BARR & BARR
[2018] FCCA 3069
•30 October 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BARR & BARR | [2018] FCCA 3069 |
| Catchwords: SPOUSAL MAINTENANCE – Whether the husband should pay the wife $750 or $1157 per week in interim spousal maintenance. |
| Legislation: Family Law Act 1975, ss.72, 74, 75, 77, 79, 80, pt.VIII |
| In the marriage of Bevan (1993) FamLR 35 Stanford v Stanford (2012) FLC 93-495 Bevan & Bevan [2013] FamCAFC 116 Strahan & Strahan [2009] FamCAFC 166 Strahan & Strahan [2013] FamCAFC 203 |
| Applicant: | MS BARR |
| Respondent: | MR BARR |
| File Number: | MLC 11085 of 2018 |
| Judgment of: | Judge Small |
| Hearing date: | 17 October 2018 |
| Date of Last Submission: | 17 October 2018 |
| Delivered at: | Melbourne |
| Delivered on: | 30 October 2018 |
REPRESENTATION
| Counsel for the Applicant: | Ms Carter |
| Solicitors for the Applicant: | Nicholes Family Law |
| Counsel for the Respondent: | Mr Wilson |
| Solicitors for the Respondent: | Lander & Rogers |
ORDERS
Within 7 days of the date of these orders the husband in his capacity as Director of Business 1 Pty Ltd as trustee for the Barr Family Trust shall pay, or cause to be paid to the wife, by way of partial property settlement:
(a)the sum of $35,000 to the bank account of the wife’s company Business 2 Pty Ltd, Bank 1 account; and
(b)the sum of $16,930 to the wife’s bank account.
UNTIL FURTHER ORDER
The husband shall pay to the wife by way of interim spousal maintenance:
(a)the sum of $750 per week with such sum to be paid to the wife’s bank account held at Bank 1 BSB;
(b)i. rent of $970.00 in relation to the property at Property A (“the rented property”)
ii.all utilities relating to the rented property
iii.the wife’s mobile telephone account
iv.the repayments for the wife’s motor vehicle; and
v.day care and school fees for the parties’ children
as and when they fall due.
The husband otherwise be and is hereby restrained from dealing with the assets of Business 1 Pty Ltd or any other assets which might properly be the subject of these proceedings other than in the normal course of business.
IT IS NOTED that publication of this judgment under the pseudonym Barr & Barr is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 11085 of 2018
| MS BARR |
Applicant
And
| MR BARR |
Respondent
REASONS FOR JUDGMENT
Introduction
These are property proceedings between Ms Barr (“the wife”) and Mr Barr (“the husband”).
This judgment relates to an interim hearing held on 18 October 2018 in which three issues were in dispute, those being:
i.The quantum and duration of the husband’s interim spousal maintenance to be paid to the wife in cash;
ii.Whether the husband ought to pay to the wife, by way of partial property settlement or otherwise, monies in the total sum of $94,560; and
iii.Whether the husband ought to be restrained from dealing with the assets of a company of which he is the sole director and which is the trustee for the Barr Family Trust.
Background
The wife is 47 years old having been born on 1971.
She is occupied in home duties and is also developing a business called “Business 2” which has been in development for some two years or so and which she hopes to launch in the next month or so.
The husband is 44 years old and was born on 1974.
He is the full time and sole company director of Business 1 Pty Ltd which trades under the name Business 1, and which is the Trustee for the Barr Family Trust.
The parties each hold one of the two issued shares in the company.
The parties were married on 2006 after cohabiting for about 18 months.
They separated in June 2017. As far as the court is aware, they are not yet divorced.
There are two children of the marriage: [X], born 2010 and [Y] born 2013. The children live with the wife and spend time with the husband according to an agreement reached between the parties.
I note that there are parenting proceedings on foot in relation to the children but that no orders were sought at the first return date.
Between the date of separation and August 2018, the wife deposes that the husband paid her expenses as follows:
(a)$750 per week for her and the children’s living expenses;
(b)rent of just under $1000 per week;
(c)all utilities of her rented property;
(d)her mobile telephone account;
(e)the repayments for her motor vehicle of about $138 per week;
(f)the children’s day care and school fees.
In addition to the above payments, the wife had access to a credit card in the husband’s name which she used for the balance of her weekly expenses, and which was paid by the husband.
