SWAYTE & SWAYTE

[2020] FamCA 450

FAMILY COURT OF AUSTRALIA

SWAYTE & SWAYTE [2020] FamCA 450

FAMILY LAW – PROPERTY – Where Application for interim orders for sale of properties to meet accruing and ongoing liabilities – Where husband seeks interim distribution of funds – Consideration of applicable principles – Where little cooperation between husband and wife – Where appropriate that wife be appointed Trustee for sale of the subject properties – Where orders made as to sale of certain properties and for interim distribution equally to both parties.

Family Law Act 1975 (Cth) ss 72, 75, 79, 114

Harris & Harris (1993) FLC 92-378
Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319
Strahan & Strahan [2009] FamCAFC 166; (2011) FLC 93-466

APPLICANT: Ms Swayte

RESPONDENT: Mr Swayte

FILE NUMBER: PAC 633 of 2020

DATE DELIVERED: 5 June 2020

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Foster J

HEARING DATE: 11 May 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Gillies SC and with her Ms Dart

SOLICITOR FOR THE APPLICANT: Diamond Conway Lawyers

COUNSEL FOR THE RESPONDENT: Mr Hodgson

SOLICITOR FOR THE RESPONDENT: Kalmath Lawyers

Orders, Pending Further Order

1. That the wife be appointed trustee for sale of the property situate at B Street, C Town (“The C Town property”) for the best price reasonably obtainable and for such purpose the property shall vest in the wife as trustee for sale and that upon sale the net proceeds of sale after agent’s commission, legal costs on sale, contract adjustments, reasonable costs of preparing the property for sale and discharge of mortgage be paid to a controlled monies account in the name of the wife’s solicitor and that the wife be authorised to utilise such funds in the ordinary course of the parties’ business to meet property outgoings including mortgage payments, accrued liabilities and other payments necessary for the orderly conduct of the residential accommodation facility (“the facility”) conducted at D Street, Suburb F trading as “H Company” and the parties affairs.

2. That pending further order the wife shall have sole use and occupation of the property at B Street, C Town for the purposes of sale and the husband is restrained from attending at or entering upon the said property without the express consent of the wife and only for such purposes as she may permit.

3. That the wife be appointed trustee for sale of the properties situate at 1 and 2 J Street, Suburb K for the best price reasonably obtainable and for such purpose the properties shall vest in the wife as trustee for sale and that upon sale the net proceeds of sale after agent’s commission, legal costs on sale, contract adjustments, reasonable costs of preparing the property for sale and discharge of mortgage be paid to a controlled monies account in the name of the wife’s solicitor and that the wife be authorised to utilise such funds in the ordinary course of the parties’ business to meet property outgoings including mortgage payments, accrued liabilities and other payments necessary for the orderly conduct of the facility conducted at D Street, Suburb F trading as “H Company” and the parties affairs.

4. That pending further order, the wife shall have sole use and occupation of the properties at 1 and 2 J Street, Suburb K for the purposes of sale and the husband is restrained from attending at or entering upon the said property without the express consent of the wife and only for such purposes as she may expressly permit.

5. That the wife do all things necessary to sell the property situate at L Street, Suburb M (“the Suburb M property”) for the best price reasonably obtainable and that upon sale the net proceeds of sale after agent’s commission, legal costs on sale, contract adjustments, reasonable costs of preparing the property for sale and discharge of mortgage be paid to a controlled monies account in the name of the wife’s solicitor and that the wife be authorised to utilise such funds in the ordinary course of the parties’ business to meet property outgoings including mortgage payments, accrued liabilities and other payments necessary for the orderly conduct of the facility conducted at D Street, Suburb F trading as “H Company” and the parties affairs.

6. That the wife shall provide to the husband by the last day of each month an accounting of funds used by her for the purposes permitted above.

7. That the husband shall vacate the said property at L Street, Suburb M within seven days from the date of these orders and that thereafter the wife shall have sole use and occupation of the property for the purposes of sale and the husband is restrained from attending at or entering upon the said property without the express consent of the wife and only for such purposes as she may expressly permit.

8. That the wife do all things necessary to remove and store furniture, furnishings, effects and antiques situate at the Suburb M property to storage facilities selected by her with the wife to pay storage fees as and when they become due and payable.

