Binett and Binett
[2018] FamCA 441
•15 June 2018
FAMILY COURT OF AUSTRALIA
| BINETT & BINETT | [2018] FamCA 441 |
| FAMILY LAW – INTERIM PROPERTY – Where there is a significant matrimonial asset pool – Where the wife seeks sale of two of the parties’ various properties to fund interim property payment to pay her litigation expenses – Where the husband controls the vast majority of the parties’ assets and financial resources – Where the payment the wife seeks comprises less than 10 per cent of the matrimonial asset pool as asserted by the husband – Where there is a need to “level playing field” – Where the wife to receive payment from the husband and sale of property the nature of which to be characterised at final hearing – Where the wife also seeks injunctive orders – Where the husband has subsequent to separation dealt with various assets and financial resources without notice to the wife – Where the relief sought by the wife is not onerous – Where it is appropriate to make injunctive orders restraining the husband from dealing with various assets without notice to the wife – Orders made. |
| Family Law Act 1975 (Cth) ss 75(2), 79, 114 |
| Harris & Harris (1993) FLC 92-378 In the Marriage of J U and T Poletti (1990) 15 FamLR 794 Moroni & Moroni [2014] FamCA 664 Strahan & Strahan [2009] FamCAFC 166 |
| APPLICANT: | Ms Binett |
| RESPONDENT: | Mr Binett |
| FILE NUMBER: | PAC | 1422 | of | 2017 |
| DATE DELIVERED: | 15 June 2018 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 21 May 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Batey |
| SOLICITOR FOR THE APPLICANT: | Jacqueline Kyle Family Law |
| COUNSEL FOR THE RESPONDENT: | Mr Givney |
| SOLICITOR FOR THE RESPONDENT: | LCI Legal |
Orders
That within seven (7) days from this date the husband pay to the wife or as she may otherwise direct in writing the sum of $100,000.00.
That the wife is hereby appointed trustee for sale of the property situate at B Street, Suburb C and for the purposes of this Order:
(a)the said property shall vest in her as trustee for sale;
(b)the wife shall do all things necessary to obtain vacant possession of the said property;
(c)the wife shall do all things necessary to sell the property at the best price reasonably obtainable by such method as she may in her discretion determine; and
(d)the wife shall apply the net proceeds of sale after selling costs, rate adjustments and discharge of any liability secured over the said property as to $300,000.00 to the wife and as to the balance then remaining to be held by the wife’s solicitors in an interest bearing account in trust for the husband and wife pending further order.
That the husband is hereby restrained from dealing with, further encumbering, assigning or transferring any or all of his right, title and interest in any real estate property in his name or in the name of any corporate entity controlled by him and is further restrained from taking any action to change the ownership of any shareholding or other interest held by him in any corporate entity controlled by him without first giving to the wife 28 days’ notice in writing of his intention to do so and providing with that notice set out reasons for the proposed dealing or action.
That the wife have liberty to apply on short notice as a consequence of any notice given to her by the husband pursuant to the previous order.
That the question of costs of and incidental to this present application be reserved.
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 Binett & Binett 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 PARRAMATTA |
FILE NUMBER: PAC 1422 of 2017
| Ms Binett |
Applicant
And
| Mr Binett |
Respondent
REASONS FOR JUDGMENT
On 29 March 2017 the applicant wife commenced proceedings seeking adjusting property orders between herself and the respondent husband.
In summary, she sought orders that the property at D Street Suburb E (“D Street”) be transferred to her and that the husband do all things necessary to discharge the mortgage encumbrance secured over that property and that she be declared the sole owner of certain items of personalty such as to give effect to an overall property adjustment as to 55 per cent to the wife and 45 per cent to the husband.
