Baillieu and Baillieu and Anor

[2018] FamCA 298

FAMILY COURT OF AUSTRALIA

BAILLIEU & BAILLIEU AND ANOR [2018] FamCA 298

FAMILY LAW – PRACTICE AND PROCEDURE – Application for sale of property dismissed – Records of company income to be made available.
APPLICANT:	Ms Baillieu

1st RESPONDENT: Mr A Baillieu

2nd RESPONDENT: Mr B Baillieu

FILE NUMBER: SYC 1492 of 2018

DATE DELIVERED: 8 May 2018

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 7 May 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Campton SC

SOLICITOR FOR THE APPLICANT: E H Tebbutt & Sons

SOLICITOR FOR THE 1ST RESPONDENT: McCabe Partners Lawyers

FOR THE 2ND RESPONDENT: Mr B Baillieu appeared in person

Orders

1. That the husband’s application for the sale of the property at C Street, Suburb D (“the property”) is dismissed.

2. That within 3 days, the husband hand to the wife a Withdrawal of Caveat in registrable form in respect of the caveat lodged by him over the property.

3. That the wife be restrained from dealing with or further encumbering the property without giving 28 days’ notice of her intention so to do to the husband in writing.

4. That the wife have the sole occupation of the property.

5. That the husband vacate the property not later than 6.00 pm on Sunday 13 May 2018.

6. That the wife’s applications in relation to the payment of the mortgage and for spousal maintenance are dismissed.

7. That within 14 days the husband cause to be provided to the wife’s legal representatives copies of the following documents in relation to E Pty Limited (ACN …) (“the company”):

   (a)Income tax returns and OTO Notices of Assessment for the financial years ending 30 June 2012 to date (“the period”).

   (b)Bank statements for all bank accounts in which the company had an interest either beneficially or as trustee during the period.

   (c)All books of account, balance sheets, profit and loss statements, trading accounts, financial reports relating to any business conducted by the company either beneficially or as trustee during the period.

   (d)All documents relating to any loan made to the company or by the company during the period.

   (e)All deeds of trust in relation to which the company is settlor, trustee or beneficiary.

   (f)All ledgers, journals, day books or receipt books kept by or on behalf of the company during the period.

   (g)That the second respondent be restrained from disposing of any funds held by him remaining from the sum of $75,000 paid to the second respondent by the husband.

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 Baillieu & Baillieu and Anor 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 1492  of 2018

Ms Baillieu

Applicant

And

Mr A Baillieu

First Respondent

And

Mr B Baillieu

Second Respondent

REASONS FOR JUDGMENT

1. Ms Baillieu (“the wife”) and Mr A Baillieu (“the husband”) married in 2001 and have two children, boys aged 13 and 11 years.

2. In the proceedings before the Court, the wife seeks interim orders for sole occupation of their home and the payment of certain sums of money. The husband seeks an order for the sale of the home.

3. The second respondent is the brother of the husband.

4. In order to understand the competing applications, it is necessary to set out the relevant background facts.

5. In 2006 a company, E Pty Limited (“EPL”) was incorporated. The husband and Mr F were directors and shareholders.

6. In 2012, the husband purchased Mr F’s shares in EPL for $250,000, becoming the sole director and shareholder.

7. In 2013, the husband established a self-managed superannuation fund, the Baillieu Family Super Fund, (“Baillieu Super”).  The wife rolled over her superannuation entitlement of $120,000 from an industry fund into Baillieu Super and the husband’s superannuation entitlement of $170,000 was also rolled over into Baillieu Super.

8. In February 2015, the parties purchased their present home at Suburb D. The wife is the sole registered proprietor.

9. The husband asserts that, in 2015, EPL experienced difficulties because the landlord of its leased premises doubled its rent and one of its key staff left. The husband asserts, but did not prove, that the business began losing money.

