Billson and Billson

[2014] FCCA 1233

FEDERAL CIRCUIT COURT OF AUSTRALIA

BILLSON & BILLSON [2014] FCCA 1233

Catchwords:
FAMILY LAW – Interim spousal maintenance – capital injection into family business.

Legislation:  
Family Law Act 1975

Strahan & Strahan (Interim Property Orders­) (2011) FLC 93-466
Wenz & Archer [2008] FMCAfam 1119

Applicant: MR BILLSON

Respondent: MS BILLSON

File Number: MLC 8915 of 2012

Judgment of: Judge Riethmuller

Hearing date: 17 March 2014

Date of Last Submission: 17 March 2014

Delivered at: Melbourne

Delivered on: 17 March 2014

REPRESENTATION

Counsel for the Applicant: Ms Farrell

Solicitors for the Applicant: Nevett Ford

Counsel for the Respondent: Ms Humphreys

Solicitors for the Respondent: Kennedy Partners

ORDERS

1. Pending further order the Husband have sole conduct of (business omitted) Pty Ltd and (business omitted) Pty Ltd and that the Wife take all reasonable steps to resign as Director and appoint the Husband in her place AND THAT:

   (a)The Husband provide a management and financial report with respect to (business omitted) and (business omitted) to the Wife on the seventh day of each month regarding the previous month’s trading; and

   (b)The Husband continue to use the Wife as a consultant as far as is reasonably practicable.

2. The Husband and Wife do all things and sign all documents as may be necessary to draw down on the loan secured over Property T and Property M in the sum of $248,500 AND pay the monies as follows:

   (a)$50,000 to (business omitted);

   (b)$5,500 to (omitted) Real Estate for the advertising costs for the sale of Property M;

   (c)$33,000 to the Wife to be categorised as spousal maintenance;

   (d)$80,000 to the solicitors on behalf of the Wife, save that $25,000 of that sum be held in the Wife’s solicitors trust account to be applied to payment of fees for the mediator and/or valuers and/or forensic accountants; and

   (e)$80,000 to the solicitors on behalf of the Husband, save that $25,000 of that sum be held in the Husband’s solicitors trust account to be applied to payment of fees for the mediator and/or valuers and/or forensic accountants.

3. Until further order, the Husband ensure that the Wife be paid 1000 British pounds per week as consultancy fees from (business omitted).

4. Until further order, the Husband be restrained from dealing with:

   (a)any dividend income received by (business omitted) Pty Ltd (in its own right or as trustee), save for payment of operating expenses, unless agreed in writing between the parties; and

   (b)any bonuses received by the Husband, unless agreed in writing between the parties.

5. The Wife do all things and sign all documents necessary to remove herself as a signatory to all (business omitted) and (business omitted) bank accounts and to appoint the Husband as a signatory to the said bank accounts AND if she fails to do so, upon being satisfied of such failure or neglect or default by the Wife by way of affidavit evidence only, a Registrar or Deputy Registrar of the Federal Circuit Court of Australia is appointed pursuant to s.106A of the Family Law Act 1975 to execute all such documents in the name of the party in default and to do all such acts and things necessary to give validity and operation to the said orders and the party in default pay to the other party to this Application that party’s costs and disbursements on an indemnity basis.

6. The parties are restrained from further drawing down on any loans unless agreed in writing between the parties.

Liberty to Apply

1. Liberty be reserved to the parties to mention this matter to me, by arrangement with my Associate  ([email protected]) following the completion of discovery and mediation as ordered.

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

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT MELBOURNE

MLC 8915 of 2012

MR BILLSON

Applicant

And

MS BILLSON

Respondent

REASONS FOR JUDGMENT

(As revised from Transcript)

1. The proceedings between the parties originally commenced on 1 October 2012 and then ended on 19 March 2013. They have commenced proceedings again on 23 December 2013 following a further breakdown of the relationship.

2. On this occasion, it is the husband’s application. The wife filed her Response on 20 January 2014.

3. Presently before me is a Further Amended Application in a Case by the wife, filed on 5 March 2014, and an Amended Response to an Application in a Case by the husband, filed 5 March 2014.

Background

1. By way of background, the husband is 39 and the wife 36. They commenced cohabitation either in 1997 or 1998, depending on which version of events one accepts.  They were married on (omitted) 2001 and, it seems, separated for a period of time in 2012 before reconciling and then separating again recently. 

2. It seems that the wife was living in (country omitted), at least for the few months leading up to the separation. The child of the parties, X, was born in (omitted) 2004. The wife has a child from a previous relationship, Y, who was born in (omitted) 1996. Until the wife returned from (country omitted) the children were effectively living with the husband.  However, in recent times, the child X has gone to a week about arrangement in accordance with some consent orders made as a result of a report from Dr N.

