PATRON & PATRON

[2015] FamCA 248

FAMILY COURT OF AUSTRALIA

PATRON & PATRON [2015] FamCA 248

FAMILY LAW – PROPERTY – Interim – Where the husband seeks an order for the husband to receive a sum of $260 000 from the mortgage secured against the parties’ property – Where the wife seeks an injunction to prevent the husband dealing with the parties’ shares – Whether the orders should be made under s 79 of the Act as a partial property settlement – Whether the orders should be made under s 117, s 80(1)(h) or s 114 of the Act – Strahan & Strahan (2011) FLC 93-466 – Where the wife has access to significant funds as a result of an inheritance – Where the parties’ have accumulated significant assets – Where the husband does not have access to significant cash resources – Where the wife alleges that the husband has sold shares of the wife without her permission – Whether the proposed order is just and equitable.
FAMILY LAW – COSTS – Where the wife seeks costs of the application – Where neither party was wholly unsuccessful – Where both parties abandoned parts of their claim – Where both parties changed their positions significantly during the course of the proceedings – Where the circumstances do not justify a departure from the usual position – Where each party is to bear their own costs of the application.

Family Law Act 1975 (Cth) s 75(2), s 79, s 80(1)(h), s 114, s 117, s 117 (2A)

Strahan & Strahan (2011) FLC 93-466

Zschokke and Zschokke (1996) FLC ¶92-693

APPLICANT: Mr Patron

RESPONDENT: Ms Patron

FILE NUMBER: SYC 3759 of 2013

DATE DELIVERED: 13 February 2015

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Aldridge J

HEARING DATE: 12 February 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Lloyd SC

SOLICITOR FOR THE APPLICANT: Foulsham & Geddes

COUNSEL FOR THE RESPONDENT: Mr Lethbridge SC

SOLICITOR FOR THE RESPONDENT: Sexton Family Law

Orders

(1)That in the event the applicant husband elects to do so, pursuant to s 79 of the Family Law Act 1975 (Cth) and by way of partial property settlement, the parties are to do all acts and sign all documents necessary to cause to be paid to the husband the sum of $260,703.00 out of the HSBC mortgage account secured against the Suburb A property.

(2)That noting the respondent wife has given the usual undertaking as to damages, pursuant to s 114 of the Family Law Act 1975 (Cth) and pending further order of the Court, the applicant husband is hereby restrained from:

a) withdrawing any funds from any loan account held jointly with the respondent wife or encumbering any real property owned in the name of the parties;

b)the selling or causing to be sold any shares held in the name of the respondent wife or in the name of the Patron Family Superannuation Fund; and

c)purchasing any shares in the name of the respondent wife or the name of the Patron Superannuation Fund

without the prior written consent of the respondent wife or leave of the Court.

(3)That liberty is granted to the applicant husband to seek to apply to relist the matter upon giving seven (7) days’ notice to vary this injunction in relation to the Patron Superannuation Fund. 

(4)That the applicant husband is discharged from the undertaking given by him to the Court on 1 April 2014.

(5)That leave is granted to the respondent wife to make an oral application for costs this day.

(6)That each of the parties shall bear their own costs of and incidental to the Application in a Case filed by the applicant husband on 7 November 2014.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 3759 of 2013

Mr Patron

Applicant

And

Ms Patron

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1.By an application in a case, Mr Patron (“the husband”) sought a number of orders.  The primary order sought by him was the sale of B Street, Suburb C (“the Suburb C property”), which is registered in the joint names of the parties to these proceedings and is presently occupied by Ms Patron (“the wife”) and the children.  The husband proposes that, following its sale, the proceeds be distributed as between him and the wife as to 50 per cent each.  Simultaneously, he was to receive Suburb A Street, Suburb A (“the Suburb A property”).  In the alternative, the husband sought an order that the parties do all acts and things necessary for the husband to receive a sum of approximately $260 000 from the HSBC mortgage account currently secured against the Suburb A property.