On 28 June 2017 the husband filed a Response to the wife’s property Application seeking overall an equal division of assets as between himself and the wife including:
a)that the wife transfer to the husband D Street and the property at F Street, Suburb C (“F Street”);
b)that the husband transfer to the wife the property at B Street, Suburb C (“B Street”);
c)that the property at 2 F Street, Suburb C (“2 F Street”) be sold and the net proceeds of sale be divided equally between the husband and wife;
d)that the husband be declared sole owner of various motor vehicles;
e)that the husband transfer a prestige motor vehicle to the wife;
f)that the wife transfer to the husband her interest in various corporate entities and that concurrently the husband do all things necessary to cause Binett Pty Ltd to transfer that company’s interest in the property at 2 B Street, Suburb C (“2 B Street”) to the wife; and
g)that, otherwise, the husband and wife keep remaining personalty in their respective possession and/or entitlement.
On 6 March 2018 the wife filed an Application a Case seeking certain interim property orders that, in summary, provided:
a)that the husband pay to the wife by way of interim property settlement the sum of $400,000.00;
b)that in default of the said payment the husband and wife do all things necessary to sell B Street and 2 F Street with the net proceeds of sale being paid as to $400,000.00 to the wife and the balance to be held in a controlled monies account pending further order; and
c)that, otherwise, the husband be restrained from dealing with, further encumbering, assigning or transferring his interest in various corporate entities and the matrimonial real estate properties together with various items of personalty.
The wife relied upon:
a)her financial statement filed 6 March 2018; and
b)her affidavit filed 6 March 2018.
The husband in his Response filed 18 May 2018 to the wife’s Application in a Case sought orders:
a)that the wife’s Application a Case be dismissed;
b)that within seven days the husband pay to the wife $100,000.00 by way of interim property settlement; and
c)that the husband pay costs of any single experts appointed in the proceedings.
The husband relied upon:
a)his financial statement filed 18 May 2018; and
b)his affidavit filed 18 May 2018.
Context
The wife and the husband are both presently aged 59.
The parties commenced cohabitation in about 1983 and married in 1986.
They separated in 2014 but have lived under the same roof since separation. Thus the parties’ relationship until separation under one roof was some 31 years but in some respects it still continues as they continue to share a common residence.
There are two children of the marriage now aged 29 and 23.
The wife’s evidence
The wife says that at the commencement of cohabitation neither party had any assets of significance save for the husband’s interest in 2 F Street. At that time the wife was in full-time employment.
The wife returned to casual employment about 12 months after the birth of the parties’ first child working about two days per week from late 1988 to 2005. Thereafter she has worked about three days per week on a casual basis.
Otherwise, the wife asserts that she undertook the “vast majority of household duties” and the “vast majority of childcare duties”.
The husband had in 1980 purchased land at2 F Street with a third party. The parties acquired the third-party interest in the land in the name of the wife in 1985 for $7,000.00 and subsequently a home was constructed on that property funded by a mortgage borrowing of $90,000.00. The parties lived in 2 F Street until 2013.
In March 1992 the parties, through the company Binett Pty Ltd, purchased 2 B Street for $270,000.00.
In 1993 the parties jointly purchased B Street for $145,000.00.
In 1996 the parties, using H Pty Ltd, purchased a factory unit at J Street, Suburb K (“J Street”) for $1.3 million.
In 1997 the parties purchased F Street for $155,000.00. The property has been tenanted since purchase and continues to be tenanted.
In November 2013 the husband and wife purchased the D Street for $1,497,500.00.
Subsequent to the parties’ separation under one roof the husband and the parties’ daughter in June 2016 purchased a home unit at L Street, Suburb M (“L Street”) as tenants-in-common for $800,000.00 funded in part by a mortgage advance of $533,000.00.
The wife says that she has limited knowledge of the husband’s various corporate entities. In March 2015 the husband without the consent of the wife caused additional shares to issue in N Pty Ltd with those shares once again held by corporate entities as trustees for the O Trust and the P Trust. In May 2015 the husband without the consent of the wife caused additional shares to be issued in Binett Pty Ltd, those shares being held by corporate entities as trustees for the O Trust and the P Trust.
