Alam & Sayid
[2016] FamCA 580
•18 July 2016
FAMILY COURT OF AUSTRALIA
| ALAM & SAYID AND ANOR | [2016] FamCA 580 |
| FAMILY LAW – CHILDREN - Interim – Where the parties agree to have equal shared parental responsibility – Where the parties agree that the children will spend time with the father on two weekends out of every three – Where there is a dispute as to whether the children’s time with the father should be extended – Where there is a dispute as to where the children should live – Where the husband submits that the children should live in the former matrimonial home with him if the mother does not want to reside there with the children –Where no weight is placed on the father’s concerns for the need to protect the children from physical or psychological harm whilst in the care of the mother in the context of an interim hearing – Where an interim ADVO has been made against the husband – Where the children have experienced significant upheaval in changes to their home and school – Where it is in the children’s best interests to live with the mother – Where the age of the children and travel time mitigate against extending the father’s time with the children. FAMILY LAW – PROPERTY – Interim – Where an order has been made against the husband in the Federal Court in favour of the Commissioner of Taxation in relation to a debt owing by the husband and a freezing order made in relation to the matrimonial home – Where the husband has lodged an objection but the outcome is unknown – Where the wife seeks the sale of the matrimonial home – Where the wife seeks the proceeds of sale be paid to her for legal costs and the balance be placed into a controlled monies account – Where the Commissioner of Taxation agrees to the sale but seeks the proceeds of sale be frozen – Where an amount of $3 million has been removed from Australia to Country A by the husband – Where the husband asserts that $1.5 million of the $3 million in Country A remains in the wife’s control – Where evidence is provided by the husband in the vaguest terms as to whether the money was transferred to Country A as a result of a commercial loan agreement – Where the husband submits that if a sale order is made now it would preclude him from arguing at final hearing that he should retain the matrimonial home – Where there is a risk that the debt on the matrimonial home will increase reducing the current equity in the property – Where there is a real possibility of a forced sale of the matrimonial home – Where it is necessary to do justice and order the sale of the matrimonial home – Where the Commissioner of Taxation is entitled to succeed against the wife and the proceeds of sale are to be placed in a controlled monies account – Where the Commissioner of Taxation is ordered to notify the parties about any garnishment notice against any future purchaser of an investment property. |
| Child Support (Assessment) Act 1989 (Cth) Crimes (Domestic and Personal Violence) Act 2007 (NSW) Family Law Act 1975 (Cth) Taxation Administration Act 1953 (Cth) |
| Commissioner of Taxation & Worsnop and Anor (2009) FLC 93-392 Harris & Harris (1993) FLC 92-378 Johnson & Johnson (1999) FLC 93-039 Trustee of the property of G Lemnos & Lemnos and Anor (2009) FLC 93-394 |
| APPLICANT: | Ms Alam |
| RESPONDENT: | Mr Sayid |
| SECOND RESPONDENT: | Commissioner of Taxation |
| INDEPENDENT CHILDREN’S LAWYER: | Ms Weaver |
| FILE NUMBER: | SYC | 3215 | of | 2015 |
| DATE DELIVERED: | 18 July 2016 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Watts J |
| HEARING DATE: | 11 July 2016 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Bridger |
| SOLICITOR FOR THE APPLICANT: | Barraket Stanton Lawyers |
| COUNSEL FOR THE RESPONDENT: | Ms Lawson |
| SOLICITOR FOR THE RESPONDENT: | Cheryl Orr Family Law |
| COUNSEL FOR THE INTERVENOR: | Ms Gover |
| SOLICITOR FOR THE INTERVENOR: | Commissioner of Taxation |
| SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER: | Legal Aid NSW Bankstown Family Law |
Orders
Pending further order
Parenting
All previous interim parenting orders are discharged.
The parents have equal shared parental responsibility for the children B born … 2010, C born … 2012 and D born … 2013 (“the children”).
The children live with the wife.
The children will spend time with the husband with the husband to collect and return the children:
4.1.For two weekends out of every three from 3.30pm or the end of school/preschool/daycare on Friday until 9am or the commencement of school/preschool/daycare on Monday (in the same cycle as under the previous orders);
4.2.For each third Monday (being the Monday after the weekend that the children are not with their father) from 3.30pm or the end of school/preschool/daycare until 7pm on the condition that the time the husband spends with the children does not involve them in any travel for a significant period during those 3 ½ hours;
4.3.On special occasions each year as follows:
4.3.1.From 9am on the day of the religious festival until 3pm three days later in odd numbered years;
4.3.2.From 9am on the ninth day of the religious festival until 5pm four days later in even numbered years;
4.3.3.On Father’s Day from 9am until 5pm should the children not otherwise be with their father on that day;
4.3.4.If the children are not otherwise with him, for a period of two hours on each of the children’s birthdays and the husband’s birthday if the children are not otherwise with their father, failing agreement to be from 3pm until 5pm;
4.3.5.For five hours on Christmas Day if the children are not otherwise with the husband, to be from 12pm until 5pm unless otherwise agreed
4.4.On other occasions as agreed between the parties.
Notwithstanding other orders, the children will be with the wife (and the husband’s time with the children will be suspended if necessary) on special occasions each year as follows:
5.1.From 9am on the day of the religious festival until 3pm three days later in even numbered years;
5.2.From 9am on the ninth day of the religious festival until 5pm four days later in odd numbered years;
5.3.From 9am on Mother’s Day until 9am/the commencement of school on the following day should the children not otherwise be with their mother on that day;
5.4.For a period of two hours on each of the children’s birthdays and the wife’s birthday if the children are not otherwise with their mother, failing agreement to be from 3pm until 5pm;
5.5.For five hours on Christmas Day if the children are not otherwise with the wife, to be from 12pm until 5pm unless otherwise agreed;
5.6.On other occasions as agreed between the parties.
The parents are each permitted to telephone to speak to the children between 5pm and 6pm on any day that the children are in the other parent’s care and the parent with whom the children are spending time will facilitate the children receiving that call.
