Atkins & Hunt
[2012] FamCA 305
•15 June 2012
FAMILY COURT OF AUSTRALIA
| ATKINS & HUNT AND ORS | [2012] FamCA 305 |
| FAMILY LAW - PROPERTY - Interim Property orders sought for payment of the wife’s legal expenses and by the husband for the sale of family home FAMILY LAW - SPOUSAL MAINTENANCE - Interim orders sought - Where husband says wife able to return to paid employment FAMILY LAW – INJUNCTIONS - Interim asset preservation orders made FAMILY LAW - PRACTICE AND PROCEDURE - Application for intervention by corporate entities - Where the evidence is not sufficiently clear in relation to the pool of assets to be able to make a firm assessment of the wife’s entitlement - Husband’s application for sale of family home refused - Interim property settlement of $200,000.00 ordered to enable wife to pay legal expenses - Where it is reasonable that the wife has a period in which to adjust to the realities of separation and to rearrange her career in the context of a final property settlement - Interim spousal maintenance orders made in wife’s favour - Where the Intervenors are joined for the wife’s interim application - Where neither party nor the Intervenors seek final orders that affect the Intervenor corporate entities - Whether pursuant to s 92 or s 79(10) of the Act or r 6.05 it is neither appropriate nor necessary that Intervenors become a party to the substantive proceedings |
| Family Law Act 1975 (Cth) ss 75(2), 79, 80, 92 Family Law Rules 2004 r 6.05 |
| Barro & Barro (1983) FLC 91-300 Bevan & Bevan (1995) FLC 92-600 M & DB (2006) FLC 93-293 Strahan & Strahan (2001) FLC 93-466 |
| APPLICANT: | Ms Atkins |
| RESPONDENT: | Mr Hunt |
| INTERVENORS: | N Pty Ltd, T Pty Ltd and H Pty Ltd |
| FILE NUMBER: | SYC | 425 | of | 2012 |
| DATE DELIVERED: | 15 June 2012 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Ryan J |
| HEARING DATE: | 31 May 2012 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Kearney |
| SOLICITOR FOR THE APPLICANT: | Paltos Briggs |
| COUNSEL FOR THE RESPONDENT: | Ms Gillies |
| SOLICITOR FOR THE RESPONDENT: | Robyn Sexton & Associates |
| COUNSEL FOR THE INTERVENORS: | Mr Silver |
| SOLICITOR FOR THE INTERVENORS: | HWL Ebsworth Lawyers |
Pending further order
Orders 1, 2, 7, 8 and 10 of the orders made in these proceedings dated 7 May 2012 continue.
That the wife is restrained from further encumbering or otherwise dealing with the property known as … B Street, Town M.
That by way of interim property settlement in favour of the wife, the husband shall pay to Paltos Briggs Family Lawyers Trust Account the sum of $200,000.00 as follows:
(a) $100,000.00 within eight (8) weeks of the date of these orders;
(b) $100,000.00 within sixteen (16) weeks of the date of these orders.
That by way of interim spousal maintenance for the wife the husband shall make the following payments as and when they fall due:
(a) AGL electricity account (including arrears);
(b) home telephone account;
(c) Foxtel account; and
(d) medical and hospital insurance at the highest level with HCF.
That the husband be responsible in the first instance for the payment of all costs for any single expert appointed in these proceedings as and when they fall due for payment and the apportionment of the same as between the husband and the wife to be determined by the trial Judge.
Unless the husband has given the wife twenty one (21) days notice in writing, he is restrained from by himself, his servants and/or agents doing and/or causing or permitting to be done, any of the following in relation to the superannuation fund:
(a) alienating or encumbering any of the assets of the superannuation fund;
(b) drawing on any of the funds of the superannuation fund
save and except that the husband is permitted to make the following drawings from the superannuation fund:
(c)payment to the husband of the amount $4,000.00 per week;
(d)his legal expenses; and
(e) otherwise for the purpose of compliance with these orders.
That the husband cause to be undertaken the following being maintenance in respect of the Town M property every twenty one (21) days and pay or cause to be paid as and when they fall due for payment the cost for undertaking such maintenance:
(a) the cleaning of the swimming pool;
(b)necessary repairs and maintenance to the home (approved by him), including the lawn and gardens.
That N Pty Ltd (ACN …), T Pty Ltd (ACN …) and H Pty Ltd (ACN …) (“the entities”) is joined as a party to the Application in a Case filed by the wife on 13 April 2012.