It is the wife’s evidence that she had (and has) no other income or means of support until Business 2 is up and running.
In late August 2018, after correspondence between the parties’ lawyers in relation to monies having been removed from company and other accounts, the husband’s lawyers advised the wife’s lawyers that he had removed the wife as a signatory on his credit card and advised that he would be severely reducing the monies he had been paying for her expenses.
The wife then issued these proceedings on 24 September 2018, seeking a return to the previous financial support provided by the husband (although she then sought $1373 per week in cash payments), as well as two lump sums: one of $45,000 to be paid to the Business 2 account for development of that business; and one of $44,560 on account of litigation funding for these proceedings.
The matter came before me in the Duty List on 17 October 2018 and, not being reached on that day, was rolled over to the following day when I heard submissions from counsel for each party: Ms Carter for the wife; and Mr Wilson for the husband. This being an interim hearing, neither party gave oral evidence or was cross-examined.
The law
Spousal Maintenance
The law in relation to spousal maintenance in family law cases is found in Part VIII of the Family Law Act 1975 (Cth) (“the Act”), and particularly in Sections 80(1), 72, 74 and 75.
Section 80(1) sets out the powers of the court, which includes the power to make an order for the payment of a weekly, monthly, yearly or other periodic sum.[1]
[1] S80(1)(b) of the Act
The relevant parts of s.72 of the Act state as follows:
Right of spouse to maintenance
(1) a party to a marriage is liable to maintain the other party, to the extent that the first mentioned parties reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a) by reason of having the care and control of the child of the marriage who has not attained the age of 18 years;
(b) by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c) for any other adequate reason
having regard to any relevant matters referred to in subsection 75(2).
In other words, the person seeking the maintenance must prove, on the balance of probabilities, that he or she is unable to support him or herself adequately, and that the other party is reasonably able to provide the maintenance sought.
In In the marriage of Bevan (1993) FamLR 35 (“Bevan”), the Full Court considered the power of the court to make orders under s.74, and said that the process required the court to apply the following principles:
· There should be a threshold finding under s.72
· The court should consider s74 and s75(2)
· There is no principle that a standard of living which existed prior to separation ought to be automatically maintained where the respondent is able to pay
· The court’s discretion is to be exercised with “reasonableness in the circumstances” being the guiding principle.
Given that the husband acknowledges the wife’s lack of independent means and her need for spousal maintenance, I am satisfied that the provisions of s.72 have been satisfied as to the first requirement. It is clear that the wife’s only means of support at this time is the money and indirect support given to her by the husband.
As a result of the husband having paid for the wife’s living expenses since separation, and his position being that he can now afford to pay for some but not all of the wife’s claimed needs, I am also satisfied as to the second limb of the test in s.72. The only question here is the quantum and duration of the cash payment to the wife.
Section 74 of the Act states that:
(1) In proceedings with respect to the maintenance of a party to a marriage, the court may make such order as it considers proper for the provision of maintenance in accordance with this part.
Section 75 states the following:
Matters to be taken into consideration in relation to spousal maintenance
(1) in exercising jurisdiction under section 74, the court shall take into account only the matters referred to in subsection (2).
Section 75(2) then sets out the matters the court must take into account when deciding whether to make any order for spousal maintenance. I note that the following list is an exhaustive list as the court may only take into account the matters referred to in section 75(2):
(a) the age and state of health of each of the parties; and
(b) the income, property and financial resources of each of the parties and physical and mental capacity of each of them for appropriate gainful employment; and
(c) whether either party has the care or control of the child of the marriage who has not attained the age of 18 years; and
(d) commitments of each of the parties that are necessary to enable the party to support:
i. himself or herself; and
ii. a child or another person that the party has a duty to maintain;
(e) the responsibilities of either party to support any other person; and
(f) subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
i. any law of the Commonwealth, of a state or territory or of another country; or
ii. any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to other party; and
(g) whether parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling the party to undertake a course of education or training or to establish him or herself in a business or otherwise to obtain an adequate income; and
(ha) (ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditors debt, so far as that effect is relevant; and
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l) the need to protect a party who wishes to continue that party’s role as a parent; and
(m) if either party is cohabiting with another person – the financial circumstances relating to the her cohabitation; and
(n) the terms of any order made or proposed to be made under section 79 in relation to:
i. the property of the parties; or
ii. vested bankruptcy in relation to a bankrupt party; and
(naa) (naa) the terms of any order or declaration made, or proposed to be made, under Part VIIAB in relation to:
i. a party to the marriage; or
ii. a person who is a party to a de facto relationship with a party to the marriage; or
iii. the property of a person covered by subparagraph i. And of a person covered by subparagraph ii, or of either of them; or
iv. vested bankruptcy property in relation to a person covered by subparagraph i. or ii; and
(na) (na) any child support agreement under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p) the terms of any financial agreement that is binding on the parties to the marriage; and
(q) the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.