3. It has also previously been agreed that one of the Audi motor vehicles, the Audi (model omitted), be provided to the wife, which removed from her the need to continue to hire a car so that she could cease the hire of the Mercedes.  It was further agreed in past appearances that the property at Property M be sold so as to bring down some of the debt of the parties.

4. The issues that were litigated before me were:  the question of spousal maintenance for the wife;  interim property payment to the wife and/or husband, and by way of a mortgage drawdown; and control of the (omitted) business in (country omitted) that is operated through two companies - (business omitted) Pty Ltd and (business omitted) Pty Ltd. 

5. The wife seeks $5000 a week in spousal maintenance, an increase on her original claim of $4700 per week. She seeks an interim distribution for payment of her legal fees for $150,000 and cash of $1000.  She also seeks orders to ensure that she has control of the (business omitted) business. 

(business omitted) business

1. It is convenient to start by looking at the (omitted) business. The business has had revenue of over half a million British pounds per annum for some time.

2. The wife was paid a consultancy fee, it seems, in Australia to avoid various (country omitted) restrictions contained within working visa rules as she is not a (country omitted) citizen. She maintains a Facebook page in (country omitted) representing that she lives in (country omitted), which she says is false and euphemistically calls a “networking tool”. 

3. The parties came to be in (country omitted) some years ago when the husband was working there with (employer omitted) and then took some time off work for study. The wife came upon the idea for the (omitted) business, commenced to set it up and between the parties they have grown a very significant business with a very large number of employees, most of whom are part-time. 

4. They have also merged with and then paid out the owner of a competing business in (country omitted).  By 2011 the wife was receiving 700 British pounds per week from the business, and it seems, in substance, the husband was undertaking the accounting part of the business and probably financial control. 

5. There are allegations from the wife about drawdowns from the business accounts by the husband and allegations by the husband about various drawings of the wife. At this stage it is very difficult to form any clear view about these as a result of the state of discovery and the stage of preparation that the case has yet reached.  More recently, the wife says that the revenues of the business have fallen considerably This is despite the wife being there from July to November of last year, after which she came back, it seems, around the time that the husband told her that they were separating.

6. The Wife alleges that the business now has no value and needs an injection of capital in the order of 100,000 pounds.

7. She says that she has few skills, saying that she was essentially a full-time parent and homemaker, which tells against her being the moving force in the business, although in other parts of her affidavit it is set out that, on her version, she was the moving force of organising and getting the business going. It is certainly now a very considerable business.  In the most recent affidavit affirmed on 19 February 2014, the wife says that the business is nearly defunct and alleges that the husband has all of the financial details of the business.  The husband denies this, but the wife also told Dr N that the business was practically defunct to fortify her position that she intended, from now on, to stay in Australia.

8. Most recently, though, on 4 March 2014, there was a letter from an accountant in (country omitted) to say that the business was, in fact, in profit, but that there were a couple of extraordinary expenses, one relating to a lease of a residence, which the wife says she took, in part, as business premises, and the drawings of the wife upon the business.  It is somewhat difficult to avoid, at least on a preliminary basis, the conclusion that (omitted) business became unprofitable in only recent times and, certainly, for a significant part of that time, the wife was present in (country omitted) operating and managing the business.  That is, if she was, indeed, actively operating and managing the business, rather than using it as a rouse for a potential move to (country omitted).

9. It’s certainly clear that the wife is not going to be back in (country omitted) for any significant period in the short-term. Her case on the parenting issues is that she will be remaining in Australia and, indeed, is here remaining because the younger child is strongly of the view that she wants more time with the mother, and the mother has shared parenting orders on that basis. It is also difficult to avoid the proposition that the husband has always been involved in, at least, clarifying and rationalising the books, and has devoted considerable accounting skills, if not financial control, to the operation of the business.  At the end of the day, it does seem that the business has the potential to be an ongoing profitable business of considerable value to the parties. 

10. On the material before me, the wife is not going to be in (country omitted) for any real period of time to actively run the business and it will benefit most from the careful financial control which the husband is able to provide it.  In this regard, it seems to me that the most practical way to preserve the business to the extent that it can now be preserved is for the husband to have the conduct of the business and to make monthly reports in that regard to the wife, and, to the extent possible, ensure that she is used as a consultant so that she can, at least by telephone and email from Australia, continue to engage in some of the day to day activities of the business that she seems to have been very active in in the past.

