Popovic & Popovic
[2023] FedCFamC2F 536
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Popovic & Popovic [2023] FedCFamC2F 536
File number(s): PAC 4697 of 2022 Judgment of: JUDGE TAGLIERI Date of judgment: 10 May 2023 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Review of Judicial Registrar’s decision – interim orders – whether real property ought to be sold – where wife seeks to remain living in the property on an interim basis – application dismissed Legislation: Family Law Act 1975 (Cth), ss 75(2), 75(2)(b), 75(2)(c), 79, 80(1)(h)
Federal Circuit and Family Court of Australia Act 2021 ss 8, 132, 254
Federal Circuit and Family Court of Australia (Consequential Amendments and Transitional Provisions) Act 2021 s 8
Federal Circuit and Family Court (Family Law) Rules 2021 (Cth) sch 4 cl 2, rr 5.01, 14.05(2) 14.08
Federal Circuit and Family Court of Australia Practice Direction – Transitional arrangements, pp 1, 2
Cases cited: Cord & Cord [2013] FMCAFam 61
Riley & Massalski [2017] FamCA 985
Strahan & Strahan (Interim Property Orders) [2009] FamCACF 166
Division: Division 2 Family Law Number of paragraphs: 35 Date of hearing: 2 May 2023 Place: Hobart Counsel for the Applicant: Ms Godden, solicitor Solicitor for the Applicant: Godden Lawyers Counsel for the Respondent: Mr Givney Solicitor for the Respondent: McClarens Lawyers ORDERS
PAC 4697 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR POPOVIC
Applicant
AND: MS POPOVIC
Respondent
order made by:
JUDGE TAGLIERI
DATE OF ORDER:
10 May 2023
THE COURT ORDERS THAT:
1.The Order made on 15 March 2023, staying the orders of the Court made on 23 December 2022, be discharged.
2.The Application for Review filed 13 January 2023 is dismissed save to the extent that order 14 of the orders made on 23 December 2022 is varied by addition as a condition of the sale of the matrimonial home, that completion of any contract of sale not occur on a date within 30 days prior to 11 October 2023 when the child X born in 2005 commenced undertaking High School Certificate examinations or within 14 days after her last examination on 3 November 2023.
3.The Application for costs by the Husband on the Application for Review filed 13 January 2023 is to be determined in Chambers on the papers, by consent of the parties.
4.Within 7 days of the date of these Orders, the Husband file and serve short written submissions not exceeding two A4 pages in length in relation to the costs orders sought.
5.Within 7 days of service of the written submissions referred to in Order 4, the Wife file and serve written submissions in reply not exceeding two A4 pages in length.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Popovic & Popovic has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
Judge Taglieri
This judgment concerns an Application for Review filed by the Wife Ms Popovic (“the Wife”) on 13 January 2023, who is the Respondent to the substantive proceedings. The Husband Mr Popovic (“the Husband”) is the Applicant in the substantive proceedings.
The Wife seeks to discharge or set aside interim property orders made by a Senior Judicial Registrar on 23 December 2022.
In essence, the Wife is aggrieved by orders made concerning sale of the former matrimonial home and consequent orders for distribution to each of the parties of $50,000 from the net proceeds of sale after discharge of the mortgage secured against the property and other outgoings.
At the hearing of the Application for Review on 2 May 2023, the Wife relied on:
(a)Her affidavit filed 26 September 2022;
(b)Her affidavit filed 27 February 2023;
(c)Her Financial statement sworn on 26 September 2022; and
(d)A written case outline dated 1 May 2023.
The Husband resisted the Application for Review and seeks to preserve the orders made by way of partial property settlement. At the hearing of the review application he relied on:
(a)His affidavit filed 7 December 2022;
(b)His Financial statement filed 26 August 2022;
(c)His affidavit filed 13 March 2023; and
(d)A written case outline filed one May 2023.