9. That pending further order the husband be restrained from doing any act or thing such as to remove any of the Suburb M property contents other than his personal effects without prior court order or written approval of the wife.

10. That notwithstanding the previous orders the wife shall do all things necessary to pay to the husband and to herself the sum of $100,000 each from the proceeds of sale of the first property sold with the classification of such sums to be reserved to final trial.

11. Liberty to apply as to implementation or enforcement.

12. The husband’s application for spouse maintenance be dismissed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAC 633 of 2020

Ms Swayte

Applicant

And

Mr Swayte

Respondent

REASONS FOR JUDGMENT 

1. On 10 February 2020 the applicant wife commenced financial proceedings in this Court. In her Initiating Application the wife relevantly sought an order that the property of the parties be divided as to 65 per cent to her and as to 35 per cent to the respondent husband.

2. In the wife’s Initiating Application the wife sought interim orders that, in summary, provided:

   a)that the wife be appointed trustee for sale of the property at D Street, Suburb F (“the Suburb F property”) together with the business conducted thereon trading as “H Company” and that there be orders made as to implementation of the sale, day-to-day management of the residential accommodation facility (“the facility”) pending sale and that the husband be restrained from attending at the premises or doing any act or thing so as to interfere with the ordinary operation of the facility pending sale;

   b)that the husband and wife do all things necessary:

   i)to cause N Pty Ltd to sell the property at 1 J Street, Suburb K (“the 1 J Street property”);

   ii)to cause P Pty Ltd to sell the property at 2 J Street, Suburb K  (“the 2 J Street property”);

   iii)to cause Q Pty Ltd to sell the property at B Street, C Town (“The C Town property”); and

   iv)that there be orders as to implementation of the sales, distribution of the proceeds of sale with remaining proceeds of sale to be held in a controlled monies account operated by the wife on behalf of the parties with funds to be used to pay ongoing holding costs in relation to certain real estate properties still remaining.

   c)that pending further order the husband be restrained in his capacity as director and/or shareholder of the corporate entities referred to above from doing any act or thing authorising any person to do any act or thing to prevent or disrupt the sales provided for above;

   d)that upon finalisation of the sales of the 1 and 2 J Street properties, named accountants be appointed to windup the entities that owned those properties;

   e)that within seven days the husband vacate the property at L Street, Suburb M (“the Suburb M property”) and that the wife thereafter have sole use and occupation thereof;

   f)that the wife do all things necessary to remove and store furniture, furnishings, effects and antiques situate at the Suburb M property to storage facilities selected by her with the wife to pay storage fees as and when they become due and payable;

   g)that pending further order the husband be restrained from doing any act or thing such as to remove any of the Suburb M property contents without prior court order or written approval of the wife or to interfere with the wife’s use and quiet enjoyment of the Suburb M property and not enter upon that property for any reason whatsoever; and

   h)that the wife be at liberty to sell the Suburb M property and that upon sale balance of funds available to be held in a controlled monies account operated by the applicant and that she account to the respondent for monies utilised by her following sale.

3. For the purposes of the wife’s interim application she relied upon:

   a)her Financial Statement filed 10 February 2020;

   b)her affidavit filed 10 February 2020; and

   c)the affidavit of the parties’ adult son, Mr FF, filed 6 May 2020.

4. The husband for his part filed on 6 May 2020 a Response to the wife’s Initiating Application. By way of final orders the husband, in summary, sought:

   a)that the overall property pool be divided as to 65 per cent to him and as to 35 per cent to the wife;

   b)that the wife transfer to the husband her interest in the Suburb M property;

   c)that the wife transfer to the husband her interest in the property at R Street, Suburb S (“The Suburb S property”);

   d)that the wife transfer to the husband her interest in the property situate at Suburb F together with the business of the facility;

   e)that the wife do all things necessary to cause N Pty Ltd to transfer to the husband the property situate at 1 J Street property;

   f)that the wife do all things necessary to cause P Pty Ltd to transfer to the husband the property at 2 J Street property;

   g)that the wife do all things necessary to cause T Pty Ltd (husband two shares and wife one share) to transfer to the husband the properties situate at V Street, W Town (“the W Town property”) and X Street, Suburb Y (“the Suburb Y property”);

   h)that the wife do all things necessary to cause Q Pty Ltd (husband and wife equal shareholders) to transfer to the husband the property situate at Z Street, Suburb AA (“the Suburb AA property”);

   i)that consequent upon the wife complying with the above orders as to property transfers, the husband refinance the mortgage secured on the said properties and indemnify the wife from any liability arising therefrom; and

   j)that consequent upon the wife complying with the above orders as to property transfers the husband pay to the wife such amount as equivalent to 35 per cent of the net value of the properties referred to and 35 per cent of the net value of the business of the facility.

