Whittaker & Sinclair (No 2)
[2013] FamCA 1040
•19 December 2013
FAMILY COURT OF AUSTRALIA
| WHITTAKER & SINCLAIR (NO 2) | [2013] FamCA 1040 |
| FAMILY LAW – PROPERTY – Interim property settlement – where applicant de facto wife seeks order for interim property settlement and interim costs – whether it is appropriate to exercise court’s power on an interim basis – where there is a significant failure of disclosure by the respondent – where it is just and equitable to make interim property settlement in favour of the wife – interim property and costs settlement in the sum of $200,000 granted. | |
| Barro & Barro (1983) FLC 91-300, 8 Fam LR 855 | |
| Family Law Act 1975 (Cth) Family Law Rules 2004 (Cth) chapter 12 & 13 | |
| APPLICANT: | Ms Whittaker |
| RESPONDENT: | Mr Sinclair |
| FILE NUMBER: | SYC | 3101 | of | 2011 |
| DATE DELIVERED: | 19 December 2013 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Loughnan J |
| HEARING DATE: | 19 December 2013 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Campton |
| SOLICITOR FOR THE APPLICANT: | Nicholas Eddy & Co |
| COUNSEL FOR THE RESPONDENT: | Mr Gould |
| SOLICITOR FOR THE RESPONDENT: | Harris Freidman |
Orders
The respondent Mr Sinclair and the applicant Ms Whittaker forthwith do all such things, sign all such documents and give all such instructions as are necessary as to cause the balance of proceeds of sale of the unit O Street, Suburb Y (presently in the sum of $181,793 held in a controlled monies account for the parties) to be paid to Ms Whittaker by way of interim property settlement.
The respondent Mr Sinclair pay to the solicitors for the applicant Ms Whittaker within 30 days such sum which will bring the amount paid pursuant to Order 1 and 2 herein to a total of $200,000 by way of interim property settlement.
The proceedings are adjourned to Justice Loughnan’s list at 9.30 am on 17 February 2014 in relation to the appointment of single expert valuers and in relation to the preparation of the matter for final trial generally.
Within seven days if practicable the respondent provide to the solicitor for the applicant copies of the reports of Mr U and Mr V and a joint statement of those experts which are referred to in the judgment of Justice Black in New South Wales Supreme Court Proceedings [2013] NSWSC 1586 delivered on 1 November 2013.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Whittaker & Sinclair has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 3101 of 2011
| Ms Whittaker |
Applicant
And
| Mr Sinclair |
Respondent
EXTEMPORE JUDGMENT
These are proceedings in the context of proceedings for settlement of property. The applicant is nearly 53 years of age, the respondent is 55. They started a relationship in 2004 and separated in 2010.
On 12 December 2012 there was a finding that the parties lived in a de facto relationship. An application for property had been filed by the applicant and the proceedings were split, with the threshold jurisdictional issue determined first. There was an appeal against the decision of 12 December 2012 and it was dismissed on 27 August 2013.
The matter has been listed in May 2014 for final trial on the merits of the property claim. The applicant originally sought a property at Suburb Y, unencumbered and $5,000,000. Events have overtaken that to some extent.
The respondent sought the dismissal both of the threshold issue and a dismissal of the substantive claim.
The Application before me is Ms Whittaker’s application for interim property settlement and interim costs. Her Application in a Case was filed in February 2013. The applicant seeks $200,000 and an order that the parties do everything to cause the balance of the proceeds of sale of a unit, presently $217,000, to be paid to the applicant. She also seeks costs.
The Response is effectively that the Application be dismissed.
There is also an Application for the appointment of a particular valuer that has not been the subject of submissions today.
I am also asked to order, relevantly, that the parties provide full financial disclosure by 15 February 2014.
Two heads of power are relied on. Interim costs and interim property settlement.
I am not sure that there is much of a struck match between them as far as the court’s determination of those issues gone. The jurisprudence from times gone by in relation to interim settlement of property involved some doubt as to whether there was capacity at all to make an interim or partial property settlement order. I think time has moved on from that position.
The decision of Hickey & Hickey & Attorney-General for the Commonwealth of Australia [2003] FamCA 395; (2003) FLC 93-143; (2003) 30 Fam LR 355 seems to suggest that property orders can be made in parts and by inference, on different days. There is a question about whether the court’s jurisdiction is exhausted in some way by certain orders but I do not think it matters for the purposes of these proceedings.
There is a decision of Strahan & Strahan (Interim property orders) [2009] FamCAFC 166; 241 FLR 1; (2011) FLC 93-466 that has been referred to by counsel today which reviewed the authorities in relation to interim costs and interim property settlement and certainly swept aside some years of jurisprudence. Applicants are no longer required to establish things like a complexity of financial affairs, one person in control of knowledge and resources and the risk that legal representation would be lost going forward.
In Strahan the court identified that while there needs to be a reason for making an order and references made to a decision of Federal Magistrate Reithmuller, as his Honour then was, in this context. Again the Full Court reiterated that the court should not, and this has been the advice given to trial judges for a long time, make up artificial rules about the requirements for particular forms of relief. I think the position we are left with is that the court should be cautious about doing something by way of interim order that cannot be undone on a final basis. The reason for that is obvious. Interim proceedings are conducted on papers. It may not be possible to make findings of fact. Evidence, even expert evidence, can be challenged and changed on the final hearing. If that occurs and the Court relied on the earlier evidence for interim orders, that can cause real problems at the final hearing. In some cases, and I guess this is a case that might be said in one of those instances, the damage cannot be repaired.
The applicant has pointed to the case she wants to make in relation to property settlement. She does not have to make that case today. As Mr Gould pointed out on behalf of his client, the trial affidavits are not required at this stage. What she has done to the best of her ability is to point to the case that she wants to make.