UNCONTENTIOUS FACTS
The Court has read all materials relied upon by the parties as no objection was taken to the same. The parties’ mutual evidence demonstrates that many facts are not subject of controversy and I find as follows on that basis:
(a)The parties have been in a relationship for in excess of 20 years;
(b)The Wife is 43 years of age and the Husband 44 years of age;
(c)They separated initially under one roof in July 2021 and subsequently the Husband vacated the former matrimonial home;
(d)The former matrimonial home is a large home at B Street, Suburb C, now comprising five bedrooms, a study, and three bathrooms;
(e)The parties have attributed a value of $1,600,000 to the property for present purposes;
(f)The parties have four children:
(i)Ms D now aged 20;
(ii)X soon to turn 18 years of age;
(iii)Y 16 years of age; and
(iv)Z eight years of age at the date of this hearing;
(g)The Wife has occupied the former matrimonial home with the children since separation and during the relationship;
(h)Ms D no longer lives in the former matrimonial home;
(i)X is studying for Year 12 exams and experiences some difficulties concentrating and learning;
(j)The Wife’s gross income from full-time employment as a professional is about $2,000 per week;
(k)The Husband’s gross income, based on the agreed fact of our annual income of $134,000, is about $2,500 per week, but he states he also receives bonus payments and it is unclear whether that is in addition to the annual income figure;[1]
[1] Husband’s affidavit filed 7 December 2022 at [95].
(l)The parties have a joint mortgage liability in respect of the former matrimonial home of approximately $710,000;
(m)The Wife also has a debt in respect of her Motor Vehicle 1 of $42,000;
(n)Both parties have superannuation interests, but given their ages I infer the funds are preserved;
(o)There is dispute in respect of parenting arrangements for the children, but noting the age of the elder two children I infer it is likely that the scope of the dispute is predominantly concerning the younger two children;
(p)The Husband has withdrawn $27,000 from the parties’ mortgage redraw facility and subsequently the Wife has also received an equivalent sum from the facility;
(q)The Husband’s parents provided $150,000 to purchase the matrimonial home, but there may be dispute as to whether the entire sum or only part thereof was a loan;
(r)The Husband pays child support of $635 per week;
(s)After the orders of 23 December 2022 were made, the parties applied to change mortgage repayments to interest only. The current interest only repayment is $680 per week;
(t)The Wife is able to afford the interest only repayment and solely pays it;
(u)The children have pets, being two dogs, four cats, and some chickens;
(v)From about June 2022, the Husband has lived in rented accommodation;
(w)The parties have attended two conferences with a view to settling property matters, but final consent orders have not been agreed;
(x)The parties have complied with the orders made on 23 December 2022, requiring conversion of the mortgage repayments to interest only;[2] and
(y)These proceedings commenced in August 2022.
[2] Order 10.
The Wife also says that lease payments on 3 to 4 bedroom rental homes are $1,000 per week.[3] Further, that she barely is able to live within her means.[4]
[3] Affidavit of the Wife filed 27 February 2023 at [13].
[4] Affidavit filed 26 September 2022 at [76].
In his affidavit of 13 March 2023, the Husband also states that:
(a)The interest only repayments arrangement on the mortgage is due to be revised in May 2023 and a further application will be necessary;
(b)He is concerned about rising interest rates, the impact of hardship applications on credit ratings, and declining house prices, noting that the property is now valued at $200,000 less than previously;[5]
(c)He pays $620 rent a week for a three-bedroom home in Suburb F;
(d)He believes the Wife could rent a similar property at a cost less than the interest only repayments and he annexed searches from realestate.com to his affidavit;[6]
(e)He pays over $2,600 per month in child support, has minimal savings and owes money on his credit card and for legal fees; and
(f)He has ceased spending time with X in accordance with orders for supervised time as he cannot afford the costs of $600 a session.
LEGAL PRINCIPLES
[5] Affidavit of the Husband filed 13 March 2023 at [12].
[6] Affidavit of the Husband filed 13 March 2023 at [19].
