ANOLICK & ANOLICK

[2019] FamCA 100

FAMILY COURT OF AUSTRALIA

ANOLICK & ANOLICK [2019] FamCA 100

FAMILY LAW – PROPERTY – application to adjourn final hearing to enable realisation of assets and restructuring of business activities.

FAMILY LAW – PROPERTY – court’s power to adjourn proceedings - whether adjournment is in the interest of justice – where adjournment granted

Family Law Act 1975 (Cth)

Doctors v van Leeuwen (1990) FLC 92-148.

Waters v Waters (1981) FLC 91-019

APPLICANT: Mr Anolick

RESPONDENT: Ms Anolick

INDEPENDENT CHILDREN’S LAWYER:

FILE NUMBER: MLC 5060 of 2012

DATE DELIVERED: 25 February 2019

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Bennett J

HEARING DATE: 27 September 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr G Dickson QC

SOLICITOR FOR THE APPLICANT: Lander & Rogers

COUNSEL FOR THE RESPONDENT: The Hon. Mr Ian Coleman SC with Mr G Thompson

SOLICITOR FOR THE RESPONDENT: Rickards Legal

COUNSEL FOR THE INDEPENDENT CHILDREN’S LAWYER:

SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER:

Orders

IT IS ORDERED THAT

(1)The final hearing set down to commence on 29 October 2018 be and is hereby adjourned and in lieu thereof this matter be set down for final hearing before me on 17 June 2019 estimated to take 5 to 7 days (“the final hearing”).

(2)This matter be listed for mention before me on 25 February 2019 at 9.00 am for the purpose of checking on the readiness of the matter for trial and to make any further directions for trial.

(3)The husband pay the wife’s costs of and incidental to today fixed in the sum of $15,000 such payment to be made by not later than 22 October 2018.

(4)Otherwise the Application in a Case of the husband filed 24 September 2018 be and is hereby dismissed.

AND IT IS NOTED that the lawyers for the wife will communicate with my Associate – email … – within 7 days as to whether the wife requires reasons for my decision this day.

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 Anolick & Anolick 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 MELBOURNE

FILE NUMBER: MLC 5060 of 2012

Mr Anolick

Applicant

And

Ms Anolick

Respondent

REASONS FOR JUDGMENT

Introduction

1. This matter came before me on 27 September 2018 on the husband’s application to adjourn the final hearing on financial matters which was due to commence on 29 October 2018.

2. Mr Dickson QC appeared for the husband and the Hon. Mr Coleman SC appeared with Mr Thompson for the wife.

3. The matter proceeded by way of submission.  Neither party sought to cross-examine the other.

4. I acceded to the husband’s application, over the vigorous opposition of senior counsel for the wife.

5. I adjourned the final hearing to 17 June 2019 (estimated to take 5 to 7 days).  There is a mention on Monday 25 February 2019 to check on the progress of the matter both in terms of the realisation of the businesses and moving the matter towards the final hearing.

6. The wife made an application for costs of today.  I heard submissions and ruled in favour of the wife.  The quantum of costs claimed was not disputed.

7. This matter was listed to be concluded by 10:00 a.m.  As we had run out of hearing time, I said that I would deliver my reasons on the adjournment subsequently. Mr Coleman said that his instructing solicitors would inform my Chambers within seven days if the wife required reasons for decision. My Chambers received that notification.  These are my reasons.

Background

1. The parties separated in August or September 2015 after a cohabitation and marriage spanning 15 or so years.  Parenting and property proceedings were commenced by the husband during an initial separation in June 2012 and discontinued in August 2012 when the parties reconciled.  The husband initiated these proceedings by application which was filed on 23 December 2015 and subsequently amended.  The wife’s response was filed on 7 December 2016 and has also been amended.  I understand that both parties may seek orders at variance with those formally sought.

