Ruane and Bachmann-Ruane

[2010] FamCA 514

FAMILY COURT OF AUSTRALIA

RUANE & BACHMANN-RUANE [2010] FamCA 514

FAMILY LAW – PROPERTY – Interim distribution

Evidence Act 1995 (Cth)
Family Law Act 1975 (Cth)

Blueseas Investments Pty Ltd v Mitchell (1999) FLC 92-856
Gabel v Yardley (2008) 40 Fam LR 66
Harris and Harris (1993) FLC 92-378
Strahan and Strahan [2009] FamCAFC 166

APPLICANT: Mr Ruane

RESPONDENT: Ms Bachmann-Ruane

FILE NUMBER: SYC 1991 of 2009

DATE DELIVERED: 4 JUNE 2010

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: THE HONOURABLE JUSTICE CRONIN

HEARING DATE: 1 JUNE 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT: MR KIRKHAM QC WITH MR WOOD

SOLICITOR FOR THE APPLICANT: TAUSSIG CHERRIE & ASSOCIATES

COUNSEL FOR THE RESPONDENT: DR INGLEBY

SOLICITOR FOR THE RESPONDENT: GADENS LAWYERS

Orders

1. That from the funds held in trust by Taussig Cherrie & Associates, the following sums be paid for, on behalf of or at the direction of, the husband:

   (a)       The sum of $250,000 by way of interim distribution of property; and

   (b)The sum of $250,000 by way of provision for past and anticipated legal costs.

2. That from the funds held in trust by Gadens Lawyers, the following sums be paid for, on behalf of or at the direction of, the wife:

   (a)       The sum of $200,000 by way of interim distribution of property; and

   (b)The sum of $160,000 by way of provision for past and anticipated legal costs.

3. That until further order, the wife be restrained from dealing with or otherwise permitting other persons to deal with by operating any of the following accounts without first having obtained the husband’s prior consent in writing:

   (a)NAB business cheque account …54 in the name of R Holdings Pty Ltd;

   (b)NAB Choice account …89 in the name of R Holdings Pty Ltd; and

   (c)NAB bank account …88 in the name of Ruane & Ruane.

4. That save as to the issue of costs, the interim applications of the husband filed 2 January 2010 (as amended by the application for interim orders filed 4 March 2010) and the response thereto of the wife filed 19 May 2010 be otherwise dismissed.

5. Notwithstanding the dismissal referred to in paragraph 4 hereof, the parties have liberty to apply in relation to discovery issues upon short notice in the event that there is disagreement as to production of documents.

IT IS CERTIFIED:

1. That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel, including senior counsel and the attendance of two counsel on behalf of a party to attend.

2. That in so far as there are any applications for costs arising out of these orders, such application be by way of written submission filed by no later than 4.00pm on 18 June 2010 and served immediately thereafter and any reply thereto be filed and served no later than 30 June 2010.

3. That the application for final orders filed by the husband (as amended) on 4 March 2010 and the response thereto filed by the wife await a final hearing before a judge at a time to be arranged with the Registrar provided she is satisfied that it is ready for trial.

IT IS NOTED that publication of this judgment under the pseudonym Ruane & Bachmann-Ruane is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: SYC 1991  of 2009

MR RUANE

Applicant

And

MS BACHMANN-RUANE

Respondent

REASONS FOR JUDGMENT

1. Should the Court exercise its discretion to partially distribute funds help as part of a property settlement in circumstance where there is significant dispute about the size of the ultimate pool because one party makes assertions denied by the other, as to incomplete discovery?

The applications

1. By an application for interim orders filed on 17 February 2010, Mr Ruane (the husband) sought a variety of orders against Ms Bachmann-Ruane (the wife). Those orders all related to financial issues including a litigation funding order, partial distribution of property, discovery, termination of an employee’s employment and control over the parties’ business.

Matter heard in duty list

1. The matter was heard in the Judicial Duty List on 1 June 2010where each party was represented by experienced counsel and solicitors. The submissions were made on the basis of the affidavit material filed. The orders sought varied slightly from the written applications.

