Anison and Anison & Anor
[2015] FamCA 973
•6 November 2015
FAMILY COURT OF AUSTRALIA
| ANISON & ANISON AND ANOR | [2015] FamCA 973 |
| FAMILY LAW – PRACTICE & PROCEDURE – application to strike out – where the wife has joined a third party to property settlement proceedings – where the third party is the corporate trustee of a trust in which the husband is a unitholder – where the wife asserts that property of the trust is property of the parties – where the trust was established before cohabitation – where the third party has applied to be disjoined and for the relief sought against it to be struck out – where there is no reasonable likelihood of success. FAMILY LAW – PROPERTY – INTERIM – SPOUSE MAINTENANCE - interim orders made. |
| Family Law Act1975 (Cth) ss 72, 74, 85A, 106B Family Law Rules 2004 r 10.12 |
| Abdullah and Abdullah (1981) FLC 91-003 Beck and Beck (2004) FLC 93-181 Biltoft & Biltoft (1995) FLC 92-614 Bourke & Bourke and Anor (2010) 243 FLR 380 Custodio & Pinto & Ors (2006) FLC 93-279 Dey v Victorian Railways Commissioners (1949) 78 CLR 62; Equuscorp Pty Ltd and Another v Glengallan Investments Pty Ltd (2004) 218 CLR 471 Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87; Friar & Friar [2011] FamCAFC 71. General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; Lindon v The Commonwealth (No 2) (1996) 70 ALJR 541; Pelerman v Pelerman (2000) FLC 93-037 Prince & Prince; General Credits Australia Ltd (Intervenor) (1984) FLC 91-501 Raftland Pty Ltd v Federal Commissioner of Taxation (2008) 238 CLR 516 Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 82 ALR 530 |
| APPLICANT: | Ms Anison |
| FIRST RESPONDENT: | Mr Anison |
| SECOND RESPONDENT: | B Pty Ltd as Trustee for the C Trust |
| FILE NUMBER: | BRC | 1827 | of | 2013 |
| DATE DELIVERED: | 6 November 2015 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Hogan J |
| HEARING DATE: | 28 April 2014 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Page QC |
| SOLICITOR FOR THE APPLICANT: | Wiltshire Lawyers |
| COUNSEL FOR THE FIRST RESPONDENT: | Mr Hackett |
| SOLICITOR FOR THE FIRST RESPONDENT: | Evans & Company |
| COUNSEL FOR THE SECOND RESPONDENT: | Mr Martin QC |
| SOLICITOR FOR THE SECOND RESPONDENT: | Hirst & Co |
Orders
IT IS ORDERED THAT
In so far as they refer to B Pty Ltd as Trustee for the C Trust and the Trust, paragraphs 1, 2 and 2(a) of the Amended Initiating Application filed 21 February 2014 are struck out.
The Second Respondent is removed as a party to the proceedings.
The Husband pay to the Wife, by way of spousal maintenance, the sum of $500.00 per week with the first such payment to be made on Monday, 9 November 2015 and, thereafter, on each Monday by deposit into a bank account nominated by the Wife.
By 4.00 pm on 4 December 2015 the Husband pay or cause to be paid to the trust account of the solicitors for the Wife the sum of $20,000.00 with those funds to be used solely for the purpose of meeting the Wife’s legal costs referable to her legal representation at the forthcoming trial of the proceedings and these funds are to be accounted for on that basis by her, with the categorisation of them whether as costs, partial property settlement or otherwise to be reserved to and determined at the trial of the proceedings.
Save as is ordered above, and in respect of any application for costs, the Application in a Case filed 4 December 2013 and the Application in a Case filed 10 February 2014 are otherwise dismissed.
Any application for costs by any party be made and supported by written submissions forwarded by email to my associate and to the other parties within 28 days of the date of this Order.
Any reply to any such submissions, restricted to issues of law and errors of fact, be filed within a further seven (7) days thereafter.
If neither party or B Pty Ltd as Trustee for the C Trust files any such application and submissions within the time frame specified, or agreement is reached in this respect, then the costs of and incidental to the hearing of the application shall be considered at the conclusion of the trial between the Husband and the Wife.
NOTATION
The Wife is at liberty to seek at the final hearing that an order be made that she be paid an amount by way of capitalised periodic spousal maintenance in the sum of $500.00 per week for the period from 28 April 2014 to 6 November 2015 and to seek that such amount be paid to her at the time any orders are made in relation to the finalisation of the s 79 proceedings between the Husband and the Wife.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Anison & Anison and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT BRISBANE |
FILE NUMBER: BRC 1827 of 2013
| Ms Anison |
Applicant
And
| Mr Anison |
First Respondent
And
B Pty Ltd as Trustee for the C Trust
Second Respondent
REASONS FOR JUDGMENT
The Applicant wife and the First Respondent husband commenced a relationship of some sort in about April 1999. They commenced cohabitation on either 10 December 1999[1] or in mid-January 2000[2]. At that time they were about 62 and 66 years of age respectively. They married in 2008 and separated on 11 March 2013.
[1] As contended for by the wife.
[2] As contended for by the husband.
The following relevant matters are clearly established, even for the purpose of considering these interim applications.
Established factual matrix
When his father died in 1998, the husband inherited half of his estate.[3] When his brother died in 1999, the husband inherited all of his estate[4] which included his brother’s interest in their late father’s estate. Consequently, by late May 1999, the husband had inherited property valued at about $9,600,000.00. Given the time when the husband became entitled to receive the money he inherited, the wife made no contribution to such inheritances.
[3] In an amount of about $1,750,000.00.
[4] Save for relatively minor bequests.
At whatever time the parties commenced cohabitation, the wife had property valued at no more than about $88,000.00.[5] She was, at that time, supported via government provided financial benefits.
[5]The wife asserts she had property valued at about $88,000.00 (including $60,000.00 in cash) whilst the husband asserts she had only a vehicle (which she gifted to her daughter shortly after the parties commenced cohabitation), some household effects, approximately $7,000.00 and an entitlement to Centrelink benefits.
In the period from about December 1999 until 31 May 2000, the husband decided to give $1,000,000.00 to each of his two adult children. He subsequently implemented this decision.
On 31 May 2000 – either about six months or about four months after the husband and wife commenced their cohabitation – the C Trust (the Trust)[6] was established. The husband ostensibly gifted his son, Mr D Anison, the sum of $4,000,000.00 on condition that Mr D would use this sum to purchase units in the Trust. No capital other than the $4,000,000.00 ostensibly gifted to Mr D by the husband and used by him to purchase units in the Trust was provided to, or applied by the Trust. These funds formed the corpus of the trust.
[6] a discretionary trust.
The husband has only ever owned units in the Trust which entitle him to receive income from it (income units) at the discretion of the trustees: he initially owned all of the income units issued by the Trust. He has never been entitled to the capital of the Trust. He received income distributions from the Trust between 2001 and 2004 and in 2007 but has not received any distributions since then.
Mr D initially owned only units in the Trust which entitle him to receive capital distributions from it (capital units): he owns all of the capital units issued by the Trust and now owns a unit[7] which entitles him to receive the income of the Trust to the exclusion of all other income unit holders and in such proportion as the trustee may, in its absolute discretion, determine.
[7] One A Special Class income unit issued to him on 27 June 2008.
Units in the Trust to which voting rights attached (voting units) were issued by the Trust when it was established in May 2000. The husband owned 39 voting units, Mr D owned 49 voting units and Mr E[8] owned 12 voting units.
[8] The husband’s now deceased brother in law.
