BURNS & SELLERS
[2017] FamCA 242
•21 April 2017
FAMILY COURT OF AUSTRALIA
| BURNS & SELLERS | [2017] FamCA 242 |
| FAMILY LAW – SPOUSAL MAINTENANCE – Interim hearing – Where contributions of the parties are disputed – Where the matrimonial assets for distribution are unclear – Where neither party appears to be making full financial disclosure – Where the wife’s assertion that she is in urgent need of funds is challenged by the husband – Where the husband appears to concede the need to financially support the wife and his children beyond child support – Orders made by consent that the husband pay expenses in addition to child support – Applications for injunctions dismissed – Orders for the husband to pay the wife $10,000 in spousal maintenance. |
| Family Law Act 1975 (Cth) ss 74, 75, 77, 79, 80, 114, 117 |
| Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 |
| APPLICANT: | Ms Burns |
| RESPONDENT: | Mr Sellers |
| FILE NUMBER: | PAC | 5854 | of | 2016 |
| DATE DELIVERED: | 21 April 2017 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Hannam J |
| HEARING DATE: | 6 February 2017 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr O'Ryan SC |
| SOLICITOR FOR THE APPLICANT: | Pearson Emerson Meyer Family Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Givney |
| SOLICITOR FOR THE RESPONDENT: | McAuley Hawach Lawyers |
Orders By Consent and Pending Further Order
That the husband pay to the Managing Agent of the property known as B Street, Suburb C NSW (“the property”) all rental payments (including arrears) as and when they fall due and payable in respect of the residential lease between the parties and the proprietor and/or his Agent of the property until 17 September 2017.
That the wife shall provide to the husband copies of all bills in respect of utilities, including consumption and supply charges for the property, together with household bills, including gas, electricity, water, internet, phone and Foxtel services and within 7 days of receipt of such bills from the wife, the husband shall pay to the wife or as she directs a sum equal to the amounts due and payable on any such bill.
That the husband pay all registration, third party and private insurance and loan repayments in respect of the Japanese motor vehicle registration no. … registered in the name of the husband and currently in the possession of the wife, and the husband be and is hereby restrained by injunction from removing, causing or permitting such vehicle from being in the possession and sole use of the wife.
That the husband pay all instalments at the current level to the private health fund of which the wife is presently a member or such other fund as the wife directs in writing.
In addition to the current Child Support assessment, the husband pay or cause to be paid by way of non–periodic child support:
(a) Education expenses in respect of each of the children at their current school and at such other private school or schools as the parties agree upon in writing that the children will attend and such expenses shall include all application and enrolment fees, tuition fees, private tutoring fees, excursion fees, holiday camp expenses, the cost of all school books, stationery, school uniforms and shoes, sports uniforms and shoes and incidental sporting costs;
(b) All expenses in respect of the attendance of the parties child known as D at his current pre-school or at such other pre-school, day care centre or kindergarten as the parties agree upon in writing that he will attend;
(c) All instalments at the current level to the private health fund of which the children are presently members or such other fund as the parties agree upon in writing (“the fund”);
(d) All medical, hospital, optical, physiotherapy, counselling, pharmaceutical, dental and orthodontic expenses in respect of the children not able to be recovered from Medicare or the fund.
Order
Pursuant to s77 of the Family Law Act 1975 (Cth), the husband pay or cause to be paid to the wife or as the wife may from time to time direct in writing by way of spousal maintenance, the sum of $10,000 to be paid within 7 days from the date of this Order.
That in the event the husband fails to pay any part of the sums due to the wife pursuant to these Orders, the husband shall pay interest to the wife on such part as remains due to be paid at the rate prescribed by the Family Law Rules, calculated on a daily basis and computed from the day after the date due for payment pursuant to these Orders until payment of the sum due in full.
The wife’s application for payment to her by the husband of $100,000 and injunctions for personal protection and preservation of property are dismissed.
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 Burns & Sellers 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 5854 of 2016
| Ms Burns |
Applicant
And
| Mr Sellers |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties’ seven year relationship has broken down and they are engaged in property and parenting proceedings.
