WATTON & SMART
[2014] FCCA 484
•14 March 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| WATTON & SMART | [2014] FCCA 484 |
| Catchwords: FAMILY LAW – Property – interim application for property adjustment – injunctive relief to restrain disbursal of funds. |
| Legislation: Family Law Act 1975 (Cth), ss.79(4), 75(2). Federal Circuit Court of Australia Act 1999 (Cth), s.17A. |
| Zschokke& Zschokke (1996) FLC 92-693 Zivanovic & Zivanovic [2013] FamCA 838 Stowe & Stowe (1981) FLC 91-027 Stanford & Stanford [2012] HCA 52 Wenz & Archer [2008] FMCAfam 1119 Strahan & Strahan [2011] FamCAFC 126 Paris King Investments Pty Ltd & Rayhill [2006] NSWSC 578 Harris & Harris (1993) FLC 92-378 Wilson & Wilson (1989) FLC 92-033 Poletti & Poletti (1990) 15 Fam LR 794 Strahan & Strahan [2007] FamCA 139 Blue Seas Investments Pty Ltd & Mitchell (1999) FLC 92-856 Kane & Kane [2013] FamCAFC 205 Bevan & Bevan [2013] FamCAFC 116 Carson & Carson [1999] FamCA 53 |
| Applicant: | MR WATTON |
| Respondent: | MS SMART |
| File Number: | PAC 3966 of 2010 |
| Judgment of: | Judge Harman |
| Hearing date: | 7 February 2014 |
| Date of Last Submission: | 7 February 2014 |
| Delivered at: | Parramatta |
| Delivered on: | 14 March 2014 |
REPRESENTATION
| Counsel for the Applicant: | Ms Gillies |
| Solicitors for the Applicant: | Antwan Lawyers |
| Counsel for the Respondent: | Mr Greenaway |
| Solicitors for the Respondent: | Lewarne & Goldsmith |
ORDERS
The husband’s Application for interim property relief is dismissed.
I reserve the costs of the parties with respect to the Application for interim property relief to be determined at final trial.
IT IS NOTED that publication of this judgment under the pseudonym Watton & Smart is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PARRAMATTA |
PAC 3966 of 2010
| MR WATTON |
Applicant
And
| MS SMART |
Respondent
REASONS FOR JUDGMENT
These are proceedings relating to interim property adjustment.
The parties to the proceedings are the husband, Mr Watton, who for the purpose of this Application is the Applicant and moving party for relief. The Respondent wife, Ms Smart, resists the Application.
History of proceedings and orders
These proceedings have an extensive history before this Court.
The circumstances causing the matter to have been so protracted need not be canvassed in any detail. However, it would be sufficient to summarise them as having been largely occasioned through a number of matters relating to the husband’s past employment, his redundancy therefrom and events flowing with respect to that redundancy, including receipt of funds, calculation and payment of income tax liabilities and the like.
The proceedings were commenced by an Application filed by Ms Smart on 15 October 2010.
The proceedings first came before the Court, having been listed on short notice, on 19 October 2010. On that date there was an appearance by a legal representative on behalf of each party. Ms Smart was present with her counsel. However, Mr Watton was then resident and employed overseas. His solicitor appeared by telephone with inadequate instruction (being no criticism of his attorney but rather reflective of the urgent listing of the proceedings).
Concern was raised at that time that funds held in an account with the (omitted) Bank were at risk of disbursal or other action at the behest of Mr Watton in whose name the account was held and by him controlled.
On that date and pending further order, a number of restraints were imposed, directed to the husband and others, to seek to preserve the balance of that account or a portion thereof of not less than $400,000.
The proceedings were next before the Court on 10 November 2010. On that date, both parties were legally represented. A number of procedural Orders and directions were made, however, the Orders of most significance were in the following terms:
Pending further order, Mr Watton is to:
(a)Do all things, sign all documents and give all consents, authorities and instructions necessary to the (omitted) Bank, to cause and require that Bank to give immediate written notice to the wife’s solicitors in the event of any application to withdraw funds from the account, (omitted), account number (omitted), such as would reduce the balance to below $400,000 and further, so as to require seven days notice by Mr Watton to that Bank, in the first instance, and if at all possible, by telephone in the event of any intention to effect such a withdrawal.
(b)Advise Ms Smart or her solicitor not less than 14 days prior to any intended withdrawal.
(c)Provide to Ms Smart, whether directly or via her solicitors, copies of all statements issued with respected to the above account, whether hard copy or electronic, within 48 hours of the receipt.
There could be, on the basis of potential conflict between the two Orders (those made 19 October 2010 and 10 November 2010) some issue as to whether the restraints made 19 October 2010 and which restrain Mr Watton from reducing the balance of the (omitted) Bank account below $400,000 remain in place. It would appear on any reasonable reading of those Orders and the parties’ evidence that the restraint remains on foot.
Following the above Orders, the parties attended a Conciliation Conference and a number of procedural events occurred.
The proceedings were listed for trial in November 2011. The matter could not proceed at that time, as a consequence of difficulties with preparation of the matter. Those difficulties arose from circumstances between the date upon which the hearing was fixed and the hearing itself and were beyond the control of the parties.
On 15 March 2012, the proceedings again came before the Court. On that date further Orders and injunctions were made with respect to the (omitted) Bank account. In particular and of significance, an Order was made in the following terms:
Pending further order, the husband is hereby restrained from dealing or further dealing in any way with the funds in (omitted) Bank bank account, (omitted), account number (omitted).
Thus, any controversy as regards to operation or potential inconsistency between the Orders 19 October 2010 and 10 November 2010 is obviated.
The Orders of 15 March, 2012 is that which the Applicant seeks to vary.
It is to be noted that on 15 March 2010, both parties were legally represented and each was afforded due process with respect to the relief sought from the Court that day and ultimately granted (as regards the above restraint). No appeal has been filed.
Following the above listings, further issues arose with respect to Mr Watton’s employment, redundancy and taxation implications thereof and as a consequence of which and at the request of the parties, the proceedings have taken some years to reach this point.
The matter came before the Court before hearing on 11 and 12 December, 2013 on which date the matter could not be accommodated and was accordingly adjourned to further hearing dates, now fixed for 18-21 August, 2014 being a listing of some four days.
One of the issues (although not the dispositive issue) relating to the adjournment of the hearing was the joinder of parenting arrangements (on the Application of Mr Watton) and consequent upon the conclusion of his prior employment (which had been overseas) and return to the jurisdiction. Interim Orders were made with respect to parenting and parenting issues remain at large and will be dealt with at final hearing.
Orders sought
When the matter was not reached and thus not concluded on a final basis, an Application for further interim relief was made by Mr Watton in accordance with a Minute or Order tendered by his counsel. Leave was granted to treat the Minute of Order as an application and I am satisfied thus and particularly in light of the adjournment of the matter, that the Respondent has been afforded due process.
