Widmann & Widmann & Anor

[2016] FamCA 693

FAMILY COURT OF AUSTRALIA

WIDMANN & WIDMANN AND ANOR [2016] FamCA 693

FAMILY LAW – PROPERTY – INTERIM – Where there were no significant assets when the parties separated – Where after separation the husband inherited assets – Where the wife seeks interim relief in the amount of $95,000 and that a further amount of $436,000 be isolated pending final property proceedings – Where the husband’s formal position is that the wife’s application be dismissed – Orders that the husband pay the wife $65,000 and that the parties establish an enforceable equitable interest or charge in the sum of $365,000 on a property to be purchased by the husband.

Family Law Act 1975 (Cth) s 79

Farmer & Bramley (2000) FLC 93-
Harris and Harris (1993) FLC 92 – 378
Strahan & Strahan (Interim Property Orders) [2009] FamCAFC 166

APPLICANT: Ms Widmann

RESPONDENT: Mr Widmann

SECOND RESPONDENT: Mr Bolt

FILE NUMBER: SYC 2334 of 2012

DATE DELIVERED: 26 April 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Loughnan J

HEARING DATE: 26 April 2016

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Ms Balafas

SOLICITOR FOR THE RESPONDENT: Mr Gallego

SOLICITOR FOR THE SECOND RESPONDENT: There was no appearance by or on behalf of the Second Respondent.

Orders

1. The husband shall pay to the solicitor for the wife by way of interim costs:

(a)$5,000 within seven days from today’s date; and;

(b)as soon as practicable after 7 July 2016, the sum of $60,000.

1. The parties do all things and sign all documents to cause the establishment of an enforceable equitable interest or charge in the sum of $365,000 on the property to be purchased by the husband at B Street, Suburb A NSW … being the land described Folio Identifier ….

1. Leave is granted to the parties to restore the proceedings to the list in relation to compliance with that order.

1. Orders are made in terms of paragraphs 9, 11 and 15 of the document titled “Minute of Interim Order” (Exhibit 2 dated 26 April 2016), directed to the Second Respondent, as set out hereunder:

Interim Financial Orders and Interim Injunctive Relief against a Third Party

9.      Pursuant to section 90AE of the Act, within twenty four (24) hours of exchange of Contracts for the sale of land taking place in respect of the C Town property, the Vendors’ solicitor shall provide the Wife’s solicitors a duly executed copy of the Contract for the sale of land executed by the Purchaser or on the Purchaser’s behalf or otherwise as the Wife may direct.

….

11.    Pursuant to section 90AE of the Act, twenty four (24) hours prior to the scheduled date of completion of the sale of the C Town property, the Vendors’ Solicitors shall provide to the Wife’s solicitors the following:

a.A copy of the cheque directions for settlement; and

b.A copy of the Settlement Sheet setting out the net proceeds of the sale available at settlement, all reasonable expenses incurred in respect of the sale and all adjustments (“the Settlement Sheet”).

….

15.    That forthwith the Wife shall cause the Vendors’ solicitor and the Husband to be served with a copy of these Orders and such service is to occur by email in the first instance.

1. The husband file an updated Financial Statement within seven days.

1. The question of costs of and incidental to the proceedings today is reserved.

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 Widmann & Widmann 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 SYDNEY

FILE NUMBER:  SYC2334 of 2012

Ms Widmann

Applicant

And

Mr Widmann

Respondent

And

Mr Bolt

Second Respondent

REASONS FOR JUDGMENT

1. These are proceedings in the context of proceedings for settlement of property.  The husband is about 60 years of age and the wife is 59.  They commenced their relationship in about 1986 and were married in 1987.  They were divorced on 27 August 2012.  There is a dispute between them as to when they separated.  The wife contends it was September 2009 and the husband thinks it was 2004.  In a sense that does not matter so much.  The focus in property proceedings is about contributions rather than cohabitation.  They have three adult children.  The proceedings have been on foot since 2013.  They have bounced between this Court and the Circuit Court, starting here, going there, coming back. 

2. It is argued for the husband that there were no significant assets when the parties separated.  The husband has inherited assets since.  The wife has made an application for interim relief.  She wants a total amount of $436,000 preserved, which she calculates as 28 per cent of a pool which she says is her claim.  Of that sum she wants $95,000 to put towards pressing expenses. 

3. There is to be a sale of a property in which the husband has a one-third interest.  It is calculated on the wife’s side that the husband will receive something like $546,000 from the sale.  The wife seeks that $436,000 be isolated out of those proceeds, that $95,000 be paid to her and that the balance be held in a controlled moneys account to await the final property hearing. 

4. The husband’s formal position is that the wife’s application be dismissed. 

5. There is a decision of Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 which made some changes to the previous law in relation to interim costs. And there is a decision of Harris v Harris (1993) FLC 92 – 378, the main point of which is that the court should not do something on an interim or interlocutory basis in property proceedings that cannot be undone on a final basis. And the relevance of that here is that if any amount of money is given to the wife now and she was not, as the husband seems to seek, to receive any property settlement, a step would have been taken that might not be able to be undone. The wife has indicated she wants to spend the money on things that cannot be recovered.

6. She wants to spend the money on legal fees, which she would not get back.  And she wants to spend the money on obtaining a new rental property, the transfer costs and costs of settling in.  And she has some other expenses.  And if she did that with those funds, they would not be available.  So Harris and Harris is important in this case. 

7. I do not think on the evidence, on the bare facts of the case it is likely or possible that the wife’s claim would be less than $95,000.  Decisions referred to in the case outline filed on behalf of the wife, include decisions where there were no net assets on the day of separation and one or other of the parties has acquired assets since separation and there has been a property settlement. 