In relation to N Pty Ltd, T Pty Ltd and H Pty Ltd other than for the purpose of compliance with orders made in these proceedings, the husband is restrained from by himself, his servants and/or agents doing and/or causing or permitting to be done, any of the following:
(a)alienating or further encumbering any of the assets, income or undertaking of any of the entities or any of the subsidiaries save for operating the entities in the usual course of business;
(b)alienating or further encumbering any of shares which he has a legal or beneficial interest in any of the entities or the subsidiaries;
(c)issuing any new shares or otherwise altering the shareholding (including any rights and entitlements attaching to or any other incident of the same) in any of the entities or subsidiaries;
(d)removing, replacing or appointing any director or other officeholder of any of the entities or subsidiaries.
The Court Notes the undertaking given by the entities that they will not interfere with the wife’s continued use and possession of the motor vehicle currently in her possession.
That the oral application that the entities to be otherwise joined as a party to the proceedings commenced by the husband on 30 January 2012 is refused.
That the husband forthwith notify the wife in writing upon the receipt by him of any notice of and/or upon otherwise becoming aware of any intention by any other person or entity to take any action so as to permit or cause any of the matters subject to paragraphs 6 and 9 above to occur.
Orders 1, 3, 6, 7 and 9 are made subject to the wife’s undertaking as to damages, which is to be filed and served within seven (7) days.
That Order 8 of the orders dated 7 May 2012 is continued on the basis of the wife’s undertaking given that day to this Court.
That the final hearing of the husband’s application filed 30 January 2012 is expedited.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Atkins & Hunt and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Act.
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 425 of 2012
| Ms Atkins |
Applicant
And
| Mr Hunt |
Respondent
REASONS FOR JUDGMENT
Before the Court are claims for interim property settlement, spousal maintenance and asset preservation orders. In addition, three companies, namely, N Pty Ltd, T Pty Ltd and H Pty Ltd have applied to intervene in these and the substantive proceedings. These are companies controlled by Mr Hunt (“the husband”) and in which he has a significant shareholding.
The husband commenced property settlement proceedings on 30 January 2012. Essentially, he applied for the sale of the parties’ home at B Street, Town M and from the net sale proceeds that Ms Atkins (“the wife”) receives 50 per cent or $500,000.00 (whichever is greater). The parties would otherwise retain assets and liabilities in their names. Relevantly, in relation to the wife, she would retain a property she owned when the parties commenced cohabitation (“Town C property”) and her interest in a business (“Business E”).
For his part, the husband would retain his interest in a series of entities which combined constitute the Mr Hunt Group (“the Hunt Group”) and his superannuation. The Hunt Group conducts a retail business; in particular Company 1 and Company 2 retail franchises (operated through H Pty Ltd) from freehold premises owned by N Pty Ltd. The retail business was established by the husband more than 30 years before the parties met. In a valuation report prepared by Mr R dated 30 June 2010, albeit for an unrelated purpose, it is uncontroversially recorded that “the [retail] businesses conducted by H Pty Ltd have an aggregate [annual] turnover of in excess of $100 million and are considered to form a large regional [retail business]”. Mr R records that the assets of N Pty Ltd consist of freehold property “valued by the directors at $16.5 million and shares in [H Pty Ltd] independently valued at $1,164,964.00”. It was his opinion that the N Pty Ltd 100 per cent control shareholder value as at the valuation date (30 June 2009) was $14,394,925.00.
One of the pivotal issues for the final property settlement hearing will be the value of the husband’s interest in the Hunt Group. As the different positions adopted by the parties in relation to this issue for this hearing demonstrate, this will be a complex and expensive issue to resolve in relation to which the interests of justice makes it preferable that the parties are represented.
The wife filed her Response to the husband’s Initiating Application on 5 March 2012. Simply put, she seeks half of the parties net assets, including the Town M property unencumbered. In circumstances where she contributed assets of little net worth, the parties cohabited for 10 years during which the wife was employed for a portion whereas the husband was generally in full-time employment and there are no children of the marriage, a preliminary assessment of her entitlement suggests that her claim is inflated.