The applicant wife seeks various interim orders, many of which are made with the consent of the husband.
At a hearing on 6 February 2017, the wife pressed some of the interim orders which were not consented to being an application for urgent spousal maintenance of $2500 a week and a lump sum payment of $100,000 to be categorised by the trial judge at the time of final hearing. The wife also seeks various injunctions including a restraint on the husband entering within 100 metres of her home and restraints in relation to financial matters.
The wife had also sought other interim orders including an application for maintenance under section 74 of the Family Law Act 1975 (Cth) (“the Act”) and an interim property settlement. These were not considered at the February interim hearing and were adjourned to a date to be fixed after the parties and children participate in the Child Responsive Program. At such future date it is expected that the parties may also seek interim parenting orders.
Background
The husband who is 45 and the wife who is 35 began living together in late 2009 or early 2010. At that stage the wife had no significant assets but was a highly paid professional. The husband was the sole director and shareholder of a company named E Pty Ltd (“EPL”) which is the trustee for an investment trust through which the husband apparently conducts a business. The nature of the business in which the husband has been engaged at all relevant times is unclear.
The wife contends that when the parties began living together the husband also had shares in a number of other companies which operated various businesses. The husband has given no evidence of his financial circumstances at the time the parties began living together.
The parties’ first child F was born in 2010 and around the time of and following the child’s birth the wife took maternity leave from work. She returned to work after about 18 months leave two days per week in 2011.
The parties married in 2013 and later in 2013 their second son D was born. Once again the wife took maternity leave and recommenced working in about August 2015. She was then employed as a consultant for about 2 to 3 days per week.
There is a significant dispute between the parties about the extent of non-financial contribution made by each of them especially in their roles as home maker and parent. This dispute clearly cannot be resolved in these proceedings.
In March 2014 the husband sold a property owned solely by him for $965,000.
In November 2015 the husband’s mother died. The husband is the executor of his late mother’s estate. The husband lists a $2,000,000 interest in his mother’s estate as a financial resource in his Financial Statement.
The parties separated in the early months of 2016 but remained living in the same home until the husband moved out in October 2016.
In June, July and August 2016, the husband transferred $20,000 each month to the wife to pay outgoings and living expenses for her and the children. The husband also paid the rent on the family home.
Following physical separation, the wife and children remained in the rented family home.
Shortly before the husband left the family home, the wife fractured her hip and ceased working. Thereafter the husband paid some of the household bills and made some cash payments and payments towards credit cards.
Following separation the parties unsuccessfully attempted to resolve matters through family dispute resolution and then each engaged legal representatives.
In December 2016 each of the parties filed an application with the Child Support Agency.
On 12 December 2016 the husband filed an Initiating Application seeking final orders for property settlement.
From November 2016 to the date of the interim hearing on 6 February 2017, the parties provided certain information concerning their financial circumstances to one another through their legal representatives though each contend that the other has not provided full financial disclosure.
On 19 December 2016 child support to be paid by the husband was assessed for both children as $379.72 per week. The husband has since then paid child support as required.
It appears there had been an expectation that the husband would continue to pay the rent on the premises in which the wife and children live until the lease on those premises expires in September 2017. However, the rent at times has fallen into arrears.
In her Response filed on 23 December 2016 the wife sought final parenting, property and other orders and various interim orders. The husband then filed an amended Initiating Application seeking final parenting orders.
On 6 January 2017, Loughnan J made various orders including that the parties attend interviews with a Family Consultant as part of the Child Responsive Program, that an Independent Children’s Lawyer be appointed, that the husband deliver the older child to the wife. Orders were also made that the children live with the wife, and until further order, spend defined time with the husband, that the husband pay the rental arrears and other procedural orders.
Throughout January 2017 the parties made requests of each other through their respective legal representatives in relation to financial disclosure and subpoenae were issued to many entities. Despite the orders made on 6 January 2017 the husband did not pay all the rent on the former family home as required.
