Chadwick and Chadwick and Anor (No. 2) - [2016] FamCA 947

FAMILY COURT OF AUSTRALIA

CHADWICK & CHADWICK AND ANOR (NO. 2)

[2016] FamCA 947

FAMILY LAW – PROPERTY – Where applicant seeks to join a third party as a second respondent – Where second respondent seeks summary dismissal of application – Where summary dismissal refused – Where second respondent is joined to the proceedings.
FAMILY LAW – PROPERTY – Transaction to defeat claims – s 106B Application – Where relief not effective – Where application is refused.
FAMILY LAW – PROPERTY – Interim distribution –– Where both parties require funds for living costs and litigation – Where interim distribution granted.
FAMILY LAW – SPOUSAL MAINTENANCE – Interim – Where Wife’s lack of capacity is by consent – Where evidence suggests Husband’s capacity to pay – Where spousal maintenance sum increased.

Family Law Act 1975 (Cth) ss 75(2), 79, 106B

Family Law Rules 2004 (Cth)
Corporations Act 2001 (Cth) s 445F

American Cyanamid v Ethicon Ltd (1975) AC 369
Australian Coarse Grain Pool Pty Ltd v Barley Marketing Board of Queensland (1982) 46 ALR 398
Blueseas Investments Pty Ltd v Mitchell and McGillivray [1999] FLC 92-856
Breedon & Bonser [2013] FamCAFC 16
DMW v CGW [1982] HCA 73
Epitoma Pty Ltd v Australian Meat Industry Employees’ Union and Ors (No.2) (1984) 54 ALR 730
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR125
R v Ross-Jones, ex parte Green [1984] HCA 82
Strahan & Strahan (2011) FLC 93-466

Tableland Peanuts Pty Ltd v Peanut Marketing Board (1984) 52 ALR 651
Yunghanns& Yunghanns [1999] FamCA64

APPLICANT:

Ms Chadwick

RESPONDENT:

Mr Chadwick

SECOND RESPONDENT:

Mr Hsiang

FILE NUMBER:

SYC

2478

2015

DATE DELIVERED:

9 November 2016

PLACE DELIVERED:

Canberra

PLACE HEARD:

Sydney

JUDGMENT OF:

Gill J

HEARING DATE:

13 July 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Schonell, SC

SOLICITOR FOR THE APPLICANT:

Macpherson & Kelly Lawyers

COUNSEL FOR THE RESPONDENT:

Mr Alexander

SOLICITOR FOR THE RESPONDENT:

Tomaras Lawyers

SOLICITOR FOR THE SECOND RESPONDENT:

Mr Tzovaras, Tzovaras Legal Corp

Orders

Spouse Maintenance

That Order 1 of the Orders dated 24 November 2015 be varied to increase the amount of spousal maintenance payable by the Respondent Husband to the Applicant Wife to the sum of $2,100 per week, the first such payment to be made on the first Monday after the date of these Orders and each Monday thereafter.

Partial Property Settlement

That within 35 days of the date of these orders, the Respondent Husband pay to the Wife the sum of $200,000 by way of partial property settlement.
Despite the orders of 14 December 2015, in order to comply with order 2 and only to the extent that it is necessary to do so, the Husband is at liberty to do all acts and things and sign all documents necessary to sell such of the shares/equities/interest rate securities held by J Pty Ltd, as Corporate Trustee of the Chadwick Family Discretionary Trust No 5, with Ord Minnett.

Further orders

That the Respondent’s application for orders as contained in his Response to an Application in a Case filed 2 May 2016 (save as to costs) is dismissed.
That the Second Respondent’s application for summary dismissal of the Applicant’s claim is dismissed.
The Application in a Case filed on 9 December 2015, further amended on 12 July 2016, (save as to costs) is otherwise dismissed and removed from the pending cases list.

Costs

That costs of each of the parties are reserved to the trial.

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 Chadwick & Chadwick & Anor 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 CANBERRA

