AITKEN & AITKEN

[2020] FamCA 421

FAMILY COURT OF AUSTRALIA

AITKEN & AITKEN [2020] FamCA 421

FAMILY LAW – PROPERTY – Interim – Where the parties’ finances are conducted through corporate entities – Where the parties jointly operate and manage a business – Orders made regarding the operation of the business, occupation of real property and maintenance of matrimonial assets in the interim.

APPLICANT: Ms Aitken

RESPONDENT: Mr Aitken

FILE NUMBER: SYC 5021 of 2019

DATE DELIVERED: 28 May 2020

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 25 May 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr O’Ryan QC with Mr Ford

SOLICITOR FOR THE APPLICANT: Nolan Lawyers

COUNSEL FOR THE RESPONDENT: Mr Campton SC with Mr Wong

SOLICITOR FOR THE RESPONDENT: Coutts Solicitors & Conveyancers

Orders

IT IS ORDERED BY CONSENT

1. That within seven days of these orders each party do all such things so as to authorise D Pty Ltd (the Company) to pay to each of them $470,000 by way of partial property settlement pursuant to section 79 of the Act, with the parties to do all such things so as to cause the payment to be paid from the Company’s cash reserve account and resolve that the payments be characterised as a return of capital to each of the Husband and Wife respectively.

2. That within 14 days each party do all things as are necessary to provide any outstanding documents or information as requested by the single forensic accounting expert JJ Group (the Valuers) to that expert to complete their opinion of the interests of the parties as at 30 June 2019.

3. That the parties forthwith do all things as are necessary to instruct the single forensic accounting expert to opine as to any impact on the value of the parties’ interests in The Aitken Unit Trust and D Pty Ltd should the circumstances of the COVID 19 pandemic as recorded in the trading performance of each continues through to 30 June 2020.

4. That the parties do all things as are necessary for the published accounts for each of the Corporate Entities and Trusts in which they have an interest for year ended 30 June 2020 be prepared and finalized by 31 August 2020, and thereafter be provided to the Valuers forthwith.

5. Within seven days of the making of these Orders, the parties jointly appoint Pickles Advisory and Valuations as the single expert pursuant to Chapter 15 of the Family Law Rule 2004 (Cth) to jointly value the stock, plant and equipment, boats, motor vehicles, guns and furniture and furnishings owned by the parties in their personal capacity and/or the Company, and the Aitken Unit Trust, with the costs to be shared equally between the parties.

IT IS FURTHER ORDERED

1. That other than for the purpose of compliance with Orders 1 and 16 hereof, each party is restrained from removing or transferring any funds from the following accounts:

   (a)       D Pty Ltd Term Deposit account number ...11;

   (b)       D Pty Ltd Term Deposit account number …03;

   (c)       D Pty Ltd Cash Reserve Bonus account number …02;

   (d)D Pty Ltd Loan Account (redraw facility account number not known);

   (e)       U Pty Ltd Business account number …72;

   (f)U Pty Ltd Cash Reserve account number …86; and

   (g)       U Pty Ltd Term Deposit account number …78.

2. That the Husband is restrained from doing any act or thing, either directly or indirectly so as to remove the Wife as a signatory or to remove her online viewing access to any and all bank accounts in the name of:

   (a)       D Pty Ltd ACN …;

   (b)       U Pty Ltd ACN …; and

   (c)       Aitken Pty Ltd ACN … (“the Companies”)

   and for the purposes of giving effect to this order the Husband shall ensure that at all times the wife is provided with all necessary passwords and shall sign all necessary authorities directed to the bankers for the said companies to provide the Wife with online viewing access.

3. That subject to Orders 1 and 16, unless otherwise agreed in writing or as ordered by the Court, the Husband and the Wife cause the term deposits invested in the name of the Companies, upon maturity, to be reinvested as term deposit(s) with the same financial institution for a further period of 12 months.

4. That the parties, without agreement in writing signed by each of them or an order of the Court, be restrained from selling or transferring their shares in the Companies or adversely dealing with their interest in the Aitken Family Superannuation Fund.

5. That the Husband, in his capacity as director of the Companies, ensure that within 14 days of the conclusion of each month the Wife is provided by email with:

   (a)the management accounts for the Companies for the preceding month, including but not limited to a copy of all documents relating to:

   (i)     tax invoices;

   (ii)    BAS payments;

   (iii)   GST payments:

   (iv)   PAYG payments:

   (v)    superannuation payments:

   (vi)   wages payments;

   (vii)  credit card statements;

   (viii) the reconciliation receipts for transactions incurred on the credit card statements and any other amounts paid; and

   (ix)   payments made by Mr X to the Aitken Unit Trust.