Spousal Maintenance

1. Turning then to the question of spousal maintenance. There is no question in this case that the parties have led a particularly affluent lifestyle for some time.  It is against this measure that one must assess the reasonable needs of the wife.  It is also clear that the husband has a very considerable income. His salary alone is somewhere in the vicinity of $300,000 per annum, on top of which he receives considerable bonuses, the last of which was $87,500, and that there are considerable dividends paid through an investment company, a trustee and family trust. Indeed, in 2011/2012 the trust had a profit of over $426,000 and at that point was said to have equity of a little under $1.3 million.  The dividends paid in March, July and October of 2013 totalled over $320,000.

2. The surplus that the investment company, (business omitted) Pty Ltd, achieved in the period July to February 2013/2014 was over $160,000.  The husband has expenses of around $10,000-odd per week by the time the various loans are paid and taking into account his living expense which, at least on their financial statements, were somewhat less than the day to day living expenses of the wife.  The basic salary income he receives is somewhere in the vicinity of $6700, according to his financial statement, and clearly the balance that he uses to meet his liabilities is made up of the various bonuses and other dividend-style income that is available.  Submissions were made that this may not be forthcoming into the future.  It is not the subject of specific evidence in the material and it seems that these moneys have come in the past in considerable sums. 

3. It seems to me on the material currently before me that it is likely that such moneys are going to continue to come in, but that the orders need to be framed around the possibility that such moneys may not, in fact, continue to come in depending upon how the various businesses are operated.  The wife also has legal expenses of over $77,000, as at 19 February 2014, and is likely to have considerable legal expenses between now and trial.  The husband has, no doubt, similar expenses confronting him.  The overall financial situation of the parties is likely to ease somewhat once the property that is now on the market is sold and dependent upon how much arrives by way of dividends and bonuses in the forthcoming months. 

4. On the material, the parties are entitled to drawdown $250,000 on the mortgages, as presently framed, which they could access towards maintenance and legal fees if need be.  The wife’s expenses, initially set out on 20 January 2014, were some $7,462 per week.  This was revised down to a bit over $6,000 per week on her 20 February 2014 Financial Statement.  This is made up of $1,050 per week in rent, $81 to cover RACV and health insurance, and credit card repayments of over $1,200 per week. Her living expenses she estimates at over $3,600 per week for her and the children.  Her component alone she estimated at over $2,300 per week.  This included items (between the two financial statements there were some changes in the sums in this regard however) such as a personal trainer at $495 per week, health expenses at $370 per week, a cleaner at $225 per week, and even food at $400 a week for a single adult. 

5. Even having regard to the affluent lifestyle of the parties, many of these figures seem rather large on the material before me at this stage.  The husband, however, also had significant expenses, some $2,519 per week for day to day expenses, after school fees, although it included some $385 per week being set aside for holidays.  If one ignores that and some of the expenses relating to the children, nonetheless it comes down to a considerable sum per week for his living expenses.  It sets a reasonable yardstick by which to measure the needs of both of the parties.  It seems to me, having regard to this and the rent that the wife must pay, her living expenses, which, it seems, are within a range for the lifestyle and affluence of this particular family, are somewhere in the vicinity of $3,000 per week.

6. The wife does not have any readily available sources of funds to live off. It is certainly not a case where it is appropriate that she be supported by the public purse, nor could she be reasonably supported on the meagre amounts that she would gain from such support.  It is clearly a case where, if one looks at the past receipts of the husband through the various business structures, their lifestyles could be afforded by them jointly.  In these circumstances, it seems to me, that the wife has established on an interim basis her needs and likely capacity for the husband to be able to meet those.  I will return to the method of meeting those in a moment. 

7. Once Property M is sold the debt will be reduced and their overall financial situation may well need to be reviewed at that time, particularly with respect to what may be available to the parties.

8. To the extent that the wife is able to receive capital from the drawdown, and the husband alike, the overall assets of the parties are so great that there would be no risk of the parties receiving more than they would ultimately receive on the property settlement, in any event, in the sense contemplated by Strahan & Strahan (Interim Property Orders­) (2011) FLC 93-466 and Wenz & Archer [2008] FMCAfam 1119.

9. It appears to me that, in a real sense, this case is more about a practical set of orders for the parties’ finances between now and when the matter can come on for trial or, indeed, as is likely, between now and the conclusion of effective discovery, and obtaining of expert reports, and of mediation so that some better material can be placed before me if further interim property orders are required.

10. The Property M property, for an effective sale, will also have to have advertising costs paid. It seems to me that these expenses will reasonably need to come from the drawdown on the property that is presently available.

