Crand and Crand

[2018] FamCA 878

FAMILY COURT OF AUSTRALIA

CRAND & CRAND [2018] FamCA 878

FAMILY LAW – PROPERTY – Interim proceedings – Where the husband seeks an interim property order for payment of litigation expenses – Where the wife seeks that the application be dismissed – Where the husband has not filed a Financial Statement since May 2016 – Where the financial circumstances of the husband are not clear – Where financial transactions between the husband, his parents and their companies continues to be blurred adding further uncertainty to the financial position of the husband – Consideration of Strahan & Strahan (2011) FLC 93-466 and the principles to be applied to interim or partial property orders – Where the interests of justice would not be served if the order sought by the husband is made – Where the application is dismissed.

Family Law Act 1975 (Cth) ss 79, 80

Strahan & Strahan (2011) FLC 93-466; [2011] FamCAFC 126

APPLICANT: Mr Crand

RESPONDENT: Ms Crand

FILE NUMBER: SYC 5368 of 2013

DATE DELIVERED: 29 October 2018

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Stevenson J

HEARING DATE: 12 October 2018

REPRESENTATION

THE APPLICANT: Mr Crand appeared on his own behalf

COUNSEL FOR THE RESPONDENT: Mr Campton SC

SOLICITOR FOR THE RESPONDENT: Newnhams Solicitors

Orders

1. The Application in a Case of the husband filed on 20 July 2018 is 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 Crand & Crand 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 SYDNEY

FILE NUMBER: SYC 5368  of 2013

Mr Crand

Applicant

And

Ms Crand

Respondent

REASONS FOR JUDGMENT

The proceedings

1. Mr Crand (“the husband”) and Ms Crand (“the wife”) have been parties to litigation concerning financial issues, inter alia, since 2013.  The wife joined the husband's parents, Mr Crand Snr and Ms Crand Snr, and the companies R Pty Ltd, Q Pty Ltd (“Q”) and F Pty Ltd (“F”) as respondents to the proceedings.

2. On 20 July 2018 the husband filed an Application in a Case by which he sought the following order:

   1.That the Applicant Wife pay or cause to be paid to the trust account of [LL Lawyers] the sum of $279,000 by way of interim provision for litigation expenses for the Respondent Husband.

3. By a Response to an Application in a Case dated 27 August 2018 the wife sought orders that the husband's application be dismissed and that he pay her costs.

Background

1. Background material to these proceedings is set out in the Reasons for Judgment of Aldridge J of 29 November 2013 and myself of 22 December 2016.  The husband appeared unrepresented at the interim hearing on 12 October 2018, as his solicitors LL Lawyers filed a Notice of Ceasing to Act on 17 July 2018.  The husband deposed that he owes $78,907 to LL Lawyers on account of unpaid legal fees.

2. The husband owned and controlled a company known as F.  F held a contract for work at the U Project site, where a major fire occurred in March 2014.

3. F hired equipment from Q Pty Ltd, which is a company owned and controlled by the husband's father.  In a 2016 affidavit the husband deposed that F has a debt to Q in a sum of $1,196,789.  On 1 September 2015 an administrator was appointed for F.

4. I made the following observations in my Reasons for Judgment of 22 December 2016:

   32.The issue is thus whether the husband has established a sufficient change in his circumstances to justify a variation to the interim order for spouse maintenance.  At the outset, I would observe that there are unanswered questions in relation to the husband's financial dealings following the fire of March 2014 which, no doubt, will receive considerable scrutiny at trial.  Obviously, the husband had no control over the events which resulted in the fire but he had oversight of [F] until the administration.  No findings in relation to these issues can be made at an interim level and I will not act on the basis of suspicion and speculation.  In my view, however, the evidence indicated that there is a lack of clarity as to the husband's current financial circumstances.

   33.Documents contained in Tab 3 of Exhibit 2 demonstrated that a total sum of $1,300,000 was withdrawn from the business account of F between 22 May 2015 and 19 June 2015.  Documents contained in Tab 4 showed that a total amount of $1,797,483 was transferred from [F] to [Q] between 15 July 2014 and 21 July 2015.  All of these transactions occurred before [F] was placed into administration on 1 September 2015.