At no time did the number of voting units owned by the husband accord him apparent complete control of the Trust.
The rationale underpinning the establishment of the Trust and the G Superannuation Fund can be seen from the contents of correspondence from Mr F (the husband’s accountant) dated 17 February 2000.[9]
[9] Affidavit of Mr I filed 23 April 2014, at pp 153-159.
This correspondence also contains the following, which I consider to be particularly relevant:
a)Under the heading “Principles involved in formulating the plan”:
In the event of a future change in legislation or for any other reason, the structure may be unwound and the assets restored to your ownership and control with the consent of the trustees, as trustees, and on a personal basis. (my emphasis)
Control vests in the family.
b)Under the heading “The nature and functions of the Unit Trust and the Allocated Pension”:
The control of the trust is structured to provide for a balanced decision making process which I am instructed is in accordance with your wishes.
I understand that [Mr H] has suggested, that the only effective way of precluding a challenge to the disposition of assets via your Will is for you to relinquish direct control of the assets during your lifetime. For this reason the capital units would be allocated solely to [Mr D]. He would not be entitled to any income from the structure other than his remuneration as manager/controller. The allocation of the voting units ensures that the manager/controller is not in a position to pursue an independent agenda. (my emphasis)
Mr D was employed by the Trust. On the basis of the evidence obtained by the wife,[10] his remuneration may, arguably have been greater than would have been paid to an unrelated third party.
[10] Affidavit of Mr I filed 23 April 2014.
In the financial year ending 30 June 2001, the husband contributed $1,000,000.00 (from his inheritances) into a self-managed superannuation fund (the G Superannuation Fund) from which he drew – and continues to draw – an allocated pension which was applied to the support of the parties during their relationship and which has been applied to his support since separation.
The balance of the monies inherited by the husband[11] – in an amount of about $2,600,000.00 – was applied by the husband to:
a)the purchase of real property (held in his name alone); and
b)the purchase of motor vehicles (held in his name alone); and
c)the payment of travel expenses for both him and the wife; and
d)the acquisition of chattels; and
e)in meeting other day to day expenses for both him and the wife.
[11]That is, the gross amount less the contribution to superannuation, monies gifted to both adult children and the monies ostensibly gifted to Mr D for use in buying units in the Trust.
In about June 2005, B Pty Ltd (“B”) was incorporated. It was appointed the corporate trustee of the Trust. The husband, Mr D and Mr F (an accountant) are all directors of B. The husband owns 39 shares, Mr D 49 shares and Mr F 12 Shares in B.
Again, the number of shares owned by the husband does not accord him apparent complete control of the corporate trustee of the Trust.
Whilst it is said that capital payments from the Trust have been applied to the benefit of the husband,[12] there is no particular detail about these payments other than a reference to a capital distribution made to Mr D in about June 2007, some of which was then lent by him to the husband to enable the husband to make a lump sum contribution to the G Superannuation Fund.
[12] Affidavit of Mr I filed 23 April 2014, Report, at [10]
During the husband and wife’s cohabitation, the parties were financially supported via the husband’s receipt of pension payments from the G Superannuation Fund and, for a period at least and consequent on his ownership of income units in the Trust, income distributions from the Trust.
Part of the husband’s intention in establishing the Trust in May 2000 was to ensure Mr D (and others who may come within the category of paternal ‘blood’ descendants) received the benefit of property held within that structure and to protect that property from claims which might be made against it. Possible sources of claims against such property included the wife, the husband’s former wife and his estranged adult daughter.
The proceeding generally
By Amended Initiating Application filed 21 February 2014, the wife seeks orders pursuant to s78 or, alternatively, s85A of the Family Law Act 1975 (Cth), that real property located at Suburb K registered in “the Respondents” name as trustees under the Trust and the “property, interests and resources of any or all of [B], the Trust, and the [G Superannuation Fund]” are declared or otherwise ordered to be property for the purpose of the proceedings and that the husband and wife have an equitable interest in such property.
In the alternative, she seeks to utilise s 106B of the Act to obtain orders setting aside:
a)the husband’s gift of $4 million made to Mr D on 7 July 2000 (the sum used to provide the corpus of the Trust); and
b)the provision of $144,700.00 to the trustees of the Trust on 15 March 2001; and
c)the husband’s resignation as a trustee of the Trust on 27 October 2003; and
d)the husband’s redemption of 39 voting units in the Trust, effective from 30 June 2004; and
e)a variation of the Deed of Trust of the Trust effected by a variation of the Deed of Trust dated 12 September 2005 whereby the trustee of the Trust became B; and
f)the husband’s transfer of his entitlement to income from the Trust to Mr D, effected on 18 June 2007; and
g)the issue to Mr D of one A Class Income Unit in the Trust on 27 June 2008, by which he was entitled to all income from the Trust; and
h)the distribution of all income from the Trust to Mr D in the years 2008-2011 inclusive; and
i)the husband’s resignation as a director of B and the redemption of his preference share in B on 27 October 2013; and
j)the variation of the Deed constituting the G Superannuation Fund by exclusion of the wife from the definition of “dependent”.
The wife seeks that the property of the parties – is arrived at following the implementation of the orders and associated processes outlined above – be adjusted such that she and the husband each receive property having a value of 50 per cent of the total value of the property.
In stark contrast, the husband asserts that it is not just and equitable that any order be made by which the wife receive any more property than that which she owns or has in her possession. This position is advanced on the basis of his contention that she has already received property valued at about 20 per cent of the value of the total property – which he asserts has a net value of about $840,000.00– available for consideration in the proceedings.
His case is that the Trust is not under his control and that the property held within it is not property of the parties for the purpose of s 79 of the Act.
The wife asserts that, irrespective of:
a)the documentation establishing the Trust; and
b)the manner in which units in the Trust are owned; and
c)the manner in which the shares in B are owned; and
d)the manner in which the Trust has operated since its inception,
the husband retain such control over it that property owned within it should properly be regarded as his for the purpose of the property settlement proceedings between them.
Both the husband and B refute these assertions completely. They advance that, consistent with the principle established in Ascot Investments v Harper[13], the Court is not entitled to ignore the interests of third parties such as B as trustee for the Trust and must take the property of the parties as it finds it.
[13] (1981) 148 CLR 337
The Second Respondent’s application for summary orders
On 10 February 2014, B[14] filed an Application in a Case seeking that:
a)pursuant to Rule 6.04 of the Family Law Rules (2004), it be removed as a party to the proceedings; or alternatively,
b)those aspects of the wife’s Initiating Application filed 13 March 2013 which refer to it and property owned by it as trustee for the Trust be struck out and the wife’s Amended Claim, filed 14 January 2014, against it be struck out; or, alternatively (if unsuccessful on its primary contentions)
c)the wife pay $112,000.00 to the Collector of Public Monies as security for its costs; and
d)the wife pay its costs of and incidental to the Application.
[14]on behalf of which an Amended Response was filed on 28 January 2014 seeking, by way of final orders, that, in so far as it referred to the property, interests and resources of B Pty Ltd or the C Trust, the Amended Initiating Application filed 12 June 2013 be dismissed and the wife pay its costs on an indemnity basis.
The husband supports the orders sought by the Second Respondent.
The decision whether to remove B as a party to the preceding seems to me to require consideration of whether the wife’s claims involving it has no reasonable likelihood of success.[15] The principles[16] to be applied in determining whether to summarily dismiss that aspect of the wife’s Amended Initiating Application by which she seeks relief against B as trustee for the Trust may be summarised as follows:
[15] Rule 10.12 Family Law Rules (2004).
