Benington and Benington

[2011] FamCA 177

FAMILY COURT OF AUSTRALIA

BENINGTON & BENINGTON [2011] FamCA 177

FAMILY LAW - PROPERTY – interim spousal maintenance – principles and findings

Family Law Act 1975 (Cth.): ss 72(1);  75(2)

APPLICANT: Ms Benington

RESPONDENT: Mr Benington

FILE NUMBER: SYC 6029 of 2009

DATE DELIVERED: 16 March 2011

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rose J

HEARING DATE: 21 & 24 February 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: R Schonell SC

SOLICITOR FOR THE APPLICANT: Diamond Conway Lawyers

COUNSEL FOR THE RESPONDENT: S Richardson

SOLICITOR FOR THE RESPONDENT: Adrian Twigg & Co Solicitors and Conveyancers

Orders

1. That Orders are made by consent in terms of Orders 1(a) to 1(m)(i), (ii) and (iii) of Exhibit 2 as follows:

   “1.That the Wife and the Husband (collectively “the parties”) in their capacity as directors of [B Pty Ltd] ACN […] do all necessary acts and things to cause the company to lease property known as [the property at W], NSW being land described in Folio Identifier […] on the following terms and conditions:

   (a)The annual rental be $73,000 plus GST or at the best commercial market rent (plus GST) that can be obtained;

   (b)The term of the lease be 3 years plus 3 years option;

   (c)The tenant shall pay all outgoings on the [property at W] including council and water rates, electricity, water usage, telephone and land tax;

   (d)The annual rental payable during the lease shall be increased by 5% on each second anniversary date of the lease;

   (e)The commencement annual rental in the first year of the option term shall be the annual amount in the last year of the original term multiplied by 105%;

   (f)The annual rental shall be paid in monthly instalments in advance on the day of each month being the day of the month when the lease term commenced (“the monthly rental”);

   (g)The legal costs to prepare the lease shall be paid by the lessee;

   (h)[Law Firm 1] shall be appointed by [B Pty Ltd] to prepare the lease and to include such other terms and conditions as being fair and reasonable for a lease of this nature;

   (i)The leasing and managing agent of the [property at W] shall be [Real Estate Company 1];

   (j)[B Pty Ltd] shall pay to [Real Estate Company 1] such reasonable commission as [B Pty Ltd] agreed in writing beforehand on the successful leasing of the [property at W];

   (k)The Wife shall within 7 days of the date of these Orders do all acts and things necessary to open a bank account in the name of “[B Pty Ltd Property at W]” with the National Australia Bank (“the [NAB B] account”) and to which the Wife shall be the sole signatory;

   (l)The monthly rental shall be paid into the [NAB B] account;

   (m)     The Wife is authorised to operate the [NAB B] account;

   (i)Each month the Wife shall account to the Husband in writing of monies received and expended from the [NAB B] account;

   (ii)The Wife shall from time to time pay from the [NAB B] account those expenses as relate to the [property at W] including GST, accounting expenses, agents commission (if any), legal expenses on issues arising from the lease maintenance and land tax;

   (iii)On the day following each month from the commencement date of the lease the Wife shall, after allowing for any due and payable expenses referred to in Order 4.1(m)(ii), distribute by way of dividends the available balance in the [NAB B] account.”

2. That an Order is made in terms of Order 1(m)(iv) of Exhibit 1, varied to refer to Order 4 as follows:

   “That in the event the Husband at any time after the sixth month from the commencement date of the lease fails to make payment in accordance with Order 4 of these orders the wife be authorised to make such payment from the husband’s share of the rental otherwise payable to the husband as per Order 1(m)(iii)(b).”

3. That Orders are made in terms of Orders 2 and 3(a) to 3(e) of Exhibit 1 as follows:

   “2.That in the event either party refuses or neglects to execute any document, deed or instrument necessary within 7 days of being asked to do so in writing as to give effect to all or any of these Orders the Registrar of the Court shall execute such document, deed or instrument in the name of the company and to do all other acts and things necessary to give validity and operation to the document, deed or instrument.

