh to say the least.
In a sense, what the husband seeks is to be able to maintain the property and stay there with the children pending a sale - which I accept is the “gold standard” to use that expression, in respect of the children. It also enables the husband to perhaps best discharge his responsibilities as a parent, or to most conveniently discharge them. But as I indicated in the course of submissions, the trouble is that the husband is sitting on all the “gold” whereas the wife is, in my view, in entirely impoverished circumstances.
The wife may have had access to a cash loan but in all of the circumstances of this case, the disparity between the parties’ present asset holdings is nothing short of enormous, and in my view, the justice of this case very heavily militates in favour of the home being sold now, particularly given that it is inevitable that it will be sold later in any event.
It may well be an entirely different case if the husband’s position was that he would be retaining the house, and paying the wife a sum of money for her share in it. Her case in that situation would be a very difficult one to run. But the type of caution referred to by the Full Court in Bearup & Bearup (supra) does need to be looked at in the context of the facts of each individual case. In this particular case I am comfortably satisfied that an order for sale is an appropriate exercise of the court’s power as it will result in the parties freeing up equity in the property, and thereby as well in my view, assisting the Trial Judge (presumably Judge Kearney) in due course to better arrive at a just and equitable property division as mandated by the legislation.
I accept that there is an element of inconvenience, perhaps even distress, to the husband and the children in selling the home but the day is coming when the place has to be sold regardless. The children have been through quite a bit of turmoil in the last few years. Moving into a rental home between now and a final hearing does not add much to that, particularly given the fact that they will continue to attend the same schools, and associate with the same friends etcetera.
The amount sought by the wife falls comfortably within her just and equitable entitlement. It would enable her to meet expenses, including repayment of the loan. Mr Guyder raised in submissions that the wife’s legal bills are very high, and that it would be potentially seen as an abuse of process – my term rather than Mr Guyder’s – if the wife was really bringing the application to pay her legal costs, rather than to meet her living expenses. But I have to take the wife’s case as it is. Her living expenses clearly exceed her income by a comfortable margin each and every week. If the wife chooses to expend her money on legal fees - and ultimately it is a matter for her - the court would obviously not lightly entertain a further application for any interim property order on her part if this was how she chose to spend her money.
CONCLUSION & ORDERS
In the end, for these reasons, I have come to the view that the husband should be paying the wife a very modest amount of monthly maintenance, and that the house should be sold.
At the end of the hearing on Monday I had indicated that this was my very clear impression, and ultimately we have arrived at exactly that position.
What I am going to do is make an order for spousal maintenance of $300 per month with the payments to be made on the first Monday of the month.
I am going to make the orders sought by the wife in terms of the sale of the home with the amendment that in order number 8, particularly paragraph (e) will be amended so that it will provide that (i) will be 20 % to the husband, as he may direct in writing by way of partial property settlement, (ii) will be 20 % to the wife or as she may direct in writing by way of partial property settlement, (iii) the balance to be deposited in a controlled monies account of Yates Beaggi as set out in the draft order.
I am going to make the other machinery orders sought by the wife in respect of the sale, particularly in circumstances where the husband’s simple position was that the application should be dismissed which from his perspective is understandable, but in reality he did not really give me any alternative proposal. It was something of an “all or nothing” proposition. In any event, there is nothing unreasonable or inappropriate in the wife’s proposed orders, and for these reasons I propose to make those orders.
I do not intend to make any costs order in this matter today but rather to reserve each party’s costs. In that regard I make just a couple of observations.
The wife was chasing money by way of maintenance that she was never, in my view, realistically going to get. The dollars just weren’t there. With the greatest respect to Mr Fernon who worked hard to get the result he did, when senior counsel is left “scratching around” to find $17 worth of deductions from the husband’s expenses, you know the maintenance application is not as healthy as an applicant might like.
Equally, the position of the husband in terms of resisting the sale of the property, was an arguable one but it would be plainly wrong to call it generous.
I am firmly of the view that this is a matter that should have been able to be resolved after I gave my intimations to the parties on Monday, and it leaves me wondering just how much acrimony exists in this case. From what I have read I suspect that the answer is – “a lot” - and I hope that for the parties’ sake that between now and the final hearing, they are able to “cool the temperature” between them somewhat, particularly for the children’s sake.
As for costs, I will order that the wife file and serve any written submissions in support of any costs application within fourteen (14) days of receipt of the written reasons, not exceeding two (2) pages. I will order the husband to file and serve a written submission in response within twenty-eight (28) days of these reasons, with such submissions also not to exceed two (2) pages. If either party seeks that the matter be listed for oral argument then it will happen as a matter of course. I will leave it in your hands, gentlemen.
I certify that the preceding seventy-nine (79) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Betts. Associate:
Dated: 5 April 2022
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