[16]See, for example: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87; Dey v Victorian Railways Commissioners (1949) 78 CLR 62; Beck and Beck (2004) FLC 93-181; Pelerman v Pelerman (2000) FLC 93-037; Custodio & Pinto & Ors (2006) FLC 93-279; Lindon v The Commonwealth (No 2) (1996) 70 ALJR 541; Friar & Friar [2011] FamCAFC 71.
a)the power for summary dismissal is a discretionary one; and
b)as the relief of summary dismissal “is rarely and sparingly provided”, the power to order summary dismissal of a claim must be exercised with exceptional caution; and
c)relevantly here, B must show that the wife has no reasonable likelihood of success in her claim as against her; and
d)if there is a serious legal question to be determined, it should ordinarily be determined at a trial; and
e)if, notwithstanding the defects of pleadings, it appears that a party may have a reasonable cause of action which it has failed to put in proper form, a Court will ordinarily allow that party to reframe its pleadings; and
f)the issue is not whether the wife ‘would probably succeed’ in the relief sought against B but whether her material demonstrates that the action should not be permitted to go to trial in the ordinary way because this aspect of her case has no reasonable likelihood of success; and
g)if sufficient facts are asserted to demonstrate that, if the same are proved, the law arguably provides the relief sought by the wife against B as trustee for the Trust, the Application for summary dismissal should be refused; and
h)in determining whether the wife has no reasonable likelihood of successfully prosecuting the claim for relief advanced as against B, caution must be exercised in making such a finding where “contested evidence might reasonably be believed one way or the other so as to enable one side or the other to succeed”; and
i)the Court should have regard only to the wife’s material (the Claim, Statement of Claim and her affidavit) and material relied upon by her; must proceed on the basis that the wife’s ‘version of the facts’ (if not inherently incredible) is that which would ultimately be accepted at a trial and must examine the substance of the wife’s claim (or case) as against B; and
j)the guiding principle is doing what is just: if it is clear that the wife’s case has no reasonable likelihood of success, her action against B as trustee for the Trust should be dismissed so as to protect it from being further troubled, the wife from further cost and disappointment and to relieve the Court of the burden of further wasted time which could be devoted to the determination of claims which have legal merit.
In order to determine whether, as B advances, the wife has no reasonable likelihood of succeeding in her claim for the relief involving it particularised in her Amended Initiating Application, it is, of course, necessary to consider whether, if proved to the civil standard, the fact she asserts are capable of supporting the basis she asserts for the declaratory and other relief she seeks.
In order to carry out this determination, it is necessary to have regard to the pleadings[17] provided by the wife (in which the facts, matters and circumstances relied upon by her for the claims against B as trustee for the Trust are supposed to have been outlined) and the evidence she relies upon in meeting the application for its removal as a party.
[17]see the comments of the Full Court in B Pty Ltd and Ors v K and K (2008) FLC 93-380 at [44]-[46] wherein reference was made to Gould v Gould: Swire investments Ltd (1993) FLC 92 – 434 at 80,451.
In doing so it is also important to note that whether property of the Trust is, in reality, property of the husband or a financial resource of his is a question of fact to be determined in the circumstances of each particular case, including by reference to the terms of the relevant Trust Deed.[18]
[18] Goodwin & Goodwin Alpe (1991) FLC 92 – 192 at 78,273.
Senior Counsel for B submitted that the Amended Statement of Claim provided on behalf of the wife[19] was embarrassing and did not plead any facts to support the contention that assets held by B as trustee for the Trust are property of the parties or either of them.
[19] filed 14 January 2014.
The wife’s Amended Statement of Claim contains the assertion that the Trust was established in relation to the marriage to preserve a fund from which the husband and wife might benefit and which might avoid claims by others and that it is “in reality the alter ego of the husband”.
No doubt the latter assertion was pleaded and/or asserted to take into account the well-established principle that, except in the case of shams and entities that are ‘mere puppets’ of a party to the marriage, the Court must take the property of a party to the marriage as it finds it and cannot ignore the interests of third parties in the property, nor the existence of conditions or covenants that limit the rights of the party who owns it.[20]
[20] per Gibbs J in Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337.
The Trust: a sham or the husband’s alter ego?
The term ‘sham’ has been interpreted as meaning something that is:
a)intended to be mistaken for something else or that is not really what it purports to be; a spurious imitation; a counterfeit; a disguise; a false front or something which is not genuine or true but which is made in imitation of something else or made to appear to be something which it is not or something which is false or deceptive;[21] and
b)brought into being, in appearance rather than reality, as a device to assist one party to evade obligations.[22]
[21] Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 82 ALR 530 at 537.
[22] per Gibbs J in Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337.
In Equuscorp Pty Ltd and Another v Glengallen Investments Pty Ltd[23] the High Court said, at p 486:
‘Sham’ is an expression which has a well understood legal meaning. It refers to steps which take the form of a legally effective transaction but which the parties intend should not have that apparent, or any, legal consequence.
[23] (2004) 218 CLR 471.
In Raftland Pty Ltd v Federal Commissioner of Taxation[24] Gleeson CJ, Gummow and Crennan JJ referred to Equuscorp and said, at paragraphs 33 and 34:
In various situations, the court may take an agreement or other instrument, such as a settlement on trust, as not fully disclosing the legal rights and entitlements for which it provides on its face.
One such case is where other evidence of the intentions of the relevant actors shows that the document was brought into existence ‘as a mere piece of machinery’ for serving some purpose other than that of constituting the whole of the arrangement (footnotes omitted).
[24] (2008) 238 CLR 516.
In a separate Judgment in Raftland, Kirby J discussed sham transactions at some length[25], saying at [145] and [146]:
The key to a finding of sham is the demonstration, by evidence or available inference, of a disparity between the transaction evidenced in the documentation (and related conduct of the parties) and the reality disclosed elsewhere in the evidence. Where, for example, the evidence shows a discordance between the parties’ legal rights or obligations as described in the documents and the actual intentions which those parties are shown to have had as to their legal rights and obligations, a conclusion of sham will be warranted. (Footnotes omitted)
The test as to the parties’ intentions is subjective, in essence, the parties must have intended to create rights and obligations different from those described in their documents. Such documents must have been intended to mislead third parties in respect of such rights and obligations. (Footnotes omitted)
[25] see [101] to [150].
I accept the submission made on behalf of B to the effect that the fact that, according to the wife, the husband on occasion said he had access to funds from the Trust does not establish that, at the time it was created, the Trust was a sham.
I also accept that the Amended Statement of Claim does not contain any assertion which, if established, would be capable of supporting a conclusion that the Trust is a sham. There is nothing alleged (or in any way particularised or adverted to) to the effect that the husband and Mr D (and, presumably, Mr E before his death) intended that the Trust should not have apparent or any legal consequences or that it does not, in fact, fully disclose the legal rights and entitlements for which it provides on its face. It is not alleged (nor, in any way, particularised) that there is other evidence of the husband’s intentions which reveals that the Trust was brought into existence ‘as a mere piece of machinery’ for some purpose other than that stated.
It is not alleged that the real conduct of the husband and/or Mr D (and, as I have said, presumably, Mr E before his death) is such that there is a disparity between that and the creation of the Trust. Nothing in the pleadings or the evidence provides any foundation for a conclusion of discordance between the legal rights and obligations created by the husband’s actions in establishing the Trust and gifting money to Mr D, conditional upon his acquisition of units in it, and the actual intentions of the husband and Mr D as to their legal rights and obligations. Nothing is alleged or particularised to the effect that the husband and Mr D (and Mr E) must have intended to create rights and obligations different from those described in the Trust Deed and associated documents executed after it, associated with the changes made over time to the manner in and by which it has operated.