5. The husband, in response to the wife’s interim orders, sought the following orders, in summary, on an interim basis:

   a)that the husband and wife do all things necessary to cause Q Pty Ltd to sell the C Town property with the net proceeds of sale to be held in a controlled monies account in trust for the parties;

   b)that the wife pay to the husband the sum of $260,000 by way of costs/partial property settlement with the nature of the payment to be determined by the trial judge at final hearing;

   c)that the husband have exclusive occupation of the Suburb M property and that the wife be restrained from entering upon the said property without the express invitation of the husband;

   d)pending further order or receipt by the husband of monies which may be due to him by way of income from Medicare the wife pay to the husband by way of interim spousal maintenance the sum of $500 per week; and

   e)costs.

6. For the purposes of the interim application the husband relied upon:

   a)his Financial Statement filed 6 May 2020; and

   b)his affidavit sworn and filed 6 May 2020.

Context

1. The wife is presently aged 68 and the husband aged 78.

2. The husband is a self-employed healthcare professional operating his business from the wife’s real estate property at R Street, Suburb S.

3. The parties married in 1973. At the time of marriage the wife was aged 21 and the husband aged 31. Following a marriage of some 44 years the parties separated in late June 2017.

4. At the time of separation the wife left the former matrimonial home being the Suburb M property. She asserts that throughout the marriage the husband had been physically and verbally abusive to her and at the time of separation she was fearful of her personal safety by reason of the husband’s conduct.

5. There are six children of the parties’ relationship, all are now adults.

6. Over the period of the parties’ marriage the parties have accrued a significant property portfolio that is referred to above in the context of orders sought by each of them.

The wife’s evidence

1. The wife asserts that she has been required to seek interim orders as a consequence of the husband’s refusal to cooperate in the proper administration of the facility and the sale and/or borrowings against the parties’ various real estate properties to meet unpaid statutory liabilities, fund the ongoing expenses of the administration of the facility and other real property outgoings.

2. She deposes as to a monthly deficit of about $71,000 with the ongoing deficit being met from a capital sum of about $377,000 presently held in the parties’ accountant’s trust account.

The Facility

1. The parties’ significant asset comprises the real estate property at Suburb F upon which the facility operates. The real property was purchased by the parties in 1986 for about $185,000. Consequently, the parties engaged in the construction of the facility in stages. The real property at Suburb F and the facility operated thereon is owned by the parties in their own names.

2. In 2007 the parties incorporated H Pty Ltd for the purposes of managing the facility. The company is also the trustee of the H Company Trust (“the Trust”) in which the husband and wife each hold 100 units.

3. Development approval for the facility was obtained in April 2010 and is subject to certain conditions as to public road access drainage and services. The development approval provided for a development of the facility in three stages: 

   (1)Stage I to construct 12 units and six three-bedroom villas

   (2)Stage II was to provide 13 villas, 27 units and five suites  

   (3)Stage III was to provide 11 three-bedroom units, 29 two-bedroom units and 15 suites

4. The wife asserts that the present value of the Suburb F property and the facility is between $15 million and $16 million.

5. In August 2013 the company entered into a finance facility with Westpac Banking Corporation to fund the development and construction of Stage I. The finance was secured by way of mortgage over the Suburb F property and properties owned by Q Pty Ltd and T Pty Ltd. Interest of about $35,000 to $40,000 per month on the loan facility was payable.

6. Difficulties arose with the builder during construction and the parties had difficulties in meeting interest payments. The parties borrowed $230,000 from a daughter together with other funds from a son.

