Railton and Railton
[2012] FMCAfam 535
•7 June 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| RAILTON & RAILTON | [2012] FMCAfam 535 |
| FAMILY LAW – Property – interim application for property distribution pending final hearing – matters to be considered – whether appropriate to make such an order. |
| Family Law Act 1975, ss.79(2), 79(4), 80(1) |
| Lee Steere v Lee Steere (1998) FLC 91-626 Wenz v Archer (2009) 40 Fam LR 212 |
| Applicant: | MS RAILTON |
| Respondent: | MR RAILTON |
| File Number: | ADC 784 of 2012 |
| Judgment of: | Brown FM |
| Hearing date: | 29 May 2012 |
| Date of Last Submission: | 29 May 2012 |
| Delivered at: | Adelaide |
| Delivered on: | 7 June 2012 |
REPRESENTATION
| Counsel for the Applicant: | Ms Lewis |
| Solicitors for the Applicant: | Tindall Gask Bentley |
| Counsel for the Respondent: | Mr Heinrich |
| Solicitors for the Respondent: | Von Doussas |
ORDERS
There be an interim distribution of property to each of the parties in the sum of $25,000.00 from the funds standing in the husband’s name at the (name omitted).
The proceedings be listed for further directions and if not settled to allocate a date for final hearing at 9.30 am on 9 August 2012.
IT IS NOTED that publication of this judgment under the pseudonym Railton & Railton is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADC 784 of 2012
| MS RAILTON |
Applicant
And
| MR RAILTON |
Respondent
REASONS FOR JUDGMENT
Introduction
These reasons for judgment relate to an application for interim or partial settlement of property brought by Ms Railton “the wife”. The amount she seeks by way of partial property settlement is $50,000.00. Mr Railton “the husband” opposes the application and seeks its dismissal.
The wife was born on (omitted) 1950. She is not in formal paid employment at present. The husband was born on (omitted) 1947. He has recently retired from employment as a (omitted).
The parties married on (omitted) 1976 and separated in February 2010. They have two adult and financially independent children. They are not as yet divorced.
The wife commenced property proceedings on 1 March 2012. She seeks an as yet unspecified division of the parties’ pool of matrimonial assets. Initially, she also sought an urgent award of spousal maintenance.
The husband retired from the workforce on 8 March 2012 and ceased formal employment on 30 March 2012. In these circumstances, the wife abandoned her application for urgent spousal maintenance and in lieu thereof brought her claim for an interim property settlement.
In monetary terms, the parties’ major asset is the former matrimonial home located at Property S. It is registered in their joint names. I have not been provided with a formal valuation of the property. In the absence of a valuation, the parties disagree as to the property’s value – the wife asserts $800,000; the husband asserts $1,200,000.
There is however no dispute that the wife was granted the sole occupation of the property on 17 April 2012. As I understand matters, it would be her preference to retain the property following the conclusion of the proceedings between the parties. It is not subject to a mortgage.
The Property S property is a farm. It has a small (omitted) and other plant and equipment associated with it. The value of these items is also disputed, but not by a great degree. The wife asserts $32,000; the husband $35,500. It would appear axiomatic that the (omitted) and the farm’s plant and equipment will go with the Property S property.
The husband also has an interest in motor vehicles and owns at least eight of them, including a (omitted) and (omitted) Falcon, both of which are asserted to have significant value.
Again, no formal valuations have been provided of these various motor vehicles. The wife estimates the value of the vehicles as being somewhere between $629,000 and $687,000. The husband estimates their value as being somewhere between $543,000 and $628,000.
No evidence has been provided to me as to how easily any of these motor vehicles could be sold or indeed whether either of the parties desires such an outcome. In general terms, it is my understanding that the husband is likely to want to retain at least some of the vehicles in question.
The dispute between the parties currently centres on their liquid assets. The husband has standing in his name savings to the value of $150,000.[1] The wife has deposed as to savings in her name, as at 3 May 2012, in the sum of $20,000.[2]
[1] See husband’s financial statement filed 1 May 2012 at item 37
[2] See wife’s financial statement filed 3 May 2012 at item 37
It is essentially the wife’s case that it is inequitable for there to be such a gross discrepancy in the parties’ holdings of cash, particularly in what she would describe as her currently straitened financial circumstances. As such, it is her case that it is appropriate that a sum of $50,000 be transferred from the husband’s account to her account.