The parties’ positions

1. The husband’s position was that the wife had all or the majority of the parties’ assets and, pending final hearing, there should be some form of equitable distribution.

2. The wife’s position was that the husband was seeking discretionary relief and as he had not made full and frank disclosure of his financial position, it was inappropriate to make any orders in his favour. On the other hand, the wife said she had made the necessary disclosure and accordingly wanted cash released to her.

Parties’ financial agreement found not be valid

1. This dispute escalated in earnest between the parties after the Court ruled on 20 November 2009 that a financial agreement between them was not valid. That order left open the way for the husband to bring the property application.

2. It remains the husband’s argument that notwithstanding what was said in their financial agreement document, their agreed position was that they would execute the agreement to protect the Australian assets. It was the husband’s evidence that at the time the agreement was executed, all of the United Kingdom assets he was to retain were already the subject of company liquidation orders. He asserted that this was so because of a disastrous financial outcome of the investments in the United Kingdom arising from the global financial crisis. To put it in simple terms, the United Kingdom assets were wiped out leaving him with a significant debt.

3. It seems that the position of the wife is to deny that there was any such asset-protection intention. If a court ultimately felt that there was, it may have to consider the provisions of s 79(10) of the Family Law Act 1975 (Cth) (“the Act”).

The wife’s argument at the future trial

1. It remains the wife’s position as set out in her affidavit that at the final hearing of the husband’s application, she will argue that:

   (t)he settlement embodied in the Financial Agreement should be the determining factor in relation to the proceedings…because it was a settlement (inter alia):

   (a)      negotiated at arms length;

   (b)      on which both…relied; and

   (c)pursuant to which (she) relinquished all rights to assets owned by the husband in England and other jurisdictions outside Australia.       

The approach of the Court

1. It was clear that the evidence is very much disputed and there are still a number of discovery tasks to be undertaken.

2. Two important observations have to be made. First, I cannot determine and make findings upon untested but contested evidence except where the inference to be drawn is very obvious. Secondly, I am determining what I can on the standard of the balance of probabilities. That is, each party seeking orders needs to satisfy the Court on the balance of probabilities that the evidence warrants the orders sought.

3. The issue now is whether I have sufficient information to enable me to make the orders sought by one or other or both of the parties.

Background of the parties

1. By way of background only, the parties married in 1990 and then were both in modest financial circumstances. Notwithstanding their respective complaints about their current parlous states, since their relationship began, they have done very well financially.

2. There are no children of their relationship.

3. The husband is currently in a relationship into which a child was born at the beginning of this year. He is by occupation a property developer and his evidence was that he is in difficult financial circumstances at the moment with significant debts including legal fees whilst he continues a Melbourne suburban property development.

4. The wife described herself as a company director and she too claimed to be struggling to make ends meet. For that reason, she too sought the release of funds to pay expenses and legal fees.

The orders sought

1. The orders sought by the husband were:

   (a)a litigation funding order in the sum of $350,000 to be drawn from the trust account where funds are currently held for both parties;

   (b)an interim property distribution in the sum of $500,000 from the same trust account;

   (c)a variety of discovery orders;

   (d)the termination of the employment of a manager/bookkeeper in the parties’ business; and

   (e)injunctions concerning the use of the Australian assets.

2. The orders sought by the wife were:

   (a)that she be paid $300,000 from the said trust account to be characterised by the trial judge;

   (b)dismissal of the husband’s application.

3. The parties reached agreement about one of the Australian real properties and although that was initially an issue, I have not mentioned it further save that the parties agree that the proceeds of sale will be used for reduction of debt encumbering other real properties.

The employee

1. The argument about the employee in 17(d) above is not a matter to which I shall return because on the evidence and submissions, there is now no longer an issue as the named employee is no longer engaged as she was. It was suggested that I could make an order that the wife not pay her the significant sums of money that seem to have been so paid in the past. In my view, it is a matter now out in the open and there is no basis for me to now make such an order on the evidence.