The Minute of Order seeks relief in the following terms:
(1) That the Orders of 15 March 2012 be varied so as to:
(a) Permit the husband to draw down $70,000 from the funds held in (omitted) Bank bank account (as above).
(b) Permit the husband from time to time to draw down on interest paid on the funds held in (omitted) Bank bank account (as above).
(c) The husband shall ensure that the balance of the funds held in the (omitted) Bank bank account (together with another account) do not fall below $350,000.
It is the above relief that occupies the Court’s time and attention at this time.
As indicated, the wife opposes the relief sought by the husband in its entirety.
Material read and considered
The material filed by the parties in these proceedings is extensive. Indeed, the file is contained within a box and comprising several volumes of file.
At the commencement of the interim hearing (called and dealt with in a busy duty list) the parties were invited to spend some brief time in seeking to resolve issues and if not resolved to provide a list of documents relied upon.
A list was tendered on behalf of the husband identifying the Affidavits and portions thereof together with other documents (including a joint balance sheet and notations as to agreed and disputed items as tendered on a previous occasion) that were relied upon. Each of those documents or portions thereof have been read and considered and which for the sake of clarity comprise:
a)The husband’s Affidavit, sworn 18 April 2013. In particular: paragraphs 58(iv), 58(v), 67, 68, 79-80, 87, 88, 90, 91-101.
b)The husband’s Affidavit, sworn 6 December 2013. In particular: paragraphs 2, 3, 7, 10, 11, 12, 14, 15, 18, 19 and 20.
c)The husband’s Affidavit sworn 10 January 2014.
d)The husband’s statement of financial circumstances, sworn 6 December 2013.
e)The joint balance sheet (referred to above).
f)The husband’s Case Outline Document as tendered at final hearing (albeit that the hearing did not proceed).
No list of documents relied upon by the wife was received. However, I have read and considered the Case Outline Document provided by the wife’s counsel and have read each of the paragraphs of Affidavits and other documents referred to therein.
Chronology of events
A chronology is included within the Case Outline Document of the wife and I propose to adopt and incorporate that chronology together with that of the husband (as set out in the husband’s Case Outline Document). They are not dissimilar and are both included so as to reflect the commonality of the parties’ positions as well as to address the disparities therein.
Chronology relied upon by the Husband
Late 1996
Parties commence cohabitation
HA1[7]
(omitted) 1998
Parties marry.
HA2[2]
July 2001
Property S property was sold for the sum of $230,000. The mortgage payout was approximately $120,000.
HA1[37]
Approx July 2001
The parties purchase a property at Property N in joint names for the sum of $368,000. The proceeds for the Property S sale are utilised. A mortgage of about $285,000 is obtained from (omitted) Bank.
HA1[37]
August 2001
The Husband’s Wife dies. Subsequently he receives the sum of $119,666 from the estate. That amount is deposited into the joint mortgage account held by the parties.
HA1 [39]
Early 2002
This is the last time that the Husband is aware that the Wife held paid employment outside the home
HA1 [36]
(omitted) 2002
X is born (11)
(omitted) 2003
Y is born (10)
(omitted) 2004
Husband invests in the (omitted) in the sum of $30,000.
HA1 [41]
(omitted) 2004
Z is born (9).
September 2005
The balance owing on the (omitted) Bank mortgage over the Property N property was discharged in full from capital gain received from the ( investment.
May 2006
Property N property is sold for $575,000.
May 2006
Property at Property L is purchased in the joint name of the parties for $689,001. The parties borrowed $255,000 from the (omitted) Bank.
HA1 [48]
28 June 2007
$793,321.84 is deposited into the Watton Family Trust bank account after recapitalisation of the (omitted) business.
HA1 [49]
July 2007
The mortgage in relation to the Property L property is discharged using part of the (omitted) funds.
HA1 [50]
Late 2008
Husband is approached to take on the additional role of (occupation omitted) for (country omitted). The position commenced in mid-September 2008 and involved a cycle of three weeks overseas work and then on week of leave in Sydney. A nanny was employed to assist the Wife with the care of the children.
HA1 [23]
6 March 2009
Parties separate.
HA2 [2]
March 2009
A total of 196,741 preference shares were purchased by the Watton Family Trust in the company.
Approx 6 March 2009 to January 2010
By agreement children spend time with the Husband as follows:
· Each alternate Friday to Monday;
· One additional weekend per four weeks;
· Half of school holidays.
HA2 [4]
Late 2009
Husband accepts the role of (occupation omitted) for (employer omitted) and commences in that role in January 2010. The role was based in (country omitted).
HA1 [24]
January 2010
Husband is relocated to (country omitted) for his employment.
HA2 [5]
January 2010 to January 2013
Husband would return to Sydney on an approximate four to six week cycle. During this time the children would spend time with him.
HA2 [6]
11 April 2010
Parties divorce.
HA1 [5]
July 2010
The company is acquired by (omitted).
HA1 [62]
6 July 2010
Two deposits of $2,157,663.06 and $214,877.52 are made into the Watton Family Trust as a consequence of the purchase of (omitted) by (omitted).
At that time $400,000 was “rolled over” into shares in a new entity (omitted).
HA1 [62]
HA 1 [63]
2011 to January 2013
Children spend at least half school holiday periods with the Husband.
HA2 [7]
March 2011
Husband is offered and accepts the role of (omitted) for (employer omitted) and his employment base moves from (country omitted) to (country omitted). This allows him greater flexibility to return to Australia.
HA1 [25]
March 2011
Husband is in Australia for five to ten days about once every six weeks.
HA1 [27]
September 2012
Husband ceases fulltime employment.
HA2 [8]
January 2013
Husband returns to Australia to attend university studies. He resides in a rented property at (omitted).
HA2 [9]
January 2013
The CEO of (employer omitted) returns the $400,000 investment that the Husband had held in the company to him.
HA1 [68]
April 2013
Parties reach agreement as to time the children will spend in the Husband’s care. The children were to spend every second weekend with the Husband Friday to Sunday, as well as school holidays.
HA2 [10-11]
September 2013
Restraint of trade clause in the Husband’s employment contract to expire.
HA1 [29]
Chronology relied upon by the Wife
(omitted) 1969
husband born (44)
(omitted) 1971
wife born (42)
1996
Cohabitation commenced. At the commencement of cohabitation the asset/liability situation is as follows:
Wife owns property: Wife owns Real Estate at Property S (solely in her name). The wife purchased this property in November, 1994 (2 years prior to commencement of relationship with the respondent). The property was purchased for $161,000.00 with a mortgage of $142,000.00. Wife also owns a Barina motor vehicle worth about $12,000-$15,000 and also has saving of $3,000.00 together with furniture contained within the unit.
