CARTER & CARTER
[2011] FMCAfam 750
•1 August 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CARTER & CARTER | [2011] FMCAfam 750 |
| FAMILY LAW – Property – interim orders – partial property distribution. PRACTICE & PROCEDURE – Fraud – allegation by the respondent that the applicant has sworn a fraudulent affidavit. |
| Family Law Act 1975 (Cth), ss.72, 74, 79,80, 117 New South Wales Bar Association Barristers’ Conduct Rules, R.64 The New South Wales Barristers’ Rules, R.37 |
| In the Marriage of Poletti [1990] FamCA 79; (1990) 15 Fam LR 794 Strahan & Strahan (Interim Property Orders) [2009] FamCAFC 166 |
| Applicant: | MS CARTER |
| Respondent: | MR CARTER |
| File Number: | SYC 443 of 2011 |
| Judgment of: | Scarlett FM |
| Hearing date: | 20 June 2011 |
| Date of Last Submission: | 20 June 2011 |
| Delivered at: | Sydney |
| Delivered on: | 1 August 2011 |
REPRESENTATION
| Solicitor for the Applicant: | Ms Hauptmann |
| Solicitors for the Applicant: | Swaab Attorneys |
| Counsel for the Respondent: | The Respondent appeared in person |
| Solicitors for the Respondent: | No Solicitor |
ORDERS
UNTIL FURTHER ORDER
Within seven (7) days of these Orders:
(a)The Respondent must do all acts and things and sign all necessary documents in order to cause [C] Pty Limited at Trustee of the [Carter] Family Trust to pay to the Applicant the sum of $50,175.00 by way of her unpaid distribution in relation to the year ended 30 June 2009.
(b)The Respondent must pay to the Applicant by way of partial property settlement the sum of $37,000.00.
IT IS NOTED that publication of this judgment under the pseudonym Carter & Carter is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 443 of 2011
| MS CARTER |
Applicant
And
| MR CARTER |
Respondent
REASONS FOR JUDGMENT
Application
The Wife, who is the Applicant, seeks interim property orders. The Husband opposes those orders, on the basis that they are unjustified and will greatly prejudice his ability to keep his [omitted] business running.
Orders Sought
By her Further Amended Application in a Case filed on 26th May 2011, the Wife seeks the following interim orders:
That within 7 days of the date of these orders that:
(a)The Husband do all acts and things and sign all necessary documents in order to cause [C] Pty Limited as Trustee of the [Carter] Family Trust to pay to the wife the sum of $50,175.00 by way of unpaid distribution in relation to the year ended 30 June 2009.
(b)The Husband pay to the Wife by way of part property settlement the sum of $37,000.00.
Background
The parties commenced living together in January 1998 and were married [in] 2004. They separated on 20th December 2010.
Evidence
In her initiating affidavit sworn on 25th January 2011 the Wife deposed that she qualified in [omitted] in her native Czechoslovakia (as it then was) in 1996 and came to Australia in 1997. She commenced working as a [omitted] and in July 2000 became [omitted]. She worked in that capacity from 2000 to 2002, from 2003 to 2007, and she has returned to that occupation on a full-time basis in January 2011.
The Husband is a [omitted] by profession and has also been involved in managing [business’ omitted]. The Husband moved to [omitted] on 30th June 2008 to manage [business omitted] in that town. The [business] was sold in November 2008.
The Wife deposes that she moved to [E] on 18th September 2008 whilst the Husband moved into the [omitted] business at [W], New South Wales. She undertook the bookkeeping for the Husband’s [business] as a [omitted] and for the two [business’]. She claims that she also worked [omitted at the [W] business] between September 2008 and January 2010. She deposes that she became the licensee of the [W] business on in early 2009 and still remains the licensee.
The Wife deposes that during the time that the parties cohabited, before and after marriage, the Husband bought and sold a number of pieces of real estate. These properties were mortgaged to the Commonwealth Bank of Australia. Several of these properties were sold in 2007 and 2008 to reduce the Husband’s indebtedness to the Commonwealth Bank.
She purchased in her name a unit in Property C, which was subject to a mortgage to the St. George Bank.
There is also a company called [C] Pty Limited, which is the trustee of the [Carter] Family Trust. The Wife deposes that she and the Husband are beneficiaries of the Trust. The Trust owns the [W] business. In the year ended 30th June 2008 the Wife received a distribution of $50,396.00 from the Trust.