The husband vehemently opposes this application. It is his case that such a transfer has the potential to skew the future final division of the parties’ pool of assets, particularly if the wife retains the Property S property and the chattels associated with it.
In these circumstances, he contends that it is probable that the wife will have to advance him a sum of money, given what he believes is the extent of the parties’ pool of assets. In these circumstances, he asserts that it is potentially prejudicial for the wife to receive what he would characterise as a premature distribution of cash.
The husband has not as yet redeemed his superannuation. It is valued at $256,966.00. The wife has modest superannuation worth $16,070.00. The parties have few significant liabilities.
The only other major marital asset is a (omitted) business (omitted). The parties have a half interest in the business, the other half being owned by their son. The business has not as yet been valued, but the wife asserts that it is a profitable going concern.
Controversies exist as to whether the business provides the wife with a reliable stream of income. The wife asserts that income is only allocated to her from the business for accounting purposes, with presumably her son or the husband actually controlling the income produced.
However, on 3 May 2012 consent orders were agreed between the parties which required the parties to do things necessary to ensure that the wife received the following sums from the business:
·a weekly sum of $200.00;
·the payment of all outgoings associated with the former matrimonial home, including but not limited to rates, insurance, utilities and other taxes;
·costs associated with her mobile phone;
·the registration and insurance costs associated with her motor vehicle.
At this stage the parties also agreed on mutual injunctions restraining each of them from selling or dealing with any asset of the marriage save for the payment of reasonable living expenses. Accordingly, in general terms, neither the husband nor the wife are able to access the cash savings, other than to pay for the day to day exigencies of life. No specific provision has been made for the payment of their individual legal expenses relating to the current proceedings.
The next step of the process of resolving the issues between them is a conciliation conference convened by one of the registrars of the court. Such a conference has been arranged for 26 July 2012. As previously indicated, there are likely to be significant valuation issues in this matter – at the very least the Property S property and the more expensive motor vehicles will have to be valued. There may also have to be an accounting appraisal undertaken of the (omitted) business.
These are likely to be expensive exercises, particularly in respect of the motor vehicles, which seem to fallen in the category of “collectible” cars and as such are idiosyncratic in their nature. I have not been provided with any evidence as to how any required valuation is to be obtained and more importantly how it is be funded.
I think I can take judicial notice of the fact that each party will be incurring legal fees in respect of these proceedings and there will be an expectation that at least some of these fees will need to be defrayed prior to the conclusion of these proceedings. However, once again, I have not been provided with any specific evidence of the anticipated extent of these expenses. It is however part of the wife’s case for an interim distribution of properties that she needs funds not only to provide for her recurrent needs but also to pay for legal expenses.
It is a significant part of the husband’s case, in opposition to the wife’s claim, that she has not provided any details whatsoever of these legal expenses and, as such the court should not act on imprecise assertions of need, made on her behalf, in respect of the issue of anticipated legal expenses.
The wife is not in paid employment. It is also her case that capacity to re-enter the work force is extremely limited as she has not worked since the birth of her now adult child and was a “stay at home mum” for the vast majority of the lengthy marriage between the parties. Ms Railton has also deposed that she does not currently enjoy good health describing herself as suffering from psoriasis and as being emotionally overwrought as a consequence of difficult circumstances between her and Mr Railton.
It would seem axiomatic that circumstances leading up to the wife’s application for sole occupation of the former matrimonial home were difficult and stressful for all concerned. The wife asserts that she was subject to threats and denigration by the husband. He denies any improper behaviour and asserts that it was the wife who behaved aggressively towards him. It is also the wife’s case that she has suffered from breast cancer, which has had implications for her self esteem. She does not have any specific workplace skills or qualifications.