   (b)the MYOB ledgers, sub-ledgers and MYOB backup-data file and bank files for the preceding month;

   (c)the Business Activity Statements as and when they are lodged;

   (d)the Income Tax Returns as and when they are lodged; and

   (e)the Financial Statements as and when they are prepared.

6. That pending further Order the Husband is restrained from varying or altering any insurance policy of the Companies without the written consent of the Wife.

7. That the husband, without requiring the consent of the wife, shall pay as they fall due the operating expenses of D Pty Limited in the categories described under the heading “Expenditure” at pages 5 and 6 of the Financial Statements for the year ended 30 June 2019.

8. That the husband, without requiring the consent of the wife, shall pay as they fall due the operating expenses of the Aitken Unit Trust in the categories described under the heading “Expenditure” at page 5 of the Profit and Loss Statement of the Trust Financial Statements for the year ended 30 June 2019.

9. That the husband is restrained from making any item of capital expenditure from the accounts of D Pty Limited or the Aitken Unit Trust in an amount greater than $10,000 unless he has first given 7 days’ notice of the proposed expenditure to the wife and she has not, within a further 7 days, responded.  

10. That the parties do all acts required to transfer the sum of $500,000 from the cash management accounts of D Pty Limited to the trading account ending #...29.

11. That the wife be restrained from attending at or entering upon the premises occupied by D Pty Limited at Suburb H.

12. That pending the determination of the substantive proceedings, the husband have the sole use and occupation of the property at E Street, Suburb F and the wife is restrained from entering upon the property.

13. That the wife cause to be delivered to the husband’s nominee, at E Street, Suburb F, at a time agreed upon with the husband, the following items:

    (a)The boat registration … together with its trailer;

    (b)The items referred to at Paragraph 15 of the husband’s response to an application in a case filed 1 April 2020.

14. That within 7 days of the completion of the valuation of the firearms owned by the husband and the ammunition stored at the wife’s home at B Street, Suburb C, the husband cause his nominee to attend at the wife’s home, at a time convenient to her, and the wife deliver the firearms to the husband’s nominee.

15. That within 7 days of the completion of the valuation of the items referred to in Order 18 (a) to (h) of the husband’s response to application in a case filed 1 April 2020, the husband’s nominee, at a time or times convenient to the wife, cause those items to be removed from the property occupied by the wife at B Street, Suburb C.

16. That the application of the husband requiring the wife to resign as a director of D Pty Limited and Aitken Pty Limited as trustee of the Aitken Unit Trust is dismissed.

17. That the application of the husband to restrain the wife from entering upon the property at Suburb BB is dismissed.

18. That the husband’s application to restrain the wife from dealing with the customers of D Pty Limited is dismissed.

19. That the husband’s application relating to the transfer of motor vehicles between the husband and the wife is dismissed.

20. That each party be restrained from disposing of any asset with a value exceeding $1,000.

21. That each party be restrained from selling or encumbering any interest in real property.

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 Aitken & Aitken 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: SYC 5021 of 2019

Ms Aitken

Applicant

And

Mr Aitken

Respondent

REASONS FOR JUDGMENT

1. Ms Aitken (“the wife”) and Mr Aitken (“the husband”) married in 1990 and, in 1991, established a business together manufacturing equipment. They continued to operate and manage the business together and acquired, from its profits, significant real estate holdings utilising a unit trust structure and two further real properties which they hold as joint tenants.

2. The parties’ affairs were and are conducted through three corporate entities:

   ·    D Pty Limited conducts the manufacturing business.

   ·    Aitken Pty Limited is the trustee of the Aitken Unit Trust which owns significant real estate including the property where the business is conducted.

   ·    U Pty Limited owns two properties in Suburb KK.

3. D Pty Limited generates the income of the group. In general terms, D Pty Ltd has three categories of accounts:

   ·    The Trading Account, an account with Westpac ending #...29, is used for the day to day trading activities.

   ·    When cash builds up in the trading account, it is transferred to one of the Cash Management Accounts.

   ·    When the amount in a Cash Management account reaches $2,000,000 the surplus is transferred to a Term Deposit.

4. In addition, a self-managed superannuation fund owns two real properties at Suburb H and cash deposits.

5. They were and remain equal shareholders and directors of the relevant entities.

6. The business is operated from premises at Suburb H owned by the unit trust.

7. They finally separated in December 2018. The wife remained living in their home at Suburb C, which is jointly owned.

8. The husband moved into a rural property a Suburb BB which is owned by the unit trust.

9. The other property relevant to the application presently before the Court is a jointly owned property at Suburb F which has been used as a holiday home. 

