Schroeder & Leblanc (No 2)

[2024] FedCFamC1F 31

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Schroeder & Leblanc (No 2) [2024] FedCFamC1F 31

File number:	MLC 2800 of 2023
Judgment of:	CARTER J
Date of judgment:	1 February 2024
Catchwords:	FAMILY LAW – PROPERTY – Application for interim property settlement by the husband – Application by the husband for the lease of a property – Orders made for the payment of part property to be paid to the husband.
Legislation:	Family Law Act 1975 (Cth) s 79
Cases cited:	Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466
Division:	Division 1 First Instance
Number of paragraphs:	32
Date of hearing:	7 December 2023
Place:	Melbourne
Counsel for the Applicant:	Ms Renwick
Solicitor for the Applicant:	Coulter Legal
First Respondent:	Litigant in person
Counsel for the Second, Third and Fourth Respondents:	Mr Upjohn KC
Counsel for the Second, Third and Fourth Respondents:	Mr Puyol
Solicitor for the Second, Third and Fourth Respondents:	Taussig Cherie Fildes

ORDERS

MLC 2800 of 2023

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MR SCHROEDER

Applicant

AND:

MS B LEBLANC

First Respondent

MR LEBLANC

Second Respondent

MS C LEBLANC (and another named in the Schedule)

Third Respondent

ORDER MADE BY:	CARTER J
DATE OF ORDER:	1 FEBRUARY 2024

THE COURT ORDERS THAT:

1.Within seven days the husband and wife do all acts and things and sign all documents necessary to:

(a)cause the husband’s access to the investment accounts ending #...00 and #...02 held with K Bank (“the investment accounts”) to be reinstated; and

(b)cause the sum of $400,000 to be paid from the investment accounts to the husband’s solicitors, Coulter Legal, to be characterised as a part property settlement to the husband.

2.The husband and wife are otherwise restrained from using or accessing the funds in the investment accounts without the prior written consent of the other, or order of this Court.

3.All interim applications are otherwise dismissed.

AND THE COURT NOTES THAT:

A.The matter remains listed for a final hearing commencing on 1 July 2024. Trial directions were issued on 25 October 2023.

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 a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

JUSTICE CARTER

1. This matter came before the Court on 7 December 2023. A number of orders were able to be made by consent that day. The outstanding matters which require adjudication as contemplated by the husband in his Application in a Proceeding filed 23 November 2023 are:

   (a)the husband’s application for part property settlement (previously expressed to be paid by way of litigation funding); and

   (b)the husband’s application that the property at J Street, Suburb R be leased, and how the rental income should thereafter be applied.

2. I have already set out in some detail the background of this matter in my interim judgment delivered on 8 November 2023.

   PART PROPERTY

3. The husband seeks an order that his access to the investment accounts held with K Bank be reinstated and that he be paid the sum of $400,000 from those accounts by way of part property settlement. He proposed additional orders that the parties be otherwise restrained from using or accessing the funds in those accounts pending written agreement or court order. I understand the funds – with an agreed value in excess of $1,900,000 – are partly in cash and mostly in blue chip shares.

4. The wife opposed the husband’s application.

5. In order to make an interim property order I must consider first whether it is appropriate to exercise the power to make such an order. In making that determination, the overarching consideration is the interests of justice. If I am so satisfied, I must then consider how the power should be exercised.

   Stage 1 – procedural

6. A party seeking an order in their favour does not need to establish compelling reasons. I need only be satisfied that it is appropriate, and in the interests of justice, to make the order. However, more is required that the mere fact that the applicant would receive at least the property sought at final hearing; see Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 at [139].

7. In this matter, the husband says he earns $8,000 per week, with expenses of over $4,400. He also asserts he has limited liquid assets, and significant legal fees to meet. The husband deposed that he is currently paying legal fees to his lawyers pursuant to a payment plan and he does not have capacity to pay the invoices in full upon receipt.

8. The husband relied on an affidavit filed by his solicitor on 17 November 2023. In that affidavit Ms Phillips, solicitor, sets out the anticipated legal fees if the matter proceeded to a final hearing in this Court to be in excess of $472,000. She also deposed that her firm would be unable to continue to act on behalf of the husband unless a satisfactory arrangement could be made for the payment of their professional costs and disbursements.

9. The husband says without provision of a part property settlement he will be unable to meet his legal fees.

10. Conversely, the husband says the vast bulk of the assets are held by the wife and the second to fourth respondents. He says the wife has access to considerable resources and income – being able to utilise funds from her company, the E Pty Ltd. He pointed to transfers totalling $100,000 to the wife from E Pty Ltd in October 2023, which the wife said reflected her income for work done. He also pointed to the wife’s transfers to her parents of around $500,000 in April/May 2023, which the wife now says is a payment that has been “allocated to my contractual obligations to them”, after signing a deed of settlement with her parents. As set out in my previous reasons, there is a significant dispute as to whether or not the wife’s parents are owed any funds at all.

11. It is the wife’s case that E Pty Ltd is a charitable entity. She said she is reimbursed from E Pty Ltd when she makes payment on behalf of E Pty Ltd from her own credit card.

12. Whilst the wife’s capacity to use funds from E Pty Ltd to meet her own needs is in dispute, and will no doubt be explored at a final hearing, I note that the wife has not also sought a part property settlement payment be made to her. That does, to an extent, suggest she may be able to meet her needs, and fund her legal fees from her income and resources.

13. The husband has demonstrated a need for the funds. Although he earns a good income, the case is reasonably complex, and it is anticipated he will incur significant legal fees. He says he cannot currently pay sufficient funds to his lawyers to meet the costs in full as they are billed. It is appropriate that the husband be able to meet those legal fees, so that his case can be properly prepared and presented. Accordingly, I am satisfied it is in the interests of justice that I exercise the power to make an order for part property distribution.