Husband owns personal property: A motor cycle with a personal loan secured against the motor cycle and some credit card debts. The husband had some furniture but no other assets at the commencement of cohabitation.
(omitted) 1998
Parties marry.
14 May, 2001
The parties purchase the property at Property N for $378,000 which was subsequently reduced to $368,000. The parties borrow an amount of $285,000 from (omitted) Bank for the purchase of this property.
19 July, 2001
The wife’s unit at Property S was sold for $230,000.00.
August, 2001
The Respondent’s mother dies. The husband inherits an amount of $119,666.00.
2002
Wife leaves paid employment prior to the birth of the parties’ first child.
April, 2002
Husband commences employment with (omitted) (also known as (employer omitted)) as (occupation omitted).
(omitted) 2002
X born (11 years)
(omitted) 2003
Y born (10 years)
8 January. 2004
The parties invest an amount of $30,000 in (omitted Pty Limited).
(omitted) 2004
Z born (9 years).
4 May, 2005
Mortgage was refinanced to $330,000.00 (increased by $55,000.00) for the husband to buy (vehicle omitted).
1 September, 2005
The first payout for the shares in (employer omitted) is made. An amount of $461,508 was withdrawn from the company and banked into the account of the Watton Family Trust. The balance of the shares being $800,000 was retained in the company and classified as 724,528 ordinary shares and loan notes of $75,472.00
23 September, 2005
The loan over Property N point was discharged. The loan balance at the time of $328,403.72 was paid.
October, 2005
Husband gifts to his sister Ms B $10,000. The wife says she was unaware of this gift.
12 May, 2006
The parties settle on the sale of the property at Property N and simultaneously settle on the purchase of the property at Property L. A mortgage was taken out from (omitted) Bank for this purchase of $255,000.00 for the Property L property.
June, 2007
The second return of funds from (employer omitted) were paid. A capital return was paid out of $793,321.84 into the bank account of the Watton Family trust. A residual shareholding of 724,528 was retained in the company.
September, 2007
The husband gifts to his sister Ms B $20,000.00. The wife says that she was unaware of this gift.
September, 2008
The husband undertakes a project for his employment which involves the husband travelling to (country omitted) for work.
1 December, 2008
The parties separate under the same roof.
9 March, 2009
The Husband vacated the matrimonial home and moves to rental accommodation.
December, 2009
The husband leaves Australia for employment and move to (country omitted) in order to prepare for the commencement of his new role in (country omitted) to commence in January, 2010.
January, 2010
The husband was offered and accepted the role of (occupation omitted) for (employer omitted). The role being based in (country omitted).
6 July, 2010
The third share payout in (employer omitted) was made. An amount of $2,157,663.06 was paid into the Watton Family Trust Account for the ordinary shares. An amount of $214,877.52 was paid into the Watton Family Trust Account for the preferential shares. The husband retained $400,000 in shares within the company. The Respondent takes from the (omitted) Bank account funds totalling $1,367,270.29 and leaves the balance of $1,005,270.29 for the wife to withdraw from the bank account for the Watton Family Trust.
19 October, 2010
Orders made by FM Harman restraining the husband from reducing the funds in (omitted) Bank bank account of the husband below $400,000.00.
June, 2011
Robbery is alleged to have occurred at the place of residence of the Respondent and his partner in (country omitted).
January, 2012
The Respondent’s partner finishes working in (country omitted) and relocated to the (country omitted).
10 August, 2012
The husband voluntarily resigns from his employment with (employer omitted).
10 September, 2012
The husband finishes work with (employer omitted).
January, 2013
The Respondent husband moves back to Australia.
14 January, 2013
The Respondent receives into his (omitted) Bank account $400,000.00 being payout for the final volume of shares held in (employer omitted) (now known as (omitted)).
February, 2013
The Respondent husband commenced (course omitted) doing (omitted) course.
12 November, 2013
Interim Parenting Orders made by Judge Harman.
What is clear from the above is that the asset pool of the parties is relatively agreed and readily identifiable.
The most significant tangible asset of the parties comprises the matrimonial home at Property L. That property has an agreed value of $840,000 and is unencumbered. The wife resides in that property with the children of the relationship.
The next most significant and presently available tangible asset comprises the funds held by the husband in the (omitted) Bank account which funds presently total in the vicinity of $428,000 (comprising the $400,000 restrained together with interest accumulated thereon since restraint).
There are a number of other bank accounts and other lesser assets which need not be the subject of controversy for the purpose of this determination.
The most significant transactions of relevance to this determination are deposits of funds to a trust (the Watton Family Trust) as a consequence of the acquisition of a company (omitted), by a further company, (omitted). The husband was employed or contracted with the former company and thus received payment out of significant funds arising from that transaction arising from the sale of shares held by the husband (referred to in the parties’ evidence as the (employer omitted) shares). Two sums comprising $2,157,663.06 and $214,877.52 were paid into the Watton Family Trust.
A sum of $400,000 was “rolled over” into new shares in a company, (omitted). The balance of funds were distributed by the husband (who was in a position to control their deposit and distribution) and divided between the parties. The husband received funds of $1,367,270.29, and the wife received a sum of $1,005,270.29. Further distributions and further transactions have occurred but I do not propose to dwell upon those for present purposes.
The husband purports to set out in his Affidavit material an itemisation of the manner in which he has dealt with the funds that he has received. The husband’s evidence in that regard is, however, somewhat confusing and difficult to make out from the material. That is not a criticism of the husband’s candour or frankness in making disclosure but perhaps more pertinently a reflection of the difficulty posed by proceedings of this nature, applications for interim property adjustment being dealt with in a busy list and on limited evidence as is the case in this matter. To seek to address those difficulties, judgment was reserved to allow the material to be further considered with less time constraint although this has not significantly assisted.
As best as can be discerned, the husband’s evidence suggests that the totality of funds that he had received ($1,367,270.29) have been dealt with such that they are no longer available to him.
The husband gives clear evidence as to a number of payments that he has made including the purchase of motor vehicles, travel expenses, payment of child support and the like.
The husband’s financial circumstances are, I accept for present purposes, reflected in his statement of financial circumstances filed in these proceedings. Therein, the husband deposes that he is not presently in paid employment and is a full-time student. Thus, the husband is “receiving” income from interest only of $231 per week (whether it comes into his hands or not).
The husband deposes that he is paying or is obliged to pay rent of $900 per week (and no issue is taken as to the quantum or necessity for accommodation of that standard) together with other expenses, none of which are seriously challenged or cavilled with at this point.
The husband asserts in his material that he is paying child support in the sum of $415 per week. That is the subject of significant controversy between the parties. The wife alleges that the amount presently received by her by way of child support (as assessed) is significantly less than this.