On 13 April 2012, the wife filed an Application in a Case in which she sought the interim orders earlier referred to. These are detailed in the Case Outline document (Exhibit “AA”) relied upon by her counsel. In summary, she sought that the husband continue to provide her with a car and pay its running costs, pay the mortgage on the Town M property (where she lives), its utilities and services and $1,288.70 per week. In addition, that he pays the costs (in the first instance) of single expert reports, $200,000.00 by way of interim property settlement (for legal expenses) and subject to payments required pursuant to orders and him receiving $3,000.00 per week, a suite of asset preservation orders designed to preserve the value of the husband’s interests in his superannuation fund and the Hunt Group.
In circumstances where the Court was informed that the husband had ceased to pay the mortgage and the mortgagee had issued a default notice pursuant to s 57(2)(b) of the Real Property Act to the wife, it is troubling that her application to list the matter on short notice was initially refused. In the event, the wife’s review application was successful and her interim application came before the Court on 7 May 2012. Short term orders were made which, simply put, required the husband to pay mortgage arrears and spousal maintenance, along with asset preservation and disclosure orders.
On the husband’s application the interim proceedings were adjourned. During the period of the adjournment he complied with the interim orders and filed a response to the wife’s interim application, in which, relevantly, he sought that her application be dismissed and an interim order for the sale of the Town M property.
In relation to the wife’s applications, it is the husband’s position that he is unable to afford the various payments sought by her. According to him, at 76 years of age, his superannuation fund is his primary source of income and he otherwise points to the illiquid nature of his assets. For example, although he conceded that his superannuation fund has cash assets of $228,000.00 it is submitted on his behalf that if those funds are paid to the wife for legal expenses, he would not have adequate income and liquid assets to meet his needs, let alone pay the mortgage and spousal maintenance. Irrespective of whether his superannuation funds are used to pay the wife the lump sum sought by her, he says he is unable to afford to pay the $11,250.00 per month mortgage repayments and, in circumstances where the wife cannot reasonably expect to retain the Town M property, it should be sold and a capital sum released to her which she could use to rehouse and support herself.
Background Facts
Unless it is stated otherwise, the following matters appear to be uncontentious.
The husband was born in 1935.
The wife was born in 1955.
Between 1960 and 1974 the husband was married to his first wife with whom he had five children. Their eldest child, Mr D, is actively involved in the Hunt Group.
In late 1967 the husband commenced a business which was to become, over time, the Hunt Group.
In 1972 Company 1 granted the husband a retail franchise. Retail franchises are tightly controlled by Company 1. In this regard, it is a requirement that the retail principal of a franchise is also a shareholder of the operating company. Although it is not entirely clear, it would appear that in 2009 steps were taken by the husband and his sons, Mr D and Mr J so that Mr J could acquire an interest in N Pty Ltd and H Pty Ltd and possibly acquire the husband’s retail franchise. While the share allocation has been implemented, it does not appear that the franchise has been transferred.
Between 1983 and 1991 the husband was married to his second wife with whom he has three children, one of whom is Mr J.
Between 1991 and 1999 the husband was married to his third wife. There are no children from that marriage.
After a career in sales, it would appear that in the late 1990s the wife was employed by the Hunt Group in a sales and sales training capacity. After her first year of training the Hunt Group won a major award.
By 2000 a personal relationship developed between the parties and, according to the wife, from late 2000 she was significantly involved in renovations undertaken and paid for by the husband to a property he owned at S Street, Town M (“S Street property”). It is the husband’s evidence that he was similarly involved.
In 2001 the wife commenced seeing a psychiatrist.
The parties commenced cohabitation in April 2001. At the commencement of cohabitation, the wife had an annual salary of about $90,000.00 and the modest assets identified at paragraph 52 of her affidavit. The husband’s assets at the commencement of cohabitation are set out at paragraph 13 of his affidavit, and essentially constitute his interest in the Hunt Group and the S Street property.
At cohabitation the parties moved into the S Street property and the wife rented the property she owned at Town C.
In June 2001 the husband sold the S Street property to N Pty Ltd for $1.75 million. The parties continued to reside at the S Street property until March 2008, during which rent was paid to the company.
In 2002 the husband purchased a packaging plant for $1 million which he subsequently sold for the same amount.
The parties married in April 2003. Thereafter, the wife reduced her working hours, according to the husband significantly. The husband puts into issue the wife’s claim that she made a significant contribution to the Hunt Group and asserts that her subsequent departure had no impact and points out that she was one of 130 employees. His point being, that although she was good at her job her role was limited and her value to the Hunt Group was reflected in her salary.