2.At the commencement of the hearing, Senior Counsel for the husband indicated that he only wished to press the order in relation to the HSBC mortgage.  In her response to the application in a case filed on 4 February 2015, the wife sought the sale of the Suburb A property and that, from the net proceeds of sale, each of the parties be paid $200 000, and the balance paid into a trust account opened by further order of the Court.  She also sought an injunction restraining the husband from dealing with a property of the parties, and, in particular, shares of the parties.

3.At the commencement of the hearing, Senior Counsel for the wife indicated that she was not pressing the order in relation to the sale of the Suburb A property and pressed only the injunction. As the parties’ submissions developed, it became clear, in the words of Senior Counsel for the wife, that she would be hard pressed to argue against the order in relation to the HSBC mortgage if that order was made as a partial property settlement under s 79 of the Family Law Act 1975 (Cth) (“the Act”). The response of the husband was that the order should not be made under s 79, but ought be made under s 117, which relates to costs, section 80(1)(h) and/or section 114 of the Act.

4.The issue as to the injunction also narrowed.  The wife did not seek to press that part of the injunction which related to the shares held by the husband, and the husband did not oppose the injunction as to the wife’s, and jointly held, shares, provided that an undertaking as to damages was given.  Such an undertaking was proffered.  The only remaining issue then was whether the injunction should extend to the shares held by the parties’ superannuation fund.

5.In Strahan & Strahan (2011) FLC 93-466 (“Strahan”) at [84], the Full Court made clear that, in determining orders for interim payments, it is essential for the Court to identify the relevant source of power:

...because it is the source of power that determines the necessary preconditions and relevant considerations for making the order.

6.As I understand what the Full Court said in paragraph 82 of their reasons, the possible pathway for making orders for litigation expenses were that that the order could be made under section 114 of the Act, could be made pursuant to section 79 and section 80(1)(h), and also under section 117. In paragraph 83, referring to Zschokke and Zschokke [1996] FamCA 79; (1996) FLC 92-693 (“Zschokke”) the Full Court noted that that the issue of s 114 as a source of power remained open. The general course as followed by the Court since Strahan is to consider payment for interim litigation expenses generally under s 79 and s 80(1)(h) or under s 117, given that the issue of power in s 114 remains open.

7.The parties married in 1999, separated on 26 January 2012 and divorced on 22 August 2013.  They have two children.  D was born in 1997 and is in year 12 at E School, and F was born in 1999 and is in year 10 at G School.  The parties acquired significant assets during the course of the relationship, with the husband being the primary breadwinner.  Since 2011, the husband has traded in shares, successfully at times.  Since 2007, he has been engaged solely in share trading, and, it seems, has not been entirely successful.  His present income is approximately $20,000 a year from two directorships.

8.The wife, who acted primarily as a homemaker and carer to the family, is presently studying for a PhD.  She receives a scholarship also in the sum of approximately $20,000 per annum.  Shortly prior to separation, she received an inheritance of approximately $610,000, and the balance of her income is comprised of interest earned on that sum.  The parties have assets of in excess of $8 million.  The Suburb C property seems to have a value of $3.2 million, and the Suburb A property a value of $1.7 million.  The husband is owed some significant amounts by an entity known as H Pty Ltd.

9.There are various sums, ranging up to $100,000 in various bank accounts, in addition to the wife’s inheritance bank account, which presently stands in the sum of approximately $642,000.  In addition, the parties have superannuation benefits of approximately $2 million, including $1.67 million in a self-managed retirement fund known as the Patron Family Retirement Fund, of which the husband and wife are the only members.  In addition to those matters, at some time in 2013, but after the proceedings commenced, the husband withdrew $150 000 from the HSBC loan account and used the proceeds for his purposes.

