BERTRAND & BERTRAND

[2019] FamCA 656

FAMILY COURT OF AUSTRALIA

BERTRAND & BERTRAND [2019] FamCA 656

FAMILY LAW – PROPERTY – Interim injunctions – Where the wife seeks that the husband be restrained from disposing of assets pending hearing of further interim applications – Where the husband resists the application – Where the Australian Taxation Office has commenced proceedings against the husband for recovery of debt – Where the net assets of the parties may be relatively modest – Where the Australian Taxation Office may wish to be heard – Where there is a serious issue to be tried and the balance of convenience between the parties weighs in favour of granting the injunction sought.

FAMILY LAW – PRACTICE AND PROCEDURE – Expedition – Where the wife seeks expedition of the final hearing – Where the husband does not oppose the application – Where the current circumstances do not warrant expedition – Where the application is dismissed.

Family Law Act 1975 (Cth)

Biltoft & Biltoft (1995) FLC 92-614

APPLICANT: Ms Bertrand

RESPONDENT: Mr Bertrand

FILE NUMBER: SYC 2440 of 2019

DATE DELIVERED: 13 September 2019

PLACE DELIVERED: Brisbane

PLACE HEARD: Sydney

JUDGMENT OF: Carew J

HEARING DATE: 12 September 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Richardson SC

SOLICITOR FOR THE APPLICANT: Barkus Doolan

COUNSEL FOR THE RESPONDENT: Mr Othen

SOLICITOR FOR THE RESPONDENT: Broun Abrahams Burreket

Orders

1. The husband be restrained until further order from selling, transferring, encumbering, gifting or in any way disposing of the G Bank shares (“the shares”) currently held in his name.

2. The wife’s and the husband’s respective applications seeking the sale and/or transfer of the shares be forthwith served upon the Commissioner of the Australian Taxation Office (“the ATO”).

3. The ATO have leave to request the re-listing of the matter upon 48 hours’ notice in writing to either party.

4. The outstanding financial applications be referred to the short matters pool to be listed before a judge for a hearing estimated to take 4 hours, with 48 hours’ notice to be provided to the parties of the listing.

5. The requirement for the parties to attend a conciliation conference be dispensed with upon the solicitors for the parties certifying that the parties have engaged in a private mediation.

IT IS FURTHER ORDERED BY CONSENT THAT

1. The hearing date listed in the duty list on 23 September 2019 and the conciliation conference listed for 24 September 2019 be vacated.

Disclosure

1. By not later than 4.00pm on Thursday, 26 September 2019, the husband provide to the wife all documents not yet disclosed pursuant to Orders 3 and 4 made 10 September 2019.

2. By not later than 4.00pm on Friday, 20 September 2019, the husband provide to the wife all documents not yet disclosed pursuant to Orders 5 and 6 made 10 September 2019.

3. In relation to H Business, no later than 28 days after the conclusion of each calendar month, the husband provide the following material to the wife:

   (a)       MYOB (or any other software utilised by H Business) accounts for the past month;

   (b)       Director’s and shareholder’s loan account statements/ledgers;

   AND the wife shall thereafter be at liberty to request that the husband provide her with source documents relevant to the transactions identified in the accounts and ledgers.

4. No later than 21 days after the conclusion of each financial year, the husband shall provide to the wife management accounts for H Business for the past financial year.

Valuations

1. If, upon consideration of the financial disclosure provided by the husband pursuant to these Orders, the wife seeks a valuation of the husband’s interest in H Business (whether directly or indirectly), the parties shall do all acts and things to appoint a single joint expert for that purpose, and in relation to this Order:

   (a)       The wife shall provide to the husband the names of three proposed experts;

   (b)       Within a further 7 days, the husband is to nominate one expert;

   (c)       Within a further 14 days, the parties are to agree upon a letter of instructions and provide same to the nominated expert;

   (d)       The husband is to meet the costs of the single expert in the first instance.

Filing of evidence

1. By close of business on 15 December 2019, the parties file and serve:

   (a)       An affidavit setting out the evidence they seek to rely upon for the purposes of a private mediation;

   (b)       Any affidavits for any lay witnesses they intend to rely upon; and

   (c)       An updated Financial Statements.

Chapter 15 expert

1. Dr D be appointed as a single expert in these proceedings to prepare a report for the Court on the care, welfare and development of the children of the marriage (“Chapter 15 expert”) and the parties forthwith do all acts and things to secure the next available appointment with the Chapter 15 expert.

2. The parties forthwith confer for the purposes of:

   (a)       The instructions to be sent to the Chapter 15 expert;

   (b)       The material to be provided to the Chapter 15 expert; and

   (c)       Any other relevant matter to enable the Chapter 15 expert to promptly carry out her task.

