CORNISH & CORNISH
[2020] FamCA 962
•19 November 2020
FAMILY COURT OF AUSTRALIA
| CORNISH & CORNISH | [2020] FamCA 962 |
| FAMILY LAW – PROPERTY – Interlocutory proceeding – application for variation of previous orders by consent – partial property settlement application by the husband – application to discharge the jointly appointed single expert witness – various applications for injunctions and disclosure |
| Family Law Act 1975 (Cth) s 79 |
| Strahan & Strahan (Interim Property Orders) [2009] FamCAFC 166 Bearup & Bearup (1993) 16 Fam LR 797 Harris & Harris (1993) 16 Fam LR 579 Furtado & Furtado [2011] FamCA 1018 |
| APPLICANT: | Ms Cornish |
| RESPONDENT: | Mr Cornish |
| FILE NUMBER: | MLC | 12589 | of | 2019 |
| DATE DELIVERED: | 19 November 2020 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Williams J |
| HEARING DATE: | 12 October 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Puckey SC |
| SOLICITOR FOR THE APPLICANT: | Taussig Cherrie Fildes |
| THE RESPONDENT: | Self-represented |
Orders
The parties do all acts and things, including providing all relevant documents, to the single expert witness appointed to value B Company, Mr C, and he be requested by both parties to complete his valuation report within one month of the date of these orders.
Within seven days of the completion of the business valuation, the husband do all acts and things to enable his accountant to provide to the wife’s solicitors a calculation of the joint taxation liability of the parties.
Within 14 days of receipt of the husband’s accountants estimated joint tax liability position, the wife do all acts and things to enable her accountant to provide to the husband a calculation of the joint tax liability of the parties.
In the event the parties respective accountants are unable to agree about the joint tax liability of the parties, the husband and wife do all acts and things to convene a roundtable conference of the accountants, and the accountants be requested to provide a joint statement at the conclusion of the conference as to agreed and not agreed facts.
All extant interim applications are otherwise dismissed.
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 Cornish & Cornish 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 MELBOURNE |
FILE NUMBER: MLC 12589 of 2019
| Ms Cornish |
Applicant
And
| Mr Cornish |
Respondent
REASONS FOR JUDGMENT
On 7 October 2020, the wife filed an Amended Application in a Case and on 10 September 2020 the husband filed an Application in a Case. The applications were listed for hearing in the Judicial Duty List on 12 October 2020 and were heard on that day.
The matter had previously been listed in the Judicial Duty List on 20 July 2020 and the parties had reached agreement about significant interim matters which had previously been in dispute. Consent orders were made on 22 July 2020 pertaining to spousal maintenance, provision of litigation funding to the wife from the sale of shares, the sale of properties with each party to receive a partial property settlement from the proceeds of sale, injunctions against the husband, valuation of the parties business, B Company and valuations of the wife’s jewellery. On that date both parties were represented by counsel.
Despite the husband filing a lengthy affidavit and Case Summary Document on 12 October 2020, Senior Counsel for the wife had no objection to the matter being determined in the Judicial Duty List on 12 October 2020.
Due to the COVID-19 pandemic, the matter was heard electronically.
Interim Issues
At the commencement of the hearing the following interim issues were disputed, however many resolved during the hearing.
a)the timing of the valuation of the wife’s jewellery;
b)the husband’s application for partial property litigation funding;
c)variation of an injunction made by consent on 22 July 2020;
d)variation of the single expert witness appointed to value the business;
e)an injunction sought by the husband to prevent the wife withdrawing more than $500 in cash from her accounts at an ATM;
f)disclosure of alleged private investigator reports and the funds to pay for the reports;
g)the wife’s application of funds which she has received from the husband;
h)disclosure by the wife of her medical prognosis and access by the husband on a monthly basis to the wife’s medical records;
i)financial disclosure.
The wife did not seek to pursue the orders in her Amended application in a Case filed 7 October 2020, for spousal maintenance and child support.
Background
The wife is aged 47 and is engaged in home duties. The husband is aged 46 and is the managing director of a firm B Company.
The parties married in 2003 and separated on 15 October 2019. There is one child of the marriage, Z, born in 2009. On 4 June 2020, Senior Registrar Field made interim parenting orders providing for Z to live with the wife and spend time with the husband.
An application for financial relief was filed by the wife in this court on 11 November 2019. The wife has also filed a number of Applications in a Case seeking interim relief. There have been a number of procedural and interim hearings subsequent to the filing of the application. On 18 March 2020, the husband filed a Response to the wife’s Initiating Application and he has also filed a number of Applications in a Case seeking interim relief.
Applications and Documents relied upon by the parties
The Wife
The wife relied on the following documents:
a)Amended Application in a Case filed 7 October 2020;
b)affidavit of the wife filed 7 October 2020;
c)Response to the husband’s Application in a Case filed 7 October 2020;
d)Outline of Case for hearing on 12 October 2020.
