Calhoun & Calhoun

[2021] FamCA 601

FAMILY COURT OF AUSTRALIA

Calhoun & Calhoun [2021] FamCA 601

File number(s):	CRC 62 of 2019
Judgment of:	AUSTIN J
Date of judgment:	16 August 2021
Catchwords:	FAMILY LAW – ENFORCEMENT – Where the husband contends there was a shortfall in payment due to him pursuant to final property settlement orders – Where the orders provide for the credit balance of a corporate working account to be divided equally between the parties at the date of settlement – Where the proposed settlement date was 9 February 2021, but did not occur until 23 February 2021 – Where the amount transferred to the husband was half of the credit balance on the proposed settlement date, not the credit balance on the actual settlement date – Where the wife asserts the husband was only entitled to recover the sum at the date of the proposed settlement – Declaration made that the husband is entitled to the shortfall – Where the husband seeks to recover certain payments made from the corporate working account prior to the date of settlement – Where there is contradictory evidence – Where the parties did not seek to cross-examine the other – Where the amount sought is de minimis – Where the disputed enforcement of a relatively insignificant amount should be refused – Party/party costs awarded to the husband in a fixed sum.
Legislation:	Family Law Rules 2004 (Cth) rr 19.18(1)(a), 20.07(a)
Division:	General Division
Number of paragraphs:	43
Date of hearing:	5 August 2021
Place:	Newcastle
Counsel for the Applicant:	Ms Beck
Solicitor for the Applicant:	Leckie Law
Counsel for the First Respondent:	Mrs Tanner
Solicitor for the First Respondent:	Coffs Coast Family Law
Counsel for the Second Respondent:	Mrs Tanner
Counsel for the Second Respondent:	Coffs Coast Family Law

ORDERS

CRC 62 of 2019

BETWEEN:

MR CALHOUN

Applicant

AND:

MS CALHOUN

First Respondent

B PTY LTD

Second Respondent

ORDER MADE BY:	AUSTIN J
DATE OF ORDER:	16 AUGUST 2021

THE COURT ORDERS THAT:

1.Declaration that the sum of $24,063.92 is due and owing to the Applicant husband pursuant to the orders made on 25 November 2020.

2.The Second Respondent shall pay the Applicant’s party/party costs of and incidental to this application in the fixed sum of $1,500.

3.Unless the First Respondent wife (in her capacity as director of the Second Respondent) files and serves, within seven days hereof, an affidavit confirming the payment of $25,563.92 to the Applicant, the Registrar shall forthwith cause a Third Party Debt Notice to issue to the Commonwealth Bank of Australia in favour of the Applicant against the Second Respondent.

4.For the purpose of Order 2 hereof, the Third Party Debt Notice shall take the form of the draft Third Party Debt Notice annexed to the Second Further Amended Application in a Case filed on 28 July 2021, save that the sum of $25,563.92 shall be substituted for the sum of $31,247.95.

Note:   The form of the order is subject to the entry in the Court’s records.

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 17.02 Family Law Rules 2004 (Cth).

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

REASONS FOR JUDGMENT

AUSTIN J

1. By a document entitled “Second Further Amended Application in a Case” filed on 28 July 2021, the applicant husband seeks to enforce property settlement orders made by Cleary J on 25 November 2020 between he and the respondent wife with their consent.

2. This enforcement dispute was not confined to the spouses and their respective rights and obligations under the orders. Belatedly, the husband joined the corporation B Pty Ltd to the proceedings as the second respondent. B Pty Ltd is a corporation in which the spouses formerly held joint shareholdings and directorships. Pursuant to the terms of the November 2020 orders, the husband had to resign his directorship and transfer his shareholding to the wife as an integral component of the resolution of their financial affairs.

3. The enforcement relief sought by the husband was resisted by both the wife and B Pty Ltd but, for the following reasons, enforcement orders should be made in the husband’s favour against B Pty Ltd, albeit not in the terms he sought.

