CHADWICK & CHADWICK

[2015] FamCA 1030

FAMILY COURT OF AUSTRALIA

CHADWICK & CHADWICK [2015] FamCA 1030

FAMILY LAW – PROPERTY – Where the wife seeks an order for interim spouse maintenance – Where the wife seeks an interim costs order – Where the wife has not been in paid employment for over thirty years – Where the husband has effective control of the wealth of the parties through various corporate and trust entities – Orders made.

Family Law Act 1975 (Cth) ss 72, 117

APPLICANT: Ms Chadwick

RESPONDENT: Mr Chadwick

FILE NUMBER: SYC 2478 of 2015

DATE DELIVERED: 24 November 2015

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Stevenson J

HEARING DATE: 9 November 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Levy

SOLICITOR FOR THE APPLICANT: Macpherson & Kelley Lawyers

COUNSEL FOR THE RESPONDENT: Mr Hodgson

SOLICITOR FOR THE RESPONDENT: Not applicable

Orders pending further order:

1. That the husband do all things necessary to cause payment to the wife of spouse maintenance in the sum of $1,000 per week.

2. That the husband do all things necessary to cause payment to the wife of a sum of $150,000 on account of interim costs within one calendar month of the date of these Orders.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Chadwick & Chadwick 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 SYDNEY

FILE NUMBER: SYC 2478 of 2015

Ms Chadwick

Applicant

And

Mr Chadwick

Respondent

REASONS FOR JUDGMENT

The proceedings

1. Ms Chadwick (“the wife”) and Mr Chadwick (“the husband”) are engaged in litigation concerning settlement of property.  By an Application in a Case filed on 24 July 2015 the wife sought interim orders for payment by the husband of:

   ·the deposit on the purchase of a property B Street, Suburb C;

   ·spouse maintenance of $1,713 per week; and

   ·interim costs of $200,000.

   The wife also sought orders in relation to disclosure by the husband.

2. The issues of payment of the deposit in relation to the purchase of the Suburb C property and disclosure, to some extent, were resolved and I made orders accordingly by consent.  A Registrar ordered the husband to make financial disclosure to the wife in August 2015.  I will not make a further order for disclosure.  There thus remained for determination the issues of interim costs and spouse maintenance.

Background

1. The husband and the wife, who are aged 72 and 57 respectively, commenced cohabitation in 1981 and married in 1985.  They separated in October 2014, after having lived together for approximately 33 years.

2. The parties have two children, Ms D and Mr E, who are respectively aged 28 and 25 years.  Mr E lives with the wife in the Suburb C property.  The husband also has two adult children from his first marriage.

3. The wife has been out of the paid workforce since the marriage, aside from a period of about six months in 2001/2002 when she worked part-time.  The husband has been a businessman for approximately 30 years.

4. The parties hold interests in a number of corporate entities, in particular a company known as F Pty Ltd (“F Pty Ltd”).  Through an entity known as G Pty Ltd, the parties hold a 24 per cent interest in F Pty Ltd.

5. The husband maintained that the Global Financial Crisis of 2008 had a significant negative impact on the financial fortunes of F Pty Ltd.  In May 2009 various entities within the F Pty Ltd group went into voluntary administration.  On 29 May 2012, F Pty Ltd entered into a deed of company arrangement, which included the husband as a party.

6. According to the husband, the parties sold their home at H Street, Suburb I in 2011 because no funds were available from F Pty Ltd to service the St George bank loan facility.  The sale price was $7,200,000 and the net proceeds amounted to approximately $3,162,000.

7. The husband maintained that the net proceeds of sale of the former matrimonial home were invested in a portfolio of ASX listed shares held by a company known as J Pty Ltd (“J Pty Ltd”).  The husband deposed:

   Our income was sourced from a combination of interest and dividends of approximately $120,000 per annum or $2,300 per week.  This was derived from the balance of the net proceeds of sale of the [Suburb I] property that were invested in a portfolio of ASX listed securities through [J Pty Ltd] managed by Ord Minnett.  Our living expenses were and still are partly met from this income and prior to our separation last year augmented from time to time, by our bank deposits and sales of some of these securities.

8. The Chadwick Trust (“the Trust”) was established by a deed dated 30 September 2009.  The Trustee is the J Pty Ltd company.  The husband is the appointor and, accordingly, is able to replace J Pty Ltd as trustee.  The husband has the beneficial ownership of 100 per cent of the shares in the J Pty Ltd company and he and the wife are directors.  It is thus evident that the husband has sole control of the Trust.

Consideration

Interim spouse maintenance

1. The husband proposed that the income of J Pty Ltd be applied to payment of credit card debts of approximately $300 per week and his rent of $800 per week, with the balance being divided equally between the parties.  On the husband’s evidence the weekly income of J Pty Ltd is approximately $2,300 per week, thus the wife would receive about $600 per week on this proposal.

2. Counsel for the husband conceded that the wife is unable to support herself adequately for the purposes of section 72 of the Family Law Act 1975 (Cth). The issues were thus the husband’s capacity to pay spouse maintenance and the extent of the wife’s legitimate needs.