Counsel for Ms Railton has expressed some degree of scepticism regarding the circumstances surrounding Mr Railton’s recent retirement from the workforce. It is the wife’s case that Mr Railton retains a significant capacity for paid employment, either as a (omitted) or in the (omitted) business, in which he has worked before, with his son, with whom he is on good terms. However, the fact remain that he has reached what was formally the statutorily based age of retirement and the necessary chronological marker for receipt of the aged pension.
At the present time, the wife’s sole source of income is the monies she receives as a consequence of the consent order of 3 May 2012. Mr Heinrich, counsel for the husband, asserts that the wife has a legal entitlement to receive a significant proportion of the income generated by the (omitted) business. Presumably the implication of this submission is that she could sue her son for this income. I consider this to be a facile argument.
As such, for the purposes of these proceedings, I find that the wife’s current level of income is $200.00 per week. She estimates her weekly expenditure at somewhere between $354.00 and $488.00. I accept that a significant level of her recurrent living expenses are now being met by the (omitted) business and she remains in occupation of the parties’ most significant marital asset. However, in my view, her current level of lifestyle cannot be described as one of largesse.
The impression I have from her affidavit material is of a person who lives frugally. Her statement of financial circumstances indicates a surplus of expenditure over income. She has also deposed that she is using her savings of “approximately” $20,000.00 to supplement her income. However I have not been provided with any up to date evidence regarding the current balance of her savings.
Again this state of affairs is a matter of significant comment by Mr Heinrich. It is his submission that, at her present rate of expenditure and with no evidence as to the rate at which her savings have been diminished, it can be anticipated that Ms Railton’s savings will be able to fund her necessary living expenses for many months to come and most probably until the ultimate conclusion of these proceedings.
Accordingly, it is the husband’s submission that it cannot be objectively sustained that the wife is without access to marital assets or needs additional monies to support herself or fund the ongoing conduct of the proceedings.
The husband’s statement of financial circumstances is an opaque document. Although he lists his occupation as retired, he deposes to income of $1,282.00 per week and gives un-itemised personal expenditure of $150.00 per week. He estimates the value of the matrimonial estate as being $1,282,538.00 and his superannuation at $252,966.43.
Contribution Issues
The marriage between the parties was one of significant length. The wife asserts that she discharged the majority of homemaking and parenting responsibilities, whilst the husband was always in the paid workforce and was the family’s major breadwinner. The husband does not disagree but asserts that he also did a significant component of housework.
The wife also asserts that she discharged the majority of administrative responsibilities for the (omitted) business. The husband disagrees and asserts that her contributions were of a minor (omitted) nature and he did the (omitted) and much of the actual (omitted) work required.
The wife asserts her father in effect gifted the land at Property S to her in 1984, although it was registered in the parties’ joint names. The implication being that this is a significant direct financial contribution, which must be attributed to her. The husband asserts that the land was gifted to both parties but the house on the property was significantly dilapidated. He asserts that he made significant contributions rebuilding the house on the property.
The husband asserts that he contributed the deposit necessary to purchase the parties’ first home in 1974/75. The wife suggests that the deposit came from joint savings.
The wife also assets that she owned a property known as (omitted) from 1984 onwards with her brother. This property was sold in 2002 recouping the wife $120,000.00 of which she gifted approximately half to the parties’ adult children, retaining the balance which she used to support herself and which is now represented by her remaining savings of $20,000.00. Again the husband asserts that he renovated the house on this property, increasing its value.
This is an interim hearing. Necessarily it must take place in a truncated or shortened form. There has been insignificant time to allow for additional oral evidence, particularly in the form of cross-examination, particularly where there is a conflict in the written evidence of the parties. It is difficult, if not impossible, to resolve such a factual dispute, at the interim stage.
In this particular case, there are significant factual disputes between the parties, starting with, at this stage, the value of their pool of matrimonial assets. It is also the wife’s case, contested by the husband, that she has made the more significant contributions towards the overall acquisition and preservation of those assets, either in a direct sense or through her contributions as a parent and a homemaker.
