BURTON & WATERS

[2014] FamCA 594

FAMILY COURT OF AUSTRALIA

BURTON & WATERS [2014] FamCA 594

FAMILY LAW – Injunction – Removal of caveat to allow husband to borrow to then invest – Opposition by the wife – Ample equity in assets – Orders made.

Family Law Act 1975 (Cth)

APPLICANT: Ms Burton

RESPONDENT: Mr Waters

INDEPENDENT CHILDREN’S LAWYER: Mr Stavrakakis

FILE NUMBER: MLC 2090 of 2014

DATE DELIVERED: 3 June 2014

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 3 June 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Dellidis

SOLICITOR FOR THE APPLICANT: Berry Family Law

COUNSEL FOR THE RESPONDENT: Ms Mandelert

SOLICITOR FOR THE RESPONDENT: Stacks

COUNSEL FOR THE INDEPENDENT

CHILDREN’S LAWYER:

Ms Stavrakakis

SOLICITOR FOR THE INDEPENDENT

CHILDREN’S LAWYER:

Victoria Legal Aid

Orders

1. That BY CONSENT there be orders in accordance with the minutes of proposed orders marked Exhibit “A” sealed and attached hereto AND IT IS DIRECTED that such minutes remain upon the Court file.

2. That the solicitor for the wife engross the minutes and deliver them by electronic transmission to my Associate within 7 days.

3. That the wife withdraw the caveat lodged by her in respect of the Certificate of Title concerning the former matrimonial home within 7 days.

4. Subject to satisfying the appropriate Land Registry Office in New South Wales as to a caveatable interest, the wife be at liberty to lodge a caveat again in relation to the same property and the husband be restrained from taking any administrative action to remove it until further order.

5. That the reasons this day be transcribed.

6. That pursuant to s.65DA(2) and s.62B, the particulars of the obligations these orders create and the particulars of the consequences that may follow if a person contravenes these orders and details of who can assist parties adjust to and comply with an order are set out in the Fact Sheet attached hereto and these particulars are included in these orders.

7. That all extant applications for final orders are listed to a FIRST DAY before the Honourable Justice Cronin at 10 am on 6 October 2014 for the purposes of listing the matter for final hearing.

8. That the parties and if represented, their legal practitioners, attend the first day of hearing.

9. To the extent that the Independent Children’s Lawyer has a firm position as to intended proposed orders, the Independent Children’s Lawyer advise each party of those proposal and on the return date, present to the Court a copy of those orders.

10. If discovery and disclosure has not been completed, each party by 4 pm on 4 August 2014 provide to the other party a list of all documents required for inspection and within 7 days thereafter, subject to any objection on the grounds of privilege, such documents be made available for and be inspected by the other party(ies).

11. To the extent that any party wishes to participate in any form of negotiation or mediation prior to the final hearing, arrangements be made prior to the first day of hearing.

12. That at the first day of hearing, each party represented by a lawyer have available to them and present to the Court, a statement setting out the costs incurred to that date, what amounts have been paid, from what source payments have been paid and what costs are expected to be incurred until the completion of the final hearing.

13. Pursuant to s 79 of the Family Law Act 1979 (Cth), the requirement that the parties attend a conciliation conference is waived on condition that prior to 8 September 2014, they attend a mediation.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Burton & Waters has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 2090 of 2014

Ms Burton

Applicant

And

Mr Waters

Respondent

INDEPENDENT CHILDREN’S LAWYER

REASONS FOR JUDGMENT

1. Before me today, having started yesterday, is a discrete issue, which on its face looks remarkably simple, but I appreciate with the nature of the relationship between the parties at the moment it is for them, extremely difficult. 

2. I am asked to direct that the wife remove a caveat which she lodged in respect of a property in New South Wales, which she says worth $1.8 million and unencumbered and in the husband’s name alone.

3. According to what I have been told, the caveat was lodged on the basis of a caveatable interest being said to be by virtue of a constructive trust. 

4. There are a number of disputes between the parties, one of which is the problems created by the tyranny of distance.  The husband is in New South Wales and the wife is in Victoria and the thing that binds them most is their young child, B, who is 16 months of age.  He is currently living with the wife.

5. As a result of some discussions yesterday and more importantly the discussions between the parties and their lawyers today and with the very important assistance of the Independent Children’s Lawyer, the parties are going to address a number of issues about the parenting problems with the assistance of a very experienced psychologist.  That person will no doubt provide a report for the assistance of the parties rather than the Court.

6. In the interim period, orders will be made that B will spend time with his father by a regime that the parties have worked out amongst themselves.  I am satisfied that that order is appropriate and in B’s best interests. 

7. Returning then to what is controversial:  I have been provided today with a list of assets and liabilities.  It is described as the husband’s list of assets and liabilities, but I have had the discussion with the parties about the fact that there are a number of structures, including trusts in this case, which complicate the matter.