Applications for Review
By virtue of section 8 of the Federal Circuit and Family Court of Australia Act 2021 (“the FCFCOA Act”), the Federal Circuit Court of Australia continues as the Federal Circuit and Family Court of Australia (Division 2) from 1 September 2021. Proceedings commenced in the Federal Circuit Court of Australia prior to 1 September 2021 are taken to be proceedings in Federal Circuit and Family Court of Australia (Division 2) from the same date.[7] Further, such proceedings, including these, are to be conducted under the Federal Circuit and Family Court (Family Law) Rules 2021 (Cth).[8] Division 2 of the Federal Circuit and Family Court of Australia has original jurisdiction in respect of proceedings instituted under the Family Law Act 1975 (Cth) (“the Act”)[9].
[7] Section 8, Federal Circuit and Family Court of Australia (Consequential Amendments and Transitional Provisions) Act 2021.
[8] Federal Circuit and Family Court of Australia Practice Direction – Transitional arrangements, paragraphs 1 – 2; Federal Circuit and Family Court of Australia (Division 2 )(Family Law) Rules 2021.
[9] Section 132, Federal Circuit and Family Court of Australia Act 2021.
The powers delegated to Senior Judicial Registrars and Judicial Registrars for Division 2 of the Federal Circuit and Family Court are provided for in s 254 of the FCFCOA Act and in Schedule 4, Clause 2 of the Federal Circuit and Family Court (Family Law) Rules 2021 (Cth) (“the New Rules”), by adoption.[10]
[10] By virtue of Rule 5.01 of the Federal Circuit and Family Court of Australia (Division 2)(Family Law) Rules 2021.
Part 14.3 of Chapter 14 of the New Rules provides for Applications for Review from the decision of a Judicial Registrar or Senior Judicial Registrar. In this instance, the application was made within the required timeframe of 21 days.[11] The procedure for the review is governed by Rule 14.07 and I exercise the same power the Senior Judicial Registrar exercised on the interim hearing. I am to determine the interim property proceedings de novo.
[11] Rule 14.05(2).
Interim Property
There is no real controversy about the relevant principles that apply to determining interim property applications and a useful summary of those are contained in reasons for decision of McClelland J in Riley & Massalski [2017] FamCA 985 (“Riley”). For convenience, I summarise those principles as follows:
(a)The legislative foundation for an order for partial property distribution is ss 79 and 80(1)(h) of the Act. In combination, these sections confer power on the Court to make orders for interim property settlement;
(b)Whether interim payments are made by way of interim order involves a discretionary determination;
(c)In Strahan & Strahan (Interim Property Orders) [2009] FamCACF 166 (“Strahan”), there are two steps to considering an application for an order for partial property distribution prior to final hearing. First, to decide whether to exercise the power before a final hearing (known as a “procedural step”) and the second step involving the exercise of power, if the decision at the first step is affirmative;
(d)Relating to the first and procedural step the Court’s guidance in Strahan at [132] is relevant and it was said that:
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; [emphasis added]
(e)An applicant for orders for the partial distribution of property, at a time prior to final hearing, carries the onus of satisfying the Court as to why it is in the interests of justice for such an order to be made, rather than for there to be a once and for all order made at final hearing;
(f)As to the second step identified in Strahan, the Court should:
(i)Identify “the parties’ property and of their interests in it”; and
(ii)Consider and apply the provisions of section 79 and have regard to the impact of the order upon the respective parties at the point in time that the interim order is made;
(g)However, it is also important to note the obligation on the parties and the Court to further the main purpose of the Family Law Rules 2004 (Cth), to ensure that each case is resolved in a just and timely manner at a cost to the parties and the court that is reasonable in the circumstances of the case;[12]
(h)It may be appropriate for there to be an order for the partial distribution of property to enable a party to proceedings to meet their legal costs or enable a party to avoid creditors; and
(i)The interim orders made must be “amenable to adjustment on a final hearing”.
[12] Strahan per Thackery J.
COMPETING CONTENTIONS
The contentions of the parties were succinct and I thank Counsel for that.
The Wife’s contentions heavily relied upon the need to provide a home to herself and three children in her care. Further, that the Court should avoid making interim property orders because of the emphasis placed on a once and for all final determination of proceedings pursuant to s 79 of the Act. The high point of her submissions were those neatly summarised at [6] and [7] of her counsel’s Case outline filed 1 May 2023.