Further, it would appear to be Ms Railton’s case that a proper consideration of the various factors arising under section 75(2) of the Family Law Act also favours her given the state of her health; her lack of recent work experience; which leaves her with no ability to derive an income. As such, it is her case that she is likely to receive more than 50% of the parties’ assets and, in such circumstances, it is inequitable in the short to medium term that she should be frozen out of her proper cash entitlements and lead an artificial confined financial existence.
At this stage, I am not in a position to resolve definitively the various factual disputes between the parties. Accordingly, I must proceed cautiously with any interim property settlement. This is the essence of the husband’s case. He would categorise the parties’ various and different contributions, during their very long marriage, as being approximately equal and the various section 75(2) factors, which each party can muster, as essentially cancelling each other out.
The legal principles applicable
The process to be followed for the division of the parties’ property is well established by law.[3] The relevant legal principles are primarily contained in sections 79 and 75(2) of the Family Law Act 1975. I am required to follow a number of specific steps.
[3] See Lee Steere v Lee Steere (1998) FLC 91-626; Ferraro v Ferraro (1993) FLC 92-335;
Firstly, I must ascertain what are the parties’ assets and liabilities as at the date of trial.[4] This is because there is only one exercise by the court of the power conferred on it by section 79 to make a matrimonial property order.
[4] See Wardman & Hudson (1978) FLC 90-466; and Biltoft & Biltoft (1995) FLC 92-614
The second step involves the court ascertaining the contributions which party each has made towards the assets identified following the first step. Contributions fall into two broad categories.
The first kind is contributions to the property: financial contributions and non-financial contributions, made directly or indirectly, by or on behalf of a party to the marriage to the acquisition, conservation or improvement of any of the property.
The second kind is contributions to the welfare of the family: in the words of the section, “the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage, including any contribution made in the capacity of home maker or parent.”[5]
[5] See Family Law Act s79(4)(c)
It is clear from the authorities that this second kind of contribution must be given appropriate weight and is not to be treated as a token matter or as a contribution which is inherently less valuable or important than a financial contribution to property.
The third step involves the assessment of the parties’ prospective needs, by reference to the factors set out in section 75(2) of the Family Law Act 1975. Pursuant to section 75(2)(o), the court is entitled to take into account “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”.
Finally in determining what order the court should make under section 79, the court must be satisfied that in all the circumstances, it is just and equitable to make the relevant orders. Overall, it is the justice and equity of the actual orders that the court must consider.[6]
[6] See Russell v Russell (1999) FamCA 187
As previously indicated, there are controversies arising between the parties at each of the three stages applicable to the division of matrimonial property in this case. In addition, there is likely to be controversy regarding the make up of the package of assets which each will receive at the end of the process of division of property, regardless of the percentage basis of any overall split.
At this stage, I do not know how these controversies are likely to play out. As previously indicated, the husband’s position is that if the wife retains the Property S property, this will skew the pool of asset and make it inevitable that he must retain the bulk of the cash assets.
Part VIII of the Family Law Act is the part of the Act dealing with property, spousal maintenance and maintenance agreements. Section 79(1) empowers the court to make such order as it considers appropriate in property settlement proceedings.
Section 80 provides the court with what are described as general powers. In particular section 80(1)(h) empowers the court to make an order pending the disposal of proceedings. However, it is clear that the same principles, set out above, apply both at the interim and the final hearing stage.
In Strahan, apropos the making of an interim property order, the Full Court said as follows:
“Once a court proceeds to exercise the power in s 79 of the Act, being in the substantive phase, a court is required to undertake consideration of the matters in section 79(4) including by reference to s 79(4)(e) the matters in section 75(2) so far as they are relevant. However consideration of such matters may be brief and if it is established that ‘it seems likely to the Court that…the applicant…will be likely to receive by way of property settlement a sum sufficient to cover the advance, that would seem to be sufficient to enable the order sought to be made.”[7]
[7] See Strahan v Strahan (2010) 42 Fam LR 203 at 230 [137]
In general terms, bearing in mind the limited nature of an interim hearing, the court is required to follow the four step process in respect of both final and interim matrimonial property proceedings. Any interim property order is required to be both just and equitable. Necessarily, any interim order must ultimately be referrable to the final order made in the case concerned, as both depend on the same exercise of the same power.