   BACKGROUND

4. Prior to the settlement effected by the November 2020 orders, the spouses used B Pty Ltd as a corporate vehicle to conduct business.

5. Essentially, the November 2020 orders required the husband to transfer to the wife all his right title and interest in B Pty Ltd, other partnership assets, and two parcels of real property. In return, he received exclusive title in a third parcel of real property and payment of nearly $4.182 million. Only the spouses were parties to the substantive orders. B Pty Ltd was not.

6. The tasks necessary to implement the settlement were to occur within 50 days of the November 2020 orders, which period elapsed on 14 January 2021. Nevertheless, the date of 9 February 2021 was fixed for settlement, though the husband signed documents to resign his office and transfer his shares in B Pty Ltd well ahead of that date. The parties were unable to implement the orders on the agreed date and so settlement was pushed back two weeks to 23 February 2021.

7. The November 2020 orders required sums of money received by B Pty Ltd in the ordinary course of its business activity up until the settlement date to be shared equally between the spouses (Orders 6 and 8). Other orders restricted the wife’s unilateral control of B Pty Ltd and its business and allowed for certain adjustments to the calculations of the spouses’ financial entitlements upon settlement (Orders 17–20 and 24). The wife purportedly ensured the husband’s payment in accordance with the orders from B Pty Ltd’s assets, but adjusted to the original completion date of 9 February 2021, not the date of actual completion on 23 February 2021.

8. The husband alleges he was short-paid and this present application amounts to an attempt by him to demonstrate the quantum of the shortfall and to recover that sum from B Pty Ltd’s assets.

   REMEDIES SOUGHT

9. Despite the terms of the orders proposed in the Second Further Amended Application in a Case filed on 28 July 2021, relief was not eventually sought by the husband in that form.

10. After interrogating the husband’s counsel, it transpired the husband actually sought relief in the form of:

    (a)a declaration that he is owed $30,605.87 under the November 2020 orders (the power to make such declaration being found in r 20.07(a) of the Family Law Rules 2004 (Cth) (“the Rules”); and

    (b)the issue of a third party debt notice to the Commonwealth Bank of Australia (“CBA”) directing it to withdraw the sum of $30,605.87 (plus costs) from B Pty Ltd’s credit account for payment to him.

11. The husband ultimately conceded that the asserted liability to him under the November 2020 orders fell to B Pty Ltd and could not be attributed to the wife personally.

    EVIDENCE

12. To prosecute his application, the husband relied upon:

    (a)his affidavit filed on 13 July 2021 (the exhibits to which were not attached and were not separately tendered);

    (b)the affidavit of his solicitor, Ms Leckie, filed on 28 July 2021; and

    (c)an invoice dated 18 February 2021 (tendered as Exhibit 1).

13. The wife relied upon her affidavit filed on 31 July 2021.

14. B Pty Ltd did not separately adduce any evidence.

15. None of the witnesses was required for cross-examination.

    DISCUSSION

16. The husband sought to establish his overall entitlement by aggregation of individual breaches of Orders 6, 8 and 17–20.

    Order 6

17. Order 6 provides:

    6.That the Respondent and Applicant will receive the management and leasing fees from the business known as [B Pty Ltd] due in December 2020 and the Applicant and Respondent will receive a pro-rata leasing payment for the period 1 January 2021 to the date of settlement of the orders.

18. As can be seen, the order castes no obligation on anybody to do anything. It is drafted in rem rather than in personam. It simply records the spouses’ expectation.

19. Nonetheless, it seems the wife does not challenge the proposition that the husband’s intended pro rata share of B Pty Ltd’s income in the first quarter of 2021 was only paid until 9 February 2021, whereas he demands his share be paid until 23 February 2021.

20. The husband claims the lost amount totals $4,219.04,[1] but the evidence fails to support that calculation. How that particular figure is derived from the information provided to him in an email on 27 July 2021 remains a mystery.[2] When asked to explain it, his counsel could not do so, in which case there is no inclination to enforce payment of an amount the husband cannot substantiate.