FILE NUMBER: SYC 2478 of 2015

Ms Chadwick

Applicant

And

Mr Chadwick

Respondent

And

Mr Hsiang
Second Respondent

REASONS FOR JUDGMENT

The proceedings before me involve interlocutory applications between the husband and wife of the marriage and the second respondent, a person closely involved with the husband in his business dealings.
As between the husband and the wife, the dispute centres on interim property distribution and maintenance. The husband conducts his business through complex interconnected corporate structures and the primary areas of contention relate to an assessment of what is the property of the parties and what is the capacity of the husband to support both himself and the wife.
As between the wife and the second respondent, the dispute centres around a payment made by the husband to the second respondent, purportedly on behalf of J Pty Ltd, a company under the control of the husband. The second respondent’s position is that the funds related to the payment of a debt owed the second respondent. The wife’s position is that the transfer is a sham designed, or with the effect of, defeating her claim against the husband in the final proceedings.
The positions of each of the parties at the commencement of the proceedings are set out below.
The wife, as against the respondent husband, sought orders in accordance with her Further Amended Application in a Case as follows:
a)Order 4 - an increase in spousal maintenance from $1,000 to $2,100 per week (in the alternative, per Order 5, to cause dividends to be paid to the wife).
b)Order 6 - a partial property settlement involving the sale of shares, equities, interest rate securities held by [J Pty Ltd] in the sum of $200,000 to the wife (in the alternative, Order 7, to transfer all shares, equities, interest rate securities held by [J Pty Ltd] in relation to the [Chadwick] Family Discretionary Trust No 5 to the wife).
For the husband, orders were sought that shares currently held by Ord Minnett on behalf of J Pty Ltd be sold, and from the proceeds, each party receive $500,000, in which case there would be no opposition to the making of Orders 4 and 6 as sought by the wife.
The wife, in relation to the second respondent, sought orders in accordance with her Further Amended Application in a Case being Order 2 - a restraint from disbursing funds being $468,973.53 transferred from a Commonwealth Bank of Australia account (account number …136) and from disbursing the sum of $351,265 transferred from the same Commonwealth Bank of Australia account on 14 December 2015, without giving the applicant wife notice.
At the commencement of the proceedings the second respondent complained that the applicant had been non-compliant with Rule 6.03, in that the relevant affidavit had not been filed regarding his joinder to the proceedings. However, accepting that he had received all relevant documents, the second respondent accepted that he ought to be treated as having been properly added to the proceedings. He is seeking removal from the proceedings. This application for removal is contingent upon the success of the second respondent’s application that the orders relating to him be summarily dismissed. In the event that they are not summarily dismissed the second respondent does not seek to be removed from the proceedings.

The case involving the second respondent - application for summary dismissal

The application by the wife in relation to the second respondent concerns transactions made by the husband on 14 December 2015, where he made payment to the second respondent of $351,265 and, at the direction of the second respondent, payment of $468,973.53 to the second respondent’s mother.
The wife, on 9 December 2015, filed an application in a case to restrain the husband from dealing with certain funds (including those referred to above), returnable on 14 December 2015. The husband did not initially appear on that day, although he was represented by a lawyer. An adjournment was sought on his behalf until 2pm. When the matter was called on at approximately 2:30pm the husband had, it turned out, already made the transfers referred to above.
The second respondent seeks summary dismissal of the wife’s claim in relation to him. He advances two grounds.
Firstly, the second respondent asserts that there is no evidence that would allow it to be established, even inferentially, that the transfers made by the husband were of money that constitutes a matrimonial asset. This is said to be a threshold requirement in relation to the remedy sought under s 106B of the Family Law Act 1975 by the wife. I take the reference to “matrimonial asset” to mean “property” as defined by s4 of the Act.
Secondly, the second respondent asserts that there is no evidence to establish that the transaction was made to defeat an anticipated order in the proceedings.

Why is the money not property of the marriage?

