Ruslan & Ruslan

Case [2024] FedCFamC1F 50

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Ruslan & Ruslan [2024] FedCFamC1F 50

File number: SYC 44 of 2022
Judgment of: MCCLELLAND DCJ
Date of judgment: 9 February 2024
Catchwords: FAMILY LAW – PROPERTY – Application for partial property distribution – Where the matter has been set down for final hearing in April 2024 – Where the husband seeks a distribution of funds from sale proceeds of former matrimonial home to fund litigation – Where the husband has failed to establish that the Court should exercise its discretion – Application dismissed – Costs reserved to final hearing
Legislation:

Family Law Act 1975 (Cth) ss 79, 80(1)(h)

Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 67, 68

Civil Procedure Act 2005 (NSW) ss 56, 60
Cases cited:

Aitken & Murphy (No 2) [2012] FamCA 239

Cook by her tutor Kristy Stewart v Riding for the Disabled Association (NSW) Raymond Terrace and Lower Hunter Centre [2023] NSWSC 1503

Davidson and Davidson (No 2) (1994) FLC 92-469; [1994] FamCA 33

Gabel & Yardley (2008) FLC 93-386; [2008] FamCAFC 162

Hardwick & Hardwick (No 2) [2022] FedCFamC1A 216

Harris and Harris (1993) FLC 92-378; [1993] FamCA 49

Iphostrou & Iphostrou and Ors [2011] FamCA 20

Medlow & Medlow (2016) FLC 93-692; [2016] FamCAFC 34

Pinta & Pinta [2022] FedCFamC2F 34

Stanford & Stanford (2012) 247 CLR 108; [2012] HCA 52

Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466; [2009] FamCAFC 166

Widmann and Widmann [2016] FamCA 1164

Yunghanns & Yunghanns (1999) FLC 92-836; [1999] FamCA 64

Division: Division 1 First Instance
Number of paragraphs: 38
Date of hearing: 21 December 2023
Place: Sydney
Counsel for the Applicant: Mr Batey
Solicitor for the Applicant: Holmes Donnelly & Co Solicitors
Solicitor for the Respondent: Mr Hargrave, Fox Cheshire

ORDERS

SYC 44 of 2022

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MR RUSLAN

Applicant
AND:

MS RUSLAN

Respondent

ORDER MADE BY:

MCCLELLAND DCJ

DATE OF ORDER:

9 FEBRUARY 2024

THE COURT ORDERS THAT:

1.The husband’s Application in a Proceeding filed 8 November 2023 be dismissed.

2.Costs of the husband’s Application in a Proceeding filed 8 November 2023 be reserved for determination at 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 Ruslan & Ruslan has been approved pursuant to s 121(9)(g) of the

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AGLC
Ruslan & Ruslan [2024] FedCFamC1F 50
Case
[2024] FedCFamC1F 50
Decision Date

CaseChat Overview and Summary

In the case of Ruslan & Ruslan, the husband sought a partial property distribution to fund litigation costs. The husband and wife had been married for many years, separated in 2018, and were divorced in 2023. Their former matrimonial home had been sold, and the proceeds were to be distributed between the parties. The husband applied for an interim distribution of the sale proceeds to fund his litigation costs. The wife opposed the application, and the court was required to decide whether it should exercise its discretion to grant the application.

The court noted that the exercise of its discretion in granting an application for partial property distribution involved consideration of several principles. These included the overarching consideration of the interests of justice, the need to ensure that the applicant had discharged the persuasive burden of establishing that there were sufficient assets available to satisfy the order sought, and the need to ensure that the order was "just and equitable". The court also noted that the party seeking the relief carried the persuasive burden of satisfying the court that the circumstances of the case were such that the court should exercise its discretion in their favour.

The court found that the husband had not discharged the persuasive burden of establishing that there were sufficient assets available to satisfy the order sought. The court noted that the husband had an alternative source of funds to assist him to conduct the litigation in the form of the equity he had in the Suburb D property. The court also noted that the husband had not established that it was just and equitable to grant the application. The court found that the husband's application was unlikely to defeat any party's claim or legitimate expectations in a final hearing, and that the application should be dismissed.

The court dismissed the husband's application and reserved costs for determination at the final hearing. The court noted that the form of the order was subject to review to remedy minor typographical or grammatical errors or to record a variation to the order. The court also noted that section 121 of the Family Law Act 1975 (Cth) made it an offence, except in very limited circumstances, to publish proceedings that identified persons, associated persons, or witnesses involved in family law proceedings.

