Charonne and Charonne

[2008] FamCA 747

FAMILY COURT OF AUSTRALIA

CHARONNE & CHARONNE [2008] FamCA 747

FAMILY LAW  -  PROPERTY  -  part property order  -  injunctions  -  discovery  -  expert valuations
FAMILY LAW  -  SPOUSAL MAINTENANCE
FAMILY LAW  -  CHILDREN  -  interim orders  -  recommendation in family report  -  best interests

Family Law Act 1975 (Cth)

HUSBAND: Mr Charonne

WIFE: Ms Charonne

FILE NUMBER: MLC 4853 of 2007

DATE DELIVERED: 12 August 2008

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Brown J

HEARING DATE: 12 August, 2008

REPRESENTATION

COUNSEL FOR THE WIFE: Ms R. Stoikovska

SOLICITOR FOR THE WIFE: Marshalls & Dent

COUNSEL FOR THE HUSBAND: Mr D.J. Brown SC

THE HUSBAND: In person

Orders

1. That from the sum held in trust in the names of the parties by the solicitors for the wife, the sum of $60,000 be paid to the wife by way of part property settlement. 

2. That within 21 days hereof the husband file and serve an updated affidavit of documents. 

3. That as soon as practicable the parties do all things reasonably necessary to obtain a valuation of the Charonne Superannuation Fund by Ms. P of P Valuers (or such other expert as they agree) and the costs of that valuation be paid initially from the sum held in trust in the names of the parties by the solicitors for the wife, and be in the ultimate discretion of the trial judge. 

4. That without limiting the generality of paragraph (3) hereof, the parties provide Ms. P or such other expert as is appointed with copies of all documents requested by her. 

5. That within 21 days hereof the husband provide to the solicitors for the wife all documents in his power, possession or control evidencing the disposition by him of proceeds of the sale of his interest in B Company. 

6. That the wife have leave to file and serve subpoenas directed to the two partners in N Partners who joined N Partners at or about the same time as the husband (whether personally or through a corporate entity).  

7. That the parties have leave to file and serve such other subpoena as they deem fit. 

8. That until further order the husband pay for the maintenance of the wife, the sum of $650 per week, the first payment to be made seven days from this date and weekly thereafter.

9. That the husband be and is hereby restrained by himself, his servants and agents from encumbering the real property at V in the State of Victoria save with the consent in writing of the wife or order of the court. 

10. That each of the parties do all things reasonably necessary to authorise each bank and other financial institution at which he or she holds an account :

    (a)to provide to the other all account statements for the period 1 January, 2007 to date;  and

    (b)to provide to the other, as each statement issues, a copy of such statement;

    and without limiting the generality of this order, it applies :

    (c)in the case of the husband, to Bendigo Bank, Commercial Bank of Australia and St. George Bank;  and

    (d)in the case of the wife, to Westpac Bank.

11. That as soon as practicable each of the parties do all things reasonably necessary to enable financial statements, accounts and tax returns for the 2006, 2007 and 2008 financial years to be prepared for G Pty. Ltd. and without limiting the generality of this order :

    (a)the wife provide to the husband within 21 days financial accounts for the business trading as S Business for the financial years ending 30 June, 2007 and 30 June, 2008, including profit and loss statement, balance sheet and BAS statements; and

    (b)until further order, the wife provide to the husband quarterly accounts for S Business within 28 days of the end of each quarter, including profit and loss statement, balance sheets and BAS statements;

    and the costs of the preparation of the financial statements, accounts and tax returns for G Pty. Ltd. be borne equally between the parties and paid (unless agreed to the contrary otherwise) from the funds held in trust in the parties’ names with the wife’s solicitor. 

12. That all extant applications for interim orders are otherwise dismissed. 

13. That the competing applications for financial and parenting orders be placed in the pool of cases awaiting trial notice allocation.

14. That the reasons for judgment this day be transcribed and a copy be made available to the parties. 

1. That pursuant to Rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of counsel, including senior counsel.

AND THE COURT NOTES

That the husband asserts that he has obtained a valuation of real property in Japan and that the property is valued at AUD$150,000 and the wife reserves the right to seek an independent valuation of that property pending translation of a document provided by the husband and the provision by him of the letter of instructions to the Japanese valuer. 