It was put for the second respondent that the money transferred to him by J Pty Ltd was his property rather than property of the marriage, as it constituted a loan by him, to J Pty Ltd, that was repayable at call. J Pty Ltd has not, as yet, been named as a party to the proceedings.
It is important at this stage to note the relationship between J Pty Ltd and the husband. At [4] of his affidavit filed 22 February 2016, the husband accepts the wife’s description of J Pty Ltd as set out at CMC 1 of the wife’s affidavit filed 9 December 2015. Accordingly, the husband owns two of two shares in J Pty Ltd. J Pty Ltd is the trustee for the Chadwick Family Trust No 5, of which the husband is the appointor. The husband, wife, family members and other entities are the beneficiaries in various classes of this trust. The wife was previously a director along with the husband. Despite the reference in CMC 1 to the wife being removed as a director on 25 December 2015, it appears common to them that the husband removed the wife as a director on 25 November 2015.
The second respondent’s evidence as to the history behind the purported loan was that he and the husband worked full time, without remuneration, as directors for the F Group while it was under voluntary administration. A deal was struck whereby under a deed of arrangement various assets were returned to creditors, but a number of assets were excluded, including a property known as the XX property. This meant that the husband and the second respondent had the benefit of this property. This property eventually reaped the funds that the second respondent asserts constituted the loan amount to J Pty Ltd. He identified a number of documents that he asserted supported his account of the transactions that led up to the payments the subject of the wife’s application.
It was conceded by the second respondent that the documentation in relation to the arrangement for XX in the Deed of Company Arrangement did not specifically set out that the interest in XX was to become the property of the husband and second respondent.
However, while the Deed of Company Arrangement was not explicit, the second respondent’s interest was said to be made plain in another document, being a s 445F of the Corporations Act 2001 Report to Creditors. At page 48 of the annexures to the second respondent’s affidavit[1] it is recorded that the husband and Mr Hsiang would acquire residual assets. Amongst that list was included an entry for XX. It was there described that the husband and Mr Hsiang would acquire the excluded assets which included XX for $590,000.
[1] Filed 22 April 2016.
The XX property was later sold, and it was asserted that the net proceeds paid to the husband and the second respondent were in the sum of $1.64 million. The second respondent asserted that he lent his share of this XX sale to J Pty Ltd, without seeking the payment of interest, as a thank you for assistance that he had previously been given by the husband.
In support of this, at page 102 of the annexures to the second respondent’s affidavit, a direction that purported to relate to the husband and the second respondent, but not executed by the second respondent, was made as to the payment of the proceeds of the XX sale on 30 January 2013. This direction indicated that the proceeds would all be deposited into a single Australian National Bank (ANZ) account.
Page 104 of the annexures was then relied upon as showing the payment of monies to J Pty Ltd. This was said to evidence the monies from XX being paid to J Pty Ltd. The correspondence is dated 27 February 2013 and is addressed to the husband. It is unsigned over the hand of Mr L. A series of cheques are said to be enclosed, a number to be paid into the J Pty Ltd account totalling the sum of $1,271,989.40. Undermining the second respondent’s argument is that all are said to be owing to the husband with no reference to the second respondent.
Further support for the notion that the monies held in J Pty Ltd had come from Mr Hsiang was derived from page 109 of the second respondent’s annexures, being a letter composed by Mr R, an accountant who dealt with the various interests of the husband, dated 27 November 2015. There it is recorded that there is a loan attributable to both the husband and the second respondent to J Pty Ltd in the sum of $1,832,730.06. It is notable that this amount does not appear to correlate to the payment recorded at page 104 of the annexures, as described immediately above, which totals $1,271.989.40. Reference is made by Mr R to this payment being recorded in the books of account as a loan. No documentation recording such was produced before the Court.
Further support was sought to be derived from page 115 of the annexures to the second respondent’s affidavit, being a balance sheet in respect of the Chadwick Family Discretionary Trust No. 5 (of which the wife is one of a number of beneficiaries) as at 30 June 2014. J Pty Ltd is the trustee for this trust. There is an entry “loan – other $1,832,730.06” that is asserted to be a reference to the joint loan from the husband and Mr Hsiang. It is noteworthy that it is not described as such. The loan recorded immediately above it is attributed to Mr and Ms Chadwick and it is unclear why no attribution is made to “loan – other”.
Paragraphs 32 to 39 of the second respondent’s affidavit then detailed the circumstances in which he asked for his portion of the loan to J Pty Ltd be repaid to him.
The second respondent then turned to the material filed by the wife at paragraph 11 of her affidavit (No 3).[2] There she recounts that on 9 December 2015 the husband sold approximately $1 million worth of shares from the Chadwick Family Trust No 5. The second respondent then referred to annexure CMC-8 being correspondence from 7 December 2015, predating the sale of the shares. There the husband identifies that he intends to sell the Trust’s ASX securities but qualifies that representation by asserting that it is with a “view to complying with her Honour’s payment orders” being a reference to previous Orders made by Stevenson J for payments to the wife. Presumably this was referred to by the second respondent in order to suggest that the wife was on notice regarding the sale of shares, $820,238.53 of which were transferred by the husband at the direction of the second respondent on 14 December 2015. It should be noted that this in no way placed the wife on notice that a sale of shares might be made in order to make a payment to the second respondent.
[2] Filed 17 February 2016.
In summary, for the second respondent it is put that the subject transfers relate to money that belongs to the second respondent, being the repayment of a loan made to J Pty Ltd, and not constituting, therefore, the property of either of the parties. It is put that the various documents referred to above ought to be seen as supportive of the second respondent’s characterisation that the payment he received was the repayment of a loan.

Why might it be found that the transactions are amenable to a s 106B order?