Within three months of the making of these orders, the parents shall enrol in and undertake a “Keeping Kids in Mind” or equivalent parenting after separation course approved by the Independent Children's Lawyer and shall provide the other parent and the Independent Children's Lawyer with evidence of their completion of such course.
Within five months of the making of these orders, the parents shall enrol in and undertake a “Circle of Security” course and shall provide the other parent and the Independent Children's Lawyer with evidence of their completion of such course.
The parents are forthwith to do all such things as are necessary to enrol the child B at E School and the wife is to ensure that from the commencement of term 3 2016, B attends school on all school days unless he is sick and the wife is to provide a copy of these orders to the school.
Subsequent to complying with order 9, the parties are each restrained from changing B’s school without the written consent of the other parent or further order of this court.
The parties are each restrained from changing the school/preschool/daycare attended by the children C and D without the written consent of the other parent or order of this court and the wife is to provide a copy of these orders to any school, preschool or daycare attended by the children C and D.
Each parent is hereby authorised to communicate directly with any school, preschool or daycare attended by any of the children, to receive copies of all reports, newsletters and other documents provided to parents and to attend any events at the school, preschool or daycare to which parents are invited.
The wife is to ensure that within four weeks of the date of these orders, she arranges for B to commence/recommence the following:
13.1.Fortnightly occupational therapy as recommenced by Ms F in her report dated April 2016; and
13.2.Speech therapy to address B’s speech “dysfluency” as recommended in the report of “Childthink” dated 5 April 2016.
The wife is to notify the husband and the Independent Children's Lawyer of the dates of B’s appointment and the name and contact details of the therapists from whom B will be receiving treatment, and authorise the therapists to release all information to the husband about B’s treatment and progress. The husband is to pay the costs of any therapy that the wife arranges for the child.
The parents are each restrained from doing any of the following:
14.1.Denigrating, criticising or otherwise speaking negatively about the other parent or members of the other parent’s family in the presence or hearing of the children;
14.2.Discussing these proceedings or any of the allegations raised in evidence in these proceedings with or in the presence or hearing of the children;
14.3.Enrolling the children in any extracurricular activities that take place at times when the children will be in the care of the other parent without the prior written consent of the other parent;
14.4.Using any form of physical discipline upon the children.
The parents are each to keep the other parent informed of their current residential address, mobile telephone number and email address at all times.
Communication between the parties in relation to the care of the children is to occur by email or text message except in the case of an emergency and such communication is to be expressed in a polite and businesslike manner at all times.
The parents are each to keep the other informed in a timely manner of any serious illness or injury suffered by any of the children while in their care, including any hospitalisation and is to provide the other parent with the name and contact details of any health care professional who has provided treatment to any of the children and authorise such professional to discuss the child’s health and treatment with the other parent.
Each of the parents are restrained from presenting the child/ren to any professional whatsoever for the purpose of assessment unless both parents have provided written consent or otherwise by court order.
The parents do all things necessary to ensure the Sydney Registry of the Family Court of Australia retain each of the children’s passports and the children shall not travel overseas (with or without the parents) without leave of the court.
Pursuant to s 65DA(2) and s 62B Family Law Act 1975 (Cth), the particulars of the obligations these orders create and the particulars of the consequences that may follow if a person contravenes these orders and details of who can assist parties adjust to and comply with an order are set out in the Fact Sheet attached hereto and these particulars are included in these orders.
Financial
Each party do all things and sign all necessary documents to vary, so far as it is necessary, any order made in the Federal Court proceedings, NSD 544 of 2015, so that orders 22 and 23 might be implemented.
The husband and wife do all acts and things and sign all writings and documents necessary to forthwith list and cause the sale by public auction of the property at G Street, Suburb H (“the Suburb H property”) being the whole of the land in Folio Identifier … at a price to be agreed upon between the parties and failing agreement, at a price to be determined by the nominee of the President for the time being of the Australian Institute of Valuers on the following basis:
22.1.Pending completion of the sale of the property, the husband pay as and when they fall due:
22.1.1.All instalments of principal and interest in respect of the mortgage which the Commonwealth Bank of Australia holds in respect of the property;
22.1.2.All rates and taxes in relation to the property;
22.1.3.All premiums of insurance in relation to the property and contents therein.
The proceeds of the sale of the property be paid in the following manner and priority:
23.1.Agents commission, costs and disbursements of the agent and/or auctioneer acting on the sale of the property;
23.2.Costs and disbursements of the conveyancer/lawyer acting on the sale of the property;
23.3.Monies owing to the Commonwealth Bank of Australia in order to effect a discharge of the mortgage that the Commonwealth Bank hold in respect of the property;
23.4.Adjustment of municipal and water rates;
23.5.The balance to be held in a controlled monies account in the names of the solicitors for the parties to these proceedings until further order of the court.
The husband is to vacate the Suburb H property not later than two days prior to the date scheduled for the settlement of the sale of the Suburb H property.
The parties have liberty to apply on 14 days’ notice in relation to the implementation of the orders relating to the Suburb H property.
The husband pay to the wife by way of periodic spousal maintenance, the sum of $600 per week. The first payment to be within seven days.
The Commissioner of Taxation is to give notice as soon as possible to the husband and wife about any garnishment notice made against any future purchaser of the property at I Street, Suburb J and the husband and wife are to be given liberty on 14 days’ notice to make an application in relation to whether or not those proceeds of sale should be frozen pending the outcome of these proceedings.
The wife’s Amended Application in a Case filed 20 June 2016 be otherwise dismissed.
The husband’s Amended Response filed 6 July 2016 be otherwise dismissed.
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 Sayed & Alam 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: SYC3215 of 2015
| Ms Alam |
Applicant
And
| Mr Sayid |
Respondent
And
| Commissioner of Taxation |
Second Respondent
REASONS FOR JUDGMENT
The wife seeks interim orders in relation to parenting, spousal maintenance, the sale of the matrimonial home property, or in the alternative, interim lump sum costs, injunctions and disclosure. The Commissioner of Taxation (the 2nd respondent) consents to the sale of the matrimonial home and seeks a freezing of the proceeds of sale.
BACKGROUND
The husband was born in 1981 and is currently 34 years of age.