The wife’s Amended Application in a Case filed 7 October 2020 sought orders which were not pursued at the interim hearing, specifically:
a)orders pertaining to subpoenas as sought in paragraph 6 of her Outline of Case;
b)injunctions as sought in paragraph 7 of her Outline of Case;
c)sale of shares as sought in paragraph 8 of her Outline of Case;
d)indemnity costs to be paid by the husband.
The Husband
The husband relied on the following documents:
a)Application in a Case filed 10 September 2020;
b)affidavit of the husband filed 12 October 2020:
c)Outline of Case for hearing on 12 October 2020.
I will address each of the category of orders sought by both parties.
Timing of the Valuation of the wife’s jewellery pursuant to the orders of 22 July 2020
On 22 July 2020, the parties entered into consent orders which provided for valuation of the wife’s jewellery by the firm D Valuers. The husband is of the opinion that of the wife’s jewellery is extremely valuable and would be worth somewhere between $100,000 and $200,000. Senior Counsel for the wife submitted that the jewellery is of sentimental value only, although the wife had agreed to value the jewellery.
The husband was frustrated that the valuation had not occurred since the making of the order. Senior Counsel for the wife submitted that as the wife has cancer she had no wish, during the COVID-19 pandemic to place herself at risk by delivering the jewellery to the proposed valuer. She was not prepared to post the jewellery to the valuer nor permit the husband to collect it for valuation. The husband conceded that the jewellery would be valued as soon practicable and he did not eventually pursue any further orders for valuation of the jewellery.
Husband’s application for partial property settlement
On 22 July 2020, orders were made providing for the wife to receive the sum of $100,000 from the sale of shares to enable her to meet her legal costs.
Additionally, paragraph 6 of the 22 July 2020 orders provide for the sale of three properties in the E Trust and for the proceeds of sale to be disbursed as set out in paragraph 7.
Paragraph 7(h) provides for the wife to receive $200,000 from the proceeds of sale and paragraph 7(i) provides for the husband to receive $50,000 from the proceeds of sale.
The three properties in the E Trust were valued by a single expert witness at approximately $2.2 million. Subsequent enquiries have ascertained that the estimated selling range is likely to be approximately $1 million less than the valuation of the single expert witness. Additionally, there will be a significant capital gains tax liability of approximately $456,000, according to a letter from the husband’s accountant which is referred to at page 58 of the husband’s affidavit of 12 October 2020. The husband seeks an increased share of the proceeds of sale of these properties.
The husband submits that he should be entitled to a partial property settlement of $300,000 to enable him to meet his legal fees, on par with the partial property settlement afforded to the wife, notwithstanding the orders of 22 July 2020.
In support of her opposition to the husband’s application for partial property settlement, Senior Counsel for the wife submitted:
a)the husband should not be entitled to pursue a further application for partial property settlement, as that application was disposed of by the orders of 22 July 2020;
b)if the court did not accept that submission, then the likely net proceeds of sale would be between $500,000 and $600,000, after taking into consideration the reduced value and capital gains tax, rather than the $2 million which the parties had previously thought may be realised from the proceeds of sale;
c)the husband has previously had the benefit of $700,000 which, as at the date of separation was in a NAB offset account, and there was a distinct possibility that the whole of the proceeds of sale of the properties would be the only source of funds to affect a settlement for the wife;
d)the wife would be prejudiced if further funds were advanced to the husband in circumstances where he has significant access to capital and income.
There were no authorities cited to support the proposition that the husband should not be entitled to pursue an application for partial property settlement, because he had previously consented to orders providing for a partial property settlement to both parties. I do not accept that proposition. The court’s power to make orders pursuant to s.79 of the Family Law Act 1975 (Cth) is exhausted upon final property orders, not interim property orders.
The submissions of the wife’s Senior Counsel were more focused on the second limb, namely that there would be insufficient assets to meet the wife’s substantive claim at trial, if the husband were to receive a cash partial property settlement, and retain a property in Suburb F, which he had previously submitted he wished to retain.
The husband submitted that he should be placed in the same funding position as the wife.
Additionally, the husband submits a substantial amount of the $700,000 of funds in the NAB offset account were applied towards significant taxation liabilities of approximately $250,000, and that the wife received significant payments from the offset account.
In the circumstances, orders should be made to enable husband to meet his legal fees from the proceeds of sale of the properties to ensure he is able to meet his commitments of spousal maintenance and child support.
The principles applicable to the court’s power to order interim funding and the principles to be applied in such an application are well settled.
