Bennett and Bennett

[2019] FamCA 392

FAMILY COURT OF AUSTRALIA

BENNETT & BENNETT [2019] FamCA 392

FAMILY LAW – PROPERTY – Interim distribution.

Family Law Act 1975 (Cth) s 75(2), 79

Strahan & Strahan [2009] FamCAFC 166

APPLICANT: Ms Bennett

RESPONDENT: Mr Bennett

FILE NUMBER: SYC 1880 of 2016

DATE DELIVERED:	20 June 2019
DATE AMENDED:	30 July 2019

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Henderson J

HEARING DATE: 17 June 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Richards

SOLICITOR FOR THE APPLICANT: Dettman Longworth Lawyers

COUNSEL FOR THE RESPONDENT: Mr Othen

SOLICITOR FOR THE RESPONDENT: Newnhams Solicitors

Orders

1. The parties to sell the customer list of the business known as E Pty Ltd as they have agreed.

2. The parties to be paid and/or cause to be paid the following from the net proceeds of sale of the customer list and monies standing in the Dettman Longworth trust accounts as follows:

   (a)       To the husband, $20,000 by way of interim property distribution, pursuant to the Orders of Justice Stevenson of February 2017;

   (b)       To the wife, $67,000 by way of interim property distribution, pursuant to the Orders of Justice Stevenson of February 2017;

   (c)       To the husband, $75,000 by way of interim property distribution for the payment of his criminal appeal legal fees;

   (d)       To the wife, all arrears of child support owing as at the date of these Orders and the wife to provide an acknowledgment of payment of this debt at the time of payment to her.

3. The husband is restrained from doing any act or thing to cause the alleged debt to him in the E Pty Ltd company accounts approaching $188,000 to be paid to him upon the sale of the customer list.

4. In so far as the wife has not already done so I order her to provide to the husband by way of disclosure and to the extent not already provided all documents requested in the letter from Newnhams Solicitors dated 14 June 2019 within 28 days.

5. The husband shall provide to the wife by way of disclosure and to the extent not already provided all documents referred to in the letter from Dettman Longworth dated 20 March 2019 and in Annexure A to the wife’s Amended Application in a Case filed 12 June 2019 within 28 days.

6. The balance of monies remaining after the payments of cost of sale and any tax payable on the sale of the customer list is to be paid in reduction of the debt to Mr V.

7. The Court notes such funds as are available in relation to Order 2 of Orders 17 June 2019 are to be paid to the parties forthwith.

8. These orders have been amended pursuant to paragraph 17.02(1)(e) of the Family Law Rules 2004.

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 Bennett & Bennett 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 1880 of 2016

Ms Bennett

Applicant

And

Mr Bennett

Respondent

REASONS FOR JUDGMENT

1. This matter concerned competing applications by the husband and wife for interim property distribution. Each party sought that I exercise my discretion to make an interim property order and consistent with the principles set out in Strahan[1] and on a reading of the evidence there is a need for each party to have an interim distribution of property if that be appropriate and not in any way interfere with or jeopardise either party’s case as to their entitlement to property. To his credit, the husband has abandoned his claim for parenting orders and this was a child focused approach by him.

   [1]Strahan & Strahan [2009] FamCAFC 166.

2. The wife, who is the applicant, sought orders pursuant to an application for interim relief filed 12 June 2019 and repeated in her Counsel’s case outline that the current busienss operated by the husband, E Pty Ltd including the customer list be sold; that from that sale various monies were to be paid by way of updating the valuation on the Suburb C property and for family report; monies owing to Mr V who has a third mortgage secured over the former matrimonial home which stands at around $300,000 and the balance be paid to the wife by way of interim property settlement.

3. In addition, she sought that of the sum of $133,000 currently held on trust by Dettmen Longworth Lawyers be distributed to her in the sum of $65,000 and to Mr V in the sum of $65,000 with the balance to be paid to the wife by way of discharging the current arrears of child support of the husband’s which amounts to some $43,146.

4. At the interim hearing both parties agreed the customer list of E Pty Ltd be sold. It is anticipated the customer list may be worth in the vicinity, at best, $388,000 gross, having regard to the valuation of a Mr W the joint valuer. There will be costs of sale and tax issues resulting from that sale, in addition the husband claims he has an unsecured debt with the company which owns a customer list of nearly $188,000 and that is a matter to be determined by usual accounting methods. If the customer list sells for this amount it was submitted there may be net $200,000 to $250,000 to divide giving a total of perhaps $400,000 to $450,000 for distribution.

