Cornett & Hext (No. 3) [2020] FamCA 1069 (15 December 2020)

[2020] FamCA 1069

FAMILY LAW - PRACTICE AND PROCEDURE - Interlocutory property and parenting applications prior to resumption of a part heard trial - where the wife seeks a further interim property distribution to enable her to fund her legal costs to conclude the trial - any further distribution opposed by the husband on the basis that the wife's eventual entitlement to property would be exceeded by further distribution - no consideration of superannuation entitlements - order made for further partial property distribution to the wife - wife consents to a variation of previous parenting orders to enable the husband to have an uninterrupted weekend once per month but seeks make up time - make up time ordered

Family Law Act 1975 (Cth) s 79

S_trahan & Strahan (Interim Property Orders)_ [2009] FamCAFC 166

Bearup & Bearup [1993] FamCA 72; (1993) 16 Fam LR 797

Harris & Harris [1993] FamCA 49; (1993) 16 Fam LR 579

Furtado & Furtado [2011] FamCA 1018

SOLICITOR FOR THE INDEPENDENT CHILDREN'S LAWYER

(1) Within seven days of the date of these orders, the husband and the wife do all acts and sign all documents to enable the sum of $150,000 from the funds held in trust by Q Lawyers solicitors, to be paid to the wife, or at her direction.

(2) Paragraph 3(d) of the orders made 13 November 2019 be varied such that the wife's time with the children be suspended for the last weekend of each calendar month conditional upon the wife being provided with the equivalent make up time during the subsequent school holidays.

(3) The wife's time with the children be suspended from 23 December 2020 to 6 January 2021 to enable the husband to take the children away on holidays.

(4) The children spend time with the wife for four hours supervised by Ms E or her nominee on 22 December 2020 and 13 January 2021.

(5) The husband facilitate the wife communicating by telephone with the children on Christmas Day 2020 at 10:30AM, with such telephone call to be to the wife's mobile phone and on loudspeaker with the husband to remain present during the telephone call.

(6) All extant interim applications are otherwise dismissed.

1. The children will be spending time with the wife in accordance with Order 2 and 4 herein on the following dates:

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 Cornett & Hext 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).

1. The parties are in dispute about parenting and property matters. The trial of the parties' respective applications commenced on 20 January 2020 and ran for five days.
2. For various reasons the trial has been unable to be concluded. Since that time there have been numerous interim applications and disputes and the trial is scheduled to recommence on 8 February 2021 for a further five days.
3. The interim dispute between the parties was heard on 17 November 2020 and due to the COVID-19 pandemic, the matter was heard electronically.
4. At the conclusion of submissions, Counsel for all parties agreed that these reasons should be brief.

1. At the commencement of the hearing the following interim issues were disputed:
   1. variation of a spousal maintenance order for the benefit of the wife;
   2. the wife's application for payment to her of funds held in the trust account of Q Lawyers solicitors, as follows:

(i) $150,000 to enable her to fund her legal fees for the balance of the trial;

(ii) to discharge a Westpac credit card of approximately $12,000, which she asserts was a liability which existed at the date of separation;

(iii) $7000 to enable the wife to pay a bond and relocation fees to enable her to obtain alternative rental accommodation;

1. the distribution of various items of furniture and chattels from the former family home;

1. whether the wife's time with the children should be suspended to enable the husband and the children to have a holiday between 23 December 2020 and 6 January 2021;
2. whether the wife's time with the children pursuant to the order 3(d) of 13 November 2019 should be suspended on the last weekend of each month, and if so should the wife receive make up time.

1. Fortunately during the running of the interim dispute the parties were able to reach agreement about:
   1. variation of the husband spousal maintenance obligations;
   2. the children's holiday with the husband, except whether the wife should be entitled to make up time.

1. The background to the entrenched and long running dispute is set out in my reasons for judgment of 17 April 2019 and I do not propose to canvass the background in these reasons.