Nothing in the pleadings or the evidence relied upon by the wife provides a basis for concluding other than that the husband’s intention to create the Trust was real and genuine and that the Trust is real and genuine. I accept the submission that the evidence establishes that the Trust was created by the husband to provide for his children (perhaps, Mr D in particular) and to protect assets held within it from third party claims.
For the reasons outlined above, I consider that the wife does not have a reasonable likelihood of successfully establishing that the Trust is a sham.
In In the Marriage of Gould[26], having referred to the meanings of ‘sham’ summarised in paragraph [37] above, Fogarty J[27] discussed the distinction between the term ‘sham’ and the term ‘alter ego’, noting that the distinction between the two is not unimportant. His Honour said, at 80,433:
On the other hand, the description of an entity as the ‘alter ego’ or ‘puppet’ of a person really denotes something different. Correctly described, it is not an assertion that it is a “counterfeit, a facade or a false front”. Rather, it describes an actual situation although as a matter of law or practicality the actions of the other entity may be capable of and may in fact be controlled by the party in question. For example, a party may establish a trust over which he or she exercises control. That trust may in turn own or control property. It may be correct to describe that trust as the alter ego or even perhaps the puppet of that party, but it would not be correct to describe its existence or its ownership or control of property as a sham. Transactions entered into by it under which it deals with its property by, for example, a transfer of property to a third party would not be a sham transaction. It is likely to be a genuine transaction although the evidence may demonstrate that the transaction was carried out “by direction of or in the interest of” the party.
[26] (1993) FLC 92-434
[27] with whom the other members of the Court agreed in this respect.
Whilst the husband was, for a period of time, a trustee of the Trust (together with Mr E, his now deceased brother-in-law and Mr D), he did not ever own the majority of voting units in the Trust nor has he ever owned the majority of shares in B.
Unlike the factual situation considered by the High Court in Kennon v Spry[28] :
a)the husband has never been the sole trustee of the Trust nor has he ever been the person with the only interest in or title to its assets; he has never ostensibly had the sole power to appoint the assets of the Trust to himself; and
b)nothing in the evidence or pleadings asserts that the wife has ever had any entitlement under the Trust; and
c)nothing in the evidence or pleadings asserts that the property of the Trust was generated by or through the marriage or personal efforts or exertions of the husband and wife or acquired by or through the efforts of either of them; and
d)the husband does not have ostensible control of the corporate trustee of the Trust; and
e)nothing in the evidence or pleadings asserts that, under the terms of the Trust, the husband can give the property held under the Trust to himself absolutely or other members of his family at his sole discretion; and
f)the property held under the Trust is not by way of ‘greater part’– or, in fact, any part - of property acquired during the marriage (it having all been sourced in and from the inheritances the husband received before cohabitation commenced); and
g)the husband does not have the ostensible ability to exercise discretion to apply property to any beneficiary and, given the manner in which the Trust was established, has never had this ability; and
h)the husband could not have appointed the whole of the Trust fund to himself and, therefore, the potential enjoyment of the whole of that fund could not be regarded as ‘property of the parties to the marriage or either of them’.
[28] (2008) 238 CLR 366.
Further, nothing in the pleadings or the evidence relied upon by the wife provides a basis for any conclusion that, after the Trust was created, the husband treated its assets as his own or that Mr D and Mr E or (after they were replaced as trustees by B) B acted in respect of the Trust as the husband directed rather than as independent trustees; there is nothing to suggest that the husband dealt with Trust funds other than those to which he was entitled as the owner of income units in it. Additionally, the evidence of Mr I suggest that, if anything, the financial arrangements associated with Mr D’s involvement with the Trust were more financially advantageous to him than the husband.
Having regard to the above, I consider that the wife has no reasonable likelihood of successfully establishing that the husband has control of the Trust and that its property is property of the parties to the marriage or either of them for the purposes of her application the property settlement orders pursuant to s 79 of the Act.
Claim pursuant to s 85A of the Act
The Amended Initiating Application seeks that, “pursuant to s 78 and/or s 85A of the Act, the Court declare or otherwise order” that particularised real property (said to be registered in the husband’s name and in the name of the ‘Respondents’ as trustees of the Trust), ‘the property, interest and resources’ of B and/or the Trust and the G Superannuation Fund are property for the purpose of the s 79 proceedings.
The Amended Statement of Claim asserts that the Trust was established in relation to the marriage of the wife and husband, was made to preserve funds from which they might benefit and which might avoid claims by others.
It was not suggested by the husband – nor could it have been – that the real property registered in his name and his superannuation entitlement with the G Superannuation Fund are not already amenable to proper consideration in the proceedings between him and the wife.
Thus, the only property in respect of which the wife’s claim in reliance on the relief sought (pursuant to s 78 and/or s 85A of the Act’) can meaningfully refer is the real property at J Street, Suburb K[29] said to be registered in the names of the “Respondents” as trustees of the Trust and “the property, interest and resources” of B and/or the Trust. All of this property has its genesis in the inheritances received by the husband before the parties’ cohabitation commenced.
[29]contained in Title Reference 16448014 and described as Lot 520, Registered Plan 183157 County of Ward Parish of Nerang.
The evidence before the Court establishes that the J Street property was acquired in 2003 and is registered in the names of the husband, Mr D Anison and Mr E as trustees for the Trust. As I understand it, the husband asserts that, as a consequence of clerical or other error, B (as the incoming trustee of the Trust in 2005) never received a transfer of this property but is the proper entity entitled to legal ownership of it.[30]
[30] Annexure ‘A’, affidavit of the husband filed 17 May 2013.
Section 85A(1) of the Act relevantly provides that the Court may, in proceedings under the Act, make such order as it considers just and equitable with respect to the application, for the benefit of all or any of the parties to the marriage, of the whole or part of property dealt with by ante-nuptial or post-nuptial settlements made in relation to the marriage.
As it stands, to bring a claim within the ambit of s 85A, there must be shown a real and relevant association between the marriage and the settlement. The nexus is a question of degree determined upon the construction of the Trust Deed.[31] A perusal of the Deed reveals nothing that would enable the Court to find that the settlement was made in relation to the marriage between the husband and the wife.
[31]Spellson v Spellson (1989) FLC 92-046 which followed Public Trustee (S.A.) v Keays (1985) FLC 91-651.
The operation of s 85A was discussed by the High Court in Kennon & Spry. Whilst, in light of the conclusion he had reached in disposing of the appeals, French CJ did not consider it necessary to consider whether s 85A had any application in that matter, he did express his inclination that he doubted that s 79 and s 85A of the Act had mutually exclusive areas of operation “notwithstanding the concerns that led to the enactment of s 85A.” In their joint Judgment, Gummow and Hayne JJ expressed[32] that s 85A should not be read as confining the powers otherwise given by ss 79 and 80 in any relevant respect and should be read as focused upon the variation of settlements of the kinds identified in it.
[32] at [132].
In dissenting from the orders proposed by the other members of the Court to dispose of the appeals, Heydon J noted that the application of s 85A depended on characterising the Trust as an ante-nuptial or post-nuptial settlement, an issue his Honour regarded as arguably capable of having factual elements not investigated at the trial of the matter. Nothing in the pleading or evidence relied on by the wife or the submission prepared on her behalf identifies any such factual elements which may require investigation or consideration in this matter.
