Watters and Fairlie

[2019] FamCA 975

FAMILY COURT OF AUSTRALIA

WATTERS & FAIRLIE [2019] FamCA 975

FAMILY LAW – Where the father seeks in his application’s that the matter be set down for trial, interim orders, a partial property settlement and an order that the wife allow him to change the nominated beneficiary under his life insurance policy – Where the wife opposes those applications – Where the father has a reasonable excuse for not filing his affidavit on time – Where there is no merit in the father’s argument that the paragraphs of his affidavit objected to by the wife should not be struck out – Where the recoverability of the judgment arising out of the sale of the parties’ property does not mean that the matter should not proceed to hearing – Where the application for a litigation funding order fails on the basis that the court has no proper basis for estimating the husband’s legal costs – Where the husband’s application for further disclosure by the wife fails on the basis there are no valuations as sought by the husband in her possession and the court accepts the wife’s claims – Where the wife’s estoppel claims are rejected – Where the husband’s application to require the wife resign as a trustee is granted – Where the husband’s application to change the nominated beneficiary under the life insurance policy fails – Where the husband’s Application for compliance with the 17 October 2018 orders fails – Where each party is obliged to advise the other of the details of their intended disbursement of the proceeds of sale of assets seven days prior to settlement.

Family Law Act1975 (Cth) ss 72, 74, 79, 80 and 117

Harris & Harris (1993) FLC 92-378
Norbis v Norbis (1986) FLC 91-712

Paris King Investments Pty Ltd v Rayhil [2006] NSWSC 578
Strahan & Strahan (interim property orders) (2011) FLC 93-466
Zschokke & Zschokke (1996) FLC 92-693

APPLICANT: Ms Watters

RESPONDENT: Mr Fairlie

FILE NUMBER: CSC 421 of 2018

DATE DELIVERED: 18 December 2019

PLACE DELIVERED: Cairns

PLACE HEARD: Cairns

JUDGMENT OF: Tree J

HEARING DATE: 14 November 2019

REPRESENTATION

SOLICITORS FOR THE APPLICANT: Hirst & Co

THE RESPONDENT: In person

Orders

1. That a Trial Management Hearing for this matter be appointed for 2:15pm on Wednesday 12 February 2020, at which time the matter will be listed for trial.

2. Upon the husband:

   (a)Effecting the release of the wife from any and all liabilities (including guarantees) secured against or related to the property at B Street, Suburb C; and

   (b)Filing and serving a written undertaking (in accordance with the Family Law Rules), not to further encumber or otherwise deal with B Street, Suburb C, save as to effect borrowings of:

   (i)$63,702.74; or if it is a lesser sum then

   (ii)The difference between 80 per cent of the assessed value of the Suburb C home, and any loans secured against it;

   the wife is to forthwith do all things necessary to resign as a trustee of the D Trust.

3. Within seven (7) days of this order the husband and the wife are to particularise, per entity, all real properties in which the parties have an interest, whether personally, jointly or through any legal entities, that are currently on the market for sale or held and not for sale, together with the details of any assessed value of the property, and if the property is for sale, then the listed sale price thereto.

4. Within seven (7) days of any contract of sale being entered into for the sale of any real property in which the husband or the wife has an interest, whether personally or through any legal entity, the husband or wife are to provide a copy of that contract to the other, and in the absence of evidence of the market price, detail how the sale price has been determined.

5. No later than seven (7) days prior to the date of completion of any contract of sale of a property in which the husband or the wife have an interest, whether personally or through any legal entities, they are to provide the other with particulars of how it is intended to distribute or deal with the proceeds of sale, together with evidence to support the proposed source/s of the distribution.

6. Either party has liberty to apply to this Honourable Court to seek any order arising from the sale of any property upon the giving of 2 days’ notice to the other.