Injunctions concerning use of Australian assets

1. In relation to the injunctions concerning the use of accounts of the entity R Holdings Pty Ltd and Ruane & Ruane, the husband sought that the wife not access them without his consent.

2. The husband pointed to a missing sum of $200,000. He calculated that sum by reference to the figures provided to him by the wife’s own affidavit. He said that the wife had accessed $424,000 and not accounted for all of it. Although the order was opposed, I see no reason to refuse it because there is ample evidence of large sums of money being spent and although it is contentious, the safeguard for the wife is that she can remove funds if it is the subject of agreement with the husband. The wife’s expenditure appears to have been reasonably explained by her affidavit but the unilateral nature of the actions would suggest that some control needs to be put in place. Insofar as there is a need for the funds to be otherwise used, an application can be made. Because I intend to make orders directed towards assisting the parties to meet their immediate living needs, again, the wife is not prejudiced.

3. The power to make such an injunctive order lies in s 114 of the Act 1975. The underlying basis for making such an order is that in all of the circumstances it is proper.

4. Having regard to the contentious nature of the evidence and the unexplained expenditure, I find that it is proper in the circumstances.

The interim property orders

The legal issues

1. I turn then to the basis upon which I can make the orders each party otherwise seeks.

2. In Strahan and Strahan [2009] FamCAFC 166, the Full Court (Boland, Thackray and O’Ryan JJ) made a number of observations about courts making orders for partial property settlement and distribution of funds for litigation funding. Boland and O’Ryan JJ observed, as a variety of authorities had before, there is only one exercise of the power under s 79 but that the power can be exercised by a succession of orders until it is exhausted. That occurs when there remained no property about which orders could any longer be made (see also Gabel v Yardley (2008) 40 Fam LR 66). Their Honours observed that the approach in relation to an application for interim property settlement using the provisions of s 79 of the Act , had two distinct aspects. Their Honours accepted a submission put to them that as follows:

   The first consideration is the adjectival or procedural step and the second consideration is the substantive step. The first step requires consideration as to whether the jurisdiction will be entertained. The second step arises if the jurisdiction is entertained and requires consideration of the factors which are relevant to the exercise of power under s 79 to make an order.

3. The two steps mentioned were discussed in the three issues raised in Harris and Harris (1993) FLC 92-378 where it was said:

   (1) The exercise of the power should be confined to cases where the circumstances presented at that time are compelling. As a generality, the interests of the parties and the Court are better served by there being one final hearing of s.79 proceedings. However, circumstances may arise before there can be a final hearing which dictate that some part of the property of the parties should be the subject of orders. A common example is where both parties agree to the disposal of some assets pending the trial. However, we do not consider that it is confined to cases where the parties consent. Urgent situations may arise where it is necessary to exercise this power if injustice is to be avoided. Examples include cases where it is necessary to do so to avoid an asset being eroded or lost in the intervening period, and cases (beyond the maintenance power) where an order in favour of one party is necessary to preserve or obtain a home for or is otherwise necessary for the welfare of the children.

   …

   (2) It is an exercise of the s.79 power. Consequently it must be performed within those parameters. Since it is not the final hearing the Judge is unlikely to have the final findings, but the exercise must fall within that general framework and the material available at that time.

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

4. O’Ryan and Boland JJ went on to say that the first step was to resolve whether to exercise the power before a final hearing. Then, if it was appropriate to do so, the second step involved the exercise of that power.

5. Thackray J in a separate judgment said:

   In my view, the two step approach advocated by senior counsel for the Wife aptly encapsulates the way the Court should approach an application for interim property settlement. 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. However, once the Court has determined that the interests of justice require it to exercise the power, the conditions on which the power is to be exercised are governed only by the obligation to make an order that is “appropriate” and to ensure that the proposed order is “just and equitable” by reference to the matters set out in s 79(4).

6. As for the “compelling circumstances” referred to in Harris (supra), the Full Court observed that the exercise of discretion to make an interim property settlement order should be based not upon a “compelling” basis but on whether or not it was a proper case in all the circumstances for such an order to be made. A proper case simply means that the court is required to do what is just.

