Arthur and Arthur

[2016] FamCA 583

FAMILY COURT OF AUSTRALIA

ARTHUR & ARTHUR [2016] FamCA 583

FAMILY LAW – PROPERTY – INTERIM PROCEEDINGS – Where the wife seeks orders that the husband make a lump sum payment for her legal costs and expenses as well as a new motor vehicle – Whether the husband has the capacity to pay – Where the Court finds the husband has the capacity to pay – Where the Court finds the sum sought in respect of legal costs and expenses is unnecessary at this stage of the proceedings – Orders made for the husband to pay a lower lump sum to the wife for legal costs and expenses – Orders made for the husband to make a lump sum payment to the wife for a new motor vehicle with the wife to return to the husband her current motor vehicle – Characterisation of payments reserved to the trial judge.   

Family Law Act 1975 (Cth)

APPLICANT: Ms Arthur

RESPONDENT: Mr Arthur

FILE NUMBER: SYC 2084 of 2015

DATE DELIVERED: 19 July 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Stevenson J

HEARING DATE: 4 July 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Sansom SC

SOLICITOR FOR THE APPLICANT: Newnhams Solicitors

COUNSEL FOR THE RESPONDENT: Mr Lloyd SC

SOLICITOR FOR THE RESPONDENT: Foulsham & Geddes

Orders

1. Within 21 days of the date of these Orders, the husband will pay to the wife a sum of $100,000 which funds the wife will apply to meet her legal costs and expenses.

2. Within 21 days of the date of these Orders, the husband will pay to the wife a sum of $40,000 which funds the wife will apply to the purchase of a motor vehicle.

3. Upon receipt of the sum of $40,000 pursuant to Order 2, the wife will return to the husband motor vehicle registered number ...

4. Characterisation of the sums prescribed by Orders 1 and 2 is reserved to the trial judge.

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 Arthur & Arthur has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 2084  of 2015

Ms Arthur

Applicant

And

Mr Arthur

Respondent

REASONS FOR JUDGMENT

The proceedings

1. By an Application in a Case filed on 19 April 2016 the wife, Ms Arthur, sought the following orders:

   1.That within 7 days of the date of these orders, the Respondent Husband pay to the Applicant Wife to an account as she may direct in writing the sum of $195,000.

   2.That within 30 days of the date of these orders, the Applicant Wife return to the Respondent Husband the … Motor Vehicle Registration number ….

   3.That the Respondent husband pays the Applicant wife’s costs of this application on an indemnity basis.

2. Counsel for the wife pressed only for orders in terms of paragraph 1 and 2.  The wife sought a sum of $155,000 in order to fund her litigation to the end of an expected four-day trial.  She proposed to spend the remaining amount of $40,000 to purchase another motor vehicle to replace the motor vehicle which is currently in her possession.

3. The husband, Mr Arthur, resisted this application on the basis that he lacks capacity to pay a lump sum of $195,000.  The husband sought the following orders in this interim hearing:

   Interim property settlement

   2.The respondent pay the applicant’s legal expenses as outlined in paragraph 19 of her affidavit affirmed on 15 April 2016.

   3.By way of implementation of order 2, the following shall apply:

   (a)the applicant shall provide, or cause to be provided to the respondent, copies of all tax invoices, statements of account, receipts and all other documents verifying costs payable in respect of order 2 above on a monthly basis, commencing the last day of the month following the date of the making of these orders;

   (b)within sixteen days of receipt by the respondent of the tax invoice, statement of account, receipt or other document provided to him by or on behalf of the applicant pursuant to order 2(a), the respondent will make payment direct to the issuer of such tax invoice, statement of account, receipt or other document; and

   (c)payments made pursuant to order 2 and 3 shall be treated as an interim property settlement.

   4.Any incidental costs, such as tax and interest, that the respondent or his companies incur as a result of borrowing funds from [C Pty Ltd] to make the payment referred to in order 2 be treated as an interim property disbursement to the applicant.