At the outset of the interim proceedings the husband consented to an order requiring him to pay all rent on the home occupied by the wife and children as it falls due including arrears until the expiry of the lease in September 2017. He also consented to orders that he pay various other household and family expenses in the terms of the consent orders (1 - 5) set out at the forefront of these Reasons.
Matters in dispute or which are unknown
There are many matters in dispute which are relevant to the applications under consideration and there is incomplete or no evidence as the other matters of significance.
First, the contentions of the parties concerning the matrimonial assets potentially available for distribution are unclear.
It appears to be common ground that the parties do not own any real estate. Further, even though each of the parties raise concern about the contents and accuracy of the other party’s Financial Statement, neither of the parties claim to have any assets of substance. There is possibly only one asset of any value that may form part of the matrimonial estate.
The wife says in her Financial Statement that she owns only household contents valued at $20,000 (and has liabilities of $57,227) while the husband deposes in his Financial Statement having two motor vehicles, small bank balances and household contents of $50,000. He also refers to a “loan receivable” from the Sellers Investment Trust (“the investment trust”) an entity controlled by him. This is valued at $650,143 in his 12 December 2016 Financial Statement and $147,125 in his 2 February 2017 Financial Statement. The only other items having any significant value are both listed as “financial resources” in the husband’s Financial Statement. These are $1.9 million in the investment trust and $2 million in his late mother’s estate. It is the wife’s case that the investment trust should be treated as the property of the husband in these proceedings.
As the party’s contentions concerning the matrimonial estate are unclear, it is not possible to ascertain their respective contentions about the percentage entitlements to that estate.
According to the husband’s Amended Initiating Application he seeks final property settlement orders that he pay to the wife the sum of $30,000 and transfer to her ownership of the car that she uses. This represents less than one per cent of the husband’s listed financial interests, almost half of which the wife contends should be treated as assets of the husband.
Second, although both parties appear to agree that they could not have relied upon their taxable income to fund the high level of spending they both engaged in throughout their relationship neither of them can point to a source of income for this expenditure. They both seem to contend that they currently continue to spend at a rate for which they have no identifiable source of income though the husband suggests that it is only the wife who spends in this manner and he is quite frugal. Their respective Financial Statements support the position that they both continue to live extensively beyond their means. For example, the wife sets out in part N of her Financial Statement that her weekly expenditure is $6586 being $4579 for the children and $1907 for herself but she says she has no income. In part N of the husband’s Financial Statement he deposes to weekly expenditure of $3570 per week in addition to other outgoings while earning $2500 per week.
Further, it is difficult to gain even a general understanding about each party’s financial contributions as their respective contentions concerning this matter are unclear.
The husband provides no evidence of his financial circumstances at the time the parties began living together and neither party provides any detail of their respective financial contributions throughout the relationship. The wife contends though the husband disputes that the parties led an extravagant lifestyle throughout their relationship but neither provides an explanation as to how this lifestyle was funded. There is a significant dispute between the parties about their respective non-financial contributions with each contending to have played the more significant role as a homemaker and primary caregiver to the children.
Finally, each of the parties claims that the other has not provided full financial disclosure and each annexes correspondence between the respective legal representatives requesting further information. Many documents were produced by both parties only on the morning of the interim hearing and other documents which may have been expected to have been provided by parties were obtained under subpoena. Many of the subpoenae had not been responded to at the time of the interim hearing.
Against this background I now consider the particular orders sought by the wife.
Urgent spousal maintenance
The wife’s application that the husband pay $2500 per week by way of urgent spousal maintenance is made under section 77 of the Act. This section is as follows:
Urgent spousal maintenance cases
Where, in proceedings with respect to the maintenance of a party to a marriage, it appears to the court that the party is in immediate need of financial assistance, but it is not practicable in the circumstances to determine immediately what order, if any, should be made, the court may order the payment, pending the disposal of the proceedings, of such periodic sum or other sums as the court considers reasonable.