Subsection (3) of section 75 states that: a court shall disregard any entitlement of the party whose maintenance is under consideration to an income tested pension, allowance or benefit.
Section 77 of the Act states that in urgent cases, where the party whose maintenance is under consideration is in immediate need of financial assistance but it is not practicable to determine immediately the orders to be made, the court may make an interim spousal maintenance order pending the disposal of the proceedings “of such periodic sum or other sums as the court considers reasonable”.
The wife in this case asserts that she is in need of spousal maintenance from the husband because she has no means of support apart from what he pays her and any Centrelink benefits to which she might be entitled.
The husband appears to accept that that is the wife’s situation, and indeed he further accepts that he is reasonably able to provide some considerable support for her in the short term, which he sets at the next six months.
The issue before the court is the amount of the cash portion of the spousal maintenance to be provided, and the length of time for which the husband ought to be obliged to pay that amount.
At the hearing before the court on 17 October 2018, the wife’s counsel submitted that the cash amount to be paid to her client by way of interim spousal maintenance ought to be $1157, and that payment ought to last “until further order”.
She referred to the wife’s Financial Statement affirmed on 21 September and filed 24 September 2018 which sets out, in Part N, her weekly expenses.
When expenses of $466 per week for food for the children and $288 per week for holidays were removed from that list, counsel asserted that the wife’s weekly expenses amount to $1157 per week, and that generally accords with my calculations in relation to that document.
As previously stated, until August 2018 the wife had been paid $750 per week in cash in addition to other accommodation and children’s expenses, but she had also had access to the husband’s credit card with which, she deposes, she paid the remainder of those expenses.
The husband’s case is that the cash amount of the spousal maintenance he pays for the wife’s support ought to be $750 per week and that that payment should be only for the next six months.
It was Counsel’s submission on his behalf that on top of the $750 per week the husband has been paying for the wife’s support, he has also been paying $400 per week in child support when he is assessed (or had agreed) to pay only $174 per week.
It is the husband’s case that he should continue to pay $750 per week to the wife for her maintenance only for the next six months because it is the wife’s evidence that Business 2 should be up and running by that time, and he is concerned about his own business’s future.
The husband’s Financial Statement, affirmed on 11 October and filed 12 October 2018, states that his average weekly income is $1552, while his weekly expenses are $2567.
He deposes that his weekly salary income is nil, but that he derives income from Business 1 Pty Ltd of $1000 per week, investment income of $262 per week and benefits from his business worth $290 per week. As the sole Director of Business 1 Pty Ltd, he has the discretion to regulate the amount of income he receives, and I take that fact into account here.
The expenses that make up his asserted $2567 per week include $250 paid in income tax, $57 paid to his superannuation fund, $547 paid in accommodation expenses, various insurance premiums of $103 per week, credit card repayments of $327 per week, child support of $400 per week, and other expenditure, set out in Part N, of $883.
In addition, he deposes that he spends $1734 per week in support for the wife, that payment being made up of $750 in cash, $950 in rent, and $34 in contents and car insurance.
At the hearing, his counsel pointed out that he pays all of those monies from his after-tax income. When taken together with his child support payments of $400 per week, Mr Barr is apparently paying at least $110,968 per annum to the wife for her support and that of the children.
His personal expenses, set out in Part N, are made up of $220 for food, $95 for household supplies, repairs and utilities, $10 for his telephone, $38 for clothing and shoes, $125 for the children’s activities, $15 for medical and allied expenses, $60 for entertainment and hobbies, $100 for holidays, $150 for education expenses including fees and levies, $10 per week for repairs to furnishings and appliances, $40 for gifts, with the remaining $20 being spent on dry-cleaning, books and magazines, and hairdressing and toiletries.