2. The husband is 53 years old and a businessman.  The wife is 38 years old and is not employed outside the home.

3. After extensive proceedings and numerous social science assessments, final parenting orders were made, by consent, on 29 January 2018 in relation to the two children of the marriage, O (nearly 16 years) and P (14 years).  The parents share parental responsibility.  The boys live between their parents’ homes on a week about arrangement during school terms and spend one half of each school holiday or vacation with each parent.  

4. The extant proceedings are for financial relief including for orders to effect a final alteration of property interests between the parties.

5. It is common ground that it is just and equitable for there to be an alteration of property interests.  Not much else has attracted agreement.

6. In March 2018 the parties had a mediation conducted by Mr DD.  In January 2017 the parties participated in a mediation convened by Mr N.  In March 2018 the parties had a mediation conducted by Mr DD.  The matter remains unresolved.

7. The major assets of, or under the control of, the parties or either of them are as follows.  A bracketed number indicates how many assets match that description:-

   a)Residential real estate owned by the wife in Suburb F, Suburb K (2), and Suburb H (2).

   b)A group of corporate entities and trusts referred to as the Anolick Group which own real property at Suburb S (5), Suburb U, Suburb F, and Suburb H (2).  The Anolick Group owns and operates businesses at Suburb S and at Suburb U.

   c)Superannuation.

   d)Personalty.

   e)Some liabilities.

8. Insofar as relevant legal and equitable interests are owned by entities including (but not limited to):

   ·D Pty Ltd as trustee for The Anolick Trust, trading as “D Business” and “Z Business”;

   ·Z Pty Ltd;

   ·B Pty Ltd;

   ·Anolick Properties Pty Ltd as trustee for the Anolick Property Trust;

   ·Anolick Holdings Pty Ltd as trustee for the Anolick Holdings Trust;

   ·Anolick Investments Pty Ltd;

   ·Anolick Family Pty Ltd, as trustee for the Anolick Family Trust

   There is no suggestion by either party that any entity or other person needs to be added as a party to the proceedings for the purpose effecting a final division of property interests between them.

Previous adjournments

1. The substantive financial applications were allocated a final hearing on 6 March 2018 but that hearing was adjourned on the husband’s application and over moderate opposition of the wife.  At the time, there were significant valuation disputes but the husband indicated that, even if his valuation evidence were to be accepted, he would not be able to afford to satisfy the wife’s entitlement and retain the businesses.  Significantly, the husband sought the adjournment to effect an orderly sale of the businesses.  

2. The valuation of real property was also not agreed.  There was a discrepancy of some $5.5 million for the property at R Street Suburb S and a discrepancy of $1.75 million for the property at T Street, Suburb U.  The single expert evidence of business valuation by Ms AA was in place.  By application filed 27 February 2018, the wife belatedly sought leave to adduce evidence of another expert valuer, Mr BB.  In January 2018, the wife made, but did not proceed with, an application to adduce valuation evidence by a Mr Y, also a valuer.

3. On 6 March 2018, I adjourned the final hearing to 29 October 2018.  I set aside a mention time on 3 September 2018 for trial directions to be made and regularised the periodic support arrangements to be paid by the husband to the wife.  The periodic support arrangements include:

   ·          Periodic maintenance of $13,400 per month;

   ·          Specified household expenses of not more than $3,400 per month;

   ·          School fees for the boys, and

   ·          Mortgage payments on the family home.

   It is a significant level of periodic support which the husband initially agreed to pay as a stop gap measure to tide the wife over between a listing in the judicial duty list and a mediation at which it was contemplated that all matters may have been able to be resolved.  However, it happens that the periodic maintenance has continued to be paid by agreement between the parties.

4. On 6 March 2018, it was also ordered:-

   4.The husband do all things to offer for sale the following assets:

   (a)the property at [R Street, Suburb S] (“R Street”);

   (b)the business and/or the business assets relating to the business operated as “[D Business]” from [R Street], (being the assets identified by [Ms AA] in her report dated 27 February 2018 as the “Business Value” save for the assets forming the operation of [Z Business] operated from [T Street, Suburb U]) (“the Businesses”)

   such offer not be put until 15 days after the giving of the notice provided in paragraph 4(a) [sic].