    [1] Affidavit of Ms Leckie, para 9

    [2] Affidavit of Ms Leckie, para 8, Annex A

21. Aside from the lack of probative evidence to establish the quantum of this claim, the wife contends that any money held back from the husband in the two weeks before settlement on 23 February 2021 would reflect in B Pty Ltd’s greater bank balance as at that date, which is the subject of the husband’s next claim associated with Order 8.

    Order 8

22. Order 8 provides:

    8.That simultaneous with Orders 1 to 3 and 7 the parties do all things required to remove the [Husband] as an authority on all bank accounts held by [B Pty Ltd] and simultaneous with this order the parties are to each take a dividend of one half of the balance of the company working account Commonwealth Bank Account …83.

23. For present purposes, the husband draws attention to the latter requirement of the order for the spouses to equally divide the credit balance of B Pty Ltd’s working account.

24. The wife ascertained the credit balance of B Pty Ltd’s working account on 9 February 2021 in readiness for settlement, one-half of which sum amounted to $37,746.63. She then ensured that amount was paid to him two weeks later on 23 February 2021.[3]

    [3] Affidavit of wife, para 32; Affidavit of husband, para 15

25. For reasons which need not be canvassed, the husband’s resignation as a director of B Pty Ltd was registered in December 2020 and by February 2021 he had been removed as a signatory to B Pty Ltd’s bank accounts. Accordingly, he was unable to check the balance of B Pty Ltd’s working account on or about the times of the intended and actual settlement.[4] Afterwards, in answer to the husband’s persistent requests, the wife furnished him with B Pty Ltd’s bank account statements which showed that one-half of the credit balance in B Pty Ltd’s working account amounted to $61,810.55 as at 23 February 2021.[5]

    [4] Affidavit of husband, paras 16–21

    [5] Affidavit of husband, paras 23-27

26. The husband alleges he should have been paid that amount, whereas the wife asserts he was only entitled to the lesser sum of $37,746.63 due at the proposed settlement date. The difference is $24,063.92.

27. The wife’s position on the issue is simply that, because the husband did not settle when she expected, he is only entitled to the amount due then. However, there is no magic about the proposed settlement date of 9 February 2021. The wife alleged the husband was in breach of the November 2020 orders by failing to settle on that date, but that is not so. They were both in default of the orders by failing to settle on or before 14 January 2021, which date represented the end of the stipulated 50 days window. But their failure to fully implement the orders by that date does not mean the orders are now unenforceable.

28. According to the evidence, the wife’s solicitors advised the husband’s solicitors of her willingness to settle on 9 February 2021,[6] which date the husband accepted, but he gave several reasons for why he failed to settle at that time.[7] The parties sought to argue over the validity of those reasons but, since neither spouse asked to cross-examine the other over the factual dispute, no finding can usefully be made now.

    [6] Affidavit of wife, para 11

    [7] Affidavit of husband, para 13

29. The point is, the proposed settlement on 9 February 2021 was already beyond the settlement period specified in the November 2020 orders and so the further delay of two weeks, which was at least partly caused by the husband’s illness, hardly now hinders the husband’s entitlement to enforce the orders. Settlement was finally achieved on 23 February 2021. On that date, Order 8 required the husband’s payment of $61,810.55, which was $24,063.92 more than he received. He established his entitlement to that amount and no reason advanced by the wife satisfactorily excuses the liability.

    Orders 17–20

30. The November 2020 orders envisaged the husband would be excluded from the day-to-day control of B Pty Ltd and its business until the property settlement orders were implemented within the following 50 days. However, the orders sought to ensure that the wife’s unilateral control of B Pty Ltd would not go completely unchecked in the interregnum by imposing restrictions upon her conduct. In the event of breach of those restrictions (Orders 17–20), the orders provided for the add-back of the amounts improperly deducted from B Pty Ltd’s resources at the time of settlement (Order 24).