In July 2003 the husband caused N Pty Ltd to issue 10 “C” class shares to the children of his second marriage. The effect of this is that in relation to the company the husband’s all eight children are shareholders.
In January 2004 the parties purchased B Street, Town M (“Town M property”) in the wife’s sole name for $2 million. The husband borrowed $1.5 million from Westpac and the balance from N Pty Ltd. He also paid the stamp duty. The wife provided a personal guarantee for the Westpac advance.
In 2007 the parties commenced a rebuild of the property at Town M. The rebuild cost approximately $1.6 million, in relation to which the parties borrowed $500,000.00 from Westpac. The husband caused F Pty Ltd, which is the corporate trustee of his superannuation fund, to sell land at Town W to N Pty Ltd for $650,000.00. These funds were then withdrawn by the husband and put towards the renovation.
Using liquid funds held by the superannuation fund, that same year, the husband caused F Pty Ltd to purchase a property at Town K for $265,000.00. Once he turned 75, the husband caused F Pty Ltd to sell the Town K unit to N Pty Ltd for $300,000.00. He then withdrew (without penalty) the $300,000.00 from his superannuation fund which he applied to the renovations.
Also in 2007, the husband caused N Pty ltd to loan $300,000.00 to an associated entity (owned by Mr D and him) for a business venture that subsequently went sour.
In March 2008 the parties moved into the Town M property.
In mid 2009, as part of his retirement plan which includes the continuation of the Hunt Group as a family enterprise, the husband retained Mr R to value a minority shareholding in the Hunt Group with the aim being that Mr J acquire shares in N Pty Ltd and H Pty Ltd. Ultimately, on 27 August 2010, N Pty Ltd transferred 20,000 of its shares in H Pty Ltd to I Pty Ltd (which is owned by Mr J) for approximately $115,000.00. Mr J borrowed the entire amount from N Pty Ltd in relation to which he has made one repayment.
Attached to the wife’s affidavit are various notes written by the husband that constitute musings about his desire to divest himself of assets and involvement in the Hunt Group. The wife is concerned that these demonstrate his desire to thwart her property and spousal maintenance claims. The husband denies this imputation and says the notes reflect no more than orderly retirement planning which effectively commenced following his heart attack in 2000 and gained momentum once he reached 75.
With $50,000.00 advanced at the husband’s direction by the Hunt Group, in early 2010 the wife established Business E in Sydney. Presently, she attends the business 3-4 days per week where she works as a receptionist. Although the wife is hopeful that the business will become profitable, to date it has not traded profitably and she has not received any income.
The parties separated on 21 March 2011. Since then, the wife has remained in the Town M property and the husband has spent significant (if not virtually all) of his time in Thailand. According to the wife, he is in a relationship with an employee of a venture owned by Mr D and him. The husband denies that he is or has been in a relationship with that person.
Thereafter, and until 1 November 2011, the husband caused the Hunt Group to provide the wife with a fully serviced motor vehicle. He paid the wife’s telephone accounts, Foxtel, rates and utilities for the Town M property, the mortgage payments and $1,288.77 per week spousal maintenance. These amounts have been paid from drawings from N Pty Ltd and income and savings from his superannuation fund.
H Pty Ltd terminated the wife’s employment in August 2011, in relation to which $18,275.55 was paid by way of a termination payment.
In October 2011 the wife unsuccessfully applied to Westpac for a $200,000.00 loan for the purpose of funding her legal expenses in these proceedings.
In November 2011 the husband ceased making loan repayments in relation to the Westpac mortgage. He also ceased paying the wife’s telephone accounts.
The husband commenced proceedings on 30 January 2012.
On 28 February 2012 Westpac issued a default notice. Documents produced by Westpac (Exhibit “EE”) show that the husband and Mr D (who has his Power of Attorney) had, for some months, been in discussion with Westpac in relation to the mortgage. Relevantly, a diary memo of 13 December 2011 records that Mr D informed the bank six weeks earlier that the husband’s lawyer “had advised them to stop making payments” and on 20 December 2011 that Mr D “has advised payments on home loan to cease to force sale of home”. That these steps were taken in the shadow of proceedings commenced by the husband but in relation to which the Court’s imprimatur was not sought, is troubling. The husband’s action in this regard, provides strong support to the wife’s claim for injunctions and asset preservation orders. So that it is clear, greater weight is attached to these actions than the husband’s compliance with interim orders.
In April 2012 Mr D informed the wife that the husband (through N Pty Ltd) would no longer pay her telephone or power bills.