   5.In relation to the sales:

   (a)the husband provide to the wife within 30 days details of the proposed mechanics of the sales (and what is to be sold), including manner of sale, method of marketing and proposed asking prices (if applicable);

   (b)the husband keep the wife apprised on a fortnightly basis of any offers received in relation to [R Street] and [the Businesses];

   (c)the husband provide to the wife any Contracts of Sale within 48 hours of execution.

   6.Reserve liberty to apply on short notice in relation to the sales, including about what is to be sold, by application to be filed with the Case Coordinator and to be listed before me in the event that I am reasonably available.

5. On 3 September 2018 I made some directions for trial and allocated a date for hearing of the wife’s application to adduce evidence from Mr BB as an expert witness other than the single expert witness, Ms AA.

   On 14 September 2018, the wife obtained leave to rely on Mr BB’s evidence.  However, the husband semaphored his intention to make an application to adjourn the final hearing which was then set down to commence on 29 October 2018.  I ordered that he file any such application and evidence in support thereof by 24 September 2018 and I adjourned the proceedings to 27 September 2018.

Legal principles

1. The court has a general power to regulate proceedings before it in the interests of justice. There is also a specific power under s.79(5) of the Family Law Act 1975 (“the Act”) to adjourn property settlement proceedings where it is of the opinion:

   (a)that there is likely to be a significant change in the financial circumstances of the parties to the marriage or either of them and that, having regard to the time when that change is likely to take place, it is reasonable to adjourn the proceedings; and

   (b)that an order that the court will make with respect to the property of the parties to the marriage or either of them if that significant change in financial circumstances occurs is more likely to do justice between the parties to the marriage than an order that the court could immediately make with respect to the property of the parties to the marriage or either of them.

2. Whilst I was not addressed on the point, it seems to me that s79(5) is merely an example of the requirement for the court to make orders only when it is just and equitable to do so (s.79(2)) and which it considers are appropriate (s.79(1)). It makes obvious that the court can, in the exercise of its power under s.79, decide not to exercise its power at that time.

3. The principles applicable to an exercise of the specific power to adjourn proceedings under s.79(5) can inform, but do not circumscribe, the court’s general power and responsibility to manage cases before it as it considers the justice of the situation requires.

4. Effective case management requires the court to make orders which provide the parties with an opportunity to resolve the matter amicably but also to give directions and make orders in relation to unresolved matters (such as this case) which will facilitate a fair, just and timely determination of all necessary issues by a judge.  In so doing, the court is frequently required to balance the rights of a party to present their case as they wish against considerations around the proportionality of costs and the need to minimise delay.  Very significantly, a case is not looked at in isolation from all of the work of the court and regard must be had to what constitutes a fair allocation of resources to each case.

5. In this instance, I will consider the husband’s application under the several powers of the Court to regulate the proceedings before it.  The husband is required to satisfy me that an adjournment of the final hearing is in the interest of justice, I need not be satisfied that there will be a significant change in circumstances.

The husband’s position

1. Mr Dickson QC, for the husband confirmed that, as of March 2018, the husband had intended to sell the business at R Street as a going concern and retain the enterprise at T Street.  However, upon obtaining the valuers report the husband realised that goodwill was non-existent and there was nothing to be made in marketing the larger business at R Street as a going concern.  I was told that the husband recognised that he had the following options:

   a)Option One, a trade sale of the entire business to a single purchaser;

   b)Option Two, to sell down the existing stock to retail customers and realise the remaining net assets;

   c)Option Three, to the sell the remaining stock to other businesses (wholesale) and realise the net assets. 

   The husband found all options to be unpalatable and was, I am told, daunted by the prospect of selling down stock and making all existing staff redundant.  The husband moved the Z Business stock to R Street but, Mr Dickson says, the husband then realised that downsizing and operating both businesses under one roof at R Street is not viable either.

2. The current plan as described by senior counsel for the husband, is to sell the R Street premises, get rid of the stocks of regular cars and then operate from the T Street property.

