Vanin & Vanin
[2012] FamCA 16
•23 January 2012
FAMILY COURT OF AUSTRALIA
| VANIN & VANIN | [2012] FamCA 16 |
| FAMILY LAW – PROPERTY – INTERIM – Approach to interim applications for property alteration discussed - Where the property pool is significant and the husband controls the assets – Where there is a three million dollar difference in the parties’ estimate of the property pool – Where the continued property litigation between the parties will involve a level of complex forensic analysis – Where the wife cannot fund litigation – Interim property order is appropriate in the circumstances – Order is within ambit of what wife could expect to receive upon final property orders. |
| Family Law Act 1975 (Cth) |
| Strahan (2011) FLC 93-466 Harris (1993) FLC 92-469 |
| APPLICANT: | Mr Vanin |
| RESPONDENT: | Ms Vanin |
| FILE NUMBER: | SYC | 618 | of | 2011 |
| DATE DELIVERED: | 23 January 2012 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Watts J |
| HEARING DATE: | 26 October 2011 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Gould |
| SOLICITOR FOR THE APPLICANT: | Karras Partners |
| COUNSEL FOR THE RESPONDENT: | Mr Wheelhouse, SC |
| SOLICITOR FOR THE RESPONDENT: | Julie A Orsini Solicitors |
Orders
Upon settlement of the property located at … B Street, Suburb L (“the L property”) the parties do all acts and things and sign all documents necessary to distribute the proceeds of sale in the following manner and priority:
1.1.All outstanding council rates for the L property;
1.2.All outstanding land tax for the L property;
1.3.Agent’s commission and costs;
1.4.Balance to be placed in an interest bearing account in the joint names of the parties’ lawyers in trust for the parties, and applied as follows:
1.4.1.to the capital gains tax relating to the sale of the L property;
1.4.2.a payment of $850,000 to the wife by way of interim property settlement;
1.5.Further payments only with written agreement of both parties or by order of the Court.
The husband’s Application filed 26 October 2011 be dismissed.
Both parties’ costs be reserved and any such application is to be considered when dealing with any cost application made after a final order pursuant to s 79 Family Law Act is made.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Vanin & Vanin 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 618 of 2011
| Mr Vanin |
Applicant
And
| Ms Vanin |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
On 22 July 2011 I ordered the sale of the parties’ L property.
The wife seeks from the proceeds, an amount by way of interim property settlement in the sum of $850,000. The wife says she needs this amount to pay $350,000 to settle costs already accrued in the proceedings and $500,000 towards future costs of the proceedings.
The husband opposes the wife’s application and seeks the proceeds of the L property to be expended in accordance with paragraphs 9 and 10 of his Amended Initiating Application filed 26 October 2011. The husband seeks the proceeds of the L property to be divided in the following manner and priority:
3.1.All outstanding council rates for the L property;
3.2.All outstanding land tax for the L property;
3.3.Agent’s commission and costs;
3.4.Balance to be placed in an interest bearing account in trust for the parties, and applied as follows:
3.4.1.to the capital gains tax relating to the sale of the L property;
3.4.2.$150,000 each to the husband and wife by way of interim property settlement;
3.4.3.to the mortgage repayments of J Street, Suburb 1; and
3.4.4.to the payments of outstanding and future council rates for the property at J Street, Suburb 1; and
3.5.Further payments only with written agreement of both parties or by order of the Court.
The wife during the course of the proceedings without objection made an oral application that after the payment of her lump sum the balance of the proceeds be used to reduce the current borrowings on the Suburb 1 property.
DOCUMENTS RELIED UPON
The husband relies upon:
5.1.Further Amended Initiating Application filed 26 October 2011;
5.2.Husband’s affidavits filed 26 October 2011 and 14 July 2011;
5.3.Husband’s financial statement filed 9 May 2011;
The wife relies upon:
6.1.Wife’s Application in a Case filed 27 April 2011;
6.2.Wife’s affidavits filed 2 May 2011 and 19 October 2011;
6.3.Affidavit of Julie Orsini filed 27 April 2011 and 20 October 2011; and
6.4.Wife’s financial statements filed 6 April 2011;
APPROACH TO AN APPLICATION FOR AN INTERIM PROPERTY ORDER
The Full Court in Strahan (2011) FLC 93-466 revisited the principles applicable to applications for interim property orders. An interim property decision involves two steps.