Given these circumstances, the Full Court of the Family Court has pointed out that, as there can be only one exercise of the power under section 79 of the Act, it is usually preferable that there be only one final hearing of section 79 proceedings, rather than a succession of subsidiary provisional hearings.[8]
[8] See Strahan v Strahan (2010) 42 Fam LR 203 at 230 [114]
In Strahan, the Full Court considered an earlier decision of the Full Court Harris & Harris.[9] In this case, the Full Court delineated the relevant considerations applicable to the making of what is conveniently described as an interim property order. The Full Court, in the case, considering it unnecessary to draw a distinction, in terminology, between an interim order and a partial order.
[9] See Harris & Harris (1993) FLC 92-378 at 79,930
In Harris, the Full Court, whilst affirming the preference that there be only one final hearing of property proceedings, identified three criteria applicable to the exercise of the power to make an interim property order namely:
·the exercise of the power should be confined to cases where the circumstances at the time were “compelling”;
·the exercise of the power, depending as it did on section 79 of the Act, must be exercised within the parameters provided by that section, notwithstanding the difficulty arising for any decision maker concerned in making final findings;
·the exercise of the power must be exercised “conservatively” in the sense that any remaining property needed to be sufficient to meet the “legitimate expectations” of both parties at final hearing, or the order being contemplated is itself capable of being reversed or adjusted at a later stage, if necessary.
In Strahan, the Full Court affirmed Harris in the sense that it accepted that an interim property application comprised a two-step process. Firstly what was described as an “adjectival stage” and secondly what was described as the “substantive stage”. The first step being concerned with the description or particularization of the circumstances required to be established before an interim property order was made. The second step dealing with the mechanisms applicable to the making of such an order.
The controversy ventilated in Strahan centred on the phrase “compelling circumstances” used in Harris and whether such a formulation unduly fettered the court’s power to make an interim property order, which was “appropriate” at that stage of proceedings. This being the expression used in the enabling provision contained in section 79(1) of the Act.
In this regard, the Full Court said as follows:
“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.”[10]
[10] Strahan v Strahan (2010) 42 Fam LR 203 at 236 [132]
In reaching this conclusion, the Full Court noted the idiosyncratic nature of litigation, under the Family Law Act, when compared with other civil litigation. In the former, there was often a marked imbalance in the power of the parties concerned and artificialities in how property available to be divided was legally controlled in the period leading up to final hearing.
In this context, the Full Court approved comments of Riethmuller FM in Wenz v Archer[11] as follows:
“It cannot be the case that a party who has an irresistible claim to a substantial share of the property of the parties should be held out of that property while the matter is litigated, left to rely upon applications for exclusive occupation of the matrimonial home or spousal maintenance alone, particularly where the parties are asset rich but have relatively modest incomes (such as the present case). Nor could it be appropriate that a party should be denied the ability to liquidate assets when there are real needs for those resources, such as to meet debts which may result in the party being pursued by creditors, or the need for the party to make payments for the benefit of the children, or to take advantage of other financial opportunities (for example the superannuation contribution cases).”
[11] See Wenz v Archer (2009) 40 FamLR 212 at 223 [53]
In terms of the second or substantive phase, the Full Court in Strahan confirmed the second and third considerations delineated in Harris, namely that the relevant provisions of section 79, including section 75(2) needed to be considered and so far as any adjustment made, at this stage, it needed to be capable of reversal or to be clawed back at a later stage.