7. Otherwise the husband’s Applications in a Case filed 20 and 21 August 2019, and the wife’s Application in a Case filed 12 September 2019, are 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 Watters & Fairlie 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 CAIRNS

FILE NUMBER: CSC421/2018

Ms Watters

Applicant

And

Mr Fairlie

Respondent

REASONS FOR JUDGMENT

INTRODUCTION  

1. Ms Watters (“the wife”) commenced these property proceedings in the Federal Circuit Court of Australia on 31 May 2018.  By his Application in a Case filed 20 August 2019, Mr Fairlie (“the husband”) now seeks that the matter be set down for trial, together with a suite of interim orders, including a litigation funding order in his favour, and a partial property settlement.  Further, by his Application in a Case filed 21 August 2019, the husband seeks an order requiring the wife to cooperate with him to change the nominated beneficiary under a policy of insurance against his life.  Both of those applications are opposed by the wife.

2. For her part, by Application in a Case filed 11 September 2019, the wife seeks a suite of injunctions requiring the husband to advise her about any proposed sale of property by him.  Ultimately, that application was substantially resolved by consent, with only one minor matter left in dispute.

3. On 14 November 2019, I heard the parties’ submissions in relation to the three applications and reserved my decision.  This is that decision and the reasons for it.

BACKGROUND

1. The wife is presently 45 years of age, and the husband 53.  The parties commenced cohabitation in February 2000, married in 2001, and finally separated on 8 February 2017, after a relationship of about 17 years.

2. To their relationship there were born four children, who are presently aged 17, 16, 13 and 11.

3. It appears as though throughout the course of the relationship, the parties engaged in property development, utilising a number of corporate vehicles.  They also conducted a self-managed superannuation fund.

4. During the latter part of the relationship, the husband was diagnosed with cancer.  Post separation, in 2018, he contracted a condition, which required him to undergo a full bone marrow transplant.  At that time the wife says that the husband ceased making payments in relation to a number of her expenses, which caused her to commence these proceedings, in which she sought not only property settlement, but also interim spouse maintenance.

5. On 27 September 2018, the wife filed an Amended Initiating Application which, although seeking interim orders for disclosure, otherwise sought an adjournment of the proceedings pending the husband’s imminent treatment, and the conclusion of some proceedings against her in the Supreme Court of Queensland.

6. On 17 October 2018, Judge Willis made orders for disclosure, adjourned the proceedings to a date not before August 2019, and transferred the proceedings to this court.  Also in October 2018, the husband underwent his bone marrow transplant.  That surgery occurred in Brisbane, and he did not return to home until February 2019.  Unfortunately he has suffered a post-transplant condition known as graft vs host rejection, which requires him to be on immunosuppressant and other medication, and to regularly undergo blood tests and medical examinations.

7. On 30 January 2019, the wife filed an Application in a Case seeking a litigation funding order by way of partial property settlement in the sum of $150,000.00.  Ultimately that application resolved by way of consent orders made 17 May 2019, under which the wife was to receive $150,000.00 by way of partial property settlement from the proceeds of sale of a property at Suburb E.  The orders also dealt with the balance proceeds of sale, the majority of which were to be paid into the parties’ self-managed superannuation fund, which it is conceded by both parties is presently non-compliant, in that there is about $1 million which has been improperly removed from it.  Those orders also made provision for the sale of an Suburb F property, and a property at G Town.  Additionally those orders provided for the husband to have the sole occupation of the former matrimonial home at Suburb C.  Finally, directions were made in relation to the valuation of the parties’ property interests, including their superannuation, and any attendant liabilities. 

8. On 21 August 2019 the matter returned for mention before me.  On that occasion I ordered a timetable for the provision of materials and submissions in relation to the husband’s Applications in a Case filed 20 August and 21 August 2019, and in relation to a then foreshadowed Application in a Case by the wife.

EVIDENTARY RULING

1. At the hearing on 14 November 2019, I reserved my ruling in relation to an objection raised by the wife in relation to the husband being permitted to rely upon his affidavit filed on 12 November 2019.  Under my 21 August 2019 orders, that affidavit was due to be filed on 17 September 2019.  However in the affidavit the husband explains his delay on the basis of multiple hospital admissions which he has had to undergo, the relocation of him, his partner and their respective children into the Suburb C home, undertaking litigation arising from the sale of the Suburb E property, and the pressure of otherwise attending to correspondence and Registrar events in these proceedings.