The wife pointed to four matters that challenge the characterisation given by the second respondent as follows:
a)That there was no formal loan document between J Pty Ltd and the second respondent.
b)That there are no documents produced evidencing a loan.
c)That there is no written demand for payment by the second respondent to J Pty Ltd.
d)That there was a lack of consistency as to the quantum of the loan, the terms of the loan and who the parties were to this loan.

Lack of consistency regarding the asserted loan

Exhibit W2 contained an e-mail from the husband to the solicitor for the wife dated 8 April 2015, attaching an asset and liability statement of the same date for himself and for the wife. In that document J Pty Ltd is recorded as being indebted to F Group Pty Limited for proceeds of the sale of XX, being a loan from F Group Pty Limited in the sum of $1,640,000. At note 19 the husband records in relation to this amount “the loan from [F] which originated from [F’s] share of proceeds from the sale of [XX] is repayable on demand and attracts interest”. That is, at April 2015, the husband represented to the wife that the money received by J Pty Ltd was in fact a loan from the F Group Pty Limited rather than a loan from the second respondent and a loan from himself.
This contrasts with the description made by the husband in [41] of the husband’s affidavit of 8 September 2015 where he represents a loan by himself and the second respondent to J Pty Ltd, with a further loan from J Pty Ltd to another entity. However, the amount there described by the husband is $1,832,000. This amount differs significantly from the amount advised by the husband in Exhibit W3 ($1,640,000). The husband’s later affidavit of 22 February 2016 asserts at [6] that the loan from himself and the second respondent was in the sum of $1,769,000. Hence, as at February 2016 three different contentions were made by the husband as to the value of the sum in question, two of which differed from that given by the second respondent, who asserted an amount at [28] of his affidavit of 22 April 2016 of $1,640,447.06.
Thus for the wife, it is contended that there are significant discrepancies in both the amounts of money concerned and as to the source of the money.
The wife referred to page 102 of the second respondent’s affidavit of 22 April 2016. This was a document dated 30 January 2013 relating to payment from distributions from the XX Land Unit Trust and the XX Development Unit Trust. The document shows a direction made by the husband and second respondent that the payment was to be made to J Pty Ltd. That direction was purportedly given on behalf of F No …7 Pty Limited and F No …9 Pty Limited.[3] This sits uneasily with the proposition that the proceeds of the sale were the property of the husband and the second respondent in the manner they asserted.
[3] Counsel for the wife contended that there was no reference to a loan, however this seems to be consistent with a loan.
Further, the second respondent’s Exhibit E, at page 104 of his affidavit of 22 April 2016 appears to deal with the distribution of the net proceeds of sale from XX. The letter is dated 27 February 2013 and is unsigned and asserts that the amount paid into J Pty Ltd is $1,271,989.40. This is described as money owing to the husband rather than money owing to the husband and the second respondent. If accepted at face value, it again reveals both a different figure and a different explanation as to who the money was owed to.
Paragraph 29 of the husband’s affidavit of 8 September 2015 contains the husband’s assertions as to the provenance of the J Pty Ltd funds. In this explanation he asserts that the sources of the funds provided to exclude the XX property under the Deed of Arrangement were a loan from J Pty Ltd in the sum of $350,000 and a loan from F Pty Ltd in the sum of $240,000, to make up the $590,000 payment. This appears to assert that the source of funds, whether by loan or otherwise, came in part from J Pty Ltd. This leaves open the question posed by the wife as to whether or not the payments to J Pty Ltd following the sale of the XX property were in a reality, in part, repayments of the loan advanced by J Pty Ltd for the purchase of the interest in the XX property.

Contrasting again, is the entry appearing at Annexure N of the affidavit of the husband of 22 February 2016. There, at 19 February 2016 at item 16 the liability on the part of J Pty Ltd is described as a “Loan from [FPL]/Directors – [XX] Sale Proceeds” and is recorded at $964,000. This provides yet another amount and further conflict as to whom the sum belonged.
It was, in summary, asserted for the wife that the $869,000 withdrawal and payment by the husband to the second respondent and the second respondent’s mother did not correspond to repayment of a loan by the second respondent. This was said to be inferred from the significant inconsistencies in the material as to the amounts of monies involved and as to who the money belonged to, along with a lack of documentation to support either the loan or a demand for its repayment.