The husband asserts that as a consequence of the disbursal of funds that he had received as detailed above, that he is no longer in a position to meet his expenses as and when they fall due. It is on that basis that the husband seeks relief from the Court to assist him in meeting his expenses for the period up to and including the hearing of these proceedings. That relief seeks the release to the husband of $70,000, together with any interest accruing upon the otherwise restrained account.
The wife opposes this release and her counsel has set out in some detail a summary of argument against the release of funds. In short, the wife’s position is that:
a)The husband had disclosed in a Financial Statement sworn 8 November 2010 that he had assets including bank accounts of $1,191,920, together with a proprietal interest in a property in Victoria, shares and a motor vehicle.
b)The husband had deposed in an Affidavit sworn 8 November 2010 that:
Nor do I intend to move assets outside of the jurisdiction to frustrate a court order.
c)It is asserted that from the $1,191,920 of assets as disclosed by the husband in his 8 November 2010 Financial Statement that the only funds or assets which now remain within the jurisdiction are the (omitted) Bank funds and accumulated interest (together with a small amount of $7,000 disclosed by the husband).
d)The wife deposes that the husband has received the following amounts since separation:
i)$101,953.13 (from the parties’ joint bank accounts at separation);
ii)$15,938.93 (from the sale of shares);
iii)$1,367,270.58 (from the sale of (employer omitted) shares);
iv)$400,000 in January 2013 from the sale of the remaining shares (as above);
v)$22,547.44 (being interest withdrawn by the husband from the (omitted) Bank account prior to restraint); and
vi)Amounts of $386,784 in income over the period from separation to date.
e)On the above basis, the wife thus asserts that the husband has had the use, control or benefit of $2,294,494.08 since separation.
From the above, it is clear that the husband has attended to expenditures which have reduced this amount and as to which there is no controversy. These include:
a)$283,110 in taxation
b)Payment of child support. The present assessment provides for payments by the husband of $31.92 per month and that applied until such time as an objection was lodged by the wife following the receipt by the husband of $400,000 in cash, January 2013;
c)Purchase of a (model omitted) motor vehicle in March 2011 for a sum of $186,000;
d)Purchase of a Toyota (model omitted) motor vehicle for a sum of $116,000, in or about October 2011;
e)Purchase of a (model omitted) motorcycle for $30,000 in January 2013; and
f)The funding of extensive travel from Australia to overseas jurisdictions at various times as set out in a summary attached to the summary of argument and covering a period 25 December 2009 to 1 October 2013. Two signed documents are tendered in the wife’s case comprising immigration and overseas travel records for the husband (exhibit R1) and statements for the (omitted) Bank bank account (exhibit R2).
Due process
These proceedings as indicated, have been dealt with in a duty list. The matter was called early in the day and was stood and re-mentioned on a number of occasions. However, when the matter was called to be dealt with on submissions, very little time remained in the day.
The parties and the counsel were advised that if the matter was to proceed, there would need to be a strict limiting by counsel themselves of the time taken in making submissions. Each submitted to that position.
If the matter had not been dealt with on the day, an adjournment would have been required. Indeed, it was open to the parties or either of them to seek adjournment of the proceedings at any time in the event that they did not feel that justice could be done to their submissions or the conduct of their respective case with such limitation and summary of submissions as they considered appropriate.
Each of the parties is and was represented by highly competent counsel. I am satisfied and accept that if either considered that they were unable to present their case in that fashion, by self constraint and providing summary submissions, that application for adjournment would have been made.
On the basis of the parties’ representation, I have no concern that they would for one moment have considered their will overborne or would have felt unable to raise with the bench any application for adjournment, any complaint or concern as regards the conduct of their case being constrained through self election to summary submissions, or to have otherwise asserted that the matter required further time than that available.
At the conclusion of submissions, judgment was reserved and thus these reasons are delivered some little time after the event. That is very much out of step with usual practice for the disposal of proceedings dealt with in a duty list. However, that step has been taken to ensure that the parties’ material could be more fully and completely read and considered (without the distraction of 20 other matters) and to also ensure that the parties’ submissions were more fully considered.
Neither party has referred to or sought to rely upon any specific authority in support of their position. Accordingly, the adjournment of the proceedings has also enabled relevant authorities to be located and considered and to which I now turn.
Basis of jurisdiction
There are a number of sources of power potentially available to found the relief sought by the husband. I propose to touch upon each.
Release of funds to fund legal costs
This was not specifically raised as the basis for the husband’s Application. It was submitted, however, that part of the expenditure of funds by Mr Watton to date had been to fund legal costs and that no doubt, part of the funds that he would receive if successful in prosecuting his Application, would fund his future legal costs. However, the Application was not identified as being solely, specifically or substantially for that purpose.
To the extent that one might infer that it is a basis for the Application (although not solely or substantially so), I am conscious of the Full Court’s decision in Zschokke (1996) FLC 92-693. Therein and to paraphrase their Honours, I must consider:
a)Whether one party to the marriage is in a position of relative financial strength as compared to the other;
b)The capacity of the Respondent to the Application to meet their legal funds readily;
c)The incapacity or inability of the Applicant to meet their legal fees.
Ultimately, the Full Court was clear that whilst the above are relevant considerations, any Application of that nature is in reality, an Application for interim property orders and I will thus deal with and address each of the above considerations briefly now before otherwise addressing other possible bases of jurisdiction.
As regards to the position of relative strength of the parties or either of them, it is to be noted that in relatively recent past each of the parties has received a significant sum from the sale of shares. In the case of the husband, as Applicant in this Court, that represents a sum of $1,367,270.29. Neither party has consulted the other as to how they have dealt with such funds as they received and indeed, one of the wife’s complaints is that she was not consulted as to the division of funds but simply provided with funds by the husband and as determined by him.
I am not satisfied on the available evidence that I can trace or understand how all of those funds have been expended by the husband. The funds were received some short time ago (having been deposited to the account of the trust fund in July 2010). However, even taking into account that time period (three and a half years), if the total funds have been expended it represents a significant expenditure of funds.
If I am to examine the parties’ present financial position, I am not satisfied that the wife is in a position of relative financial strength as against the husband.
Certainly, on the evidence available, the wife retains funds of $347,683.56 in savings accounts (or did at the time of completion of the joint balance sheet). The wife also remains in occupation of the former matrimonial home with an agreed value of $840,000.
The husband’s evidence would suggest that he has few if any assets presently available to him other than motor vehicles.
I am not satisfied that the wife could be described as being in a position of relative financial strength with regards to the husband purely because her asset position is presently stronger than that of the husband. This has not always been so.
The significant funds that were received from the (omitted) shares were, for all intents and purposes, controlled by the husband. The husband’s evidence is that he effected through the distribution of those funds, a relatively equal division of the then available matrimonial pool of property. However, there is nothing in the evidence to suggest that this was in accordance with any agreement between the parties, but rather simply the husband’s determination as to how those funds would be distributed.
