Speadley and Spatforth

[2013] FamCA 995

FAMILY COURT OF AUSTRALIA

SPEADLEY & SPATFORTH [2013] FamCA 995

FAMILY LAW – INTERIM PROPERTY ORDERS –– Where the wife and husband sought a number of orders regarding interim property settlement – Where the wife submitted that an order for sale of the property, the subject of interim orders, was appropriate because there is no realistic prospect that the husband could raise funds to make a lump sum payment – Where the court determined that assumptions as to the husband’s financial circumstances at the time of trial should not be made at this stage of the proceedings – Where the court determined that no order be made with respect to the sale of the property prior to a final hearing – Where the husband consented to the interim orders proposed by the wife in relation to distribution of sale proceeds regarding a property already sold – Where the wife’s Application in a Case and the husband’s response are otherwise dismissed.

Family Law Act 1975 (Cth)

Strahan & Strahan [2010] 42 Fam LR 203

APPLICANT: Ms Speadley

RESPONDENT: Mr Spatforth

FILE NUMBER: SYC 7135 of 2012

DATE DELIVERED: 25 September 2013

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Stevenson J

HEARING DATE: 13 September 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Tockar

SOLICITOR FOR THE APPLICANT: Delaney Lawyers

COUNSEL FOR THE RESPONDENT: Mr Millar

SOLICITOR FOR THE RESPONDENT: Robyn Sexton & Associates

Orders

1. The Docket Registrar is requested to allocate the earliest date for the first day of a Less Adversarial Trial before Stevenson J in consultation with the parties and their legal representatives.

2. The costs of each of the parties of the interim proceedings are reserved to the final hearing.

3. By consent, the husband will do all things necessary to cause the company B Pty Ltd to distribute the net proceeds of sale of the property situate at and known as C Street, Suburb D in the State of New South Wales as follows:

   3.1      in payment of any further legal costs incidental to the sale

   3.2      in payment of the balance into an interest-bearing account as arranged and agreed by the parties’ solicitors, pending further order.

4. The Amended Application In  A Case of the wife filed on 5 August 2013 and the husband’s Response to an Application In A Case filed on 12 September 2013 are otherwise dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Speadley & Spatforth has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 7135 of 2012

Ms Speadley

Applicant

And

Mr Spatforth

Respondent

REASONS FOR JUDGMENT

the proceedings  

1. On 5 August 2013 the applicant wife, Ms Speadley, filed an Amended Application in a Case by which she sought the following orders: 

   [E Street] orders

   1 That pursuant to section 79(1) of the Family Law Act (“the Act”) the husband and the wife do all acts and things and sign all documents necessary within 1 week of the date of this Order to list the property known as and situate at [E Street, Suburb F] in the State of New South Wales, Folio Identifier 1/900644 (hereinafter referred to as “the [E Street] property”) for sale by public auction and sell the property for the best price reasonably obtainable and provided further that the wife is to sign all documents and do all acts and things necessary at her sole cost to withdraw the caveat registered on the title of the [E Street] property (registered dealing no.(…) forthwith.

   2    That the husband and the wife shall co-operate in every way with the agent including (without limiting the generality of the foregoing):

   2.1making the property available to the agent;

   2.2allowing inspections of the property at all reasonable times requested by the agent;

   2.3doing or saying anything or nothing to hinder or prevent a sale being effected;

   2.4ensuring that the property is in a neat and clean condition at the time of inspection by the agent or prospective purchasers; and

   2.5signing all documents requested by the agent in relation to the listing for sale.

   3    For the purposes of orders 2 and 3 above:

   3.1the [E Street] property shall be listed [G Real Estate] ([Mr G]), and the agency agreement shall be signed by each party no later than 23 August 2013,

   3.2the husband shall appoint Atkinson Vinden solicitors to act as solicitor on the sale of the [E Street] property,

   3.3the [E Street] property shall be made open for inspection on or before and from 6 September 2013,

   3.4the [E Street] property shall be listed for sale by auction on or before 4 October 2013 with a settlement period of six weeks, and a reserve of $2 million.

   3.5The parties may accept an offer prior to auction above or below the reserve.

   3.6If the [E Street property] is not sold at or before the auction, the parties shall sell the property forthwith at a price recommended by the agent.