The husband purchased a business franchise in Australia subsequent to the parties’ separation. The wife has little knowledge as to the details of this transaction.
The wife asserts that the various real estate interests of the parties including the real estate held in the two corporate entities referred to above has a total value of about $11 million in addition to which there are various bank accounts and publicly listed shares having a value of approximately $100,000.00 subject to secured liabilities totalling about $1.79 million.
Otherwise, the wife asserts that the husband owns various motor vehicle and trailers with as yet an undetermined valuation in addition to an extensive collection of sporting memorabilia also not yet valued.
The parties have superannuation entitlements of about $118,000.00 each.
Subsequent to separation the wife discovered the husband holds a bank account with the Q Bank. As at 30 December 2017 that account had a balance of $390,861.00.
Otherwise, says the wife, the parties have two portfolio loans with St George Bank from which the husband on 6 December 2017 withdrew $80,132.00 from portfolio loan 2492 then on the following day deposited $18,054.00 and withdrew further funds of $33,226.00.
As a consequence, the wife attended upon the bank and was informed that she was not able to freeze the account so she withdrew from the portfolio loan 2492 $78,147.00. The wife then withdrew $257,906.00 from portfolio loan 3689 and deposited those funds to her bank account. These funds by the wife were redeposited by the wife to the portfolio loans on 1 February 2018 which are now frozen and require joint signatures of the husband and wife. The husband has not redeposited the funds withdrawn by him.
The wife seeks release of funds as the husband controls the vast majority of the matrimonial assets save for the wife’s bank account and her superannuation. Whilst several of the properties owned by the parties are rented the husband does not account to the wife for any of the rental income.
The wife seeks to apply the funds sought by her to her legal expenses and the cost of single expert reports. She also seeks to retain senior counsel. Significant expense will be incurred by way of single expert’s fees for the purposes of real estate valuations and the valuations of the parties and the husband’s corporate interests. Otherwise, it will be necessary for single expert valuations to be carried out in relation to motor vehicles, personalty and memorabilia unless the parties can reach agreement as to value.
The wife is presently in full-time employment earning about $97,500.00 per annum from which she meets her living expenses. The wife has available to her about $15,000.00 in cash at bank. She and the husband continue to reside under the one roof in the matrimonial home in respect of which the husband pays the outgoings.
The husband’s evidence
The parties’ daughter P resides in L Street. The parties’ other daughter O resides in 2 F Street with her partner and daughter and has done so since July 2017.
The husband says that the property sought to be sold by the wife at B Street is an income producing property and subject to a prospective capital gains tax liability in the event of that sale. However, it appears that any prospective capital gains tax liability will accrue in the financial year ended 30 June 2009 with any assessment of additional tax payable thereafter. The question of any capital gains tax liability is dependent on the relevant marginal tax rate in the relevant financial year and will be known with more precision subsequent to sale of the property. The prospective accrual of capital gains tax liability is no reason why the property should not be sold but is indeed a necessary incidence of the ownership of investment property.
The husband opposes the sale of the property. The property, asserts the husband, is rented at $350.00 per week but is managed directly by him. However, he asserts there are some $13,000.00 in rental arrears. Whilst the rental payments, he asserts, are paid to meet outgoings, maintenance and mortgage payments there is a shortfall which he is required to meet from other sources.
The husband agrees that this property has a value of about $690,000.00. The wife asserts the property is unencumbered. The husband asserts that the property presently is currently mortgaged to the sum of $192,597.00. Notwithstanding, there is sufficient equity in this property to meet the order for interim distribution as sought by the wife.
The husband says that his investment in the franchise is performing poorly in that there is a significant balance-sheet deficit and accumulating liability to the Australian Taxation Office of about $1.193 million. Yet no financial statements or tax returns for the various corporate entities involved in the franchise had been provided in the context of the present application until the actual hearing and indeed, as the wife complains, were not provided by way of prior timely disclosure by the husband. It may be a circumstance that ultimately a liquidator is appointed to the various corporate entities.