   3.That within 14 days of the date of these orders the Husband produce to the Wife’s solicitors:

   (a)copies of all bank statements disclosing the funds identified in paragraph 22 of the Husband’s Affidavit sworn 24 November 2009;

   (b)all documents he relied upon to evidence that the funds held by him in the National Australia Bank term deposit referred to in paragraph 22 are the property of [B Pty Ltd];

   (c)copies of all invoices in relation to work carried out by the Husband and/or any other party on the Husband’s behalf to property known as [the property at P]. For the purposes of this clause “work” means renovations, refurbishments, clearing or levelling, excavations, fencing or building;

   (d)a reconciliation statement of all monies spent by the Husband or paid by third party on his behalf in relation to the [property at P] from 1 September 2005 to date;

   (e)all documents evidencing his shareholding interest in CommSec (“the shares”) and the source of monies to purchase the shares.”

4. That the husband promptly pay by way of child support departure the school fees, school uniforms and education expenses for the attendance of the youngest child of the marriage K born … February 1995 at the C school in Sydney when due and payable.

NOTATION

A.The parties have agreed that all income by way of rent from the properties in C, Sydney owned by B Pty Ltd be frozen in such bank accounts as they may agree upon subject to the parties authorising payment of the C school in Sydney school fees, uniforms and educational expenses being met if necessary from such funds until further order.

IT IS NOTED that publication of this judgment under the pseudonym Benington & Benington is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 6029 of 2009

Ms Benington

Applicant

And

Mr Benington

Respondent

REASONS FOR JUDGMENT

Introduction

1. In these proceedings the applicant wife sought interim maintenance and interim property settlement orders pursuant to her Further Amended Application in a case filed 11 February 2011.

2. The wife’s application was amended unopposed by the Minute of Orders Sought marked Exhibit 1.

3. In substance those orders sought that the parties cause B Pty Ltd to do all things necessary to lease the property situate at and known as the property at W on certain terms and conditions and that the net rental received be distributed to the wife for the first six months and thereafter between the parties equally.

4. In addition, a child support departure order was sought in relation to payment by the husband of school fees for the youngest child’s attendance at the C school in Sydney.

5. Pursuant to his Response filed 17 February 2011 the respondent husband (“the husband”) had sought interim property settlement orders which in substance required the parties to cause B Pty Ltd to sell the property at W and divide the net proceeds of sale between the parties equally.  Further orders were sought by him in relation to compliance with interlocutory orders and the transfer to the wife of the motor vehicle on certain terms.

6. The husband’s Response was amended unopposed by the Minute of Orders Sought by him marked Exhibit 2.  The order for sale of the property at W was no longer sought.  The husband sought an order requiring the parties to cause B Pty Ltd to lease the property at W in similar terms to that sought by the wife.  However, the husband sought a different order to that sought by the wife in relation to the utilisation of the net rent.

7. The husband sought the same orders as the wife so far as child support departure is concerned.

8. Accordingly, the issue for determination in the context of these interim proceedings is whether or not an order should be made requiring the net rental from the property at W to be distributed by way of a dividend to the parties equally as sought by the husband or, alternatively, the net rent applied as sought by the wife in order 1(m)(iii) and (iv) as follows:

   “(m)    The wife is authorised to operate the [NAB B] account.

   …

   (iii)On the day following each month from the commencement date of the lease the Wife shall, after allowing for any due and payable expenses referred to in Order 4.1(m)(ii) [sic] distribute by way of dividends the available balance in the [NAB B] account as follows:

   (a)For the first 6 months after the commencement date of the lease to the Wife;

   (b)After 6 months following the commencement date of the lease to the Husband and Wife equally;

   (iv)That in the event the husband at any time after the sixth month from the commencement date of the lease fails to make payment in accordance with Orders 7, 8 of these Orders the wife be authorised to make such payment from the husband’s share of the rental otherwise payable to the husband as per Order 4.1(m)(iii)(b)[sic].”

Historical background

1. The following are brief historical matters which are not controversial.

2. The parties cohabited for a period of about twenty-one years which commenced, so far as I am aware, on their marriage which took place in 1988 and continued until they finally separated on 23 March 2009.

3. The wife is 47 years of age and employed as a part-time administration officer working three days per week from 9.00am to 5.00pm.

4. The husband is 52 years of age.  He is a company director.

5. There are three children of the marriage, namely:

   (a)J, 21 years of age having been born in 1989.  J is in full-time employment;

   (b)N, 19 years of age having been born in 1991.  N is a university student;

   (c)      K, 16 years of age having been born in February 1995.

6. The youngest child is the only child the subject of the proceedings, in the context of the child support departure order sought by the wife.  The youngest child lives with her and the other two children in the property at B, Sydney (“the former matrimonial home”).