Firstly, the fact that the wife has chosen to deal with the portion of funds received by her in a more conservative fashion than the husband does not in my mind support a submission (if it were to be made) that the wife is in a position of “relative financial strength” with regards to the husband or, to the extent that there might be any force or basis to such a submission, that I should thus ignore the ability of the husband to have retained funds in his own possession, custody or control rather than to have expended them (with the possible exception of the tax liability).
Secondly, I am not satisfied that the wife has any greater capacity to meet legal fees than the husband. She certainly has funds available to her. But to draw upon those funds as capital (it being the wife’s application that she would, in addition to the assets she already has in her possession, receive substantial further payment) cause her some degree of hardship which may or may not be compensable by further Orders that could be made by the Court.
Thirdly, I am not satisfied that the husband is in a position whereby he is unable to fund his own legal fees.
Lest I am wrong in that regard, I am not satisfied that any inability which presently exists in regards to the husband’s capacity to meet his legal fees arises other than from the husband’s own conscious course of conduct in expending the funds that were available to him. In short, the prioritisation of expenditure were matters for the husband.
The husband was aware that he was involved in these proceedings and would likely incur legal costs and his failure to make any adequate provision for same (if indeed that is the case) is entirely a decision of his own.
Interim spouse maintenance
The husband’s case is not pleaded as an application for interim spouse maintenance. Accordingly, I do not propose to devote any significant time to dealing with the matter on that basis. However, to the extent that the husband might assert or could be suggested to assert that his Application arises in the context of an application for interim spouse maintenance, I have regard to the decision of Watts J in Zivanovic [2013] FamCA 838 in which his Honour eruditely summarises the applicable law.
In short and by way of summary, I am not satisfied that the husband has an inability to support himself nor lest I am wrong or if he does, that the wife has any capacity to assist in support of the husband.
I need not address matters further as regards to this ground as it was not pleaded nor relied upon as the basis for the exercise of jurisdiction. However, I touched upon it to make clear that if it were relied upon or should it subsequently be suggested to have been relied upon that I would not be satisfied that it could succeed.
Injunctive relief
The Order that is sought by the husband could appropriately be categorised as an injunction. However, it is not sought by the husband to plead his position as injunctive relief.
The discharge of injunctive relief as oppressive or unnecessary or a change of circumstances
This ground would have some real relevance, both to the determination of the matter on the basis of an interim property adjustment claim (which I am satisfied is the basis upon which the husband’s position is advanced) and having regard to the injunction in force which restrains the husband from dealing with funds otherwise held by him in an account in his name and to which he would absent restraint be entitled to have recourse.
The injunction granted by the Court, 15 March 2012 is the reason that the husband cannot access nor have recourse to the (omitted) Bank funds held in his name. I note with respect to that injunction that:
a)It was determined following hearing and based upon evidence available at that time;
b)Both parties were represented by competent counsel at the time the Order was made;
c)Each party had been afforded due process with respect to the making of the Order its necessity, effect and utility;
d)No appeal has been lodged against the Order at any time;
e)The relief had been urged upon the Court by the wife and on the basis of concerns raised by her that those funds (or other property) would be dealt with, diminished or expended in such fashion as would render her application for final relief nugatory.
As events have transpired (particularly with regards to the expenditure of funds by the husband (as to which he is not criticised - they are funds in his hands which are unrestrained and which he was entitled to deal with as he sees fit) the wife’s bases for concern would appear to have and to have had some grounding in reality.
I am conscious of the decisions such as that of the Full Court in Stowe (1981) FLC 91-027 and which require that an Applicant for injunctive relief (particularly if sought on an ex parte basis) bears the onus of proof to establish not only the necessity and utility of the injunction at first instance, but to satisfy the Court of the ongoing existence of such circumstances as would justify the continuation of such relief. Mr Watton does not bear an onus of proof as regards to the discharge of the injunction. The onus of proof lies squarely with Ms Smart to justify its continuation.
A significant element of Ms Smart’s position is that the release of the funds sought by the husband will obviate against and render nugatory her applications for final relief. In that regard, it is to be noted that the parties’ proposals for final property relief are substantially at odds.
Mr Watton seeks Orders for an equal division of property between the parties. That is characterised in Mr Watton’s material as reflecting the “status quo” of each party retaining that which is in or has been in their possession. Mr Watton urges the Court on a final basis to make no Order for property adjustment whatsoever. Mr Watton asserts reliant upon the High Court’s decision of Stanford [2012] HCA 52, that the Court would not and could not be satisfied that any Order for property adjustment over and beyond Mr Watton being compelled to effect a transfer of any interest he holds in the matrimonial home to the wife as being just and equitable. On that basis, Mr Watton asserts that the funds from which he now seeks to access $70,000 are funds that he should and which he will retain.
Ms Smart agitates for Orders that would see her receive 70 per cent of the total asset pool. However, whatever it may ultimately be found to comprise with respect to the wife’s position:
a)If she successfully prosecutes her application, then her entitlement with respect to property adjustment would include in all probability, the totality of funds presently held in the (omitted) Bank account and being the very funds which Mr Watton seeks to access; and
b)The wife’s application and the basis upon which she agitates for relief could not be described as fanciful or incapable of success. That is not intended to suggest that the wife’s application has found favour with me at this time, but simply to make clear that on a consideration of the argument as skeletally outlined in her counsel’s Case Outline Document, the position could not be dismissed out of hand as incapable of success (by reference for example, to the considerations for summary dismissal in section 17A of the Federal Circuit Court of Australia Act 1999 (Cth).
As regards the continued operation of the injunction, I would not be satisfied that the wife has done other than to make out her case that:
a)The funds would in all probability and unless restrained, be expended and thus not available for division between the parties.
b)The wife’s position at final hearing would be significantly prejudiced if such distribution occurred. That is particularly so as any Order that was made which would of necessity require the provision of funds by Mr Watton to Ms Smart in satisfaction of the Court’s judgment could not be readily satisfied or attached absent the (omitted) Bank funds; and
c)Ms Smart’s application would be frustrated or rendered nugatory in the absence of injunctive relief to restrain disbursal of funds.
Interim property adjustment
I am satisfied that the fundamental basis upon which Mr Watton seeks to press his Application is a claim for interim property Orders.
I need not significantly review authorities with respect to the Court’s jurisdiction regarding interim property Orders as these are already extensively reviewed by my brother Judge Riethmuller in his decision of Wenz & Archer [2008] FMCAfam 1119 and as approved by the Full Court in Strahan & Strahan [2011] FamCAFC 126.