Counsel for the Wife also submitted that:
(a)In accordance with the instruction in Strahan, there ought not be two hearings with respect to property settlement;
(b)One final hearing would provide certainty about her financial situation and ability to re-accommodate in a similar property close to where she and the children live, meaning this is compelling reason to discharge the orders made by the Senior Judicial Registrar;
(c)If the Wife is forced to rent, she would need to use her capital to rehouse herself and the family, and this may lead to a spouse maintenance application and further proceedings, which is undesirable; and
(d)There are no pressing financial circumstances for the Husband. He earns $134,000 gross and is able to provide for his expenses.
Counsel then referred to the factual circumstances in Cord & Cord [2013] FMCA Fam 6 (“Cord”) and Riley and submitted there were parallels to the facts of this case and that this too warranted discharge of the orders.
Simply put, the Husband says that the orders should not be discharged. There was power to make the interim orders and the discretion exercised was proper, given the inevitability of the former matrimonial home having to be sold, the inability of either party to service the mortgage in the longer term and the funds required by each party to pay legal fees and bring the proceedings to an end.
For the Husband it was also emphasised that:
(a)There was simply no evidence provided by the Wife that the bank would likely continue the interest only repayment requirement or grant a hardship application;
(b)There was ample evidence of the capacity of the Wife to rehouse in a suitable property upon sale of the matrimonial home, pointing the realestate.com searches annexed to his second affidavit;
(c)The cases of Cord and Riley can be differentiated to the present as they involved one party seeking to retain the matrimonial home on a final basis;
(d)The final hearing would not occur within 12 months and stated it was more likely to be in the latter part of 2024 and there was simply no evidence the bank would be willing to give the parties grace until then; and
(e)Delays in resolving the proceedings were prejudicial to both parties because of the decreasing value of the property market and that there already was agreement of a $200,000 decline.
Counsel for the Wife submitted that movements in the property market were irrelevant because property values vary up and down.
EVALUATION AND DETERMINATION
Both parties seek final orders pursuant to s 79 of the Act for property adjustment. I consider that there ought to be an exercise of power to make interim property orders, because it is in the interests of justice to both parties to do so in circumstances where:
(a)There is no evidence about the likely date of a final hearing and the parties’ submissions reflect an agreed minimum position that a final hearing is likely to be up to 12 months from now, in circumstances where the proceedings commenced in August 2022;
(b)There is no evidence adduced by the Wife as to her capacity to acquire the Husband’s interest in the matrimonial home, where the equity in it is in the vicinity of $900,000 based on the balance sheet received in evidence, she has conceded that it will likely need to be sold, and the Wife’s Response seeks a final order for sale of the property; and
(c)In the above circumstances there is likely to be sufficient net value in the non-superannuation pool of assets to make final property orders that are just and equitable despite the sale of the property and distribution of some funds to the parties from the net sale proceeds on an interim basis.
In being satisfied that the Court should exercise power to make the interim property orders, I do not ignore the public interest considerations referred to at [12(d)] of these reasons but observe that these considerations are broader. They include promoting timely process and disposition of proceedings to avoid consequences of delay and ensure public confidence in the administration of justice[13]. In making these observations, I note that on the Wife’s case there is no evidence of her seeking to find alternate suitable housing, in circumstances where she seeks an order for sale of the matrimonial home and seems to concede the parties cannot afford to make the usual principal and interest repayments on the mortgage.
[13] See [12](g) of these reasons.
Furthermore, contrary to that submitted on her behalf, the preponderance of evidence does not demonstrate that rental payments for suitable housing exceed the amount she is paying on interest only, let alone interest and principal repayments.
While I accept the Wife may need to move more than once if the property is sold before final orders are made, this constitutes an inconvenience to her and to the children, who have primarily lived the matrimonial home for all their lives. In reality, the parties’ separation has caused a need for a change in the children’s stable living arrangements and generally avoiding or delaying the sale of the matrimonial home does not alter this fact.