2. The primary objection made by the wife to the husband relying upon his affidavit of 12 November 2019 is that it was filed outside of the timetable which I had previously ordered.  However the wife herself did not comply strictly with that timetable in that:

   ·Her application for injunctive relief against the husband was due to be filed on 10 September 2019, but was not filed until 11 September 2019; and

   ·The written submissions in support of that application, which were due under the orders to be filed on 1 October 2019, were not in fact filed by her until 15 October 2019.

3. The wife does not suggest that, if the husband is able to rely upon the 12 November affidavit, that she will suffer some prejudice, irremediable or otherwise.  Whilst it is regrettable that the husband did not comply with the timetable in relation to the provision of the material, I am satisfied that he does have a reasonable excuse, and absent any assertion of prejudice by the wife, he ought be permitted to rely upon that affidavit.

4. In that event, the wife raised a further seven objections as detailed in her List of Objections provided on the day of the hearing.  The husband conceded all of those, with the exception of the objections to paragraphs 46, 47 and the first sentence of paragraph 54, which the husband sought to resist for reasons advanced in an email of his of 14 November 2019.  What those paragraphs do is recite some views of three of the parties’ children, and annexed letters from them to the court asking that the Suburb C house not be sold, and remain as the husband’s home.  The husband says in his email of 14 December 2019 that they are admissible because “the children’s interests and rights to communicate to the Court are to be protected under Australian Law Reform Commission 5.57 and proposal 7-4 and AIFS 2018 Findings Hitchings v Clarke et el”.

5. There is no merit in the husband’s argument and paragraphs 46 and 47, and the first sentence at paragraph 54 will be struck out.

THE HUSBAND’S APPLICATION THAT THE MATTER BE LISTED FOR TRIAL

1. The husband contends that the matter ought now be listed for trial, because the parties have been separated for three years, the litigation has been on foot for more than 18 months, he has now survived his bone marrow transplant, and the other reason for the wife’s seeking an adjournment of the proceedings in 2018, namely that she wanted to await the finalisation of some Supreme Court litigation that she was involved in, is no longer valid, as it has settled.

2. Further, in his Summary of Argument filed on 12 November 2019 at  [26 b.], the husband says that “[my] uncertain future as to life and death which still is an ongoing month to month treatment regime is made worse by the weekly stress of these continued proceedings and is an arguable need to conclude matters between the parties.”

3. Also in that paragraph, he goes on to detail the disclosure which he has undertaken, and asserts that the wife has refused to cooperate in obtaining valuations as required under the orders of Judge Willis, and indeed myself.

4. The main reasons now advanced by the solicitor for the wife as to why the proceedings are not ready for trial, are firstly, that she is awaiting the outcome of recovery proceedings in relation to the now concluded litigation in relation to the Suburb E property, and secondly, that she perceives that, in the future, she may need to join other parties to this litigation, apparently because she suspects that they hold assets which properly should fall for division between the parties.  Additionally, in her Outline of Submissions filed 18 September 2019, she asserted that the husband was seeking an order for an “expedited final hearing” (which the husband denies) and that it must fail because the husband is “estopped” because of previous case management orders, and that the matter is not ready for trial because of ongoing issues relating to disclosure and valuations.

5. In his oral submissions, and indeed elsewhere, the husband seemed to be suspicious that what the wife was really seeking was to delay the proceedings until he has passed away, because in that event, there may fall for division in these proceedings the proceeds of policies of insurance against the husband’s life.  The wife denies that is her intention, and the material would not enable me to so conclude.

6. The Supreme Court litigation which the wife had previously proffered as a justification for the proceedings being adjourned, settled on 7 November 2019, and a Notice of Discontinuance has been filed.  The litigation arising out of the sale of the Suburb E property has also now concluded, with judgment in favour of a trust controlled by the parties in the sum of $680,000.00.  In her affidavit of 8 November 2019 at [14], the wife says that “where the status of, and recoverability of, [the Suburb E judgment] is currently unknown, however, I remain of the view that these proceedings are not in a position to be set down for a final hearing.”

7. It appears as though the recoverability of the $680,000.00 judgment is moot.  However the wife proffers no indication as to when that is likely to clarify, and in any event, before me the husband indicated that he would be happy for the property division to be structured in a way such that he takes that judgment at full value, although doing so in a clear cut way may be problematic.