7. The marriage of the parties was dissolved by divorce order made 6 July 2010.

8. On 1 December 2009 interim property settlement orders were made by consent.  The substantive order required the husband to cause the wife to be paid interim property settlement of $115,000.00 and to meet the costs of registration and insurance for the motor vehicle used by her.

9. The former matrimonial home is jointly owned by the parties.  Since the parties separated the wife and the three children have had exclusive occupancy of it.

10. In 1987 B Pty Ltd was incorporated.  The parties are the directors and equal shareholders.  The principal business undertaking of B Pty Ltd is property development.

11. In 2003 D Pty Ltd was incorporated.  Scant details are provided of office-bearers and allotted share capital.  Its principal business undertaking is in the building industry.

12. B Pty Ltd is the registered proprietor of lots AA, BB and CC in C, Sydney.  Lot BB is occupied by the husband.  Lots AA and CC (“the properties in C, Sydney”) are leased.  The rent payable for lot AA is $350.00 per week and the rent payable for lot CC is $420.00 per week.

13. Lots AA, BB and CC have current market values arrived at by the agreed single joint expert in the amounts of $525,000.00 for lot AA and $510,000.00 for each of lots BB and CC.  I am unaware of any mortgage encumbrance.

14. B Pty Ltd is the registered proprietor of the property at W.  It is vacant.  It had been leased to the husband’s brother in the sum of $3,300.00 per month.  The property at W has been valued by the single joint expert in the sum of $780,000.00.  I am unaware of whether the property at W is subject to a mortgage encumbrance.

Section 72

1. I am satisfied that the wife has established the threshold issue in her favour of being unable to support herself adequately by reason of her care of the youngest child who has not attained the age of 18 years and on the separate ground of the impact of her serious health issues.  However, as the section makes clear, any prospective order must have regard to relevant matters pursuant to section 75(2).

Relevant matters pursuant to section 75(2)

1. I make the following findings in relation to relevant matters pursuant to the provisions of s 75(2).

2. The wife and husband are 47 and 52 years of age respectively.

3. The wife has significant health issues which arise from time to time including a lung disease and the effects of stress.

4. The husband also has serious health problems including symptoms of depression and “moderately advanced [joint disease] in both knees” which according to Dr T “are not causing significant symptoms at this stage”.[1]

   [1] Affidavit of the husband sworn 23.1.2011 Annexure “F”.

5. The wife’s average gross weekly income is $696.00 as set forth in her Amended Financial Statement sworn 28 October 2010.  The wife’s principal source of income is her salary of $536.00 per week gross.

6. The wife has the capacity for employment in her current occupation as a part-time administration officer.  I accept her evidence that it is reasonable, at this stage, for her employment to be on a part-time basis particularly in view of the parenting and home-maker role provided by her for the youngest child who is being medically treated for a neuropsychiatric condition.

7. The substantial property interests held by the wife are represented by her joint ownership with the husband of the former matrimonial home and shareholding in B Pty Ltd as well as D Pty Ltd.  The former company owns substantial real estate.  D Pty Ltd is currently barely active in the conduct of its business.  Otherwise the wife has funds at bank described in her Financial Statement.  The wife’s only significant liability is represented by an outstanding loan made by her mother.

8. In his Financial Statement sworn 16 February 2011 the husband states that his income is derived from the two companies in the estimated amount of $500.00 per week gross.  On the face of it, he also has access to funds by virtue of a loan account with D Pty Ltd.  D Pty Ltd’s balance sheet as at 30 June 2010 being Annexure “C” to the husband’s Affidavit sworn 17 February 2011, note 5 reveals “loans to directors” $33,592.19 being an increase of approximately $19,000.00 compared to the end of the previous financial year.

9. The husband has been the controlling director and shareholder of D Pty Ltd as well as B Pty Ltd.  B Pty Ltd is owed $129,616.42 in accordance with its balance sheet as at 30 June 2010.  That amount is represented as a loan from it to D Pty Ltd as is shown in D Pty Ltd’s balance sheet as at 30 June 2010, note 10.  It is not clear on the evidence before me, as to the manner in which funds so lent have been utilised by D Pty Ltd.  D Pty Ltd’s balance sheet as at 30 June 2010 reveals that at that date it did not have liquid funds.  Its principal asset is represented by trade debtors of $159,500.00.  The extent to which that amount is recoverable may need to be explored.

10. B Pty Ltd’s principal assets are the property at W and the properties in C, Sydney.  It does not appear to be a trading company, yet amongst its current liabilities are trade creditors in the amount $159,500.00.  That liability may have arisen due to property development.  However, that matter may require further analysis.  B Pty Ltd is not a trading company as is made clear from its profit and loss statement as at 30 June 2010 showing its only source of income as being rent, apart from fringe benefit employee contribution.