Summary dismissal

In support of the application for summary dismissal, it was asserted by the second respondent that the payment by J Pty Ltd to the second respondent must constitute a matrimonial asset in order for a s 106B remedy to be invoked. As, according to the second respondent, the monies were loaned to J Pty Ltd, it was asserted that they could not be said to constitute a matrimonial asset.
In relation to the issue as to whether or not the transaction was made to defeat the claim of the wife, the second respondent asserts that there is sufficient evidence to establish that he acted in a bona fide manner.
On the issue of summary dismissal I was referred to General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR125 per Barwick CJ at 128 and following.[4] Such a jurisdiction:
a)“is to be sparingly employed and is not to be used except in a clear case where the court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion”;
b)Requires that “a case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination”;
c)Whether the jurisdiction exercised is inherent, or founded on the statutory rules of the court, the need for exceptional caution is the same;
[4] General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR125.
In Breedon & Bonser [2013] FamCAFC 16 Finn and Strickland JJ emphasised that where the jurisdiction is founded in the rules of court, it is necessary to consider the particular tests set out in the rules.[5]
[5] Breedon & Bonser [2013] FamCAFC.
Rule 10.12 of the Family Law Rules 2004 (Cth) deals with applications for Summary Orders as follows:
A party may apply for summary orders after a response has been filed if the party claims, in relation to the application or response, that:
(a) the court has no jurisdiction;
(b) the other party has no legal capacity to apply for the orders sought;
(c) it is frivolous, vexatious or an abuse of process; or
(d) there is no reasonable likelihood of success.
Here the second respondent relied on two bases, being a lack of jurisdiction and there being no reasonable likelihood of success.
As to the jurisdictional issue, the second respondent asserts that the necessary jurisdictional fact cannot be found, that is that the monies the subject of the application constitute the property of the parties to the marriage. In particular, it is asserted that, as the monies are the repayment of a loan made by the second respondent to J Pty Ltd, they can in no sense be seen as the property of the parties to the marriage.
That is, it is asserted that if the monies are, or were not the property of a party to the marriage, they are neither amenable to an order under s 79, nor, more broadly, fall within the concept of matrimonial case at s 4 at (ca).
The Full Court in Yunghanns & Yunghanns [1999] FamCA64 at [109] per Lindenmayer Holden and Mullane JJ outlined the “essential principles” to be applied when dealing with such a challenge:[6]
[6] Yunghanns & Yunghanns [1999] FamCA64.
109.              Before proceeding further, we think it may be useful to summarise what we see as being the essential principles, relative to the determination of this appeal, arising from the decisions of the High Court in R v Ross-Jones, ex parte Green and D.M.W. v C.G.W. (both supra). Those essential principles, we perceive, to be:-
(1)      Before making orders in proceedings (including interlocutory orders) the Family Court of Australia, as a court of limited jurisdiction, must be satisfied:
(a)      that it has jurisdiction to make those orders in the proceedings; and
(b)      that it is appropriate to exercise that jurisdiction by making those orders on the facts of the case as then known to it.
(2)      The Court always has jurisdiction to entertain proceedings for the purpose of and up to the point of deciding whether it has jurisdiction to make the orders sought in the proceedings.
(3)      In carrying out that limited exercise of jurisdiction, the Court is required to determine any essential facts upon which the existence of its jurisdiction to make the orders sought ultimately depends (“the jurisdictional facts”). That determination is a function which is incidental to the exercise of the jurisdiction referred to in (2) above.
(4)      Where, from the very nature of the proceedings and the relief claimed, the substantive proceedings prima facie fall within the definition of “matrimonial cause” in s.4(1) of the Act, the jurisdiction to determine the jurisdictional facts, as an incident of determining whether it has jurisdiction to make the orders, is itself a matrimonial cause, and therefore within the exclusive jurisdiction of the Court.
(5)      There is a distinction between the jurisdictional facts, as defined under (3), above, and the facts the existence of which it is necessary to establish in order to entitle the applicant (subject to discretionary considerations) to an exercise in his or her favour of the jurisdiction which the Court has (“the adjudicational facts”).
(6)      Once a respondent challenges the Court’s jurisdiction to make the orders sought, the Court, before considering the adjudicational facts, must find the existence of the jurisdictional facts, on the balance of probabilities.
(7)      However, once that threshold of jurisdiction is crossed, in the case of interlocutory proceedings (at least where what is sought is an injunction in the same or similar terms to the permanent injunction sought in the substantive proceedings) the Court, before making an order, does not need to find the existence of the adjudicational facts, but only that there is a serious issue to be tried as to their existence, and that the balance of convenience supports the making of the order: American Cyanamid v Ethicon Ltd (1975) AC 369; Australian Coarse Grain Pool Pty Ltd v Barley Marketing Board of Queensland (1982) 46 ALR 398; Tableland Peanuts Pty Ltd v Peanut Marketing Board (1984) 52 ALR 651; and Epitoma Pty Ltd v Australian Meat Industry Employees’ Union and Ors (No.2) (1984) 54 ALR 730.
(8)      The only circumstance in which the Court may proceed to make orders, despite a challenge to its jurisdiction so to do, and before it has found the existence of the jurisdictional facts, is that referred to by Gibbs CJ in R v Ross-Jones, ex parte Green (supra) at 202, namely when it is considered necessary to make holding orders to maintain the status quo pending its determination (with “the utmost urgency”) of whether it does have jurisdiction.