   3.7The husband shall forthwith take all necessary steps at his own expense to discharge the mortgage to National Australia Bank over the [E Street] property and indemnifies wife against any cost, expense or liability in respect of that mortgage for the discharge of it.

   4    That pending completion of the sale of the E Street property the husband shall pay all outgoings in respect of the E Street property as and when they fall due defined as council rates, water rates and property damage insurance premiums.

   5    That at the completion of the sale of the E Street property pursuant to these Orders the parties shall do all acts and things necessary to cause the proceeds of the sale to be paid and distributed on completion in the following manner and priority:

   5.1in payment of all legal costs, real estate agent’s commission and expenses (including advertising expenses) in relation to the sale;

   5.2in reimbursement to either party of any sale or other costs paid in advance by that party with the prior written agreement of the other party; and

   5.3in payment of the balance then remaining to the husband and the wife in equal shares.

   [B] orders

   6 That pursuant to section 79(1) of the Act, the proceeds of sale of the principal asset of [B Pty Ltd] (“[B]”), the property known as [C Street Suburb D] (the “C Street property”) which is subject to a contract for sale to be completed on 20 December 2013 (the “Contract for Sale”), shall be applied forthwith on completion of the sale as follows:

   6.1in payment of any further legal payable by B in relation to the sale;

   6.2the balance of the proceeds of sale be paid into and held in an interest bearing account in the joint names of the solicitors for the respective parties (the “solicitors joint account”), until further order, or with the prior written agreement of the parties, in payment of liabilities of B (including, without limitation, income tax payable on filing of the 2013 income tax return).

   7    That, save only in complying with order 8 below, the Husband shall not further deal with, dispose of, distribute or otherwise alienate:

   7.1the proceeds of the deposit (the “Deposit”) under the Contract for Sale of $141,111 paid on 11 April 2013 into B’s account with the National Australia Bank Limited (account number … – “[B’s] Account”).

   7.2The proceeds of the payment of $100,000 (the “Payment”) made from [B’s] Account on 9 May 2013 into the Husband’s account with National Australia Bank Limited (account number … – the “Husband’s account”), and/or

   7.3The proceeds of cheque #23 (the Cheque 23#”) drawn on the Husband’s account on or about 10 May 2013, or any deposits, accounts, assets or other property into which that sum was applied (in whole or part).

   8    That on or before noon on 22 August 2013 the Husband shall cause the sum of $100,000 (and any interest accrued on the proceeds of cheque #23) to be deposited or transferred into the solicitors’ joint account, such sum or proceeds to be held in that account until further order;

   9    That the Husband shall by 22 August 2013 file and serve an affidavit explaining:

   9.1how the proceeds of the Deposit, the Payment and Cheque #23 (as referred to in order 7.1.-7.3 above) were dealt with and applied by [B] and/or the Husband him from the date of receipt on or about 11 April 2013 until complying with order 8 above, and/or

   9.2if the Husband has not been able to comply with order 8 above in whole or part, the reasons for failing to do so and the steps taken by him to secure the Proceeds.

   10   Liberty to apply in one day’s notice.(as per original)

2. On 12 September 2013 the respondent husband, Mr Spatforth, filed a Response to an Application in a Case in which he sought the following orders: 

   1.That the wife’s application seeking an interlocutory order for the sale of the property known as [E Street, Suburb F] in the state of New South Wales, Folio Identifier … (“the [Suburb F] home”) registered in the sole name of the husband is dismissed (or otherwise adjourned to the final hearing of these proceedings.)

   2That the wife is to sign all documents and do all things necessary to remove the Caveat registered on the title of the [Suburb F] home (registered dealing no…) at the sole cost of the wife within 21 days of the date of these orders.

   3Order that [Mr H], Registered Real Estate valuer be appointed a single expert to inspect the [Suburb F] home and the wife’s investment property known as [I Street, Suburb F], Folio Id. … (“the investment property”) and prepare a valuation report in relation to the current market value of each property, the costs of the single expert to be paid by the parties in equal shares in the first instance and otherwise on the following terms:

   3.1The husband’s solicitors are to prepare a joint letter of instructions to the single expert in draft form and send it to the wife’s solicitors within 7 days of the date of these orders for their approval;

   3.2The final form of the joint letter of instructions to the single expert is to be settled and signed by each party’s solicitors within 14 days of the date of these orders;

   3.3Liberty to apply to each party in relation to the implementation of order 3.