The Full Court in Strahan & Strahan (Interim Property Orders) [2009] FamCAFC 166 stated at [132]:
[132] In relation to the first stage, in our view, when considering whether to exercise the power under s 79 and s 80(1)(h) of the Act to make an interim property order the "overarching consideration" is the interests of justice. It is not necessary to establish compelling circumstances. All that is required is that in the circumstances it is appropriate to exercise the power. In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.
The considered and accepted two-step approach adopted in Strahan, at paragraph [137] is as follows:
[137] 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…
As to the authority relevant to the requirement that any interim order must be capable of variation or reversal at any time prior to, or as part of, the final exercise of the s.79 power, the Full Court said in Strahan at paragraph [136] as follows:
[136] As to the third matter identified at 79,930 by the Full court in Harris, in discussion before us it was described as the "adjustment issue" or "claw-back issue". It was submitted by senior counsel for the Wife that it is relevant to consider whether an order would give the applicant "more than they would be indubitably entitled to on a final hearing" or alternatively "would it give them so much that it could not be adjusted on a final hearing?" As we have observed the Full court in Zschokke at 83,220–221 stressed the importance of consideration of the "adjustment issue" if the power in s 80(1)(h) of the Act is being exercised. We accept the submission and observe that this matter is relevant because the discretion conferred by the power in s 79 is to make such order as the court considers appropriate provided it is just and equitable to make the order in circumstances where the power will not be exhausted by the interim order. As Bryant CJ and Coleman J observed in Gabel v Yardley at [69] and [72] the interim order must be capable of variation or reversal without resort to s 79A of the Act or appeal. As Finn J said at [126] the interim order must be "capable of alteration at any time prior to, or as part of, the final exercise of the s 79 power".
Bearup & Bearup (1993) 16 Fam LR 797, Harris & Harris (1993) 16 Fam LR 579 and the decision of Murphy J in Furtado & Furtado [2011] FamCA 1018 at [10] and [11] refer to the context of restraint and caution which should be exercised by a trial judge in making interim orders.
In this case, the parties have been married for 17 or so years and have accumulated a considerable asset pool. Each party has made financial and non-financial contributions to the acquisition and preservation of those assets.
I am unable to be satisfied on the evidence before me that the husband would be likely to receive $300,000 from the sale of the properties, absent ascertaining the actual sale price of the properties and receipt of the valuation of the business. The nett proceeds of sale of the properties has yet to be established and the valuation of the husband’s business has yet to be completed, and in my view both are determinative as to whether or not the husband will receive any substantial funds from the proceeds of sale of the three properties in addition to his retention of the property situated at Suburb F. The Suburb F property, which the husband seeks to retain and which has been valued by the single expert witness at $1,200,000 is encumbered by a mortgage of approximately $670,000. The valuation process of the business is underway and indeed was the subject of complaint by the husband in this application.
Once that valuation has been completed and the three properties have been sold, it may be possible to determine whether the husband could receive more than $50,000 from the proceeds of sale of the E Trust properties and whether a further application for partial property settlement would be successful.
Having said that, if the husband receives $50,000 from the sale of the properties by way of partial property, the Suburb F property may have to be sold at the end of the day, to enable an appropriate adjustment of property between the parties.
On the evidence before me I cannot be satisfied that the husband would be likely to receive in a final property settlement $300,000, from the sale of the proceeds of the three properties, although he may well be entitled to a lesser amount. If it were the case that the properties were to realise a sale price as anticipated by the single expert witness valuation, then probably the husband would be entitled to a further partial property settlement from the proceeds of sale of the properties, subject to the valuation of the business.
Pursuant to the 22 July 2020 orders, the husband is entitled to receive $50,000 from the sale of the properties, and the equity in the Suburb F property will ensure that there are sufficient assets remaining to enable a proper adjustment between the parties at trial.
Variation of an injunction made by consent on 22 July 2020
The husband seeks that order 10 of the orders made on 22 July 2020 be set aside.
That order provides that in the event the husband seeks to make payments exceeding $20,000 per week from B Company, then the wife be notified.
The wife opposes the orders sought on the basis that the husband has not provided any evidence of why he requires a variation of the order particularly in circumstances when according to the wife he has never advised the wife that he has required to make payments exceeding $20,000 per week. Accordingly, I do not intend to discharge or vary paragraph 10 of the orders made by consent on 22 July 2020.
Variation of the single expert witness appointed to value the business
The husband seeks orders discharging the appointment of Mr C, who was appointed as a single expert witness to value the business. He seeks that one of two alternative valuers nominated by him be appointed instead and that the husband pay the costs of the new valuer.
In the alternative, if Mr C is to continue to be retained, then he prepare a draft report within five days, and a final report within 10 days, failing which a different valuer be appointed. He also seeks to:
a)specify the maximum amount that Mr C is permitted to charge the parties;
b)the husband be permitted to engage a shadow valuation;
c)Mr C and the shadow expert confer within 28 days after completion of the valuation report;
d)the husband be permitted to adduce evidence from the shadow expert at trial;
e)the wife’s solicitors disclose all correspondence with between themselves and Mr C.