IT IS NOTED  that publication of this judgment under the pseudonym  Charonne & Charonne is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 4853 of 2007

MR CHARONNE

Husband

And

MS CHARONNE

Wife

REASONS FOR JUDGMENT

1. This is the most recent of a series of interim hearings in this case, which commenced in May 2007 and has already generated close to 70 documents on the court file.  Before the court are financial applications, and applications relating to the parties' daughter (“the child”).

Background

1. The parties met in 1996 and commenced a relationship the following year.  At that time the husband was practising his profession in B and the wife was living in R.  The wife moved to K in 1998.  The parties married in July 2002 and by that time the wife, and her three children from previous relationships, were living in what became the parties’ matrimonial home in C.  In 2003, the husband moved from B to C.  The parties separated under the one roof in late 2006 and the husband left the former matrimonial home in July 2007. 

2. The difficulties the parties have faced since separation are illustrated in the family report, which demonstrates the continuing tensions and, in some areas, animosity, between them.  It is the wife's contention that the husband abused alcohol when they were together and continues to do so, that he was verbally abusive to her in the child’s presence, and was violent towards her.  The husband denies all of those allegations and contends that the wife has been and remains hostile and alienating, particularly in relation to the child.

3. For the last couple of years the wife has conducted a retail business in S Street.  The husband practices a profession. He changed firms, if one can use such an old-fashioned expression, in July this year, moving from B Company to an entity known as N Partners. 

4. A plethora of material has been filed, including material from two experts, Mr K and Mr M.  Numerous orders have been made in an attempt to move the case along the litigation pathway; some have been complied with, some have not.  The parties seem to have taken a robust attitude and their solicitors are trying to move the matter further forward.  I am aware that judicial homilies are of limited use but when a little more material is before the court, a roundtable conference, or a mediation by a senior and experienced practitioner, might well bear fruit and save the parties a long and inevitably very expensive trial.

5. The application before the court is the amended application filed by the wife on 19 June.  Events have overtaken some of the orders sought and not all are pressed.  I am not critical of the husband for not filing an amended response.  Reference has been made to an earlier amended response, filed by him on 8 February, and it is clear that the parties are well aware of the matters to be determined by the court.

Litigation funding

1. I will start with one of the more straightforward of the applications.  The wife sought the payment of funds, by way of litigation funding and her solicitor swore two affidavits in support of that application.  The parties have agreed that the sum of $60,000 will be paid to the wife by way of part property settlement.  That can be utilised by her to fund the litigation.  There remains a dispute as to whether the $60,000 should come from funds held in trust, being the balance of proceeds of sale of the former matrimonial home of some $260,000, or from another source. 

2. The submission of the wife is that although the husband says that his financial position is parlous, he has recently paid an additional $99,000 to reduce a mortgage with St George over a property at H, where there is no evidence of arrears and no evidence that the bank has pressed for a capital payment.  It is put that this is indicative of a capacity to use income surplus to immediate requirements to increase the equity in a property owned by him.  That may be relevant to other aspects of the applications before me today but I am not satisfied that it follows that the $60,000 should be paid from unspecified funds of the husband or by re-drawing against that mortgage.  The $60,000 will be taken from the funds held in trust in the names of the parties. 

Discovery

1. The wife sought an updated affidavit of documents, which is not opposed.  I will tentatively fix 21 days as the period in which it is to be filed, but I am happy to hear from counsel for the husband in due course, if a longer period is sought.

Valuation of superannuation fund

1. There is then the question of the appointment of a single expert to value the Charonne Superannuation Fund.  An order was made on 20 February this year which provided that, failing agreement on a number of valuations within 14 days, single expert valuations be obtained of a number of assets, including the interest in this fund.  The parties have agreed that Ms P of P Valuers will undertake a valuation of the Charonne Superannuation Fund, provided the cost will be no more than $1,300, plus GST. 

Sale of interest in B Company

1. The wife sought documents evidencing the disposition by the husband of the proceeds of sale of his interest in B Company.  The submission was couched in terms of source documents.  The husband is prepared to agree to provide documents within his power, possession and control.  I will not repeat what I said to counsel in the course of discussion.  I do propose to make an order referable to documents in his power, possession and control. 

2. The wife also sought an order that the husband use his best endeavours to provide evidence of what was paid by the two other partners who joined N Partners at, or just prior to, the time the husband came in, as he has deposed that their acquisition cost fixed the price for his entry into that practice.  I do not propose to make an order in those terms.  The wife will be given leave to issue subpoenas addressed to those partners.  Costs can remedy a problem if it is found, in due course, that this evidence should have been provided by the husband. 