Here, the only Trust was created in May 2000 when the only disposition of property to Mr D for his use in acquiring units in it occurred. The parties married in 2008, nearly 8½ years later. The J Street property was acquired in 2003 using some of the funds which formed the corpus of the Trust.
In Kennon, Heydon J also considered whether the Trust in that case (which he considered the only Trust, created some ten years before the parties married) was an ante-nuptial settlement and whether it had been ‘made in relation to the marriage’. He considered that, for a settlement to be an ante-nuptial settlement, it must have been made in contemplation of the particular marriage in relation to which s 85A was invoked.
As Heydon J noted was the case in Kennon, there is nothing in the ‘recitals or substance’ of the Trust Deed here (or any of the documents by which variations to the same were effected) to suggest that it was. Nothing in the pleadings or the evidence relied on by the wife asserts this to be the case.
In this case, the reality is that there is a person, not connected to the marriage, to which the settlement relates and who is a substantial beneficiary of it – namely, Mr D (who is not, obviously, a child of the marriage). If the reasoning expressed by Heydon J - which appears consistent with the approach taken by the Full Court in Spellson and Spellson[33] was applied, this would prevent the Trust (and other actions capable of amounting to settlements) from falling within the category of ante-nuptial or post-nuptial settlements. Additionally, if his Honour’s further reasoning was applied, however wide the words “made in relation to the marriage” in s 85A are, they could not be “stretched” to establish the necessary relationship between the creation of the Trust in 2000 and the marriage and 2008.
[33] (1989) FLC 92-044
Further, according to Heydon J, s 85A requires that the relevant settlement must be made in relation to the marriage (between the husband and wife the parties to the proceedings in which it is sought to rely on s 85A) and “not simply in relation to marriage”.
In Kennon, Kiefel J expressed the view that:
a)it is not difficult to infer that s 85A is directed to the use of discretionary family trusts and other structures used for holding assets, acquired in the course of the marriage, for tax-related and other purposes (my emphasis); and
b)it is apparent that s 85A was intended to give the Court power to deal with property which could not be the subject of an order under s 79, but which accorded with current conceptions of what was a “settlement” of property in matrimonial law; and
c)nuptial “settlement” of property may involve a disposition of property for the purposes of regulating the enjoyment of the settled property; may provide for succession; limits the alienation and transferability of the property but, given that statutory provisions give the Courts power to vary it, cannot involve an absolute interest in property; and
d)it is necessary that a settlement provide for the financial benefit of one or other of the spouses and it may imply some kind of continuing provision for them.
If that last mentioned statement is applied in a manner consistent with that which is to be applied in determining applications for summary orders, I accept that the gift of $4,000,000.00 to Mr D in about May 2000 on condition that he use it to acquire units in the Trust (and, thus, provide the corpus which was to be used to create income to which the husband was entitled to be considered to receive as a consequence of his ownership of the income units in the Trust) and the provision of other funds by the husband to the Trust at or around that time could be capable of constituting ‘settlements’ for the purposes of s 85A of the Act.
Kiefel J also expressed the view that a provision which was in respect of the parties and their family may have a “nuptial” element. She also emphasised, it seems to me, the importance of noting that the essential purpose of a provision like s 85A was to enable the Court to enquire into post-nuptial and ante-nuptial dispositions of property, in favour of one or other or both of the parties to the marriage, which should be reconsidered because of the dissolution of the marriage.
In discussing the submissions made in Kennon that the Trust predated the marriage, was neither an ante-nuptial or post-nuptial settlement and that s 85A had no application, Kiefel J made what I understand to be the following points:
a)the presence of the phrase “made in relation to the marriage” in s 85A may mean that a less direct connection is required between the settlement of the particular marriage than would be required under the English equivalent (pursuant to which a settlor must have the particular marriage in question in mind – and not just the prospect of future marriage – before the settlement qualifies as ante-nuptial); and
b)the connection required by “in relation to” in s 85A must be as between the settlement of the particular marriage which is the subject of the proceedings: the expression “in relation to” is of wide and general import and should not be read down in the absence of some compelling reason for doing so – the words are prima facie broad and designed to catch things which have a sufficient nexus to the subject; and
c)the question of nexus[34] depends upon statutory context and, in order to construe s 85A so as to determine its intended operation and the degree of connection necessary between settled property and the marriage, consideration must be given to the language and purpose of the Act; and
d)the process of construction should begin with examining the context of the provision in question; “context” includes the existing state of the law and the problem that the statute was intended to remedy and s 85A was intended to extend the Court’s powers to property which did not fall within the purview of s 79, but which nevertheless fell within the conception of a nuptial settlement of property; and
e)given that the Act requires that orders made respecting property are done so by reference to the contributions (financial and otherwise, direct and indirect) of the parties to the marriage to the acquisition, conservation or improvement of the property which is accumulated in the course of the marriage, the focus of s 85A is on the property dealt with by the settlement: additionally, given that s 85A(2) requires that the matters in s 79(4) are taken into account “so far as they are relevant”, it must be taken as intended that the Court consider any contributions (direct or indirect) to the property the subject of a nuptial settlement; and
f)by virtue of the wide meaning given to the term “settlement” in s 85A, it is sought to give the Court power to deal with all property held for the use and benefit of the parties to the marriage and which may represent an accumulation of their assets in the course of the marriage; and
g)the purpose of s 85A is to ensure that, since the previous arrangements for the property cannot continue, the property is applied equitably to the benefit of the parties, or the children; and
h)whether a disposition or other settlement qualifies as an “ante-nuptial or post- nuptial settlement made in relation to the marriage” is informed by the purposes summarised above.
[34]which I understand to encompass matters like the degree of association which is necessary and its relevance to the question of the temporal relationship between settlement marriage.
I consider it particularly important to note the following from the reasoning expressed by Kiefel J:
a)s 85A (1) was intended to have a wide operation to property held for the benefit of the parties on a settlement and to which they have contributed and it is intended to apply to settlements whether they occur before or during marriage; and
b)the essential requirement of the section is that there be a sufficient association between the property the subject of a settlement and the marriage the subject of proceedings; and
c)s 85A (1) does not require that a settlement made prior to marriage be directed to the particular marriage at the point it is made and it is sufficient for the purposes of the section that the association of which it speaks (“made in relation to”) be present when the Court comes to determine the application of the property settled under s 85A (1).
In Kennon, Kiefel J concluded that each of the features necessary to render the property of the Trust there considered as settled property within the purview of s 85A was present. Her Honour noted that the term “settlement” was to be given a broad meaning consonant with the intention of s 85A to bring discretionary family trusts within the ambit of the act; “property” was to be read as including those assets to which the parties had contributed throughout the course of their marriage and which were held for their use and benefit and, therefore, the Trust assets constituted property, much of which had been obtained by way of the parties’ contributions to the marriage. Kiefel J also considered that, whenever property was transferred by the parties to the Trust, the parties “dealt with” their property and effected settlements within the meaning of s 85A and that, therefore, the Trust property represented contributions of the parties and was held on terms of a settlement.
Even if the view expressed by Kiefel J is considered as representing the law, I consider that, given the husband’s intention when the Trust was made and that it was made in May 2000 and the parties married in 2008, the Trust when made could not have been referable to the marriage. It may well be that the Trust was used to hold property (which originated from the husband via the inheritances he received before he and the wife commenced cohabitation) for the benefit (being the realised possibility – at least for some years during cohabitation – that he may receive income as a consequence of his ownership of income units) of the husband upon the terms of the Trust.