8. Understandably, given his ill health, the husband wishes to conclude this litigation, not only to reduce the stresses upon him that it inevitably gives rise to, but also to ensure that his affairs are in order in the event that he were to die.

9. Balancing those matters, and the vintage of the proceedings, against the matters relied upon by the wife, telling weighs in favour of the matter proceeding to trial.  Particularly I am not persuaded that the recoverability of the Suburb E judgment necessarily impedes a hearing, or indeed that the prospect of additional parties being added to the litigation should do so either.  If the matter ultimately does have additional parties added in, then if needs be, an application to adjourn the trial can be made and determined.  I should also make it plain that I reject the wife’s novel argument that, somehow or other, earlier procedural directions effect any estoppel against the husband seeking to have the trial heard.

10. I am therefore satisfied that the matter should proceed to hearing.

11. However it is presently not possible to make any orders for the listing of the matter for trial, as I have no idea as to the length of time it might require, the identity of witnesses and their availability, or indeed the availability of the parties.  What I will therefore do is appoint a date for a Trial Management Hearing in this matter earlier next year, at which time the matter can then be listed for trial.

THE HUSBAND’S LITIGATION FUNDING APPLICATION

Overview

1. The actual terms of the orders sought by the husband by his Application in a Case filed on 20 August 2019 are as follows:

   2. A dollar for dollar order against the H Trust monies due and payable that the husband receives the same sum as allocated to the wife.

   The orders of 10 May 2019 to be amended to include as the second payment the sum of $150,000.00 to be paid to the husband to fund his own legal costs and repay his overdue legal accounts on a dollar for dollar basis.  This is the same amount that has already been granted to the wife for her legal costs.

   The other orders to remain unchanged apart from this addition.

2. Paragraph 1 of the orders of 17 May 2019 provided as follows:

   The loans

   1.The husband, in his capacity as trustee of the H Trust, shall do all things and sign all documents necessary to cause, upon the repayment of the loans and/or advances owing to the H Trust by J Pty Ltd as trustee for the K Family Trust and/or Mr K and/or Ms K (“the loans”) arising from the sale of the property located at M Street, Suburb E in the State of Queensland, the following:

   1.1Payment to the wife of the amount of $150,000.00, by way of partial property settlement;

   1.2The retention by the Trust of $47,892.00; and

   1.3The balance to be paid into the Super Fund 1 towards repayment of any loan owing by the parties to that Fund.

Relevant statutory provisions and legal principles

1. There are at least three sources of power to make litigation funding orders. The first is s 117 of the Family Law Act1975 (Cth) (“the Act”) which relevantly provides as follows:

   117(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118 each party to proceedings under this Act shall bear his or her own costs.

   117(2) If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.

   117(2A) In considering what order (if any) should be made under subsection (2), the court shall have regard to:

   (a)the financial circumstances of each of the parties to the proceedings;

   (b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;

   (c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;

   (d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;

   (e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;

   (f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and

   (g)such other matters as the court considers relevant.

1. The second source of power is under s 79 of the Act, which is the general power of the court to alter property interests of parties to a marriage. Section 80(1) of the Act articulates the powers of the court in exercising, amongst other things, the discretion under s 79 of the Act. Those powers include the order of a payment of a lump sum or periodic sums.

2. A further source of power is under the maintenance power created by s 72 and s 74 of the Act.

3. Many cases have now emphasised the importance in applications such as this of identifying the relevant source of power for the proposed order, as that determines the necessary preconditions and relevant considerations for making the order.[1]  However irrespective of which power is in play, there are three relevant matters common to each source of power, namely:[2]

   ·A position of relative financial strength on the part of the respondent;

   ·A capacity on the part of the respondent to meet his or her own litigation costs; and

   ·An inability on the part of the applicant to meet his or her litigation costs.

   [1]Zschokke & Zschokke (1996) FLC 92-693 (“Zschokke”); Paris King Investments Pty Ltd v Rayhil [2006] NSWSC 578 (“Paris King”) and Strahan & Strahan (interim property orders) (2011) FLC 93-466 at [84] (“Strahan”).

   [2]Zschokke at 83,217; Paris King at [30]; Strahan at [90]-[91].