   34.There could well be valid reasons for these transactions but the husband elected to provide no explanation.  His counsel tendered in evidence paragraphs 24, 30 and 56 of the husband's affidavit sworn on 26 September 2014.  This material indicated that:

   ·the husband's companies paid rent and lease fees to his father's entities, at a rate below market level;

   ·[F] paid fees for equipment hire to entities other than [Q];

   ·[F] invested $200,000 in a development project of [Q];

   ·the [U Project] fire resulted in debts of [F] to [Q] for loss of equipment; and

   ·as at September 2014 an insurance claim was pending as a result of the fire.

   35.The financial relationships between the husband, [F] and [Q] are blurred and, as noted, will no doubt attract considerable scrutiny at trial.  It is clear that substantial sums of money have moved between [F] and [Q], in largely unexplained circumstances, and prior to the administration of the former company.

1. In my Reasons for Judgment of 22 December 2016 I recorded the following facts:

   9.In May 2015 the husband entered into an arrangement with one [Mr Y], who is the director of a company known as [Z] Pty Ltd ("[ZPL]").  On 17 June 2015 the husband executed a contract of employment with [ZPL], whereby he took on a job … on a salary package of $155,938 per annum.  The husband deposed that he receives a net salary of $1,902 per week, which is paid to him by way of a cash cheque.

   10.The husband is provided with a [4WD] sports motor vehicle by [ZPL], which purchased this car in June 2015 for $180,250.  Part of the purchase price consisted of a trade-in of a car owned by [Q], which was previously used by the husband.  The wife continues to have use of an [German] motor vehicle owned by [Q].

   11.On 12 August 2016 ZPL took out a twelve month lease on a three-bedroom plus study apartment at [AA Street, Suburb BB].  This property is occupied by the husband at a monthly rental of $5,779.

2. Exhibit 3 contained the following documents:

   1.pay advices issued to the husband by Z Pty Ltd dated 7 August 2018, 14 August 2018 and 21 August 2018, showing a net weekly income of $1,178;

   2.Life Insurance Policy with Death and TPD benefits of $2,121,800;

   3.the husband’s tax returns for 2016 and 2017 showing incomes of $129,039 and $94,336 paid by Z Pty Ltd;

   4.Child Support Agency account statement for the period 21 July 2018 to 17 August 2018 recording arrears of $256,345; and

   5.child support payer transaction statement for the period 29 May 2013 to 2 October 2018.

3. In his Outline of Case document (page 14) the husband stated that his employer has paid rent on his behalf of approximately $120,000 "as part of my salary package" since the date of separation.  The husband stated further in his Outline of Case document "[r]ent is paid by my employer, as part of my salary package" (page 17).

4. The husband did not tender a contract of his employment with Z Pty Ltd and/or Z2 Pty Ltd.  The only documents in evidence in relation to the husband's employment were the three payslips issued in August 2018 and tax returns for the years 2016 and 2017.

5. In my Reasons for Judgment of December 2016 I referred to the husband's overseas travel in 2015 and mid-2016.  The husband's evidence was that he spent three weeks in the US in December 2015 in order "to attend two engagement parties".  The husband claimed that Z Pty Ltd paid all expenses associated with this trip.  In relation to the 2016 travel the husband deposed as follows:

   17.On 15 June 2016 the husband travelled overseas and was out of Australia until 29 July 2016.  The husband gave this evidence in relation to the source of funds for this trip:

   During this trip, I travelled to [Country CC] for employment, with expenses met by my employer and to [Country DD] to visit my family with my parents and to [Country EE], staying at my employer's house.  I stayed at my parents' home in [Country DD].

   The husband gave no other evidence whatsoever in relation to the funding of this trip.

6. In my Reasons for Judgment of 22 December 2016 I made these observations concerning the financial relations between the husband, Mr Y and Z Pty Ltd:

   36.The husband's financial relationships with [Mr Y] and [ZPL] similarly are blurred and likely to come under scrutiny at trial.  There was no explanation why [Mr Y] and/or [ZPL] funded the husband's trip to the United States in December 2015.  There was no evidence in relation to the business which the husband allegedly undertook for [ZPL] in [Country CC] in June/July 2016, nor the source of funds for the rest of this trip.  There was no explanation why [ZPL] elected to take out a lease in respect of accommodation occupied by the husband.  There was no explanation of the arrangements between the husband, [Q] and [ZPL] in relation to his luxury motor vehicle.