First, it must be established that s 80(1)(h) Family Law Act 1975 (Cth) (“FLA”) was enlivened to allow an interim property settlement under s79 FLA. The test for this was not confined to ‘compelling circumstances’. The Court in Strahan revisited the earlier well known statement made in Harris (1993) FLC 92-469 where the Full Court had said:
“The exercise of the power should be confined to cases where the circumstances presented at that time are compelling. As a generality, the interests of the parties and the Court are better served by there being one final hearing of s.79 proceedings. However, circumstances may arise before there can be a final hearing which dictate that some part of the property of the parties should be the subject of orders. A common example is where both parties agree to the disposal of some assets pending the trial. However, we do not consider that it is confined to cases where the parties consent. Urgent situations may arise where it is necessary to exercise this power if injustice is to be avoided. Examples include cases where it is necessary to do so to avoid an asset being eroded or lost in the intervening period, and cases (beyond the maintenance power) where an order in favour of one party is necessary to preserve or obtain a home for or is otherwise necessary for the welfare of the children.”
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.
[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.
As explained by the Full Court, s 80(1)(h) FLA is a wide enabling provision for interim property decisions, and there is no reason to limit it, by requiring a finding of ‘compelling circumstances’. All that is required before the power to make an interim property order is exercised, is an assessment of whether it would be “appropriate” to make an interim order, with the “over arching consideration” being the interests of justice. There may need to be evidence of the likely cost of litigation, but only if that is the reason or part of the reason that is propounded as to why it is appropriate that the order be made.
As was discussed in Harris and confirmed in Strahan, the second step in making an interim property order is to have regard to the usual matters in a section 79 order (ss 79(2) and 79(4) FLA). A detailed inquiry is not required, but there must be some assessment of section 79 factors. Given it is an imprecise exercise, the interim property order has to be “conservative” so that the final outcome of property settlement will not be compromised by the 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.
Being a preliminary property order, the recipient may choose to spend that money however they wish.
In Harris, 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.”
In Strahan, the Full Court said in exercising the wide and unfettered discretion conferred by s 79 and s 80(1)(h) FLA:
“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.”
A corollary of these statements made by the Full Court in Harris and Strahan is the proposition that as a generality, the interests of the parties and the court are better served by there being as few interim property applications under s 79 as is possible.
EVIDENCE
Availability of Funds
On the husband’s evidence, as I have noted in my previous judgment of 13 July 2011, the parties’ net property pool is $5,500,000. I note that in his affidavit of 14 July 2011 the husband reassesses the net property pool in excess of $5,928,367. The wife asserts it is more in the order of $9million. The wife now claims $850,000 of that by way of interim property settlement, approximately 14 to 16 per cent of the total pool (on the husband’s evidence). The wife was the major homemaker over a ten year marriage with three children aged 10 and under. I can comfortably say that she will receive in excess of 16% in the final determination of the matter. The husband for the purposes of this hearing confirmed by way of application for further final orders that apart from chattels and items, his application to the court was that the wife receive $1million from the sale of the home and a further $800,000 from the sale of the Suburb 2 property, or the property worth that sum.
The Wife’s Need
The husband’s council did not cavil with the suggestion that $60,000 would be a reasonable amount to allow the wife for a new motor vehicle.
The wife asserts the property proceedings are complex, requiring expert evidence to investigate the husband’s trusts, his business and eleven domestic and overseas properties. Given the complexity of the matter, the wife claims she is being severely prejudiced by lack of funds from the marital property pool with which she may conduct her case.
In my judgment of 13 July 2011 I outline the short history in relation to the parties and their financial circumstances. I noted the wife does not work, barely worked during the marriage and has limited skills to assist her in the workplace. She denies currently receiving any income from her former business ‘[Business 1]’ or rental of its premises.
The wife claims at separation the husband terminated the wife’s access to marital funds and began paying a meagre support payment of $450 for child support. The wife’s Applications of 27 April 2011 were pursued on a promise of payment. I made orders on 13 July 2011 including:
20.1.That the husband pay the wife spousal maintenance in the sum of $770 per week;
20.2.That the husband pay any council and water rates; electricity; gas; telephone; household and home insurance; and mortgage payments in respect the wife’s residence, and her motor vehicle insurance;
20.3.That the husband pay child support in the sum of $815 per week in total for the three children; and
20.4.That the husband pay the children’s school and sporting fees.
The spousal maintenance and child support was referrable to the wife’s expenditure detailed in her financial statement. There is little left which the wife may apply to the running of her case. The wife’s lawyer has put on an affidavit filed 27 April 2011 detailing accrued and prospective fees which amount to a very substantial sum. In the hearing the wife pointed to the fact that she estimates that if her litigation runs all the way she will need $429,600. The April affidavit of the wife’s lawyer at paragraphs 17 to 19 records that the wife already owed $93,769.70 for family court matters and $21,090 for related Supreme Court matters. These amounts are in addition to Schedule E.
I have no issue in finding that the wife is currently unable to fund her own litigation.