Within Wenz & Archer (and commencing at paragraph 18), Riethmuller FM (as he then was) undertakes an extensive review of case law, including case law which would touch upon Orders for the provision of funds to meet legal costs, injunctive relief and property adjustment.
The most helpful and significant portion of His Honour’s judgment is that set out in paragraphs 50 to 57, which I incorporate herein:
50) A review of the cases indicates that the Full Court has not attempted to proscribe the relevant factors to be taken into account. The later Full Court decisions in Bearup, Bonisoli, Carson and Spoke all tell against Harris establishing a test requiring ‘compelling circumstances’ per se, rather than simply identifying considerations that would be relevant to the exercise of the discretion. Indeed a careful reading of the relevant paragraph of Harris reveals that the Full Court contemplated the exercise of the power ‘where it is necessary … if injustice is to be avoided.’
51) Thus, a consideration of the need for and effect of interim orders weighed against the risks that the exercise of the power on an interim basis will interfere with the power of the court to make ‘just and equitable’ orders on a final basis is required. Importantly, the considerations that may weigh in favour of such an order should not be considered to be limited, but must be determined on the facts and circumstances of each case: see generally Bonisoli and Bonisoli [1996] FamCA 45 at [13].
52) The test for an interim order under s.79 must be whether, in all of the circumstances, it is ‘appropriate’: s.79(1). This requires a consideration of the matters relevant to making a final order under s.79, not the least of which is that the order be ‘just and equitable’: s.79(2). In order to determine whether or not to exercise, on an interim basis, the power under s.79, the case must be first analysed in terms of s.79 to identify the range of outcomes that may flow in final orders. Whether it is just and equitable to make interim orders will require a balancing of the risks of unduly limiting the final orders that can be made (or even potentially defeating parties’ claims or legitimate expectations) against the circumstances said to show that it is just and equitable to make interim orders.
53) As was said by Nicholson CJ, Lindenmayer and O’Ryan JJ in Blueseas Investments (supra at para.54) a ‘highly relevant matter that distinguishes litigation under the Family Law Act from ordinary civil litigation … is the fact that very often the wealth of the parties is controlled by one rather than both of them.’ It cannot be the case that a party who has an irresistible claim to a substantial share of the property of the parties should be held out of that property whilst the matter is litigated, left to rely upon applications for exclusive occupation of the matrimonial home or spousal maintenance alone, particularly where the parties are asset rich but have relatively modest incomes (such as the present case). Nor could it be appropriate that a party should be denied the ability to liquidate assets when there are real needs for those resources, such as to meet debts which may result in the party being pursued by creditors, or the need for the party to make payments for the benefit of the children, or to take advantage of other financial opportunities (for example the superannuation contribution cases).
54) The first consideration identified in Harris’s case appears to me to reinforce the importance of recognizing that any interim orders have the potential to limit the type and extent of the orders that can be made under s.79 which must ultimately be ‘just and equitable’: s.79(2). Because the orders under s.79 are the exercise of such a broad and complex discretion, generally the interests of the parties are better served by there being one final hearing under s.79. If the s.79 proceedings are not completed in one decision various options may not be left open and therefore the Court may not be able to ensure that a ‘just and equitable’ outcome overall is achieved. However, there will be cases where it would not be ‘appropriate’ to deny interim relief, as this would not permit a ‘just and equitable’ result in the interim.
55) Whilst the phrase ‘compelling circumstances’ is often referred to, it appears to me that this is simply descriptive of the need for there to be matters that weigh sufficiently against the benefits of having only one exercise of a s.79 power, rather than generating a new test of ‘compelling circumstances’ which is not referred to in s.79 nor within the usual legal framework of the tests appropriate for interim relief. It appears that this was the process contemplated by the Full Court in Bonisoli and Zschokke; similarly, in Carson where the court spoke of the ‘balance of hardship’. Such an approach adequately accommodates the other decisions which have referred to the test as being ‘sufficiently compelling circumstances’, and sits comfortably with the outcomes in the series of cases for interim payments to allow the wife to take advantage of the changes in the superannuation rules.
56) Of course, the relevance of the parties’ obligations as carers of children will also impact on the decision. This will be a significant factor in cases where the primary carer is living in the matrimonial home and wishes to continue to do so, pending the property proceedings being determined so as to be able to conduct the search for alternative accommodation in the knowledge of the outcome of the proceedings and without a hiatus in access to their share of the property (whether by use of a home or receipt of the appropriate share of the proceeds).
57) A review of the legislation and authorities allow for a number of comments to be made concerning the appropriate approach to applications for interim property settlement orders:
a)There is power to make interim property orders under s.79, which should be exercised when ‘appropriate’: s.79(1) and (5).
b)In order to determine whether it is ‘appropriate’ to exercise the power, the case must be analysed as required by s.79 through the usual 4 step process of identifying the pool, contributions, s.75(2) factors, and whether the ultimate orders are ‘just and equitable’.
c)As it is an interim hearing careful consideration must be given to the potential impact of any disputed facts and circumstances. Consideration must be given to the claims of the parties and their legitimate expectations. Whether the orders could later be reversed, bearing in mind the need to ultimately be in a position to make ‘appropriate’ orders that are ‘just and equitable’, will often be a significant, but not necessarily determinative consideration. For example the sale of an asset may not be reversible, but may be inevitable on any version of the facts of the case. In other cases the present needs may be so compelling as to outweigh these risks.
d)The reasons for making interim orders must be identified and assessed to allow them to be properly weighed against the risk that interim orders may pose to the parties’ claims or legitimate expectations.
e)Orders under s.79 are to provide relief to parties to the marriage by ensuring that they receive ‘appropriate’ shares of the matrimonial resources. It would be naïve to overlook the significant power differential between parties in many cases as a result of access to financial resources in the interim, pending final orders under s.79. It may well be unjust and inequitable for one party to be denied access to matrimonial property for a substantial period whilst awaiting a trial. Similarly, it may be unjust and inequitable to require the sale of a matrimonial home in the interim where a party has no other assets and can not reasonably purchase an alternative home until the quantum of the final orders is determined. In this sense regard must be had to the positions of the parties at the time of the application for interim orders.
The decision of Watts J in Zivanovic (to which I have already referred) also helpfully summarises the law to be applied in such cases and in particular, paragraphs 12 and 24 thereof, which I also incorporate herein:
THE LAW TO BE APPLIED
Approach to an application for an interim property order
12) The Full Court in Strahan & Strahan (2011) FLC 93-466 revisited the principles applicable to applications for interim property orders. An interim property decision involves two steps.
The first step
13) 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 s 79 FLA. The test for this was not confined to ‘compelling circumstances’. The Court in Strahan revisited the earlier well known statement made in Harris & Harris (1993) FLC 92-378 where the Full Court had said:
(a) 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.
14) In Strahan, the Full Court said:
(a) [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.