That is, before moving to determine the appropriateness of the remedy sought by the wife, I must be satisfied as to the jurisdiction to grant the remedy. In this case, the provenance of the funds the subject of the s 106B application is raised as being a jurisdictional fact that is necessary to resolve in order for the Court to exercise the jurisdiction to make a further order regarding the funds.
The s 106B application made by the wife is directed at a disposition, the payment of the monies at the direction of the second respondent, made at the direction, or in the interest of the husband, to defeat, or as likely to defeat an anticipated order.
Here J Pty Ltd is the property of a party to the marriage. It is wholly owned by the husband. Determining the extent of the parties’ property interests, including what is properly to be determined as being comprised by J Pty Ltd, is an integral part of the court dealing with the wife’s s 79 claim. The transaction in making the payment to the second respondent bears upon that property. This is sufficient to establish jurisdiction to make an order.
Accordingly, the s 106B application is not to be summarily dismissed for want of jurisdiction.
This leaves an application for dismissal based on there being no reasonable likelihood of success.
Moving to the wife’s case as outlined above, that the monies are not in fact the repayment of a loan by the second respondent to J Pty Ltd, the inconsistencies within the evidence, about both the provenance of the monies and the quantum of the monies, raises significant questions about the husband’s and second respondent’s accounts of the transactions. These issues become more cogent when it is considered that no loan documents are produced, and no written demand for the payment produced. It could not be said that there was no evidence that undermined the bona fides of the second respondent.
The inconsistency in the documentary material necessitates a heavy reliance on the credibility of the respondents in their explanations. It is premature, in the context of interim proceedings, to make a determination one way or another regarding their credibility.
The material indicates that it is an arguable proposition that the monies paid into J Pty Ltd were monies owed to the husband (Exhibit E of the second respondent) and properly are part of the property of a party of the marriage amenable to an order under s 79 of the Act. The material further indicates that it is an arguable proposition that a portion of what was paid to J Pty Ltd was the repayment of a debt to J Pty Ltd (paragraph 29 of the husband’s affidavit of 8 September 2015), again potentially impacting the value of property of a party to the marriage amenable to adjustment.
Further, given both the circumstances outlined above and the matters later dealt with in this judgment regarding the assessment of the pool, it remains arguable both that the transaction was to defeat, or was likely to defeat an anticipated order in relation to the wife.
Given that, in the terms employed in the General Steel Industries case,[7] summary dismissal requires a “clear case” and further, given that the proceedings are still at an early interlocutory stage and I could not be “satisfied that (the court) has the requisite material,” the matters raised by the wife mean that I am not satisfied that, at final hearing, there is no likelihood of success. That is sufficient to dispose of the application for summary dismissal on either of the grounds sought by the second respondent.
[7] General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR125.
Under those circumstances, the second respondent does not seek to be removed from the proceedings.
However, the attempt by the wife to characterise the transaction as other than the repayment of the loan, and the attempt to reverse the transaction, is a matter that bears directly upon J Pty Ltd as an entity. J Pty Ltd is not, as yet, a party to these proceedings. The interests and rights of J Pty Ltd are affected by the application made by the wife and, accordingly, it would be necessary for J Pty Ltd to be a party to the proceedings before the matter could be taken further.

Interlocutory remedy sought against the second respondent

Having determined the jurisdictional issue, it is necessary to consider whether the remedy ought to be granted.
The Wife seeks orders against the second respondent as set out at Order 2 of her Further Amended Application in a Case filed 13 July 2016.
The remedy sought is a restraint upon the second respondent disbursing the funds transferred by the husband on 14 December 2015. The second respondent’s affidavit of 22 April 2016 at [35]-[39] indicates that those funds have already been disbursed. $351,250 has been paid out to the vendor of a property at Suburb M. $468,973.53 was paid by the husband directly to the second respondent’s mother.
Under these circumstances, the terms of the restraint sought are not effective in protecting the s 106B claim made by the wife. This is sufficient to refuse the relief sought.
Further, in seeking relief, the wife specifically declined to offer an undertaking as to damages. I was referred to Blueseas v Mitchell which supports the notion that failure to offer an undertaking is not an absolute bar to the granting of relief by injunction.[8] Accepting that this is so, this is still a matter that weighs heavily in determining whether or not to grant the relief sought and would be sufficient to cause me to refuse the relief in circumstances where, at this stage, such uncertainty surrounds the facts of the transaction. The risk to the third party is significant and requires the appropriate safeguard of an undertaking.
[8] Blueseas Investments Pty Ltd v Mitchell and McGillivray [1999] FLC 92-856.