10. Each party complains about actions taken by the other after separation in relation to the removal of items from various properties, removal of money from accounts of the business, and purchase of significant items without the consent of the other.

11. Within days of their separation in December 2018, in circumstances which are contentious, the wife was excluded from the day to day operation of the business and the husband took over the de facto control of the affairs of the business and of the unit trust.

12. Until the parties separated, they each drew the same salary from the business. In the financial year ended 30 June 2019, the husband drew a salary of $180,000 and the wife was paid $17,498. The wife received no payment of salary from 3 January 2019.

13. The competing interim applications before the Court deal with a number of aspects of the use of the assets pending determination of the substantive proceedings.

14. A numbered of matters have been agreed.

15. It is agreed that:

    ·    Each party will be paid $470,000 by way of interim property settlement, such funds to be paid from a Cash Reserve account.

    ·    Other than for the purpose of the payment to the wife and a proposed transfer of funds to the Trading Account (which is in dispute), each party will be restrained from dealing with the funds in the Cash Management accounts and the Term Deposits, other than for the purpose of depositing funds in those accounts.

    ·    The wife will have online viewing access to all of the bank accounts.

    ·    The husband will be restrained from making payments from the Trading Account other than in the ordinary course of business.

    ·    The husband will cause each of the Term deposits to be renewed as it matures.

    ·    Each party will be restrained from disposing of any asset with a value of more than $1,000.

    ·    The husband will cause to be forwarded to the wife each month, the management accounts of the companies.

    ·    Each party will be restrained from selling or transferring his or her shareholding in any of the companies or dealing with his or her interest in the self-managed superannuation fund.

    ·    The husband will be restrained from varying any insurance policy held by any of the companies without the written consent of the wife.

    ·    Each party will be restrained from selling or encumbering any interest in real property.

16. The matters in issue are:

    ·    The wife’s application to restrain the husband from using the Trading Account other than for the usual trading activities of the business, that is, for capital expenditure.

    ·    The husband’s application to be permitted to transfer $2,000,000 from the Cash Management accounts to the trading account.

    ·    The husband’s application for an order requiring the wife to resign as a director.

    ·    The husband’s application to restrain the wife from entering the business premises.

    ·    The husband’s application to restrain the wife from entering the property at Suburb BB.

    ·    The husband’s application for the sole use of the Suburb F property.

    ·    The husband’s application for the return of a boat and other items removed from the Suburb F property.

    ·    The husband’s application to restrain the wife from dealing with or communicating with the customers of the pallet business.

    ·    The husband’s application to remove items belonging to the business from the wife’s home.

    ·    Orders for the transfer of motor vehicles used by each of the parties.

    ·    Orders permitting the husband to remove the gun safe, the guns and the ammunition stored at the wife’s home.

17. I propose to deal with the applications in that order.

The wife’s application to restrain the husband from using the Trading Account

other than for the usual trading activities of the business.

1. This application is opposed in part by the husband.

2. The wife seeks to restrain the husband from using the Trading Account for capital acquisitions or for capital improvements, without her consent.

3. She proposes that the category of expenses for which the husband can use the Trading Account should be the categories of expenses which are listed in the 30 June 2019 Profit and Loss Statements of the companies.

4. The wife asserts that the husband has used money from the Trading Account to restore a collectable motor car, for earthworks at the business premises to a cost of some $136,000, for extensions to a shed at Suburb BB, for earthworks at Suburb BB, to purchase quad bikes, for unspecified “development consolidation work”, to acquire an excavator for $60,000.

5. On behalf of the husband, it is submitted that he should have the ability to replace machinery used in the business. One of the expenses of which the wife complained was the purchase of a forklift for use by the business.

6. It is appropriate that the husband should be able to spend money from the Trading Account for the day to day running of the business, as is agreed. Those are the expenses listed in the Profit and Loss Statement under the heading “Expenditure” at pages 5 and 6.

7. The dispute is whether those expenses should include capital expenses.

8. The wife is an equal shareholder and a director. It is appropriate that she is informed of any proposed capital expenditure. I accept that it would unreasonable complicate the day to day running of the company of the wife had to approve every item of capital expenditure, however small. I propose to make orders that the husband be entitled to spend not more than $10,000 on any one item of capital expenditure, provided that the wife is advised monthly of that expenditure. In the event that the husband proposes to spend more than $10,000, he must give the wife 7 days’ notice in writing by email and can proceed in the event that she does not dissent within a further 7 days. If the wife dissents, the parties must reach agreement.