The wife was born in Country R in 1990 and came to Australia in that year. She is currently 26 years of age.
The husband and wife were married in a religious ceremony in 2009.
The first child of the marriage was born in 2010 and is five years of age. The second child of the marriage was born in 2012 and is four years of age and the third child of the marriage was born in 2013 and is two years of age.
The parties initially separated in December 2014 and the wife and the children remained in the matrimonial home with the husband at G Street, Suburb H (“the Suburb H property”) until September 2015.
In September 2015 the wife and the children moved to live at the wife’s mother’s home in Suburb K.
In March 2016 the wife and children returned to live at the Suburb H property with a view to the parties reconciling.
On 9 May 2016 the wife and the children left the Suburb H property to live again at her mother’s Suburb K property and for the purposes of these proceedings, it was assumed by all parties that that was a final separation of the parties.
PARENTING
The parties have substantially agreed upon interim parenting orders. There is agreement that the parents would have equal shared parental responsibility for the children. There is agreement that the children will spend time with their father on two weekends out of every three from Friday afternoon until Monday morning but there is a dispute between the parties as to whether or not those weekends should be extended to Tuesday morning.
There is a dispute between the parties as to where the children should live. It is the husband’s case that they should live in the Suburb H property with their mother but if their mother is not prepared to return to the Suburb H property, they should live with their father in the Suburb H property. Part of the husband’s proposal is that he would move out of the Suburb H property to allow the wife to live there with the children.
Given that there is to be an order for equal shared parental responsibility I am required by s 65DAA(1) Family Law Act 1975 (Cth) (“the Act”) to consider whether or not the children spending equal time with both their parents would be in their bests interests and reasonably practicable. Neither parent has made that application and I do not need to further consider that matter in the context of this hearing.
Section 65DAA(2) of the Act then requires me to consider whether or not the children spending substantial and significant time with each of their parents would be in their best interests and otherwise reasonably practicable and if it is, consider making an order providing that the children spend substantial and significant time with each of their parents. I do not need to further concern myself with this subsection given that on both parent’s proposal, the children will be spending substantial and significant time with each parent. I otherwise have to make an order which is in the best interests of the children and in doing so, I take into account relevant matters pursuant to s 60CC(2) and (3) of the Act. During submissions neither counsel for the parents referred specifically to those sections.
The children will benefit from having a meaningful relationship with both their parents. Whilst there is reference in some of the husband’s material for the need to protect the children from physical or psychological harm whilst in the care of their mother, I am unable to place any weight on those concerns in the context of this interim hearing. Given the children’s ages, expressed views are not a factor. I have limited information about the nature of the relationship with the children with persons other than the parents.
Submissions in relation to the children’s best interests focused upon the age of the children; the likely effect of changing the existing arrangements and the capacity of each of the parents to provide accommodation that was physically appropriate.
The wife asserts that there has been an incident of family violence. She says on 9 May 2016 the husband said to her, “Do you remember what I promised before? I am going to end you and your fucked up family. I am going to fuck you and end you.” The wife subsequently made a complaint to the police about this threat. An interim ADVO was made against the husband in the wife’s favour at the Waverley Local Court on 25 May 2016. The husband has also been charged with a stalking/intimidating offence under the Crimes (Domestic and Personal Violence) Act 2007 (NSW) on 12 May 2016. The husband denies the allegations made by the wife.
The husband submitted that there are real benefits to the children in requiring the children to live back in the Suburb H property which include:
17.1.The children will return to a home and a neighbourhood that they know;
17.2.The children will be in proper accommodation and not suffering from over-crowding in the wife’s mother’s home at Suburb K;
17.3.The children will be in the vicinity of the school and day care that they have previously attended;
17.4.Any issue in relation to the wife’s relationship with her extended family will no longer be the subject of any question;
17.5.A “buffer” will be provided to the children from some of the “issues” with the wife’s parenting.
The eldest child began attending L School in 2013 at the preschool associated with the school and he had been attending L School early learning centre five days a week. The husband wants the children to attend L School and M School. There does not seem to be any issue that when the parties were together these are the schools to which they intended the children to attend.
It is the husband’s case that the paternal family have offered to help fund the children’s continued attendance at these schools. There has been a history, notwithstanding the freezing orders made by the Federal Court on the husband’s income, of fees at L School being paid by third parties friendly to the husband.
The eldest child has a number of difficulties and has been supported at L School through Earlylink Assessments and occupational therapy.
The husband also points to the lack of stability in the preschools attended by the two younger children. The husband seeks orders that the wife not unilaterally change the children’s day care in the absence of joint agreement by the parties. The agreed order for equal shared parental responsibility means that a joint decision needs to be taken about those matters and in addition, the parties have agreed to specific injunctions about that topic.
It is the husband’s case that the children have been through significant upheaval in recent times. There have been five moves. The wife moved with the children to her mother’s home for two weeks in April 2015 and she then moved back. She left the matrimonial home again with the children in September 2015. After Judge Henderson ordered overnight time in favour of the husband, the wife returned to live in the matrimonial home with the children on 9 March 2016 to attempt a reconciliation. The wife and the children were back in the home until 9 May 2016. The husband claims that the wife limited the husband’s involvement with the children in the period 9 March 2016 to 9 May 2016. The Independent Children's Lawyer expressed concerns that these movements by the wife had had an impact on the eldest child’s schooling. At the beginning of 2016 the eldest child started school at N School over the husband’s objection. When the parties reconciled, the eldest child went back to L School where he had been at preschool. When the wife left again in May and relocated back to Suburb K, the wife put the eldest child back in N School. The husband however indicated to N School that he did not consent to the child attending that school and after a few weeks the school told the wife they couldn’t keep the eldest child at the school. The husband’s objection to N School was because, in his view, it is a strict conservative religious school and the husband has concerns about the impact on the eldest child of cultural and religious differences between the school he was used to and N School. The unfortunate result has been that the eldest child has lost a month of school prior to the last school holidays. Both parents have some responsibility for the confusion that has occurred in relation to the eldest child’s schooling this year. That issue has now gone away. The husband and wife both agreed that if I order that the children live at Suburb K then they needed to attend a school locally rather than travel each day to school and preschool at L School (and M School for the second child commencing next year). Further, the parents have agreed that if the children are to live at Suburb K, they will attend the local E School.