   5.Any incidental costs, such as tax and interest, that the respondent or his companies have already incurred to date as a result of borrowing funds from [C Pty Ltd] or his other companies to make payments to the applicant pursuant to the orders made by Watts J on 28 May 2015 be treated as an interim property disbursement to the applicant.

   6.The respondent pay or cause to be paid to the NRMA the total sum of $5,578.90 for the purpose of repairing the [motor vehicle] (registration no. …), and the payment referred to in this order be treated as an interim property disbursement to the applicant.

   7.Within 28 days of the date of these orders, all right title and interest in the [motor vehicle] (registration …) be transferred to the applicant, and the transfer of the car be treated as an interim property disbursement to the applicant.

   8.That the applicant’s application in a case be dismissed.

   9.Each party shall pay his or her own costs of and incidental to these interim proceedings.

4. The wife particularised her estimated costs in paragraph 19 of her affidavit of 15 April 2016.  This paragraph read as follows:

   19.I understand and verily believe that the costs moving forward to a final hearing are approximately $155,000.  This is made up of the following costs:

A.     Actual costs to date including Conciliation Conference:
i)     Professional costs and disbursements outstanding:	$0
ii)     Accounting fees:	$E20,000.00
iii)    Valuation fees * Husband to Pay at First Instance:	$0
iv)     Filing fees (Conciliation Conference):	$350.00
v)     Estimated costs for future professional costs, conference and Conciliation Conference:	$9,900.00
vi)     Costs not billed:	$3,097
Total:	$33,347
B.     Estimated future costs up to and including listings before hearing (including one Interim Application):
i)     Counsel’s fees;	$11,000.00
ii)     Interim Hearing (allow 10 hours):	$5,500.00
iii)    Conferences, subpoena and perusals (allow 5 hours):	$2,750.00
iv)     Affidavits (allow 10 hours):	$5,500.00
v)     Valuer’s fees (50%)	$0.00*
vi)     Accountant’s fees – update (50%):	$22,000.00
vii)   Perusals and preparation (allow 2 hours):	$1,100.00
viii)  Listings (allow 2 hours):	$1,100.00
Total:	$48,950.00
C.     Estimated future costs to the conclusion of the hearing (estimate 4 days):
i)     Professional costs (allow 40 hours):	$22,000.00
ii)     Barrister’s fees (allow $9,900 x5):	$49,500.00
iii)    Disbursements:	$2,000.00
Total:	$73,500.00
D.     Total	$155,797.00

Background

1. The husband and the wife, who are both aged 45, began to live together in May 2004 and married in 2004.  They separated on 27 December 2014 but attempted a reconciliation between 25 August 2015 and 2 December 2015.  This attempt at reconciliation was unsuccessful and the wife commenced these proceedings by way of an Initiating Application filed on 10 December 2015.

2. The parties have one child, B, who was born in 2007 and is aged nine years.  Pursuant to interim orders made on 28 May 2015 the husband pays child support of $745 per week, together with educational and health care expenses.

3. The same orders provided that the husband pay interim spouse maintenance of $2,250 per week.  These orders provided further that the husband pay to the wife a lump sum of $100,000, with characterisation reserved to the trial judge.

4. During the attempted reconciliation, the husband placed an order for a 4WD motor vehicle at a purchase price of $245,000 and a boat in an amount of $25,580.  The husband cancelled the order for the 4WD after the failure of the attempted reconciliation.

5. On 8 May 2015 the wife was diagnosed with breast cancer.  She underwent surgery, chemotherapy and radiotherapy.  The wife deposed that she spent approximately $17,000 from the lump sum payment of $100,000 on this treatment.  The husband took issue with that assertion.

6. The motor vehicle which is currently used by the wife is registered in the name of the husband’s parents.  The wife contended that this car is mechanically unreliable and currently requires costly repairs.

7. The wife obtained a quote for the work necessary on the motor vehicle in the sum of $21,057 from the automotive company.  NRMA assessed the cost of the necessary work at $5,711.  The wife annexed to her affidavit of 15 April 2016 a Red Book valuation of the motor vehicle in the range of $7,740 to $10,990.