The nature of an application under this section was recently confirmed by the High Court in Hall & Hall[1] at [7]
It was established at an early stage in the history of the Family Court that the power to make an interim order under s74 (1) is separate and distinct from the power to make an urgent order that is separately conferred by s77. Section 77 allows the Court to “order the payment, pending the disposal of the proceedings, of such periodic sum or other sums as the court considers reasonable” if a two – part condition is met. First, it must appear to the court that a party to the marriage “is in immediate need of financial assistance”. Second, it must be “not practicable in the circumstances to determine immediately what order, if any, should be made”.
[1] [2016] HCA 23; (2016) 332 ALR1.
It is the wife’s contention that she has significant outgoings and expenses and no income. According to her affidavit she has not worked since November 2016 and was then working about one day per week. She does not however give any details of her income at that time (or at any time throughout the relationship). According to her affidavit filed 16 December 2016 she was then unlikely to undertake “any significant time at work” until February 2017, though she did depose to being owed $46,153.84 for previous work. In an updating affidavit of 31 January 2017 the wife says she has no income and no savings and that she had exhausted all possibilities of borrowing from family members. In a further affidavit of 5 February 2017 the wife does not provide any further evidence regarding income.
Although the husband appears to concede through an offer to pay a lump sum of $10,000 by way of urgent spousal maintenance that the wife is in immediate need of financial assistance, his general position in the proceedings is to challenge this assertion. It is submitted on his behalf that the litigation funding business in which the wife has been engaged is controlled by the wife’s sister who has very generously provided for the wife in various ways in the past including funding of overseas trips, providing loans and allowing the wife to use her credit cards. He contends that the source of funding of the extravagant lifestyle engaged in by the wife also includes undisclosed sources available to the wife.
However, notwithstanding the husband’s contention that the wife has undisclosed sources of income herself which she has been and continues to access, he does seem to concede that he should be responsible for providing financial assistance to the wife until a more complete interim spousal maintenance application can be brought. As noted, it is not in dispute that after the parties separated but continued to live in the same home, for three consecutive months the husband provided $20,000 to the wife for living expenses for herself and the children as well as paying for the rent on the home. He also consented in these interim proceedings to orders that he pay many other outgoings including utilities, registration and insurance on the vehicle used by the wife, private health insurance, all education expenses in relation to the children, clothing for school activities and extracurricular activities, preschool and child care expenses and other medical expenses in respect of the children not able to be recovered from Medicare or the health fund. In these circumstances it seems implicit that the husband recognises that the wife needs some financial assistance until a more fulsome interim spousal maintenance application can be determined.
It is clear from the terms of the section itself that such payment may be ordered where it is not practicable in the circumstances to determine what order, if any, should be made and that the party “appears” in immediate need of financial assistance. In this case, having regard to the significant matters which are in dispute or in respect of which there is limited or no evidence, I am unable to determine immediately what order if any should be made. However, it does appear that the wife is in some immediate need of financial assistance as recognised by the husband in his offer to make a lump sum payment of $10,000.
When considering an application under s77 if this need “appears” to the court to exist, the court may order that payment in a sum “as the court considers reasonable”.
Although it is contended by the husband that the wife has sources of undisclosed income, I approach the matter by accepting her assertion that she is currently not working. I also accept that she has some weekly outgoings which are not currently being paid for by the husband.
Although orders for urgent spousal maintenance are in the nature of stop-gap orders, they are not only available where the claimant is virtually destitute. There must however, be some scrutiny of the wife’s claim that she is in immediate need of financial assistance and to determine a sum that may be considered reasonable.
Without undertaking a detailed examination of the need for financial assistance claimed by the wife, in my view some of the matters set out in part N of her Financial Statement relating to average weekly expenses are nothing short of extraordinary. For example she says she spends $231 for clothing and shoes for herself and the same amount for entertainment and hobbies for herself each week. She says she spends for herself each week $322 on holidays, $77 on hairdressing and toiletries and $200 for “miscellaneous expenses”. These sums seem excessive and may be categorised as discretionary spending both being matters which are relevant in determining both a need for assistance and the reasonableness of the sum claimed.
In an application for spousal maintenance I must of course disregard expenditure that the wife claims is related to the children. However, although the husband is paying Child Support and has consented to orders requiring that he pay other expenses in relation to the children, these payments may not completely cover all of the outgoings in relation to the children. For example, significant expense that the wife says she pays, being child minding expenses of $500 per week is difficult to categorise as a payment for the wife or for the children.