   4.Order that [Mr J], Remuneration Expert be appointed a single expert to assess:

   4.1the husband’s capacity to obtain paid employment having regard to his age, physical and mental capacity for appropriate gainful employment, skills and experience;

   4.2      the husband’s earning capacity;

   and prepare a written report in relation to such matters and such other issues as the expert considers relevant, the costs of the single expert to be paid by the parties in equal shares in the first instance and otherwise on the following terms:

   (a)        The husband’s solicitors are to prepare a joint letter of instructions to the single expert in draft form and send it to the wife’s solicitors within 7 days of the date of these orders for their approval;

   (b)        The final form of the joint letter of instructions to the single expert is to be settled and signed by each party’s solicitors within 14 days of the date of these orders;

   (c)        Each party is entitled to submit a separate statement of facts alleged by the party bearing upon the report to be obtained from the single expert in accordance with the Family Law Rules;

   (d)        The husband is to attend upon a meeting with [Mr J] and undertake whatever psychometric tests and/or other assessment or interview tasks the expert sets as and when requested by the expert;

   (e)        Liberty to apply to each party in relation to the implementation of this order 4.

   5.That the final hearing of these proceedings be expedited subject to the convenience of this Honourable Court.

   6.That the wife pay the husband’s costs associated with the wife’s application in a case filed 12 June 2013 and in relation to the hearing of the wife’s amended application filed 5 August 2013 on a party-party basis in such sum as determined by the Duty Judge (or otherwise as agreed between the parties’ solicitors in writing within one month of the date of these orders and failing agreement as assessed by a Registrar.)”

3. The wife’s interim application came before me in a duty list on 19 August 2013.  The husband had filed no material in relation to this application and sought an adjournment on the basis of an alleged medical incapacity which prevented him from doing so prior to 1 September 2013.  His solicitor relied upon a medical certificate from Dr K, which stated inter alia: 

   This letter is to certify that [Mr Spatforth] underwent a haemorrhoidectomy on the 5^th August 2013.  Unfortunately [Mr Spatforth’s] post-operative recovery was complicated by significant constipation with faecal impaction.  [Mr Spatforth] is suffering from significant anal discomfort which will require a few more weeks of analgesia and laxatives.

   Unfortunately [Mr Spatforth] is not fit to attend any court matters until the 1^st September 2013 at the earliest.  I would be grateful if you could please take this information into consideration in assisting [Mr Spatforth] with this matter.

   The wife opposed the application for an adjournment but I nevertheless fixed the interim issues for hearing on 13 September 2013.

Background

1. The husband was born in 1954 and is 59 years of age.  He left the paid workforce more than twelve years ago.  The wife was born in 1968 and is presently aged 44 years.  She conducts a full time practice as a barrister.

2. The parties commenced habitation in 1991 and married in 1994.  They separated under one roof on 24 October 2011 and, after several months, the wife moved into rented accommodation.  The parties were divorced on 1 March 2013.

3. The parties have three children:

   L born in 1998 (15)

   M born in 2000 (13)

   N born in 2001 (12).

   The boys are weekly boarders at O School and spend approximately four nights per term with each parent.  M is a full time boarder at P School.  The children spend half of their school holidays in the care of each parent.  The wife is solely responsible for the payment of all of the children’s school fees and expenses.

4. At the commencement of cohabitation the husband owned the property E Street, Suburb F, which he purchased in 1987.  In approximately 1993/1994 he discharged a mortgage and a personal loan from his mother which he had taken out to fund the purchase.  The husband also owned a motor vehicle, household contents and an interest in a business at the commencement of cohabitation.  When the parties began to live together, the wife was a law student who possessed no substantial assets. 

5. In 1998 a company known as B Pty Ltd purchased commercial premises known as C Street, Suburb D.  The husband is the sole director and shareholder of this company.  The Suburb D premises have been leased continually and the husband has had exclusive use of the rental income since the parties’ separation.   The property was sold by the husband for $1,411,111 pursuant to a contract dated 5 April 2013, with settlement to occur on 21 December 2013. 