The Wife deposes that she and the husband travelled to Sydney on or about 19th November 2010 because he was involved in a [occupation omitted]. During that time she worked a few shifts at [omitted]. The parties stayed at a house in Property Q, which the Husband had purchased in his own name in November 2001.
The Husband and wife had an argument on 20th December 2010. The Wife deposed that she went to work the next day, but when she returned from work she found that the lock on the main front door had been removed. She was able to enter the house by another door and she removed some of her personal property. She further deposes:
I subsequently ascertained that the Husband had changed the locks on Property E where most of my clothing and personal property are located. I wish to obtain access to that property to remove my personal belongings.[1]
[1] Affidavit of Ms Carter 25.1.2011 at paragraph [48]
The Wife also deposes that on 23rd December 2010 the Husband withdrew the sum of $72,338.16 from the parties’ joint account, thereby closing the account. She later ascertained that he had removed her access to his Visa card.
The Husband sent an email to the Wife on 17th January 2011 in which he accused her acting for financial gain:
The overwhelming message from your behaviour is that your number one concern is MONEY of financial enrichment at my expense. You appear to be a gold-digger going for gold. Your deceit, lies and behaviour are all utilized to effect a classless, grubby grab for money at my expense.[2]
[2] Ibid Annexure “J”
The Wife’s solicitor wrote to the Husband on 24th January 2011, offering to negotiate an amicable property settlement. The solicitor’s letter went on to say:
We note that on 23 December 2010, which was 3 days after the date of separation, you withdrew the sum of $72,338.16 from the joint Westpac account. You advised the writer over the telephone that you have deposited that money into another account in your sole name. We are instructed to request that that money be paid to our client by way of part property settlement, so that our client can use same to pay her legal costs and living expenses. As you are aware, our client earns little as a [occupation omitted].[3]
[3] Affidavit of Ms Carter 25.1.2011 Annexure “L”
The Wife claims in her affidavit that she fears he may attempt to encumber further or dissipate some of the assets of the marriage so as to deprive her of a proper property settlement.
The Husband was, for a while, represented by a firm of solicitors, Messrs Johnston & Vaughan, and there was some correspondence between them.
In her affidavit sworn on 30th May 2011, the Wife deposes that her solicitors issued a subpoena to Westpac Banking Corporation, from which it was ascertained that the Husband had paid the sum of $72,338.16, which he had withdrawn from the parties’ joint account, into an account in his sole name and had made a number of payments out of that account between 15th February and 9th March 2011, totalling $51,881.04. The balance remaining at 23rd March 2011 stood at $20,457.12.
The Wife is seeking payment to her of an amount of $50,175.00, being her unpaid present entitlement from the [Carter] Family Trust. She annexes to her affidavit a copy of the balance sheet of [C] Pty Limited as trustee for the [Carter] Family Trust showing that entitlement. She further states that the husband is the sole director and shareholder of [C] Pty Limited.
The Wife also relies on her Financial Statement filed on 27th January 2011. In that document, she sets out her financial position, summarised as:
a)Total average weekly income $1797.00
b)Total personal expenditure $2094.00
c)Total value of property owned $864,844.00
d)Total gross value of her superannuation $78709.00
e)Total liabilities $796762.00
f)Total financial resources Nil
The Husband filed a Financial Statement and an affidavit on 30th March 2011, on a day when the matter was before the Court. The affidavit states that it was sworn on 22nd February 2011, although it was filed in Court on 30th March 2011.
In his affidavit, the Husband gives his occupation as “[omitted]”. He deposes that he suffered a back injury whilst [occupation omitted] on 25th January 2011 and further unspecified injuries on 1st February 2011 as a result of an assault. He annexes various medical certificates.
The Husband also states that he has developed depression as a result of the marital breakup:
Further as a result of my wife’s gross dishonesty and deception and emotional brutality in deserting me days before Christmas I have developed depression.[4]
[4] Affidavit of Mr Carter 22.2.2011 at paragraph [4]
He expresses the opinion that the Wife is in a better financial position than he is:
My wife is 12 years younger than me and is currently earning a lot more money than me. She has recently successfully obtained an extremely sought after highly paid [omitted] job that opens up a lot of future highly remunerative career options for her. On or about 20 December 2011 my wife informed me that she had obtained approval from St George for an additional $40,000 to $50,000 to renovate Property C.[5]
[5] Ibid at [11]
The Husband goes on to state that the Wife actually owes him money and not the other way around. He expresses the belief that her solicitors are conducting this litigation in order to run up costs:
The affidavit that has been filed on behalf of my wife is misleading, incomplete and fraudulent and lays a sturdy foundation for Swaab Lawyers to carry out a lot of further legal work to the financial detriment of my wife.[6]
[6] Affidavit of Mr Carter 22.2.2011 at [13]
The allegation of fraud is disturbing and I will have more to say on that aspect later.