4. However when s 117 of the Act is under consideration, other matters arise, particularly:[3]

   ·An applicant should have “at least an arguable case for substantive relief which deserves to be heard”;

   ·There should be evidence of the applicant’s likely costs of the litigation;

   ·It is not an essential precondition that the applicant’s legal representatives will continue to act unless the costs are paid or secured on an ongoing basis;

   ·An order may make a provision for litigation expenses at a rate that appears reasonable in all the circumstances;

   ·An order can be made in respect of costs already incurred as well as future costs;

   ·Whether the order is to be in respect of costs already incurred or costs to be incurred, and whether the applicant’s lawyers will continue to act in the absence of provision for costs be incurred, may be relevant to the discretion to make an order, and its quantum; and

   ·Any such order should be framed to protect the parties from any risk of injustice arising from the manner in which the funds are expended, and this may be done by requiring that the funds be administered solely by the applicant’s solicitors and applied only to meet the expenses referred to in the order, with detailed records being maintained to permit review by the Court at the time of the exercise of its discretion in the substantive property proceedings or the final determination of the issue of costs.

   [3]Strahan at [96] quoting from Paris King at [30] and [31], with relevant citations omitted.

5. In considering an application for litigation funding by reference to s 79 of the Act, it is plain that the exercise of the discretion must be undertaken within the usual parameters applicable to that section[4] and because, of necessity such an exercise is likely to be imprecise, it must be conservative and the Judge satisfied that the remaining property will be adequate to meet the legitimate expectations of both parties at the final hearing, or on a practical level, be able to be reversed.[5]  However it is no longer correct to say that the exercise of the power should be confined to cases where circumstances presented at the time are “compelling,”[6] although more is required than the mere fact that upon a final hearing the applicant would receive the amount being sought – or more – from the other party.[7] However none of the foregoing should be confused with binding principles of law: “the nature of the issues which arise under s79 is such that there is either little or no scope for giving guidance in the form of binding rules of law.”[8]

   [4]Harris & Harris (1993) FLC 92-378 at 79,929-79,930 (“Harris”) and Strahan at [100].

   [5]Harris at 79,929-79,930 and Strahan at [100].

   [6]Strahan at [132].

   [7]Strahan at [139].

   [8]Norbis v Norbis (1986) FLC 91-712 at 75,166.

Evaluation

1. Initially the husband was legally represented, but says that he can no longer afford to either meet his outstanding bill to that firm, or retain new solicitors.  He says that therefore there is no longer a level playing field, because the wife has the benefit of a litigation funding order (although as I understand it, no funds have yet actually flowed to her, and may never do so, unless the judgment in the Suburb E sale litigation is substantially satisfied), and he should be placed in a similar position.  Additionally, he says that there have been earlier interim property settlements in favour of the wife, in order to provide her with housing.  Further, in his submissions, the husband seems to allude to a more fundamental concern, being that the parties’ self-managed superannuation fund, which was to receive the lion’s share of any recovery of the loan relating to the sale of the Suburb E property, is now irremediably non-compliant, and hence, as I understand his likely submission, paying money to it is simply a waste.

2. The wife’s primary basis for opposing the litigation funding order sought by the husband is that the application of the loan repayment owing to the H Trust was dealt with in the 17 May consent orders, which reflected a compromise between the parties.  I accept that is likely so, although the consequences of that are less clear. 

3. In the alternative, the wife says that, contrary to the authorities, there is no evidence as to the husband’s likely costs of the litigation, and that in any event, the husband has control of the various legal entities which were previously associated with the parties, and has operated them to his own advantage without recourse to the wife from time to time.

4. Absent any evidence as to the husband’s likely legal costs, the figure of $150,000.00 seems to be simply a tit-for-tat claim, on the basis that the wife has an entitlement to the sum of $150,000.00.  It is almost inconceivable (or one would at least hope it is inconceivable) that between now and end of the trial, the husband’s legal costs would amount to $150,000.00.  However I have no proper basis for estimating those likely costs and that, it seems to me, precludes any litigation funding order, at least at this point in time.  In those circumstances, it is not necessary for me to express any concluded view as to the asserted preclusion of the husband seeking any variation to the 17 May 2019 consent orders, based upon the wife’s argument that they reflect a contractual compromise.

