PERICLES & HOPMAN

[2017] FamCA 805

FAMILY COURT OF AUSTRALIA

PERICLES & HOPMAN [2017] FamCA 805

FAMILY LAW – PROPERTY SETTLEMENT – partial property order proposed but evidence does not justify the exercise of the power.

Family Law Act 1975 (Cth)

Paris King Investments [2006] NSWSC 578
Strahan & Strahan [2009] FamCAFC 166
Zschokke & Zschokke [1996] FamCA 79; (1996) FLC 92-693

APPLICANT: Ms Pericles

RESPONDENT: Mr Hopman

FILE NUMBER: MLC 9624 of 2016

DATE DELIVERED: 11 October 2017

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 3 October 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Swann

SOLICITOR FOR THE APPLICANT: Lander & Rogers

COUNSEL FOR THE RESPONDENT: Ms Stoikovska SC

SOLICITOR FOR THE RESPONDENT: Blackwood Family Lawyers

Orders

1. That the application in a case filed 17 August 2017 and the response thereto filed 28 September 2017 are both dismissed save as to issues of costs.

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 Pericles & Hopman 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 MELBOURNE

FILE NUMBER: MLC 9624  of 2016

Ms Pericles

Applicant

And

Mr Hopman

Respondent

REASONS FOR JUDGMENT

1. In the Judicial Duty List on 3 October 2017, Ms Pericles (“the applicant”) sought an order that Mr Hopman (“the respondent”) pay her $500,000 by way of part property settlement within 30 days.

2. The affidavit of evidence upon which the applicant relied was filed on 17 August 2017 and a financial statement filed 27 September 2017. 

3. The respondent sought a dismissal of the application by his response filed 28 September 2017.  His evidence was contained in an affidavit filed 28 September 2017.

4. Counsel for the applicant advised the court that the applicant was residing in Asia.  That becomes relevant to the issues to which I turn below.  However, counsel complained that the affidavit of the respondent was only served some days prior to the hearing and that the applicant had not had a chance to respond to it.  Despite that, counsel indicated that she was not instructed to seek an adjournment and wanted to proceed.

5. The substantive proceedings relate to the alteration of property interests arising out of the ending of the parties’ de facto relationship.  There was no issue of jurisdiction raised. 

6. The substantive application filed by the applicant on 4 April 2017 sought that of the “net asset pool available for division”, the applicant received 30 per cent and the respondent 70 per cent.  The applicant pleaded that she wished to be excused from particularising what that 30 per cent meant “pending receipt of joint valuations” for two properties in Sydney.

7. It will be self-evident therefore that it is difficult to assess from the applicant’s point of view what her proposed order means in final terms.  That is relevant on the basis that the applicant now seeks an interim property division by way of a payment by the respondent to her of $500,000. 

8. In his amended response seeking final orders which was filed on 28 September 2017, the respondent said that within 90 days, he pay to the applicant $300,000.  On the face of that statement, one might conclude that the applicant could call for that sum to settle the proceedings overall.  However, senior counsel for the respondent distanced herself from that as not being an accurate picture of what the respondent was proposing. 

9. The respondent’s position is that if, and only if, the applicant satisfies the court that it is just and equitable to make an order at all, he should then pay no more than $300,000.  Albeit that remains unclear, that sum would not satisfy the applicant on an interim basis.

10. Counsel for the applicant confirmed that the power being exercised by the court lay in s 90SM of the Family Law Act 1975 (Cth) (“the Act”) and she was not pursuing litigation funding from any other orders such as spousal maintenance or the exercise of other powers. It is that course of action that creates a distinct difficulty here.

11. The applicant’s position was that there was approximately $10 million in assets and on the basis that her unparticularised claim of 30 per cent was correct, she should be receiving something in the vicinity of $3 million less whatever it was that she had received.

12. The respondent’s position was that at separation he and the applicant owned assets which totalled $2.24 million.  Of that sum, the respondent asserted that the applicant had already retained approximately $320,000.  It was not conceded by the applicant that those figures were correct but it is difficult to know what the correct position is at the moment. 

13. In her affidavit, the applicant said:

    [9]The total asset pool available for division between the respondent and I is approximately $10 million and may well be greater.  If have filed an amended initiating application seeking that I retain 30 per cent of the overall asset pool on account of my entitlement.  The respondent’s position is that I receive less than 10 per cent of the overall asset pool.

14. The affidavit does not tell me how that conclusion was justified and much of it was argument in any event.

15. In her financial statement sworn in Asia on 27 September 2017, the applicant said that she had $1109 in a bank and a $3000 motor car.  She had no superannuation.  She confirmed that she had liabilities of $124,000.