However, unlike the situation in Kennon, there is nothing in this case in the pleadings prepared on behalf of the wife or the evidence relied on by her to provide a basis for a conclusion that the Trust assets:
a)arose as a consequence of any settlements (to which the wife had made contribution) other than those initially made (to which she had made no contribution) when it was created; or
b)constitute property obtained by the parties’ contributions made during their marriage; or
c)arose from, or out of, contributions made by the parties or either of them throughout their marriage to the property settled on the Trust; or
d)are property which reflect the contributions, direct or indirect, of the parties to the marriage.
Further – and, perhaps, repetitively – the circumstances here pleaded and apparent from the wife’s material are such that:
a)even if it is concluded that the funds gifted to Mr D in about May 2000 (which were subsequently applied by him in acquiring units in the Trust and thereby creating its corpus) could be regarded as amounting to a settlement of property by the husband to the Trust, none of those funds had their genesis in contributions made by the parties during their marriage; and
b)the essential requirement that there is a sufficient association between the property the subject of a settlement and the marriage the subject of proceedings is not established nor capable of being established.
For these reasons, I consider that the wife has no reasonable likelihood of succeeding in a claim against B as trustee for the Trust based upon the operation of S 85A in the circumstances of this case.
The claim pursuant to s 106B of the Act
If, as the wife submits should occur, the dispositions identified in the Amended Initiating Application filed 21 February 2014 are set aside and consequential orders made retransferring the identified property to the husband, it will be part of “the property of the parties or either of them” for the purpose of s 79 of the Act.
B’s application may succeed only if I conclude that the wife has no reasonable likelihood of success in her claim to set aside those instruments or dispositions or transactions particularised in the Amended Initiating Application.
The submissions made on behalf of B in essence advance that, when regard is had to the pleadings and the totality of the evidence presented by the wife, it is impossible to discern any basis upon which the Court would be persuaded that a case pursuant to s 106B can be sustained at trial. That is, it is submitted that the wife has failed to assert sufficient facts which, if proved, will arguably provide the foundation for the relief sought. As noted earlier – albeit more generally – even if the case asserting the application of s 106B appears weak, this is an entirely different matter to concluding that there is no reasonable likelihood of it succeeding at trial.
Ascertaining whether the wife has no reasonable likelihood of succeeding in her claim against B pursuant to s 106B of the Act requires careful consideration of those matters which must be proved for such a claim to be sustained. It is, however, unnecessary to consider whether the wife has no reasonable likelihood of establishing any sort of mala fides on the part of the husband because, to use phraseology employed by other members of the court,[35] ‘perfectly innocent transactions’ may be caught by the operation of s 106B. Thus, “non-fraudulent” dispositions may be set aside.
[35]see: Bourke & Bourke and Anor (2010) 243 FLR 380 per Murphy J where his honour referred to Abdullah and Abdullah (1981) FLC 91 – 003 and In the Marriage of Gould (1993) FLC 92-434.
Section 106B of the Act requires that there is evidence upon which the Court could conclude that:
a)there are proceedings under this Act; and
b)there is an instrument or disposition sought to be attacked; and
c)the instrument or disposition was made by or behalf of, relevantly, the husband; and
d)the disposition was, relevantly, made to defeat an existing or anticipated order in the proceedings; or
e)the disposition was, irrespective of intention, likely to defeat any such order.
Authority establishes that proceedings need not have been instituted at the time of the disposition or the making of an instrument for s 106B to apply.
The evidence obviously establishes that there are proceedings under the Act, that the husband made a series of dispositions (including his $4,000,000.00 gift to Mr D on condition that that sum be used to acquire units in the Trust) and executed a number of instruments in relation to the Trust.
The real issue appears to relate to whether such dispositions and/or instruments were made to defeat an anticipated order or, irrespective of intention, were in fact likely to defeat that order.
That is, B’s application will only succeed if, having regard to the pleadings and the evidence relied upon by the wife, I conclude that she does not have a reasonable likelihood of succeeding on her claim that the husband’s actions in:
a)gifting $4,000,000.00 to Mr D in May 2000 on the basis that such money was used to form the corpus of the Trust; and
b)undertaking the actions particularised in the Amended Initiating Application,
were, at the times each was made, made to defeat an anticipated order or, irrespective of intention, were in fact likely to defeat that order.
I proceed on the basis of the wife will be able to establish that one of the aims identified in the time leading up to the creation of the Trust in May 2000 was “to protect the capital of the Trust from any de facto relationship or family law claim that may be made.” (my emphasis)
In Pflugradt [36] Elliot J said, at 76,429 and 76,430:
…I consider that the elements of expectation or foreseeability in an “anticipated order” must be considered on an objective rather than subjective basis - to hold otherwise would be to favour the determinedly ignorant or the blissfully unaware; “anticipated” as used in sec 85 [now 106B] is an adjective, not a verb. It is therefore descriptive of the order referred to. It requires the order to have the quality of being “anticipated”. By whom? The law’s answer must be by a reasonable disponer, at the time of the disposition, properly considering all the circumstances of the case.
…
In the instant matter before me it is not a question of whether the husband expected or foresaw a subsequent property application by the wife and “anticipated” an order being made, but whether, considering all the circumstances of the time of the disposition, such an application by her at some time, with a consequent order, was objectively to be foreseen or to be expected by him as being likely or reasonably probable.
…
It should be noted that sec 85 [now 106B] requires an order to be “anticipated” – not merely a claim.
[36] (1981) FLC 91-052.
Having regard to the circumstances which were in existence when the husband gifted $4,000,000.00 to Mr D for the purpose of establishing the Trust, I consider that the wife has no reasonable likelihood of succeeding in her claim that this gift be set aside and the funds held within the Trust returned to the husband. It cannot be forgotten that the parties had only recently commenced living together when the gift was made in May 2000 - accepting the wife’s assertion for the purpose of this analysis, they had only cohabited for six months at that time.
The wife has not identified and/or particularised the nature and the extent of the order she anticipated would be made at the time the gift to Mr D was made and/or the other dispositions made and/or instruments particularised in the Amended Initiating Application executed. It is clear that, when the relevant transactions took place, the husband and wife’s relationship and, then, marriage was intact. There is nothing in the evidence to provide a basis for a conclusion other than that there was no suggestion at those relevant times of any proceedings under the Act.
Whilst the evidence appears to me – for the purpose of deciding this application – to establish that the husband acted to establish the Trust in order to protect assets he had inherited from his father and brother from potential claims by persons he considered not entitled to those assets (which persons included, as I have already noted, his former wife, his estranged daughter and, arguably, the wife – or any other person with whom he may have subsequently formed an intimate relationship), I consider that the wife has no reasonable likelihood of succeeding in establishing that an order could reasonably have been foreseen by a reasonable person in his position in May 2000 or at subsequent times when other instruments were effected.
Accordingly, I consider that the wife does not have a reasonable likelihood of successfully establishing that an order was reasonably “anticipated” when the gift from the husband to Mr D was made. Additionally, I consider that she does not have a reasonable likelihood of successfully establishing that this gift – made in May 2000 – was likely to defeat any then anticipated order in proceedings under the Act.
For these reasons, I consider that the wife does not have a reasonable likelihood of succeeding in her claim pursuant to s 106B of the Act as it relates to B as trustee for the Trust.
Whilst I am, of course, completely cognisant of the comments of Kirby J in Lindon v the Commonwealth (No 2)[37] that “…Experience teaches that the concentration of attention, elaborated evidence and argument and extended time for reflection will sometimes turn an apparently unpromising cause into a successful judgment”, it should not be forgotten that the wife has already filed affidavits in the Court and that pleadings (including amended pleadings) have been delivered in which the very issues which must be established in order for her claim against B to succeed have been addressed.