7. A relevant statement about what were appropriate circumstances to make interim orders is found in Blueseas Investments Pty Ltd v Mitchell (1999) FLC 92-856 where the Full Court said (at para 54):

   a “highly relevant matter that distinguishes litigation under the Family Law Act from ordinary civil litigation … is the fact that very often the wealth of the parties is controlled by one rather than both of them.” 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).

8. In Strahan, Boland and O’Ryan JJ noted that a distribution which enabled the payment of legal costs may be one such situation in which justice required an order. Their Honours noted that as an interim distribution of property was an exercise of power under s 79, there had to be evidence that would satisfy the relevant criteria in that section. One such consideration in determining whether the order was just and equitable was the capacity to claw back the sum on a final hearing. It is clearly a relevant factor to consider whether a distribution which is unashamedly used to pay legal fees and also to enable a party to live on comfortably can be clawed back from other assets or adjustments. That will usually be so, as it is here, because the distribution once made, will have permanently gone.

9. Neither party disputed that the power being exercised was under s. 79 of the Act.

The first of the two steps

1. The first of the two steps referred to earlier needs to be contemplated. Counsel for the wife said in respect of the husband’s application, I should not exercise the discretionary power in his favour because he had not been honest and frank in his disclosure to the Court and to the wife. Consequently, he could not expect the Court to assist him.

2. Senior Counsel for the husband denied that there was any non-disclosure. He said that for the Court to exercise its discretion in favour of the wife but not the husband would give rise to an inequity and injustice.

The evidence

1. I turn then to the first question of whether the evidence is such that I could be satisfied in both cases that the discretion should be exercised.

2. Each party filed a number of affidavits and which collectively showed a progressive unfolding of their respective positions. Unfortunately, there was considerable overlap between them which made the task of determining this matter more difficult.

3. It was the husband’s evidence that by April 2008, the world financial crisis hit the property market in the United Kingdom where a significant portfolio of assets was held by the husband’s business. The business involved buying properties and then when they had secured tenants, on-selling them to members of the investment group for whom they arranged finance. These assets over earlier years had enabled large sums of money to be repatriated to Australia. To put it the way the husband described it, as the “GFC” hit, the entity through which these properties were held was caught with unsold properties and consequently, had no capacity to meet heavy financial commitments.

4. According to the husband, a variety of measures was undertaken to keep the business going but eventually the entity went into liquidation.

5. The wife expressed considerable disquiet about this evidence because she said she had not been provided with any of the documents that might give rise to answering her questions about the liquidation and level of debt. She criticised the husband for being unresponsive. In her affidavit, the wife concluded that because the husband said he was unable to provide “source documentation”, he had not made full disclosure.

1. It was not just the liquidation issues that caused the wife angst. She referred to the husband talking of a “merger” in April 2008, his exposure to personal bankruptcy and undisclosed financial interests in the Isle of Man.

2. The wife asserted that the husband had not provided statements from an HSBC account in the Isle of Man and not provided documentation about money movement there. It would appear that the husband has now provided some documentation but the evidence does not enable me to say what.

3. In his affidavit, the husband swore that he did not have bank accounts in Switzerland and the Channel Islands. The wife referred to him having accounts with money in MPH Fiduciary ATF the Mayfair Trust and Milloaks Limited. The husband acknowledged that he had had such facilities but they were now closed. Importantly, he said that he had provided details of the closures to the wife.

4. Counsel for the wife referred to the fact that the husband was adopting an approach of “catch me if you can” but the facts are too contentious for me to make a finding at this stage that he is deliberately ignoring reasonable disclosure requests.