7. The wife complains that the husband refused to sell any of their other real estate properties or secure funds against those properties to meet ongoing interest and building costs. Subsequently, and in July 2019, the parties’ daughter sold her residential apartment and from the proceeds of sale advanced to the parties a further sum of about $202,000. These funds have been expended on meeting ongoing holding costs in relation to the facility and the parties’ other business interests

8. Stage I of the development was completed in about August 2016 with the last of the units being “sold” by way of long-term lease in April 2019. The sale of each leasehold unit was registered as against the title to the property at Suburb F. Part of the proceeds of sale of each unit are paid by way of loan from each purchaser to the Trust.

9. The last unit in Stage I was “sold” in April 2019 for $700,000. Those funds were deposited to the trust account of the parties’ accountants. Previously, sale of the remaining units realised about $14 million with those funds being held in the trust account of DD Lawyers. These funds were expended on servicing loan repayments and part discharging mortgages and paying building costs. The sum remaining in the trust account of the parties’ accountants from the last sale referred to above is about $377,000.

The husband’s conduct

1. The wife asserts that since 1973 she has managed the parties’ business affairs including the husband’s business. She is presently supported in property management by her sons Mr FF and Mr GG who have not been paid a salary since April 2010.

2. Since June 2018 the wife has not managed the husband’s business.

3. The wife complains that the husband since separation has refused to co-operate in an orderly and timely manner in the management of the facility in that he has refused to sign leases, refused to pay administrative and outgoings in relation to the business, refused to carry out roadworks as required by the council development approval and refused to attend board meetings of the parties’ various corporate entities. As a consequence, the husband and wife agreed in 2017 to establish the Swayte Council (“SC”) to assist in making decisions for the proper management of the facility and the parties’ other business interests. The board comprised the husband and wife, their son Mr FF, their advisor Mr HH and the parties’ accountant Mr JJ.

4. SC met regularly until December 2018. Minutes of the meetings were prepared and the board considered payment schedules prepared by the wife for payments that were required to be made with those payments relating to known outgoings and expenses or supported by invoices.

5. As at July 2017 it appears there were funds totalling about $715,000 (from the sale of the second last unit) in an ANZ bank account available to meet ongoing expenses. However, at that time the husband unilaterally effectively froze that account. In September 2018 the parties met in endeavour to reach agreement as to accessing the ANZ funds but no agreement was reached.

6. In November 2018 the wife informed the husband of invoices totalling $137,000 that were required to be paid but could not be paid as there were insufficient funds remaining in the trust account of the parties’ accountant. These invoices included invoices for telephone, electricity, water and power, due Australian Taxation Office payments, insurances and defect works necessary at the facility for the health and safety of the residents, together with various mortgage repayments, interest due and other property outgoings.

7. In December 2018 SC met; the husband was absent. It was resolved that there be a transfer of $715,000 from the ANZ trust account to the parties’ accountants trust account. Subsequently, invoice payments have been made against those funds and the last sale funds thus leaving the current balance available of about $377,000.

The other real estate properties

1. The adjoining properties being the 1 J Street property (N Pty Ltd: Wife 99.8 per cent, Husband 0.2 per cent shareholding) and the 2 J Street property (P Pty Ltd: Wife 50 per cent Husband 50 per cent shareholding) had been used by the husband for storage for the last 12 years with a rental payment by him of about one half of the commercial rent obtainable. The husband had previously represented that he wished to obtain development approval to build a medical centre but has never to the wife’s knowledge made any such application for approval or development. The wife has obtained a market appraisal for the sale of the two Suburb K properties and if sold together she asserts they will realise something in the order of $1.9 million.

1. The husband pays $1,100 per month to lease the Suburb S property owned by the wife. He operates his business from those premises. He has paid no rent since October 2019. The wife asserts that the husband has failed to lodge invoices to secure payment for services rendered since June 2018. The property, she says, has a value of between $800,000 and $880,000.

2. The husband pays storage fees of $150 a month for the Suburb Y property (T Pty Ltd), a property the wife asserts has a commercial rental value of about $1,200 per week as it comprises a significant home on five acres. The husband, she says, now occupies this property and has stored in the property significant furniture, household effects and building material. The wife asserts that the property in its present condition cannot be commercially rented with the husband refusing her access to the property to collect certain items of furniture and household effects that she wishes to retain. The property, asserts the wife, has a value of between $2.9 and $3.3 million and is subject to a mortgage of about $1.2 million.