The husband concedes his available funds in his Q Bank account and asserts that he has withdrawn about $290,000.00 of those funds to pay “a number of liabilities”, for building works at one of the franchises and certain borrowings from a Mr R.
He asserts that he has cash funds at bank of approximately $212,000.00. His Financial Statement discloses an income paid to him by his corporate entities of $237,300.00 per annum in addition to which he receives and disperses rental income from several of the parties’ properties.
The husband provides his history as to the accumulation of assets by the parties over the long period of the parties’ cohabitation. There was an initial contribution by him in terms of his interest in 2 F Street.
There is no issue that the husband was the primary income earner throughout the parties’ long cohabitation but the wife’s primary role in the household, in the care of the children and her contribution of her part-time income is also deserving of significant recognition. A more precise determination as to the parties’ respective overall contributions will need to await final hearing.
The husband asserts that the net matrimonial asset pool including various notional liabilities for capital gains tax has a value of about $4.269 million. The amount sought by the wife is only about 10 per cent of the husband’s asserted available pool of matrimonial assets.
Discussion
The principles as to applications for interim property provision are well settled, (Strahan & Strahan [2009] FamCAFC 166) and require a two-step process.
In Strahan (supra), the Full Court said:
132.In relation to the first stage, in our view, when considering whether to exercise the power under s 79 and s 80(1) (h) of the Act to make an interim property order the “overarching consideration” is the interests of justice. It is not necessary to establish compelling circumstances. All that is required is that in the circumstances it is appropriate to exercise the power. In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.
Firstly, there must be circumstances enlivening the power to make an interim order. The test is not limited to “compelling circumstances” but whether it would be “appropriate” to make an interim order, with the “overarching consideration” being the interests of justice.
Secondly, the Court is to have regard to relevant matters in s 79 of the Family Law Act 1975 (Cth) (“the Act”). It needs to be kept in mind that the final outcome of property settlement should not be compromised by an interim property order. Either the remaining property needs to be adequate to meet the legitimate expectations of both parties at the final hearing or the order that is contemplated needs to be capable of being reversed or adjusted if it is subsequently considered necessary to do so.
A detailed inquiry is not required, but there must be some assessment of s 79(4) factors.
In Strahan (supra) the Full Court went on to say:
137.Once a court proceeds to exercise the power in s 79 of the Act, being in the substantive phase, a court is required to undertake consideration of the matters in s 79(4) including by reference to s 79(4)(e) the matters in s 75(2) so far as they are relevant. However consideration of such matters may be brief and if it is established that “it seems likely to the Court that ... the applicant ... will be likely receive by way of property settlement a sum sufficient to cover the advance, that would seem to be sufficient to enable the order sought to be made”: Zschokke; Polletti and Polletti per Nygh J and Wenz v Archer. As senior counsel for the Wife submitted, “provided scope can be found within the assets of the parties for an order of the size sought ... then that should be the end of the matter”. In other words, in such circumstances the applicant would only be receiving what he or she was entitled to receive when the power was exhausted.
138.The legislation does not prescribe what the Full Court in Zschokke at 83,218 described as “preconditions” and nor would we seek to exhaustively prescribe matters that may be relevant to take into account in the exercise of the discretion under s 80(1)(h) of the Act. As to the three “criteria” identified by the Full Court in Zschokke, we accept that an inability on the part of an applicant for an interim property order to defray the costs of litigation to meet his or her litigation costs would be a relevant matter to take into account at the procedural or first stage. Senior counsel for the Wife submitted that it may be relevant at the substantive or second phase in reviewing the “necessarily limited and impressionistic budget for costs” to ensure that the application is bona fide. We are of the view that it may be that any issue about the bona fides of an application is relevant at the procedural phase in the context of considering if in the interests of justice it is appropriate to make an order before the final hearing.