6. On 5 April 2013 the husband received a deposit of $141,111 in respect of the sale of the Suburb D property.  By 19 August 2013 he retained approximately $100,000 from the deposit money.  On that date, he gave an undertaking to the court in the following terms: 

   I, Mr Spatforth, of E Street, Suburb F in the state of NSW, undertake to the Court that:

   1.I will not deal with the sum of $100,000 presently held in my name on deposit with ING Direct account no. 84110120 other than to pay:

   1.1Reasonable living expenses for myself and the children;

   1.2Legal costs and disbursements in relation to these proceedings

   And I agree to be bound by this undertaking until 6pm, 13 September 2013 or excused by the court.

   I acknowledge that:

   a)The nature and terms of the undertaking have been explained to me; and

   b)I promise the Court that I will comply with the terms of the undertaking:  and

   c)The undertaking has the same effect as an order of the court;  and

   d)If I breach the undertaking, I may be guilty of contempt of the court and may be punished by a fine or imprisonment.”

7. By the time the husband swore his affidavit on 11 September 2013, he had spent approximately $25,000 on legal fees and $5,000 for living expenses from this fund.  Accordingly, the husband has to date expended some $71,000 from the deposit money.

8. By her Initiating Application filed on 27 November 2012 the wife sought, inter alia, orders which would cause the sale of the E Street property.  By a Response filed on 30 January 2013 the husband sought orders, inter alia, which would affect a sale of this property.  By an Amended Response filed on 12 July 2013 however the husband sought orders, inter alia, that he pay a sum of $850,000 to the wife and that he retain the E Street property. 

9. At a Conciliation Conference on 7 May 2013 the parties signed Heads of Agreement which provided, inter alia, for the sale of the E Street property.  This agreement is not binding and no suggestion to the contrary was put on behalf of the wife at the interim hearing.

10. Until August 2012 the wife provided financial support for the husband in an amount of $1,000 per week.  She also advanced a sum of $40,000 to him in October 2012 to enable B Pty Ltd to meet some of its taxation liabilities. 

The Evidence

1. The applicant wife relied on the following written evidence:

   1.paragraphs 23 to 52 and 53 to 61 of the affidavit of Ms Speadley sworn on 12 June 2013

   2.affidavit of Ms Speadley sworn on 5 August 2013

   3.affidavit of Ms Speadley sworn on 19 August 2013

   4.Financial Statement of Ms Speadley sworn on 26 November 2012.

   The respondent husband relied upon his affidavit sworn on 11 September 2013 and Financial Statement of 30 January 2013.

Consideration

Interim Property Settlement

1. In Strahan & Strahan [2010] 42 Fam LR 203 the Full Court considered, inter alia, the proper approach to the determination of applications for orders for interim property settlement. I respectfully adopt the formulation of the relevant principles set out by Thackray J as follows (at page 250):

   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).”

   I also have regard to the remarks and rulings of Boland and O’Ryan JJ as follows (at page 236):

   [136] …It was submitted by senior counsel for the wife that it is relevant to consider whether an order would give the applicant “more than they would be indubitably entitled to on a final hearing” or alternatively “would it give them so much that it could not be adjusted on a final hearing?”  As we have observed the Full Court in Zschokke at Fam LR 786; FLC 83,220-21 stressed the importance of consideration of the “adjustment issue” if the power in s 80(1)(h) of the Act is being exercised. We accept the submission and observe that this matter is relevant because the discretion conferred by the power in s 79 is to make such order as the court considers appropriate provided it is just and equitable to make the order in circumstances where the power will not be exhausted by the interim order. As Bryant CJ and Coleman J observed in Gabel at [69] and [72] the interim order must be capable of variation or reversal without resort to s 79A of the Act or appeal. As Finn J said at [126] the interim order must be “capable of alteration at any time prior to, or as part of, the final exercise of the s 79 power”.

1. Counsel for the wife submitted a detailed set of calculations which was said to establish that the husband will need to pay to her a lump sum between $291,323 and $647,573, if he is to retain the E Street property.  For present purposes, I will assume that these calculations are correct.