In his Financial Statement filed on 30th March 2011, the Husband sets out his financial position, summarised as:
a)Total average weekly income $1,200.00
b)Total personal expenditure $4,440.00
c)Total value of property owned $6,680,000.00
d)Total gross value of superannuation $E350,000.00
e)Total liabilities $3,000.000.00
f)Total financial resources (left blank)
The Husband annexes a handwritten list of current outstanding debts totalling $60,600.00.
Submissions
The Wife’s solicitor, Ms Hauptmann, submitted that statements subpoenaed from the Commonwealth Bank showed that the Husband had made a number of payments to the Australian Taxation Office, yet the Husband was still saying that he needed money to pay tax. She also complained that the Husband had not provided any documents to the conciliation conference that took place in June.
The Wife’s solicitor claimed that all of the Husband’s assertions about his precarious financial position were all based on his say-so and that his affidavit evidence was inconsistent. She submitted that the sum of $37,000.00 sought by the Wife was only 8% of the total net assets, based on the Husband’s figures.
Further, the Wife’s solicitor had written to the Husband’s then solicitors on 28th April, suggesting that a single expert valuer be appointed for the purpose of valuing the [business], but no reply had ever been received. The parties’ estimates of the value of the [business] were a long way apart. The Wife’s estimate is $2.7 million; the Husband’s estimate is $1.7 million.
Ms Hauptmann submitted that this was a case where the parties cohabited from January 1998 until 20th December 2010, with a separation of 6 months in 2003. In property proceedings, the Wife could expect to receive at least 8% of the net asset pool, based on the lowest estimate of values.
The Wife relies on the decision of the Full Court of the Family Court in Strahan & Strahan (Interim Property Orders)[7] in support of her claim for an interim property order.
[7] [2009] FamCAFC 166
It was submitted that there would be no prejudice to the Respondent Husband in those payments being made. He is the sole director of the Trust and a distribution should already have been made to the Wife.
The Husband submitted that the Court’s primary task was to do justice between the parties. The order sought by the Wife, for an interim property order to fund the Wife’s litigation costs, should only be made in exceptional circumstances. There should only be exceptional circumstances to depart from the rule that costs follow the event.
The Husband further submitted that it would grossly prejudice him and, to an extent, his wife, to make such an order in that it would greatly diminish his ability to “run the matrimonial ship”. The Wife is living in the property in Property C, which is solely in her name. It is the only property that has a debt attached to it that has gone down. All of the other debts have not been reduced. He said that the Wife had not made any contribution to the assets. She has “jumped ship”.
The Husband said that the Wife was acutely aware of the precarious financial situation that he was in. The properties were heavily encumbered to the Commonwealth Bank and to Westpac and he was expected to pay close to $6,000.00 off the mortgages.
Further, the costs of running a [business] have escalated since 2008 when he was “mired in the worst financial crisis” of his life.
The Husband said that he had willingly agreed to the orders set out in paragraphs 1(a) and (b) of the Further Amended Application in a Case, which provide that he would give the Wife no less than 28 days prior written notice of any intention to sell, transfer, assign or further encumber any real property or personal property or of any intention to change the officeholding or shareholding of the company [Mr Carter] Pty Limited or to replace the appointer, the trustee or the beneficiaries of the [Carter] Family Trust.
The Husband stated that the only people who would benefit from the proposed interim orders would be the lawyers. He reiterated that the Court should focus on doing justice between the parties. The orders sought by Wife would significantly handicap him and prejudice the Wife.
The Relevant Law
Section 79 of the Family Law Act empowers the Court to make alteration of property interests. Section 80 gives the Court a number of powers, including the power to make an order pending the disposal of proceedings or an order until further order (s.80(1)(h)).
The Full Court of the Family Court held in the case In the Marriage of Poletti[8] that an order to one party to pay the other party’s solicitors an amount of money to be utilised on account of that party’s costs in prosecuting the claim for property settlement was properly made under the provisions of paragraph 80(1)(h) and could be supported under subsection 117(2). The Court has power in appropriate cases to make an order for interim costs.