5. The wife referred to the husband’s financial statement filed in the Court which made no reference to a company G Properties Pty Ltd of which he was appointed director in June 2009 according to a search of ASIC. The financial statement was filed only days after the appointment. The company in turn had acquired land in December 2009. The husband had filed a number of affidavits in 2009 yet there was no reference to this entity. I was unable to find any reference by the husband to this assertion even allowing for the fact that it was raised only just before the hearing but I have decided that it is not a matter about which I should reject the husband’s proposal. It would appear on the wife’s material that this entity involves a number of people and the interest arose well after separation. It is of concern that the husband has given a personal guarantee for the entity when it borrowed finance presumably to acquire property at the end of 2009. That guarantee may affect the capacity to “claw back” any money used by the husband if the guarantee is ultimately called upon and he is unable to meet it. That is not to say that the husband does not have the obligation to disclose and perhaps should have but in this case, it is not a matter about which I would reject his application for the purposes of the first step.

6. The wife also referred to the husband being “involved in” a company “V Properties” and said its status and levels of debt were not known to her. The husband responded by saying that he had no interest in V Properties and his involvement was incidental because it was a company “owned” by his partner Mr B. He said it was a company that managed his personal property portfolio when he lived in the United Kingdom. The wife was aware of that information for some weeks prior to the hearing before me.

7. The wife also referred to investigations she has currently underway with an investigator examining the matters relating to the husband’s financial position in the United Kingdom. Serious assertions were made that the investigations “reveal” that the husband and his former partner had an interest in a company BR Partnership Limited based in the Isle of Man. This entity was mentioned in the wife’s affidavit filed 21 May 2010 as being referred to in emails and documents that showed transfers of funds to Australia. The husband did respond to this assertion and said that such an entity did exist and it operated in conjunction with the main UK investment entity. However, he said it was wound up in 2007 and no longer existed. No doubt discovery will reveal all of this.

8. It is important to note that the wife referred to funds coming into Australia but at unspecified times. The husband in his affidavit material has referred to significant funds being brought into Australia from overseas and he refers to a time frame. The wife’s assertion therefore lacks weight.

9. In respect of the wife’s ongoing investigation, she said that the husband’s entities were “implicated” in mortgage fraud. This allegation was made in her affidavit in February 2010 when she said the husband had been involved with “3 separate court cases on mortgage fraud”. The husband did not specifically deal with that allegation in his affidavit in reply filed on 13 April 2010. It or something similar, was raised again by the wife in the affidavit filed on 1 June 2010. In that affidavit, the wife set out, without precise detail, the husband’s “modus operandi”. Although the husband filed an affidavit in reply earlier than that of the wife, it was common ground that he had access to the wife’s affidavit before the filing date. This time, the husband responded denying the allegation of any investigation of fraud although he did not mention court cases. In respect of the fraud, he sought proof.

10. The denial by the husband may arise from lack of knowledge on his part if there is some investigation going on but the wife does not provide a source other than her investigator from Q Investments Limited. Just whether this person has documents, formal indications from prosecutory authorities or scuttlebutt, I am unable to say.

11. Having regard to the common ground about the size of the financial collapse and the GFC, I would not be at all surprised about the husband being involved in litigation. Unfortunately, there is no detail from either party.

12. In circumstances where the evidence is but assertion and unsubstantiated, I consider I should approach it cautiously using the provisions of s 140(2) of the Evidence Act 1995 (Cth) and in particular, the warning in Briginshaw.

13. The wife also pointed to the fact that the husband had sent an email only days ago to a finance industry acquaintance in the United Kingdom which came into the possession of her investigator. Relevantly, it read:

    Anyway, I’m just in a bit of a bind with the family court case with [the wife] and I hope you can help. I need to show that the banks have taken full possession of my properties that is I have no assets in the UK in regards to my x property portfolio. Any ideas?

14. The email is open to a variety of interpretations. The fact that it came into the hands of the investigator could mean that it was sent there by the recipient or it alternatively could have come into his hands inappropriately. Senior Counsel for the husband produced the response from the recipient of the email which noted that he could obtain information but it would take time. Senior Counsel for the husband also informed the Court that he had sought details because the information to which I next turn was limited in value. The email response combined with the husband’s counsel’s indication, leads me to think that the husband’s explanation was the correct one; that is, he needed some information to satisfy not only the wife but also the Court as to what was happening about the properties in the United Kingdom. Accordingly, I infer nothing sinister in that email.