In oral submissions, it was also claimed that sale of the matrimonial home in the foreseeable future would be problematic for X because of difficulty concentrating and applying herself to study. There is no evidence about this in the two affidavits relied upon by the Wife. Despite this, because no challenge was made to the submission, I can generally accept that a child may find the process of marketing the property and sale somewhat disruptive to their studies. But difficulties with undertaking study are not uncommon in teenage children and commonly require management with assistance of teachers, social workers and the like.
The submissions above concerning X are capable of being mitigated by planning and sensible timing of completion of a sale. I do not place significant weight on these the Wife’s inconvenience and possible study interruption when deciding whether to exercise the power to make interim orders for these reasons.
I reject the submission that ordering sale of the property now creates uncertainty for the Wife. Instead, it will define the net proceeds of sale and provide certainty about what dollar sum she is likely to receive upon various percentage property adjustment outcomes.
Concerning step two in the necessary evaluation as to how to exercise the power to make interim property orders, the parties provided by consent a balance sheet containing the non-superannuation assets, parties’ superannuation interests and liabilities. Based on the values disclosed therein, the net non-superannuation assets are likely to be in the order of $980,000 and the value of the parties’ superannuation is about $330,000.
The untested evidence in the parties’ affidavits and the content of the balance sheet also suggest that:
(a)The parties each had no or very modest property when they commenced their relationship;
(b)The Husband’s parents provided funds, possibly up to $150,000, towards the acquisition or improvement of the matrimonial home. There is likely to be a dispute about how this should be treated;
(c)The Husband fulfilled the role of primary earner during the relationship, although the Wife returned to employment around her primary care responsibilities for the children;
(d)The parties are of similar ages and likely not able to access superannuation;
(e)The Wife has some health conditions that may warrant an adjustment for future needs, but that is presently unclear and the parties are earning not dissimilar income regularly, although the Husband apparently also receives bonus payments;
(f)The Wife has primary care of three children who live with her;
(g)Each party has a vehicle, but the Husband says his will need to be replaced and the Wife’s is subject to finance;
(h)The Wife has savings of around $34,000 and the Husband $44,000, but this does not correspond with what the parties have stated in their Financial Statements; and
(i)The parties do not have other property of significant value.
On the basis of the above, the Husband’s contributions may be assessed to be greater, noting the contribution by his parents to acquiring the matrimonial home, but that assumes that they are not to be repaid monies. Otherwise the Wife’s financial and homemaking/caregiving duties are probably equal to, if not greater than, those of the Husband. However, this depends on the testing of evidence. Accordingly it is conceivable that on contributions, the assessment may be 52/48 in favour of the Husband.
Some modest adjustment on the basis of s 75(2) (b) and (c) factors may ultimately be made in favour of the Wife, but if made may be five per cent but not 10 per cent, particularly given the age of the children and that they are less likely to require onerous attention. This also allows for possible adjustment for health considerations.
Accordingly, at this juncture preliminary assessment of s 79 considerations suggests a potential range of property adjustment of the net non-superannuation asset pool of perhaps up to 53/47 in favour of the Wife.
If the property is sold, disbursement of $50,000 to each of the parties from an estimated net proceeds of $900,000 will not prevent the adjustments referred to above being made. There will be sufficient funds held in trust to achieve the required outcome, even if the Wife’s entitlement is assessed to be 60 per cent of the net non-superannuation pool.
Even if it is the case that the parties have savings as set out in the balance sheet, which I doubt given the contents of their Financial Statements, neither have funds to meet their legal expenses to finalise the proceedings based on the estimated future costs disclosed by each parties’ solicitors in the costs notices.
I consider that the order made by the Senior Judicial Registrar should not be discharged, but should be varied to require that the property be placed on the market forthwith and that the completion of its sale occur either at least two months before the HSC exams or otherwise after them. This will materially mitigate the concern for the child X referred to in my earlier reasons.
I will hear from the parties about the precise terms of the orders to be made.
I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Taglieri. Associate:
Dated: 10 May 2023
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