[8] [1990] FamCA 79; (1990) 15 Fam LR 794
In Strahan & Strahan[9], the Full Court of the Family Court held that an order for the provision of funds for litigation expenses may be made as a maintenance order under ss.72 and 74 of the Act or a property settlement order under s.79 or s. 80(1)(h), or a costs order under s.117.
[9] supra
It is important for a Court to identify the relevant source of power when contemplating an order for interim provision for litigation expenses, since it is the source of power that determines the necessary preconditions, relevant considerations, factors or matters for making the order. An order sought under s.79 of the Act may be made by the Court as it considers appropriate, provided that it is satisfied that it is just and equitable to make the order.
Conclusions
In this case the Court does not have be satisfied that there are compelling circumstances in order to make an interim property order, only that it is a proper case to do so. The Court must still be satisfied that it is just and equitable to make the order.
The Husband claims that the Wife has a greater income than he does. This is rather surprising, considering that she is a [omitted] by profession and he is not only a [omitted] but a [omitted]. In any case, if the Husband is in fact income-poor, he is certainly asset rich. Most of the matrimonial assets are in the Husband’s name or under his control.
The Husband gives no reason why the Wife’s entitlement from the [Carter] Family Trust of $50,175.00, has not been paid before now. He claims that he needs all the funds he can get to maintain the precarious financial situation in which he is in. There is evidence that he withdrew the entire contents of the parties’ joint Westpac account, the sum of $72,338.16, on 23rd December 2010, some three days after the parties separated. There is also evidence that he paid the proceeds into an account in his own name and has disbursed a considerable amount of that sum.
An inference arises that the Husband has acted in the way that he has in order to prevent the wife from having access to the funds. I am also satisfied that the Husband has the capacity to pay the amounts sought, which are relatively minor compared to the total net value of the assets.
The Wife may well need to expend some of that money on solicitors’ costs and, possibly, on briefing a barrister. The Husband has stated that he wishes to negotiate a settlement without the intervention of lawyers, but that would hardly amount to a level playing field. The Husband is a [omitted] by profession and it is hardly surprising that the Wife wishes to have her own legal advice and representation.
However, there is no evidence before the Court as to what liability for costs the Wife has already incurred, or what she can expect to pay for further legal representation. For that reason, I propose to make orders under the provisions of s.80 of the Act in respect of the sums of money sought. I agree with the submission on behalf of the Wife that she can reasonably expect to receive more than 8% of the matrimonial property on a final property settlement.
There are some concerning aspects to this matter. The Husband is a [omitted] by profession, as he states in his affidavit. Whilst he initially had solicitors acting for him, they were never on the record. He appears to have drafted his affidavit and Financial Statement himself. The Husband has now elected to represent himself, in a jurisdiction in which he does not claim to have ever practised. He claims to be suffering from depression as a result of the marital breakup, and the certificates of Dr M and Dr A annexed to his affidavit refer to this diagnosis, although almost in passing. There is no diagnosis from a psychiatrist, for example.
However, the Husband needs to consider whether his decision to represent himself, in a jurisdiction where he apparently has no experience, whilst he is suffering from depression, is necessarily in his best interests.
It is also a matter of concern that the Husband has sworn an affidavit on 22nd February 2011 in which he accuses his wife, and apparently her solicitors, of filing a “fraudulent” affidavit. As a [occupation omitted], the Husband should be aware of the seriousness of making an allegation of fraud.
Rule 37 of The New South Wales Barristers’ Rules, which are currently in force, provides:
A barrister must not allege any matter of fact amounting to criminality, fraud or other serious misconduct against any person unless the barrister believes on reasonable grounds that:
(a)available material by which the allegation could be supported provides a proper basis for it; and
(b)the client wishes the allegation to be made, after having been advised of the seriousness of the allegation and of the possible consequences for the client and the case if it is not made out.
The current New South Wales Barristers’ Rules are to be replaced on 8th August 2011 by the New South Wales Bar Association Barristers’ Conduct Rules. Rule 64 of the new Rules is in identical terms to the current Rule 37.
If the Husband wishes to press his claim that his wife and her solicitor have been party to a fraudulent affidavit, he would be well advised to satisfy himself that he has reasonable grounds to believe that available material by which the allegation could be supported provides a proper basis for the allegation.
I certify that the preceding fifty-five (55) paragraphs are a true copy of the reasons for judgment of Scarlett FM
Date: 25 July 2011
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