10. In 2015, the husband, without the knowledge of the wife, withdrew the parties’ respective superannuation entitlements and those funds were injected into EPL. It is not clear what mechanism was adopted for that transaction. The husband acknowledged that he was not entitled at law to utilise the superannuation fund as he did.

11. In the financial years ended 30 June 2016 and 30 June 2017, the average amount received by the husband and the wife from EPL by way of wages alone was $273,742 per annum.

12. In May 2017, the marriage came to an end and the parties separated under the one roof.

13. On 6 June 2017, the husband transferred the shares in EPL to his brother, the second respondent. The husband continued to be involved in the business, he asserts, as an employee. The wife had no knowledge of this transaction.

14. On 30 August 2017, the husband persuaded the wife to agree to draw down on the mortgage over Suburb D. The husband drew $75,000 from the mortgage and paid that money to the second respondent.

15. In February 2018, the husband stopped making payments on the home mortgage.

16. On 9 March 2018 the wife filed an application for property settlement.

17. On 13 March 2018, a company G Pty Ltd (“GPL”) was incorporated. The sole director of GPL is a member of a family who are friends of the husband. The records produced by ASIC indicate that none of the shareholders holds his or her share beneficially. There is no evidence of who beneficially owns the shares in GPL.

18. The wife’s case is that the husband beneficially owns the shares and that the transactions whereby he divested himself of his interest are a sham, designed to reduce the assets available to her in her application for property settlement.

19. On 16 March 2018, EPL sold its stock, plant and equipment and intellectual property to GPL for $19,102. That sale was completed on 8 April 2018.

20. On 9 April 2018, EPL was placed into voluntary liquidation.

21. The husband deposed that he is now an employee of GPL earning a salary of $1,500 per week.

22. The husband and the wife remain living in the former matrimonial home. The mortgage is not being paid. The husband makes no financial contribution to the costs of the home or to the children’s school fees.

23. The wife seeks an order for the sole occupation of the home, an order that the husband meet the mortgage payments, spousal maintenance and financial disclosure. As against the second respondent, the wife seeks that he be restrained from disposing of any assets remaining in his possession from EPL and, as was made clear in submissions, specifically the $75,000 which the husband paid to him.

24. The wife also seeks an order that the husband withdraw a caveat which he has lodged over the former matrimonial home, upon her undertaking that she will notify him of any intention to further deal with the property. No submissions were made in the husband’s case about this application and I infer that it is not opposed.

25. The husband seeks an order that the house be sold and that the wife receive $30,000 and he receive $20,000 by way of interim property settlement.

The husband’s application to sell the house

1. On behalf of the husband, it was submitted that the appropriate course is to sell the home in which the parties and the children live and discharge the mortgage, including the funds drawn down by the husband and paid to his brother. He proposes that the wife receive $30,000 and he receive $20,000, that a fund of $40,000 be put aside to pay the children’s school fees for the remainder of 2018, and that the balance be held pending final determination.

2. In broad terms, the equity in the property is approximately $1,500,000.

3. How the wife, whose income as a piano teacher is less than $1,500 gross per week, is to rehouse herself and the children with $30,000 was not explained.

4. The wife’s substantive application is that she will retain the former matrimonial home.

5. The husband has not demonstrated that the wife’s case is without merit.

6. His application will be dismissed.

Sole occupation

1. The wife’s application is opposed by the husband.

2. In the event that the wife continues to occupy the home with the children, she proposes to borrow funds from her parents to meet the outgoings and thus preserve the property as a home for herself and the children.

3. The wife is the sole registered proprietor of the property. She is solely meeting the costs of the property from her own income and with assistance from her parents. The husband makes no contribution and consumes food that the wife has purchased for herself and the children.

4. The husband concedes that the wife has been the primary carer for the children.

5. The wife relied on an affidavit of her treating doctor who has diagnosed her as suffering from anxiety and reactive depression. The wife has been referred to a psychologist with a mental health plan and prescribed an antidepressant and sleeping tablets. She reports insomnia and inability to concentrate and feeling stressed, anxious and depressed.

