Rivera & Rivera
[2022] FedCFamC1F 328
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Rivera & Rivera [2022] FedCFamC1F 328
File number(s): SYC 868 of 2021 Judgment of: SCHONELL J Date of judgment: 13 May 2022 Catchwords: FAMILY LAW – FINANCIAL – Interim orders – Where orders had been made by consent to effect sale of properties – Where the husband filed an Application seeking to set aside those orders – Where the husband had not sufficiently established a change of circumstances to warrant setting aside the orders – Where the wife sought a partial property settlement and the husband also sought the same in the event that his Application to set aside the orders was dismissed – Where it was in the interests of justice to make the orders sought for interim property settlement. Legislation: Family Law Act 1975 (Cth) ss, 79, 80
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 10.13
Cases cited: Adam P Brown Male Fashions Pty Ltd and Phillip Morris Incorporated (1981) 148 CLR 170; [1981] HCA 39
Bing & Bing (2007) FLC 93-318; [2007] FamCA 418
Medlow& Medlow (2016) FLC 93-69; 2016] FamCAFC 34
Poletti & Poletti (1990) 15 FamLR 794; [1990] FamCA 79
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466; [2009] FamCAFC 166
Wenz v Archer (2008) 40 FamLR 212; [2008] FMCAfam 1119
Division: Division 1 First Instance Number of paragraphs: 50 Date of hearing: 6 May 2022 Place: Sydney Solicitor for the Applicant: Finn Roache Lawyers Counsel for the Respondent: Mr Gardiner Solicitor for the Respondent: KF Lawyers Australia ORDERS
SYC 868 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR RIVERA
Applicant
AND: MS RIVERA
Respondent
ORDER MADE BY:
SCHONELL J
DATE OF ORDER:
13 MAY 2022
THE COURT ORDERS THAT:
1.The husband’s Application in a Case filed 21 July 2021 be dismissed.
2.The wife’s Response filed 1 November 2021 be dismissed.
3.All extant interlocutory applications of the parties be dismissed.
4.Order 4(e) made 12 May 2021 be varied by inserting the words “the proceeds of sale be paid as to $150,000 to the wife and thereafter $150,000 to the husband and” at the commencement of the subparagraph.
5.The payments to each of the wife and the husband be taken into account by the trial judge at the final hearing.
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 the pseudonym Rivera & Rivera has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
On 12 May 2021, a judge of the Federal Circuit Court of Australia (as it then was) made orders (“the May orders”) by consent providing for the sale of property at Suburb B and Suburb C, and that the proceeds of sale be applied in discharges of mortgages and to otherwise be held in the trust. Pending sale of those properties, both parties were to pay in equal shares the mortgage over the matrimonial home. The Court noted that the parties would likely have a liability for capital gains tax arising on the sale of the properties.
Notwithstanding those orders, on 21 July 2021, the husband filed an Application in a Case seeking to set aside the May orders that effected a sale of the Suburb C and Suburb B properties.
It is unclear why it has taken so long for that application to be listed for hearing.
In her Response, the wife seeks a dismissal of the husband’s application and ultimately settled on a Minute of Order (Exhibit 1) in which she sought an order that she be appointed as trustee for sale of the Suburb C property (it being the case that the wife was the legal owner of the Suburb B property), an order for periodic spousal maintenance in the sum of $1,200 per week, and an order for $150,000 with the sum to be characterised by the trial judge.
During the course of submissions counsel for the husband indicated that in the event that the Court was not inclined to set aside the May orders then he also sought a capital sum order in the same terms and amount as sought by the wife. The wife opposed that late amendment.
The wife in her Case Outline identified one of the issues in dispute being “interim property orders” and the order sought in that document was characterised as a partial property settlement. Whilst those words did not translate into Exhibit 1, it was not suggested by her counsel that the wife had departed from such position.
Both counsel conceded that if the lump sum orders were made it would not have the effect of defeating either party’s application for property settlement on a final basis.
The husband relied upon the following documents:
(1)Application in a Case filed 20 July 2021;
(2)Affidavit of husband filed 20 July 2021;
(3)Affidavit of husband filed 29 April 2022;
(4)Financial Statement filed 29 April 2022; and
(5)Case Outline.