7. The husband did not provide a Financial Statement in support of his present application.  I accept the submission of senior counsel for the wife that the husband has filed no Financial Statement since May 2016.

8. For these reasons, it seems to me that the financial circumstances of the husband are no clearer now than was the case in December 2016.  I consider that the husband has defined and explained the financial relationships between himself, Mr Y, Z Pty Ltd and Z2 Pty Ltd no more clearly now than was the case in December 2016.

9. In my Reasons for Judgment of December 2016 I stated, inter alia:

   32.... At the outset, I would observe that there are unanswered questions in relation to the husband's financial dealings following the fire of March 2014 which, no doubt, will receive considerable scrutiny at trial.  

   I said further:

   35.The financial relationships between the husband, [F] and [Q] are blurred and, as noted, will no doubt attract considerable scrutiny at trial.  It is clear that substantial sums of money have moved between [F] and [Q], in largely unexplained circumstances, and prior to the administration of the former company.

10. In his Outline of Case document senior counsel for the wife put the following submissions:

    8.It is submitted that, notwithstanding the husband has had the benefit of experienced solicitors acting for him over the past 5 years, and notwithstanding the clearly identified passages in each of the identified Reasons for Judgment, the husband has elected not to disclose any further documents or information to clarify his prior, or current, financial circumstances to the wife or the Court, or as to the largely unexplained substantial movements in monies from [F] to [Q] prior to the administration of the former – the blurred financial relationships between he, his parents, [F], [Q] and [R] continue.  The disclosure of documents and information by the husband on that topic has not meaningfully progressed since late 2015.  His last financial statement was filed 2.5 years ago in May 2016.

11. It seems to me that issues concerning the transfer of funds between F and Q have not been clarified since December 2016.  This obscurity adds to the uncertainty surrounding the financial position of the husband.

12. The wife submitted a draft Balance Sheet in the following terms:

DRAFT		Name	CRAND
BALANCE SHEET		File No	SYC 5368/2013
Ownership	Description	Wife's  Value	Husband's  Value	Requires Expert Evidence
Assets
1	J	B Street, Suburb C	$2,800,000.00	$3,000,000.00
2	J	Shares in K Pty Ltd	$1.00
3	W	BankWest account # 0-3	$198,029.00
4	W	BankWest account #44	$0.00	$90,000.00
5	W	Commonwealth Bank account #92	$0.00
6	W	Country DD bank	$3.00
7	W	Commonwealth Bank account #63	$1.00
8	W	Commonwealth Bank account #97	$0.00
9	W	Commonwealth Bank account #08	$38,841.00
10	W	Commsec Share Portfolio	$337,173.00	$330,498.00
11	W	1948 IAG shares	$14,882.00
12	W	German motor vehicle	$0.00
13	W	Household furniture	$5,000.00	$29,000.00
14	W	Funds in Newnhams Solicitors Trust account	$33,490.00
15	W	PP Pty Ltd	$1.00
16	H	F Pty Ltd	$0.00
17	H	H Pty Ltd loan account	$681.00
18	H	G Trust	$7,800.00
19	H	J Pty Ltd	$0.00
20	H	Commonwealth Bank account #86	$0.00
21	H	Commonwealth Bank account #78	$0.00
22	H	Commonwealth Bank account #88	$0.00
23	H	Commonwealth Bank account #24	$0.00
24	H	Household furniture - husband's accomm.	$15,000.00	$15,000.00
25	H	Payments made by F Pty Ltd to Q between 8/2013 and 6/2015	$2,567,909.00
26	H	Payments made by F Pty Ltd to R Pty Ltd between 9/2013 and 6/2014	$422,800.00
27	H	Payments made by F Pty Ltd to R Pty Ltd between 7/2012 and 6/2013	$621,280.00
28	H	Payments made by F Pty Ltd to J Pty Ltd then to Q Pty Ltd between 2/2013 and 2/2015	$343,047.00
29	H	F Pty Ltd investment in S Town property owned by R Pty Ltd	$200,000.00
Total	$7,605,938.00	$3,464,498.00