On those figures, it is difficult to see how the husband could pay more than $750 in cash support for the wife per week.
The wife’s case is that she needs the whole $1157 per week because that is what she has been spending since separation, with the “gap” amount of some $407 per week being paid from the husband’s credit card account, to which she had access until August 2018.
I note that there is no presumption at law that a party is entitled to the same standard of living as pertained during the marriage after the parties have separated.
When I consider the matters set out in section 75(2) of the Act, and in particular those matters set out in subsections (b), (c), (d), (g), (j) and (l) of that section, together with the matters discussed by the Full Court in Bevan, I consider it “proper” and “reasonable in the circumstances” to order that the husband continue to pay spousal maintenance of $750 per week in cash for the support of the wife.
In relation to the duration of those payments, I find it appropriate to order that they be made until further order of the court. If the wife’s financial circumstances improve after the launch of her Business 2 business, the husband is at liberty to seek a reduction or cessation of those payments.
Ms Barr will simply have to restrain her spending while this order is in force.
Partial property settlements
The wife seeks two payments from the husband and/or his company Business 1 Pty Ltd by way of a partial property settlement.
She seeks $44,560 in litigation funding and $45,000 to be paid to her company Business 2 Pty Ltd for the further development of that company’s business so that it might be launched appropriately.
The law in relation to property settlements between married couples, whether partial or complete, is also found in Part VIII of the Act.
Section 80(1)(a) of the Act gives the court the power to make an order for “payment of a lump sum, whether in one amount or by instalments”.
Section 79(1) establishes the power of the court to alter the property interests of married parties.
Section 79(2) prohibits the court from making such an order “unless it is satisfied that, in all the circumstances, it is just and equitable” to do so.
In Stanford v Stanford[2], the High Court said the following at paragraph 42:
In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and the wife.
[2] Stanford v Stanford (2012) FLC 93-495.
In Bevan & Bevan the Full Court said that the circumstances described in the above passage of the Stanford judgment “encapsulate the vast majority of cases”[3] .
[3] Bevan & Bevan [2013] FamCAFC 116 paragraph 70.
There is nothing in the present case to distinguish it from “the vast majority of cases”[4] and therefore I find that it would be just and equitable to consider making the orders sought by the wife.
[4] Bevan & Bevan [2013] FamCAFC 116 paragraph 70.
That is, I am satisfied that it would be just and equitable to consider making orders for the husband to provide the wife with the sums of $44,560 and $45,000.
It is the husband’s case that the wife has already received monies in the sum of $89,279 between 21 August and 20 September 2018, and that if I were to order a further payment in the sum of $94,560, she would have received, by way of partial property settlement, a total of $183,839 since 21 August 2018.
At the hearing on 17 October 2018, Counsel for the husband emphasised that the sums amounting to $89,279 were removed from joint company accounts by the wife unilaterally – that is without the husband’s knowledge or consent – and that she had said nothing about those sums in her affidavit affirmed on 21 September and filed 24 September 2018.
In those circumstances, says the husband, the wife ought not to be entitled to any further payment by way of partial property settlement.
The wife disputes the quantum of monies she has already received, her counsel telling me from the bar table that she acknowledged having had the benefit of $74,000: $33,800 which she had invested in Business 2; $32,000 which she had applied to her legal fees to the end of this hearing; and the remaining $8200 having been spent on her general living expenses. I assume that that $8200 was spent in addition to the spousal maintenance the husband had been paying her, and I note that indeed she did not mention those payments in her Affidavit affirmed on 21 September and filed 24 September 2018.
It is the wife’s evidence that she requires $44,560 to pay legal fees to the end of a proposed and agreed mediation process.
In support of that assertion, the wife’s lawyer, Keturah Sanae Sageman (“Ms Sageman”), of Nicholes Family Lawyers (“the wife’s lawyers”), affirmed and filed an affidavit on 24 September 2018.
She deposes that without at least $1000 in trust, the wife’s lawyers would not be prepared to continue to represent Ms Barr and would withdraw from the proceedings.
Ms Sageman annexes to her affidavit copies of a Legal Services Agreement dated 28 February 2018, and a retainer letter dated 24 August 2018, together with a Notification of Costs document dated 21 September 2018.