The wife has, since the birth of each of the children, been their primary carer. The husband has spent long hours, said to be seven days a week, working outside the home, during the period the parties were together. I accept the Independent Children's Lawyer’s submission that it is in the children’s best interests that they ordinarily live with the wife who has been their primary carer.
The husband submits that the wife’s mother’s rental property is a three bedroom home which currently houses five persons in addition to the wife and the three children. The wife says she and the children share a bedroom and each have a bed.
The husband also expresses concerns about the wife’s mental health; her relationship with her family and her parenting practices, including her physical chastisement of the children but not withstanding that, concedes that the children should ordinarily live with her.
In relation to the wife’s mental health, the husband asserts that he has become “aware” that the wife attended upon her general practitioner for a mental health plan in January 2016 but he is unaware as to whether or not the wife followed through with that mental health plan and is unaware as to whether or not the wife has engaged with a mental health professional (those statements were made by the husband in an affidavit that was served on the wife at a time that did not enable her to respond for the purposes of this interim hearing).
Given the orders that the husband was agreeing to, although the husband did not formally resile from it, I place no weight upon the husband’s contention in his written submissions that there are sufficient reasons for the court to place the children in the primary care of the husband at least until deficits in the mother’s ability to care for the children can be properly addressed.
The husband sought an order that the wife forthwith consult a relevant expert as agreed between the parties to complete a mental health assessment and the wife is to follow the recommendations as determined by the mental health assessment. I took it from the submissions made by the Independent Children's Lawyer without comment by counsel for the husband, that that application by the husband was no longer pressed in the circumstances where I was informed the parties had agreed that a holistic assessment of the family would be made by a Chapter 15 expert.
The children are to ordinarily live with their mother. I find that it is in their best interests that she should be able to ordinarily live with them in the Suburb K area.
The Independent Children's Lawyer is concerned that if an order is made that the children return to Suburb H, then there is, and I accept there is, a significant cloud over whether or not the Suburb H property will be able to be retained by the husband.
In fact, as will become evident, for reasons set out below, the Suburb H property is to be sold.
The husband did not make clear what his application was if an order was made for the Suburb H property to be sold.
The current order that allows two periods of three nights in a three week period for the children to be with their father was put in place by Judge Henderson on 1 March 2016. There is no indication that that has not been working well. The Independent Children's Lawyer indicated that in her view, in normal circumstances given the age of the children, the current order is at the outer limit of what she would have recommended to the court had she been appointed at the time and that the Independent Children's Lawyer would propose that that order not be varied to allow an increased number of nights away from the primary carer. Counsel for the husband made the point that the parties by agreement have just had a school holiday period where the children have been with their father for 10 nights. However, the effect of a further change, so soon after the making of the initial interim order for time during school term, is not something I am able to predict.
I accept that the age of the children (particularly the youngest child) militate against the order which the father seeks for two four night blocks in a three week period. There is however another reason why the order for more nights is not in the children’s best interests and that is if the children are living at Suburb K and the husband living in the Eastern suburbs (although I accept I have no evidence about where he might live after the sale of Suburb H), then the children will be involved in four significant trips in peak hour traffic on two Monday afternoons and two Tuesday mornings out of three during school term.
There is an issue as to who should pay for therapy for the eldest child. Apart from the husband’s claim that the wife’s father holds $1.5 million on behalf of the wife in Country A and that the wife could sell jewellery, the wife has no apparent ability to meet the costs of therapy. As discussed below, the husband says he has a financial resource available to him, being monies family and friends are prepared to advance to him in the short term. Consequently, the husband should pay these costs.
FINANCIAL APPLICATIONS
The matter proceeded on the basis that the marriage of the husband and wife would not be recognised under Australian Law and that the financial proceedings under the Act would proceed on the basis that the husband and wife were living in a de facto relationship.
The application for interim property settlement is made by the wife pursuant to s 90SM of the Act and the application for spousal maintenance is made pursuant to s 90SE of the Act (and an application for an initial payment of $3,000 is made under s 90SG of the Act).
The wife seeks an order for the sale of the Suburb H property and that from the net proceeds of sale that she be paid an amount of $250,000 on account of her legal costs (either pursuant to s 90SM or s 117(2) of the Act) and for the balance to be held in a controlled monies account in the names of the solicitors for the parties to the proceedings until further order.
The wife seeks an order for the husband to otherwise pay to her by way of an interim costs order the sum of $250,000.
The major asset of the parties which remains in Australia is the Suburb H property.
On 1 March 2016 the Commissioner of Taxation (“the Commissioner”) was joined to the proceedings as the 2nd respondent. The Commissioner has filed a notice of address for service and relies upon a substantial affidavit by Mr O filed 27 June 2016. The Commissioner has not yet sought any final orders. The Commissioner however supports some of the orders sought by the wife and opposes others. The Commissioner opposes the making of any order in respect of I Street, Suburb J (“the I Street property”) and any other asset of the husband that would operate in a manner contrary to the freezing order made in the Federal Court or in a manner inconsistent with the s 260-5 notices.
In relation to the wife’s application for a sale of the Suburb H property, the Commissioner would consent to an order being filed in the Federal Court, proceedings … of 2015, varying the freezing order to enable the Suburb H property to be sold and for the proceeds of sale to be used to pay agents and auctioneer’s commission; legal costs on the sale; discharge of the mortgage to the Commonwealth Bank of Australia and adjustment of rates. The Commissioner opposes an order that the wife receive a payment of $250,000 from the net proceeds of the sale and contends that the balance of the proceeds of the sale of the Suburb H property should be held in a controlled monies account until further order of the court.
Having heard the condition upon which the Commissioner would support the wife’s application for a sale of the Suburb H property (which requires a variation of the current Federal Court orders), the wife continued to press her application for sale.
The husband opposes any order for the sale of the Suburb H property.