15. In February 2010, the wife said that the husband owned a Range Rover that was not “accounted for”. In his affidavit in April, the husband swore that he had sold the Range Rover in London for approximately $50,000 but the dealer went into liquidation without paying him.

16. The husband produced a schedule showing the properties in the United Kingdom. The analysis showed purchase price, borrowing and recently attributed value; that is, value subsequent to the GFC. The totals of the various columns showed that the husband has a significant shortfall in equity. There was no evidence before me as to how that shortfall is being treated and whether, as suggested by the wife, there will be a personal bankruptcy action against the husband or whether the entity will simply fade out of existence. Much also obviously depends upon the capacity of the liquidator to sell the properties and what amounts are recovered.

17. Counsel for the wife pointed to inconsistencies in the husband’s evidence. First, there were properties without detail. Senior Counsel for the husband in reply described those as an oversight but if the figures he referred to are correct (and no doubt they will be the subject of discovery), the equity position did not alter in any significant way. Secondly, in the husband’s financial statement filed in the Court, no reference was made by him to any of these details. The explanation that the financial statement related to Australian assets where there was equity was unsatisfactory but I see no reason to infer there was a sinister motive in the husband ignoring a liability of the magnitude he did.

18. When I asked why the details were lacking, Senior Counsel for the husband said that he recognised the problem and had endeavoured to address it by having the details pursued. He conceded that what was presented was the best that could be obtained.

19. The husband was criticised by counsel for the wife for failing to produce the valuation document that gave rise to the figures in the husband’s equity overview mentioned above because it was dated September 2009. Again, Senior Counsel for the husband explained that as arising because the valuation document had only just been received. I note that it refers in a general way to values and specifying properties. It also seems to refer to the husband’s former partner’s properties.

20. In his evidence, the husband has consistently maintained a number of things. First, the financial agreement was executed after being drawn by one solicitor in 2008 on the basis of the protection of Australian assets. As I remarked in discussion, it therefore has all of the hallmarks of avoiding creditors. Certainly, the timing with the demise of the UK assets is consistent with the husband’s position. Secondly, at all times, the husband has maintained that the company in the United Kingdom went into liquidation. Thirdly, the husband has said that because of the liquidation, he has had difficulty obtaining access to documents. Fourthly, whilst the properties are still registered in the name of the husband, there is no evidence before me that I could use to draw any adverse inference about that because I do not know what the conveyancing/liquidation laws are in England.

Conclusion about the evidence

1. Whilst there are arguments between the parties about disclosure, each complaint against the husband has been met by a plausible explanation.

2. Inconsistencies have been explained by reference to the inability to obtain documents and information that may resolve the impasse.

3. In the circumstances, using the first step approach referred to above, I see no reason why I should not exercise the discretionary power in relation to both parties’ applications.

The second step: s 79 factors

1. In respect of the matters that would require consideration under s 79 of the Act, I am unable to say what the pool of assets is with any certainty. However, it is clear that in Australia, there is at least $4 million. All or most of that appears to be in the control of the wife save that as a result of previous orders, the proceeds of sale of a N suburb Development nearing $900,000 have been placed in the trust account of the solicitors for the husband. It is from these funds that each party seeks the distributions.

2. Although the wife decries the lack of disclosure of the husband and says that he has other assets, there is an implicit acceptance by her that the English financial position has been disastrous. It is not clear to me what the wife is asserting might be possibly in the hands of the husband if he has not made full disclosure. The one disconcerting factor is that I do not know with any certainty what the husband’s liability might be. Whilst there was an attempt to establish the size of the shortfall at something in the vicinity of 1.7 million pounds, that does not mean the liability will fall upon the husband. On that basis although the pool might be reduced if the liability is called upon, it still means that the wife has the majority of the assets and the husband little.

