RILEY & MASSALSKI
[2017] FamCA 985
•4 December 2017
FAMILY COURT OF AUSTRALIA
| RILEY & MASSALSKI | [2017] FamCA 985 |
| FAMILY LAW – PROPERTY – INTERIM PROCEEDINGS – Where the husband made an application for partial property distribution – Where the husband sought orders for the sale of one of the parties’ jointly owned properties and $350,000 to be distributed to him from the proceeds of sale – Where the husband argued that it is in the interests of justice for there to be a partial property distribution to enable him to discharge some of his indebtedness – Where the wife opposed the application – Court finds that the orders sought by the husband would deprive the wife of the ability to argue for the final orders she seeks – Whether it is in the interests of justice for an order to be made – Court finds that the husband has sufficient resources to manage his indebtedness until the final hearing – Application dismissed. |
| Family Law Act 1975 (Cth) ss 79, 80(1), 90SM, 90SS |
Family Law Rules 2004 (Cth) r 1.04
| Davidson and Davidson (No 2) (1994) FLC 92-469 Riley & Massalski [2016] FamCA 1169 Strahan & Strahan (Interim Property Orders) (2011) FLC 93‑466 Stanford and Stanford (2012) 247 CLR 108 Sully & Sully (No.2) [2016] FamCA 706 |
| APPLICANT: | Mr Riley |
| RESPONDENT: | Ms Massalski |
| FILE NUMBER: | SYC | 496 | of | 2015 |
| DATE DELIVERED: | 4 December 2017 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | McClelland J |
| HEARING DATE: | 9 October 2017 |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | Russell C Byrnes Solicitor |
| COUNSEL FOR THE APPLICANT: | Mr Fowler |
| COUNSEL FOR THE RESPONDENT: | Mr Hayes |
Orders
THE COURT ORDERS THAT:
The husband’s application for a partial property distribution is dismissed.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Riley & Massalski has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 496 of 2015
| Mr Riley |
Applicant
And
| Ms Massalski |
Respondent
REASONS FOR JUDGMENT
Introduction
This matter concerns an application by Mr Riley for orders for a partial distribution of property pending the final hearing of the matter. Mr Riley is the former de facto partner of Ms Massalski. For convenience, Mr Riley will be referred to as the husband and Ms Massalski will be referred to as the wife.
The husband seeks an order for the sale of part of the property that the parties jointly own at F Street, Suburb G (“the F Street Property”) and, from the proceeds of sale, an amount of $350,000 to be distributed to him. As previously described in earlier decisions, the building constructed on that property is two semi-detached villas (“the villas”). The parties have agreed to strata the units. The orders sought by the husband are premised on the assumption that will occur.
The reasons advanced by the husband for seeking the sale of one of the villas and the distribution of funds to him is that, as result of the delay in the finalisation of this matter, he has been left with substantial debts arising from his property development business. In those circumstances, it is contended that it is in the interests of justice for there to be a partial property distribution to him to enable him to discharge some of his indebtedness.
The application is opposed by the wife on the basis that she seeks final orders that she retain both of the villas.
The application is made by the husband in the context of the husband also jointly owning a property at Suburb A in Victoria (“the Suburb A property”) as a tenant in common in equal shares with the husband of the wife, Mr K. Mr Riley and Mr K are in the process of subdividing the Suburb A property and, in anticipation of that occurring, the property has been described in two parts as B Street and C Street, Suburb A (collectively, “the Suburb A property”). The wife’s relationship with Mr K ceased prior to her commencing a relationship with Mr Riley, however, it appears that Ms Massalski and Mr K have not yet divorced. Nevertheless, for convenience, Mr K will be referred to as the wife’s former husband.
Further, the wife alleges that a property currently owned jointly by the husband with his current partner at D Street Suburb E, should be included in the balance sheet in identifying available property for distribution at final hearing.
Background
In my decision dated 11 March 2016,[1] I set out the relevant background to this matter up until 1 December 2015 as follows:
[1]Massalski & Riley [2016] FamCA 144.
·The applicant was born in 1958 and is currently aged 57. The respondent was born on in 1951 and is currently aged 65.
·In 1982, the applicant married Mr K. The marriage is said to have ended in 2002. The respondent, however, disputes this separation date and alleges that, up until March 2009, the applicant and Mr K were still living together. The respondent alleges that the applicant and Mr K continue to maintain a “close relationship”.[2]
[2] The respondent’s affidavit filed 7 July 2015 at paragraph 92.