3. The husband also pays $330 a month to lease the W Town property (T Pty Ltd) owned by the wife.

4. The Suburb M property is in the sole name of the wife. She asserts it has a value of about $1.28 million and is subject to a mortgage of $420,000. A sale would realise approximately $800,000 that would be available to meet holding costs, property liabilities and necessary expenses for the facility. The husband, she says, has padlocked the front gate to prevent access to the property by her. The property, she asserts, is presently uninhabitable and the husband has stored significant effects in the property. The husband had previously occupied the property subsequent to separation but the wife asserts that he has vacated that property and he is presently residing at the Suburb Y property.

5. The C Town property (Q Pty Ltd) has a market value of between $920,000 and one million dollars and is subject to an outstanding mortgage of approximately $750,000. The mortgage also secured, it appears, collaterally over The Suburb S property. Net proceeds says the wife could be contributed to meeting holding costs in relation to the facility and other real property outgoings.

Other issues

1. Road works: At present roadworks to the frontage of the Suburb F property, being a condition of the development approval remain incomplete. The wife has obtained estimates for completion of the works at a cost of about $1.15 million and asserts there is sufficient security in the Suburb F property to support an application for a finance facility to complete those works to facilitate a sale of the overall development once complete.

2. At present the local council holds a bank guarantee by way of security bond for completion of the roadworks in the sum of $675,000. Upon completion of the roadworks to the council’s satisfaction, those funds would be released and be able to be paid to reduce any sum borrowed to complete the works. The local council requires a Deed of Agreement be entered into for the purposes of carrying out the works to the council’s satisfaction. The wife asserts that the Deed of Agreement is necessary as part of the application for the required finance to complete the works.

3. The ATO: the Australian Taxation Office has assessed the parties as liable in the sum of $523,244 with such sum including interest and penalties. That liability remains unpaid.

4. The Facility: the wife asserts that three of the residents have made complaints to the Department of Fair Trading and the local council about delays in undertaking the necessary roadworks to the frontage of the property. Otherwise, one of the unit owners passed away in January 2019 and is due a refund payable to her estate of $643,808. Those funds are not available absent the realisation of assets. Otherwise, another unit owner has terminated the lease requiring a repayment of $1.2 million. Demand has been made for that payment with the threat of proceedings being commenced for recovery.

5. Land Tax: Land tax remains outstanding for the 2019 year in the sum of $40,000. The wife estimates that the parties’ land tax liability for the 2020 year will be in the order of approximately $200,000. There are no funds available to meet this expected liability.

6. The wife complains that the husband has frustrated the release of funds from the parties’ accountant’s trust account to meet ongoing liabilities, refused to join in an application to borrow funds to meet the liabilities referred to above, refused to join in the sale of real estate properties to realise necessary capital and refused to join in the sale of the Suburb F property and the facility.

7. The wife proposes that net funds from the sale of the Suburb K properties of about $600,000 would be available to meet part of the costs of roadworks and other outgoings.

8. The wife’s application is supported by the parties’ adult son Mr FF who has been intimately involved with the development of and the ongoing conduct of the Suburb F property and the facility. He has received no financial remuneration or salary for his efforts since May 2012 including the marketing and sales of the various units when completed. His evidence corroborates the wife’s evidence as to the urgency of the realisation of capital to meet and reduce ongoing liabilities.

The husband’s evidence

1. Notwithstanding being a self-employed healthcare professional, the husband in his Financial Statement asserts no income from his profession.

2. The husband asserts that as at the date of marriage he owned two properties at Suburb LL, subject to mortgage and tenanted. The properties were purchased by him the year before marriage. The equity in these properties as at the date of marriage is not known. He also had some savings accrued from his professional employment prior to marriage.

3. The husband asserts that subsequent to marriage he subdivided and developed the Suburb LL properties into townhouse accommodation. The various townhouses were sold for about $500,000 each and the proceeds of sale were used to purchase the Suburb F property.

4. Thereafter he gives detailed evidence as to the parties’ respective contributions during their long marriage including various property acquisitions and as a consequence there is little to suggest that contributions over the period of the marriage in all the various hues would not be regarded as substantially equal.