3. That there be liberty to apply in relation to the preceding order, in the event of any disagreement as to its implementation.

4. That the husband pay the costs of the Chapter 15 expert in the first instance.

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 Bertrand & Bertrand 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 BRISBANE

FILE NUMBER: SYC 2440 of 2019

Ms Bertrand

Applicant

And

Mr Bertrand

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. There are two applications pressed by Ms Bertrand (“the wife”). The first is an oral application for expedition of the final hearing, and the second is an interim injunction enjoining Mr Bertrand (“the husband”) from disposing of G Bank shares (“the shares”) held in his name.

2. The husband does not oppose the application for expedition but does oppose the granting of the injunction.

3. Before turning to consider the applications, I will set out some background to this matter.

Background

1. The parties were married in 2005 and separated in January 2019.

2. The wife is 44 and engaged full time in home duties. The husband is 42 and, until July 2018, was working in finance. He was made redundant at that time and now operates his own finance business in association with others. Prior to his redundancy, the husband received a salary of $450,000 per annum plus contractual bonuses.

3. The parties have four children aged 13, 11, 9 and 7. The children live with the wife and spend alternate weekends and holidays with the husband. On 24 July 2019, interim parenting orders were made by consent although, the wife has recently filed a contravention application relating to parenting matters.

4. The wife is engaged to be married to Mr B and proposes at some point to relocate with the children to Melbourne with her fiancé. Her relocation with the children is opposed by the husband.

5. All of the children attend private schools and engage in a variety of extracurricular activities. The wife and children continue to live in the former matrimonial home at Suburb C in Sydney. The husband recently acquired rental accommodation and prior to that was living with friends.

6. The wife commenced proceedings in this Court in April 2019 and there have been numerous Court appearances since then.

7. On 3 June 2019, an order was made by the Senior Registrar placing the balance of the financial issues between the parties into a list for hearing before a judge and a notation was made that parties must be ready upon the giving of two business days’ notice. The parties were given notice on Tuesday for a hearing yesterday.

8. The outstanding financial issues include the wife’s applications for spouse maintenance of $3,506 per week; a departure from administrative assessment of child support requiring the husband to pay $5,848 per week by way of periodic child support and all private school tuition and related expenses (estimated to be about $130,000 per annum); for the husband to pay the mortgage, rates, insurance and outgoings on the former matrimonial home; a payment of $300,000 to her lawyers for ongoing legal costs; and a restraint on the husband from selling G Bank shares except to pay the wife’s lawyers. The husband is seeking to have the home sold to pay debt. The sale is resisted by the wife.

9. Pursuant to an undertaking given to the Court on 3 June 2019, the husband gave notice on 31 July 2019 of his intention to sell shares to the value of $200,000 for the purposes of:

   a)Paying child support arrears of $14,766 (although I note that the husband has objected to the child support assessment and his objection is yet to be determined);

   b)Repaying H Business (his business group) $32,945.37 which it is claimed was lent to him to pay legal fees (and I note that this alleged debt is in issue between the parties and there is no evidence that the husband is being pressed for payment);

   c)To repay a debt of $55,748.64 to Mr F (and again I note that this debt is in issue and there is no evidence of the husband being pressed for payment); and

   d)to pay to his lawyers $20,000 on account of future legal costs and disbursements.

   The balance will be held to meet anticipated tax on the sale of the shares.

10. As the matter had not been allocated a judicial hearing as at 21 August 2019, the wife filed a further application seeking an injunction to prevent the husband’s proposed sale of shares. The notice period will expire on 29 September 2019 and, unless enjoined, the husband proposes to sell the shares, or at least a portion of them.

11. At the commencement of the hearing before me, it was candidly acknowledged on behalf of the wife that she faced some difficulties with her application for transfer of the shares to her for sale, given the husband’s recent disclosure indicating that the Australian Taxation Office (“ATO”) has commenced proceedings against the husband for an alleged debt of $1,198,112 for unpaid income tax, referable to the financial years 2014 to 2018 including general interest charges. The wife concedes that the ATO will need to be served with the competing applications before the matter can proceed further, however, given the looming end of the notice period she presses her application to enjoin the husband selling the shares in the interim.  

12. The husband has not as yet filed a defence to the ATO proceedings, nor does he say in an affidavit filed by leave yesterday that he intends to, despite an email from, I think his accountant, suggesting that the calculations by ATO are “erroneous”.

13. On 10 September 2019, Registrar Bastiani made a number of procedural orders including that the husband be required to file a financial questionnaire by 16 September 2019 and to disclose particular documents by particular times. It is agreed between the husband and wife that the husband should be granted an extension of time to provide some of the documents and an order will be made by consent in relation thereto.