11. The most effective way to make the provisions that are needed it seems to me to be as follows, and I will so order that:

    1)Pending further order, the Husband have sole conduct of (business omitted) Pty Ltd and (business omitted) Pty Ltd and that the wife take all reasonable steps to resign as Director and appoint the Husband in her place and that:

    (a)The Husband provide a management and financial report with respect to (business omitted) and (business omitted) to the Wife on the seventh day of each month regarding the previous month’s trading; and

    (b)The Husband continue to use the Wife as a consultant as far as is reasonably practicable. 

12. I pause here to note that depending upon the level of communication between the parties, that this may not be particularly practicable, but I would have some confidence that, from the parties perspective, there is a joint benefit in ensuring that the (omitted) business is profitable for the future, and in that regard, no doubt, they will endeavour to apply their skills to the business.

13. I further order that

    2)The Husband and Wife do all things and sign all documents as may be necessary to drawdown on the loan secured over Property T and Property M in the sum of $248,500 and pay the moneys as follows:

    (a)$50,000 to (business omitted); 

    (b)$5,500 to (omitted) Real Estate for the advertising costs for the sale of Property M;

    (c)$33,000 to the Wife to be categorised as spousal maintenance; 

    (d)$80,000 to the solicitors on behalf of the Wife, save that $25,000 of that sum be held in the Wife’s solicitor’s trust account to be applied to payment of fees for the mediator and/or valuers and/or forensic accountants;  and

    (e)$80,000 to the solicitors on behalf of the Husband, save that $25,000 of that sum be held in the Husband’s solicitors trust account to be applied to payment of fees for the mediator and/or valuers and/or forensic accountants. 

14. In addition:

    3)Until further order, the Husband ensure that the Wife be paid 1000 British pounds per week as consultancy fees from (business omitted).

    4)Until further order, the husband be restrained from dealing with:

    (a)any dividend income received by (business omitted) Pty Ltd (in its own right or its trustee), save for payment of operating expenses, unless agreed in writing between the parties;

    (b)any bonuses received by the Husband, unless agreed in writing between the parties. 

1. Further:

   5)the Wife do all things and sign all documents necessary to remove herself as a signatory to (business omitted) and (business omitted) bank accounts and to appoint the Husband as a signatory to the said bank accounts and if she fails to do so, upon being satisfied of such failure or neglect or default by the Wife by way of affidavit evidence only, a Registrar or Deputy Registrar of the Federal Circuit Court of Australia is appointed pursuant to s.106A of the Family Law Act 1975 to execute all such documents in the name of the party in default and to do all such acts and things necessary to give validity and operation to the said orders and the party in default pay to the other party to this Application that party’s costs and disbursements on an indemnity basis.

2. And that:

   6)The parties are restrained from further drawing down on any loans unless agreed in writing between the parties.

3. And obviously, given the nature of the case and the financial uncertainties:

   7)Liberty be reserved to the parties to mention this matter to me, by arrangement with my Associate ([email protected]) following the completion of discovery and mediation as ordered).

4. I add to my reasons that, firstly, it seems agreed by all concerned that (business omitted) needs capital injection if it is to survive.  The wife suggests 100,000 British pounds; the husband suggested $50,000. Given the financial circumstances of the parties, it seems to me $50,000, being the lower of the figures in the range given by the parties, is an appropriate place to start, at least until such time as some formal accounting evidence can be placed before me as to the current state of the business and trading.  Clearly the advertising expenses need to be paid to enable the property to be sold as soon as possible to alleviate some of the financial pressure upon the parties. The spousal maintenance figure is a figure discussed during the hearing, reflective of the expenses of the husband. 

5. The draft of the husband, which, when taken with the consultancy fees that can be paid from (business omitted), amounts to slightly more than what I have assessed as being the likely reasonable expenses of the wife.  However, they were the figures that were in the draft of the husband and it doesn’t seem to me to be appropriate to reduce it further at this stage. The reason for the structuring of the orders to come from the drawdowns is to ensure that the wife, in fact, receives the moneys concerned, or the bulk of them. Orders in the form as sought by the husband could well have left a situation where there was nothing specifically to execute against. This way the wife will not only be assured of receiving the money, but she will receive the bulk of the spousal maintenance in a very short period of time as a result of the drawdown. 

6. Hence, also the need for orders to restrain the dealing with the other moneys that the husband says he is no longer likely to receive, but, in my view, is reasonably foreseeable to receive, and once that money arrives, if at all, the parties can either agree upon its use or apply to the court, and, clearly, if that money comes in there are various debts that will also have to be met from that money, that are outstanding not only to banks but the tax office and private creditors.  It’s for those reasons that I make the orders that I have indicated.    

I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of Judge Riethmuller.

Associate: 

Date: 13 June 2014