Husband’s income

1. Similarly, counsel for the wife pressed for an order referable to the basis of the husband's estimation of his annual income at $150,000.  Unless such an order is made by consent, I am not minded to make an order in those terms at this time.  I repeat what I said earlier, which is that the husband will almost certainly have to establish that in the trial as the court may be a little sceptical of the figure, having regard to the lifestyle the parties have enjoyed in the past and the lifestyle he continues to enjoy. 

Property in Japan

1. There is then a question of the valuation of a property in Japan, or the husband’s interest in a property in Japan.  Counsel for the wife advised that she would be content with a notation that the husband has asserted he has obtained a valuation of that property, and the valuation is of some $A150,000.  She reserves the right to seek an independent valuation, pending translation of a document provided by the husband.  I will make a notation to that effect.  I note for the record that the wife initially put forward the names of two valuers to undertake a valuation of the property.  The husband's position is they were too expensive and that he obtained a valuation from another expert.

Financial statements

1. There is then the issue of orders referable to the preparation of financial statements, amongst others, of a company called G Pty Ltd.  G Pty Ltd is the trustee of the Charonne Business Trust.  The business name S Business (the retail business conducted by the wife) is registered to G Pty Ltd.  The husband is the sole director and secretary of G Pty Ltd, and it is that company which has rented the premises in S Street, from which the business operates. 

2. The retail business was set up in May 2006.  About $30,000, as I understand the evidence, was injected into it.  It is clear that when the parties were together the husband handled financial aspects and the structural or corporate aspects of the transaction.  The wife undertook the activity of procuring stock and running the business.  It is the husband's submission, and I will refer to this further, that the business is far more lucrative than the wife is prepared to concede and that it has a value which should be taken into account when determining the asset pool.

3. It is apparent that each of the parties expresses scepticism about the value the other attributes to the business in which he or she works.  Each expresses scepticism about the financial resources available to the other.  Each accuses the other of failing to make full and proper disclosure of financial affairs.  Each asserts that the failure to adduce evidence is the responsibility of the other;  an example is the valuation of S Business.  The court cannot make findings on these matters at this time.  What is important is that orders move the case along the litigation pathway so if it requires a judicial determination, that can occur. 

4. What the husband seeks are orders in terms of paragraph 22 of his amended response, in particular sub-paragraphs (c), (d) and (e).  An order made on 20 February, 2008 required the husband to arrange a valuation of S Business and required the wife co-operate to achieve that.  By implication, each accuses the other of responsibility for the fact no valuation has been done.  There is no point in the court considering this now;  as Mr. Brown said, the evidence would not allow findings to be made. 

5. Orders will require the wife to provide to the husband the information sought in paragraphs 22(c), (d) and (e) and require the parties, as they are required pursuant to the earlier order, to arrange a valuation of the business.  The order will provide - if counsel want to put in a form of it, I am happy to use that - that the parties be jointly responsible for the preparation of the financial statements and accounts of G Pty Ltd for the financial years 2006, 2007 and 2008. 

Bank statements

1. The parties seek that each authorise his or her banks and financial institutions to provide to the other copies of financial statements, whether statements are provided by internet or in hard copy.  In the wife’s case, she sought statements from Bendigo, CBA and St. George from 1 January, 2007 to date, and an authority to enable their provision in the future.  She does not oppose an order in similar terms referable to her bank, which is Westpac.  I will make those orders.

Spousal maintenance

1. That leaves what might be called one of the two more significant matters argued before me today, being the question of spousal maintenance.  The Family Law Act 1975 provides that each party to a marriage has a responsibility to maintain the other party to the marriage to the extent that other party cannot maintain him or herself adequately and he or she has the capacity to do so. The matters to take into account are those set out in s.75(2) of the Family Law Act.

2. There is much in contention about the husband’s financial position.  The court must try to piece together broad assertions in his most recently filed affidavits (including the affidavit filed yesterday) with the financial statement filed by him earlier in the proceedings.  Given the number of assets and the asserted change in his financial position since July of this year, a composite document is going to have to be prepared and it may need to be a financial affidavit, rather than a form 13, which is not designed for cases of this complexity. 

3. The husband deposed that he hopes to earn $150,000 per annum for his work for N Partners but that his present income is closer to $120,000.  He deposed to very considerable demands upon that income, to negatively geared properties, to outgoings and expenses of H property, and to a generally parlous financial position.