3. I was informed by Mr Dickson that, in order to facilitate his plan:

   ·The husband has engaged a human resources company, Fibre HR.  He estimates having to reduce staff from 88 staff to 25 staff, with associated redundancy costs.

   ·The husband is going to engage CC Agents as estate agents to sell the R Street property by inviting expressions of interest closing on 22 November with a run-off period of seven to 10 days with the intention of offering vacant possession and by 1 March, 2019.  

   ·The husband intends to focus on selling commercial and SUV vehicles from the T Street property.  T Street has a smaller capacity than the larger premises on R Street.

   ·Between now and March 2019 the husband proposes to sell all cars which are at R Street and relocate as many of the remaining stock back to the T Street premises.

   ·The husband proposes to modernise and refurbish the T Street premises and fit it out to accommodate all administration equipment and personnel.  Mr Dickson says that there are likely to be unforeseen costs as well.

4. Mr Dickson referred to the disparity in evidence relating to valuation of the business as relating to the period ending 30 June 2017, the most recent calculations.  The single expert witness, Ms AA, has included a goodwill figure of $2.18 million.  Mr BB, upon whose valuation evidence I have given the wife leave to rely, calculates something like $6 million for goodwill as the businesses are currently structured.  If the husband sells the premises at R Street and converts T Street, the applicability of either calculation of good will is attended by doubt.  In short, the business which the husband expects to have going forward will be different to either he currently operates and on which the two valuers have rendered expert opinion.

5. Mr Dickson referred to the unquantified cost of relocating the business, including modification of the premises at T Street to make them fit for purpose, and the as yet unknown cost of making 63 staff members redundant.  Neither Ms AA nor Mr BB have reported on those aspects of restructuring.

6. Mr Dickson submits that, on the other hand, an adjournment will not change much for the wife.  She will continue to receive the maintenance package and the rental income from a number of properties in her name and can deal with those properties as she sees fit.

The wife’s position

1. Mr Coleman handed up a helpful outline of the wife’s contentions in opposition to the husband’s adjournment application.

2. It was submitted that the husband was seeking to delay proceedings by applying for an adjournment at the last possible opportunity whilst having failed or neglected to take steps in a timely manner.  In particular:

   a)The Order made 6 March 2018, enabled the husband to do what he now asserts that he wishes to do, being to sell the property at R Street Suburb S (“R Street”).  He had obtained two reports, (annexed to his affidavit of 24 September 2018 as “EA-01” and “EA-02” respectively), with respect to “business options” for D Business and advice “relating to the disposal” of R Street, on 5 and 6 June 2018.

   b)Between 6 June 2018 and 19 September 2018, the husband took no steps to sell R Street.

   c)On 19 September 2018, the husband’s solicitors wrote to the author of the latter report, conveying the husband’s “wishes to engage you to act as the vendor’s advocate in relation to the sale” of R Street (annexure “EA-04” to the husband’s affidavit).  Between 19 and 24 September, the author of the second report responded to the husband’s solicitors and recommended the appointment of CC Agents to sell R Street, on a retainer which it would “seek to negotiate” (annexure “EA-05” to the husband’s affidavit).  However, there is no evidence that CC Agents, or any other agent, has been retained to sell R Street.

3. Senior counsel for the wife contended that granting the husband’s application for an adjournment is to be likely to both protract the proceedings and increase the expense of the litigation.  The wife resists the adjournment on several grounds, which are:

   a)Granting the adjournment constitutes a denial of natural justice to the Wife – justice delayed is justice denied;

   b)The evidence does not establish that the interests of justice, or the interests of the administration of justice, would be served by an adjournment;

   c)On the Husband’s own evidence, no rational or sufficient basis for an adjournment is demonstrated;

   d)The evidence leads to the irresistible inference that the Husband does not want the Wife’s case to be heard; and

   e)Adjourning the hearing will cause the Wife distress, substantial expense, having retained solicitors, Senior and Junior Counsel who have passed up other work, and spent time in preparation for the hearing.