On 7 May 2012 the following interim orders were made:
PENDING FURTHER ORDER OR UNTIL 5.00PM ON 31 MAY 2012 WHICHEVER FIRST OCCURS
1.That the husband continue to pay to the wife the sum of $1,288.77 per week which payment is to be made in accordance her direction in writing, the first payment to be made on the first Tuesday immediately following the date of these orders and on the same day each week thereafter.
2.That the husband pay or cause to be paid as and when they fall due for payment in respect of the motor vehicle:
a. registration and 3rd party insurance; and
b. maintenance and repair costs.
3.That the wife have the sole use of the motor vehicle.
4.Within 7 days the solicitor for the wife shall serve on the solicitor for the husband a request for answers to questions in relation to the drawdown and application of funds by him from the Westpac “Line of Credit” secured against the home.
5.The husband shall provide a written response to questions asked pursuant to Order 4 by 4.00 pm on 28 May 2012.
6.That the husband do all things required to discharge all arrears of the Rocket Home Loan Westpac Account No […], in particular, pay the sum of $11,476.86 by 11 May 2012.
7.That the husband do all acts and things and sign all documents necessary so as to pay or cause to be paid the following:
a. The mortgage payments as and when they fall due for payment to Westpac Banking Corporation with respect of the following accounts:
i.The Rocket Home Loan;
ii.The Line of Credit.
8.That the husband be and hereby is restrained from further encumbering or otherwise dealing with the property known as [… B Street, Town M].
9.The Court Notes that Order 8 is conditional upon the wife filing her undertaking as to damages.
10.That the husband pay or cause to be paid the following for the [B Street, Town M] property as and when they fall due for payment:
a. Council rates;
b. Water rates; and
c. Home and contents insurance with CGU Insurance Limited policy number […].
IT IS FURTHER ORDERED
11.The wife’s interim application filed 13 April 2012 is listed for hearing before Ryan J at 10.00 am on 31 May 2012.
12.That the respondent file a response to the application in a case filed by the wife on 13 April 2012 and any affidavit in support by 4.00 pm on 21 May 2012.
13.Within 7 days the solicitor for the wife provide to the solicitor for the husband the documents requested in the husband’s solicitor’s letter of 24 October 2011 and BAS statement to the end of March 2012 in relation to the business.
On 28 May 2012 N Pty Ltd, T Pty Ltd and H Pty Ltd filed an Application in a Case seeking leave to intervene in these interim proceedings.
On 31 May 2012 the 7 May 2012 orders were continued pending further order.
Application of the law to the facts
The approach to an application for an interim property order is well settled and is as described in Strahan & Strahan (2001) FLC 93-466. Essentially, this involves a two-step process. Firstly, it must be established that s 80(1)(h) of the Family Law Act 1975 (Cth) (“the Act”) is enlivened to allow an interim property settlement pursuant to s 79. In determining to depart from the usual approach that there is a once and for all order made after a final hearing, it is necessary that it is appropriate to make an interim order, with the overarching consideration being the interests of justice. In determining what interim property order might be in the interests of justice, a preliminary assessment of the application of s 79 and s 75(2) is required. The imprecise nature of this component of the exercise makes it appropriate to exercise a degree of caution so that the ability to achieve a just and equitable final property settlement is not compromised by the earlier interim property order.
At paragraph 6 of the husband’s affidavit, he details his interest in the various entities which constitute the Hunt Group and other companies in which he has an interest. For present purposes, it is sufficient to focus on H Pty Ltd, N Pty Ltd, T Pty Ltd and F Pty Ltd.
N Pty Ltd was registered in 1973. It invests in real estate and owns the premises from which the Hunt Group operates. The company has 10 “A” class shares (voting), of which five are held by the husband and the other five by T Pty Ltd. The husband and Mr D are the company’s directors.
T Pty Ltd is owned by the husband (99 per cent) and one per cent by Mr D. The husband and Mr D are its two directors.
Counsel for the wife submitted that because the husband holds or controls the entirety of the 10 “A” class voting shares in N Pty Ltd, he has the ability to declare and pay dividends, to control the appointment and removal of directors and to pass a special resolution to effect a winding up of N Pty Ltd. In addition, the husband, directly and through T Pty Ltd, holds 10 (of 10) “B” class and 10 (of 40) “C” class shares in N Pty Ltd. These shares entitle the husband to receive dividends and a distribution of assets. Counsel for the wife’s submission on this issue is accepted.