8. There is a decision of the Full Court of Farmer & Bramley (2000) FLC 93-060 which left in place the decision of the trial judge. I think there was $4 million in the property pool in that case. And the trial judge ordered $750,000 to the wife. There was an appeal. The Full Court, I think, agreed that there was some errors in the judgment, but ultimately the majority of the Full Court agreed that the outcome was correct. So there is no doubt that that a property settlement can be made out of funds that did not exist on the day of separation or some day since. The Court’s task under s 79 of the Family Law Act 1975 (Cth) (“the Act”) is to identify the assets of the parties on the day of the hearing and to make a change in property interests by reference to the matters in s 79.

9. The wife’s case is that her claim is 28 per cent.  I do not quite know where that figure comes from.  It may be that that is correct.  I would not be heard to say that it was not within a legitimate range.  However, the Court needs to be conservative at this stage.  The husband’s solicitor has referred to the fact that, much of the current asset is in the form of shares in listed companies and that the share market can go into periods of stagnation.  On the other hand the husband is proposing to invest other amounts of money in real estate, and real estate typically over time appreciates. 

10. The Court needs to be conservative about any interim order, and if the wife’s case was legitimately for something of the order of 28 per cent, then an order today of that magnitude without knowing all of the things that might apply between now and a hearing would be imprudent and not within the spirit of the authorities.  But I am satisfied for the purposes of today that the wife’s property claim is not less than $95,000 and that therefore a payment could be made of that sum. 

11. The next consideration is as to the balance of convenience and practicability.  The husband says it will be expensive for him to raise the money very quickly because he has double capital gains tax payable between now and 1 July on a sale of shares.  He has disposed of the cash asset that he had as part of one of the inheritances.  The wife understands that he received, I think, $139,000 in cash, $925,000 in shares, I think perhaps from his father’s estate.  The cash is gone.  I understood from something that has been said on behalf of the husband, the cash might have been applied in part to the purchase of other shares, and then they in those shares were sold. 

12. It will be the husband’s case that he has only $800,000 worth of shares remaining.  He does not want to dispose of shares before about 7 July, because he will be up for additional tax.  There would be a cost of raising the money immediately.  He wants to pay as little as he can.  He plans to live on the investment; he has expenses; and he can see that already his capacity to live on the investment will be significantly reduced. 

13. On the other side of the ledger he relies on the wife’s contention that she could earn of the order of $40,000 a year.  At the moment she has income from working three days a week as an administrative assistant and otherwise from running a business at Suburb D.  She contends that it is not a profitable business.  I think that is the essence of it.  She is hoping to sell it and was hoping to use some of the money that she received by way of this initial injection to put ads in the trade papers to try and sell the business.  Those are all legitimate concerns. 

14. So the first issue is as to $95,000.  The wife has already incurred some legal costs, and she will have some legal costs into the future.  It was once the case that solicitors’ contracts were entire and they were not allowed to receive part payment.  The practice now is for interim billing.  That means that parties understand what they are really up for and can make meaningful decisions about settlement and so on.  That said, on the wife’s case she wants the Court to accept that she will receive a substantial property settlement.  Presumably her solicitor is as confident about that as she is. 

15. So there will be money coming that can be applied to legal costs.  Not all legal costs fall due at once. Although this has not been a good start, if the parties settle the case tomorrow perhaps some of the legal costs will not be incurred.  So I have indicated to the parties based on some things that have been said about capital gains tax – and I appreciate there is not any documentary evidence about it – that I thought an appropriate order would be for a payment of $5,000 within seven days and then $60,000 as soon as practicable after 7 July. 

16. As to the second part of the claim, the wife would like part of the husband’s share of the proceeds of sale of a property to be held in the controlled moneys account to meet her claim.  The husband is proposing that the wife take a security in relation to the property he intends to buy immediately on the sale of the other property.  And in my view, his proposal is a sensible one. 

17. The things in favour of the wife’s case are that the husband has manifestly not met his obligations of disclosure.  He has not filed updated Financial Statements when his circumstances changed.  He had not kept the wife up to date.  Even now she is without information about what he had, what he received, what he did with it, where the money is now - all things that he was obliged to tell her as soon as he knew about any of those things happening.  The explanation offered is that he was not legally represented for a period in the proceedings.  That is not the wife’s fault.  She would be held to the same standard. 

18. Parties to litigation about property settlement or maintenance have an ongoing daily obligation of financial disclosure, and it is not a matter of saying “Well, I know she already knows, because she went round me and went to the conveyancer acting on or the solicitor acting on one of the estates and found out from him”.  It is the husband’s obligation to make that disclosure, even if somebody else has provided the information.  His most recent Financial Statement is from 2013.  There he deposed to owning $250,000 and owing $276,000.  It is as wrong as it can be.  One can understand why the wife is anxious about his conduct.  That said, as I said to her solicitor, her claim will be protected if the husband puts in place an equitable charge in relation to his new property. 

19. The wife will know as soon as the new property is bought that that the charge or interest has not been established.  In order to frustrate her claim, he would also need to alienate so much of his share portfolio as would defeat that claim. That is not likely.  Some people do not like property claims being made against them, even by somebody to whom they were married for 22 years, but not many people are willing to ruin their own retirement in that cause. 

20. It seems to me, unless my faith in the husband is damaged by what happens from now on, that it is a proper course for the wife to have a document that means that her claim for property settlement is reserved in equity in a new property purchased by the husband.  If that is done properly, then she would receive notice of any attempt to register a dealing on the title of that property.  If she gets notice of such a dealing she can bring the matter back to Court and we will do something else.  But it seems to me that that is the best solution.  Now, the orders are going to be necessarily imprecise.

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Loughnan delivered on 26 April 2016.

Associate: 

Date:  22 August 2016