·In 2005, the applicant and Mr K bought two apartments at the Suburb G Resort, entering into a joint mortgage to finance the purchases.
·In 2006, the respondent and Mr K purchased the Suburb A property for $300 000 as tenants in common in equal shares, with a view of building two townhouses on the property. The respondent borrowed $135 000 to put towards the purchase of his share of that property.
·After the purchase of the Suburb A property, the respondent and Mr K constructed two townhouses on the land. The townhouses are to be known respectively as B Street and C Street, Suburb A. As at the date of the hearing, the plan of subdivision had not yet been registered.
·The respondent alleges that in 2007 the parties began an intimate relationship.
·In December 2008, the parties purchased land at F Street, Suburb G, with a view to constructing two home units. The F Street property was purchased by the parties as tenants in common in equal shares and the purchase price was $330 000. The parties agreed to contribute equally to the cost of constructing the units and that, after the subdivision was completed, they would each retain one of the units. The applicant retained possession of, and continues to reside in Unit 1, which is at the front of the property, whilst the respondent retained possession of Unit 2, which is located at the back of the property.
·The applicant borrowed $165 000 from Mr K for her share of the purchase price of the F Street property. The respondent borrowed $182 000 from his father to contribute to his share of the purchase price. The respondent contends that he has contributed $30 000 more than the applicant to the cost of the development – however, that difference was allegedly remedied by the applicant allowing the respondent’s father to move into Unit 2 rent-free for two years commencing in January 2011. The respondent also contends that he still owes the estate of his late father the sum of $182 000 which he borrowed.
·In early 2009, the respondent moved out of the home where he was living with his then wife, Ms Riley, to F Street, Suburb G (being a property owned by the applicant) to oversee the construction of the F Street property.
·Between January and March 2009, the parties commenced cohabitation.
·Between May 2009 and May 2010, the parties constructed the two F Street units at the F Street property (hereafter “the F Street units”). The respondent took seven months off work during the construction of the two units. The applicant contributed approximately $50 000 cash to the initial cost of construction of the units and borrowed a further $190 000 from Mr K for her share of the construction costs. The respondent contributed $50 000 to the initial cost of construction of the units and borrowed a further $260 000 from the Commonwealth Bank which he contributed to the construction costs.
·The respondent alleges that the Commonwealth Bank insisted on the applicant’s name being placed on the loan due to the F Street units being registered in both parties’ names. The respondent alleges that the Commonwealth Bank loan is wholly his responsibility and he has met all repayments for it. The applicant, however, alleges that it is a joint loan, which the parties intended to pay off utilising rental income generated by the respondent’s father’s home in Suburb J.[3]
[3] The applicant’s affidavit filed 8 September 2015 at paragraphs 53-54.
·In January 2010, the applicant bought a laptop computer for the respondent. According to the respondent, the computer was bought to re-pay the respondent for money he had loaned to the applicant.
·Between December 2010 and September 2012, the respondent resided with his father in Unit 2 of the F Street units whilst the applicant continued to reside in Unit 1.
·The respondent alleges that in October 2012 the parties separated. The applicant, however, alleges that the parties separated “in or around October 2013”.[4]
[4] The applicant’s affidavit filed 8 September 2015 at paragraph 7.
·In 2013, the respondent and Mr K obtained a joint construction loan of $660 000 for the construction of the two townhouses at the Suburb A property.
·Between January 2013 and April 2014, the townhouses were constructed. Mr K chose to retain the townhouse at B Street, leaving the townhouse at C Street for the respondent.
·In January 2014, the respondent’s father was relocated into permanent care at an aged care facility in Sydney and the respondent vacated Unit 2 of the F Street units. The respondent alleges that he tried to tenant Unit 2 through a real estate agent, but was prevented from doing so by the applicant who, the respondent asserts, told the agent she was a joint owner and would not give permission for it to be tenanted.
·Throughout 2014, the respondent alleges that he carried out lengthy negotiations with the surveyor and with Suburb H City Council, paid for an engineer’s certificate, arranged council inspections and paid fees to the Council and to the Commonwealth Bank to procure the issue of an Occupation Certificate for the F Street units. This was in order to proceed with the subdivision of the property.