H Pty Ltd is the operating company of the Hunt Group. This company is comprised of 100,000 ordinary shares and 800,000 redeemable preference shares. Of these shares, N Pty Ltd owns 80,000 ordinary shares and the 800,000 redeemable preference shares. The other 20,000 ordinary shares are owned by I Pty Ltd (Mr J). The husband, Mr D and Mr J are the directors. It is accepted that by virtue of the husband’s control of N Pty Ltd he also controls H Pty Ltd.
The composite effect of the husband’s shareholdings is that he controls and has a significant shareholding in the Hunt Group. The remaining shares are owned by his children. At least in relation to the shares owned by Mr J, it is the wife’s contention that these (perhaps also others) may be held on trust for the husband.
As at 30 June 2011 H Pty Ltd had net assets of approximately $2 million, which included retained profits of $1.1 million and cash assets of $400,000.00 (rounded out). Rounded out, as at 30 June 2011 and before receipt of any dividend from H Pty Ltd, N Pty Ltd had net assets of approximately $4 million which included retained profits of $3.3 million and cash assets of $523,000.00. At that date, T Pty Ltd had a deficiency in its net assets of $67,000.00 (rounded out).
It is accepted that putting to one side the husband’s entitlement to superannuation, he is able to cause dividends to issue (through H Pty Ltd, N Pty Ltd and then T Pty Ltd) to the extent of the retained profits ($4.4 million and, as at 30 June 2011, cash assets of $900,000.00). As is apparent from the husband’s affidavit and the report from Mr R, this is the method by which the husband has historically met his needs. There is no dispute, for example, that in 2009 he declared a taxable income of $1.148 million which included dividends of $412,500.00 from N Pty Ltd and $408,375.00 from T Pty Ltd or that annually the dividends paid have varied widely, basically in response to the parties’ needs and in accordance with accounting advice.
It will also be recalled (for example in 2007) that the husband has moved significant assets between the companies to free up liquid assets and to suit his needs. In a similar vein, no difficulties were created for the companies in advancing to I Pty Ltd the funds that Mr J needed to acquire a minority shareholding.
None of the steps taken by the husband conflicted with his fiduciary duties as director of the various entities.
The gravamen of Mr R’s valuation is that the Hunt Group is a mature business “well placed in terms of facilities, capital and management taking advantage of the emerging opportunities to preserve and enhance [retail business] revenue. The Prime Market Areas of the [retail businesses] operated by [H Pty Ltd] are located in sound regional economic environments” and “… is a large sized [retail] business with static annual revenues”. This puts into a more balanced context the husband’s evidence that at the end of April 2012 N Pty Ltd had approximately $80,000.00 cash and an outstanding invoice in a larger amount in relation to improvements at one of the retail business sites. That the Hunt Group decided to spend a significant amount on improvements is a further indication that this is not a business in decline; it is one viewed with optimism by its directors. It is not accepted that there is a cash flow crisis or that the current cash at bank reflects the extent of the husband’s and the Hunt Group’s access to liquid assets. For a business which last year had about $105 million in sales, bank balances are likely to swing widely. It is plain that a longer term view is appropriate. If per-chance, there is a temporary liquidity difficulty, the Hunt Group’s lengthy history of profitable trading suggests this will resolve and, if necessary, short term funds can be borrowed.
In short, just as he has in the past, through his interests in the Hunt Group the husband is able to access sufficient funds to meet his and the wife’s needs. Relevantly, this includes not only her application for interim property relief but the other financial orders sought.
