Strahan v Strahan [2011] FamCAFC 126 – The Principles Behind Making Interim (Property) Orders in Family Law

Interim orders affecting the rights of parties in Family Law matters are common-place, but their impact can be extraordinary. If litigation drags on for 1-2 years (and often longer), the implications of the decisions of the trial judge or federal magistrate before trial are, of course, magnified. The case of Strahan (Leave to Appeal Interim Orders and Appeal Against Costs Orders)* describes the principles applied in making interim (property) orders pursuant to Family Law proceedings.

This appeal arose from the decision of Dawe J, who refused to exercise her discretion to make an interim property settlement of $9 million in favour of the Wife. This seems like an incredible amount of money, but originally the Wife was asking for an interim payment of $24 million, and the Husband had conceded that the asset pool was $78 million (the Wife claimed that there were substantial assets overseas in addition).

Exercising the Discretion to Make Interim Orders Pursuant to s 79(6) of the Family Law Act (Cth) 1975 (‘the Act’)

In dismissing the appeal, the Court (consisting of Coleman, May and Murphy JJ) referred [at 32] to the decision of FM Reithmeuller in Wenz v Archer[2008] FMCAfam 1119 with approval:

‘Her Honour, again, with respect correctly, referred to the “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”, as discussed by Federal Magistrate Reithmuller in Wenz…and referred to by the Full Court (per Boland and O’Ryan JJ) in Strahan & Strahan(2009) 42 Fam LR 203.’ (Note the similar case name; they were collateral proceedings!).

In Wenz, the issue was dealt with in incredible depth by the learned Federal Magistrate, who conducted a thorough survey of the authority at the time** (including further still collateral proceedings regarding the ‘Strahans’!***)

Synthesising the principles in the authority, and having regard to s 79 of the Act, FM Reithmuller’s articulated the test at [52], being:

‘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.’

His Honour FM Reithmuller went on to say at [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:

– There is power to make interim property orders under s.79, which should be exercised when ‘appropriate’: s.79(1) and (5).
-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’.
– 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.
– 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.
– 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.

Conclusion

Ultimately the Wife in Strahan failed, mainly because the trial judge was not satisfied as to the size of the asset pool (see below). Perhaps of note too was the issue that the application was for $24 million and that the $9 million ‘fall back position’ was never actually articulated by Counsel for the wife (at [28]-30]). The proceedings being adversarial, it did not fall to the learned trial judge to award the Wife $9 million dollars, and the Full Family Court declined to impeach her decision (at [31]):

‘The proceedings before the trial Judge were adversarial. The parties were both represented by Senior Counsel. Absent any indication to the contrary, her Honour was entitled to consider the wife’s claim, and was not required to explore possible claims which the wife had not made.’

Further, the Full Family Court held (at [38]) that:

‘Her Honour recorded, again accurately… that there is considerable dispute about the likely final property settlement order because of the dispute about the assets to be considered, the Court cannot at this stage determine that it is in the interests of justice to make a further interim property order. The circumstances which currently exist do not make it appropriate for the Court to exercise the power available to it.’

The appeal was dismissed.

Marc Testart, Principal Family Lawyer

*Strahan & Strahan (Leave to appeal interim orders and appeal against costs order) [2011] FamCAFC 126 (10 June 2011)

** Most notably at [30] refering to:

• Burridge and Burridge (1980) FLC 90-902 (per Nygh J);
• Kearney and Kearney (1991) FLC 92-208;
• Harris and Harris [1993] FamCA [1993] FamCA 49 (per Nicholson CJ, Fogarty and Moore JJ); and

Further at [33] referring to Bearup and Bearup [1993] FamCA 72 (per Baker J, who spoke of the caution which needs to be exercised before selling matrimonial property);

Further at [34] referring to: Bonisoli and Bonisoli [1996] FamCA 45 (Ellis, with whom Fogarty and MayJJ agreed);

Further at [37] referring to Pedersen and Pedersen [2003] FamCA 625 (per Ellis, Rowlands and Finn JJ); and

Further at [38] refrering to Spoke & Spoke [2008] FamCAFC 59  (per Warnick, May, and Boland JJ).

*** Note the following citations:

• Strahan & Strahan (Appeal costs) [2009] FamCAFC 225 (21 December 2009)
• Strahan & Strahan (Disqualification) [2009] FamCAFC 204 (18 November 2009)
• Strahan & Strahan (Interim property orders) [2009] FamCAFC 166 (14 September 2009)
• Strahan & Strahan (Leave to appeal interim orders and appeal against costs order) [2011] FamCAFC 126 (10 June 2011)
• Strahan & Strahan [2010] FamCAFC 83 (23 April 2010)

At the date of the hearing of Strahan & Strahan (Leave to appeal interim orders and appeal against costs order) [2011] FamCAFC 126, each party had expended in excess of $10 million dollars in legal fees!