The property settlement enquiry is made up of identifying the pool of assets, identifying contributions of various sorts and then taking into account a whole lot of other things to see what adjustments might be made or what overall orders should be made. There is an overarching obligation for a just and equitable outcome.
The respondent has not helped the applicant to identify the pool of assets. It is argued on behalf of the respondent that he did not have any obligation of disclosure. I do not think that is right. If not the letter of the Rules of Court, then the spirit of the Rules requires disclosure in financial matters. It does not require explanation as to why that is appropriate.
Chapter 12 of the Family Law Rules requires the exchange of certain information before the first court date: three years of taxation returns and assessments, superannuation records, financial statements for three years and so on. There are a raft of obligations.
Chapter 13 says that each party in a case has a duty to the court and to each other party to give full and frank disclosure of all information relevant to the case in a timely manner. There is no qualification in the Rule to permit delaying that obligation until after an order is made for disclosure or while a stay is in place in relation to something.
There is a nice argument as to whether the respondent might have felt it appropriate to withhold disclosure because I granted a stay in relation to the December 2012 decision on certain conditions. That point has been taken. I do not need to decide it today, but whatever the merits of that argument, the appeal was dismissed in August. Thereupon there were property proceedings on foot and from that date there was an unambiguous obligation on the respondent. Particularly so, in light of the fact that there had been no significant disclosure in the course of the preliminary proceedings. That was something the respondent was entitled to do, but particularly when he knew there had been no disclosure to date, his failure from that date not to provide documents available to him needs explanation. He does not give any explanation. In fact the only testimony directly from the respondent to date is his Financial Statement. We now know, for example, that there was judgment from the NSW Supreme Court of November 2013 that deals with the value of the respondent’s assets. Even if the respondent thought there was a restriction of him providing to the applicant the source documents that he provided to the Supreme Court, he could have provided the judgment to her. He had that judgment and that I am told it first comes to light attached to an affidavit from his solicitor yesterday. The fact that there was no specific order requiring him to file a Financial Statement at an earlier date is irrelevant and ignores the obligations in the Rules.
The Financial Statement comes late, it is incomplete and it begs more questions than it answers. As was submitted on behalf of the applicant, the fact that there is such precise figures placed on certain values leads to the necessary inference there are documents available that would enable somebody to follow the basis for those valuations.
In my view there has been a significant failure by the respondent to put the applicant in possession of necessary information. If there is a legitimate reason for that then it has to be provided by the respondent. He is only obliged to do what he could do. In the Financial Statement he left blanks in some sections, presumably because it was too hard to identify the answer. In some sections he said nil and other he left blank.
In that context it was disingenuous for him to argue, through his counsel that the applicant has not fleshed out all of the detail of her case. The case starts with the pool of assets. As counsel for the applicant noted the submission on behalf of the respondent that his client’s contribution based entitlement is not substantial. I think counsel for the respondent said something about keeping the claim in perspective, the perspective is provided by the pool and his client has not revealed what it is. Further, there is more to the calculation in s 90SM than contributions. There are a number of other matters to take into account. Finally, as was said on behalf of the respondent, it is not necessary for the applicant to make her entire case now.
There is a property dispute between the parties and all the obligations of disclosure apply. They necessarily mainly fall to the respondent because it seems, and the concession is made I think, that the substantial aspects of the property pool are going to be found with him. I do not have much sympathy with the complaint about the rather colourful language used by the applicant’s counsel about the failure of disclosure of the respondent. In any event there has been a significant failure of disclosure by the respondent.
That failure of disclosure provides more latitude in relation to the applicant’s claim. It also adds to the argument that the estimates provided to the applicant by her solicitors about the task of managing this litigation may be understated.
Sometimes an argument is made that an applicant for interim costs will not need to fund all of the litigation because most cases settle. The signs are not good for these proceedings. Secondly, added the problems that were identified in cases such as Poletti, Zschokke, Hogan and Barro where there are complex affairs and one person controls the knowledge it is likely that the applicant might have to do more of the heavy lifting in relation to identifying the pool of assets, that issue than would normally be the case. It could well be that the estimates provided to the wife as to her costs are conservative.
Life does not stop just because parties are involved in property settlement litigation. Their fridges die, their cars have flat batteries, life is not on hold. There is an undisaggregated pool of assets between these two good folk and we do not know what the break up will be.
To the extent of the respondent’s disclosure to date, I am sure what to do with the reference to negative values in Annexure B to the Financial Statement. I say that because he has not included any of them in his liabilities column. That could be because there is no necessary link between the negative values and anything that he might be obliged to pay. The respondent has provided estimates which total roughly $7,000,000 in assets. It seems to me that, even with the advances that have been made to date, there is no significant risk that the orders she seeks will exhaust the applicant’s entitlement to property settlement.
There is no rule or law that says an interim order cannot go beyond what might be the outcome on a final basis. That is just the counsel of common sense. Even if there were such a rule, and the interim orders she seeks exceeds her overall entitlement, the applicant is in paid employment and she has some resources she identifies in her Financial Statement including a superannuation interest. Sometimes members of superannuation funds are able to have early access to their superannuation.
There is not much doubt that the parties will incur further significant legal expenses. One would normally counsel the parties to think about making a commercial decision about these things. No doubt their lawyers have advocated that but on the basis of the history of the proceedings, I concede that the signs are not good.
The order pressed today is a claim for a payment of $200,000. It seems proper to me that an order be made as asked. $181,000 odd is available in a fund. I am told the respondent would ask for 30 days to pay the balance and I will provide him with that time.
I certify that the preceding thirty (30) paragraphs are a true copy of the extempore judgment of the Honourable Justice Loughnan delivered on 19 December 2013.
Associate:
Date: 9 January 2014
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