Addbacks/Section 75 adjustments
Ownership	Description	Wife's Value	Husband's Value	Requires Expert Evidence
30
31
Total	$0.00	$0.00
Liabilities
Ownership	Description	Wife's Value	Husband's Value	Requires Expert Evidence
32	W	American Express credit card	$1,090.00
33	W	Commonwealth Bank Mastercard	$11,589.00
34	W	Newnhams Solicitors - outstanding account	$9,413.00
35	W	Superannuation contributions for 2017 & 2018	$7,500.00
36	W	F Pty Ltd loan account	$175,843.00
37	H	F Pty Ltd loan account	$23,086.00
38	H	J Pty Ltd loan account	$0.00
39	H	Personal Liabilities	$226,926.00
40
Total	$228,521.00	$226,926.00

Superannuation
Member	Fund & Interest	Wife's Value	Husband's Value	Expert
41	W	Crand Superannuation Fund	$176,637.00
42	W	Staff Super Fund	$143,044.00
43	H	Crand Superannuation Fund	$353,400.00
44	H	F Super Fund	$19,441.00	$19,441.00
Total	$692,522.00	$19,441.00
Financial Resources
Ownership	Description	Wife's Value	Husband's Value	Requires Expert
45	W	J Pty Ltd	$10,343.00
46	W	Arrears of child support & spouse maintenance	$190,404.00
Total	$200,747.00	$0.00
Totals
Assets	$7,605,938.00	$3,464,498.00
Addbacks	$0.00	$0.00
Liabilities	-$228,521.00	-$226,926.00
Superannuation	$692,522.00	$19,441.00
Financial Resources	$200,747.00	$0.00
Total Matrimonial Asset Pool	$8,270,686.00	$3,257,013.00

CRAND BALANCE SHEET NOTES
Assets
1	From Wife's Financial Statement sworn 28/8/18. Husband's figure from last Financial Statement filed 27/5/2016
2	Trustee of the Crand Super Fund. From Single Experts report 2/8/2017. Husband's figure from last Financial Statement filed 27 May 2016
3	Being the balance of the wife's share from the RR Trust, payment from the husband's share ($85,000) and S72A payment ($89,968)
4	Wife transferred $10,000 & $66,033 to CBA account 10019008 on 8/8/2016. Husband's figures from last Financial Statement filed 27/5/2016
5	Wife's Financial Statement sworn 28/8/2018. $258,562 funds held in trust for the children
6	Wife's Financial Statement sworn 28/8/2018.
7	Wife's Financial Statement sworn 28/8/2018.
8	Wife's Financial Statement sworn 28/8/2018. $88 held in trust for the children
9	Wife's Financial Statement sworn 28/8/2018.
10	Wife's Financial Statement sworn 28/8/2018. Husband's figures from last Financial Statement filed 27/5/2016
11	Wife's Financial Statement sworn 28/8/2018.
12	Registered in name of Q Pty Ltd
13	Husband's figure from last Financial Statement filed 27/5/2016
14	Funds held represent balance of joint funds remaining after payment of Single Expert Accountant and held in trust pursuant to Order 5 made 9/2/2015
15	From Single Expert Accountant's report 2/8/2017
16	Value by Single Expert Accountant report 2/8/2017.
17	From Single Expert Accountant's report 2/8/2017
18	From Single Expert Accountant's report 2/8/2017
19	From Single Expert Accountant's report 2/8/2017
20	From Husband's last Financial Statement filed 27 May 2016
21	From Husband's last Financial Statement filed 27 May 2016
22	From Husband's last Financial Statement filed 27 May 2016
23	From Husband's last Financial Statement filed 27 May 2016
24	From Husband's last Financial Statement filed 27 May 2016
25	Paragraph 83 of Wife's affidavit sworn 27/8/2018
26	Paragraph 84 of Wife's affidavit sworn 27/8/2018
27	Paragraph 85 of Wife's affidavit sworn 27/8/2018
28	Paragraph 86 of Wife's affidavit sworn 27/8/2018
29	Paragraph 30 of Husband's affidavit sworn 26/9/2014
Addbacks
30
31
Liabilities
32	Wife's Financial Statement sworn 28/8/2018.
33	Wife's Financial Statement sworn 28/8/2018.
34	As at 24 September 2018
35	Wife's Financial Statement sworn 28/8/2018.
36	From Single Expert Accountant's report 2/8/2017
37	From Single Expert Accountant's report 2/8/2017
38	From Single Expert Accountant's report 2/8/2017
39	From Husband's last Financial Statement filed 27 May 2016
40