·In February 2014, an interim Apprehended Domestic Violence Order was made by N Town Local Court against the applicant for the protection of the respondent and Ms O, the respondent’s new partner (“Ms O”).
·The respondent alleges that in March 2014 the applicant took $25 000 from the Commonwealth Bank loan account without the consent of the respondent.
·In April 2014, an Occupation Certificate was issued for the Suburb A property.
·In June 2014, the respondent and his former wife, Ms Riley (“Ms Riley”), divorced. Around this time, the respondent and Ms Riley also finalised a property settlement – which included a term that the respondent pay her the sum of $100 000 by 31 December 2015. Ms Riley subsequently placed a caveat over the F Street property.
·On 12 June 2014, a final Apprehended Domestic Violence Order was made by Suburb H Local Court against the applicant for the protection of the respondent and Ms O, including an order that the applicant not enter the respondent’s Unit 2 at F Street.
·In September 2014, the respondent obtained an Occupancy Certificate for the F Street units. The F Street units were also valued, with Unit 1 being valued at approximately $700 000 and Unit 2 being valued at $675 000.
·In September 2014, the respondent’s father gifted his property at I Street, Suburb J in New South Wales (“the Suburb J property”) to the respondent.
·In October 2014, the respondent sold his father’s property at Suburb J for $1.436 million and applied the proceeds of that sale towards the purchase of the Suburb E property with Ms O.
·The respondent alleges that, in October 2014, he sent the documentation required to subdivide the F Street units to the applicant but the applicant refused to sign the documents. The respondent further alleges that the applicant would not return the documentation to him.
·The respondent also alleges that, in November 2014, he sent another set of documents to the applicant for her to sign in order to proceed with the subdivision of the F Street units. He says that the applicant has not responded to requests for her to sign the documents, thereby preventing the registration of the plan of subdivision with NSW Land and Property Information.
·Between December 2014 and February 2015, the construction of the townhouses at the Suburb A property was finalised and those townhouses were in a position to be tenanted.
·On 12 December 2014, the parties were separately served with a Statement of Claim filed by Suburb H City Council for outstanding rates relating to the F Street units. The respondent alleges that he has since paid 50 per cent of the outstanding rates.
·In January 2015, the applicant entered the respondent’s F Street Unit 1 and removed the laptop computer which the respondent alleges was his.
·On 30 January 2015, the applicant commenced proceedings in the Family Court of Australia.
·On 17 June 2015, the applicant lodged a caveat over the Suburb A property.
·On 18 June 2015, the Apprehended Domestic Violence Order against the applicant for the protection of the respondent and Ms O was extended by Suburb H Local Court.
·On 25 November 2015, the respondent’s former wife, Ms Riley, filed an Application in a Case seeking leave to be joined to the proceedings.
·On 1 December 2015, Ms Riley discontinued her application to be joined to the proceedings.
In my further decision in this matter dated 3 June 2016[5] I updated that background as follows:
·By Application in a Case filed by the husband on 22 January 2016, the husband sought orders to reopen the hearing that had been listed before me on 16 December 2015. That hearing was for the purpose of determining whether Unit 2 at the property should be subdivided or strataed with title transferred to the husband or, alternatively, rented out. At that hearing on 16 December 2015, both parties were in agreement that the property itself should be subdivided or strataed.
·Consequent to that hearing, by orders made on 11 March 2016, the parties were required to attend to all necessary steps and sign all necessary documentation to effect the subdivision or stratering of the property and for Unit 2 to be rented out. My orders also dealt with the payment of outgoings, including utilities, rates, insurance, in respect of the property, and also maintenance.
·Despite those orders having been made, the wife, failed to vacate Unit 2 and, accordingly, it was not, at that time, possible for that unit to be rented out. The circumstances were that the wife had been living in Unit 1 since 2009 and continued to live there until January 2016. Specifically, the wife confirmed that she slept in Unit 1 for effectively the period from December 2009 until January 2016. Despite her history of residing in Unit 1, subsequent to the hearing on 16 December 2015, the wife, in January 2016, moved into Unit 2.
·On 24 March 2016, the wife filed an Application in a Case seeking a variation of the orders on 11 March 2016 effectively seeking to interchange a reference to Units A and B. That is, the wife sought orders that would have required Unit 1, rather than Unit 2, to be rented out.
[5]Riley & Massalski [2016] FamCA 1169.