Orders

Orders of the court

SYC 44 of 2022

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MR RUSLAN

Applicant

AND:

MS RUSLAN

Respondent

ORDER MADE BY:

MCCLELLAND DCJ

DATE OF ORDER:

9 FEBRUARY 2024

THE COURT ORDERS THAT:

1. The husband’s Application in a Proceeding filed 8 November 2023 be dismissed.

2. Costs of the husband’s Application in a Proceeding filed 8 November 2023 be reserved for determination at 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.

Background

Background to the litigation

For the following reasons, I have dismissed the husband’s application.BACKGROUND The husband was born in 1965 and is currently 58 years old. The wife was born in 1968 and is currently 55 years old. The parties commenced cohabitation in or around 1996 and were married in1999. The parties have two children who are now adults, Ms B, who is presently 23 years of age and Mr C, who is presently 22 years of age. The husband has worked primarily in contracting throughout the relationship. The wife was primarily a homemaker having ceased work after the birth of Ms B to take on parenting responsibilities. The parties separated on 1 December 2018 and were divorced in 2023. At the commencement of the parties’ relationship, the husband owned two properties, one in Suburb D, Queensland valued at $130,000 and one in Suburb E, Victoria valued at $130,000. The husband also owned Motor Vehicle 1. After a brief period of time where the parties lived in Country F, the parties returned to live in Sydney in 1997 where the parties resided in a self-contained unit in the wife’s mother’s home, rent free and later, a rental property in Suburb G from 1998. In 2001, the parties purchased H Street, Suburb J NSW (“the Suburb J property”) for around $550,000. The parties jointly contributed $110,000 for the purchase with the balance financed by way of a mortgage. In 2007, the parties sold the Suburb J property for over $900,000 with the proceeds of sale applied towards the purchase of the former matrimonial home, K Street, Suburb L NSW (“the Suburb L property”). That property was purchased for over $1,500,000 in 2007. The remaining balance was financed by way of a mortgage. In 2011, the husband established his company, M Pty Ltd (trading as N Pty Ltd). The husband established a number of trust and corporate entities that loaned monies to M Pty Ltd, and later to Q Company. Q Company was another start up company established by the husband. The husband sold his property in Suburb E, Victoria for $550,000 in 2014, with $430,000 of the proceeds of the sale applied to the mortgages of the Suburb L property and P Street, Suburb D QLD (“the Suburb D property”). In 2018, the parties separated but remained living under the same roof. On 6 January 2022, the wife filed an Application for Final Orders in Division 2 of this Court. Consent orders were made on 19 April 2022 for the parties to sell the Suburb L property with the property to be listed for sale by public auction in mid-2022. Order 4.7 of the consent orders noted that upon settlement, each party would receive $150,000 with the balance to be held in a controlled monies account on behalf of both parties. The property ultimately sold for over $3,000,000 with settlement having occurred in late 2022. Following the discharge of the mortgage, the remaining balance was $2,025,386.58. The husband noted that following the making of the orders dated 19 April 2022 and the sale of the former matrimonial home, the parties agreed to increase the amount they would receive to $250,000.[1] On 12 September 2022, the sum of $1,525,386.58 was deposited in the husband’s solicitor’s trust account. The parties have disbursed a further $18,634 to pay for the Single Expert Report and $13,768.48 for private mediation.[2] As of November 2023, $1,492,984.10 remains in the controlled monies account.[1] Husband’s affidavit filed 8 November 2023, paragraph 10.[2] Husband’s affidavit filed 8 November 2023, paragraph 12.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Consideration as to whether discretion should be exercised to grant an application for partial property distribution involves consideration of the following principles:(1)The exercise of discretion: ss 79 and 80(1)(h) of the Family Law Act 1975 (Cth) (“the Act”) confer power on the Court to make orders for a partial distribution of property prior to the final hearing. That is: (a)Section 79 confers a discrete power to make orders for property settlement and the Court may exercise that power 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: Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 (“Strahan”) at [110], quoting Gabel & Yardley (2008) FLC 93-386 at [57]. (b)Section 80 is not, in itself, a source of jurisdiction for such an order to be made. Rather, the section is an “enabling provision” that provides various ways in which the general power in s 79 of the Act may be exercised in individual cases: Davidson and Davidson (No 2) (1994) FLC 92-469 at 80,875 and Yunghanns & Yunghanns (1999) FLC 92-836 at [118]. This includes, by s 80(1)(h), the making of “a permanent order, an order pending the disposal of proceedings or an order for a fixed term or for a life or during joint lives or until further order”.(2)There are three stages to the hearing of an application for interim property adjustment orders:(i)The first two stages were described in Strahan at 85,645–85,646, with the first being a “procedural step” which requires an analysis of whether the circumstances of the case triggers the Court’s power to invoke s 80(1)(h) of the Act to make an order for partial property adjustment. At this stage, the “overarching consideration” is the interests of justice: Strahan at [132]. (ii)The second stage is the “substantive step”, where the provisions of s 79 must be considered and applied, but with limitations, given that it is not the final hearing.