10.The wife also alleges that the husband has sold several hundred thousand dollars of shares held by her without her knowledge or consent and retained the proceeds.  The husband asserts that the wife consented to this course.  Obviously, that is a matter for a final hearing and is not something that can be determined today.  As can be seen, the parties have substantial assets.  The proposed payment to the husband permitting the drawdown on the HSBC mortgage to an amount of approximately $260,000 is a small fraction of the total assets.  In the event that it is found at a final hearing that this payment should not have been made, there are more than sufficient assets available to adjust the property division to take that payment into account.

11.In considering an interim or partial property settlement, a court is nonetheless required to have regard to the matters contained in s 79 the Act. Given the acquisition of the assets in joint names throughout the relationship and the termination of the relationship, it is clearly just and equitable, and will be just and equitable in due course, for there to be an order adjusting the parties’ property interests within the meaning of s 79(2) of the Act. The parties have clearly made financial and non-financial contributions to the property of the parties and to the welfare of the family.

12.The order will not have any effect upon either the earning capacity of either party to the marriage. The relevant s 75(2) factors are that – although the parties have between them significant property assets, only the wife presently holds a significant amount of liquid assets. Each of them is currently earning a small amount per year. Although there was a dispute as to the amount of time that the children spend with the husband, particularly given his evidence that he spends, or is proposing to spend, four months a year overseas, there is no doubt that each of the parties has the care and control of the children for a substantial time and that commitments flow from those; in particular, school fees.

13.The husband presently has available limited cash resources, as opposed to the wife, who, as I have said, has available to her approximately $640 000, representing the inheritance, albeit an inheritance received shortly prior to separation.  The husband has indicated that his expenses over the next 12 months will be of the order of $260,000. These include rent of $48,000.  The husband rents premises from his mother at North Sydney, so that he can be near the children’s school, as opposed to living at Suburb A. 

14.The husband also seeks travel expenses of some $29,000, and interest of $16,800, no doubt to cover the increased borrowing;  although, there was some suggestion by the wife that these expenses could be ameliorated for example, by the husband not renting the Suburb A property or by not travelling overseas.  Ultimately, this is not an application for spousal maintenance, and, if parties are otherwise entitled to a partial property settlement or interim costs order, their funds are available for them to do as they see fit.  There are two major assets held by the parties, the Suburb C property, which the wife wishes to retain after a final hearing, and the Suburb A property, that the husband wishes to retain on a final property settlement. 

15.The proposed order will obviate the need for either of these properties to be sold. I am satisfied that the proposed order is just and equitable and otherwise appropriate within the meaning of s 79. It was submitted by the husband that, as the proposed budget includes $90,000 for legal expenses, $30,000 school fees, and $13,000 for entertainment, which included the children’s entertainment, the order should not be made under section 79, but should be made under other provisions of the Act. I interpolate here that it appears that the school fees have been paid for this year, but I accept the husband’s submission that the budget can be read as including next year’s educational expenses for the children.

16.As to the $90,000, it is possible that I could consider making an interim costs order, and that is done pursuant to s 117, which would then necessarily involve the application of the terms of that section. I have determined that that sum is an appropriate part of a partial property settlement. No detail was provided as to how the estimate of $90,000 was arrived at. I do not know whether it is reasonable or not. In that circumstance, it would be difficult to be satisfied that the interim costs order is reasonably necessary. It is, of course, ultimately up to the husband as to the amount he wishes to spend on legal fees.

17.I consider that the preferable course is to provide him with the sum he seeks, and he can then determine the appropriate amount he wishes to spend on lawyers. The consequence of this approach is that each of the parties will be spending what will ultimately be their own money on legal costs, and that is the more equitable course. As to the school fees and entertainment, given the doubt as to the availability of s 114, and given that s 80(1)(h) is not, of itself, a separate source of power, I think the preferable course is to proceed as I have indicated.

18.As to the injunction, it is clear that the husband removed the money from the HSBC account and spent it.  There is evidence which, if accepted at a hearing, would establish that he sold the shares of the wife without her consent.