In support of the orders sought, the husband submitted that the valuer had a background in international tax minimisation matters rather than evaluation of this of the type of business conducted by the parties. That submission was made in the context of the husband having nominated Mr C as the single expert witness.
The husband was also critical of what he perceived was the wife’s solicitors “guiding” or influencing the valuer, so that his impartiality was in question.
The wife position is set out at paragraphs 47 to 53 of her affidavit filed in support of her Application in a Case, it is simply that she seeks that Mr C complete the valuation. It was a matter for him whether he would then choose to engage another valuer, however he would need to make an application to adduce evidence from an adversarial witness if he chose to obtain another valuation.
During the course of submissions, the husband accepted that the appropriate course would be to enable the single expert witness appointed by the parties to complete his job within a requisite timeframe of one month.
I intend to make an order that the parties do all acts and things to facilitate the completion of Mr C’s valuation within one month from the date of these reasons.
Injunction sought by the husband to prevent the wife withdrawing more than $500 in cash from her accounts at an ATM
The husband sought orders restraining the wife from withdrawing from her own bank account any sum in cash exceeding $500, and that any withdrawals over $500 should be communicated to the husband with the purpose of such withdrawal to be communicated to him in a parenting app. He also sought that the wife be prohibited from transferring more than $500 in her bank accounts to any of her family members, and that any amounts over $500 should be communicated to the husband on the same terms as with cash withdrawals.
Most sensibly, during submissions the husband abandoned that application.
Disclosure of alleged private investigator reports and the funds to pay for the reports
The husband sought orders that the wife disclose to him all invoices and costs incurred to obtain private investigator reports. Again, during the course of submissions that application was abandoned by the husband.
Wife’s application of all funds received from the husband
The husband sought orders that a single expert forensic accountant be appointed to review the wife’s source and use of funds from 1 July 2018 to present including the application of all money she had received from him, the Australian Tax Office, family members including money from the sale of shares and monies transferred from joint bank accounts, received by child support or spousal maintenance.
He submitted that since the date of separation until 9 September 2020 the wife had received $245,000 from the husband together with her entitlements to partial property.
This application was opposed by Senior Counsel for the wife, who submitted that the wife was not required to account to the husband how she applied funds from a partial property settlement and that the distribution of funds would be taken into consideration at trial.
During submissions, the husband abandoned this application.
Disclosure by the wife of her medical prognosis and access by the husband to the wife’s medical records
Most unfortunately the wife has been diagnosed with cancer although she is now in remission.
The husband submitted that he should be able to join the wife’s G health fund to enable him to obtain information about the wife’s treatment and current health requirements. He submitted this information was required to enable him to monitors the wife’s health status and future life expectancy, in circumstances where she had the care of their daughter and when he had not been provided with any current information about her health, other than a letter from her treating oncologist stating that she was in remission.
Understandably, that application was vehemently opposed by the wife on the basis that it was an invasion of her privacy and that the husband’s ulterior motive was to undermine her recovery and mental health. Senior Counsel for the wife acknowledged that the wife’s health was relevant to the financial dispute between the parties but the degree to which the husband sought information was not. The parenting orders were made by the Senior Registrar in the context of the wife’s current health status.
During submissions the husband appeared to abandon this claim when it was explained to him that it was highly unlikely to be successful as the orders sought by him on an interim basis were intrusive and possibly beyond the power of the court.
Financial disclosure
The husband sought financial disclosure from the wife of various documents referred to at paragraphs 19 and 20 of his Case Outline.
The wife’s position was that proper financial disclosure had been made and disclosure would continue to be made. The documents referred to at paragraph 20 of the Case Outline had been provided. The documents sought at paragraph 21, namely bank statements of the wife’s brother, could not be ordered by the court.
The husband did actively pursue the disclosure and it was suggested that he provide an ongoing list of documents required to the wife’s solicitors to facilitate his disclosure requests.
How to ascertain the joint tax liability of the parties
At the conclusion of the proceedings the husband submitted that it would be appropriate to jointly appoint an accountant to ascertain the tax liability of the parties . His accountant had a different assessment of tax liability from the wife’s accountant and he submitted it would be preferable for both accountants to confer to ascertain the tax position of the parties prior to a mediation occurring.
The wife had no objection to an exchange of correspondence from both parties respective accountants pertaining to the potential tax liability of the parties, and thereafter both accountants conferring in the event they were unable to agree initially.
I intend to make an order to provide for an exchange of the parties respective asserted tax liability positions and for both accountants to confer and produce a joint statement as to agreed and non-agreed facts.
I certify that the preceding sixty-four (64) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Williams delivered 19 November 2020.
Associate:
Date: 19 November 2020
2