4. The reality is that the husband has been able to put $99,000 into the H property mortgage. There is no evidence he has tried to remove assets from the jurisdiction. If the cash is in the property, always subject to a downward market (given the current snow season, that market might be one of the few that is not declining) the asset is preserved.  But that capital injection demonstrates a capacity to accrue funds and apply them to discretionary expenditure. 

5. Further, the husband’s financial position is not so parlous that he had to break the habit of a decade, and have a skiing holiday in Canada earlier this year, with his current partner.  He has found funds to inject into his MasterCard;  evidence of payments between 7 February and 6 March is before the court and the sums are considerable.  The husband can still afford to play golf;  that is borne out by the child’s complaints to the family reporter about her own attendances at golf with him. 

6. The husband has deposed to a level of support for his current partner at a very modest level.  He conceded a few modest payments and deposed that a number of other payments which, on their face, appear to have been made to Ms. U, were, in fact, repayment to her of money she lent or expended on his behalf.  If her income is as low as he asserts – he deposed to around $1,000 per week in his most recent affidavit – one might wonder at her capacity to lend him significant sums but she may have other financial resources, of which the court knows nothing.

7. The wife has been in tenanted accommodation since February 2008, when the sale of the former matrimonial home in C settled.  In July 2007 the husband paid her $20,000 by way of lump sum maintenance and relocation expenses and an order provided he pay her $450 per week by way of spousal maintenance until the sale of the former matrimonial home settled. 

8. The wife's evidence is of using all capital sums received, including that $20,000.  She seeks spousal maintenance of $450 per week.  In addition she seeks that he either pay her current rent of $415 per week or, subject to any tenancy arrangement in respect of it, gives her possession (in the interim) of a property owned by the husband in V, in which she and the child could live.  That property, the evidence establishes, is unencumbered.  As I understand it, the husband does not oppose an order that he not encumber it without the written consent of the wife or order of the court. 

9. The husband's submission is that the wife is hiding income from the retail business and that she can generate an income of some $50,000 to $70,000 a year on which to live.  He placed significant weight on a document tendered this morning, acquired through a subpoena directed to Mr A.  The fax receipt on the document is 23 January, 2008.  It is the wife’s application for the residence in which she and the child presently live.  In it, she deposed to a weekly income of $1,200. 

10. It is put by the husband that this is definitive evidence that she has an income of $1,200 per week, and, thus, no need for spousal maintenance.  It is put that even were one to include in the $1,200 the sum of $450 then paid to her by the husband, pursuant to the earlier orders, it would still amount to an admission, against interest, of receipt of $750 per week.  In her most recent financial statement the wife deposes to a nil income from S Business.

1. The wife relied on the evidence of Mr K, which is that the business was only generating an income of around $5,000 per annum.  At that time the rental was $25,000.  Recently, it increased to just over $31,000 as a result of a rent review in March of this year.  It is put that the rent increase has swallowed any profit of the business;  it is now not running at a profit at all and is not an income source for her.

2. I should note that the husband relied on an affidavit sworn by Mr M, who analysed Mr K’s opinion, and does not agree with a number of the assumptions or conclusions of Mr. K.  That is not a contest the court can resolve today.  It is a nice illustration of the benefit of single expert evidence in cases like this. 

3. The husband pointed to the wife's most recent financial statement in which she deposed to personal weekly expenses of $418 per week for herself, and $212 for the child.  She deposed to spending $155 to support another adult and I assume that is her daughter, E, who lives with her and is 19 or, possibly, 20.  She receives some $700 per month by way of child support, pursuant to an assessment.  In terms of fixed expenses the wife deposed to $415 a week for rent, $16 a week for car insurance, $11 a week for car registration and $5 a week for water rates, a total of some $447.

4. I am oversimplifying the submissions of senior counsel for the husband but, in broad terms, he said, “If you take the $418 per week for the wife’s expenses, and take a bit off the $447 per week fixed expenses (attributable to the fact that the benefit of the rental goes to people other than her), then her overall expenses are in the vicinity of the $750 weekly income she has (i.e. $1,200 less $450) and well below the weekly income of $1,200 (if no deduction is made for the maintenance the husband then paid). 