5. This aspect of the husband’s application fails.

THE HUSBAND’S APPLICATION FOR FURTHER DISCLOSURE BY THE WIFE

1. The husband seeks orders as follows:

   3. The wife disclose the following matters:

   (a)the valuation of luxury diamonds and handbags as so disposed in her possession;

   (b)the updated Harris litigation steps and proposal to strike out these proceedings;

   (c)her full insurance details including the beneficiaries under the Super Fund 2 policy; and

   (d)the current market rent of the Suburb L Investment home against the actual rent being received.

2. As to the first valuation issue, the husband asserts that the wife has refused to select a valuer from the list of names which he nominated.  However that misstates order 8 of the 17 May 2019 orders, which affords the wife the opportunity to nominate a list of three valuers, from which the husband selects one.

3. In any event, the wife correctly identified that the husband is seeking disclosure, and is not seeking to enforce the court ordered valuation process.  She says that there are no valuations of the kind sought by the husband in her possession, and therefore they cannot be disclosed.  I accept that is correct.

4. Turning then to the Harris litigation, as I understand it that now has concluded, and the wife has made the relevant disclosure.

5. As to her Super Fund 2 Insurance, the wife says that she has disclosed all documents in possession relating to it.  There is no evidence to the contrary. 

6. Finally, the wife says that she does not have any appraisals in respect of the Suburb L property, and therefore has no documents to make available.  Again there is no material upon which I could conclude that other documents exist.

7. Those matters inevitably mean that this aspect of the husband’s application also fails.

THE HUSBAND’S APPLICATION FOR A TIMETABLE FOR VALUATIONS

1. The husband seeks orders in this respect as follows:

   4. The orders of 10 May 2019 be set with a deadline for directions 7 and directions 8 namely that all interests in the properties and value of those interests and liabilities is to be finalised and completed by 30 September 2019 and direction 8 is required to be fully complied with by 30 October 2019.

2. In his Summary of Argument, the husband says that in relation to this aspect of his claim “the husband seeks no variation to the May directions but compliance by the wife.”

3. The relevant directions in the 17 May orders are as follows:

   7.The parties, through their solicitors shall confer and cooperate with respect to ascertaining their respective interests in property, superannuation and liabilities, and the value of those interests.

   8.Upon the parties doing so, and to the extent that agreement is not reached as to the value of any interests, the wife shall provide the husband with a list of three proposed single expert witnesses for each class of asset for which there is no agreement as to value, together with an estimate of their proposed fees, with the husband to nominate the expert for each class of asset to be appointed as single expert for the purpose of the proceedings.

4. To this, in her Outline of Submissions, the wife says “the husband has provided no basis to change or vary the order made on 10 May 2019, and his endeavour to do so is opposed.”

5. What I propose to do in this respect is to make this an item for discussion at the Trial Management Hearing, which I will appoint under the orders which I intend to make.  However, if by then the wife has still not provided the husband with a list of three proposed single expert witnesses for each class of asset in relation to unagreed values, subject to argument, I am likely to make an order that she then do so within 7 days.

THE HUSBAND’S APPLICATION FOR INTERIM PROPERTY SETTLEMENT – SUBURB C

1. The husband seeks an order as follows:

   5. As a partial property settlement; the Suburb C house which has two trustees namely the husband and wife be ordered to have the wife resign as trustee from the property.  The property is not to be sold and remains a part of the property pool for estate assessment purposes.  As a part of this transfer the wife’s guarantee with CBA Bank is removed in full.

2. Although the application does not make it clear, the husband’s affidavit and submissions demonstrate that the real purpose of having the asset transferred across to his sole name, is so that he can further encumber it so as to pay an account that he owes to a builder, arising from repair work which has been undertaken to the property.  However during the course of argument, the husband suggested that he would submit to an order restricting him to borrowing no more than 80 per cent of the appraised value of the property, to which suggestion the solicitor for the wife objected, on the basis that this was the first occasion that such an order had been raised.

3. The husband asserts that there is a total of $63,702.00 due to the builder, which he cannot pay other than by further borrowings against the Suburb C house.  He says, no doubt correctly, that the builder is likely to commence proceedings against him in the event that payment is not received.

4. The Suburb C house is the home of the husband, his partner, and their respective children.  Under the 17 May 2019 consent orders, the husband has sole occupation of the property.

