We have seen many Family Law decisions where the court has ordered an early distribution of assets (an Interim Property Order), before a final decision is reached in the Family Law property dispute. The recent case of Sully v Sully (No. 2)  FamCA 706, is a reminder that under the Family Law Act, the court has a wide discretion to make these types of orders
In Sully v Sully (No. 2)  FamCA 706, the court dismissed the wife’s application of a partial property settlement of $10million dollars as it was not ‘just and equitable’ for such an order to be made at that stage of the proceedings.
Mr and Mrs Sully physically separated on 26 December 2015 after a marriage of approximately 17 years. Since the separation the three youngest children spend three nights per week with the wife whilst the eldest son has elected to spend no time with his mother.
Over the course of the marriage the husband grew and operated a successful construction and property development business referred in the case as “X Pty Ltd” (“X”). At the stage of the hearing, there was no valuation of the business, however the husband deposed X had net assets of $120,944,062.
In their names personally, the husband held assets and superannuation of approximately $9,529,000 and the wife held assets and superannuation of $7,872,000. The matrimonial home, valued at $10 -11 million, was held in the name of the wife which the husband asserted is held upon trust for them jointly.
The wife made an application for the partial property settlement of $10million dollars in order for her to purchase real property to live in and which the children could ultimately live with her. In her affidavit she provided four properties which were within 5km of the children’s school and all had swimming pools to which the children were accustomed to.
The wife submitted that it would be just and equitable for the partial settlement to take place. The reasons she gave included:
- the marriage lasted 17 years and the equal division of the net assets is an ‘achievable’ result;
- the wife contends the husband is in control of around $20million of the assets outside X;
- the husband has exclusive control over X;
- the substantial wealth of the parties means ‘this is not a usual case’;
- the husband seeks to prevent he wife from rehousing herself to a comparable standard;
- it is no defence that tax liabilities will be triggered by the payment of the $10million; and
- the husband has outside of X which he could sell or use as security to raise the $10million.
The husband made several submissions against the order, including that:
- wife had already entered into a lease which expired in 25 February 2017 for her and the children to reside in;
- it was premature for the wife to purchase a property on the basis the children would ultimately live with her; and
- the husband had no access to $10million other than extracting out of X which would generate a substantial tax liability.
Stevenson J expressed concerns that there was no evidence to the net value of the husband’s company other than an ‘indicative’ assessment and that there was no known taxable or commercial consequences for the extraction of the $10million at that stage of the proceedings.
The sum of $10million could not be extracted from the assets of the husband and wife without the sale of the former matrimonial home. The wife’s submissions stated she did not seek to interfere with her husband’s residence. Such a sale would mean the children and the husband would need to be re-accommodated.
Furthermore, the wife had entered into a lease which expires on 25 February 2017 in respect of a property which constitutes a ‘comfortable home for the children, aiming for a standard similar to that of which the children are accustomed’. His honour noted that the children’s future living arrangements ‘are far from clear’ given the eldest son refused to live with his mother and the father was seeking final orders for primary residence.
For those reasons his honour was not satisfied that his was just and equitable at that stage of the proceedings to make an order for the husband to pay $10million by way of an interim or partial property settlement and dismissed that part of the wife’s Application.
For more information regarding family interim property orders
While Interim Property Settlements can be of great help to a party’s financial circumstances, this decision makes it clear that not all Interim Property Settlements are straightforward.