Looking in the broadest terms of the assets and liabilities of the husband and wife, they consist of :
45.1.The Suburb H property being the whole of the land in Folio Identifier … which currently has an equity of about $1.8 million;
45.2.An amount of $3 million removed from Australia by the husband (on the wife’s case) or an amount of $1.5 million held in Country A by the wife’s father with an associated debt in the husband’s name to a third party in Country A of $1.5 million (on the husband’s case);
45.3.As discussed below, a debt of in excess of $11 million owed by the husband to the Commissioner (on the Commissioner’s case) or $250,000 (on the husband’s case);
45.4.The I Street property which the husband estimates is worth $1,050,000 but which is subject to notices issued by the Commissioner pursuant to s 260-5 of Schedule 1 of the Taxation Administration Act 1953 (Cth) (“TAA”);
45.5.Jewellery removed by the wife which the husband estimates to have a value of $120,000;
45.6.The husband also indicates in his September 2015 financial statement that he has $208,000 in publicly listed shares; a motor vehicle worth $45,000; an interest in his business of $400,000; jewellery of $15,000 and superannuation of $65,000.
The husband’s estimate of the value of the Suburb H property is $4.8 million and for the purposes of this interim hearing, I accept that estimate. The Commonwealth Bank of Australia have an unregistered first mortgage on the Suburb H property. The loan which is secured by that mortgage is slightly under $3 million. The regular monthly repayments in respect of that mortgage are approximately $13,000 per month.
I now discuss some of the background to the competing contentions of the parties.
In early February 2015 the husband was advised of the Commissioner’s intention to audit the husband in relation to refunds of tax paid by the husband to the Commissioner. On 26 February 2015 the husband attended an interview with officers representing the Commissioner in relation to the husband’s tax affairs and refund payments. On 6 March 2015 the husband started moving monies out of Australia and completed the transfers by 9 May 2015. The amount that left Australia was either slightly under $3 million or slightly over $3 million, depending on whether or not alleged movements of funds to Country A by the husband of $283,000 on 6 March 2015 and $333,000 on 10 March 2015 were the same amount or not. Counsel for the husband made different submissions at different times as to whether or not they were the same or different transfers by the husband to Country A. The husband alleges that that was a repayment of a debt that he owed to a Country A citizen by the name of Mr P, as a result of a commercial loan agreement that he entered into with Mr P on 25 February 2009. That agreement provides for a borrowing of $1.3 million to be repaid at Mr P’s request after two years and within a period of ten years and to be secured on Australian property if Mr P at any point requested that security to be provided. That Australian property was not to be sold without Mr P’s consent. Counsel for the wife challenges the authenticity of the agreement. It is unclear to me as to whether or not the husband produced this document to the Federal Court (see [27] of Gleeson J’s reasons for judgment set out below) The wife also points to the fact that the husband has seemingly dealt with Australian property without obtaining Mr P’s consent. It is the husband’s case that in 2009 Mr P provided him the $1.3 million in cash and that by 27 February 2015 the $1.3 million loan had accumulated interest so that the amount owed to Mr P was $2,933,506.33.
After the Commissioner became aware of the transfer of $3,000,000 out of Australia by the husband, the Commissioner applied for and obtained in the Federal Court, freezing orders against the husband.
The wife commenced proceedings in the Federal Circuit Court in May 2015 seeking property orders. The wife and the children continued to live in the Suburb H property up until 14 September 2015. On 7 October 2015 the husband signed a statutory declaration saying that since 20 March 2009 the husband managed the financial affairs of the wife and himself and that it was he who executed most bank transfers into and out of their bank accounts, including those accounts which were solely in the name of the wife and that he also managed the wife’s tax affairs and prepared her income tax returns for the periods 20 March 2009 to 30 June 2015. The husband says in his affidavit (at [211]) that he signed this declaration because he wanted to repair his marriage but he does not explicitly say that what he swore to in the statutory declaration was untrue. For the purposes of these interim proceedings, I proceed on the basis that it was true. At this stage the Commissioner has accepted that the wife did not have knowledge of what the husband was doing in relation to movement of monies and entries of figures on the wife’s income tax returns.
A working day before this interim hearing, the husband has filed an affidavit in which, for the first time, he gives the following evidence:
212.On or around this time [7 October 2015] [the wife] requested I meet with him to discuss business matters we had intended to occur in Country A.
213.The [wife’s] father said to me “now you have paid most of the loan back I think you should re-draw on the loan and purchase property in [Country A] for development”. I responded to the [wife’s] father “I am unable to do this because I cannot travel to [Country A] because of the departure prohibition order”. The [wife’s] father said to me “I can assist you will need to contact [Mr P] and give your consent for the $1.3 million to be transferred to my account in [Country A], he already had the $205,000 Euro you sent for the other property I have arranged this”
214.On 23 October 2015 with the blessing of the [wife’s] father and [wife’s] uncle the [wife] and I reconciled and the [wife] the children moved back into the matrimonial property.
215.On the 27 October 2015 the [wife] left the matrimonial property with the children because I would not consent to the children going to [Country A]. The [wife] wanted to travel to [Country A] with the children at the same time the [wife’s] father was return to [Country A].
216.By this stage the [wife’s] father was in control of approximately $1.5 million dollars.
217. On around 2 November 2015 the [wife’s] father returned to [Country A]. Business relations between the [wife’s] father and I rapidly declined and by 11 November 2015, the [wife’s] father continued to assert to me “I am holding the money for [the wife] it is her right under [religious] Law”. This has become a major area of frustration and concern for me.
The husband goes on to assert that approximately $1.5 million remains in the full control of the wife’s father on behalf of the wife and that that money is owed by the wife’s father to the husband, “This is a current liability to me but is currently being used by [the wife] as an asset”.
The husband also refers to various emails and texts in support of his contentions but none of them are obviously corroborative of the husband’s assertions.
In respect of the new alleged borrowing of $1.3 million, the husband gives little if any evidence about what he says happened between 7 October 2015 and 27 October 2015; whether or not the alleged loan was directly between Mr P and the husband; whether the agreement to lend was in writing (the husband has not produced any written loan agreement); what the terms were; to whom the monies were transferred (I infer to the husband initially); how the husband then transferred the monies to the wife’s father, if in fact that is what the husband is asserting happened. There is a vague reference in [213] that some property development in Country A was involved.