[37] (1996) 70 ALJR 541 at 544-545.
For the reasons I have expressed, I consider that the wife’s application for relief as against B as contained within the Amended Initiating Application filed on 21 February 2014 and the Amended Claim and Amended Statement of Claim filed 14 January 2014 has no reasonable likelihood of success.
Given the conclusion I have reached, it is unnecessary that I consider B’s application for an order requiring the wife to provide monies by way of security for its costs.
Relief sought by wife’s Application in a Case filed 4 December 2013
The wife seeks orders that the husband:
a)pay or cause to be paid the sum of $125,000.00 to meet the payment of her legal costs or, alternatively, that the Court make a “dollar for dollar” order; and
b)pay spousal maintenance in an amount of $1,000.00 per week; and
c)is compelled to make particular Right to Information applications to the Department of Human services (“Centrelink”) to obtain documents referable to the period from 1 December 1999 to 1 April 2013.
The husband opposes any order being made in terms sought by the wife.
The provision of funds for litigation
In Strahan v Strahan[38], Boland and O’Ryan JJ said at [79]:
The need for a party to proceedings under the Act to seek an order for the provision of funds to enable the payment of his or her legal costs of participating in the proceedings has been recognised many years. It is a reflection of an important matter that distinguishes litigation under the Act from civil litigation between parties who are not parties to a marriage, namely that “very often the wealth of the parties is controlled by one rather than both of them”: Blueseas Investments Pty Ltd v Mitchell (1999) FLC 90 – 856 at 86,128 per Full Court (Nicholson CJ, Lindenmayer and O’Ryan JJ).
[38] (2011) FLC 93-466.
The wife relies on ss 74, 79 and 80 of the Act as the relevant source of power for the making of the order sought. Whilst preliminary identification of the source of power is necessary – because this determines the necessary preconditions and relevant considerations for making the order sought – it is clear that many of these are common to the respective sources of power.
Is there a position of relative financial strength on the part of the husband, does he have the capacity to meet his own litigation costs and does the wife have an inability to meet her own costs?
It is clear that the husband’s financial position is significantly superior to that of the wife. He is in receipt of not insubstantial payments from the G Superannuation Fund whilst the wife is supported by receipt of the age pension. She has no entitlement to superannuation. He is the owner of the former matrimonial home, a boat, a motor vehicle and furniture and contents which he asserts have a combined gross value of over $1,000,000.00. She owns a motor vehicle (valued at around $20,000.00) and has spent all of the $100,000.00 she removed from joint accounts at separation. Whilst she had funds at bank at the time her Financial Statement was sworn, it is more likely than not that these have diminished in the intervening period.
It is clear the husband has the capacity to meet his own costs of litigation. Whilst the wife has met some of her costs of litigation to date (via the use of funds taken by her at separation) her financial situation is such that she is unlikely to be able to meet her ongoing and future litigation costs from property and/or resources to which she is entitled at present.
Is there complexity in the financial affairs of the parties and the need for expert investigation?
Given the conclusions I have outlined above, there is no particular complexity in the financial affairs of the parties. However, I note the existence of correspondence in which point has been made about the wife’s relative lack of financial sophistication.
The wife has already obtained a report from an accountant, Mr I, and it would be open to her to rely upon it at the final hearing of the matter. In that sense, then, it may well be likely that any necessary expert investigation into the financial affairs of the parties has, to a large extent, already been undertaken.
Does the wife have at least an arguable case the substantive relief which deserves to be heard?
The parties cohabited from about 13 years. During this time each made various contributions as outlined in their respective affidavits. Whilst the degree and nature of the contributions remain somewhat in dispute and are incapable of resolution at an interim hearing, it could not be said that the wife does not have at least an arguable case for substantive relief which deserves to be heard.
What are the wife’s likely costs of the litigation?
The wife has paid her legal representatives approximately $64,236.08 to date. These payments had been made from the $100,000.00 she took at separation, with the balance of that sum having been said to have been spent in meeting living expenses. It is said that the wife owes her legal representatives a further amount of approximately $30,000.00, including in relation to work not invoiced at the date of the hearing.
The wife’s evidence is that her likely future legal expenses will be between about $94,000.00 and $137,500.00. Given the conclusions I have reached in relation to her claim against B, I suspected her future legal expenses are likely to be significantly less than this.
Whatever they are, however, it is clear that the wife’s financial position is such that, absent an order requiring the husband to provide her with access to funds for the purpose of meeting these expenses, she will not be in a position to meet them. Given her age, it is also highly unlikely that she will be able to secure litigation funding from another source or be in a position to obtain funds for use in meeting her litigation expenses by borrowing from a commercial lender. Such conclusion is strengthened by the fact that she does not own any property against which any borrowings could be secured.
Will it be possible to “take into account” in the property proceedings any sum paid by the husband to the wife?
A significant aspect of the husband’s resistance to an order requiring him to pay funds to the wife to enable her to meet her litigation expenses rests upon his contention that, such is the value of the property of the parties available for consideration in the property settlement proceedings between them, it will not be possible to “adjust” or “take into account” any such sum at a final hearing. That is, having regard to the wife’s financial circumstances, the husband asserts that any funds paid to her and spent by her in meeting legal expenses will not be able to be recovered by him at trial if his contention that it is not just and equitable that any order be made for her to receive any further property finds favour.
The husband’s case is that, when the $100,000.00 taken by the wife at separation is considered with the other property currently in her possession, she has already had the benefit of property valued at about $209,000.00 (being $133,000.00 cash, her car at about $20,000.00, jewellery at about $15,000.00 and her shares at about $41,000.00.) He advances that the Court will not consider it just and equitable to make any order by which she would receive any further property.
This submission is advanced in circumstances where he contends that the nett value of the property of the parties amenable to the proceedings between them is in the vicinity of about $1,061,647.00 (of which about $260,000.00 was held in the G Superannuation Fund). This nett value is calculated on the basis that the Court will conclude that the husband owes Mr D no less than about $320,000.00.
It is, of course, well established that, as a general rule, the “property” of the parties for s 79 purposes is arrived at by deducting the parties’ total liabilities from the value of their property. Unsecured liabilities frequently come within the terms of this general rule; it is frequently the case that a debt – although incurred by only one of the parties to a marriage – will be treated in such manner.[39]
[39]see, for example: Prince and Prince; General Credits Australia Ltd (Intervenor) (1984) FLC 91-501.
However, as the Full Court made clear in Biltoft and Biltoft[40] “… although [that] is a general rule…. the rule is not absolute, is not prescribed by statute and there are a number of well-recognised exceptions.”
[40] (1995) FLC 92–614 at 82,128.
In Prince and Prince; General Credits Australia Ltd (Intervenor)[41], the Full Court said, at 79,076:
In other cases, the Court may take the view that because of the circumstances surrounding the incurring of the liability it ought in justice and equity to be wholly or partly disregarded in determining the appropriate order to make under s 79 as between the parties to the marriage….
Of course, the Court cannot ignore the fact that there is or may be a liability; the effect is simply that it does not consider that the other spouse should be called upon to in effect ‘contribute’ to the liability by having that spouse’s fair share reduced by virtue of its existence……
[41] (1984) FLC 91-501
In AF Petersens and AF Petersens[42] the Full Court said, at 76,699:
Nor, as has been pointed out earlier, is there anything in the decision of the High Court in Ascot Investments Pty Ltd v Harper and Harper to suggest that this Court cannot make an order dividing the assets of the parties because such a division might hamper a third party in his or her chances of recovery of a debt.
