Pappas and Pappas

[2017] FamCA 139

FAMILY COURT OF AUSTRALIA

PAPPAS & PAPPAS [2017] FamCA 139

FAMILY LAW – PROPERTY – Interim property distribution – Where the matter may not reach final hearing for considerable time – Whether an equal distribution to each party is just and equitable – Whether a party is required to provide evidence of a need for funds – No such requirement necessary

Strahan (2011) FLC 93-466

APPLICANT: Ms Pappas

RESPONDENT: Mr Pappas

FILE NUMBER: SYC 7631 of 2016

DATE DELIVERED: 10 March 2017

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 10 March 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Othen

SOLICITOR FOR THE APPLICANT: York Law

COUNSEL FOR THE RESPONDENT: Mr Dura

SOLICITOR FOR THE RESPONDENT: Anderson Lawyers

Orders

IT IS ORDERED

1. That each of the husband and the wife give such instructions as are necessary to effect the payment of $165,000 to each of them from the money held in trust from the proceeds of sale of the property at B Street, Suburb C.

2. That the wife’s application in Clause 3 of her interim application filed 18 November 2016 is otherwise dismissed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Pappas & Pappas has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 7631 of 2016

Ms Pappas

Applicant

And

Mr Pappas

Respondent

REASONS FOR JUDGMENT

1. Ms Pappas (“the wife”) and Mr Pappas (“the husband”) are engaged in proceedings for property settlement. The matter is not yet in the pool of matters awaiting allocation to a Judge and, realistically, will not be allocated to a Judge’s docket within the next two years.

2. The wife in her substantive application seeks an order that she receive 65 per cent of the net assets and the husband 35 per cent. The husband seeks an equal distribution.

3. The wife brought a number of interim applications which were heard in a duty list on 5 December 2016 by Watts J. His Honour made orders restraining the husband from dealing with certain assets and, relevantly, made an order that a bank account in joint names (“the …45 account”) be used to make the repayments on the mortgage secured over the jointly owned property at Suburb D in which the wife lives, after payment out to each of them, by way of interim property settlement, of the sum of $30,000. Thus, there has already been one partial property settlement order made.

4. Time did not permit his Honour to deal with all of the wife’s interim applications and her application for interim property settlement was listed before me today.

5. There is some dispute about the current balance of the ...45 account. The wife asserts the balance is $211,768 and the husband asserts $221,500.

6. The wife seeks an order that the whole of the …45 account be paid to her by way of partial or interim property settlement.

7. Before me, counsel for the wife indicated that she sought $165,000 towards the payment of her legal costs and that she wished to have the balance of the fund so that she could have control of the mortgage payments. She did not suggest that the mortgage payments were not being met in accordance with his Honour’s orders.

8. Counsel for the husband indicated that the husband agreed to the release of $165,000 to each party and opposed any variation of his Honour’s orders in relation to the ...45 account.

9. In order to understand their respective positions, it is necessary to have an over-view of the asset pool.

10. A draft joint balance sheet was tendered. The net asset pool is approximately three million dollars. Of that pool, $1,518,000 is held in a controlled money account by solicitors and a further amount is held in the ...45 account.

11. Counsel for the wife conceded that it was immaterial whether any amount ordered to be distributed was paid from the controlled money account or from the ...45 account.

12. Counsel for the wife argued that it would not be just and equitable to order any payment to the husband. In so arguing he relied on the following passages from the judgement of the Full Court in Strahan (2011) FLC 93-466:

    118.    We agree with the submissions of senior counsel for the Wife in relation to the approach to be taken to the hearing of an application for an interim property settlement order. There are two stages to the hearing of such an application where the power is to be exercised pursuant to s 80(1)(h) of the Act. This is recognised by the fact that although the power under s 79 should ordinarily be exercised on a once only basis, "circumstances may arise before there can be a final hearing" where the power is exercised. Thus the first step is to resolve whether to exercise the power before a final hearing and if it is resolved to do so then the second step involves the exercise of that power.

    132. In relation to the first stage, in our view, when considering whether to exercise the power under s 79 and s 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.

    133. In Harris at 79,930 the Full Court gave some examples of circumstances where it may be appropriate to exercise the power being "where both parties agree to the disposal of some assets pending the trial" and "[u]rgent situations" to avoid injustice. Another example is where, as in this case, one party requires funds to assist in defraying the costs of litigation without which funds an injustice may be caused.

13. It was not disputed that, even if the wife is wholly successful in her substantive application, the husband will receive funds in excess of a million dollars. Thus it could not be argued that any distribution of funds to the husband, however he chose to use it, would be irreversible.

14. Rather, the argument advanced on behalf of the wife was that the husband had not demonstrated any need for the funds and therefore they should remain in the controlled money account.

15. The husband is not required to show compelling circumstances. Once the Court determines, as the wife asks, that it is appropriate to exercise the power to make an interim distribution, the discretion is wide and fettered only by the requirements of justice and equity. On the wife’s case, a substantial amount from the controlled moneys account is the husband’s money.

16. Why it is just and equitable to make an interim distribution to the wife but not allow the husband access to what is unarguably his own money, is not clear.

17. Justice and equity require that each party has access to funds and orders will be made for the release of $165,000 to each of them from the controlled money account.

18. In relation to the release to the wife of the funds in the ...45 account, there is no evidence of the amount of the repayment of the mortgage over Suburb D. The husband deposed to paying $1,950 per week for combined mortgage repayments over Suburb D and another property at Suburb E.

19. The amount of the mortgage over Suburb D is $790,000. The amount of the mortgage over Suburb E is $520,000. It is reasonable to assume that at least $1,000 per week is attributable to the Suburb D mortgage.

20. Having regard to the length of time that is likely to expire before this matter is determined, the safest course of action is to leave the ...45 account available to pay the mortgage over Suburb D, in the hope that the fund will not have been exhausted before the matter is heard and determined.

21. Both parties were required to provide costs letters in relation to this application. The costs letters have been marked as an exhibit in the proceedings. The wife has spent $31,853. The husband has spent $17,875. No doubt there will be further applications before this matter finally comes to trial. The wife’s lawyers estimate that her costs will be about $200,000 in all.

22. They are in dispute about a differential of 15 per cent of the net assets. As the pool is presently understood, their dispute is about $450,000.

23. It would seem likely that, between them, they will spend that amount in arguing about it over the next two years or so.

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 10 March 2017.

Associate:

Date:  10/3/2017