Applications and Documents relied upon by the parties

The Husband

1. Amended Application in a Case filed 11 November 2020; 2. Affidavits of the husband filed 11 November 2020, 9 October 2020 and 26 August 2020;

1. Further Amended Financial Statement filed 25 October 2020;

1. Second Further Amended Financial Statement filed 11 November 2020; 2. Orders made 28 June 2018, 17 April 2019, 13 November 2019 and 26 October 2020.

1. Response to an Application in a Case dated 16 November 2020; 2. Affidavit of the wife dated 16 November 2020:

1. Affidavit of the wife's solicitor dated 16 November 2020.
2. There was no objection to the late filing of material.
3. I will address each of the category of orders sought by both parties.

Wife's application for partial property settlement and distribution of chattels

1. There have been various orders for partial property distributions to the parties. The previous payments to the wife are as follows:

1. $100,000 pursuant to orders of 28 June 2018; 2. $500,000 pursuant to orders of 14 January 2020;

1. $150,000 pursuant to orders of 17 July 2020.
2. The previous payments to the husband are as follows;

1. $500,000 pursuant to orders of 14 January 2020; 2. $150,000 pursuant to orders of 17 July 2020;

1. additional payments of legal fees by the husband and drawdowns on lines of credit in 2019, all of which are referred to in paragraph 118 of the husband's affidavit sworn 26 August 2020.
2. The wife submits that she should be entitled to a further partial property settlement of $150,000 to enable her to meet her estimated legal fees for the resumption of the trial, together with funds to discharge a Westpac credit card of approximately $12,000, which was a liability which existed as at the date of separation and $7000 to enable her to relocate to cheaper rental accommodation.
3. The source of proposed funds is the balance of the proceeds of sale of the parties' former matrimonial home, of $1,477,785, which is held in the trust account of the wife's former solicitors.
4. Neither party identified the source of power to make such an order, however having regard to the previous partial property distributions to the parties and the arguments advanced by each of them, I consider the relevant power relied upon is s.79 of the Family Law Act 1975(Cth).
5. Senior Counsel for the husband opposed any further distribution of funds to the wife the following basis:

1. the payments as sought by the wife would not enable husband to receive a just and equitable settlement at the conclusion of the trial; 2. the husband submits that the property available for distribution should be distributed as to 25% to the wife and a 75% to the husband;

1. the wife has effectively already received all of her entitlements save for approximately $30,000;

1. the husband is claiming an additional $16,450 from the wife for her share of various expert reports and costs which he seeks were thrown away for a conference on 25 October 2018; 2. any distribution exceeding $30,000 would result in the wife receiving more than she would be entitled to in circumstances where there is no prospect of recovery of any overpayment to the wife; 3. the wife has not explained any material filed by her how she has disposed of $650,000 since January 2020 when to do so would have been a simple task; 4. the wife's failure to explain her expenditure is deliberate and the court could not be satisfied that the wife does not have the means to fund the balance of her legal fees; 5. the $12,000 credit card debt existed at separation and since that time the wife has received $750,000 and has elected not to repay that debt, and she should not be entitled to have the debt paid at a time when any further entitlements to a distribution of property are opposed by the husband; 6. the wife did not refer to her entitlement to receive a refund of her bond of the existing premises, and she would be able to apply that bond to a bond of alternative premises; 7. of the items of furniture which the wife is seeking, the husband uses the table and chairs and fridge, the couch was broken and disposed of, the wife has the Thermomix and the drawings and pictures of the children she seeks; 8. as the wife is paying $115 per week storage, it is reasonable to assume that she has stored furniture at her disposal.
2. In support of the distribution of funds to the wife, Counsel for the wife submitted :

1. the wife is likely to receive a distribution of between 30% and 40% of the asset pool; 2. a distribution of 40% of the asset pool would result in a further $418,000 being paid to the wife;

1. a distribution of 30% of the asset pool would result in a further $151,000 being paid to the wife;