The wife relied upon the following documents:
(1)Response to Application filed 1 November 2021;
(2)Affidavit of wife filed 26 April 2021 (paragraphs 11, 13, 16, 24–32, 35, 36, 41 and 164);
(3)Affidavit of wife filed 1 November 2021;
(4)Financial Statement filed 29 October 2021; and
(5)Case Outline.
BRIEF BACKGROUND FACTS
The wife was born in Country E on 1963 and is currently aged 59 years. The husband was also born in Country E in 1970 and is currently aged 52 years.
In mid-1984, the wife immigrated to Australia.
In or about mid-1995, the wife purchased the property at Suburb B in her sole name.
In 1998, the parties married in Country F.
In or about early 1999, the husband immigrated to Australia and the parties commenced cohabitation.
During the course of the parties’ marriage, they had four children.
In mid-2001, the parties purchased a property at Suburb C in their joint names. The wife contends that her property at Suburb B was used as security to enable the purchase of the Suburb C property.
In early 2005, the husband and wife purchased a property at Suburb D in their joint names, which became the former matrimonial home of the parties in 2010 when the parties and children commenced living in that property.
The parties separated in or about January 2021.
Over the course of their marriage, the parties have acquired a number of pieces of real estate. Counsel for the husband contends the parties’ net assets have a value of approximately $3,200,000 (Case Outline, paragraph 18(f)), whilst the wife contends for her part that the net value of the parties’ property is approximately $3,800,000 (Case Outline, paragraph 3).
In support of the competing applications, each party filed and sought to rely on, contrary to the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”), more than one affidavit. In large part, the contents of the affidavit were irrelevant to the issues that the Court was required to determine. In addition to the lengthy and largely irrelevant affidavits, each party relied upon tender bundles of documents, which in the case of the wife ran to some 430 pages. With the exception of a few documents, the Court was not taken to any of the documents in the tender bundles.
A failure by both parties to engage with the issues and to provide evidence that is relevant to the matters that the Court has to determine has no doubt contributed to the legal costs incurred by each party. Orders were sought for which there was no power and the evidence in support of the orders for which there was power consisted in large part of a series of inadmissible submissions and conclusions.
Each of the counsel sought to urge the Court to make findings about disputed facts notwithstanding the lack of cross-examination. These are interim proceedings and the Court’s ability to make any findings on the disputed facts about which there are many is curtailed.
The husband contended that on a final basis, the parties’ assets should be divided in the proportions as to 48% to the husband and 52% to the wife.
The wife contended that the parties’ assets should be divided on a final basis in the proportions as to 80% to the wife and 20% to the husband.
I propose to deal with first the husband’s application then that of the wife.
APPLICATION TO VARY MAY ORDERS
The Court’s power to vary and/or set aside orders is both inherent and recorded in the Rules of Court at r 10.13, which provides that the Court may at any time vary, or set aside an order if it is interlocutory.
Appropriately so, the rule provides no guidance as to how the Court is to exercise its discretion in varying and/or setting aside an order.
The High Court in Adam P Brown Male Fashions Pty Ltd and Phillip Morris Incorporated (1981) 148 CLR 170 (“Adam P Brown”) at 178 observed in relation to interlocutory orders as follows:
… Just as an interlocutory injunction continues “until further order”, so must an interlocutory order based on an undertaking. A court must remain in control of its interlocutory orders. A further order will be appropriate whenever, inter alia, new facts come into existence or are discovered which render its enforcement unjust: cf. Woods v. Sheriff of Queensland; Hutchinson v. Nominal Defendant; Chanel Ltd. v. F. W Woolworth & Co. Ltd. Of course, the changed circumstances must be established by evidence: Cutler v. Wandsworth Stadium Ltd.
(Footnotes omitted)
It is undoubtedly the case that the May orders were interlocutory.
The husband put forward the following as the basis for grounding his application to set aside the May orders:
(6)That the husband now wished to retain the subject properties on a final basis;
(7)That the sale of the properties would give rise to a substantial capital gains tax liability of approximately $280,000 and this would decrease the pool of assets available for distribution. Further, at the time the May orders were made the husband did not appreciate the size of the capital gains tax liability;
(8)That the husband has the financial capacity to take over the loans on the Suburb B and Suburb C properties and that he is able to re-finance the properties;
(9)That if the properties are sold then the wife may not be able to retain the former matrimonial home at Suburb D and that it might therefore have to be sold to give effect to a property settlement in favour of the husband; and
(10)That the wife did not have a need for access to the proceeds for sale.