16. Part M of the financial statement form requires a deponent to set out property falling within rule 13.04 of the Rules which has been disposed of.  The respondent in his evidence made reference to the applicant having sold a business and having retained the proceeds.  He complained she had not disclosed any of the details but he had obtained accounting and financial documents indicating what transpired..  The respondent’s affidavit was also replete with complaints about the accuracy of the financial statement of the applicant.

17. All of this means that it is difficult to assess what property is being divided (if any), who has retained what assets and at what value.  It is impossible on the basis of the affidavits of each of the parties to reconcile the “pool” that each party talks about. 

18. Counsel for the applicant submitted (as did the applicant in her affidavit) that on any view, the disparity of earning capacity between the parties would justify saying that the applicant would receive more than what she was seeking by way of interim division of property.  Against that however is the fact that the evidence to which I turn below, is distinctly unhelpful

19. The applicable principles to be applied in an application for an interim property settlement were articulated in Strahan & Strahan [2009] FamCAFC 166. It is again helpful to remember that this is not an application for litigation funding even if that is one of the purposes to which the applicant intends to use any money she receives.

20. There are two steps. First, the Court must consider whether there is jurisdiction. The second requires a consideration of the relevant factors under section 79 of the Act (or in this case section 90SM of the Act).

21. Once the relevant source of jurisdiction for making an order is resolved (as it is here) then “the necessary preconditions and relevant considerations” (or as the Full Court in Zschokke & Zschokke [1996] FamCA 79; (1996) FLC 92-693 described as the “matters” to be taken into account) should be easy to identify (see Paris King Investments [2006] NSWSC 578). As can be seen below, those matters are not so easy to identify here.

22. In Strahan, Boland and O’Ryan JJ articulated the test at [132] this way:

    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.

23. Their Honours said that an order under section 79 (and relevantly s 90SM) is usually a “once and for all order”. That concept can be seen at [113]:

    There is only one exercise of the power under s 79 of the Act. However, this power may “be exercised by a succession of orders until the power … is exhausted” and the power is exhausted “when there remains no property … with respect to which orders by way of alteration of interests in property could be or have been made”: Gabel per Bryant CJ and Coleman J at [57] . As Finn J in Gabel at [125] said: “it is only the final order, which deals on a final basis with all known property of the parties, which completes the one single exercise of the s 79 power”. Further, an earlier order whether made under s 79(6) or s 80(1)(h) is capable of alteration at any time prior to, or as part of the final exercise of the s 79 power: Gabel per Bryant CJ and Coleman J at [69]–[73] and Finn J at [126] .(citations omitted)

24. As their Honours observed, circumstances may arise before a final hearing which dictate that some part of the property of the parties should be the subject of orders. But again, it is incumbent upon the parties to identify what the circumstances are that, relevantly here, justify a distribution of property other than in a once and for all exercise of the power. It may be that someone needs to use property to live on although one would question why the spousal maintenance power might not be first used. A more common example is where it is abundantly clear that one party has the control and use of property which will invariably become the other’s and the delay in a final hearing is simply preventing that party being able to access what is rightfully theirs.

25. Ultimately, the question to be satisfied is whether it is appropriate to exercise the power and to that end, the onus of showing the relevant circumstances lies with the party who seeks the exercise of the discretion.

26. Critically, before that discretion can be exercised, the applicant has to show “the necessary preconditions and relevant considerations”. If those considerations can readily be seen, the exercise of discretion includes contemplation of what Thackray J said in Strahan (supra):

    Of necessity it is likely to be a somewhat imprecise exercise. Consequently, it must be exercised conservatively and the Judge must be satisfied that the remaining property will be adequate to meet the legitimate expectations of both parties at the final hearing, or that the order which is contemplated is capable of being reversed or adjusted if it is subsequently considered necessary to do so...

27. Thackray J ultimately said:

    (o)nce the Court has determined that the interests of justice require it to exercise the power, the conditions on which the power is to be exercised are governed only by the obligation to make an order that is “appropriate” and to ensure that the proposed order is “just and equitable” by reference to the matters set out in s 79(4).

28. All of those matters are relevant in this case.

29. In the context of what is required of an applicant for orders, the following paragraphs set out the affidavit of the applicant.  She said that over a number of years, she underwent attempts at in vitro fertilisation but was unsuccessful.  She said that as a consequence, the relationship came to an end and she was emotionally distraught.  She then moved to Asia where she elected to remain and intends to do so, for the foreseeable future.