(2)…
(a) [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.
15) 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 “overarching 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.
Considerations about making an interim property order in “the interests of justice”
16) The notion of a “level playing field” is one which almost axiomatically is in the interests of justice and an important matter to consider when deciding whether it would be appropriate to make an interim property order.
17) In In the Marriage of Poletti (1990) 15 FamLR 794, Ellis, Strauss and Butler JJ quoted Ngyh J with approval at [796]:
(a) …It is rather, as it certainly was in Wilson and Wilson [(1989) 13 Fam LR 205], a situation where one party to the marriage controls almost exclusively what might be described as the patrimony of the parties and has control of the bulk of the assets and funds of the parties, where an order may be made to ensure that the other party, who does not have the fortune of controlling those funds, at least has an equal or near equal opportunity to present his or her case...
18) One method sometimes adopted is to provide a disadvantaged spouse with a “dollar for dollar” order. That is, an order that the advantaged spouse has to pay the disadvantaged spouse one dollar for each dollar the advantaged spouse pays his or her own lawyer. There has been previous discussion in cases as to whether or not an application of this nature relies upon s 79 and s 80(1)(h) or s 74 or s 117 FLA.
19) In Farnell & Farnell (1996) FLC 92-681, Kay J said:
(a) In the Marriage of Gould, (Appeal EA 37 of 1994, judgment of 29 June 1994), the Full Court coram Fogarty, Kay and Graham JJ[1], overturned an order of the trial Judge wherein her Honour had ordered that pending trial, for every dollar that the husband had spent on his lawyers, he should provide the wife with a similar amount for costs. The trial Judge ought to make that order to create what she saw as ''a level playing field''. The Full Court disallowed the orders on the basis that the wife had adequate finances to provide for her own costs by reason of a substantial recent inheritance. In the course of my reasons for judgment I said this:
(b) I wish to make comment on ... the general philosophical views expressed by her Honour about endeavouring to achieve a level playing field by providing the wife with a dollar for dollar basis for costs. Whilst I agree with his Honour's [Fogarty J's] observations that this may not be an appropriate approach to these cases, I would also like to make reference to an article from the Chicago Daily Law Bulletin of 20 April 1992 which indicated that wives in these circumstances often have to spend much more than dollar for dollar to achieve a level playing field, particularly, and I quote - this is in reference to a survey of the American Bar Association Family Law Section:
1. ‘Most of the lawyers agree that women will face higher legal bills in a divorce. Accordingly to 91% of those surveyed women splitting from their husbands will have to pay more for discovery. Husbands traditionally have had full control over the family finances and economic information. This means the wife's attorney must often engage in discovery to gain equal knowledge about assets and income. The lawyer has an obligation to undertake discovery to find out if there are assets in just the husband's name, or if the wife has no knowledge of them.’
[1] The published report incorrectly states the constitution of this Full Court which was actually Fogarty, Kay and Renaud JJ.
20) Putting the sexist language to one side, nearly twenty years later the position of a former spouse, now in highly conflicted litigation, who has not played a significant role in controlling the finances of the parties, has not much changed.
The second step
21) 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 sufficient 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.
22) In Harris, the Full Court said:
(a) As a generality, the interests of the parties and the Court are better served by there being one final hearing of sec 79 proceedings.
23) In Strahan, the Full Court said in exercising the wide and unfettered discretion conferred by s 79 and s 80(1)(h) FLA:
(a) 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.
24) A corollary of these statements made by the Full Court in both Harris and in 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 possible.
In accepting that the Court has jurisdiction to make an Order for interim property adjustment and noting that I must be satisfied only that it is just and equitable for such Orders to be made, I then turn to the circumstances of this case.
The Court must be satisfied that the exercise of discretion in making an Order for interim property adjustment is “just and equitable, appropriate and necessary”.
In addressing that which is described by Watts J in Zivanovic as the “first step”, I must be satisfied that jurisdiction is established. In that regard, I am particularly guided by the passages quoted by Watts J from Strahan, as well as those included in the extensive summary and discussion of the issues by Judge Riethmuller in Wenz.
It is particularly apt to note the comments of Brereton J in Paris King Investments Pty Ltd & Rayhill [2006] NSWSC 578 (regarding interim Orders) as follows:
… if it appeared that the applicant would likely receive by way of property settlement a sum sufficient to cover the advance, then an interim order may be made. (Then referring to Zschokke and Harris (1993) FLC 92-378).
By way of corollary I am satisfied that if the converse is true (that the advance may potentially exceed the likely fruits of the party’s litigation) that some real caution would be exercised.
In this case clearly and on the basis of the wife’s application (which as indicated cannot be described as fanciful or incapable of success), the sum which Mr Watton seeks would be released to him would form a part of the property entitlement of Ms Smart. That is not to suggest that any determination is made that it is so but purely to acknowledge that it is within the quantum the wife seeks). The portion of the funds Mr Watton seeks if distributed and expended, would frustrate Ms Smart’s application.
Similarly, in Zschokke (considered by Brereton J in the above passage), it was noted:
If on a brief consideration of those matters [being section 79(4) and section 75(2)] it seems likely to the Court that the party who is the applicant for the interim order for an advance of funds from the other party will be likely to receive by way of settlement a sum sufficient to cover the advance, that would seem to be sufficient to enable the orders sought to be made. (And then also referring to Wilson (1989) FLC 92-033 and Poletti (1990) 15 Fam LR 794).
Again, I could not be satisfied that the wife will fail in prosecution of her application. That is a matter to be determined at final hearing.
Perhaps that which best encapsulates the present conundrum is the judgment of Strickland J in Strahan & Strahan [2007] FamCA 139 wherein his Honour opined (paragraph 48).
It is also necessary, in my view, to consider why the Full Court says that the circumstances need to be compelling[2] and the reason for that is apparent from the quotation above, namely that the interests of the parties and the Court are better served by there being one final hearing of section 79 proceedings.
[2] By reference to Harris, it is clear that compelling circumstances need not be demonstrated simpliciter
In this case, and in the absence of a full and proper determination of all applications by the parties, there is the possibility of a grave injustice being done to Ms Smart by the release of funds in that her application may be rendered nugatory or the relief proposed by her otherwise frustrated and rendered impossible (whether as to it being ordered or compliance therewith if ordered). To that end I am satisfied that Ms Smart has discharged her burden.