By orders made on 3 June 2016 I dismissed the wife’s application.
On 30 August 2017 I made the following orders and notations:
1. This matter is listed for hearing at 10:00am on 9 October 2017 for the purpose of considering an Application in a Case to be filed by the Respondent seeking interim property orders.
2. The final hearing listed to commence 9 October 2017 for 5 days is vacated.
3. The Respondent is to file and serve an Application in a Case together with any supporting affidavit within 14 days of the date of these orders.
4. The Applicant is to file and serve a Response to the Application in a Case together with any supporting affidavit within 28 days of the date of these orders.
5. By close of business on 1 September 2017 the Respondent is to provide the names of 3 valuers to value the property located at [F Street, Suburb G] NSW, [D Street, Suburb E] NSW, and [W Street, Suburb G] NSW to the Applicant.
6. By close of business on 6 September 2017 the Applicant is to advise the solicitor for the Respondent of the name of the valuer from the above list that she selects to value the properties.
7. In the event of the Applicant failing to so advise the solicitor for the Applicant by close of business on 6 September 2017 of the valuer she selects, the Respondent shall select the valuer to value those properties.
8. The Respondent shall prepare a draft letter of instruction to the valuers and provide it to the Applicant by close of business 1 September 2017.
9. The Applicant shall propose any amendments to the joint letter of instruction by close of business on 6 September 2017.
10. In the event that the Applicant does not propose any amendments to the joint letter of instruction by close of business on 6 September 2017 the Respondent shall send the letter as provided to the Applicant as a joint letter of instruction to the valuers.
11. By no later than 20 September 2017 the Applicant is to file and serve a Notice to Admit Facts and Authenticity of Documents detailing:
a. The property she asserts is joint property of the parties’ relationship;
b. The nature of the interest she claims in respect to that property;
c. In the event that the Applicant claims an equitable interest in any such property, the basis upon which she claims such an equitable interest;
d. The contributions that the Applicant contends that she made to the property of the parties at the commencement of their relationship;
e. The direct financial contributions the Applicant contends she made to the property of the parties during the course of their relationship;
f. The direct financial contributions the Applicant contends she made to the property of the parties in the period subsequent to the termination of the parties’ relationship;
g. The Applicant’s contentions as to the indirect contributions she contends she made in respect to the parties’ property during the course of the parties’ relationship; and
h. The Applicant’s contentions as to the indirect contributions she contends she made in respect to the parties’ property during the period subsequent to the termination of the parties’ relationship.
12. The Respondent is to file and serve a Notice Disputing Facts and Authenticity of Documents by no later than 4 October 2017.
13. Insofar as they are in his possession, the Respondent is to provide to the Applicant a copy of the contract for building works undertaken in respect to the property at [D Street, Suburb E] NSW together with a copy of the any plans relating to those building works within 14 days of the date of these orders.
14. The costs of the hearing commencing 9 October 2017 for 5 days are reserved.
THE COURT NOTES THAT:
A. Part of the proceedings in the Supreme Court of Victoria with claim number S CI 2016 05260 have been transferred to this Court to be consolidated with these proceedings, being [Ms Massalski’s] claim and [Mr Riley’s] defence to that claim.
B. Chambers is to liaise with the Supreme Court of Victoria to arrange the transfer of the relevant documents from those proceedings to this Court.
C. The parties have agreed to instruct a valuer in Victoria to value the property at [B Street, Suburb A] Victoria and the Applicant has agreed to pay for the valuation of the ‘revenge strip’ of that property.
In the period since August 2016, the husband and the wife’s former husband have been in dispute regarding their respective interests in the Suburb A property. The wife’s former husband has also agreed that the wife has an equitable interest in the Suburb A Property but this is denied by the husband. The wife maintains an entitlement to place a caveat on that property. It is unnecessary to determine that issue in dealing with this interim application.
Also in the period since August 2016, one of the villas at the F Street property has been tenanted and no issue was raised in respect to the rental income being applied in accordance with previous orders.
Competing applications
The husband’s application
The Minute of Order proposed by the husband was as follows:
1. That within 7 days of the date of this order [Ms Massalski] (“the Respondent”) deliver the HP laptop computer (with all data that was on the computer when removed by the Respondent) to the office of Russell C Byrnes solicitor between the hours of 9am and 5pm.