The retainer letter estimates the wife’s costs at:
· $10,000 (excluding GST) “if your matter proceeds to a first Court hearing for an urgent application for property matters to injunct monies, spousal maintenance and parenting matters”
· A further $15,000 “if your matter proceeds to a Court ordered mediation with an additional $30,000 for costs of expert valuers for the business”
· A further $20,000 (excluding GST) “if your matter proceeds to an interim hearing”
· A further $50,000 (excluding GST) “if your matter proceeds to a final hearing.”
That is, wife’s lawyers estimated, on 24 August 2018, that Ms Barr’s costs to the end of the hearing on 17 October 2018 would be about $10,000.
Ms Sageman deposes that on 21 September 2018, the firm “provided the Wife with a Costs Notification further detailing that the Wife’s legal fees have increased beyond the estimate provided in the letter of 24 August 2018”.
She deposes that the wife had paid the firm $31,365.50 in legal fees and disbursements as at 24 September 2018 and that she had incurred work in progress fees of $17,099.36 plus GST, a total of $48,464.36 some three weeks prior to the first hearing date.
I note that the Notification of Costs document, dated 21 September 2018, reveals that the wife could expect to have incurred $27,631.25 in fees and disbursements up to the end of the first hearing date of 17 October 2018, including unbilled work in progress.
The document notes that the firm held the sum of $11,583.76 in trust for Ms Barr on 21 September 2018, $4500 of which was “protected for Counsel’s fees”.
Further, Ms Sageman deposes that the $44,560 sought by Ms Barr in litigation funding would comprise the $27,631.25 for fees and disbursements up to the first court hearing and a further sum of $28,512 in estimated fees and counsel’s costs for a private mediation, minus the $11,583.76 held in trust[5].
[5] $27,631.25 + $28,512 = $56,143.25 - $11,583.76 = $44,559.49
I glean from those figures that as at 24 September 2018, the firm effectively held the sum of $7,083.76 in trust for Ms Barr against unbilled fees of $17,099.36, but the discrepancies between the figures contained in the retainer letter of 24 August 2018, the Notification of Costs dated 21 September 2018 and the Affidavit of Ms Sageman affirmed on 24 September 2018 make little or no sense. It would seem that the $27,631.25 has been counted twice: once as part of the $31,365.50 already paid by 24 September 2018; and again as part of the sum of $44,560 sought by the wife.
On any measure, legal fees of this magnitude are well outside those which “the ordinary person” might expect to incur up to the first hearing date in a family law matter.
The second sum sought by the wife is $45,000 which she deposes is necessary for her fledgling business, Business 2, to be taken to the launch phase.
She says that the parties have invested over $150,000 in Business 2 and that it is a joint venture with other investors involved as well. If she does not receive the monies needed for its final launch, it is her evidence that that investment will be lost entirely.
It was counsel’s advice from the bar table that her client instructed that she expected Business 2 to launch about three or four weeks after the hearing.
At the hearing, counsel for the wife submitted that even if the wife had already had the benefit of $89,000 of joint funds since 21 August 2018 (and of course, she disputes that sum), the property settlement the wife can expect as a result of these proceedings would be much more than those funds plus the $94,560 she now seeks.
She submitted that the major asset of the parties, the business known as “Business 1”, was purchased by the parties during the marriage and that the wife had contributed to that asset as she had contributed her income to the parties’ assets when she had been working.
It is the wife’s further evidence that the parties had purchased a property from her parents at a significant discount and sold that property at a significant profit, those monies being re-invested in joint assets, and that she had also been the primary carer of the two children.
In addition, said Ms Carter, the matters to be considered under s.75(2) of the Act in any property settlement favoured her client because of the great income disparity between the parties and the fact that the wife has the primary care of the children.
In those circumstances, she said, the wife has “an irresistible claim” to a substantial property settlement.
It is her client’s case that the property pool is worth about $1.1 million and that even if the full amount of $183,839 (made up of monies the wife is said to have already received plus monies she now seeks) were “added back” to the pool, and she were to receive a 50% settlement, she would receive assets worth more than $500,000.
The husband’s company, Business 1 Pty Ltd, is the trustee for the Barr Family Trust, whose beneficiaries are the parties to these proceedings.
The 2016 – 2017 financial year, the wife says each party received a distribution from the family trust of $166,592. That does not appear to be disputed by the husband.
The husband says that the business has seen a downturn in the last year and that this year he expects distributions to be $111,000 to each party.