Notwithstanding the volume of documents filed by the husband (his exhibits run to 401 pages), counsel for the husband submits that even though the husband has given evidence in the vaguest of terms, he is entitled to rely upon that vague evidence on the basis that the detail is more properly the subject of a full final hearing where he can be tested about his assertion that $1.5 million of the $3 million transferred by the husband to Country A has found its way into the hands of the wife’s father in Country A along with an additional amount of about $200,000.
The husband gave evidence by affidavit in the Federal Court proceedings between the husband and the Commissioner. The wife has asked for copies of those affidavits, but I was informed by counsel for the wife (without contradiction by counsel for the husband) that the husband has failed to date to provide them.
The husband was tested on his evidence in the Federal Court proceedings. Gleeson J in Deputy CMR of Taxation v Sayid – BC…, when continuing the freezing order against the husband, made the following factual findings:
20. [Mr Sayid’s] evidence was that he made the transfers to [Country A] to accumulate one larger amount to repay his lender, [Mr P], on about 10 May 2015. In support of this statement, [Mr Sayid] annexed to his first affidavit a copy of a document headed “Creditorship Agreement” dated 25 February 2009. The document records the receipt by [Mr Sayid] of $1.3 million. The document provides that [Mr P] may determine the period of the investment of $1.3 million being “not earlier than 2 years”. The document also provides that “[a]fter 10 years, this agreement is going to be automatically terminated”.
21. [Mr Sayid] said that [Mr P] is a business acquaintance of his de facto spouse’s father. He says that he borrowed $1.3 million from [Mr P] for a minimum term of 2 years and a maximum term of 10 years. The money was borrowed to fund [Mr Sayid’s] business, pay down loans for the business and rental properties and to renovate a rental property.
22. [Mr Sayid] gave evidence that he decided to repay the loan in May 2015 because:
(a)The interest rate climate has dropped significantly over the years in Australia and the loan was becoming quite expensive relative to loans that were available in Australia
(b)I had many more assets available as security and the cost of lending in Australia had reduced significantly compared to 2009. This was particularly due to the property boom in [sic] since early 2013.
(c)Until quite recently, obtaining alternative means of funding was not an option because my assets were not valuable enough to secure funding to pay down the current loan.
(d)The decision to repay the loan was made by me, not by [Mr P] making a call for the repayment. Therefore I received no notice from [Mr P].
(e)Once the loan is paid out in full I will receive a deed of release from [Mr P].
23. [Mr Sayid] also said:
11.I repaid the money to [Mr P] by way of transfer, instead of repayment in cash. This was because the cost of transferring the funds to me was very cheap from my Australian Bank, the Commonwealth Bank of Australia. It literally only cost me the $50 international transfer fee. Once the funds were in my [Country A] Bank account, transferring the money to [Mr P] was a costless exercise.
12.I have calculated that the total amount payable as of about 10 May 2015, including capital and interest payable, is $2,933,506.63. Annexed and marked “B” to this affidavit is a copy of my calculations. To date, I have repaid $2,815,000.00. Therefore an amount of $118,506.63 is still payable.
24. In his affidavit of 17 August 2015, [Mr Sayid] referred to an email exchange with an officer of the [Q Bank] in [Country A] on 11 and 12 May 2015 concerning the payment of $2,810,000 to [Mr P]. The first email, dated 11 May 2015, attaches a letter dated 12 May 2015 requesting transfers of 9484 [Country A currency] and AUD$2,810,000 from two separate accounts to [Mr P] and referring to two account numbers. [Mr Sayid] also annexed to the 17 August 2015 affidavit copies of two statements purporting to be statements from the [Q Bank account] number xxxxxxx-… showing a debit of $2,810,000 with an explanation “…-[MR P]” and a debit of 9484 [Country A currency] with an explanation “…-[MR P]”.
25. The AUSTRAC transaction report for the 15 April 2015 transfer of $580,000 records the following details of payment:
CREDIT REFERENCE: AUD CBA AUST [MR SAYID PRESTIGE CAR] FUND
26. In cross-examination, [Mr Sayid] said that these details were in the nature of a joke. I found that evidence unconvincing.
27. Ms Morgan submitted that the court could not be satisfied that the transfers to [Country A] were in repayment of a loan, where there was no document from the purported lender to support that conclusion and no evidence of the existence of [Mr P], or of the transfer of $1.3 million from [Country A] to Australia. Ms Morgan submitted, based on the AUSTRAC transaction report for the 15 April 2015 transfer, that over $500,000 appears to have been transferred to [Country] A to fund the purchase of a [prestige car].
28. I accept Ms Morgan’s submission that the evidence is insufficient to warrant a conclusion that the monies transferred to [Country A] have been used to repay an amount in the order of $2,810,000 owing to [Mr P]. While the documentary evidence provided by [Mr Sayid] is consistent with his claim, it is also not necessarily inconsistent with [Mr Sayid] continuing to have access to those funds. In particular, I would require substantial evidence to rebut the inference arising from the 15 April 2015 report that [Mr Sayid] has access to a fund of $580,000 in [Country A].
29. Accordingly, I do not accept that there are no offshore funds to which [Mr Sayid] has access. I conclude, on the balance of probabilities, that [Mr Sayid] has access, at least, to the fund that was $580,000 as at 15 April 2015.
In relation to the I Street property, the Commissioner contends that by reason of notices issued by the Commissioner pursuant to s 260-5 of Schedule 1 of TAA on 13 and 14 May 2015, the Commissioner is a secured creditor in respect of the proceeds of any future sale of the I Street property and has a charge over the proceeds of any sale being the debt owed by any purchasers to the husband, taking priority over the wife and the husband’s interest in the property. Notwithstanding that, the Commissioner has agreed that proper notice will be given to the wife of any garnishment notice that is made against any future purchaser of the I Street property and the husband and wife are to be given liberty on 14 days’ notice to make an application in relation to whether or not those proceeds of sale should be frozen pending the outcome of these proceedings.