In these circumstances in my view, the sum claimed by way of urgent spousal maintenance of $2500 per week is excessive to address the wife’s need for financial assistance until the court is able to consider fully an application for interim spousal maintenance. Rather than attempt to quantify an appropriate weekly sum in my view the $10,000 that the husband agreed to paying is a reasonable sum for him to pay until the interim spousal maintenance application may be considered by the court.
Lump sum payment of $100,000
According to the wife’s application which was further amended on the morning of the hearing, she seeks an order that the husband pay her a “lump sum” of $100,000 to be categorised by the trial judge at the time of final hearing. In her case outline this is described as an interim costs order.
At the hearing Senior Counsel who appeared on the wife’s behalf approached the matter primarily as a payment for the purposes of legal costs but submissions were also made with reference to authorities that dealt with an interim exercise of the property settlement power in s79 of the Act.
It is essentially the wife’s contention that this is a case such as those typically encountered where one party (the husband) controls the bulk of the funds of the parties and an order is required to ensure that the party who does not control the funds has at least an equal or near equal opportunity to present her case. It is also contended on behalf of the wife that due to the manner in which the husband has approached the proceedings to date particularly in his alleged failure to provide financial disclosure, the wife has incurred significant additional costs and is likely to do so in the future.
In the course of submissions made on behalf of the wife Senior Counsel explained that the application under consideration was only a lump sum to defray legal costs and that a further “lump sum” in the nature of interim property settlement would be sought on a future date when the other interim property and interim parenting matters are to be considered.
It is contended on behalf of the husband that the application for the lump sum made by the wife at this stage is premature. It is the husband’s case that there is no fund in this amount readily available to the husband and that there is so little known about the parties respective financial positions that the court could not make any meaningful findings upon which to exercise the discretion.
As I understand it, the husband disputes that he effectively controls the funds of the parties and it is his case that although he may have significant financial resources (which may be relevant to s75(2) in a property settlement) there are no other funds of the parties over which he has control.
It is submitted on his behalf that in a more complete interim hearing the court may be able to make the necessary findings including the issue of whether or not the husband has made full disclosure as contended by the wife and disputed by the husband which is a central plank in this application.
The Law and Discussion
It was observed in Paris King Investments Pty Ltd v Rayhill[2] that there are a number of juridical bases for an order of the type sought by the wife. The Full Court in Zschokke & Zschokke[3] had observed that there was some uncertainty as to the source of jurisdiction to make the orders of the type sought but were of the opinion that the decisions in Wilson & Wilson[4] and Poletti & Poletti[5] established that where there are pending proceedings under s 79 of the Act for property settlement, and order for funds for litigation expenses may be made pursuant to s 80(1)(h) or s 117(2).
[2] [2006] NSWSC 578
[3] (1996) FLC 92-693
[4] (1989) FLC 92-033
[5] (Unreported, Family Court of Australia, Nygh J, 2 March 1990)
In Strahan & Strahan[6] at [84] the Full Court said:
In Paris King Investments Brereton J, with whom on this point we agree, at [30] said that Zschokke “establishes that it is important, when contemplating an order for interim provision for litigation expenses, to identify the relevant source of power because it is the source of power that determines the necessary preconditions and relevant considerations for making the order”.
The Full Court went on to say at [86]:
… If the source of jurisdiction is s 117(2) of the Act then the court may make such order as it considers just provided there are justifying circumstances. If the order is sought under s 79 of the Act then the court may make such an order as it considers appropriate provided it is satisfied that it is just and equitable to make the order. …
[6] [2009] FamCAFC 166
This application is based primarily upon s 117 of the Act as an application based upon s 80(1)(h) utilising s 79 will be made at a future date.
Central to the wife’s case in this application is that the husband should be required to provide funds to her so she may pursue her claim for property settlement as she does not have control of funds and needs such payment to have a fair opportunity to present her case.