19.It was said at the hearing, without contradiction, that the husband is of the view that he can deal with the funds in the superannuation fund as some of the shares are his.  Immediately prior to the delivery of judgment, senior counsel for the husband indicated that he sought leave to reopen the case to adduce evidence that the husband is entitled to shares standing for the credit of his member’s account in the Patron Superannuation Fund, and, therefore, that the injunction should not extend to those shares.  That application was opposed by the lawyer acting for the wife, partly on the ground that she had only become aware of the proposed new evidence, and partly on the ground that she would wish to call evidence to the contrary.

20.I do not propose to grant leave to reopen.  However, I will give leave to the husband in due course to apply to vary that part of the injunction, should he wish to do so, and the appropriate notice and opportunity to the wife to respond to the evidence can be given. 

21.The wife seeks an order for the payment of her costs. Section 117(1) of the Act provides that, subject to the balance of that section, each party to proceedings under the Act is to bear his or her own costs. If the Court is of the opinion that there are circumstances that justify it in doing so, the Court may make such order for costs as it considers just. In undertaking such a consideration, the Court is to have regard to the matters set out in section 117(2A) of the Act. The financial circumstances of the parties are such that each has, and will have, available to them, at the end of the proceedings, a significant number of assets, and each, therefore, is well able to meet any order for costs that might be made.

22.Neither party is in receipt of Legal Aid.  There was some reference made to the conduct of the proceedings, including the replacement of an affidavit filed by the husband on 7 November 2014 with an affidavit almost, but not entirely, identical on 11 February 2015.  There was also a reference to the length of that affidavit, which, as seems traditional in interim matters in the Sydney registry, read more like an affidavit seeking final relief, rather than an interim affidavit.  It was also suggested that the husband indicated to the registrar a different affidavit on which he wished to rely, and that was, in fact, relied on by the husband before me.  I have to say, I do not understand that submission.  What the wife says is true, but I do not see that anything flows from that that would justify making a costs order.

23.More importantly, it is asserted by the wife that the husband sought substantial orders in relation to the sale of the Suburb C property, that he adduced substantial evidence to support that claim, which the wife was then required to traverse, and that relief was ultimately not pressed.  On the other hand, it also has to be said that the wife sought the sale of the Suburb A property, when on any view of the evidence, there was no basis for her seeking an order that she be paid $200 000, she having $640 000 cash available to her.  I am of the view that those matters do not tilt in favour of departing from the usual position.

24.Neither party was wholly unsuccessful. Each abandoned parts of their claim, each proceeded with parts of their claim, and each obtained relief, substantially, in accordance with part of the claim. Finally, two matters are relied on. On 30 October 2014, there was correspondence as to what interim relief should be granted by the Court prior to filing the application in a case. The wife’s solicitors had offered to seek instructions to permit the husband to have the amount, in effect, he sought, ultimately paid by way of an interim property settlement. That, however, is not, in my view, an offer in writing to the other party to the proceedings to settle the proceedings. It is a relevant matter under section 117(2A), but, it seems to me, in the absence of a clear and unequivocal offer, does not carry substantial weight.

25.Each party changed their position significantly on the day of hearing, so, again, I do not place any great weight on the very proper concession by senior counsel for the wife that, had the amount been sought by way of interim property settlement, the wife would be hard pressed to propose it.  Finally, reference is made to a without prejudice save as to costs offer made by the wife at 11.50 am yesterday, that is to say, approximately two and a half hours prior to the hearing commencing before me.  That offer does contain some conditions, which were not the subject of my orders.  More importantly, I do not see how the acceptance of that offer would have made any difference to the costs incurred by the parties, because the parties had already incurred the costs they would have incurred in relation to the correspondence.

26.Thus, it seems to me that criticisms could be made generally as to both parties in relation to these proceedings.  Whether one party might be said to be more to blame than the other probably depends on your point of view, and, whatever that position being, I am not satisfied the matters to which I have just had regard justify a departure from the usual position, and accordingly, each of the parties shall bear their own costs of the application in a case.

I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Aldridge delivered on 13 February 2015.

Associate: 

Date:  13 April 2015