2. Within twenty-eight (28) days of the date of this order [Mr Riley] (“the Applicant”) and the Respondent do all acts and things and sign all documents required to list for sale, and thereafter to sell, the rear Unit 1t [F Street, Suburb G] ( the “rear F Street unit”) at the best price reasonably attainable and otherwise in accordance with the following orders:
(a) The rear F Street unit shall be listed for sale with [H Real Estate] at [Suburb G] (“[HRE]”).
(b) That the Applicant and the Respondent act upon the advice of [HRE] in relation to the method of sale and the marketing and advertising for the sale of the rear [F Street] unit, unless they otherwise agree in writing.
(c) That the Applicant and the Respondent engage Russell Byrnes solicitor to act on the sale.
(d) If an offer is made to purchase the rear [F Street Unit 1] and the Applicant and the Respondent do not agree within 48 hours of the offer having been made on whether the offer should be accepted the Applicant and the Respondent shall accept and act upon the recommendation in writing of [HRE] as to whether or not the offer should be accepted.
(e) If the rear [F Street] unit is to be offered for sale by public auction and the Applicant and the Respondent do not agree on the reserve price by 48 hours before the auction is due to commence then they shall accept and act upon the recommendation in writing of [HRE] as to the reserve price.
(f) The Applicant and the Respondent shall cause the sale proceeds of the rear [F Street] unit to be applied in the following manner and priority:
(i)Discharge of the loan secured over the rear [F Street] unit to the Commonwealth Bank of Australia
(ii)Payment of agent's commission, expenses and auction expenses.
(iii)Payment of the legal costs on the sale.
(iv)Reimbursement to a party of any amounts paid in advance by that party for any expenses as referred to in sub-paragraphs (ii) or (iii).
(v)To pay out the Applicant’s loan from the Commonwealth Bank of Australia loan number … which is secured on [B Street, Suburb A], Victoria.
(vi)To pay out the Applicant’s one half share of the construction loan for [B Street, Suburb A], Victoria being loan number ...
(vii)To pay any remaining balance to the Applicant.
3. That in the event that either party refuses or neglects to execute a Deed and/or Instrument in compliance with the provision of these Orders, the Registrar of the Family Court of Australia at Sydney is hereby appointed pursuant to Section 106A of the Family Law Act 1975 to execute all Deeds and/or Instruments in the name of the defaulting party and do all acts and/or things necessary to give validity and operation to the Deed and/or Instruments.
4. That the Respondent pay the Applicant’s costs of and incidental to the Applications in a Case filed by the Applicant on 07/07/2017 and 15/09/2017.
5. Such further or other orders as this Honourable Court deems fit.
The wife’s application
In her outline of case document, the wife sought the dismissal of the husband’s application.
Resolution of the Laptop issue
Fortunately the parties were able to resolve a long running issue regarding the return of the husband’s laptop computer.
Evidence and witnesses
The husband relied upon the following documents:
· Application in a Case filed 7 July 2017;
· Application in a Case filed 21 September 2017;
· Affidavit of Russell Byrnes sworn 20 June 2017 and filed 21 June 2017;
· Affidavit of Mr Riley sworn 13 September 2017 and filed 15 September 2017;
· Affidavit of Mr Riley sworn on 6 July 2015 and filed 7 July 2015; and
· Financial Statement filed 6 October 2017.
The wife relied upon the following documents:
· Response to an Application in a Case filed 29 September 2017;
· Statement of Facts filed 5 October 2017;
· Affidavit of Ms Massalski filed 30 January 2015;
· Affidavit of Ms Massalski filed 29 September 2017; and
· Affidavit of Ms Massalski sworn and filed 5 October 2017.
CONSIDERATION
In the case of parties to a marriage, the legislative foundation for an order for partial property distribution is sections 79 and 80(1)(h) of the Family Law Act 1975 (Cth) (“the Act”). In combination, these sections confer power on the Court to make orders for interim property settlement. Section 80 is not, in itself, a source of jurisdiction for an order for the partial distribution of property to be made in the course of interim proceedings. Rather, the section is an “enabling provision” that provides various ways in which the general power in section 79 may be exercised in individual cases. In that respect, in Davidson and Davidson (No 2) (1994) FLC 92-469, the Full Court stated:
Section 80(1) is limited by its introductory words, namely that “The court, in exercising its powers under this Part, may do any or all of the following ...”. That is, s. 80(1) is activated by the exercise by the court of some other of the powers in Part VIII. [6]
[6] Davidson and Davidson (No 2) (1994) FLC 92-469 at 80,874.