8. The nub of the problem is that the husband wants to spend over $700,000 on an investment in Country C.  He has already entered into negotiations over there, but I am told he has not entered into any contract.  That said there is a proposed agreement and the details of that do not seem to be agreed upon between the parties.  The husband says that if the agreement falls through, he will end up having to pay $70,000 to his nominee in Country C.  That problem arises, he says, because in Country C, a foreigner cannot be the owner of property and, therefore, he has to rely upon someone else to assist him.

9. The wife’s response to that is that she does not know where the $70,000 obligation comes from.  That is a classic example of the problem of disclosure.  There is a primary obligation upon all parties to be full and frank in their disclosure relating to not only documents but also information.  It is, therefore, understandable why the wife might be somewhat hesitant, if not cynical, about just exactly what is going on in Country C and what the husband’s losses might be if this arrangement does not go ahead.

10. Counsel for the husband assures the Court that the husband is a businessman and he would not be taking any action that would be deemed inappropriate and, indeed, he intends very much to make some money out of the whole exercise.  The wife’s concern is that this exercise encumbers the Australian property over which she has the caveat and by allowing that withdrawal of funds, creating an encumbrance, it diminishes the pool.

11. I am not entirely sure that that is the basis upon which I should grant the injunction.  When one analyses the position, it seems that there are three quite distinct entities here.  The first is the husband and it seems that the major asset he has is this house over which the caveat has been lodged.  If I work on the basis of $1.8 million and take off $700,000 or thereabouts being what the husband is intending to borrow, there is still a million dollars worth of equity there.

12. The second equity lies in a company called D Pty Ltd, which I understand to be a trading company over which the husband has absolute control notwithstanding one of the shareholders is another company.  It seems that he has the control over that other company as well.  It seems that on the wife’s calculations there is about $1.5 million in assets there less half a million dollars or thereabouts in liabilities, leaving an equity of about $1 million.

13. The third entity is the Waters Family Trust.  On the wife’s evidence, the husband is the appointor of the trust and to that extent I can have some comfort that he has control over it.  Leaving aside the finer details of the mathematics, it is clear that there is only about $300,000 in equity in the assets that are owned by the family trust.  But on the assumption that the husband has the control and as the appointor of the trust, could make a distribution under that trust, it seems that adding those figures together I can come up with an equity in the control of the husband of about $2.4 million.

14. Without tying the wife to a precise position, her counsel quite property says that she might be seeking up to about 45 per cent.  On that basis, she is looking for somewhere around the million-dollar mark.  Again the precise details do not matter.  What is obviously clear is that if the husband did something inappropriate, the assets that are otherwise in his control would enable the wife’s judgment in due course to be satisfied.

15. The husband’s position quite clearly is that he does not want to lose, but equally I have to take into account the position of the wife.  Her concern is that she is not being given adequate information and that can be seen by counsel for the wife indicating that none of this material is very clear and these various things ought to be much clearer than they are.  There is no reliable valuation in this case and on it goes.

16. The parties now understand that they have a primary obligation in a property case to make sure that each fulfils the duty of disclosure. Having regard to the fact that s 114 of the Family Law Act 1975 (Cth) (“the Act”) has the power that I am exercising, the fundamental question is whether or not it is proper to make the order in the circumstance. All of the other jurisdictional factors are not in dispute. It is simply a discretionary judgment as to whether I ought to allow the husband to do what he wants to do.

17. On one view, the husband is simply changing one asset for another.  If that is the case then my $2.4 million analysis earlier becomes much, much higher.  If, indeed, the wife’s cynicism is correct then the reality is there is still ample equity to satisfy any judgment that the Court might ultimately make in her favour.  Having regard to the fact that the parties have been together in a relationship for something like six years and the structure is what it is, it would not be proper, in my view, to restrain the husband from carrying on life as normal.

18. The authorities of this Court have long said that separation cannot put the parties into a state of suspended animation.  This is one of those cases.  Because of the fact that I need to protect the assets but at the same time allow the husband to do what he sees as right for himself in the future, I think it is proper to allow him to do what he is doing and, therefore, proper to make an order that the wife remove the caveat, subject to the consideration that she be allowed to lodge a further caveat.

19. Bearing in mind that I have no control over what the Registrar of the appropriate land registry does in New South Wales – notwithstanding I understand that they do follow Court orders – it seems that the appropriate order I should make, but subject to satisfying the appropriate land registry in New South Wales as to the existence of a caveatable interest, the wife be at liberty to lodge a caveat and the husband be restrained from taking any administrative action to have it removed.  That caveat should be removed within seven days and it is then a matter of when the wife wants to lodge her caveat thereafter.

20. I also intend to waive the s 79 requirement that the parties attend a conciliation conference, but that is on condition that they undertake a mediation at their expensive, obviously, prior to 8 September this year.  If that occurs, they will not be required to attend a further Court attendance for a conciliation conference, but I will fix 10 o’clock in the morning of 6 October as the first day before me for determination of when this case goes to trial.

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 3 June 2014.

Associate: 

Date:  25 July 2014