I am conscious that a number of the decisions canvassed extensively by Judge Riethmuller make clear that I should turn attention to the present, past and future positions of the parties. As the Full Court had opined in Blue Seas Investments Pty Ltd & Mitchell (1999) FLC 92-856:
… very often the wealth of the parties is controlled by one rather than both of them. It cannot be the case that a party who has an irresistible claim to a substantial share of the property, the parties should be held out of that property whilst the matter is litigated … nor could it be appropriate that a party should be denied the ability to liquidate assets when there are real needs for those resources such as to meet debts which may result in the party being pursued by creditors or the need for the party to make payments for the benefit of the children or to take advantage of other financial opportunities …
What is clear in this case is that:
a)The wife has a claim which she seeks to maintain, alleging an entitlement to the totality of funds in the (omitted) Bank account;
b)The husband has had the benefit of sums not less than $1,367,000 and possibly, as alleged by the wife, in excess of $2 million in the three and a half year period that these proceedings have been before the Court.
In the above circumstances, the husband’s failure to make any adequate conservative provision for his own needs from the funds that he has had the benefit of is entirely beyond the control or influence of the wife. They are decisions that he has made entirely and which have now led to his present alleged paucity of funds.
It is also of some relevance to note that, whilst the Full Court in Blue Seas Investments had referred to one party “controlling” the wealth of the parties jointly, this is not an allegation that can be levelled against Ms Smart. Indeed, the significant asset which gave rise to cash funds (ie, the sale and receipt of funds from sale of the (employer omitted) shares) was “controlled” by Mr Watton, as was the distribution of those funds.
If I turn my attention to the provisions of sections 79(4) and 75(2) of the Family Law Act 1975 (Cth), and without seeking to canvas in any detail the parties’ respective positions in support of their claim for final relief, I note:
a)There is no issue between the parties that each has made significant contributions in the relationship, albeit that clearly the husband has made the more significant financial contribution and the wife has made the more significant homemaking and parent contribution. I am conscious of the Full Court decision of Kane & Kane [2013] FamCAFC 205, which canvasses prior authorities relating to “special financial contributions.
b)The husband, through the Case Outline Document filed by his counsel, urges that financial contributions favour the husband “60/40”. This would appear to relate in large part, to the undisputed proposition that he was the significant income earner during the relationship. It also relates to the receipt by the husband in 2002 or thereabouts of an inheritance in the sum of $120,000 (applied to reduction of the then mortgage over the matrimonial home). The husband does not assert any position as regards non-financial contributions including the arrangements which have existed between the parties in the past regarding the care of the children of the relationship. The husband asserts:
The non-financial contributions as a parent and homemaker favour the wife –
although, unlike the percentage asserted by the husband with respect to financial contributions, it is not suggested that any percentage finding would be made.
c)The husband asserts in his Case Outline Document that if he is successful in prosecuting his parenting application that he would then spend equal time with the children and thus, his homemaking and parent contribution (or his non-financial contributions) would be equal to the wife. The husband’s position as advanced does not seek to acknowledge or apportion any specific contribution as regards the wife’s significant homemaker and parent contribution prior to the husband’s return to Australia, during which period the children lived in the wife’s sole care and she was solely responsible for their day-to-day needs.
Overall, the husband would appear to assert that an equal division of property should occur between the parties. That is consistent with that alleged by the husband on the basis that, by reference to Stanford and Bevan & Bevan [2013] FamCAFC 116, that no further Order for property adjustment need be nor should be made. It is also to be noted that this is on the basis that the husband asserts that following his distribution of the funds from the sale of the (omitted) shares, that an equal division had by and large been achieved. Thus, I can infer that the husband proposes that there should overall be an equal division of all assets.
The funds in the (omitted) Bank account and the subject of the husband’s Application are difficult to quantify as a specific proportion of the pool of property available to divide between the parties. The wife agitates for significant “notional add-backs” on the basis of funds received by the parties and how they have been expended or applied. Whilst there is some controversy on present authorities as to pursuing such “add-backs” they are not matters that can be dealt with or disposed of at this point and will need to await final hearing (being a trial allocated over four days of hearing). However, I cannot be satisfied that if the funds in the (omitted) Bank account or any portion thereof were released that the wife’s claim, if it were successful, could be met.
On the above basis and by reference to section 79(4) the wife’s position could not again be suggested to be fanciful or incapable of successful prosecution.
As regards section 75(2), the husband concedes through his Case Outline Document that an adjustment “might” be made in the wife’s favour “in the order of five per cent”.
The wife, through the Case Outline Document provided by her counsel, agitates for a far greater section 75(2) adjustment. They are again matters which cannot be determined at this stage and will need to await final hearing.
There are a number of factors which arise from the facts of this case which would appear to have relevance to section 75(2) including:
a)The income and earning capacity of the parties;
b)The care arrangements for the children of the relationship (which remain at large and in dispute);
c)The commitments of each party necessary to enable them to support themselves and their children;
d)The responsibility of either party to support any other person and/or the children;
e)The parties and each of them being able to maintain a reasonable standard of living in all the circumstances.
The above factors alone would suggest that a significant issue arises as regards a section 75(2) adjustments which again could not be suggested to render the wife’s position fanciful.
On the above basis I am not satisfied that it would be just or equitable for the Court’s interim property jurisdiction to be enlivened nor for any Order to be made which further distributed or interfered with funds from the (omitted) Bank account.
Again with respect to the above I am conscious that this would no doubt be perceived by the husband as a hardship. The balancing of hardship is particularly relevant in dealing with such matters (as observed by the Full Court in Carson & Carson [1999] FamCA 53).
The hardship to the husband as asserted by him (being that he no longer has funds available to him to support himself and meet his expenses) is a circumstance brought about through the husband’s choice and poorly explained in his evidence.
The husband has had sole discretion and control over the expenditure of the funds that have come into his hands (whether they be $1.3 million or $2.2 million or any other figure) since July 2010. The husband has determined to engage in a relationship (both business and personal) which are suggested to require or compel overseas travel.
The husband has solely determined that rather than seek fresh employment that he will engage in full time study.
In all of those circumstances I am satisfied that to the extend that hardship exists these are not matters to which the wife has either contributed or which would outweigh the hardship to the wife of the frustration of her claim for property relief if it is successful at hearing.
As regards that which Watts J refers to as the “second step” in dealing with any application for interim property adjustment I am satisfied that such matters as are relevant have been canvassed above and would obviate against orders being made.
I am not satisfied that justice and equity would be served by either:
a)Distributing funds to the husband at this time in light of his own role and culpability in creating the circumstances of which he complains and which he relies upon in seeking to invoke the court’s interim property jurisdiction;
b)Would obviate against or outweigh the hardship that would flow to the wife through orders being made which would potentially render her application incapable of success or practical enforcement;
c)Would cause the court to depart from usual practice in hearing and determining the parties’ competing property claims on a final and “once and for all” basis.
Accordingly, I am not satisfied that the court’s jurisdiction is enlivened or if so enlivened, that it is just and equitable as between the parties to grant the relief sought.
I certify that the preceding one hundred and fourteen (114) paragraphs are a true copy of the reasons for judgment of Judge Harman
Date: 14 March 2014
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