I am not satisfied, consistent with the observations of the High Court in Adam P Brown, that the husband has established a change of circumstances sufficient to warrant the Court setting aside the orders.
I reach that conclusion for the following reasons:
(1)In relation to the husband’s assertion that he wishes to retain the properties on a final basis, the husband’s counsel conceded quite properly that a sale of the properties did not defeat the husband’s application on a final basis, namely, that the husband is entitled to a property settlement but not necessarily entitled to retain a particular property;
(2)I am not satisfied, notwithstanding the quantum of the capital gains tax, that this constitutes a change of circumstances. The notations to the May orders clearly contemplate that there will be capital gains tax payable on the sale of the properties. This is not some new fact or circumstance that came to the knowledge of the husband after the making of the orders.
(3)As to the contention that the capital gains tax liability will reduce the pool of assets, I note that the husband, in the schedule of assets and liabilities prepared for the purposes of the hearing, seeks to bring to account as a liability the capital gains tax referrable to the Suburb B and Suburb C properties. Therefore, he seeks to reduce the pool of assets by the very liability he seeks to avoid. He cannot have it both ways.
(4)In relation to the proposition that he has the capacity to take over the loans, the husband sought to rely upon a document provided by a financier. When further enquiries were made with the husband’s counsel, the Court was advised that it was not in fact a loan approval but rather an indication. An indication of finance is not the same as a loan approval. The husband does not inform the Court what representations were made as to his income to the financier in the assessment of loan payment capacity. I note that the husband’s Financial Statement identifies that his income is some $1,169 per week and his weekly expenses are some $1,625 per week. This does not include any amount for child support payable by the husband where the wife has not yet applied for a child support assessment. I note the husband’s evidence at paragraph 73 of his affidavit filed 29 April 2022 were he says “I do not have the financial capacity to meet any order to pay spouse maintenance or child maintenance to [Ms Rivera]”, and his Case Outline which states:
35. By contrast, the capacity of the Applicant to pay $1,200 per week, or any amount, is limited. The Applicant is self employed. He operates his business through [G Pty Ltd]. He draws a wage from [G Pty Ltd], when cash flow permits.
…
39. Having regard to the matters set out above, the evidence makes it clear that the Applicant does not have the capacity to pay spousal maintenance.
Thus, on the husband’s own evidence without any proper assessment or enquiry, the husband’s weekly expenses exceed his income. I am not satisfied that the husband has demonstrated that he has the capacity to take over the loans.
(5)In relation to the contention that it may be that the wife will have to sell the Suburb D property in the event that the Suburb B and Suburb C properties are sold, that is a matter that is at the risk of the wife. The wife, at all times, sought to press an order that the husband’s application be dismissed in the knowledge of such a submission.
(6)The question of the wife’s need of funds is not a matter that goes to whether the orders should be varied or discharged. The wife has the benefit of an order for sale. The force of this submission is weakened by the husband’s oral application for access to funds.
I am not satisfied that the husband has discharged the onus he carries to establish a change of circumstance sufficient to warrant setting aside the May orders.
I will dismiss the husband’s application.
COMPETING APPLICATIONS FOR INTERIM PROPERTY SETTLEMENT
The wife sought an order for $150,000 by way of a partial property settlement.
The husband indicated by way of oral application that in the event that the application to vary and/or discharge the May orders was dismissed, then he sought orders in the same magnitude as that sought by the wife.
Each counsel indicated that the making of the order would not defeat the other party’s application.
What must not be lost sight of is that this is the parties’ money. In my view, a Court should only intervene where it is necessary to protect a party’s position but, in circumstances where the parties seek access to their own funds, then that is a relevant consideration in the exercise of the Court’s discretion.
APPLICABLE LAW
The jurisprudence on the circumstances in which the Court can make an order for what is colloquially called interim property is well settled. The authority to make such an order is found through a combination of s 79 and s 80(1)(h) of the Family Law Act 1975 (Cth) (“the Act”). Section 79 is the source of power, while s 80 enables the making of the order.
The Court must initially be satisfied that it is appropriate to make an order; and that it is it in the interests of justice to make an order. If so, then has a case been established for the making of a s 79 order. An exhaustive assessment of the s 79 considerations is not required.
In Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 (“Strahan”), the Full Court observed:
132.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.
Their Honours dicta in Strahan (supra) included approval of observations by Riethmuller FM (as he then was) in Wenz v Archer (2008) 40 FamLR:
128. …
[53]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 … particularly where the parties are asset rich but have relatively modest incomes … 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
In Poletti & Poletti (1990) 15 Fam LR 794, the Full Court observed at 796:
… the issue on such an application is not the question of whether one party should be responsible for the costs of the other, nor is it a question of determining in advance whether any expenditure was reasonably or properly incurred. It is rather, as it certainly was In the Marriage of Wilson, a situation where one party to the marriage controls almost exclusively what might be described as the patrimony of the parties and has control of the bulk of the assets and funds of the parties, where an order may be made to ensure that the other party, who does not have the fortune of controlling those funds, at least has an equal or near equal opportunity to present his or her case.
Such an order certainly will be made on account of costs but what ultimately will be the fate of the monies paid, whether it is to be treated as an advance on the ultimate property order, or whether it is to be treated as an advance on any ultimate costs order or a mixture of the two, is a matter which must be left to the trial judge.
Nor, is it a necessary precondition to the making of an order that a party needs to identify a particular fund. The Full Court in Bing & Bing (2007) FLC 93-318 observed:
23....The mere assertion that there are no immediately available funds to provide to the applicant to enable him or her to continue on with the proceedings cannot simply be accepted at face value. If it is apparent that one of the parties controls a vast pool of assets (irrespective of whether those assets are readily capable of liquidation) then the Court has a broad enough discretion to enable an order to be made for the provision of funds by the holder of those assets to enable the other party to continue on with litigation…
And further, the Full Court observed:
27.Finally it has been asserted that the husband was and remains unable to raise the capital sum sought by the wife. This is a matter which may become relevant if and when the husband defaults in the order and an enforcement application is brought. However, the question of enforcement of the order remains a separate question from the propriety of granting the order in the first place.
Finally, as their Honours in Medlow& Medlow (2016) FLC 93-692 observed:
86.The onus was clearly upon the husband to establish that there were sufficient assets available for the interim distribution and that the effect of any interim order was capable of being reversed as part of the final hearing or at least would not defeat the wife's property claims. The onus was not on the wife to adduce such evidence.
Therefore, the authorities establish that Court should consider the following in making an interim property order:
(1)The Court should act conservatively;
(2)Is it in the interests of justice to make an order;
(3)Is a case established to make a s 79 order? A detailed assessment of the s 79 considerations is not required;
(4)Are there sufficient assets available for an interim distribution? However, it is not necessary to point to an immediate fund;
(5)The categories of cases in which an order will be made are not closed and are not limited solely to costs;
(6)Is the order capable of being reversed or taken into account at the final hearing; and
(7)Albeit that the matter can be determined pursuant to a particular section of the Act, the ultimate categorisation of the amount to be paid can be left to the final trial judge.
In light of the above, I am of the view that it is in the interests of justice to both parties to make the orders as sought by each of them for $150,000. It is clear by way of the concessions made by each counsel that if the order is made it would not defeat the legitimate claims of each party at a final hearing. There are sufficient assets available for an interim distribution and the contributions of the parties over the long marriage are nevertheless significant, even taking into account each of the parties’ asserted claims. The order is capable of being taken into account in the final proceedings and, accordingly, I am of the view that it is appropriate that the orders be made.
WIFE’S APPLICATION FOR INTERIM SPOUSAL MAINTENANCE
The wife’s counsel conceded that if the order for interim property settlement were made, then the wife would not be able to satisfy the Court that she was unable to meet her weekly needs. That concession, having properly been made, I dismiss the wife’s application for interim maintenance.
CONCLUSION
Accordingly, I intend to make orders dismissing the husband’s Application in a Case and the wife’s Response, and make orders varying the May orders to provide for the distribution of the proceeds of sale of the Suburb C and Suburb B properties so that each party is to receive the sum of $150,000 with the balance to be held in trust.
Each of the parties urged that the Court allocate final hearing dates. I have accommodated that joint application by orders made on 6 May 2022 if only to not further deplete Court resources by the hearing of further applications and in an attempt to arrest the further expenditure by the parties on legal fees.
I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 13 May 2022
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