5. In resisting the husband’s claim, the wife says in her Outline of Submissions that the husband “is estopped from seeking this relief against the Wife where he has previously sought such orders in these proceedings and resolved them by way of consent order, at a time when he was legally represented.”  That argument is then advanced by reference to an asserted Anshun estoppel, and it is further said that the husband’s claim is subject to an issue estoppel.

6. It is correct that in his Response to an Application in a Case filed 3 may 2019, the husband then sought that the wife resign as a trustee of the D Trust, which owns the Suburb C property.  It is further the case that orders 4 and 5 of the 17 May 2019 consent orders provide:

   4.The husband have sole use, possession and occupation of the property located at B Street, Suburb C in the State of Queensland (“the Suburb C property”) to the exclusion of the wife pending further agreement between the parties or failing agreement, to be determined by the court at final hearing of this matter.

   5.Except as provided for in these orders, the wife’s Amended Application in a Case filed 1 May 2019 and the husband’s Response to Application in a Case filed 3 May 2019 be dismissed. 

7. However the wife’s evidence of the terms of any agreement which underpinned those orders is virtually non-existent.  All she says is that “those applications were comprised by way of consent order made on 17 May 2019.”  She does not give evidence of any representation made to her upon which she acted to her detriment, so as to found an estoppel.  For instance, she does not say that the husband agreed not to re-agitate any of the issues in his Response, nor is such a term necessary to imply so as to give business efficacy to the underpinning agreement.

8. It is difficult to see what role Anshun estoppel could play in the context of consent interim orders, considering its justification lies in requiring parties to litigate all related causes of action in the one proceeding.

9. Finally, issue estoppel may have had a role to play if there had been findings of fact made, or issues finally determined, in the course of the orders of 17 May 2019, but there were not.  Indeed that much is clear from the terms of order 4 itself.   

10. I therefore reject these claims advanced by the wife.  Moreover, it is very difficult to see any sound reason for holding that the resolution of earlier interim proceedings should preclude the parties from ever thereafter revisiting issues dealt with in them, except at a final hearing.  It would require more than the simple fact of consent orders to so persuade me. 

11. I must say I am a little surprised by the position of the wife, given that, as part of the husband’s proposal, she will be released from any liability or guarantee associated with the Suburb C home.  Further, she offers no other suggestion as to how the husband might otherwise pay the builders’ final account of $63,702.74 in relation to the renovation of the property.

12. I am satisfied that the wife should be required to resign as a trustee of the D Trust which owns the Suburb C property, but I am satisfied that there should be an order restraining the husband from otherwise selling, encumbering or dealing with the Suburb C property, save and except to:

    (a)Secure the release of the wife from all liabilities, including guarantees, relating to the property; and

    (b)Further encumber the property so as to increase the mortgage by the sum $63,702.74 to the builders, unless that encumbrance would take the mortgage beyond 80 per cent of the value of the property, in which case the borrowings should be limited to 80 per cent.  

13. In so saying, I reject the husband’s suggestion that he should have a cap of 80 per cent, which might thereby permit him to borrow further against the property to meet expenditures other than the presently outstanding builders’ account.  I say that because the builder’s account is a present extant liability, such that the net pool of the parties is not affected by that account being paid from further borrowings.  However I am troubled at the prospect that the husband may dissipate further borrowings in a way that does not discharge present indebtedness, and which may not thereafter be reflected in assets available for distribution between the parties.  However I am generally satisfied that the husband’s application to require the wife resign as a trustee should be granted.

14. I should make it plain that, to the extent that such an order is an exercise of the discretion under s 79 of the Act, it is not intended to make any interim award to the husband of the property. It will remain available for division at trial, and such orders would not preclude orders for its sale, or indeed, transfer to the wife. Therefore questions such as a preliminary assessment of the husband’s likely entitlements do not factor large in this issue, and plainly the order is susceptible of later reversal.