Absent an interim property settlement order, it is apparent from the wife’s Financial Statement, that she does not have the capacity to raise the $200,000.00 towards legal expenses, which it is established she requires. The only exception to this is if the husband is permitted to sell the Town M property from which she will receive, at least, $500,000.00. This component of the applications, in particular, requires consideration of the asset pool. As a working guide this was helpfully summarised by counsel for the wife as follows:
ASSETS Description Wife's
estimated
value ($)Husband's estimated value ($) 1 H NAB Bank Account in the name of [Mr Hunt] […] 29,454 29,454 2 H [N Pty Ltd] (for H @ 30 June 2009) Nk — adopt
5,666,850
5,666,850 3 H [A Pty Ltd] Nk 0 4 H [F Pty Ltd] Nk 0 5 H [T Pty Ltd] (for H @ 30 June 2009) Nk — adopt 1,133,370 1,133,370 6 H [G Pty Ltd] Nk 0 7 H 50% Furniture and effects at [… B Street, Town M] 10,000 75,000 8 W [… B Street, Town M] 3,220,000 9 W [Town C property] 390,000 10 W [Business Z] (49%) 0 0 11 W St George Bank Account in the name of [the wife] […] 153 12 W CBA Bank Account in the name of [the wife] […] 137 13 Jnt 2 Golf Carts 7,000 14 H NSW number plate […] 75,000 15 W Jewellery 5,000 16 H Jewellery 5,000 Total 10,541,964 6,904,674
LIABILITIES Description
Wife's
estimated
value ($)Husband's estimated value ($) 17 Jnt Westpac Banking Corporation Rocket Home loan 499,905 500,000 18 W CBA Home Loan ([Town C] property) 360,638 19 H Westpac Banking Corporation Mortgage 1,500,000 1,500,000 20 H [N Pty Ltd] Loan Nk 368,031 21 W CBA Gold Awards Credit Card 43,119 22 W Westpac Altitude Gold Card 16,720 23 W American Express 3,703 24 W St George Mastercard 6,168 25 W David Jones Card 9,544.53 Total 2,439,798 2,368,031
SUPERANNUATION Name of Fund Type of
InterestWife's
estimated
value ($)Husband's estimated value ($) 26 H
[Hunt] Group Staff Superannuation Self Managed Fund Nk — adopt
1,262,632
1,262,632 27
W
[Y Super Fund]
Accumulation Interest
64,832
Total 1,327,464 1,262,632
NET ASSETS Description Wife's
estimated
value ($)Husband's estimated value ($) 28 Assets 10,541,964 6,904,674 29 Superannuation 1,327,464 1,262,632 30 Sub total 11,869,428 8,167,306 31 Less Liabilities 2,439,798 2,368,031 Total Total 9,429,630 5,799,275
It will be seen that it is the wife’s hope that the Town M property is worth $3.22 million and that approximately $2 million is outstanding. In relation to that asset alone, even on her balance sheet figures, she seeks more than 50 per cent of the parties’ assets. It was earlier observed that her application is inflated, which preliminary assessment is worthy of restatement. However, in the absence of current valuations it is not possible to determine that she has no hope of retaining the Town M property. The point being, the evidence is not sufficiently clear in relation to the pool of assets to be able to make a firm assessment of the wife’s entitlement. In these circumstances, it is not in the interests of justice to order a sale of the property at this time. As an asset preservation measure, the husband will be required to make the mortgage payments and generally maintain the property.
Turning then to the wife’s claim for spousal maintenance. It is submitted on the husband’s behalf, the wife has not established that she is unable to adequately support herself and thus the threshold requirement (s 72) has not been made out. Adequately is a relative concept and varies from case to case. Here, the wife continues to operate a relatively new business which was established with funds advanced by the husband (through N Pty Ltd) prior to separation. It may be that were she to no longer work in the business that it would fail and that investment would be lost. Although in time she may be better placed to return to sales work, it is reasonable that she has a period in which to adjust to the realities of separation and to rearrange her career in the context of a final property settlement. On balance, the wife has established that she is presently unable to adequately support herself by reason of the manner which, prior to separation, the parties agreed she would spend her time and arrange her working life.
Turning then to the remaining relevant s 75(2) matters. The wife’s income and expenses are set out in her Financial Statement. In circumstances where the husband previously paid her the amount sought, her failure to complete Part N is not fatal. In short, her expenses reflect the standard of living enjoyed by the parties prior to separation and which, following separation, the husband at least implicitly agreed it was reasonable to continue. Although the total amount is significant, it is in all of the circumstances reasonable. Bevan & Bevan (1995) FLC 92-600.
According to the husband’s amended updated Financial Statement and affidavit (excluding payments to the wife and in relation to the mortgage), his average weekly expenses are $926.00 plus $350.00 rent (in Thailand) and $65.00 private health insurance. He has approximately $30,000.00 cash at bank and superannuation worth approximately $1.262 million. As was earlier mentioned, the superannuation fund has $228,000.00 cash assets and otherwise owns real estate which provides rental income (from H Pty Ltd) of about $3,000.00 per week. Thus, although the husband has a more modest lifestyle than the wife, their standards of living do not differ greatly.