The debt owing by the husband to the Commissioner under the initial notices of assessment for the income tax years ended 30 June 2011 to 30 June 2014 was $6,198,330. I accept the proposition that at this point, the assessments are conclusive as to the matters set out in them. The Commissioner filed an Originating Application and Statement of Claim on 8 September 2015 in respect of outstanding income tax, additional charges for late payment, administrative penalties and shortfall interest charges. The husband did nothing to defend that claim and on 23 December 2015 an order was made by the Federal Court that judgment be entered in the favour of the Commissioner against the husband in the amount of $10,757,407. This included penalties and general interest. The current amount outstanding is the sum of $11,194,357.
On 28 June 2016 (less than two weeks before the hearing), the husband lodged an objection to the income tax assessments for the financial years ended 30 June 2011, 2012, 2013 and 2014.
The husband in his affidavit of 7 July 2016, refers to an affidavit that he swore on 25 February 2016. At that time it was the husband’s assertion that instead of the $11 million figure, he owed the Commissioner for Taxation only $1 million ([47] of the husband’s affidavit). The husband however in his objection has recalculated that estimate to an amount of $250,000 ([191] of husband’s affidavit).
Turning then to the question of whether the Suburb H property is to be sold. The Full Court in Harris & Harris (1993) FLC 92-378, said that:
... circumstances may arise before there can be a final hearing which dictate that some part of the property of the parties should be the subject of orders … Urgent situations may arise where it is necessary to exercise this power if injustice is to be avoided. Examples include cases where it is necessary to do so to avoid an asset being eroded or lost in the intervening period …
The power being referred to in that passage is s 79 of the Act (in this case s 90SM when read in combination with s 90SS(1)(k) and s 90SS(5) of the Act).
Section 90SS(1)(k) and s 90SS(5) are in the following terms:
General powers
(1) The court, in exercising its powers under this Division, may do any or all of the following:
...
(k) make any other order, or grant any other injunction, (whether or not of the same nature as those mentioned in the preceding paragraphs of this section) which it thinks it is necessary to make to do justice;
…
Injunctions
(5) Without limiting paragraph (1)(k), the court may:
(a) grant:
(i) an interlocutory injunction; or
(ii) an injunction in aid of the enforcement of a decree;
in any case in which it appears to the court to be just or convenient to do so; and
(b) grant an injunction either unconditionally or upon such terms and conditions as the court considers appropriate.
Alternatively, the power to make the orders sought by the wife is found in s 114(3) of the Act based upon the court exercising jurisdiction in a de facto financial case.
Section 114(3) is in the following terms:
(3) A court exercising jurisdiction under this Act in proceedings other than proceedings to which subsection (1) applies may grant an injunction, by interlocutory order or otherwise (including an injunction in aid of the enforcement of a decree), in any case in which it appears to the court to be just or convenient to do so and either unconditionally or upon such terms and conditions as the court considers appropriate.
Given the result of the parenting applications, what the husband in effect proposes is that he would remain living in a property worth $4.8 million whilst the wife, with the children with her most of the time, live in accommodation that the husband himself criticises as being very inadequate.
I have no evidence as to the weekly value to the husband of his occupancy of that property as I have no expert evidence as to what the rental value of that property would be. Since the freezing order was made, the repayments in respect of the loan on the Suburb H property have been satisfied by way of increasing the amount of the debt under the facility provided by the loan agreement. That facility has now been exhausted and is overdrawn. There is evidence that there are outstanding rates that have not been paid on the Suburb H property.
There is no evidence by the husband as to how he would maintain regular payments of about $13,000 per month in his current circumstances. His counsel submits, without evidence, that the husband has support from third parties that would enable him to pay $13,000 per month. What he says is he hopes within three to six months he would be able to reach agreement with the Commissioner for Taxation in relation to monies payable to the Commissioner for Taxation.
The husband is a registered professional. He set up his own business in about 2005 and at [38] estimated that on average his personal gross income was approximately $250,000 per annum and in the past his business has generated gross income of approximately $1 million per annum. The husband apparently continues to work in the business which is now effectively run by his brother who is also his business partner. Apparently restrictions have been placed upon the husband by his professional body in relation to him running a business, but I infer from what was said that he still continues to operate in his business under the direction of his brother. Counsel for the husband highlighted the fact that the document prepared by the husband dated 28 June 2016, being his objection to the assessment of tax made by the Australian Taxation Office, would indicate that his gross income is in excess of $700,000 per annum and the husband confirmed that by holding up seven fingers when I asked his counsel about his current level of income. The husband says his difficulty is that the Federal Court has frozen his income allowing him to draw only $1,500 per week. It is unclear to me what arrangements are in place in relation to any personal exertion income he currently generates more than that figure.
The risk to both the wife and the Commissioner of not ordering a sale is:
71.1.Regular repayments will not be maintained by the husband and the debt on the property will increase reducing the current equity in the property;
71.2.There is a real possibility of a forced sale by the bank that holds an unregistered first mortgage on the property;
71.3.Any monies paid by the husband on the mortgage in the interim would be funds provided by third parties under arrangements whereby the husband potentially has an obligation to repay those monies.
The husband argues that justice would require that he be given a chance to retain the Suburb H property. The husband argues that the court is unable to say at this stage whether or not he might be able to retain the Suburb H property and it would be premature at an interim stage to preclude arguments as between himself and the wife that might be available to him at a final hearing, including arguments that would involve him in asking the court to find that the wife has $1.5 million available to her in Country A. The husband asserts that by the time the final hearing comes on, his position with the Commissioner will have resolved and that he will have had released back to him his income earning capacity. The husband says that if a sale order is made now it would preclude him from arguing at the final hearing that he should be given the opportunity to retain the property.
As things currently stand, we know that the debt that the husband has to the Commissioner far exceeds the assets that the husband has available to him in Australia. We know for a fact that the husband shortly after he was interviewed by the Commissioner, moved $3 million outside Australia in circumstances where he himself says that there was no compulsion on him to do so. There is controversy as to what has happened in Country A once the $3 million arrived there.