The difficulty in this matter at this stage in my view is that neither party has accounted for the source or control of the parties funds to date. In his Financial Statement, the husband identifies few assets and sets out total expenditure each week that vastly exceeds his average weekly income.
The husband sets out virtually no information concerning his financial circumstances throughout the relationship and currently in either of the affidavits filed by him. He describes currently living a modest lifestyle moving between a small rented home near his former wife and his father’s rural property and living on the largesse of his father who apparently has extensive business interests. Virtually all of the husband’s two affidavits deal with parenting matters only. The husband also says that since the second child was born in 2013, he has resigned from “most boards and scaled back [his] executive involvement in any businesses” and says that currently he is a non-executive director of two commercial businesses and one charity. There is no information before the court about the nature of the two businesses and whether they are a source of funds which may be accessed by the husband.
It is also the wife’s case (particularly when submissions were made concerning injunctions, a matter to which I will return) that the investment trust over which the husband has control through being the sole director and shareholder of the corporate trustee EPL is the alter ego of the husband and the assets of the trust should be treated as the property of the husband in these proceedings. The husband’s position as I understand it, is that the assets of the trust should be characterised as a financial resource available to him rather than as an asset potentially available for distribution. There is insufficient evidence before me to make any determination as to this matter even in a limited sense for the purposes of these proceedings.
The husband also disputes the wife’s contention that the parties had a particularly high standard of living when the relationship was intact and describes their life style prior to separation as “modest”. The husband says he has not received any money from his late mother’s estate but concedes that he will ultimately receive his late mother’s home but that is subject to a ten year tenancy in favour of her partner.
According to the husband’s Financial Statement the only other asset of any significance is a loan owed to him by the investment trust which he entirely controls through his sole directorship of the corporate trustee EPL. According to the husband, the corporate trustee is not in a financial position to repay that loan.
It is a central plank in the wife’s case in this interim application that the husband has not made financial disclosure as required. In my view, it does appear that the husband has not been as forthcoming in relation to his financial circumstances as he could have been even at this early interim stage. For example, very little information about the company EPL which appears to be central to the husband’s financial interests has been produced. Despite specific orders that had been made by a Registrar directing the husband as sole director and shareholder of EPL to produce documents referred to in subpoena issued on that company, a few documents only relating to the company were produced on the morning of the hearing.
Although it is not necessary in making the order sought to make particular findings, I must nevertheless find justifying circumstances to do so. In making such an order on the basis sought I would need some level of satisfaction that the husband controls the parties’ funds and that ordering that he transfer an amount to the wife will give her a fair opportunity of presenting her case. In my view, for the following reasons it is difficult in these circumstances to even have some level of satisfaction as to this matter.
There is no doubt that the wife has already incurred significant legal expenses. The wife’s Memorandum of Costs at the date of the interim hearing indicate that accounts had been rendered for $60,542.36 and $8,470 had been incurred for work in progress none of which had been paid. The Memorandum of Costs issued to the wife estimated the costs and disbursements in the proceedings as just over $435,000 on the basis that the matter proceeds to a 5 day trial and there is no dispute in relation to expert valuations.
It is the wife’s contention in these proceedings that the parties led a particularly extravagant lifestyle when they were together. It is her case that when the parties relationship was intact and for at least three months prior to physical separation the husband largely funded this lifestyle. She contends that he clearly had access to other sources of funds in addition to income disclosed for taxation purposes though she is unable to point to the exact source and extent of those funds as the husband has provided inadequate disclosure in these proceedings.
The husband’s case is that the wife herself earned a reasonable income for much of the relationship and even on her own case to some significant extent funded her own extravagant lifestyle.
There is no dispute that at the date of the proceedings the wife was owed $46,000 for work undertaken in the business of which the wife’s sister was a manager. The husband also contends that the wife’s sister has been particularly generous to the wife in the past including permitting the wife to use a credit card in the sister’s name and paying for overseas travel which has been claimed as a “work conference”. He claims that the wife has a financial arrangement with her sister and the sister’s de facto husband to conceal the wife’s true income and avoid paying tax. There is also some weight to the husband’s contention that the wife has also not provided full financial disclosure and many details about her financial circumstances including the source of funds available to her remain unclear.