(iii)The third stage, although not necessarily to be considered in this order, is to assess whether the applicant for relief has discharged the persuasive burden referred to in Medlow & Medlow (2016) FLC 93-692 (“Medlow”) at [86], of establishing that there are sufficient assets available to satisfy the order sought without prejudicing the other party (“the Medlow onus”). In that respect, the Full Court said:The onus was clearly upon [the applicant for relief] 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 respondent’s] property claim. The onus was not on the [respondent] to adduce such evidence.(iv)Moreover, the evidence required to discharge the Medlow onus is such that the Court should be “comfortably satisfied” of the sufficiency of assets to ensure that the applicant would receive, at final hearing, no less than the amount sought by way of interim property distribution: Widmann & Widmann [2016] FamCA 1164 at [14] and see Hardwick & Hardwick (No 2) [2022] FedCFamC1A 216 at [72].(3)Even if there is sufficiency of evidence to discharge the Medlow onus, that is not the end of the matter. An applicant seeking orders for partial property distribution is required to show more “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”: Strahan at [139].(4)The overriding consideration at all stages of the process is that the Court is satisfied that it is “just and equitable” to make the order in the circumstances: Stanford & Stanford (2012) 247 CLR 108 at [35] (“Stanford”). The determination of that issue should not be approached on the basis of an assumption “that one or other party has the right to have the property of the parties divided between them”: Medlow at [72], quoting Stanford at [40]. This applies to an application for an order 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.(5)In applying these considerations, the exercise of the Court’s jurisdiction should be conducted with an appreciation that “as a generality, the interests of the parties and the Court are better served by there being one final hearing of s 79 proceedings”: Strahan at [177], quoting Harris and Harris (1993) FLC 92-378 at 79,929–79,930. (6)Additionally, subsequent to the introduction of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“FCFCOA Act”) in September 2021, the Court, the parties and their legal advisers are required to have regard to the “overarching purpose” set out in s 67 of the FCFCOA Act, which includes the public interest of ensuring that disputes are resolved “as quickly, inexpensively and efficiently as possible”. In respect to comparable provisions set out in ss 56 and 60 of the Civil Procedure Act 2005 (NSW), it has been determined that it will usually be the case those principles are best served by one rather than a multiplicity of hearings: Cook by her tutor Kristy Stewart v Riding for the Disabled Association (NSW) Raymond Terrace and Lower Hunter Centre [2023] NSWSC 1503 at [19].(7)As a related issue, the manner in which the party seeking a partial property distribution has conducted the proceedings will also be relevant. Most relevantly, that includes the extent to which the party and or their legal advisers have complied with their obligations pursuant to ss 67 and 68 of the FCFCOA Act to promote the overarching purpose by keeping costs to a reasonable and proportionate amount. To do otherwise, simply provides additional resources to the party to engage in ongoing “lawfare” at a likely disproportionate cost to the parties and to taxpayers. (8)The party seeking the relief carries the persuasive burden of satisfying the Court that the circumstances of the case are such that the Court should exercise its discretion in their favour. In that respect, as noted by Thackray J in Strahan at [223]: … it is important to note that s 80(1) [or s 90SS(1)] is couched in the permissive. Hence, although the Court must give consideration to the matters set out in s 79(4) [or s 90SM] 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. (9)Circumstances in which the Court has made an order for partial property distribution include, but are not necessarily limited to, where one of the parties has a monopoly in terms of access to the finances and resources of the parties such that they have a significant advantage in the litigation and, conversely, the other party is significantly disadvantaged: see, eg, Strahan at [80] and Iphostrou & Iphostrou and Ors [2011] FamCA 20 at [60].(10)It is unlikely that the Court would grant such relief in circumstances where to do so would “potentially defeat any party’s claim or legitimate expectations in a final hearing”: Aitken & Murphy (No 2) [2012] FamCA 239 at [158].(11)Additionally, I would add, that in considering whether to exercise my discretion to grant the relief sought by the husband in this case, I have had regard to the fact that he has an alternative source of funds to assist him to conduct the litigation in the form of the equity he has in the Suburb D property.(12)Finally, among the matters that the Court may take into consideration in the exercise of its discretion is the proximity of the final hearing dates and the complexity of the issues involved in determining the likely ability of the Court to, if necessary, ‘claw back’ the funds released by way of interim property settlement: Pinta & Pinta [2022] FedCFamC2F 34 at [115].CONSIDERATION