On the wife’s best case she is left with her equity in the Suburb H property or whatever smaller percentage that she has depending upon the outcome of any contention by the Commissioner that she may not entitled to the whole of the equity that she currently has in the Suburb H property. The husband’s continued occupancy of the Suburb H property presents a risk to her of an erosion of whatever equity she has remaining in the Suburb H property.
By supporting the wife’s application for a sale of the Suburb H property, the Commissioner also seeks to protect the current equity that is left in the Suburb H property which has been increasing at a rate of $13,000 per month since the freezing orders have been in place, I find that as the evidence currently stands, the Commissioner is entitled to rely upon the assessments that have been made. Because the husband has failed to make any objection to the taxation assessments until recently and failed to do anything at the time proceedings were taken against him, default judgment was entered against him and the Commissioner is entitled to rely upon that default judgment at this point in time.
What will happen or may happen in relation to the husband’s objection in three or six months’ time is entirely speculative and I have no idea whether or not there would be any movement in what I must currently assume are valid assessments made by the Commissioner. I am not prepared to assume in the context of this hearing that the husband’s objection filed on 28 June 2016 will reduce an $11 million debt to $250,000.
I accept it would be inconvenient for the husband to be ordered to leave his current accommodation but on the other hand I am mindful that on the husband’s case, the wife’s current accommodation is less than convenient for her, although I accept an order for sale of the property in which the husband is living does nothing to ameliorate the circumstances of the wife’s short term accommodation.
The wife has established that she has a sufficient likelihood of success, as against the husband, to justify an order which, as far as is possible, militates against the erosion of the major asset against which she has a claim in Australia. It is not just the husband who submits there is “irreparable damage” on the facts of this case. Balancing all those matters to which I have referred, I find it is necessary to do justice in this case and I consider it proper that the order for sale sought by the wife of the Suburb H property be made.
It is the Commissioner’s position that if the Suburb H property is to be sold, none of the proceeds of sale should be made available to the wife. The Commissioner wishes to reserve an argument at the final hearing that notwithstanding the wife may not have known about the husband’s use of funds that were otherwise rightfully payable to the Commissioner, her equity in the Suburb H property is the inadvertent (from the wife’s point of view) product of the husband’s non-payment of tax and that she should not benefit by it at the expense of the Australian tax payer who would have otherwise been entitled to have received those funds. In those circumstances it is not clear that the wife will ultimately receive any payment from the sale of the Suburb H property (see Johnson & Johnson (1999) FLC 93-039 at [20.4 – 20.7]; Trustee of the property of G Lemnos & Lemnos and Anor (2009) FLC 93-394 at 83,294 – 83,296; Commissioner of Taxation & Worsnop and Anor (2009) FLC 93-392 at 83,221 – 83,222).
Given the position outlined by the Commission, the Commissioner is entitled to succeed against the wife in resisting the wife’s application to receive monies from the proceeds of a sale of Suburb H at this time.
SPOUSAL MAINTENANCE
The wife seeks an order for periodic spousal maintenance in the sum of $3,000 per week.
The Commissioner opposes any order for spousal maintenance that would require the husband to pay an amount that was in excess of the amount allowed to the husband on a weekly basis by the Federal Court.
The husband is currently allowed to receive $1,500 per week from his personal exertion income. At [31] of Gleeson J’s judgment of 17 September 2015, his Honour finds that the husband’s expenses were $1,500 per week and comments, “Although some of the amounts (for clothing, petrol and tolls) seem high, I accept that they probably represent reasonably accurate estimates of reasonable living expenses”.
The husband has not completed Part N of his financial statement and I do not have available the material Justice Gleeson had available to him to assess the husband’s reasonable weekly living expenses.
The wife has no income relevant to her maintenance application. The wife’s financial statement indicates that her sole current source of income are Government benefits apart from an amount of $77.73 per week by way of child support. I do not accept the submission by counsel for the husband that she should look for a part time job given that she has the primary responsibility for the day to day care of three children aged five, four and two and there is no evidence that she has any significant history of earning capacity.
The wife is currently not paying anything towards her accommodation. The wife sets out in her financial statement her weekly expenses at $620 per week. Of those expenses, I discount house repairs at $50 as I am uncertain as to what that expense relates to. The wife would like to move into her own independent accommodation with the children but she does not have any money at the moment to enable her to pay rent. The wife has not given any estimate of what her rent would be to enable her to live independently with the children in the Suburb K area. It is not clear from the wife’s affidavit as to what the expense of $120 per week for herself is in respect of medical, dental and optical expenses. Taking those matters into account, the wife has established a need for herself in the sum of $450 per week together with a reasonable amount for rent for herself. The wife also has a shortfall in relation to the expenses of the children but there is no application pursuant to the Child Support (Assessment) Act 1989 (Cth) before me. Taking a broad brush approach, I assess the wife’s reasonable needs including some provision for contribution to accommodation to be in the order of $600 per week.
I am prepared to find that the husband has a capacity from his drawings of $1,500 to contribute $600 of it towards the wife’s weekly needs. I do that mindful of the fact that the husband seems to have financial resources available to him through borrowings from third parties, given a representation was made by his counsel from the bar table that he would be able to organise payments of up to $13,000 per month on the mortgage on the Suburb H property.
Injunctions
The wife originally sought injunctive orders restraining the husband from:
88.1.Selling or transferring or dealing with any household effects, including furniture, clothing jewellery and other items in the Suburb H property;
88.2.Divesting himself of any shareholding or directorship of companies controlled by the husband including S Pty Ltd and Sayid Partners Pty Ltd;
88.3.Divesting himself of control or being a beneficiary of trusts, including T Trust and U Partners, any shares in any private or public companies in his control or personal name and any funds that he has in any bank or financial institution.
The Commissioner opposes the injunctive relief sought by the wife in respect of the I Street property and any other asset of the husband that would operate in a manner contrary to the freezing order and in a manner inconsistent with the terms of the s 260-5 notices.
The wife, presumably having read the written submissions of the Commissioner, did not press the orders for injunctions as originally sought.
I certify that the preceding ninety (90) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 18 July 2016.
Associate:
Date: 18 July 2016
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