Examples of where it may be appropriate to use the power to make an interim property order include where both the parties agree to the disposal of some assets pending trial; urgent situations to avoid injustice being wreaked upon one party if the power was not exercised; and where one party requires funds to assist in the defrayal of legal costs arising from the litigation involved.[12]
[12] See Strahan (ibid) at [133]
The discretion to make an interim property order must be closely considered, bearing in mind the different nature of an interim, as opposed to a final hearing, which nonetheless involves the exercise of the same power. Riethmuller FM expressed the dilemma arising in this way:
“…Because the orders under s.79 are the exercise of such a broad and complex discretion, generally the interests of the parties are better served by there being one final hearing under s.79. If the s.79 proceedings are not completed in one decision various options may not be left open and therefore the Court may not be able to ensure that a ‘just and equitable’ outcome overall is achieved. However, there will be cases where it would not be ‘appropriate’ to deny interim relief, as this would not permit a ‘just and equitable’ result in the interim.”[13]
[13] See Wenz v Archer (ibid) at [54
Considerations of this type led the Full Court in Strahan to say as follows:
“We also emphasise that in order to establish an appropriate case for an interim property settlement order more is required than the mere fact that upon a final hearing the applicant would receive the property being sought (or an amount in excess of the funds being sought) from the other party. [14]
[14] See Strahan (ibid) at [139]
Conclusions
Before turning to the question of whether it is in the interest of justice to make an interim distribution of property in this matter and what form such a distribution should take, it will be necessary for the court to turn its mind to the marital estate available for distribution. Necessarily this cannot be a comprehensive exercise but it is necessary to set the possible parameters of this estate so that some consideration may be given to the implications of any interim property order, particularly at the final hearing stage.
In this regard, I propose to group the various assets in question and tabulate them in such away that the respective values attributed to them by the parties can be compared. I will utilise the lowest values provided by each of the parties, so that the overall totals will be conservative in nature.
Assets
Wife’s Values
$
Husband’s Values
$
Property S
800,000.00
1,200,000.00
Various motor vehicles
629,000.00
543,000.00
Livestock and chattels
32,000.00
35,500.00
Husband’s bank account
150,000.00
150,000.00
Wife’s bank account
20,000.00
20,000.00
Total
1,631,000.00
1,948,500.00
Superannuation
Husband’s superannuation
Not known[15]
273,036.00
Wife’s superannuation
16,070.00
16,070.00
Total Superannuation
16,070.00
289,106.00
Combined Assets & Super
1,647,070.00
2,237,606.00
[15] This is the position as reflected in her affidavit filed on 1 March 2012 at paragraph 13
I acknowledge that there is some imprecision surrounding these calculations. I have not included any reference to the parties’ interest in the (omitted) business, although both agree the business has access to about $30,000.00 in its cheque account. In addition, I have not included amounts referable to household contents and tools. There also seems to be a small parcel of AMP shares.
The greatest potential anomaly however concerns the husband’s superannuation. As previously indicated, he has deposed that he is now retired. Necessarily, this implies a degree of permanency and irreversibility in respect of his decision to cease fulltime paid employment. As such, I would anticipate that he is now in a position to crystallise his superannuation entitlements, given his age.
The wife has deposed that she personally does not know the value of the husband’s superannuation. However, it would seem likely that it is at least the amount asserted by Mr Railton. If so, this would bring the wife’s estimate of the parties’ combined worth to $1,936,176.00. This would make the difference between the parties’ respective views of their overall material worth one of around $300,000.00 – a not inconsiderable sum in the overall scheme of things.
In another recent decision, regarding an application for property distribution made at the interim stage, I said as follows:
“The discretion to make an interim property order is one which is to be conservatively exercised. Issues which are inchoate, at this stage, may become more apparent to me at the final hearing stage and may considerably change the topography of the dispute between the parties, at this later stage. To use the terminology of the former US Secretary of Defence, Mr Rumsfeld, these are the “known unknowns”.
In addition and more significantly, as the final hearing unfolds, “unknown unknowns” may arise which will even more significantly change the issues in dispute the parties and how their property is to be distributed between them.” [16]
[16] Benson & Benson [2012] FMCAfam 335 at [91] – [92]
In this case, some of the “known unknowns” include the following:
·the value of the Property S property;
·if the property has the higher value ascribed to it by the husband, is it viable for the wife to retain it on completion of the proceedings;
·the value of the collectible motor vehicles;
·are the vehicles, in any event, readily convertible to cash;
·if the husband retains the various vehicles, how is he to accommodate himself and provide his other financial needs in future, given the vehicle themselves will neither provide him with accommodation nor a source of income;
·what is the value of the (omitted) business;
·will the business continue to provide the parties with an income stream; if so, how much and will it depend in the husband’s case on him being formally employed by it;
·can the parties sell their interest in the business to their son; if so, do they want to.