THE HUSBAND’S APPLICATION TO CHANGE THE NOMINATED BENEFICIARY UNDER LIFE INSURANCE POLICY

1. There is a policy of insurance taken out against the husband’s life by the parties’ self-managed superannuation fund.  It is the nominated beneficiary of the policy.  The husband in his Application in a Case filed 21 August 2019 seeks an order as follows:

   1.…[t]he wife to complete and do all things necessary to allow the transfer and beneficiary of the husband’s life insurance in the self-managed superannuation fund to be transferred and any proceeds made payable to his estate in the case of demise.  These orders are to be completed and actioned no later than 30 days from this date due to the applicant’s medical condition.

2. In these reasons, I have already adverted to the fact that the parties’ self-managed superannuation fund is non-compliant, and it appears as though something in the order of $1 million is required to be restored to it to give it any prospect of returning to being compliant, although even that may not achieve that goal, depending on the level of any penalty imposed by the ATO.

3. The effect of the order which the husband seeks it that, in the event that he were to pass, an asset which, under present arrangements, would be available to the parties’ superannuation fund, would cease to be available, but would rather become available to whoever the new nominated beneficiary was, presumably the husband’s new partner.  It is perfectly understandable that the husband wishes to provide for his partner in the event of his demise, particularly given that his illness means that a new policy of life insurance can no longer be obtained. However the effect of that order if the husband passes away prior to trial or judgment, would be to either remove an actual asset from the balance sheet, or in the event that the husband remains alive at the time of judgment, to render the parties’ self-managed superannuation fund ever being able to become compliant in the future practically impossible.

4. It would plainly be an improper exercise of any power that I may have (assuming there is one) to require the wife to assist to put a potential asset beyond the jurisdiction of the court, or to deprive the parties’ self-managed superannuation fund of the prospect of a payment to it. Even assuming that the power exists under s 79 of the Act to make such an order, I am far from satisfied that making it would achieve a just and equitable outcome, or that a just and equitable outcome would thereafter be possible.

5. This aspect of the husband’s application therefore fails.

THE HUSBAND’S APPLICATION FOR COMPLIANCE WITH 17 OCTOBER 2018 ORDERS

1. Paragraph 2 of the husband’s Application in a Case filed 21 August 2019 sought an order as follows:

   2. The orders of Judge Willis made on 17 October 2018 be complied with by the parties within the strict scope and specificity of her Honour’s orders with prior leave of the Court.

1. This matter was addressed by the husband in his Outline of Submissions in a somewhat oblique way.  At [58] he says:

   With respect to the orders sought by the husband for ‘strict compliance’ with the order of Judge Willis on 17 October 2018 this has been necessitated by subpoena served on non-parties to the proceedings and the widening of timelines to make it impossible to finalise disclosure.

2. A little later at [62] the husband says “[t]he husband seeks to contain the parameters of the proceeding to some reasonable scope so that the proceedings can indeed be satisfied and concluded.”

3. The wife opposes such an order, on the basis that it is an order requiring compliance with an order, which is unnecessary, or alternatively, that it is an attempt by the husband to evade obligations of disclosure under the rules.

4. It seems to me that the point which is being missed by the husband is that, although order 2 of the orders of 17 October 2018 contains some specific reference to identified documents, it is preceded with the words “That the Husband and Wife forthwith do all acts and things to complete disclosure within 60 days of the date of this Order in respect of all financial and other documents relevant to the issues in question including but not limited to the following.”

5. There is no reason that the husband advances to restrict the course of the scope of disclosure only to the identified documents.

6. This aspect of the husband’s application fails.

THE WIFE’S APPLICATION FOR INJUNCTIONS

1. The only issue remaining in dispute between the parties in relation to the wife’s Application in a Case filed 11 September 2019 is the time when each party is obliged to advise the other of the details of their intended disbursement of the proceeds of sale of assets.  The wife wants it to be 7 days after the relevant contract is entered; the husband wants it 7 days prior to settlement.  He justifies that on the basis that financiers are unlikely to have advised him of their requirements within 7 days of any contract, but are likely to have done so by 7 days prior to settlement.

2. I accept that is so.  True it is that 7 days may not give the wife much time to seek any injunction, but in my view it is sufficient.  I will therefore order as the husband proposes.  

CONCLUSION

1. For these reasons there will be orders as set out at the commencement of this judgment.         

I certify that the preceding eighty-one (81) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Tree delivered on 18 December 2019.

Associate:

Date: 18 December 2019