In summary, I formed the impression that both of the parties have access to sources of funds which have not been fully disclosed to the other party or to the court for the purposes of this application. So far as the husband is concerned, his declared income for tax purposes is insufficient to fund his own expenditure and all of the expenditure for the wife and children to which he has agreed. The wife for her part contends that the parties had in the past lead a very extravagant lifestyle and according to her Financial Statement, she at least continues to do so. Even allowing for payments for which have been made by the husband in the past she is unable to explain how this lifestyle has been funded. She is also vague about her own income, having not filed a tax return for many years.
I can go no further in these proceedings than form the impression that both of the parties have access to sources of funds which have not been fully disclosed. I am unable to be satisfied even in a limited sense that the other funds controlled by the husband through his investment trust and the company EPL should be categorised as the husband’s property as opposed to a financial resource available to him as he contends. I cannot even determine that there will be any matrimonial property available for distribution if the matter proceeds to final hearing.
In these circumstances it is not clear whether the husband does control the parties’ funds or the extent (even in a general sense) of an asset pool for distribution. In my view there is insufficient justification to require the husband to make payment to the wife of $100,000 as sought in order to give her an equal opportunity to present her case for property settlement before court.
Injunctions for the personal protection of the wife
As noted previously when setting out the background on 6 January 2017, Loughnan J made various orders including the following:
Until further order, each of the parents is restrained from entering upon the property occupied by the other parent as a residence from time to time, without the prior consent of the other parent.
That order is made without prejudice to the rights of the owner of a property to admit or refuse to admit one of the parties.
The 6 January orders also specify that handovers [of the children] which do not take place at school or preschool will occur outside the wife’s home.
The wife seeks that the abovementioned order be varied to restrain the husband from being within 100 metres of or entering upon her residence.
The husband opposes this variation to the injunction and submits that there is no basis on which such a variation should be made.
According to the wife’s outline of case and submissions made on her behalf, this variation to the injunction would be regarded by a court as “proper” as the husband breached the order made on 6 January 2017 by entering the wife’s home without her permission.
Initially the husband opposed the variation sought as he disputed the wife’s allegation that he entered her home without her consent. The husband’s counsel at that stage submitted that the wife had previously given him permission to attend the home to collect some items of personal property and when he arrived the wife was not at home and the au pair invited him in.
It was subsequently submitted on behalf of the husband that the variation sought by the wife was also neither reasonable nor practicable especially as changeover for the care of the young children occurs outside the wife’s premises. This impracticality was not addressed by the wife.
Having regard to the age of the children, that the orders provide for changeover to occur outside the wife’s home and that the facts in relation to an alleged breach are a matter of significant dispute I am not satisfied that it is proper for the variation to the injunction to be made as sought by the wife.
Restraints in relation to property
The wife also seeks orders being injunctions restraining the husband from taking a wide range of actions in his capacity as sole director and/or shareholder of EPL or in relation to his role in respect of the Investment Trust over which he has sole control. The husband opposes the making of such orders.
The Law and Discussion
Section 114(3) of the Act provides that a court may grant an injunction “in any case in which it appears to the court to be just or convenient to do so”.
The Full Court in In the Marriage of BA and RS Waugh[7] dealt with interlocutory injunctions under this section which had been made by a trial judge restraining the husband from dealing with property, rental income, trusts, business entities or ventures pending the determination of a property settlement between him and his former wife. In granting leave to appeal and allowing the appeal against these injunctions, the Court set out the principles of law to be applied in such a case.
[7] (1999) 27 FamLR 63
Firstly, it was noted [at 32] that “it is important to bear in mind that the jurisdiction to grant interlocutory injunctions under the Act is a statutory jurisdiction derived from s 114(3) and/or s 34(1) of the Act”. In this regard the Court considered the principles enunciated and explained by the High Court when considering a very similar grant of power to the Federal Court in Jackson v Sterling Industries Ltd[8]. In Waugh extracts from Deane J’s judgment in Jackson include when discussing the purpose of a Mareva injunction the following, [at 37]:
It is to prevent a defendant from disposing of his actual assets (including claims and expectancies) so as to frustrate the process of the Court by depriving the plaintiff of the fruits of any judgment obtained in an action.