5. The husband sought by way of his Amended Response and confirmed in his case outline that the monies in the Dettman Longworth Lawyers trust account be effectively paid to him as follows. $75,002 meet ongoing legal costs in relation to his court of criminal appeal matter to be heard in the latter part of 2019, $20,900 to pay to his Counsel Mr Othen, $43,1450 be placed in his solicitor’s trust account being arrears of child support to await an application he filed on 17 June 2019 seeking a departure application and the balance be paid to Messrs Newham in payment of their outstanding legal fees.

6. The husband also sought that the former matrimonial home where the children and the wife live be sold with monies disbursed to the parties by way of interim property settlement for legal fees. The wife resisted sale of the former matrimonial home and the distribution of current liquid assets and future liquid assets as the husband determined. The husband resisted sale of his business together with the distribution of the capital funds that are now available to the parties and will be when the customer list is sold.

7. Mr Richards of Counsel represented the wife and Mr Othen of Counsel the husband.

8. For the wife I read the following:

   a)Amended Application in a Case filed 12 June 2018;

   b)Her Affidavit of 14 June 2019 and 11 June 2019 together with her tender bundle. The wife tendered 4 exhibits;

   c)Exhibit 1, the wife’s balance sheet;

   d)Exhibit 2, an aide memoire;

   e)Exhibit 3, and letters from the wife’s lawyers to the husband’s lawyers dated 30 March 2019 and 14 June 2019 seeking further disclosure from the husband; and

   f)Letter dated 13 June 29 from the husband’s criminal law team as to his legal fees.

9. For the husband:

   g)His Response filed 6 June 2019;

   h)Affidavit of 23 April 2019;

   i)Financial Statement of the same date;

   j)An Affidavit of Ms F filed 7 June 2019; and

   k)Exhibit 1, a bundle of bank documents and emails of the wife’s expenditure and receipt of front funds from friends.

10. The wife’s case is that she will retain the former matrimonial home and that the husband has effectively had whatever assets he is entitled to retain already. Each party attached a balance sheet to their case outline. Mr Richards in addition provided and aid memoire of what the wife said each would retain should I make the orders that she seeks on an interim basis.

11. It is the wife’s application that the husband is entitled to 15% of the matrimonial pool and she the balance after a 20 year marriage as at today’s date and 17 years as at the date of separation. She says this is due to her initial superior initial financial contribution having regard to the assets she had at the commencement of the relationship and her current 75(2)[2] needs with the five children of the marriage G born in 2000, H born in2001, J born in 2003, K born in 2005 and L born in 2008.

    [2]Family Law Act 1975 (Cth), s 75(2).

12. Additionally, the mother says the father was physically violent, coercive, controlling of the children and her throughout the marriage and that the violent incident at separation on 29 January 2016 was a particularly traumatic event for she and the children.

13. The husband was charged with assault to which he pleaded not guilty. The matter was heard by a Local Court Magistrate for six days, all the children were extensively cross-examined and the husband was found guilty of five of the 12 allegations of assault and intimidation arising from his conduct towards the children and their mother which was no less than, punching H, engaging in a physical brawl with J and H who were punched at least four times by their father, the father had H and headlock and L was kicked during this incident. All the children witnessed this event and were participants at the defended hearing. Suffice to say the wife says this incident, the Local Court proceedings and extensive cross examination of the children together with the father’s behaviour during the marriage, has resulted in all the children being traumatised.

14. The husband appealed the Local Court decision and the appeal was dismissed.

15. Additionally the wife pleads a lack of employment for many years as a significant 75(2)[3] factors.

    [3] Above, note 2.

16. A significant factor, the wife pleads, is that G, L and J made allegations of indecent sexual assault by their father in in 2016 and 2017, that the father was charged with 10 counts of indecent assault. The father pleaded not guilty and again the children were subject to extensive cross examination in court. The husband’s trial lasted for 24 days, he was found guilty and sentenced to a term of imprisonment 4.6 years with 2.8 years non-parole. The father has lodged an appeal of this conviction and is currently on bail pending that appeal. It is anticipated the matter will be dealt with in the second half of 2019.

17. The mother says G, J and L have undergone extensive therapy and this will continue for some time due to the behaviour of their father. That the husband has not supported the family post separation. He has not paid child support and that is correct there is a sum $43,000 in child support arrears current as at today’s date.

18. The mother asserts these events, father’s conduct and behaviour towards his children and the trial itself has had a difficult negative emotional impact upon the children and herself and that all these factors combined will give her a significant section 75(2)[4] all loading over and above that of the husband.

    [4] Above, note 2.

19. The husband says he requires funds to prosecute his criminal appeal. To date he has paid some $137,000 in legal fees $27,000 having been provided by other sources.

20. The short relevant chronology is as follows.

21. The wife is 51, the husband 55.

22. They commenced cohabitation in April 1999 and separated on 29 January 2016 in most distressing circumstances.

23. Cohabitation is approaching 17 years the marriage is approaching 20 years.

24. All the children attend private school and always have.

25. The wife is a retailer and commenced that occupation in 1990.

26. In 1997 she had a franchise with X Group S Street Suburb O and had purchased her property at the S Street Suburb O in 1998.