    Stage 2 – substantive

14. In terms of how that power is to be exercised, the authorities make it clear that the power should be exercised conservatively, as at an interim stage, there may be a great deal of imprecision as to the pool, and the parties’ contributions to it. The power must also be exercised within the parameters of s 79 of the Family Law Act 1975 (Cth).

15. According to the husband’s case, the asset pool is around $8,000,000. There is no agreement as to the extent of the pool, but even on the wife’s case, the pool is around $4,000,000. The husband has set out what he asserts are his contributions to the pool over the course of the parties’ 30 year marriage, that produced two children. In her material, the wife admits the husband worked in paid employment throughout the relationship.

16. Whilst there is a dispute about the pool, and the husband’s contributions to it, in the course of her submissions the wife sensibly conceded that the husband’s overall entitlement would exceed the $400,000 part property application he presses at this time.

17. In light of the material filed by the parties, I agree. It seems highly likely that in addition to the assets already in his control, the husband would receive by way of property settlement at the conclusion of a final hearing a sum at least sufficient to cover the interim property distribution he seeks at this stage.

18. The husband says the funds held with K Bank are ready and available and are not funds that need to be applied or disbursed at this interim stage to meet any other pressing or urgent liability.

19. The wife said, from the bar table, that the funds in the investment accounts were earmarked as potentially necessary to meet the needs of her parents as their health deteriorated. She said the funds were ‘hers’, they had always been in her name, and that the needs of her elderly, infirm parents should take precedence. She acknowledged, however, that the sales of properties as an alternate source of funds on an interim basis was not possible, as the various properties were security for the deed of settlement she had entered into with her parents.

20. There is, in my view, no evidence that the investment monies are currently needed for other purposes, or that they are required to meet the wife’s parents’ needs beyond the wife’s unparticularised assertion.

21. For these reasons, I am satisfied there are sufficient funds reasonably readily available in the pool to make the payment to the husband as sought without exceeding the likely settlement to be paid to the husband at trial. I am also satisfied that the order sought by the husband for part property distribution is appropriate in all the circumstances, and that it is just and equitable the order be made.

    RENTAL INCOME FOR J STREET

22. This property is owned by the fourth respondent, D Pty Ltd as trustee for the F Family Trust. The wife is the appointor of that trust. The husband and wife previously operated their businesses from these premises. The husband says it is a commercial property, which could attract significant rental pending the final resolution of this matter. He seeks the parties forthwith do all acts and things to secure a tenant for the property, and that the rental income be paid into an account and used to meet the expenses for the property.

23. The property is subject to a Line of Credit, which, as at September 2023, was drawn down to $812,000. Interest is accruing at about $6,000 per month. The total available under the Line of Credit is $1,040,000. I am unclear whether that is the same, or a separate Line of Credit associated with other properties that are registered in the wife’s name.

24. According to the wife, the J Street property enjoys significant capital gains tax exemptions and land tax concessions as a result of it being used by E Pty Ltd. She says those benefits would be lost if the property were tenanted – and if the property is tenanted now, and then subsequently sold, the proceeds of that sale would be subject to capital gains tax. She said further the property would immediately become assessable for higher land tax.

25. The wife said contrary to the husband’s assertions otherwise, the property had not been tenanted previously. She said that E Pty Ltd had previously paid rent in error, the payment of which was subsequently reversed. She acknowledged the property currently has an undisclosed ‘house sitter’ in occupation, which she said was on a rent-free basis. She acknowledged that the house sitter paid $10,000. However, she said that was by way of payment of a security bond and not rental.

26. In her submissions the wife said, from the bar table, that the J Street property had been on the market to rent out at the end of 2021 and remained on the market for four or five months, without a single offer being made. She said as a commercial property, any lease would need to be for at least five years, with options to extend. In circumstances where the property may have to be sold as part of the parties’ overall settlement, she said it would be premature to enter into a long-term lease. I note the wife said she would seek to retain the property, but was currently unsure whether that would be feasible.

27. I do not have any evidence from any third party to corroborate – or negate –  the wife’s assertions regarding the financial implications of leasing the property, the terms of any lease that would be offered, or the impact, if any, if the property is sold subject to a lease. It remains a little unclear as to how I reconcile the wife’s submissions the property was previously on the market to lease with her submissions now that doing so will have a significant adverse impact on the pool.

28. As noted, neither party adduced any evidence as to:

    (a)what the monthly rental income that could be generated might be; or

    (b)what the capital gains tax liability or increased land tax might be

    in the event the property was leased.

29. It is possible the tax implications could be quite significant. However, in the absence of any evidence or submissions in this regard, it is simply not possible to assess the benefit and/or prejudice to the parties if the property was to be tenanted as sought by the husband.  

30. On the wife’s evidence, the property has not been tenanted for a protracted period.

31. In the absence of evidence that enables me to properly assess the impact on the pool and in circumstances where the matter is listed for a final hearing in a little over five months’ time, I am not prepared to make an order at this interim stage that the property be leased. Of course, the husband is at liberty to seek an adjustment at trial in the event he is able to adduce evidence that supports a finding that the wife’s refusal to lease the property has resulted in a reduction in the assets available for distribution.

32. For all of the foregoing reasons, I make the orders as are set out.

I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Carter.

Associate:

Dated:       1 February 2024

SCHEDULE OF PARTIES

MLC 2800 of 2023
Respondents
Fourth Respondent:	D PTY LTD