Even if there has been a downturn, about which the wife is sceptical, she says that the nature of the business as a profitable going concern means that there ought to be existing funds from which to pay the monies sought.
In addition, says the wife, the funds to pay her the $94,560 sought are readily available and the payment would result in no prejudice to the husband’s claim for a just and equitable property settlement at the conclusion of these proceedings.
Counsel submitted that the $94,560 should be taken from the loan facility of $125,000 the husband has and which has never been used, that facility being offset by a term deposit of $127,000 which matures in December 2018. In other words, the $94,560 could be drawn down from the loan account immediately and repaid upon maturation of the term deposit in only a couple of months.
I note that it is the wife’s evidence that in August 2018 the husband withdrew $401,000 from his business account and deposited those monies in an account in his sole name. There is a dispute between the parties as to how much remains in that account but in any event the wife does not seek a payment from it at this time.
It is the wife’s case that if funds sought are not advanced to her, she will be facing the remainder of these proceedings without lawyers, and Business 2 will fail.
In response, the husband’s counsel referred the court to two judgements of the Full Court of the Family Court of Australia in the matter of Strahan: one in 2009[6] (“Strahan No. 1”) and one in 2013[7] (“Strahan No. 2”).
[6] Strahan & Strahan [2009] FamCAFC 166
[7] Strahan & Strahan [2013] FamCAFC 203
In Strahan No. 1, the Full Court stated that a court considering an application for an interim property settlement ought first to decide whether to exercise the discretion contained in s80(1)(h) of the Act, which states that a court may make “a permanent order, an order pending the disposal of proceedings or an order for a fixed term or for a life or during joint lives or until further order”.
Having decided that it is appropriate to exercise that discretion, the court must then do so.
In these proceedings, where the entirety of the family’s assets and finances are under the control of the husband, I do consider it appropriate to exercise the discretion contained in s80(1)(h) to make an order for property settlement under s.79 “pending the disposal of proceedings”.
As the Full Court said in Strahan No 1, at paragraph 128(e):
It would be naïve to overlook the significant power differential between parties in many cases as a result of access to financial resources in the interim, pending final orders under s.79. It may well be unjust and inequitable for one party to be denied access to matrimonial property for a substantial period whilst awaiting trial.
Having decided to exercise the discretion, I must now decide whether it is appropriate to exercise the power under s.79, and in Strahan No1, the Full Court stated that an example of a case in which it might be appropriate to do so is one where “one party requires funds to assist in defraying the costs of litigation without which funds an injustice may be caused”.
In Strahan No 1, the Full Court said that the test needed to satisfy the court that it should exercise its discretion, is not whether there are “compelling” circumstances for that exercise, but whether the matter is a proper case in all the circumstances for the court to do so.
In relation to an argument such as that made by counsel for the wife that the property pool could well accommodate the payment sought by the wife without prejudicing the husband’s claim, the Full Court said the following:
We also emphasise that in order to establish an appropriate case for an interim property settlement order more is required than the mere fact that upon a final hearing the applicant would receive the property being sought (or an amount in excess of the funds being sought) from the other party.[8]
[8] Strahan No. 1 paragraph 139
In all the circumstances of this case, where the wife has no access to funds with which to conduct these proceedings, and where it is possible that major investments of the parties might be lost, I find that it is proper to exercise the power under s.79 in order to make orders for an interim property settlement between the parties pending final orders.
The question then becomes how that discretion is to be exercised and I will return to the law in relation to that matter later in these reasons.
The husband’s case, as put by his counsel at the hearing, is that the payment of $94,560 to the wife would put his business in jeopardy.
On the morning of the hearing, the husband affirmed and filed an affidavit (“his second affidavit”) as a clarification of matters stated in his affidavit affirmed on 11 October and filed on 12 October 2018.
In his second affidavit, the husband sets out a list of the amounts he expects to pay from his company’s cash reserves in October 2018, some being quarterly payments, some monthly and one annual.
Those amounts total $229,930, which he says needs to be withdrawn from the company’s cash reserve account, although he does not disclose the balance of that account at the time of affirming his second affidavit, and he does not say how much he expects the company to receive in earnings in the same month.
He deposes that the $125,000 term deposit that secures the (unused) loan facility is “a cash reserve in the event that there is a substantial shortfall in income generated by the business to meet fixed expenses such as salaries”.