27. The parties met in 1998 and at that time the husband was employed as a retailer with Y Group.

28. In 1999 the parties married.

29. G was born in 2000.

30. In 2001 the husband commenced E Pty Ltd.

31. In 2001 H is born.

32. In 2003 J is born.

33. In 2005 K is born.

34. In 2008 L is born.

35. Following the birth of each of the children the wife stayed at home for a period of time, returned to work and then a nanny was employed to care for the children whilst she worked full-time.

36. In October 2008 the wife sold her X Group agency at Suburb O and became a full-time parent. The wife assisted the husband in the E Pty Ltd spending three days a week for periods of time assisting him in its administration.

37. The parties’ home in Suburb T is sold in November 2014.

38. In 2015 the wife sold her commercial property at Suburb O.

39. In October 2015 the wife was diagnosed with cancer and appears to have made a successful recovery.

40. On 29 January 2016 the parties separated and husband was found guilty of assaulting the wife and children at separation.

41. It is the wife’s case it since separation the husband has not paid any monies towards the support of his family which is denied by him. The wife and children have lived in the former matrimonial home, however, it is the wife’s claim that up to separation the husband paid for all the costs and expenses of his family and has not done so since separation.

42. There is some force to the wife’s argument given the child support debt at $44,000 and the extraordinary borrowings of the wife has taken out in order to maintain herself and the children in the former matrimonial home. On her own evidence she owes her brother $600,000, has credit card debts amounting to $54,000 and has borrowed $70,000 from friends a total of $724,000. The two Commonwealth Bank of Australia mortgages secured over the former matrimonial home total $1,300,000 together with a secured third mortgage from Mr V of $300,000. Adding the mortgages to the Mr V debt is $2.3 million of debt that the wife acknowledges. The wife asserts that come September an aunt will be able to assist her to purchase out her interest in the former matrimonial home. I remain highly doubtful that even if even this occurs wife can remain in as I accept the wife’s case she has been without income, has no income and that the husband has failed to support his family on an interim basis. This position of being able to retain the former matrimonial home may only be possible if the wife is correct and the husband is to receive no liquid assets as they currently stand.

43. The only valuation I have of the former matrimonial home is $3,950,000. I accept that valuation was carried out some time ago and having regard to the Sydney property market the home may be worth less now. However, this is the only valuation I have and I cannot accept any other figure in the absence of expert evidence.

44. To support her argument that the husband has already received the percentage of assets to which he is entitled, or indeed more, Mr Richards prepared an aide memoire wife’s exhibit 2. This document set out what she asserts is the result of the orders she proposes today which she says is a distribution to the husband of 30%. The wife’s ultimate application is that the husband’s entitlement is around 15% of the matrimonial asset pool. I have formed the view that to rely on this document would be to fall into error for the following.

45. The first is that the valuation of the former matrimonial home the wife has used in her aide memoire is $1.3 million less than the filed joint valuation and that is only valuation before me. The wife asserts the home is now worth $2,650,000, some $1.3 million less than the joint valuation. In the absence of expert evidence I do not agree with her position. Additionally, in the in the aide memoire the wife asserts the husband has had the benefit of $118,755 to pay towards his legal fees. That may will be correct, however, that has clearly come from income earned by him from the business post separation and may not be regarded at a final hearing as an ad back although clearly is a relevant matter. Therefore, as I see it the wife has varied the matrimonial pool to suit her purposes in the amount of $1.4 million to the disadvantage of the husband and I cannot accept that this would be the asset pool at a final hearing which I have listed in February 2020 for five days.

46. Looking at the parties’ respective balance sheet the wife’s balance sheet has significant difficulties which were also repeated in the aide memoire. She has the matrimonial home valued at $2,650,000 when the valuation is $3,950,000. She is added back on the husband side of the equation $79,370 was paid to him from the Mr V loan in trust account, $25,000 paid for accountancy fees from joint monies, $350,004 criminal proceedings from joint monies and an unsecured loan payable to the husband of $187,728 from his business. Those amounts the wife claims as add backs or having been paid for the benefit of the husband for which she received no benefit total $667,000.

47. The wife’s assertion in regard to these matters is yet to be accepted by the court and the evidence is that he has paid $137,000 in his criminal proceedings and only $118,000 from his own resources not $350,000. Having regard to these difficulties with the wife’s document I prefer on an interim basis to rely upon the balance sheet provided by the husband in which he asserts there is a gross value of divisible assets of $4,426,765 based on a value of the matrimonial home at $3,950,000. Additionally, the husband as set out debts being the mortgages to secure mortgages over B Street with CBA of $1.3 million, a loan to secure third mortgage from Mr V of $300,000 Capital Gains Tax of $450,000 in relation to the sale of U Street and S Street which debts total $2,050,000.