9. I will make similar orders in relation to capital expenditure by the Aitken Unit Trust for the same reasons.

The husband’s application to be permitted to transfer $2,000,000 from the Cash Management accounts to the trading account.

1. I was not directed to any evidence to substantiate the requirement for $2,000,000 to be made available to the Trading Account.

2. I accept that there has been a reduction in sales in 2020. For example in May 2020 the company’s sales were $585,210 compared to $1,857,000 in May 2019.

3. I accept that the husband has made a commitment to retain the staff and that wages and other overheads have to be paid.

4. However, at Paragraph 81 of his affidavit sworn 2 April 2020, the husband deposed that “The company is meeting its debts as and when due and payable”.

5. I was not directed to any evidence of the current balance of the Trading Account or of the current monthly outgoings of the company.

6. On behalf of the wife, it was conceded that, during the parties’ joint administration of the business, the trading Account had a balance from time to time of up to $500,000.

7. I propose to order that the husband be permitted to make one transfer of the sum of $500,000 from the Cash Management accounts to the Trading Account. No further transfer of funds is permitted without the express written consent of the wife.

The husband’s application for an order requiring the wife to resign as a director.

1. The wife has been a director of these companies since their incorporation.

2. The fact that the parties cannot agree on some aspects of the management of the companies is not a reason to deprive the wife of the rights attaching to her being a director.

3. The application will be dismissed.

The husband’s application to restrain the wife from entering the business premises.

1. The husband’s evidence in relation to the Suburb H properties is found at Paragraphs 139 to 145 of his affidavit. He deposes to one incident where the wife attended at the property.

2. However, having regard to the acrimony between the parties and the need for the business to be conducted without interruption, it is appropriate for the order to be made as sought by the husband.

The husband’s application to restrain the wife from entering the property at Suburb BB.

1. I was not referred to any evidence that the wife has ever attended at the Suburb BB property uninvited.

2. The application for orders restraining her from doing so will be dismissed.

3. However, the wife should understand that this is not a tacit approval for her to do so.

The husband’s application for the sole use of the Suburb F property.

1. Neither party wants to retain the Suburb F property in the substantive proceedings. The wife, in her affidavit, proposed that it be sold although she does not seek an order to that effect in these proceedings.

2. The husband wants to use the property. The wife does not suggest that she wants to use Suburb F and gives no evidence to suggest that the husband should not be able to use it.

3. The husband will have the right to occupy the Suburb F property, subject to the orders restraining the husband from using the funds of the unit trust for capital expenses.

The husband’s application for the return of a boat and other items removed from the Suburb F property.

1. The husband deposed that, on 14 December 2019, he received a phone call from a neighbour telling him that the wife was at Suburb F and was removing the contents.

2. He deposed that he went to the property the following week to find that furniture and fittings had been removed and other items had been vandalised. Photographs of the damaged items were in evidence.

3. The wife does not deny removing the items or causing the damage.

4. The order will require the wife to return the items she took from Suburb F, excepting the car charger.

The husband’s application to restrain the wife from dealing with or communicating with the customers of the pallet business.

1. I was not referred to any evidence that the wife has dealt with or communicated with any customer.

2. This application will be dismissed.

The husband’s application to remove items belonging to the business from the wife’s home.

1. At Order 18 of the husband’s response to an application in a case filed 1 April 2020, he sets out the items which he seeks to remove from the wife’s home, including but not limited to demountable offices, shipping containers, plant and equipment.

2. I do not understand that the wife has any objection to the removal of the items but that she wants them to be valued before they are removed.

3. The items can be removed, once valued, by arrangement with the wife at times convenient to her, by the husband’s nominees.

4. The orders currently in place restrain the husband from attending at the property.

Orders for the transfer of motor vehicles used by each of the parties.

1. I was not referred to any evidence which suggests that it is necessary to make such an order at this time.

2. The application will be dismissed.

Orders permitting the husband to remove the gun safe, the guns and the ammunition stored at the wife’s home.

1. The husband is the holder of the licence relating to the guns. He has the obligation to secure them, and the ammunition.

2. However, I assume that the gun safe is a fixture in the wife’s home and the husband can acquire another safe, rather than require the wife to rectify any damage caused by its removal.

3. I infer that the wife’s only objection to the removal of the guns is that she wants them to be valued before they are removed and the orders will make provision for this.

I certify that the preceding fifty-nine (59) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 28 May 2020.

Associate: 

Date:  28/05/2020