2. On behalf of the wife it was submitted that an order for sale of the E Street property is now appropriate because there is no realistic prospect that the husband could raise funds to make a lump sum payment.  It was contended that part of his case is that his age and state of health are such that he is unable to engage in paid employment, hence he could not raise and service a loan.  It seems to me that this proposition is one which should be established at trial, when all relevant evidence has been adduced and subject to proper scrutiny.

3. On behalf of the husband, it was submitted that “he may obtain finance from non-commercial sources”.  It was further submitted that “it cannot be assumed he will not be working at the time of the trial”.  I agree that assumptions as to the husband’s financial circumstances at the time of the trial should not be made at this stage of the proceedings.  I agree also that the possibility that the husband may secure finance from “non-commercial sources” cannot be excluded on an interim basis.

4. It seems to me that the above-cited passage from the judgment of Boland and O’Ryan JJ encapsulates a fundamental obstacle to the wife’s application for an order that the husband forthwith sell the E Street property so as to provide her with an interim property settlement.  Such an order would completely eliminate any prospect of the husband’s retaining that asset in a final property settlement.  There is simply no subsequent order which could possibly restore that option at trial.

5. For all of these reasons I consider that there should be no order for sale of the E Street property prior to a final hearing.

Expedition of the Proceedings

1. Having reached that conclusion, however, I am sympathetic to the wife’s financial plight at the present time as she set out in her affidavit of 5 August 2013.  I appreciate, for example,  that the entire responsibility for the children’s school fees and expenses will continue to be borne by the wife until a fund is established to meet these costs, in accordance with final orders proposed by each of the parties.

2. Counsel for the wife conceded that there was little to distinguish the present proceedings from many other cases which await the allocation of trial dates.  I agree with that observation.

3. On behalf of the husband, it was submitted that the proceedings should be expedited on the basis that he suffers from depression, prostate cancer and non-Hodgkin’s lymphoma.  There is as yet no expert evidence as to the impact, if any, of these conditions on his capacity to engage in gainful employment.  That issue no doubt will be a matter of significance at trial.

4. I am not prepared to order expedition of the proceedings on the basis suggested by either party.  I will, however, request that the Docket Registrar list the proceedings for a Less Adversarial Trial first day at the earliest date available in my calendar.  When the sale of the Suburb D property is finalised and the net proceeds quantified, it seems to me that the parties should then take the opportunity to give further consideration to an overall settlement.  It may be that they would benefit from a further Conciliation Conference at that point.

Injunctive Orders in Relation to B Pty Ltd

1. The husband consented to the interim orders proposed by the wife in relation to the distribution of the sale proceeds of the Suburb D property, save that his solicitor does not hold funds in this manner.  I will thus order that the husband lodge the sale proceeds in an interest-bearing account as agreed by the parties’ solicitors.

2. The husband made no application to be released from his undertaking to the court given on 19 August 2013.  Accordingly he is bound, pending further order, to deal with that sum of $100,000 only for the purpose of meeting reasonable living expenses for himself and the children and his legal fees of these proceedings. 

3. It was common ground that the net assets and superannuation of the parties have a value of approximately $4 million.  Accordingly, there is ample scope for the court to take into account the husband’s application of these funds on a final hearing.  In my view, there is thus no necessity for an order in the terms sought by the wife in paragraph 8 of her interim application.  The fate of these funds is a matter for exploration at a final hearing, rather than at this stage of the proceedings.  I thus decline also to make an order as sought by the wife in terms of paragraph 9 of her interim application.

The Husband’s Application for the Appointment of Experts

1. In my view, the appointment of expert witnesses is a matter for consideration and determination at the first day of a Less Adversarial Trial.  I expect that the parties and their legal representatives will be in a position to address that matter on that occasion.

The Wife’s Application for her Costs of 19 August 2013

1. I propose to reserve the costs of both parties of the interim proceedings to a final hearing.  The husband’s medical evidence as to an alleged incapacity to deal with the interim issues prior to 19 August 2013 will be untested until that point.  On the other hand, the wife has failed in her application to seek interim orders for the sale of the E Street property.

I certify that the preceding twenty nine (29) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 25 September 2013.

Associate:     

Date:              25 September 2013