It is not accepted that the husband is unable to afford to continue to pay spousal maintenance as he has done previously or that doing so is likely to compromise his standard of living. In short, the wife has established that he has access to significant income and assets in the Hunt Group (as well as his superannuation) and is reasonably able to pay her the spousal maintenance sought.
The next issue which arises are the injunctions sought by the wife to preserve assets pending the final hearing. Counsel for the parties agree, that the relevant principles are set out in M & DB (2006) FLC 93-293. In this regard, the issue is whether the wife has established that, on balance, it is just and convenient that the orders are made. In support of her application, she proffers an undertaking as to damages. As the equity in the Town M property would appear to be in the vicinity of $1 million her undertaking is not illusory. She points to the husband’s control of the companies discussed earlier and his decision to force the sale of the Town M property. There is no dispute that at the same time he claimed to be unable to support the wife, he caused his superannuation fund to pay his daughter, Ms V $10,000.00.
In co-operation with the intervenor entities, the wife settled on a form of order which will not interfere with their ability to operate in the ordinary course of business and with which the companies are content. Having regard to the totality of circumstances and in the absence of prejudice to the husband the wife has established that in order to protect her claim for property settlement, it is both necessary and appropriate for injunctions along the lines sought by her to be made. Prejudice to the husband is further avoided by orders which enable him to meet his reasonable expenses, provide him with a buffer in relation to unexpected exigencies and to pay his own legal expenses.
Before the application by the entities for permission to intervene is addressed, it is appropriate to consider whether the husband’s application for final orders should be expedited. The effect of the orders which will be made is that the husband will pay significant holding costs in relation to the Town M property and spousal maintenance. This situation should not endure longer than is necessary to prepare for an orderly hearing. Expedition is appropriate in relation to which further submissions will be sought about how this should be implemented.
That said, it is expected that once the valuation evidence is available the parties will make a genuine attempt to resolve the proceedings without a hearing. It would be unwise for the wife to forget that the $200,000.00 which she will apply to legal expenses, forms part of her property settlement. The point being, the more she spends on legal expenses the less she will have available for the future. These remarks are not intended in any way to be critical of the parties’ lawyers. Legal expenses in complex cases are a commercial reality. It is my desire to do no more than encourage the parties to maintain a degree of objectivity and commercial reality as they approach the future conduct of these proceedings. The staged nature of the proceedings and the magnitude of the orders make it appropriate that the $200,000.00 is paid in two instalments.
In relation to his directorships and officeholder roles in the Hunt Group, provision will be made for out of the ordinary course of business decisions and transactions (for example, capital raising) to be implemented after 21 days notice to the wife.
Turning then to the entities application for intervention. This application is predicated upon the basis that the entities will not seek costs from either party and do not themselves seek relief from the Court. Counsel for the entities explained that although the interim injunctive orders sought by the wife were directed to the husband, because of the positions he holds (variously secretary and director) restraints upon him would potentially affect and render the board of the entities impotent. For example, should a director require replacement a number of the entities would need the husband to be able to resolve to do so, or, if a capital raising venture was required (for which there is no plan) the restraint on the husband would prevent this happening.
Consistent with authorities such as Barro & Barro (1983) FLC 91-300, even without leave being granted to intervene, the companies were entitled to be heard in relation to the form of injunctions sought against the husband. In so doing, the companies established that as originally proposed the orders were sufficiently broad as to potentially affect them. As the owners of the car driven by the wife, in relation to which interim injunctions were sought, on that limited issue, they were clearly affected and entitled to be heard. Accordingly and in accordance with r 6.05 the entities are given leave to intervene in these interim proceedings.
However, intervention, whether pursuant to s 92 or s 79(10) of the Act or r 6.05, in the substantive proceedings is neither appropriate nor necessary. In this regard, other than in relation to the car in the wife’s possession, neither she nor the husband seeks final property settlement orders that affect the companies.
As to the wife’s car, she and the husband agree that this is to be retained by her. It is apparent that the husband is satisfied that by virtue of his interests in and control of the Hunt Group, that company asset will ultimately be able to be transferred to her. In the event that at the final hearing the relevant company seeks to be heard in relation to that specific matter, a further application for intervention may be made.
For these reasons, the orders identified at the commencement of this judgment are made.
I certify that the preceding seventy four (74) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ryan delivered on 15 June 2012.
Associate:
Date: 15 June 2012
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Injunction
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Procedural Fairness
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Jurisdiction
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