The argument that all the funds are not required immediately
Counsel for the husband submitted that Schedule E of Ms Orsini’s evidence demonstrates that the $429,600 identified is to cover the wife’s legal costs to the end of a 10 day hearing and there’s no basis to give that to the wife straight away.
I refer to the passages quoted above from Harris and Strahan and my view that an order should be made, if possible, which will have the effect of limiting the need for the wife to make any future application for interim property adjustment.
Financial Strength of the Husband
As noted in my judgment of 13 July 2011 the wife believes the husband has access to substantial rental income from the parties’ properties, detailed in her affidavit of 2 May 2011. Counsel for the wife submitted that the husband has access to income from three properties – V Street, H Street and D Street Suburb 3 – which in 2009 were in the order of net $439,983 ($48,983 + $319,000 + $72,000). On their face the bank statements show substantial cashflow. I acknowledge those records are not current records, but they are indicative of a recent history of very successful building activity by the husband who has managed to build up substantial assets over the period of his career. The husband has at his disposal and control, capital which he admits is about $6million. I note in the husband’s most recent affidavit that he says he now controls the trust of the company completely.
My interim orders of 13 July 2011 reduce the husband’s available income by $1,135 ($770 + $815 - $450) per week. He is also required to continue to pay expenses in relation to the children’s education and sport, and expenses in relation to the former matrimonial home.
I noted in my judgment of 13 July 2011 that there seems to be some disconnect between the husband’s reported income and the lifestyle the parties led. The wife claims a history of non-disclosure and non-compliance with directions.
The husband claims he has had to secure loans from family and from the family trust to meet his obligations including, most substantially, the mortgage repayments on the Suburb 1 property.
Counsel for the husband said that based on the husband’s most recent affidavit I would conclude that the husband is currently “going out backwards”. I am mindful of the preliminary analysis done by senior counsel for the wife in relation to various documents in the tender bundle. I do not place great weight on this analysis given that there was no way of me knowing whether or not it was a selective snapshot, given it was only provided to the husband on the morning of the hearing, contrary to my earlier directions. What is in those documents may well be the subject of full analysis either by a single expert or at the final hearing. I therefore do not reach any conclusions about submissions made by senior counsel for the wife but I am by no means convinced that the husband is “going out backwards”. I am satisfied the husband will continue to have the ability to manage his cash flow even if the orders sought by the wife are made.
Payment of Suburb 1 Mortgage
The husband seeks the proceeds of the L property be partially reserved to pay mortgage repayments for the Suburb 1 property. The wife’s application is that they may be used to reduce the capital debt rather than to provide the husband with the opportunity to make periodic payments. I am not satisfied the material that he has presented is a justification for allowing him to make periodic payments. I am particularly mindful of the apparent history of the husband being allowed to draw on the cash-flow of his business operations to fund personal expenditure in the recent past. The wife’s oral application to use the proceeds to reduce the debt on the Suburb 1 property is also not supported by any evidence that would allow me to say that that is an appropriate order, given the husband’s opposition to that order being made. However, if both parties agree at some point that that is a suitable arrangement in the future, they can do so by written agreement. I will otherwise entertain a further application about the balance proceeds if that is necessary.
CONCLUSIONS
The parties have agreed to pay capital gains tax and land tax and the costs associated with the sale of the L property.
I find that on the face of the documents the continued property litigation between the parties will involve a level of complex forensic analysis. The husband is involved with his parents and two brothers in business dealings. The parties are a long way apart in terms of what the value of the net pool is. The wife is entitled to be in a position to obtain her own independent advice from a forensic accountant in addition to any process that is undertaken by a single expert. Senior counsel pointed to a number of areas in the husband’s financial history which on balance, I conclude may lead the wife to some deeper analysis of how the husband has operated his financial affairs. The wife is comparatively in a weaker financial position. She is entitled to explore matters that have been raised by her senior counsel in submissions.
I find that it is established by the wife that it is appropriate in this case to make an interim property order and that it is in the interests of justice to do so. I have expressed the opinion that what the wife seeks by way of an interim adjustment for property falls within the likely expectation of what she would be awarded pursuant to s 79 on a final basis adopting, as I am required to do, a “conservative” approach and having regard to the imprecise nature of that exercise.
Accordingly, I will make an order in the terms sought by the wife (apart from the order sought by her that the balance of the proceeds of the L property be used to reduce the mortgage on the Suburb 1 property).
Given my conclusions as to the husband’s control of the assets of the parties, I conclude there is no basis for the husband’s application to be paid $150,000 out of the proceeds of the sale of the L property and I will dismiss it.
I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 23 January 2012.
Associate:
Date: 23.1.2012
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