5. I am not satisfied the exhibit can bear the weight, even in an interim hearing, that the husband seeks to put on it.  It is an unsworn document, not a sworn document.  The wife deposed to the circumstances in which it was made in an affidavit sworn on 18 February this year.  She will no doubt be robustly cross‑examined about that in due course but her explanation for the figure of $1,200 is the necessity to inflate income in order to be considered a potential tenant.  In a competitive rental market, for a property in the range of $415 per week, that may not be unusual.  She also deposed to no longer receiving $170 per week from a casual tenancy of the upstairs area of the rented business premises in S Street, the sub-tenant having vacated. 

6. I am not satisfied that the spousal maintenance application can be so simply dismissed.  I am satisfied the wife has a need of continuing spousal maintenance. 

7. The evidence satisfies me the husband has the capacity to pay spousal maintenance in the total sum of $650 per week.  It is significantly less than the amount sought by the wife.  The order will remain on foot until further order.

The child

1. To the parties' credit - and it is one of the few things in which they can both take pleasure, when these proceedings must otherwise bring neither any joy – it is clear that the child is an absolutely delightful child.  She is doing well at school.  She seems to be a very intelligent little girl.  Inevitably, she has been touched by her parents' separation and the unhappiness which has ensued.  The mother says nothing adverse about the child’s relationship with Ms U.  Save for the unsurprising report that the child sometimes thinks her father’s attention is on his new partner rather than her, there is no evidence her relationship with Ms. U is other than comfortable. 

2. The family report in evidence is, in my experience, a little unusual.  I am told by counsel that its form is usual for Mr. Y.  I am not a social scientist but I do not think it is necessarily useful for parents to be given a verbatim account of their child’s discussion with an expert.  I do not suggest that either of these parents would visit their unhappiness upon the child, but it could be a cause of some stress and impact adversely on a child.   

3. There is much in issue in that family report.  There is an account of the wife’s allegations about the husband’s drinking, which are maintained by her and denied by him.  There is the question of the child’s identification with her mother;  she lives predominantly with her mother and is very closely attached to her, and may have taken on her mother's feelings about her father.  Importantly, there is a recommendation which would increase the time the child has with her father, without any explanation for that change. 

4. The father seeks an extra day in each week.  At the moment the child is with him from Thursday to Sunday in each alternate week, on one night in the other week and during holiday periods. 

5. To the parties' credit, the child appears to be developing very well.  Her attachment is good with both parents.  She related warmly and appropriately with each of them when observed by Mr Y, in the rather artificial environment in which people must be observed for a family report. 

6. The Family Law Act 1975 contains a presumption of equal shared parental responsibility unless the court finds abuse or violence. It can be rebutted if the court finds it not in the child’s best interests. The presumption and the consequences of the presumption must be considered in an interim hearing. If the presumption applies, as it does – no-one has suggested it does not – the court must consider whether spending equal time with each parent is a reasonably practicable and in that child's best interests and if not, whether spending substantial and significant time with both parents is reasonably practicable and in the child's best interests.

7. Whilst not expressly articulated, those are matters on which senior counsel for the husband placed weight in seeking to extend the father's time with the child.  I note that the father’s long-term application  (as I read it;  there have been a number of amendments) is for an equally shared regime, whereas the mother's long-term proposal is not.

8. The father’s proposal is certainly in line with the recommendation of Mr Y and it is understandable that he would seek to have it implemented sooner, rather than later.  The parties are not looking at a trial until next year unless they can resolve a number of facts and issues presently in dispute. But a recommendation is just that;  it is not determinative.  The absence of any reasoning for Mr. Y’s recommendation is not helpful. 

9. I have regard to the child’s views as expressed in the family report.  I accept the evidence that she loves both her parents dearly.  She is thriving under the current regime and has, on his own evidence, a meaningful relationship with her father.  I am not satisfied that the court should change the orders at this time as I am not satisfied that would be in her best interests. 

10. I would encourage the parents to consider arranging some additional time for the child with her father at times that suit the child, rather than them.  I have read the material about birthday parties and telephone calls;  I am aware of the hostility between the parties.  But if they can focus, having read Mr. Y’s report, on the child’s interests, they may be able to move forward themselves, rather than by court direction.  That may be seen by each of them as a naïve aspiration but they should consider it. 

11. I will certify for counsel, including senior counsel. 

12. I dismiss all other extant interim applications.

13. The reasons for judgment will be transcribed and a copy will be made available to the parties.

I certify that the preceding
50 paragraphs
are a true copy of the reasons for
judgment herein of the
Honourable Justice Brown AM.

Dated the           day of            2008.

…………………………………………
Associate.