Consideration

1. The husband did not dispute that it is appropriate that there be a partial or interim property order for the purposes of Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466. As noted, the husband contended that he lacks capacity to pay a lump sum of $195,000 but he was prepared to pay the wife’s actual legal costs from time to time, on provision of invoices and receipts.

2. The husband’s Financial Statement of 4 March 2016 indicated that the parties have assets to the value of $7,293,116 and liabilities of $573,017.  There was no issue that the companies known as C Pty Ltd, C Holdings Pty Ltd, C Enterprises Pty Ltd and D Pty Ltd are alter egos of the husband.  These companies hold assets and contracts with Qantas and Macquarie Bank.

3. The reasons for judgment of Watts J dated 28 May 2015 indicate that the husband contended in that interim hearing that there were no liquid funds from which he could make a lump sum payment to the wife.  In fact, he paid a lump sum of $100,000 in compliance with orders made in those proceedings.

4. I admitted into evidence, over the objection of the husband, certain bank statements for the companies C Pty Ltd, C Enterprises Pty Ltd and an account styled C Investment.  I appreciate that company turnover does not equate to profit but I considered that the balance of the husband’s alter ego companies was relevant to his capacity to pay a lump sum to the wife.

5. These statements showed a balance of the account of C Pty Ltd as at 28 June 2016 of $1,461,223 and the lowest amount well in excess of $400,000.  The statements in respect of this account covered the period 1 May 2016 to 28 June 2016.

6. As at 27 June 2016 the credit balance of the account of C Enterprises Pty Ltd was $175,508 and the lowest figure for the period 1 May 2016 to 27 June 2016 was $89,598.  The credit balance of the account styled C Investment as at 4 June 2016 was $700,000.

7. The 2015 tax return of the company C Investment Pty Ltd was tendered in evidence (Exhibit 1).  This return showed a total profit of $1,581,813 and a taxable income in the same amount for that year.

8. For these reasons I reject the submission that the husband lacks capacity to pay a lump sum of $195,000 to the wife.  The question whether he should be required to make a payment in that quantum is, however, another issue.

9. I see substance in the submission on behalf of the husband to the effect that the wife makes claim at this stage for legal costs and expenses which she has not yet incurred or which she may not have to meet any stage of the proceedings.  For example, the wife required the husband to pay a sum of $20,000 for “accounting fees – update”.  Over the objection of the husband, counsel for the wife informed me that these fees are intended to cover the wife’s shadow expert.  The wife has claimed these fees even before the report of the single expert, Ms I, has been released to the parties.  Similarly, the wife makes claim at this stage, prior even to a Conciliation Conference, to the anticipated total costs of her litigation.

10. The husband expressed concern that the wife may use any lump sum payment for purposes other than the meeting of her legal costs and expenses.  I would observe that, if the wife were to do so, she would most likely encounter considerable difficulty with any future application for payment of a lump sum on account of her legal fees.

11. I can see no valid reason why the wife should be locked out of the assets of the parties and be required to submit invoices and receipts to the husband before she is able to meet her legal costs.  On the other hand, I consider the amount of $155,000 to be unnecessary at this stage of the proceedings.  In the exercise of my discretion, I will order that the husband pay to the wife a lump sum of $100,000.  I will specify that these funds are to be applied to meet the wife’s legal costs and expenses.

12. As to the motor vehicle, it seems to me that it would similarly be appropriate for the wife to have access to part of the wealth of the parties in order to procure reliable transport for herself and the parties’ child.  The available evidence indicates that the anticipated costs of repairs would go very close to the value of the vehicle.  That expenditure does not seem to me to be a productive use of the parties’ wealth.

13. As was submitted by counsel for the wife, a new motor vehicle which she now purchases will be included in the balance sheet and taken into account in the division of the parties’ property.  For these reasons, I will order that the husband pay to the wife a sum of $40,000 to enable her to procure a new motor vehicle.  I will specify that these funds are to be used for that purpose.

I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 19 July 2016.

Associate: 

Date:  19 July 2016