The maintenance application

On 24 November 2015 Stevenson J made orders for the maintenance of the wife by the husband, in the sum of $1,000 per week. The wife, pursuant to s 83 of the Act seeks that the amount be increased to $2,100 per week. The change in her circumstances put forward as justifying the increase is the requirement for her to now pay rent, a matter that was not current at the time of the making of the previous orders.
The husband conceded before me that the wife presently lacks the ability to self-support. The requirement to pay rent, supported by Annexure CMC-1 of the wife’s affidavit filed 12 July 2016, therefore marks an additional inability on the part of the wife to adequately support herself. This inability is a prerequisite to the making of an order for maintenance.
Section 72 of the Act requires, for an order to be made, a reasonable ability on the part of the husband to maintain. The husband asserts that, without access to the funds in the J Pty Ltd Ord Minnett account, he lacks capacity to support himself, and further lacks the ability to support the wife. With access to those funds he accepts that he could make the maintenance payments sought. He did not dispute the amount of maintenance as being improper.
The wife disputes this inability on the part of the husband and asserts that he has access to undisclosed sources of funds such that I should find that he has capacity despite the apparent incapacity disclosed in his Financial Statement.
The wife pointed to Item 6 of Exhibit W4 – the asset and liability statement as at 12 July 2016, prepared by the husband. While the wife did not accept, as a general proposition, that this document accurately set out the property of the parties, one particular matter operates significantly as an admission against interest on the part of the husband. The document shows that the husband purports to have made a loan to F Pty Ltd of $434,500. This was not an amount that appeared on Exhibit W2, being the corresponding document prepared by the husband in April of 2015. Similarly, this was not an amount that appears in the husband’s financial statement as at August 2015. That is, since August 2015, the husband has been able to source funds such as to make this loan to F Pty Ltd, despite asserting being unable to support himself. In the course of submissions no explanation was advanced in respect of this loan.
The wife further points to the husband’s financial statements filed 24 August 2015 and 2 May 2016. These each assert a weekly shortfall for the husband of income versus expenditure, of approximately $1,200 and $2,100 respectively. Much of the increase in shortfall is attributable to the responsibility cast upon the husband by the Stevenson J orders for maintenance. While there are significant weekly shortfalls, the wife points to the fact that there is no corresponding entry to explain how the shortfall is met. That is, each week the husband is, apparently, able to source $2,100 to make good the shortfall, but has not disclosed how this occurs.
These two matters, unanswered by the husband, lead me to conclude firstly, that the husband is able to support himself, as evidenced by the lack of a relevant indebtedness to explain the asserted shortfall set out in his Financial Statement. Secondly, by virtue of his capacity to source funds to advance a loan to F Pty Ltd, he also has a capacity to further support the wife. Given the magnitude of what he was able to advance, where he, on his Financial Statement at August 2015 had no such funds available to him, yet by July 2016 had advanced the sum of $434,500, this capacity appears well in excess of what is necessary to meet the maintenance claim made by the wife.
I will make an order for the payment of spousal maintenance as sought by the wife.