3. According to the wife’s Financial Statement, the parties’ son Mr E has an income of $450 per week but she pays his expenses to the extent of $300 per week.  Additionally the wife provides Mr E with cash of $95 per week.  These sums alone would reduce the wife’s claimed weekly expenditure from $2,013 to $1,618, even before consideration is given to the reasonableness of the other items.  It may be that some asserted expenses, for example, “entertainment/hobbies” might be regarded as excessive at the rate of $300 per week.

4. In her Financial Statement of 20 April 2015 the wife deposed that she had a total of $99,321 in bank accounts.  By the time of her Financial Statement of 23 July 2015 the wife’s savings had reduced to $14,704, thus she spent approximately $85,000 in that period of three months.  A significant portion of this sum would appear to have been expended on fees paid to lawyers and a forensic accountant (Exhibit 4).

5. The bank statements in relation to the husband’s Commonwealth account (Exhibit 3) show that he received a total of $33,000 from F Pty Ltd between 5 May 2013 and 30 June 2015.  The husband explained these payments as “undocumented short term loans” and reimbursement of costs he incurred as trustee of the estates of his aunt and cousin, together with “corporate expenses”.

6. Assuming that the husband’s explanation for these payments is correct, it appears that he was able to access funds held by F Pty Ltd at his election.  The husband offered no further evidence in relation to these payments. 

7. The husband’s own evidence was that the parties’ income prior to their separation consisted “partly” of the income generated by the share portfolio and paid to J Pty Ltd.  As noted above, he deposed that this income was “augmented from time to time by our bank deposits and sales of some of these securities.”

8. In his report of 6 August 2015 a forensic accountant, Mr K, offered inter alia the following opinions and conclusion:

   ●the Trust made a net profit of $141,616 in 2013 and $160,102 in 2014; and

   ●the Trust holds “readily realisable assets comprising cash of $405,000 and an investment portfolio [of] $2,130,000.”

9. It seems to me that three conclusions flow from the evidence addressed above in these reasons.  Firstly, the wife’s asserted expenses are either excessive or those of an adult child of the marriage who has his own income.  Secondly, the husband recently has received the benefit of funds held by F Pty Ltd.  Thirdly, the pre-separation income of the parties was derived from sources in addition to the funds generated by the share portfolio and paid to J Pty Ltd.

10. The wife’s evidence as to her expenses is untested but, as noted above, I have reservations that her reasonable needs amount to $1,713 per week.  It should be remembered that she incurs no costs for her accommodation, as the Trust pays the outgoings in relation to the Suburb C property.  I am prepared to make orders which would see her receive a sum of $1,000 per week.

11. I have referred above to the husband’s own evidence of access to funds in addition to the money paid to J Pty Ltd.

12. Additionally, the wife deposed that the parties celebrated the husband’s 70^th birthday in 2013 by a three week stay in Europe with their children and their families, at a cost of around $30,000.  In these circumstances, I am satisfied that the husband could make arrangements for the wife to receive a weekly sum of $1,000.  As noted above his proposal would see her receive an amount of $600 per week, so the difference which he would be required to find would amount to approximately $400 per week.

Interim costs

1. In her Application in a Case filed on 24 July 2015 the wife sought inter alia an order “That pursuant to section 117 of the Act, within 14 days the respondent husband pay to the applicant wife a sum of $200,000 by way of interim costs.”  It is thus clear that the wife invoked the court’s jurisdiction only pursuant to that section.

2. There is a clear disparity in the financial circumstances of the parties.  Effectively, the husband has sole control of the wealth of the parties to the exclusion of the wife.  Of course, that situation arises due to the structure of the corporate and trust entities and not because of any act on the husband’s part to exclude the wife from access to the parties’ assets and income.

3. It seems to me that no other provision of section 117(2A) is relevant for present purposes.  I can see nothing of relevance in the conduct of either party.

4. In my view, the inequality in the financial positions of the parties is such as to warrant an order for interim costs in favour of the wife.  I am not prepared to order that the wife receive a sum of $200,000.  A costs memorandum prepared by her solicitor (Exhibit 4) indicated the following:

   ·costs of $56,541 have been paid;

   ·costs billed but not paid and work in progress amount to $23,484;

   ·anticipated costs up to the interim hearing are $13,200;

   ·anticipated costs up to a conciliation conference or mediation are $103,200; and

   ·“total anticipated costs and disbursements” amount to $153,872 inclusive of GST.

5. I have referred above to the opinion of Mr K that the Trust holds “readily realizable assets comprising cash of $405,000 and an investment portfolio [of] $2,130,000”.  It seems to me that the husband could organise payment of a lump sum to the wife.  I will make orders to the effect that the husband cause payment to the wife of a lump sum of $150,000 within one calendar month.  I am satisfied that such a payment would not compromise the legitimate expectations of either party, in terms of the final outcome of the proceedings.

I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on

24 November 2015.

Associate: 

Date:  24 November 2015