31. The husband alleged that four different payments made out of B Pty Ltd’s bank accounts in the period between the November 2020 orders and settlement on 23 February 2021 should now be retrospectively added back to his entitlement. The four expenses total $6,478.34 and relate to expenses incurred by B Pty Ltd for building work, council rates, insurance premium and vehicle registration.[8]

    [8] Affidavit of husband, para 37

32. The wife deposed the husband made no demand to adjust the sum of money due to him before 23 February 2021,[9] implying he was not able to maintain the demand now, but he would have been unable to make that demand if she had refused to give him copies of B Pty Ltd’s bank statements in answer to his requests, as he alleged.[10] Conversely, the wife deposed the husband did not ask for them.[11] Such flatly contradictory evidence cannot be reconciled and, in the voluntary absence of any challenge at all by way of cross-examination, cannot be resolved now by an arbitrary finding.

    [9] Affidavit of wife, para 27

    [10] Affidavit of husband, paras 23–27

    [11] Affidavit of wife, para 28

33. The evidence given about the subject payments was intricate and, given the failure of either spouse to cross-examine the other to vindicate their respective positions, it would be foolhardy to try and resolve the conflict. Aside from anything else, their unduly fastidious debate over $6,478.34 must be de minimis in the context of the husband’s receipt of nearly $4.220 million.[12]

    [12] Affidavit of husband, para 15

34. Given the unresolved factual conflict, the controversial enforcement of such a relatively insignificant amount should be refused.

    Conclusion

35. In the exercise of discretion, the husband’s claims for sums of money to enforce compliance with Orders 6 and 17–20 are rejected.

36. The husband proved his entitlement to an extra $24,063.92 under Order 8. That sum was supposed to be withdrawn from the bank account of B Pty Ltd. It was not. The sum should now be recovered from B Pty Ltd rather than from the wife personally.

37. As sought, a declaration will be made to the effect that the husband is entitled to the sum of $24,063.92 under the November 2020 orders.

38. Orders will be made for the registrar to issue a third party debt notice to the CBA requiring the garnishment of that sum (together with costs) from B Pty Ltd’s bank account unless, within seven days hereof, the wife (as director of B Pty Ltd) files and serves an affidavit confirming the sum has been paid to the husband.

    COSTS

39. The total amount sought by the husband was $30,605.87, though he sought to add costs of $642.08 in the draft third party notice annexed to his Second Further Amended Application in a Case filed on 28 July 2021. His claim for $30,605.87 failed, but he established entitlement to $24,063.92 and was therefore substantially successful.

40. In the event of substantial success, the husband sought party/party costs of $5,000 against both the wife and B Pty Ltd, who were commonly represented.

41. The wife opposed any liability for costs because she successfully defended the husband’s enforcement application. As he was impelled to belatedly concede, monies due to him under Order 8 were payable from B Pty Ltd’s working account. No order for costs is made against the wife. The wife’s costs of the aborted hearing on 26 July 2021 were reserved, but her costs incurred that day were inconsequential as her solicitor only appeared briefly by telephone.

42. B Pty Ltd conceded it could not sensibly oppose an order for costs if the enforcement application made against it was substantially successful. However, the husband’s costs relate to the entirety of the enforcement application, which he commenced in March 2021. The husband did not join B Pty Ltd as the second respondent to the application until 28 July 2021. The enforcement application was heard on 5 August 2021, in which event only a fraction of the husband’s overall costs relate to B Pty Ltd. The costs expended by the husband before 28 July 2021 were wasted, for which waste B Pty Ltd should not be responsible. To avoid further delay and expense in assessing costs, an order is made pursuant to r 19.18(1)(a) of the Family Law Rules 2004 (Cth) requiring B Pty Ltd to pay the husband’s party/party costs in the fixed amount of $1,500.

43. In the event it becomes necessary for the third party debt notice to issue, that sum of $1,500 will be added to the principal amount of $24,063.92 owed by B Pty Ltd to the husband.

I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Austin.

Associate: 

Dated:       16 August 2021