It is his evidence that the wife has already taken $186,639 from joint funds between January and October 2018. He says that the fact that she has not accounted for all of those monies should be reason for the court not to exercise its discretion to make orders for any further property settlement to her.
Counsel for the husband referred me to Strahan No. 2 in that regard.
In Strahan No 2, the Full Court was dealing with amounts of money that are stratospheric when compared to those in this case. The wife in that case had been awarded over $1million in interim payments and had not fully accounted for her use of those monies.
The Full Court found that the fact that the trial judge in that case had taken that non-disclosure into consideration in her dismissal of the wife’s application for more funds was not an error of law.
I do not read that decision as saying that such non-disclosure prevents a court from making an order for a partial property settlement when a spouse has already received monies which have not been disclosed or accounted for.
As I have already stated, I find that it is appropriate in all the circumstances of this case, to exercise my discretion to make a partial property settlement under s.79 of the Act.
I have addressed the threshold issue of whether it would be just and equitable to alter the parties’ property interests under s.79(2) and now move to the remainder of the law relating to property settlements under s.79.
S.79(4) sets out the matters the court must consider when deciding which orders to make in a property settlement as follows:
(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
The wife’s evidence is that she has made direct and indirect financial and non-financial contributions to the assets of the marriage.
I do not think that there is any demur on that account from the husband although he might question the quantum of those contributions.
Both parties say that they have contributed to the welfare of the family by caring for the children both during the marriage and after separation.
The wife says that the $45,000 sought for the development of the application which will operate Business 2 is necessary for her to be able to support herself in the future. In other words, it will build her earning capacity.
The husband does not deny that, but he is sceptical about the future of Business 2, saying that it has been in development for two years and is still not operating.
I have already discussed s.75(2) in the context of the spousal maintenance application and will not repeat that discussion here.
I note that the husband pays child support of $400 per week, which, he says, is more than double the amount he has been assessed to pay.
So, having dealt with the law and some of the evidence in this matter, I must decide whether to make orders for the payment of the sum sought by the wife, a different sum, or no sum at all.
In relation to the payment of $44,560 in litigation funding, I will not make an order for payment of that whole sum, as I consider that the sum of $27,631.25 has been counted twice in the wife’s lawyers’ calculations as explained above. I will therefore make an order that the husband, in his capacity as Director of Business 1 Pty Ltd, pay the sum of $16,930 to the wife’s lawyers to be used for the wife’s legal fees, that being the rounded figure of the amount sought minus the twice-counted sum.
In relation to the $45,000 sought for investment into the Business 2 business, I am satisfied that some payment is necessary for the preservation of the investment of over $150,000 made to that business by the parties.
However, I will make an order for the husband to pay $35,000 to Business 2, as the wife has not particularised the need for the whole $45,000, merely deposing in her Affidavit affirmed on 21 September and filed on 24 September 2018 that she needs the funds for “the expenses associated with Business 2 including, the rental expenses for the office space, the developers and my employee who is employed on a contractual basis”.
I am informed that Business 2 will launch in a few weeks’ time and Ms Barr will need to ensure that the launch happens as quickly as possible so that the business can begin to earn income.
Restraints
The wife seeks a restraint on the husband from dealing with assets of the company in which she is an equal shareholder until further order of the court.
Ms Barr cites the fact that the husband has transferred some $400,000 from company accounts without her prior knowledge or consent since the parties had a major disagreement about their finances in August 2018.
I have made orders for some company monies to be used both for spousal maintenance for the wife and for two lump sums to assist her in conducting her own business and these proceedings.
In circumstances where she has an interest in the company but no control over the way in which it is operated, I find it reasonable to restrain the husband from dealing with the assets of the company save in the normal course of business so that joint assets of the marriage are preserved until final orders are made.
Conclusion
These orders are interim orders. The first is a spousal maintenance order made under s.75(2) of the Act which will last until further order of the court, and the second is a partial property settlement order made under s.79.
I note that the parties have agreed to attend a private mediation in an attempt to resolve all financial matters between them and it is to be hoped that that mediation will be successful.
If not, the matter will be listed for trial.
I certify that the preceding one hundred and thirty seven (137) paragraphs are a true copy of the reasons for judgment of Judge Small
Date: 30 October 2018
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