In this case the parties are, as noted, in a de facto relationship. Accordingly, the relevant provisions that mirror sections 79 and 80 of the Act are section 90SM and section 90SS(1)(h). These provisions are found in Part VIIIAB of the Act.
It is clear that the power to make orders pursuant to section 90SM can be exercised prior to final hearing including through “a succession of orders until the power ... is exhausted” or until a final order dealing with all the known property of the parties is made.[7]
[7] Gabel & Yardley (2008) FLC 93-386, cited in Strahan & Strahan (Interim Property Orders) (2011) FLC 93‑466 at 85,640;[2009] FamCAFC 166 at [113].
However, as noted by Thackray J in Strahan & Strahan (“Strahan”):[8]
…it is important to note that s 80(1)[or s90SS(1)] is couched in the permissive. Hence, although the Court must give consideration to the matters set out in s 79(4)[or s90SM] when hearing an application for an interim payment, it has no obligation to make an interim order. The Court “may” do so if it considers that it should in the exercise of its discretion.
[8] Strahan & Strahan (Interim Property Orders) (2011) FLC 93‑466; [2009] FamCAFC 166 at [223].
In Strahan,[9] the Full Court held that there are two steps to considering an application for an order for partial property distribution prior to final hearing. The first step is to resolve whether to exercise the power before a final hearing. This is a “procedural step” which requires an analysis of whether the circumstances of the case trigger the Court’s power to invoke section 80(1)(h) [or s 90SS(1)] of the Act to make an order for interim property settlement before a final hearing. At this stage, the “overarching consideration” is the interests of justice.[10]
[9] Ibid.
[10] Ibid at [132].
In approaching the determination of the first issue, the Full Court in Strahan said:
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.[11]
[11] Ibid.
It is clear that it is not necessary for an applicant seeking orders for the partial distribution of property, prior to final hearing, to show “compelling circumstances”. Nonetheless, in Stanford and Stanford,[12] the High Court held that consideration as to whether there should be an order for the adjustment of the parties’ legal and equitable interests in matrimonial property should not be commenced with the assumption “that one or other party has the right to have the property of the parties divided between them”.[13] This applies to an application for a partial distribution of property in interim proceedings as much as it does to an application for the adjustment of property at the final hearing of the matter.
[12] Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 5 at [40].
[13] Ibid; see also Medlow & Medlow (2016) FLC 93-692 at 81,089; [2016] FamCAFC 34.
In other words, 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.
The second step identified in Strahan,[14] involves the exercise of the power pursuant to section 79 or, in this case, section 90SM of the Act. In turn, insofar as it is possible in interim proceedings, this step requires the Court:
·to identify “the parties’ property and of their interests in it”;[15] and
·to consider and apply the provisions of section 79.[16]
[14] Strahan & Strahan (Interim Property Orders) (2011) FLC 93‑466; [2009] FamCAFC 166.
[15]Medlow & Medlow (2016) FLC 93-692; [2016] FamCAFC 34 at [69].
[16] Strahan & Strahan (Interim Property Orders) (2011) FLC 93‑466; [2009] FamCAFC 166 at [135] to [137].
Section 79 should be applied in the context of the interim proceedings and, in particular, in considering whether it is just an equitable to make the order, it is necessary to have regard to the impact of the order upon the respective parties at the point in time that the interim order is made.[17]
Is it in the interests of justice for an order for partial distribution of property to be made prior to final hearing?
[17]Sully & Sully (No.2) [2016] FamCA 706 at [36].
The task of determining whether it is in the interests of justice for an application for partial distribution of property to occur prior to final hearing involves a consideration of not only the parties’ interests but also the public interest. In that respect, in Strahan, the Full Court said:[18]
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.
[18] Strahan & Strahan (Interim Property Orders) (2011) FLC 93‑466; [2009] FamCAFC 166 at [132].
In a similar context, Thackray J said:
The Court must first identify circumstances that make it appropriate to give consideration to exercising its power to make an interim order. It is at this stage that the Court has regard to the policy consideration that it is generally in the interest of the parties and the Court for there to be only one exercise of the s 79 power.[19]
[19] Ibid at [226].