30. The applicant went on to say that she was not engaged in employment but in the early years of the relationship, she owned and managed a business.  She said that in 2009, to advance the respondent’s career, she moved with him to Sydney and she continued to manage the business but it was not profitable because of her absence and she sold it.  No indication was given as to what happened to the proceeds.

31. Those few lines encapsulate the total of the evidence of the applicant apparently to satisfy the requirements as outlined above by the Full Court.

32. To make matters more difficult, apart from indicating that the respondent was not currently engaged in employment, she pointed to the fact that the respondent was highly successful and in receipt of a substantial income. However, there is no immediate application for spousal maintenance. The relevance of that evidence can only be considered as a factor in s 90SF of the Act.

33. Counsel for the applicant pointed to the disparity of income but  the respondent said the applicant enjoys good health and is an accredited professional albeit not employed since approximately 1995.  He otherwise referred to the fact that she had the business acumen.  Subsequent to the parties’ relationship coming to an end, significant sums of money were spent by the applicant on her credit card no doubt explaining how the liabilities arose as outlined in her financial statement.

34. At [34] of his affidavit, the respondent said that he had paid the applicant $299,300 in the same period.  He detailed those payments.  In addition, he deposed to her having received the proceeds of the sale of her business which he estimated to be in the vicinity of $69,000 by virtue of the fact that he had seen the contract of sale.

35. Inferences from the disparity of earning capacity could be drawn here but the respondent’s affidavit was replete with photographs presumably taken from social media in which the applicant posted information indicating that she had been in a number of overseas locations.  Whilst the applicant can spend her money any way she wishes, she cannot run a disparity of income argument by inference and the court is entitled to know about her employment capacity, circumstances and just what her future intentions are.  In her affidavit, she made reference to the respondent providing her with $100,000 which she said was intended to be a small partial advance which she had used to support herself.  I know little otherwise how that was used.  The rest of the affidavit is simply a matter of argument rather than admissible fact.

36. Counsel for the applicant conceded that there had been a significant disparity in contributions which she explained was the reasoning behind the 30 per cent that the applicant was seeking. She conceded that there was an “overwhelming contribution” by the respondent. That gave rise to the submission by senior counsel for the respondent that the court had no evidence about what the applicant was currently doing and that she had not provided disclosure documents as had been requested of her. It was submitted that the exercise of the power in s 90SM was discretionary but the court could not make such an order unless it was satisfied that it was just and equitable to do so. Senior counsel submitted that if an order was made of the nature pursued by the applicant, the court could not be satisfied today that a future adjustment in favour of the respondent back from the applicant could ever be made if the court decided that such a sum was not just and equitable. It had to be remembered that the parties had been separated for something in the vicinity of two to three years.

37. There is substance to that submission because first, counsel for the applicant submitted that the respondent’s complaint about the applicant’s unrestrained expenditure was indeed seen in her indebtedness as shown in the financial statement.  That bears out the concern of the respondent that if the court took the view in future that the applicant was not entitled to such a sum, it could never be recovered if she had repaid her debts and continued not to be employed and pursued the lifestyle described in the social media pages attached to the respondent’s affidavit.  The second issue is that it is clear that alteration of property interests is intended to be a once only exercise of power and the court should only exercise that power otherwise if it is satisfied that it is just and equitable to do so. 

38. In the original response filed by the respondent, he proposed that he pay the applicant $600,000 but his very recent amendment changed that figure back to $300,000.  Nowhere in the respondent’s material is it indicated that the $300,000 is a “conditional” payment requiring the applicant to satisfy the Stanford principles.  It was submitted by counsel for the applicant that if that had been apparent she could have put her case differently.

39. The dilemma here lies in the exercise of discretion in circumstances where the evidence is sadly lacking. I could not be satisfied that I understand the assets of each party either individually or jointly. I do not understand from the evidence of the applicant how it is suggested that it would be just and equitable in this case to make an order. There is a concession that substantial portions of the assets are owned by the respondent in his own right; thus one might expect to see some evidence from the applicant as to why she was not a participant purchaser in those assets during the relationship. There is no evidence apart from that to which I have referred. Even if one might conclude that it is just and equitable to alter the respective interests of the parties in property at present, evidence about contributions required by s 90SM of the Act is missing. To the extent that there is a significant economic difference between the parties and their respective futures, the evidence is limited to the fact that the applicant has chosen not to work whilst the respondent seems to have continued his career successfully. No explanation of any substance was given as to how that situation would alter out in the future.

40. The absence of a very clear picture from the applicant must mean that the court has a doubt about what is just and equitable here at all.  On that basis, the application cannot succeed and is dismissed.

I certify that the preceding Forty (40) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 11 October 2017.

Associate:

Date:  11 October 2017