1. an assessment of 25% of the asset pool to the wife is too low having regard to the huge earning discrepancy between the parties and the wife's needs for spousal maintenance; 2. the credit card debt existed at the end of the relationship and the wife seeks that be discharge now to alleviate any future liability for periodic payments; 3. the wife may not be able to access the refund of the bond for her existing premises in a timely fashion to enable her to pay a new bond for less-expensive premises; 4. she had applied the funds she had received as follows:

(i) $406,000 paid to her former solicitors of an account of $550,000;

(ii) $200,000 paid to another firm of former solicitors;

(iii) $150,000 paid to a further firm of former solicitors of which $65,000 had been transferred to her current solicitors;

(iv) her current solicitors had $38,000 of work in progress outstanding and $18,000 in the trust account;

(v) solicitors who had been retained to act on her behalf in intervention order proceedings had $5000 in a trust account;

(vi) the wife's possessions in storage included a mattress and a cross trainer and not the items which she had requested.

1. The principles applicable to the court's power to order interim property settlements pursuant to s.79 and the principles to be applied in such an application are well settled.
2. The Full Court in S_trahan & Strahan (Interim Property Orders)_ [2009] FamCAFC 166 stated at [132]:

[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.

1. The considered and accepted two-step approach adopted in Strahan, at paragraph [137] is as follows:

[137] Once a court proceeds to exercise the power in s.79 of the Act, being in the substantive phase, a court is required to undertake consideration of the matters in s.79(4) including by reference to s.79(4)(e) the matters in s.75(2) so far as they are relevant. However consideration of such matters may be brief and if it is established that "it seems likely to the court that ... the applicant ... will be likely receive by way of property settlement a sum sufficient to cover the advance, that would seem to be sufficient to enable the order sought to be made...

1. As to the authority relevant to the requirement that any interim order must be capable of variation or reversal at any time prior to, or as part of, the final exercise of the s.79 power, the Full Court said in Strahan at paragraph [136] as follows:

[136] As to the third matter identified at 79,930 by the Full court in Harris, in discussion before us it was described as the "adjustment issue" or "claw-back issue". It was submitted by senior counsel for the Wife that it is relevant to consider whether an order would give the applicant "more than they would be indubitably entitled to on a final hearing" or alternatively "would it give them so much that it could not be adjusted on a final hearing?" As we have observed the Full court in Zschokke at 83,220-221 stressed the importance of consideration of the "adjustment issue" if the power in s 80(1)(h) of the Act is being exercised. We accept the submission and observe that this matter is relevant because the discretion conferred by the power in s 79 is to make such order as the court considers appropriate provided it is just and equitable to make the order in circumstances where the power will not be exhausted by the interim order. As Bryant CJ and Coleman J observed in Gabel v Yardley at [69] and [72] the interim order must be capable of variation or reversal without resort to s 79A of the Act or appeal. As Finn J said at [126] the interim order must be "capable of alteration at any time prior to, or as part of, the final exercise of the s 79 power".

1. Bearup & Bearup [1993] FamCA 72; (1993) 16 Fam LR 797, Harris & Harris [1993] FamCA 49; (1993) 16 Fam LR 579 and the decision of Murphy J in Furtado & Furtado [2011] FamCA 1018 at [10] and [11] refer to the context of restraint and caution which should be exercised by a trial judge in making interim orders.
2. Whilst I accept the submissions of Senior Counsel for the husband that the wife did not adequately explain in her material the disposition of the funds previously received by her, the disposition of those funds was the subject of submissions made by counsel for the wife, without objection from Senior Counsel for the husband. I consider it likely that the wife has indeed incurred such legal fees during this protracted and hard fought litigation.
3. During the course of submissions, neither Counsel included an adjustment of superannuation interests between the parties in their calculations of likely division of the asset pool. I specifically requested Senior Counsel for the husband whether superannuation had been included in his calculations of the asset pool and was advised that it had not been.
4. Paragraph 118 of the husband's affidavit filed 26 August 2020 also sets out the party's superannuation entitlements as follows:

1. $347,789 of the husband's entitlements in the Hext Cornett Superannuation Fund as at 20 August 2020; 2. $63,406 of the husband's superannuation entitlements in the Super Fund 1 as at 20 August 2020;

1. $130,000 in the wife's Super Fund 2 as at October 2019.
2. On an interim basis, in the middle of a part-heard trial, I am unable to make any findings about the parties' definitive or exact entitlements to property. However, even if I accept the husband's estimate of the wife's entitlements, exclusive of superannuation, the funds in the wife's Super Fund 2 would enable an adjustment to be made in favour of the husband, if his proposal was ultimately successful.
3. I therefore propose to make an order that the wife receive the sum of $150,000 from the proceeds of sale of the former family home which are held in trust by the wife's former solicitors.
4. I do not propose to make an order for the release of the further $12,000 as sought by the wife, to discharge the Westpac credit card, as she was unable to provide any explanation why she had not applied previous funds to discharge the liability, and why it was imperative that she did so at this stage of a part-heard trial.
5. Similarly, I accept the submission of Senior Counsel for the husband that if in fact the wife did seek to move to a less expensive property she would be able to apply the bond from her existing premises to assist with a relocation.
6. I do not propose to make any orders in relation to the furniture or chattels, as it is impossible to make any findings in an interim hearing that the existence or disposal of a couch and whether or not the wife does indeed have the Thermomix and photographs of the children.

1. During the course of the hearing, agreement was reached that the children's time with their mother should be suspended to enable them to enjoy a holiday with their father between 23 December 2020 and 6 January 2021. The husband proposes to take the children on a driving holiday with his partner.
2. The remaining issues were:
   1. whether there should be make up time for the wife because of the suspension of her regular time on the last weekend of each month, to enable the husband's blended family to spend weekend time together;
   2. whether the wife's telephone call with the children on Christmas Day should occur on loudspeaker with the husband permitted to remain present during the telephone call.
3. I requested each Counsel to provide an exact Minute of Orders sought. Counsel for the Independent Children's Lawyer did not seek to be heard on this issue.
4. Counsel for both parents agreed on the following orders:

1. the wife's time with the children be suspended for the last weekend of each calendar month; 2. the wife's time with the children be suspended from 23 December 2020 until 6 January 2021 to enable the husband to take the children on holidays;

1. wife's spend time with the children supervised by the W Contact Service under the direction of Ms E for four hours on 22 December 2020 and 13 January 2020;

1. the husband facilitate the wife communicating by telephone with the children on Christmas Day at 10:30AM, with the husband to initiate the call to the wife's mobile telephone.
2. Senior Counsel for the husband submitted that the husband's proposal for suspension of time on the last weekend of the month was because the husband wanted both to spend an uninterrupted weekend with the children and his partner, her son and their newborn baby, as well as not being responsible for the supervision costs of just over $500.
3. Counsel for the wife submitted that the children's time with their mother is restricted and should not be restricted further. The wife is making the appropriate concession for the benefit of the husband's family and that concession should not be to the detriment of the children and the relationship they have with their mother. Furthermore, the husband's Financial Statement includes the costs of supervision which up until 9 November 2020 had been two hours per week rather than four hours per week, due to COVID-19 restrictions.
4. Neither Counsel specifically addressed the conditions of the Christmas Day telephone call. I consider that the call should be on loudspeaker and the husband be permitted to remain present during the telephone call, as all time between the children and their mother is currently professionally supervised.
5. I am persuaded by the submissions of Counsel for the wife with regard to make up time and agree that the wife's concession, to enable the husband's family to spend a weekend together, is appropriately made and should not result in a reduction of time whilst the matter remains part-heard.
6. I will make an order that the variation of paragraph 3(d) of the orders made 13 November 2019 shall be varied to suspend the wife's time with the children for the last weekend of each calendar month, conditional upon the wife being provided with the equivalent make up time during the subsequent school holidays.

I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Williams delivered on 15 December 2020.