Further to the policy consideration referred to by Thackray J, 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) (“the Rules”) which is set out in rule 1.04 as follows:
Main purpose of Rules
The main purpose of these Rules is 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. (emphasis added)
Unless satisfied that it is in the interests of justice, the Court should avoid hearing a multiplicity of interim applications that traverse matters that will ultimately be considered in an orderly and considered way at final hearing.
The husband states that his reasons for seeking the orders set out in this interim application are to discharge the following debts:
·repayment of loan to the Commonwealth Bank in respect to the Suburb G property in the sum of $179,000.
·repayment of real estate agents commissions and expenses and auction expenses in the sum of $14,000.
·the payment of solicitors costs on the sale in the sum of $2200.
·the payment of the loan from the Commonwealth Bank which is secured against the Suburb A property in the sum of $72,000.
·the payment of one half share of the construction loan for the property at Suburb A in the sum of $320,000.
·the payment of the remaining balance of the proceeds of the sale, estimated to be approximately $132,000 to be paid to the husband.[20]
[20] Transcript of proceedings dated 9 October 2017 at page 15.
The husband contends that it is appropriate for the distribution to be made because the repayment of loans associated with the F Street property and the Suburb A property, together with the costs associated with effecting the sale of the rear Villa of the F Street property, will total approximately $588,000.[21] This amount, it was contended, would, if not discharged, diminish the balance sheet of available property for distribution by that equivalent amount. In other words, it was contended that if the orders sought by the husband are made, it will increase the positive side of the balance sheet by an amount of $588,000.
[21] Ibid at page 16.
It was contended that it is reasonable for the remainder of the proceeds of the sale of the rear villa of the F Street property to be paid to the husband for the following reasons:
…The Applicant has substantial outstanding legal costs relating to both these family law proceedings and to other proceedings involving the Applicant and the Respondent in various jurisdictions including the Supreme Court in Victoria, ADVO proceedings (for the protection of the Applicant against the Respondent) in the NSW Local Court, the NSW District Court and the NSW Court of Appeal. The Respondent lodged various appeals all of which have been unsuccessful. Orders have been made on a number of times for the Respondent to pay the Applicant’s costs of these proceedings all of which remain substantially unpaid. The Respondent has yet again filed proceedings in the NSW Court of Appeal, seeking to overturn a decision of Judge Buscombe in the District Court of NSW dismissing the Respondent’s appeal from a decision made by a Local Court Magistrate on 24/10/16 to extend an ADVO made for the protection of the Applicant against the Respondent and an order for costs against the Respondent. This summons is listed for hearing on 27/10/2017. As a consequence of the Respondent’s continuing litigation and her failure to pay costs ordered against her to be paid to the Applicant, the Applicant has no funds available to pay his legal costs and presently has legal bills outstanding in the region of about $230,000.[22]
[22] Husband’s Case Outline document dated 5 October 2017 at pages 2 - 3.
As against the distribution of property to the husband, as sought in his proposed order, the husband contends that the effect of his order would be that the wife would retain the front unit of the F Street property valued at approximately $750,000. The husband further contends that, in the event of the wife succeeding in her argument that she is entitled to funds over and above that amount, there is adequate property existing in the form of the Suburb A property and the Suburb E property such that any reasonably likely order of the Court could be satisfied.
It is well established that 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.[23] As I noted in my decision dated 11 March 2016, such an order may also be appropriate where a party may need access to resources “to meet debts which may result in the party being pursued by creditors”.[24]
[23] Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 at 85,631 and cases referred to therein.
[24] Ibid at 85,643; Wenz v Archer (2008) 40 FamLR 212 at [53].
As noted above, in this matter, it is necessary to balance the reasons the husband requires orders to liquidate and access a portion of the parties’ property at this point in time, as against the impact that such orders will potentially have on the wife. In considering that matter, I note that the husband has access to resources to enable him to meet his liabilities between now and the date of final hearing which has been set down for 30 July 2018.
In that respect, the husband’s Financial Statement filed on 6 October 2017 relevantly states the following:
·The husband’s total average weekly income is $2826;
·The husband’s total personal expenditure is $2582;
·The total value of property owned by the husband is $2,749,199; and
·The total of the husband’s liabilities is $990,231.