The essential difficulty in the case is easily summarised. On the case of both the husband and wife, they are persons of reasonable wealth, which has been acquired after a long married life involving significant toil and contributions referable to them both.
In common with many separated couples, their wealth is held in a variety of forms – some liquid or easily converted to a liquid form – others not so liquid. In addition, they find themselves confronted with the dilemma inevitably facing separated persons – two households cannot live as cheaply as one. Accommodation and the necessities of life and indeed arrangements for financial security in retirement must be replicated.
In addition, the parties are of an age when they must consider drawing down upon their accumulated assets to provide for themselves in retirement. Neither can rely on a regular stream of income from employment to supply their recurrent financial needs in future.[17] Accordingly, both parties are likely to require a combination of liquid and fixed assets, from their marital estate, to maintain financial equilibrium in their later years.
[17] I am unaware of the parties’ respective levels of eligibility to receive social security entitlements, as no evidence has been provided in this regard.
For obvious reasons, in the absence of definitive evidence regarding the value of the Property S property and the various collectible motor vehicles, what unknown unknowns may materialise at hearing is unknown to me, but I suspect that they will centre on the justice and equity of the make-up of the split between the parties of cash assets and the real property and whether it is ultimately viable for the wife to be able to retain the former matrimonial home and the chattels related to it absolutely.
Other, as yet inchoate issues, relate to whether the husband has actually formally retired from the workforce and so crystallised his superannuation entitlements, so boosting the actually cash assets available to be divided between the parties. I have also not been provided with evidence regarding the parties’ respective likely legal costs and whether equity and justice will dictate that these expenses should be “added back” into the pool of matrimonial assets. However, undoubtedly, at some stage or other those expenses will have to be paid.
In general terms, given the duration of the marriage between the parties and the brief nature of the consideration as envisaged by the Full Court in Strahan, it does not appear to me to be unreasonable to consider that the starting position of any interim property distribution is that the wife is likely to be regarded as having made contributions equal to those of the husband. I acknowledge however that she is likely to submit her contributions are greater than 50% and the husband will most likely argue otherwise.
But the fact remains the marriage was one well in excess of thirty years in duration. In those circumstances, it would be ludicrous to assert that one party’s contributions are significantly outweighed by those of the other. Accordingly, the starting point of my deliberations, in respect of this interim property application, is that Ms Railton will receive a significant portion of the parties’ net marital assets, although the exact extent of that portion cannot be determined at this stage and more importantly perhaps nor can its make-up.
How the various section 75(2) factors will play out and who of the parties they will ultimately favour is unclear to me. The unchallenged evidence does indicate however that Ms Railton has not been in the paid workforce for a significant period of time and faces a number of issues relating to the state of health.
Mr Railton is older than she is and is of retirement age. Accordingly, although section 75(2) matters are likely to be important in this case, it is not immediately obvious that they will favour one party significantly more than the other and so bring about a final division of property that will greatly favour one party more than the other.
Accordingly, the end of my provisional examination of the third stage of the process of property division between the parties is that Ms Railton continues to have an expectation that she will retain a significant component of the parties’ property. This is the essential flavour of her application.
She echoes what was said in Wenz v Archer and points to the fact that it is a false dichotomy for the court to fall into the error of identifying property in the husband’s possession and property in the wife’s possession at this stage, in determining any interim property distribution issue. Rather the court should consider that all of the property concerned is jointly and severally owned by both parties and as such, at the interim stage, it is open to the court to distribute that property in order to do justice to the parties.
At this stage, the wife argues she has need for some of the parties’ liquid assets to meet her legitimate expenses and it would be unjust and inequitable for this need to be denied, given the likely extent of her overall claim and what she would categorise as the parties’ asset rich position.