48. This is results in net assets for division of $2,376,765. As best I am able on an interim basis without making findings I refer the husband’s balance sheet and find that as at today’s date excluding superannuation there may be $2,376,765 for distribution.

49. I accept the wife’s position that the husband has had the benefit of some $80,000 from the Mr V account being, in part, $55,000 directly and his share of joint expenses such as valuations of property businesses and the like otherwise I do not accept the submission she has made in relation to other amounts she asserts he has had the benefit of. 15% of the adjusted pool I have found today is $356,515. In passing I must comment that the wife’s application that she be paid 85% of the matrimonial pool may be at the higher end of what a judge may determine is an appropriate division of the parties’ assets.

50. Going now to the parties’ interim applications.

51. I will not today make an order for sale of the former matrimonial home. The husband is not paying the mortgage the wife is not paying the mortgage. Mr V has a commenced Supreme Court proceedings against the wife for repayment of the third mortgage to him standing at $300,000. The wife failed to disclose this new evidence in any of her documents which is not to her credit, however, I accept that this debt is now due and payable due to the Supreme Court proceedings. The home is in the wife’s name. The wife asserts the Commonwealth Bank is quite happy to have a debt of $1.3 million not paid by either she or the husband and will not take any action against her. I have no document to support that assertion either. This is a matter that may play out in another place.

52. I will not order a sale of the husband’s business as there is absolutely no reason whatsoever or evidence to support the wife’s claim that if this business is not sold with the customer list it will affect the value of the customer list. In the absence of expert evidence to that effect to sell the only income producing asset of the parties is tantamount to punishment of one party over the other and is not an appropriate exercise of my discretion on an interim basis under section 79 of the Act[5].

    [5]Family Law Act 1975 (Cth), s 79.

53. Going now to what I can deal with namely the $133,000 in the Dettman Longworth worth trust account and the net proceeds of sale of the customer list which each have agreed to sell and may net the parties some $250,000.

1. I have formed the view that it is essential that the husband be paid $75,000 to fund his appeal from his criminal conviction given his liberty is at stake. A payment of $75,000 now to the husband will not jeopardise the wife’s position that she is entitled to 85% of the matrimonial pool. It is imperative that he has these funds, if they are available, given that his liberty is at issue in that appeal.

2. I have also formed the view that it is an imperative that the wife is paid child support for the children. The husband was assessed to pay child support in the sum of $2,200 per month in March 2016 has not paid the debt now stands at some $44,000 and is increasing at the rate of $2,200 per month. It is aberrant nonsense for the husband to suggest that I should in some way quarantine that money to some other date. The children need to be fed and clothed now not sometime in the future and I will order payment in full all child support arrears as at the date of the monies being released pursuant to my orders. This would leave some $17,000 I the trust account.

3. The husband has been through the entire Child Support Agency process of reviews and appeals as he is entitled to do and the debt stands as it stands.

4. As to the monies to be received from the sale of the customer list. I will injunct and restrain the husband from doing any act or thing to cause the alleged debt to him in the E Pty Ltd company accounts approaching $188,000 to be paid to him should that be an outcome of the sale of the customer list, however, I am also unclear on this issue as well.

5. I accept the husband has had the benefit of $80,000 paid from the monies borrowed from Mr V and the wife has also had benefit of that money, however, not to the same extent. Her benefit from her affidavit at paragraph 51 is $12,000 to her accountant $16,000 being her half share of Mr W’s fees $1,250 half of the valuation and $4,300 been half the payment of school fees this totals $33,630. Justice Stevenson made an order that the parties were to each receive $100,000 by way of an interim property order for payment of the legal costs by an increase in the mortgage indebtedness. On the basis of that order the husband is entitled to $20,000 and the wife $67,000 and I will allow those additional amounts to be taken be paid to the parties as well as the child support arrears to the wife.

6. Otherwise I formed the view that the balance of the monies remaining after payment of costs of sale and any tax payable on the sale of the customer list is to be paid in reduction of the debt to Mr V in an endeavour to stave off his ability to force a mortgagee sale of the parties property prior to the final hearing which I have listed in February 2020. I have made this decision having regard as I must to best interests of the children and the necessity for them to have stability and continuity together with preserving as best I can matrimonial assets pending the final hearing given the apparent inability of either parent to support their children as they had done prior to separation.

7. I find these orders are just and equitable in all the circumstances and will so order.

I certify that the preceding sixty (60) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Henderson delivered on 20 June 2019.

Associate:

Date: 20 June 2019