5. The husband complains that funds available from the development of Stage I of the facility have been expended without proper management or adequate explanation and without his authorisation or consent to the payment of liabilities relating to the facility. He further complains about the expenditure of funds on unnecessary repairs and works to the facility without his consent or authorisation. He denies that he has refused to cooperate with the due administration of the facility.

6. He asserts that he was not involved in the meetings of the SC (although he agreed to it being set up) nor did he approve any of the resolutions of the board. He, otherwise, asserts that he is unaware as to the ATO liability accrued by himself and his wife from their partnership activities.

7. He asserts he is currently working part-time as a healthcare professional, three days per week in his business at the wife’s Suburb S property. All of his income he asserts is derived through Medicare payments. He asserts that he has been unable to submit invoices to Medicare since separation as previously such had been done by the wife or his bookkeeper. Once Medicare payments are received he asserts that he will receive a lump sum payment in the vicinity of about $200,000 from which he will be required to pay income tax in due course.

8. He says that he is presently working on preparing and lodging outstanding Medicare claims. There appears to be no reason why, if such is completed in a timely manner, he would not receive prompt payment. He estimates that he will be able to earn an ongoing income of between $2,000 and $3,000 per week.

9. He asserts that he has not paid his receptionist for 18 months and that she is owed about $35,000 for unpaid wages and superannuation.

10. He acknowledges that the wife has been the financial controller throughout cohabitation, asserting now that he has no access to his bank accounts and he is unable to afford his living expenses. He says he has borrowed $25,000 from his daughter.

11. He asserts that he has resided alone at the Suburb M property since separation but travels to the Suburb Y property to spend weekends there. He does not assert that he is unable to reside at the Suburb Y property if indeed he remains at the Suburb M property mid-week. Otherwise, if indeed he remains residing at the Suburb M property, there is no reason why the Suburb Y property cannot be sold.

12. As to the properties at Suburb K the husband asserts that the wife has changed the locks on those properties and he has been unable to access them. Building material and scaffolding previously stored at those premises, he says, has now been removed. He opposes the sale of the Suburb K properties asserting without any objective evidence his belief that they have significant development potential. Perhaps if that is the case such development potential will be reflected in any sale price.

13. As to the various issues raised by the wife, he says that the roadworks are due to be finished upon completion of Stage II of the facility development. Yet he proffers no solution as to how such further development could be funded having regard to the present difficulties in relation to finances.

14. As to the taxation liability, he asserts that is presently the subject of negotiation by his accountant with the Australian Taxation Office. Clearly he is aware of the debt.

15. Otherwise, he disputes that other issues raised by the wife are pressing and need to be addressed at present. This assertion is contrary to his contentions that he has been isolated from ongoing decisions relating to management of the facility and has no intimate knowledge of the parties’ financial affairs.

Discussion

1. The wife’s evidence is clearly supportive of there being an immediate need to realise capital and funds to meet ongoing liabilities and outgoings. She provides to the Court a detailed analysis of the financial circumstances of herself and her husband and their respective business interests.

2. The husband, for his part, asserts that he has been in effect sidelined and been isolated from any intimate knowledge of the financial circumstances of the matrimonial property. Their respective contributions to the accrual of the present asset pool are both most significant.

3. Yet he concedes that for the last 47 years the wife has been in control and managed the family finances. It would appear from the assets presently known for the purposes of division that, as a consequence of their respective contributions, the parties have a most significant asset pool.

4. The asset pool faces, it appears, significant risk of depletion by reason of ongoing accruing liabilities in respect of which the parties’ daughter has already funded over $400,000 to meet ongoing payments. There are clearly limited cash funds available in the parties’ accountant’s trust account to meet ongoing expenses. It is readily apparent that outgoings have been funded by capital for some time.

5. The husband for his part proffers no pathway to resolve the ever-growing difficulty of accumulating liabilities except the suggestion that the parties borrow even more funds.

6. His final property orders sees him retaining most if not all of the real estate and then paying to the wife a capital sum equal to 35 per cent of the property pool’s net value. Such sum could be a multimillion dollar payment. His capacity to realise funds for such payment is not readily apparent or indeed addressed by him. His income is modest and his age would most probably mitigate against any significant borrowing. The most probable source of funds could be the sale of various properties once transferred to him.