In my view, the ultimate determinant of the equity of the interim property order sought by the wife must be its overall pragmatism, in the sense of the practicality of making the order sought, particularly in terms of there being sufficient cash assets remaining to satisfy the husband’s final entitlements, particularly if Ms Railton retains the Property S property. I have however no doubt that Ms Railton is equitable claim on a significant proportion of the marital assets available for distribution.
As a matter of practicality, at the present time, she retains the Property S property and the chattels associated with it. Neither party seeks to sell the property and indeed my understanding is that, if at all possible, Ms Railton would want to retain the property given her long standing ties to it. Accordingly, at the present time, she controls assets to the value of between $800,000.00 and $1.2 million dollars, which must represent a significant proportion of the parties’ overall assets, no matter how they are otherwise valued.
I have not been provided with any evidence regarding Ms Railton’s capacity to borrow against the Property S property but, given her evidence regarding her income earning potential, it does not seem an unreasonable conclusion that her capacity to borrow is extremely limited. As such, it is difficult to see how she could liberate capital from the Property S property to pay Mr Railton any monies to which he might be entitled if she retains the property.
On the figures attributed by the wife to the pool of property, if she retains Property S and the chattels associated with it, she would have property marginally over the value of 50%. If the husband’s superannuation is included in the pool, she would have property to the value of around 43% on the same basis.
Accordingly, an interim distribution of cash to her in the sum of $50,000.00, on Ms Railton’s figures would keep her within 50% of the asset pool and would, in my view, represent a conservative adjustment, which could be readily justifiable on the basis of what is in the interest of justice, particularly given the length of the marriage and the extent of the parties’ overall asset backing.
The situation shifts if Mr Railton’s figures are utilised. The wife would retain just over 55% of the asset pool if she retained Property S and the chattels associated with it. These figures, in both cases, would be distorted when regard is had to the wife’s superannuation and the cash currently attributed to her, which is likely to be a diminishing asset in the period leading up to trial.
In addition, if the value of the Property S property falls between the figures attributed by the parties (or indeed is either less or more than the wife or the husband currently considers) the exercise which I have just undertaken becomes more artificial and less useful.
In my view, the essence of the power to make an interim property order is that it is to be exercised conservatively, bearing in mind the preference that there be only one hearing regarding the exercise of the section 79 power, which necessarily involves the exercise of a complex discretion.
Although the parties have a variety of assets, which in total have a significant value, that does not, in my view, diminish the potential complexities arising in this matter – the chief one being how in practical terms the wife may retain the Property S property without compromising the entitlements of the husband. This question terms on the value of the property – an issue which remains in vehement dispute between the parties.
Although the circumstances arising before the exercise of the power need not be compelling, there must be still some appropriate justification before such an order is made. It must be in the overall interests of justice that an interim property order be made.
At this stage, although the wife occupies the parties’ most significant asset in dollar terms, there remains a marked imbalance in their access to others of their material assets. The wife has limited income and is likely to have pressing (and possibly escalating) financial needs, particularly in the period leading up to the resolution of the property proceedings between the parties. I think this consideration renders it in the interest of justice that there be some release of funds to each of the parties to harbour them through to a final hearing, if one is required.
However, in making such an order, I must be careful of unintended consequences, the chief of which being that such an interim order may prevent the court doing justice at the final hearing stage. Accordingly the section 79 power, at the interim stage, must be exercised carefully and cautiously.
I have come to the view that it is in the interests that each party be authorised to access the sum of $25,000.00 from the monies standing in the husband’s savings account pending final order in the matter. I will make an order to this effect.
In percentage terms, $50,000.00 represents around 3% of the wife’s approximate pool (not including the husband’s superannuation) and around 2.2% of the husband’s approximate pool. Given the extent of the other assets, in my view, not withstanding the likely value of Property S, an interim distribution in this sum will be able to be taken into account at the final hearing stage without any injustice to either party.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding one hundred and two (102) paragraphs are a true copy of the reasons for judgment of Brown FM
Date: 7 June 2012
and Clauson v Clauson (1995) FLC 92-595; Hickey v Hickey & Attorney General of the Commonwealth of Australia (Intervenor) 2003 FLC 93-143
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