[8] (1987) 162 CLR 612; 71 ALR 457
It was noted [at 53] in Waugh (supra) that the wife’s affidavit in support of her application in that case had many statements about her fears that the husband would deal with property under his control but there were no assertions that he had, in fact, disposed of anything or incurred any liability other than in the ordinary course of his business operations.
Another High Court case dealing with Mareva injunctions referred to in Waugh is Cardile v LED Builders Pty Ltd[9]. In Cardile the plurality referred to the observations of Dixon J in Glover v Walters[10] who referred to a Mareva injunction as a “drastic remedy” and said “its purpose is to preserve the status quo”. In Cardile Kirby J (concurring with the result reached by the plurality) said “the plaintiff must establish a real risk of assets being disposed of”.
[9] (1999) 198 CLR 380
[10] (1950) CLR 172 [at 175-6]
The written outline of case filed by the wife makes no reference to these injunctions and very little was said in relation to them in oral argument.
The wife’s case as expanded upon in oral submissions is that the company EPL (the trustee of the investment trust) controlled solely by the husband is “the alter ego of the husband” for the purposes of the property settlement proceedings and the assets of that trust are to be treated as the property of the husband for these proceedings. It was explained in submissions that a critical banking record was revealed in documents produced on subpoena on the morning of the interim hearing. This record indicates that on 19 December 2016 $1.14 million was deposited into EPL’s company bank account and that this transaction forms the basis for the necessity that the injunctions be made.
The wife does not depose in any of her affidavits to having any fears or concerns that the husband may deal with property under his control nor does she depose that he had disposed of anything or incurred any liability otherwise than in the ordinary course of his business. However, it was submitted by Senior Counsel on the wife’s behalf that a conversation referred to in the wife’s affidavit of 16 December 2016 when considered in the context of the 19 December transaction gives rise to the relevant concerns.
In that affidavit wife says she had a conversation just prior to the husband leaving the family home [in October 2016]. She deposes that the husband said to her
“[Company G a company of which the husband was previously executive chairman] has finally been sold. We should get more than $1 million after tax”.
It is submitted on the wife’s behalf that the deposit of $1.4 million in December 2016 “may” be associated with this sale and that “something is occurring” without the wife’s knowledge in relation to the company which the wife contends is the husband’s alter ego. It is noted that the husband makes no reference in his affidavit filed in response to the wife’s affidavit about that conversation. It is submitted that if the company “Company G” was sold for $1.4 million, that may amount to the disposition of an asset. For this reason it is submitted that it may be appropriate to grant the injunction restraining any further dealing with property.
In opposing the making of these injunctions, it is submitted on behalf of the husband that there is nothing in the wife’s affidavit that raises any concern about the manner in which the husband has conducted his business that would give rise to such draconian orders. It is noted that the application for these injunctions had not been sought prior to the date of the interim hearing and appeared to be based upon the submissions made by the wife’s Senior Counsel about one particular transaction.
In my view, the deposit of $1.4 million into the husband’s business account does not give rise to a concern that the husband may be disposing of assets in an effort to frustrate the court by depriving the wife of any judgment. The husband’s failure to respond in his affidavit to a comment allegedly made by him referred to in the wife’s affidavit together with submissions made by the wife’s Senior Counsel cannot ground a conclusion that the husband has disposed of anything other than in the ordinary course of his business.
There are no other particular transactions relied upon by the wife in her affidavit or in submissions made on her behalf as a result of documents produced on subpoena to support any contention that there is a risk that the husband will dispose of assets to defeat her property settlement.
In these circumstances I am not satisfied that it is just or convenient to make the injunctions in respect to property as sought by the wife.
For the foregoing reasons, I make the orders set out at the forefront of this Judgment.
I certify that the preceding ninety seven (97) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hannam delivered on 21 April 2017.
Associate:
Date: 21 April 2017
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