7. Section 114 of the Family Law Act 1975 (Cth) (“the Act”) provides that the Court may make such order or grant such injunction as it considers proper with respect to the matter to which the proceedings relate. In this matter, of course, the proceedings relate to the property of the parties and to the use and occupation of the former matrimonial home.

8. The grant of an injunction is discretionary and the basis upon which an order or injunction may be made is well settled. The wife, in this case, has readily satisfied the Court that there is a serious issue to be tried that being the question of overall property entitlement as between herself and her husband.

9. It is clear by reason of the discussion above that the wife has significant likelihood of obtaining orders for substantial property adjustment. She, in the context of this matter, seeks orders that would address the prospect of the diminution of the overall property pool by reason of accumulating liabilities or indeed the prospect of litigation in respect to the various claims and outstanding liabilities asserted by her.

10. In this matter the Court is readily satisfied that the foundational basis for the grant of orders or injunctions as sought by her has been made out.

11. The Court must have regard to the balance of convenience as between the parties in the context of the orders sought by both of them. The determination about the balance of convenience may thus be an inference drawn from the facts and circumstances established by the applicant’s evidence: Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 at 321-322.

12. In Patterson, Gleeson CJ said after discussing the discretionary nature of the remedy at 321–325:

    It is not difficult to imagine situations in which justice and equity would require the granting of an injunction to prevent dissipation of assets pending the hearing of an action even though the risk of such dissipation may be assessed as being somewhat less probable than not.

13. The husband, for his part, seeks an order for the sale of the C Town property although it appears solely for the purposes of paying to him an interim property entitlement as he identifies no other source from which the funds he seeks from the wife can be identified.

14. The wife also seeks the sale of The C Town property, although funds realised will be modest and she seeks the sale of the Suburb K properties that are vacant with significant funds to be realised from these sales. There is no reason why such properties should not be sold in the circumstances discussed above. The wife appropriately, by reason of the matters discussed above, will be appointed trustee for sale.

15. The wife seeks the sale of the Suburb F property and the facility. There are significant issues outstanding as to the disposition of such a significant asset that perhaps needs to be addressed at final hearing. Yet in the interim the wife should have the capacity to address the issues raised by her in relation to the business without the husband obstructing same.

16. Otherwise, significant funds can be realised from the sale of the former matrimonial home at Suburb M with the husband having alternate accommodation available to him at Suburb Y. In the circumstances, it is proper to order a sale of that property. The wife should, in preparation for sale, have sole use and occupation of the property and will be appointed trustee for sale.

17. With the Suburb M property to be sold the husband’s application for sole use and occupation will be dismissed.

Interim property

1. The husband seeks an interim property/costs order.

2. The principles as to applications for interim property provision are well settled, (Strahan & Strahan [2009] FamCAFC 166; (2011) FLC 93-466) and require a two-step process.

3. In Strahan, the Full Court said:

   132.In relation to the first stage, in our view, when considering whether to exercise the power under s 79 and s 80(1)(h) of the Act to make an interim property order the “overarching consideration” is the interests of justice. It is not necessary to establish compelling circumstances. All that is required is that in the circumstances it is appropriate to exercise the power. In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.

4. Firstly, there must be circumstances enlivening the power to make an interim order. The test is not limited to “compelling circumstances” but whether it would be “appropriate” to make an interim order, with the “overarching consideration” being the interests of justice.

5. Secondly, the Court is to have regard to relevant matters in s 79 of the Act. It needs to be kept in mind that the final outcome of property settlement should not be compromised by an interim property order. Either the remaining property needs to be adequate to meet the legitimate expectations of both parties at the final hearing or the order that is contemplated needs to be capable of being reversed or adjusted if it is subsequently considered necessary to do so.

6. A detailed inquiry is not required, but there must be some assessment of s 79 factors.

7. In Strahan the Full Court went on to say:

   137.Once a court proceeds to exercise the power in s 79 of the Act, being in the substantive phase, a court is required to undertake consideration of the matters in s 79(4) including by reference to s 79(4)(e) the matters in s 75(2) so far as they are relevant. However consideration of such matters may be brief and if it is established that “it seems likely to the Court that ... the applicant ... will be likely receive by way of property settlement a sum sufficient to cover the advance, that would seem to be sufficient to enable the order sought to be made”: Zschokke; Polletti and Polletti per Nygh J and Wenz v Archer. As senior counsel for the Wife submitted, “provided scope can be found within the assets of the parties for an order of the size sought ... then that should be the end of the matter”. In other words, in such circumstances the applicant would only be receiving what he or she was entitled to receive when the power was exhausted.