4. I do not accept the wife’s contentions.  I was relieved, however, to learn from Mr Coleman that ground (e) does not relate to payment of disappointment fees to any member of counsel retained by the wife.

5. An adjournment does not deprive the wife of natural justice.  The wife does not oppose the sale proposed by the husband.  She seeks that the final hearing be conducted in what would necessarily be the early stages of preparation for sale of the undertaking at R Street and the conversion of the business at T Street.  The wife and her advisors will best know what case she faces when the husband has been given a further opportunity to liquidate and restructure.

1. I also take into account Mr Coleman’s comments, first in March 2018 and again at this hearing that the wife may argue at the final hearing that the husband’s waxing and waning about the realisation of the businesses amounts to a wastage of assets by him.  I retain an open mind but, in the context of the timing of the hearing, my impression is that a wastage argument would be best run after, and not before or during, a realisation of assets, if it should run at all.

2. It is submitted on behalf of the wife that granting the husband’s application for a second adjournment would be an affront to the administration of justice.  I do not accept that is the case.  I am satisfied that one hearing at a later date in mid-2019 is likely to render a safer result than a final hearing which commences in September this year and has to be re-convened part way through 2019 to take into account the actualities of realisation.

3. It was also submitted on behalf of the wife that there is no rational, or sufficient basis for an adjournment, an adjournment will not only prolong the proceedings, but also be likely to substantially increase costs.  I cannot accept that submission.  In my experience an interrupted hearing is more expensive in time and money than a hearing conducted on consecutive days.  Non-contiguous hearing days are harder to accommodate into a judicial docket and transcription of proceedings becomes a necessity rather than a luxury. 

4. It was submitted on behalf of the wife the court could hear and determine the proceedings regardless of whether R Street is sold, or not sold, at the date of the Court’s judgment.  Assuming, as appears probable, that R Street could not be sold by the end of October 2018, the distribution of the net proceeds of sale, could be ordered on a proportional basis and implemented by a formula.  Mr Coleman submitted that such a course had met with judicial approval consistently since the early 1980s.  He referred me to the decisions of the Full Court in Waters v Waters (1981) FLC 91-019 and Doctors v van Leeuwen (1990) FLC 92-148.

5. Senior counsel for the wife may have some affection for Water’s case, in which he appeared for the successful appellant, but neither Water’s case nor Doctors v van Leeuwen assist me here.  Both stand for the proposition that, where a future sale of assets is contemplated, it is preferable to make orders which divide the proceeds of sale in percentage terms rather than expressing the entitlement of one party as a fixed amount.  A formula may avoid vicissitudes of a fluctuating property market, inflation or an unforeseeable blowing out in time for sale.  However, there is a limit to the number of variables and components that a formula can accommodate.  Water’s case and Doctors v van Leeuwen were both cases where the principal asset was a residential property and the variable was the selling price.  In the present case there are many more assets and the scope for controversy about the variables is significant.

6. Any formula cannot be confined to the R Street property.  For instance:

   a)There is no suggestion as to how the cost of renovating and making the premises at T Street fit for purpose is to be calculated;

   b)There is no estimate on cost of retrenching 70 per cent of the employees;

   c)There could be difficulty in the wife accepting that the husband’s disposal of stock was bona fide; and

   d)There is no allowance for the apportionment of the liability for capital gains tax as between the parties through intervening entities.

7. There is also the alteration in goodwill to which I have referred.  It may not evaporate entirely but it will not be as the valuers have opined by reference to the current structure. 

8. The parties have not been able to readily agree on many matters to date.  It is likely that starting the final hearing in late September 2018 will exhaust 5 or 7 days and we will have to continue for a similar time in 2019 to look at the figures on realisation and, potentially, further evidence about contribution or wastage.   