Superannuation
41	Wife's Financial Statement sworn 28/8/2018.
42	Wife's Financial Statement sworn 28/8/2018.
43	Husband's figure taken from Single Expert Accountant's report dated 2/8/2017
44	From Husband's last Financial Statement filed 27 May 2016
Financial Resources
45	Wife's Financial Statement sworn 28/8/2018. Represents unpaid employee entitlements
46	Wife's Financial Statement sworn 28/8/2018.
Totals

1. It was agreed by the parties that funds held in Commonwealth Bank account number #92 are quarantined for the payment of school fees for the parties' four children.  For that reason, a nil amount appears in the draft Balance Sheet in respect of this account.

Consideration

1. The husband identified the Comsec share portfolio as the source of funds for payment to him of a lump sum of $279,000.  As submitted by senior counsel for the wife, sale of these shares would generate a capital gains tax liability.  This share portfolio is held in the name of the wife, thus such a capital gains tax ("CGT") liability would fall to her nominally.  There was no evidence as to the likely amount of CGT which would result from the sale of these shares.

1. In his Outline of Case document senior counsel for the wife identified the process for determination of whether there should be an interim or partial order for property settlement as follows:

   3.As to the exercise of an interim property power pursuant to Sections 79 and 80(1)(h), the Full Court in Strahan (2013) [sic] [2011] FLC 93-466 revisited the principles effectible to interim or partial property orders, and set out effectively two steps being:-

   i.Establishing that S.80(1)(h) is enlivened.  The test is not confined to "compelling circumstances".  More is required than the mere fact that upon a final hearing the Applicant would receive the property sought.  This first step requires the "overarching considering" [sic] ["consideration"] of the interests of justice – the wife submits that this first limb is not achieved by the husband; and

   ii.The 2^nd step requires regard to be had to the "usual matters in a S.79 determination" and therefore some assessment of S.79 factors.  Given it is an imprecise exercise in the making of these orders, any discretion ought be:-

   a.Conservative so as to ensure the final property outcome is not compromised; and

   b.That the remaining property is sufficient to meet the legitimate expectation of both parties at the final hearing – in this case, a very significant matter against the exercise of discretion having regard to long standing, substantive, and continuing disclosure failures; and

   c.The interim or partial order is capable of being reversed or adjusted if it is subsequently considered necessary to do so – in this case, a determinative factor against an exercise of discretion.

2. In Strahan & Strahan (2011) FLC 93-466 the Full Court said at 85,645:

   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.

3. I accept the submission on behalf of the wife, to the effect that movement of funds between F and Q remains largely unexplained and has progressed little since December 2016.  I note that, at an interim hearing on 20 July 2018, Mr Crand Snr, Ms Crand Snr and Q objected to a subpoena to the Commonwealth Bank to produce documents which might be expected to have relevance to some of those issues.  I dismissed that objection on 15 August 2018.

4. In my view, the picture which emerges is that financial transactions and relationships between the husband, his parents and their companies continues to be blurred and likely to attract considerable scrutiny at trial.  I consider that these blurred relationships add further uncertainty to the financial position and resources available to the husband.

Conclusion

1. For these reasons, I conclude that the interests of justice would not be served if there is an exercise of power pursuant to sections 79 and 80(1)(h) of the Family Law Act 1975 (Cth) in favour of the husband. I will dismiss his Application in a Case.

I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 29 October 2018.

Associate: 

Date:  29 October 2018