   138.The legislation does not prescribe what the Full Court in Zschokke at 83,218 described as “preconditions” and nor would we seek to exhaustively prescribe matters that may be relevant to take into account in the exercise of the discretion under s 80(1)(h) of the Act. As to the three “criteria” identified by the Full Court in Zschokke, we accept that an inability on the part of an applicant for an interim property order to defray the costs of litigation to meet his or her litigation costs would be a relevant matter to take into account at the procedural or first stage. Senior counsel for the Wife submitted that it may be relevant at the substantive or second phase in reviewing the “necessarily limited and impressionistic budget for costs” to ensure that the application is bona fide. We are of the view that it may be that any issue about the bona fides of an application is relevant at the procedural phase in the context of considering if in the interests of justice it is appropriate to make an order before the final hearing.

   139.We also emphasise that in order to establish an appropriate case for an interim property settlement order more is required 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.

   140.As to the other matters being a position of relative financial strength on the part of the respondent to an application and the capacity of the respondent to meet his or her own litigation costs, there is no doubt that the financial circumstances of both parties are relevant at the substantive stage and may also be relevant at the procedural stage. Senior counsel for the Wife submitted that all of the matters discussed by the Full Court in Zschokke are self-evident and we accept that this is so in relation to at least two of the matters being the need for funds and the financial circumstances of both parties.

   141.As to the various matters discussed by Brereton J in Paris King Investments which we have discussed above, we do not propose to deal with all of what his Honour said, however we make the following observations about some of the matters. Obviously the applicant should have “at least an arguable case for substantive relief which deserves to be heard”. Further, in determining at the procedural stage whether to exercise the jurisdiction there may need to be evidence of the applicant’s “likely costs of the litigation” given that the need for funds to defray litigation costs and expenses is the circumstance propounded as to why it is appropriate that an order be made. We also accept that “it is not an essential precondition” that the applicant’s legal representatives will not continue to act unless the costs are paid or secured on an ongoing basis.

1. It is important to have regard to an overall caution. In Harris & Harris (1993) FLC 92-378, the Full Court said:

   As a generality, the interests of the parties and the Court are better served by there being one final hearing of s 79 proceedings.

2. In Strahan, the Full Court said at [132]:

   … regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.

3. The discussion above is clearly indicative of the need to make interim financial provision in the context of a very long marriage, significant contributions by both parties and a most significant property pool.

4. Such funds, it appears, can only be realised on sale of one or other of the properties. Both parties should receive a capital distribution from the proceeds of the first property sold. The basis of the husband’s quantum sought is not made clear. Doing the best on the evidence at present the parties should receive $100,000 each. The reality of funds available will be known after the various property sales.

5. Any further distribution should be the subject of further application or agreement.

Spouse maintenance

1. The husband seeks interim spouse maintenance.

2. Section 72 of the Act sets out the relevant provisions in relation to the right to spouse maintenance. Section 72 provides that a party to a marriage is liable to maintain the other party, to the extent that the first mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:

   a)By reason of having the care and control of a child of the marriage who has not attained the age of 18 years;

   b)By reason of age or a physical or mental incapacity for appropriate gainful employment; or

   c)For any other adequate reason;

   having regard to any relevant matter referred to in s 75(2) of the Act.

3. The husband is a self-employed healthcare professional.

4. He asserts no incapacity for proper employment. Indeed, he asserts an income capacity of $2,000 to $3,000 per week with outstanding fees of $200,000.

5. His present circumstances are of his own doing in failing to lodge Medicare claims. He is now properly attending to doing so.

6. He is capable of supporting himself adequately with the proper administration of his practice. He has demonstrated no reason why he is unable to do so. His application will be dismissed.

I certify that the preceding ninety four (94) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 5 June 2020.

Associate:

Date:  5 June 2020