6. The wife deposed that she suffers from disturbed sleep, headaches, teeth grinding and that her hair is falling out.

7. When the husband returns to the home, she immediately leaves what she is doing and retreats to her bedroom.

8. The wife complains that the husband “taunts” her by using the bathroom adjacent to her bedroom on the upper floor although there are bathrooms downstairs close to his bedroom, that he wakes her by using the bathroom late at night and leaves it in a mess. The husband returns to the home late at night and eats a meal in the lounge room at 11.00 pm or midnight, consuming food that she has bought or prepared for the children and leaving his dishes for her to clean up.

9. The husband has not attended to maintenance or chores around the house since about November 2017.

10. The wife believes that the husband’s behaviour is deliberate and intended to intimidate and harass her. Whether his behaviour is deliberate cannot be determined on the evidence before me but it has the effect of intimidating her and causing her anxiety.

11. The wife deposed that their oldest child has been referred to his school counsellor by a teacher and that he has become withdrawn.

12. These parties have been separated since May 2017 in circumstances where the financial conduct of the husband, as it has come to light, has caused the wife great distress.

13. The husband works six days each week. He makes no contribution to the household costs and the situation where they both continue to share the house, despite having been separated for almost a year, is causing stress to the wife (and no doubt to the husband) and distress to the children.

14. I accept the submission of Senior Counsel for the wife that it is not reasonable or practicable for the parties to continue to share the property.

Financial provisions

1. On behalf of the wife, it was conceded that the husband cannot pay both the mortgage of $2,300 per week and spousal maintenance of $3,900 per week.

2. It is not in dispute that the wife cannot meet the expenses of the household, including the mortgage, from her own income. The issue is whether the husband has the ability to pay the amount sought.

3. The wife places heavy reliance of the income which was historically derived from EPL by the family. It is conceded that until June 2017, the husband and the wife between them drew wages of $273,742.

4. However, the wife is unable to establish that the husband is continuing to draw that level of remuneration.

5. I accept that the chronology of events whereby the husband divested himself of the business operated by EPL gives rise to a reasonable suspicion that this is, as the wife asserts, a “Phoenix Business” and that the husband has manoeuvred a situation where he appears to have no interest in the business which continues to operate in the same premises as those which were used by EPL and using the plant and equipment and intellectual property of EPL.

6. However, reasonable suspicion is not sufficient to base the wife’s claim and she has not been able to demonstrate, on the balance of probabilities, that he has the ability to contribute either to the mortgage or to spousal maintenance.

7. As a result of the orders for sole occupation, he will be required to find alternate accommodation and to incur the cost of rent.

8. The wife’s applications will be dismissed.   

Orders against the second respondent

1. It is not in dispute that the husband withdrew $75,000 from the mortgage secured against the property and gave that money to the second respondent. The second respondent has filed no evidence and has not accounted for the use of those funds. The basis on which the husband, who had divested himself of all of his shares in EPL to the second respondent for no consideration, gave those funds to the second respondent will no doubt be examined in detail in due course.

2. It appears beyond dispute that the assets of EPL have been sold by the liquidators to GPL. I assume that the money paid by the purchaser has been paid to the liquidator.

3. Until such time as the second respondent accounts for his use of the payment of $75,000 it is appropriate that he be restrained from further disposing of the funds or that portion that remains.

Disclosure

1. Annexed to the affidavit of the wife are a number of letters seeking documentary disclosure to which there has been no, or no adequate, response.

2. The husband should understand that giving an authority to the wife to ask third parties for documents is not compliance with his own obligations of full and frank disclosure and he bears the obligation to provide the documents which the wife seeks. If his lawyers have not made that clear to him already, it is both appropriate and necessary that they now do so.

3. Orders will be made for the provision of documents as sought by the wife.

I certify that the preceding fifty-nine (59) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 8 May 2018.

Associate:   

Date:     8 May 2018