14. The former matrimonial home at Suburb C is estimated to be worth between $5,000,000 and $5,500,000. The home is registered in the name of the wife as to 99% and the husband 1%. The current mortgage debt is $3,024,000 of which $24,000 represents arrears over 60 days. In or about June 2019, the husband entered into a hardship arrangement with the mortgagee which relieved him of making mortgage repayments. That arrangement expires next month. The husband owns 3,460 shares with G Bank worth approximately $427,000 gross. Any sale of the shares will trigger a further tax liability at the top marginal rate. The husband has superannuation of $486,449. Apart from cars and chattels, and the husband’s interest in his newly established business, there does not appear to be any other assets. Subject to the value of the husband’s business, the net assets of the parties appears to be quite modest, somewhere in the vicinity of $800,000. Each of the parties has already incurred significant legal costs.

15. The husband’s pre-tax salary is $450,000 but, unlike his former employment at G Bank, he does not have a contracted bonus entitlement and says that he does not expect to receive one in the foreseeable future. He contends that his expenses exceed his income by nearly $5,000 per week. The wife contends that expenses claimed by the husband are not being paid by him e.g. he has not paid the mortgage since June, he has not paid school fees since August, and he is no longer making the arranged payment to the ATO.

16. The wife has been out of the workforce for over ten years but has qualifications in accounting. The wife employs a nanny and a cleaner.  

17. Both parties say they will soon be desperate for funds to meet their day to day living expenses and ongoing financial obligations. Whatever their respective situations, it seems likely that the mortgagee and/or the ATO may cause the ‘house of cards’ to fall sooner rather than later. 

Applicable Relevant Legal Principles

1. Turning then to consider the injunction pressed by the wife.

2. Under s 114(1) of the Family Law Act 1975 (Cth) (“the Act”) the Court has power to ‘make such order or grant such injunction’ in relation to the property of a party to a marriage as the Court ‘considers proper’ (see s 114(1) of the Act)

3. Prior to granting an injunction, the following matters need to be considered:

   (a)whether there is a serious issue to be tried;

   (b)the balance of convenience; and

   (c)whether there is an objective risk of disposal of assets if the injunction is not granted.

4. If it is considered appropriate to issue injunctions, the Court should fashion the injunctions to the minimum extent required.

Discussion

1. As noted, the wife concedes that in accordance with the guidelines discussed by the Full Court in Biltoft & Biltoft,[1]  her application to sell the Macquarie shares and access the proceeds is one that is required to be made on notice to a significant creditor, namely, the ATO. This is because, if her applications were successful, a significant asset in the husband’s name would be depleted to the detriment of the ATO.

   [1] (1995) FLC 92-614.

2. The husband resists the granting of the injunction and argues that the position of the ATO is secure because it is inconceivable that the wife would succeed in her claim for the 100% of the gross value of the home and, after payment of the mortgage, there remains sufficient equity to meet the taxation liability.

3. The husband says that if he is restrained from dealing with the shares he will be starved of funds as he already has a significant shortfall of income over expenses. He points to the fact that the parties have historically lived beyond their means and have regularly sold shares in order to meet their debt. While that may be so, it does not overcome the disadvantage to the ATO who may wish to be heard on the issue of the parties competing claims to use the sale proceeds of the shares. 

4. In my view, there is a serious issue to be tried. The shares or at least a significant tranche will be disposed of by the husband unless he is enjoined. The balance of convenience favours the granting of the injunction as sought.

expedition of final hearing

1. The delay in the Sydney Registry of the Family Court of Australia from date of filing to final hearing is currently about three years. While that is completely unacceptable, the current resources available to the Court are simply insufficient to meet demand.

2. If this matter is expedited it is likely to be allocated a final hearing date in about six months and the parties acknowledge that they would not be ready for a final hearing before then. Sensibly, the parties intend engaging in a private mediation after obtaining any necessary valuations and a private family report. I note that an independent children’s lawyer has been appointed in the matter and I am told that he approves of the proposed appointment of the joint expert.  

3. Expedition of a matter disadvantages every other case already awaiting a trial and while there may well be circumstances in this case that, in time, warrants expedition, I am not persuaded that the time has yet arrived.

other matters

1. The parties agree that court dates already allocated to this matter on 23 September 2019 in the duty list and the conciliation conference on 24 September 2019 can be vacated and that the conciliation conference should be dispensed with upon solicitors certifying that parties have attended a private mediation.

2. Both parties support the making of directions as set out in minute provided by Mr Richardson SC, with a few amendments as discussed during the hearing yesterday.

I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Carew delivered on 13 September 2019.

Associate:

Date:  13.09.2019