9. Mr Coleman submitted that granting the Husband’s application, effectively places the husband in control of the future management of the case.  It was submitted that it is implicit that the matter will not be relisted for final hearing until R Street is sold.  I do not accept any of those propositions.  An adjournment will allow the husband a further and extended opportunity to liquidate assets which, in the circumstances of this case, I regard as reasonable.

10. I do not accept the wife’s assertion that the husband has been idle or has unduly delayed a sale.  Mr Dickson has described the husband’s deliberations and the timeline for his decisions in a way which I find to be plausible.  The husband has not rushed but he has a lot to contend with on a day to day basis.  He has the parties’ teenage sons in his primary care for 50 per cent of the time, he is running the business on multiple sites and has been expected to plan the disposal of an enterprise which has been built by him over a life time in business.  He has admitted to not having told his employees about his intention to downsize, the concomitant of which is that he has not been able to share the burden of that decision with anyone.

11. It was submitted on behalf of the wife that, if the adjournment is granted, she could reasonably seek to invoke the Court’s accrued equitable jurisdiction to appoint a receiver for sale of R Street.  Indeed, that the appointment of a receiver would be appropriate, and, potentially, the only effective way of ensuring that the case is ever heard.  I have an open mind but contemplating the appointment of a receiver seems, at first blush, to be premature in the extreme.  The wife can make applications as she sees fit or as advised.  Whether she will succeed, can only be decided when the application is made, evidence received and with the benefit of legal argument.  Given that this matter is docketed to me, however, any such application should be returnable before me if I am reasonably available. 

12. I was informed that the wife has incurred approximately $26,000 in real estate valuation fees and the husband is likely to have incurred an even greater expense.  There are fourteen real properties owned by them directly or through corporate/trust structures the valuations for which will require to be updated if the adjournment is granted.  I am not persuaded that real estate valuations militate against the trial being conducted after the R Street property is sold and the restructuring is commenced.  As indicated, I very much doubt that the trail could be finalised if we commence in late October 2018.  Therefore, such of the properties as are to be retained in specie, should be revalued in the second tranche of proceedings in any event.

13. It was submitted on behalf of the wife that she will incur increased expenses to value whatever business remains to be valued and that her costs of investigating the veracity and commerciality of the husband’s activities on a month by month basis will be greater.  Mr Coleman observed that the probability of further interlocutory applications will be greater if the matter is adjourned on the husband application.  He referred to more funding for litigation expenses and for monies with which to repair some of the wife’s properties to enable them to be tenanted.  I am satisfied that, if the wife acts prudently, the expenses she actually needs (as opposed to threatens) to incur will not be disproportionate when compared to the more definite result which will be obtained at a delayed hearing.

14. It was submitted the prolonged stress on the wife of the current litigation is a matter which the Court should take into account in refusing to adjourn the forthcoming hearing.  Although no specific evidence was presented in this application, it was submitted that the Court should accept that intense litigation between their parents is not conducive to the best interests of the children.  I accept that litigation is stressful and distracting.  I recall that the parenting proceedings were difficult for the wife before they were resolved.  The more realistic the wife is in her expectations the less stressful the proceedings are likely to be.

Conclusion

1. Having considered all of the submissions for and against an adjournment, I am satisfied that this matter could not be concluded in this year and will necessarily require significant court time next year after the R Street property is sold.  I am satisfied that one trial on consecutive sitting days is preferable to two sittings separated by some months.

2. I have considered that it is possible that the husband might do nothing and, when this matter returns to me for mention in February 2019, R Street may not be sold and/or the realisation of assets no better progressed.  If that is the case, and I am satisfied on the evidence that the husband has engaged in purposeful or unwarranted delay, he should not expect further indulgences.  That is the point in time when a receiver may be a worthwhile consideration.  However, from my current vantage point, a delayed trial is going to be infinitely better and fairer on the parties, and more manageable for the court, than a fragmented trial.

3. For the above reasons I consider it to be in the interests of justice to accede to the husband’s application for an adjournment.

I certify that the preceding fifty-three (53) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Bennett delivered on 25 February 2019.

Legal Associate: 

Date:  25 February 2019