[42] (1981) FLC 91–095
Other authority establishes that the existence of matters like the nature of an (alleged) debt and uncertainties about its enforcement may well permit the Court to disregard it entirely.[43]
[43] see: Biltoft & Biltoft (1995) FLC 92-614
As at 30 June 2012 the Trust had nett equity of $2,968,740.00. Mr D is entitled to the capital of the Trust as the only capital unit holder. He is also entitled to the income of the Trust as the owner of the A Special Class income unit issued to him on 27 June 2008.
If the husband’s primary argument about the manner in which the money advanced by Mr D should be regarded does not ultimately find favour, the value of the property of the parties is about $1,381,647.00.
Using the range for the nett value advanced by the husband and assuming that all of the assets already taken up by the wife are considered as property already received by her – rather than encompassing some spouse maintenance as well – the wife has already had property representing either about 19.68 per cent (of the lesser valued pool of property) or 15.12 per cent (of the greater valued pool).
In acting with the caution required in determining applications like this in circumstances like these and taking into account the length of the parties’ cohabitation and the extent of the financial support the husband has drawn from the G Superannuation fund between 2011 and 2012 (being an annual pension of about $115,000.00), I am persuaded that a payment to the wife of $20,000.00 to assist in meeting her legal expenses will be able to be taken into account at the final hearing of the matter.
In the alternative, I am satisfied that, given the husband’s relative financial strength, capacity to meet his own legal costs and the wife’s relative inability to meet her legal costs from her own much more meagre financial resources, the circumstances justify the making of an order that the husband pay this amount toward the wife’s ongoing legal costs.
Spousal maintenance
The husband is liable to maintain the wife to the extent that he is reasonably able to do so if and only if she is unable to support herself adequately by reason of age, or physical or mental incapacity for appropriate gainful employment or for any other adequate reason having regard to any relevant matter referred to in s 75(2) of the Act. [44]
[44] s 72(1) of the Act.
If satisfied that the wife is unable to support herself adequately by reason of age, or physical or mental incapacity for appropriate gainful employment or for any other adequate reason and that the husband has the capacity to maintain her, the Court may make such order as it considers proper for the provision of maintenance to the wife.[45]
[45] s 74(1) of the Act.
Is the wife unable to support herself adequately?
It was not seriously submitted that the wife was able to support herself through gainful employment. I am satisfied that, by reason of age, the wife is unable to support herself adequately.
Given this conclusion, the wife is entitled to be maintained “adequately” - which imports a standard of living which is “reasonable in the circumstances” – by the husband to the extent that he is reasonably able to do so.
In Brown and Brown[46] the Full Court summarised the principles, which had emerged from previous authority, as follows:
a)‘adequately’ is not to be determined according to any fixed or absolute standard; and
b)‘adequate’ does not mean a subsistence level of support; and
c)where possible, both spouses should continue to live, after separation, at the level previously enjoyed if this is reasonable, although their standard of living may have to be lower if financial resources are insufficient to maintain that standard; and
d)in some circumstances, it may be ‘reasonable’ for the parties to live at a higher standard than previously enjoyed; and
e)is not necessary for an applicant to use up all capital in order to satisfy the requirement that that party is unable to support himself/herself adequately; and
f)an applicant is not entitled to live at a level of considerable luxury or comfort merely because the other party is very wealthy.
[46] (2007) FLC 93 – 316
It is accepted that the determination is not to be made by reference to a fixed or absolute standard: adequate support is to be determined upon a consideration of a standard of living that is reasonable in the circumstances.
The wife’s Financial Statement indicates that her financial position is weak; she is reliant upon Centrelink, receiving approximately $473.00 from that source per week. Her only other income is the approximately $22.00 per week she receives by way of dividend from shares owned in a publicly listed company. Thus, her total income is about $495.00 per week. Her expenses include: about $340.00 for rent, $34.00 for health insurance, $9.00 for motor vehicle insurance, $11.00 for car registration and $650.00 for other expenses including food ($190.00), electricity ($25.00), telephone ($23.00) and car costs ($33.00).
She has limited assets: her shares are said to be valued at about $42,000.00; she had about $18,000.00 in cash at bank at the time she swore her Financial Statement (and it is highly likely that some – if not all – of this has been spent on meeting her living expenses since that time), she owns a motor vehicle said to be valued at about $20,000.00 and personal effects valued at about $3,000.00. She does not have any entitlement to superannuation.
Counsel for the husband submitted that the wife had failed to establish that the expenses for which she claims are necessary for her support. It was submitted that the following amounts for the following expenses in particular are ‘unreasonable’ when regard is had to the circumstances and the parties’ general expenses during the relationship:
a)holidays – $77.00 per week; and
b)hobbies – $50.00 per week; and
c)gifts – $23.00 per week; and
d)food – $190.00 per week.
Such submissions are made in circumstances where the husband’s Financial Statement contains no particularisation of the matters outlined in Part N of that document. Rather, his case was presented on the basis that his cost of those matters (which include the categories in respect of which particular adverse submission was made) amount to about $1,617.00 in total.[47]
[47]being the difference between his income of $1,882.00 and his particularised weekly expenses of: rates ($90.00), insurance ($78.00), motor vehicle insurance ($53.00) and registration ($44.00).
The husband has the capacity to pay spousal maintenance to the wife. His income ($1,882.00 per week) exceeds his expenses ($1,259.00 per week) by $623.00 per week. In addition, he had about $130,000.00 cash at bank and about $116,000.00 in shares at the time his material was prepared.
I conclude that the wife has a reasonable need for maintenance in an amount of $500.00 per week and that the husband has the capacity to meet this reasonable need. I consider it proper in all the circumstances of the case – which include that the parties cohabited for about 13 years during which they were supported by the husband’s receipt of entitlements from the G Superannuation Fund, that the husband continues to live in the property in which both parties lived during their cohabitation and that he continues to receive the same entitlements now as he did previously - that the husband pay this sum to the wife by way of spousal maintenance.
Given the delay which has attended the finalisation of this matter - a matter in respect of which neither party bears any responsibility – I consider it proper and appropriate that the wife is able to advance an argument at trial that the husband should pay to her, by way of spousal maintenance, the sum of $500.00 per week from the date on which she filed her Application in a Case seeking spousal maintenance until the date on which it was finalised. A Notation will be made to reflect my conclusion in this regard.
Of course, it is also open to the wife to advance a case at trial that the husband pay her an amount by way of lump sum spouse maintenance, calculated from the date on which she filed her Initiating Application seeking an interim order for spousal maintenance.
Disclosure of Centrelink records
The wife’s legal representatives have sought on a number of occasions that the husband undertakes steps to obtain his Centrelink records. The husband swears that his only involvement with Centrelink occurred during two short periods: one approximately 30 – 40 years ago during which he was briefly unemployed and another in the late 1980s/early 1990s after he had some medical attention. He says he has a Seniors card (which allows him to obtain some discounts) but has otherwise supported himself. He is not in receipt of government provided payments.
I am not persuaded that any documents held by Centrelink have been shown by the wife to be of such relevance as to warrant an order in the form of mandatory injunctions directing the husband to undertake steps to request them via a Freedom of Information application.
I certify that the preceding one hundred and thirty-four (134) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hogan delivered on 6 November 2015.
Associate:
Date: 6 November 2015.
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