It appears that the husband’s surplus of income over expenditure of $244 is in circumstances where the expenditure includes the husband’s loans to the Commonwealth Bank of Australia to which I have earlier referred. The Financial Statement also notes that the income of the husband’s current partner is $2800 gross per week.
In those circumstances, I am not satisfied that the husband’s debts are so pressing that it justifies departing from an orderly consideration of all issues in these proceedings at final hearing which is now approximately seven months away.
In so determining, I note that the husband contends, with some justification, that there has been unnecessary delay in the finalisation of these proceedings as result of the wife, who has, until recently, been self-represented, failing to give appropriate and realistic focus to the issues in these proceedings. It is reasonable to assume that the husband will incur an additional interest burden as result of that delay. The husband will, however, be entitled to make such submissions as he deems appropriate, in respect to that matter, at final hearing.
As against the resources that are available to the husband, the orders sought in the husband’s Application in a Case filed 15 September 2017 would have the effect of depriving the wife of the opportunity to argue that the entirety of the F Street property, including both villas if they are subdivided, should be transferred into her name. That contention on the part of the wife is ambitious but not fanciful or necessarily doomed to fail.
The Full Court in Medlow & Medlow[25] referred to Strahan,[26] and the authorities referred to therein, in confirming that an interim order for the distribution of property must be “amenable to adjustment on a final hearing”. In this matter, I accept that, in terms of the requirement set out in Medlow & Medlow,[27] the property available to the parties is such that, at final hearing, there could be an adjustment in the wife’s favour to accommodate, at least in monetary terms, the effect of the partial property distribution sought by the husband.
[25]Medlow & Medlow (2016) FLC 93-692 at 81,089; [2016] FamCAFC 34.
[26]Strahan & Strahan (Interim Property Orders) (2011) FLC 93‑466; [2009] FamCAFC 166.
[27]Medlow & Medlow (2016) FLC 93-692 at 81,089; [2016] FamCAFC 34 at 81,090.
The husband contends that the value of the F Street property, which the parties jointly own, is appropriately assessed as being a combination of $750,000 for the front Unit 1nd $720,000 for the rear unit. There is currently a mortgage of $178,231 secured over the F Street property.[28] The husband acknowledges that loan to be his sole debt.
[28] Annexure B to the Husband’s Affidavit dated 13 September 2017.
The husband also contends that the property described as B Street, Suburb A is valued at $695,000 and the property at 17 C Street is valued at $725,000.[29]
[29] Transcript of proceedings dated 9 October 2017 at page 13.
In addition, the husband asserts that the value of his interest in his current home at D Street, Suburb E is $1 million.[30]
[30] Husband’s Financial Statement filed 6 October 2017.
For the purpose of considering the husband’s application, I assume the accuracy of the valuations asserted by the husband. On that basis, I accept that, in simple monetary terms, the total potential marital property pool is such that, at final hearing, an adjustment in respect to the orders sought by the husband could be made.
However, as the majority in Strahan pointed out, “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”.[31]
[31] Strahan & Strahan (Interim Property Orders) (2011) FLC 93‑466; [2009] FamCAFC 166 at [139].
The Full Court in Strahan also cited with the approval the remarks of Reithmuller FM in Wenz & Archer[32] and held that there was a need to balance “...the risks of unduly limiting the final orders that can be made (or even potentially defeating parties’ claims or legitimate expectations) against the circumstances said to show that it is just and equitable to make interim orders”.
[32] [2008] FMCAfam 1119; (2008) 40 Fam LR 212 at [52].
In the circumstances of this matter, I am not satisfied that it is in the interests of justice for the Court to consider the husband’s application for orders requiring the sale of one of the F Street villas and for the proceeds to be applied to his indebtedness and for the balance to be paid to him. This is because the orders sought would deprive the wife of the ability to argue for the final orders she seeks for the F Street property to be transferred to her. As against that detriment to the wife, the husband has sufficient resources to manage his indebtedness between now and the dates allocated for the final hearing.
In those circumstances, it is unnecessary to move to the second stage, referred to in Strahan, of considering whether the orders sought by the husband would be appropriate, just and equitable in terms of section 79 or in this case section 90SM of the Act.
For these reasons I dismiss the husband’s application
I certify that the preceding fifty-two (52) paragraphs are a true copy of the reasons for judgment of the Honourable Justice McClelland delivered on 4 December 2017.
Associate:
Date: 4 December 2017
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