139.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.
140.As to the other matters being a position of relative financial strength on the part of the respondent to an application and the capacity of the respondent to meet his or her own litigation costs, there is no doubt that the financial circumstances of both parties are relevant at the substantive stage and may also be relevant at the procedural stage. Senior counsel for the Wife submitted that all of the matters discussed by the Full Court in Zschokke are self-evident and we accept that this is so in relation to at least two of the matters being the need for funds and the financial circumstances of both parties.
141.…As to the various matters discussed by Brereton J in Paris King Investments which we have discussed above, we do not propose to deal with all of what his Honour said, however we make the following observations about some of the matters. Obviously the applicant should have “at least an arguable case for substantive relief which deserves to be heard”. Further, in determining at the procedural stage whether to exercise the jurisdiction there may need to be evidence of the applicant’s “likely costs of the litigation” given that the need for funds to defray litigation costs and expenses is the circumstance propounded as to why it is appropriate that an order be made. We also accept that “it is not an essential precondition” that the applicant’s legal representatives will not continue to act unless the costs are paid or secured on an ongoing basis.
It is important to have regard to an overall caution. In Harris & Harris (1993) FLC 92-378, the Full Court said:
As a generality, the interests of the parties and the Court are better served by there being one final hearing of s 79 proceedings.
In Strahan (supra), the Full Court said at [132]:
… regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.
It is now well settled that in property cases the Court must identify the existing legal and equitable interests of the parties in the property, the liabilities and financial resources of the parties at the time of the hearing and then whether it is just and equitable to make a property settlement order. Such a consideration should not be guided by an assumption that the parties’ rights to, or interests in, property are, or should be, different from those that then exist. The question is whether those rights and interests should be altered.
Yet in this matter both parties seek final adjustive orders as to property.
Clearly the wife has a significant claim for property adjustment and is in a weaker financial position than the husband and may be entitled to an adjustment of her contribution based entitlement under s 75(2) of the Act.
As has been often said before, the notion of a “level playing field” is one which almost axiomatically is in the interests of justice and an important matter to consider when deciding whether it would be appropriate to make an interim property order (see Moroni & Moroni [2014] FamCA 664 (Watts J)).
In In the Marriage of J U and T Poletti (1990) 15 FamLR 794, Ellis, Strauss and Butler JJ quoted Ngyh J with approval at [796]:
…It is rather, as it certainly was in Wilson and Wilson [(1989) 13 Fam LR 205], a situation where one party to the marriage controls almost exclusively what might be described as the patrimony of the parties and has control of the bulk of the assets and funds of the parties, where an order may be made to ensure that the other party, who does not have the fortune of controlling those funds, at least has an equal or near equal opportunity to present his or her case...
The sum sought by the wife represents only about 10 per cent of the net pool as asserted by the husband. It is clearly appropriate to make orders substantially as sought by the wife given the husband’s majority control over the asset pool and the need to facilitate a level playing field for the wife. The husband has the capacity to fund a prompt payment in part to the wife. Otherwise, orders should be limited to the sale of B Street to fund the balance of her entitlement.
The characterisation of funds received by the wife will be reserved to final trial.
Orders will be made accordingly.
Injunctions
Otherwise, the wife sought injunctive relief to restrain the husband from any adverse dealing with the assets of the marriage or any of his corporate interests without giving to the wife 28 days’ notice in writing.
It is only a notice provision sought so as to allow the wife to consider her position in a timely manner that would facilitate her bringing, if necessary, an application before the Court. The wife complains of various transactions by the husband such as his dealing with the Q Bank funds and issuing further shares in the parties’ companies without notice to her.
The Court has a general power under s 114 of the Act to grant such injunction as in the circumstances is proper.
The order sought by the wife is in all the circumstances proper. An order will be made accordingly.
I certify that the preceding sixty-two (62) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 15 June 2018.
Associate:
Date: 15 June 2018