Interim property settlement applications

The wife seeks a lump sum interim property settlement to be made in her favour of $200,000. She identifies the source of such a payment as coming from the J Pty Ltd account with Ord Minnett that holds shares worth about $1.2 million. The husband sought that he and the wife each receive a sum of $500,000, from the same source.
In submissions the husband asserted that he is content for the current assets of J Pty Ltd to be distributed between him and the wife. It was further specifically conceded by the husband that his ultimate claim is not prejudiced if the wife takes the $200,000 she seeks from J Pty Ltd. To that extent his position was that the $200,000 payment sought by the wife is not subject to what he described as “formal challenge”.
The wife does not concede that an interim distribution to the husband will not prejudice her claim.
Both the husband and wife expressed uncertainty as to the extent of the pool. The wife expressed this uncertainty as being the result of a lack of disclosure on the part of the husband. The husband accepts that disclosure has not been completed on his part, although he asserts that flows from the practical difficulties in making the disclosure rather than from tardiness. The husband expressed it as being the product of the nature of the property owned by the parties.
The framework for making an interim property settlement has been set out by the Full Court in Strahan [118]:[9]
There are two stages to the hearing of such an application where the power is to be exercised pursuant to s 80(1)(h) of the Act. This is recognised by the fact that although the power under s 79 should ordinarily be exercised on a once only basis, “circumstances may arise before there can be a final hearing” where the power is exercised. Thus the first step is to resolve whether to exercise the power before a final hearing and if it is resolved to do so then the second step involves the exercise of that power.
[9] Strahan & Strahan (2011) FLC 93-466 at [118].
Both of the parties by their applications seek the exercise of the power in advance of the hearing. The common position that the power should be exercised at this stage, even without full agreement as to how it is to be exercised, leads readily to the conclusion that the power should be exercised at this stage. This is fortified, in particular, by the wife’s identification of the looming exhaustion of the funds that she is using for litigation, with the husband’s concession that she is unable to support herself. At the time of the hearing, the wife had about $35,000 left from the Stevenson J orders. She had unpaid legal fees of $10,000 and work in progress of $7,500. Further fees were estimated to be incurred of $28,000 by 10 August 2016. At that stage it was put that she would no longer have sufficient funding to conduct litigation.

As to the second of the steps set out in Strahan, being the manner of the exercise of the power [137]:[10]
Once a court proceeds to exercise the power in s 79 of the Act, being in the substantive phase, a court is required to undertake consideration of the matters in s 79(4) including by reference to s 79(4)(e) the matters in s 75(2) so far as they are relevant. However consideration of such matters may be brief and if it is established that “it seems likely to the Court that … the applicant … will be likely receive by way of property settlement a sum sufficient to cover the advance, that would seem to be sufficient to enable the order sought to be made”: Zschokke; Polletti and Polletti per Nygh J and Wenz v Archer. As senior counsel for the Wife submitted, “provided scope can be found within the assets of the parties for an order of the size sought … then that should be the end of the matter”. In other words, in such circumstances the applicant would only be receiving what he or she was entitled to receive when the power was exhausted.[11]
[10] Ibid at [137].
[11] Strahan & Strahan (2011) FLC 93-466 at [137].
The key consideration in resolving whether it is in the interests of justice to make a particular order is that the interim adjustment ought to sit within a likely ultimate distribution to that party. The concessions made by the husband, including that a payment could be made to the wife in excess of that which she currently seeks, leads me to readily conclude that the payment sought by her is within the range of a likely distribution to her.
Having determined that the power ought to be exercised, and that the amount sought falls within a likely distribution, an order will be made as sought by the wife for the payment of a lump sum by way of partial property settlement.
The husband’s position is different. In discharging the onus of bringing his application within the framework set out in Strahan the husband does not have the benefit of a concession from the wife that corresponds to the concession made by him with respect to her. The husband asserts, by virtue of Exhibit W4, that his application for interim adjustment would leave no shortage of funds. There the husband asserts net assets at $1,961,000 plus entries at 8 and 9 relating to F Pty Ltd that as yet have no ascribed value. An assertion was made on his behalf that balancing an interim distribution against a final distribution would cause “no problem” due to the plentiful nature of property to allow adjustment.
However, the values contended for by the husband were not accepted by the wife. The material before me does not allow confidence as to the extent or value of the property of the parties. At present the constitution of the pool is an unresolved controversy, the size of the pool is unknown.
The wife, by her amended application filed 12 July 2016, changed her application from seeking 55 per cent of the net matrimonial asset pool, to seeking the payment of $2,500,000 from the husband. Even on the husband’s account of the property of the parties, this application on the part of the wife faces frustration by an interim adjustment to the husband.
Without greater certainty as to the pool, and as to what a proper claim by the wife might demand of what is available for distribution, particularly with doubts being raised as to the legitimacy of the transfers made by the husband to the second respondent, I am left in a position of being unable to establish that payment to the husband will not be of a nature that threatens a proper adjustment in respect of the wife.
Accordingly I decline to make the order sought by the husband.
Each of the parties sought their costs in relation to these interlocutory proceedings. A significant determinant in relation to whether costs orders are justified may be found in the final determination of the matters argued in these interlocutory proceedings, particularly as to the characterisation of the transaction between the husband and the second respondent. Accordingly I will reserve each party’s costs applications to the trial.

I certify that the preceding eighty-four (84) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Gill delivered on 9 November 2016.

Associate:

Date: 9 November 2016