3. Whilst I understand the wife’s argument will be put about equity, I do not think I can simply ignore the fact that there is currently an inequity between the parties in circumstances where, on any view, each has made significant contributions over many years. Subject to the equity argument, it is hard to see on the wife’s material how the contribution argument can be simply brushed aside.

4. Further, the evidence about the future economic circumstances of the parties is limited but it shows that each is currently in difficult living circumstances.

5. The wife is living in rental accommodation which she says she can ill-afford and the husband is living on borrowed funds with a new-born child to support.

6. Whilst there are other factors in s 75(2) of the Act to be considered, there is sufficient material before me to say that the husband and the wife could argue there is justification for an adjustment.

Conclusion about an interim distribution

1. I have some misgivings to which I earlier referred about the inability to claw back money spent on living and legal fees but I am not persuaded that I should simply reject the application of the husband on that basis having regard to the evidence presented to me.

2. I am particularly mindful of the husband’s assertion that there was an agreement at the time of the financial agreement which protected the Australian assets. I am also mindful of the fact that even if there was some equitable argument open to the wife requiring the Court to follow the path of the agreement, there is still the underlying requirement in s 79(2) that an order must not be made unless it is just and equitable. That leaves open a very wide discretion.

3. In my view, the parties are both entitled to share in the funds currently in trust. It would not be just and equitable for the wife to simply retain all of those assets in the circumstances presented to me.

The legal fees argument is different to the interim distribuiton per se

1. Neither party was able to satisfy me about the quantification of their needs other than in relation to their legal fees which are quantified sums.

2. I do not find that it is fair to either party to simply give them what they have asked for just for living (or living type) expenses. I say that taking into account the fact that the wife has already had significant sums according to the husband. It would seem on the evidence that the wife had spent money on loans to family members and others. If that is the case and her parlous position continues, she can seek to recover those amounts.

3. I consider that this case should be heard and determined within a year. I understand that there is a property development of the husband under way.

4. In her financial statement in March, the wife did not set out her daily living expenses. In his financial statement in April, the husband said he needed $3,520 per week of which $1,100 was for accommodation. However, there was a component in there for $500 per week for holidays and $300 for entertainment. Subjective though it may be, perhaps the parties have to cut their cloth according to their new means.

5. If the sums I have in mind do not last the required distance, they can consider making a further application. Whilst it is a very imprecise science, it is clearly a discretionary exercise and in the circumstances, having regard to the uncertainty about just what the pool will be, I propose to order that each have $200,000 as an interim property settlement.

6. The wife’s practitioner’s affidavit sets out that the wife will need a further $150,000 for legal fees over and above what is currently due. What is currently due is a little unclear but seems to be somewhere around $50,000 to $60,000. The wife has already paid some legal fees as is evident from the disclosure by her.

7. The husband currently owes his legal practitioners just over $150,000 after he has already paid $78,000.

8. Each party should be on a similar footing. I intend to make an order that effectively cleans the slate for each. I intend to allow them each a further $100,000 to be placed in trust whilst the necessary investigations go on. To the extent that sums beyond that are required, an appropriate application can be made at some time in the future when explanations will have to be proffered as to the necessity at a time when all of these investigations will have been either completed or will be well on the way there.

9. The husband also sought as part of the sum to be paid to him an amount of $50,000 being funds that he borrowed and are now required to be repaid. The details of how that arose are a little unclear but it seems it arose in the proceedings before Young J. If so, those funds should be paid back because otherwise, the husband has a distinct disadvantage of having to meet a $50,000 debt out of the “living expenses” money.

10. Accordingly the husband should have $250,000 for legal fees and the wife $160,000. In respect of a partial distribution for their own purposes, each party can take a further $200,000.

11. The total distribution of funds will therefore be $860,000. There are apparently funds in the trust accounts of both firms but much less in those of the wife. The husband should draw down against his practitioners first, the wife against hers and insofar as there is not sufficient in the wife’s practitioners’ account, she is to be funded from the funds in the trust account of the husband’s practitioners.

I certify that the preceding Eight Three (83) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate: 

Date:  4 June 2010