11. The parties have commitments for their support as set out in their respective Financial Statements.  They also have financial commitments in relation to one or more of the children of the marriage and in particular the youngest child.

12. The parties are the sole members of the Benington Superannuation Fund.  Its assets include property at M in Sydney and B in Queensland.

13. The husband has the capacity to be engaged in the business activities of the building industry.  He is a highly experienced operator and has been successful over the years.  He contends that he his very limited in being able to exercise that capacity due to health issues.

14. The wife has the primary care of the youngest child.

15. The wife also exercises responsibility for providing existing support for the two other children together with financial assistance for the parties’ daughter.

16. The wife and the husband have had access to substantial amounts deposited in a term deposit in the husband’s name.  By consent, orders were made on 1 December 2009 which provided for the wife to receive half of that term deposit namely, the sum of $115,000.00.  In addition, the wife has withdrawn various amounts from one or more bank accounts.  The husband suggests the wife is “living beyond her means” or perhaps “hiding money”.[2]

    [2] Affidavit of the husband sworn 23.1.2011.

17. In Annexure “P” to her Affidavit sworn 28 October 2010 the wife provided a detailed itemised accounting for those amounts.  That accounting appears to be plausible and I accept her evidence and find accordingly.  The husband’s subsequent affidavit does not provide any detail disputing all or any part of that accounting.

18. The wife’s case is that the husband has not provided a full and frank financial disclosure in that she contends he has been receiving and not accounting for rent for one or more of the properties owned by B Pty Ltd and is also working to a degree beyond that claimed by him.  Some of the evidence before me including D Pty Ltd’s cash disbursements journal being Annexure “D” to the husband’s Affidavit sworn 17 February 2011 adds support to the wife’s case.  However, in the context of proceedings heard in the Duty List, without cross-examination of either party, I am not persuaded on the balance of probabilities that a serious finding should be made against the husband that, in one respect or more, he has failed to make a full and frank disclosure.  No doubt that will be considered further in the event that the substantive proceedings are not settled.

Conclusion

1. I will make orders as sought by each of the parties in identical terms reflecting paragraphs 1(a) to (m)(i) and (ii) of Exhibits 1 and 2.

2. In relation to the contentious issue of application of dividends sourced by net income in the hands of B Pty Ltd, due to rent anticipated to be paid by a tenant of the property at W, I will make the orders sought by the husband in Exhibit 2 for the following reasons as representing an order for interim spousal maintenance in favour of the wife which I consider to be proper in all of the circumstances.

3. The wife’s Financial Statement sworn 28 October 2010 reveals gross weekly income of $696.00.  Her expenses solely attributable to her as set forth in parts G and N amount to $676.50.  Quite clearly, subject to other relevant factors including the capacity of the husband to pay, the wife should not be left on a subsistence level.

4. However, the wife herself explained that on the assumption of the property at W being rented and after payment of the youngest child’s “school fees at [C school in Sydney] and payment of expenses in relation to the [property at W], the balance be paid by way of dividends equally to [the husband] and I.”[3]

   [3] Affidavit of the wife filed 10.2.2011 paragraph 39

5. Consequently, the wife herself considered that she will be placed in a more satisfactory financial position on an interim basis should that approach be taken in relation to division of dividend.  However, the amount that will be available for equal distribution will be greater than contemplated by the wife as the husband will ensure that the youngest child’s private school fees are paid without recourse to the dividends based upon rental of the property at W.  Indeed, I was informed by the husband’s solicitor that payment would be made from funds to be frozen emanating from leasing of the properties at C in Sydney.  That was an approach which found favour with the wife through her senior counsel.

1. I have further taken into account that the order sought by the husband in Exhibit 2 confirms his responsibility for payment of the youngest child’s C school in Sydney school fees.  The husband has emphasised his commitment in that regard in his affidavit evidence.

2. In those circumstances, the wife’s available funds will be significantly increased enabling her to be placed in a more satisfactory position on an interim basis pending disposal of the substantive proceedings.

3. An order will be made by consent for the purpose of the child support assessment departure in relation to the husband’s liability to pay the youngest child’s school fees at C school in Sydney which, to avoid disputes, I will include his uniforms and educational expenses.

I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rose delivered on 16 March 2011.

Associate:

Date:  15 March 2011