Crimmins and Montagu

[2017] FamCA 749

FAMILY COURT OF AUSTRALIA

CRIMMINS & MONTAGU [2017] FamCA 749

FAMILY LAW – PROPERTY – Interim – Where the husband has transferred assets out of the parties’ superannuation fund into a family trust in which he has sole control without the wife’s knowledge or consent – Where those assets should be transferred back into the superannuation fund so that the assets of the parties are preserved – Where the wife seeks orders that she be made joint appointer of the family trust and appointed as director of the trustee company of the family trust – Where the wife is entitled to the orders she seeks.

Family Law Act 1975 (Cth)

APPLICANT: Ms Crimmins

RESPONDENT: Mr Montagu

FILE NUMBER: SYC 8485 of 2016

DATE DELIVERED: 25 September 2017

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 18 September 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Millar

SOLICITOR FOR THE APPLICANT: Karras Partners

COUNSEL FOR THE RESPONDENT: Mr Hodgson

SOLICITOR FOR THE RESPONDENT: Clinch Long Woodbridge

Orders

1. Within seven days the husband do all acts and things necessary to sign all instruments, documents and writings required to:

   1.1.Irrevocably appoint the wife as a director of B Pty Ltd;

   1.2.Irrevocably nominate the wife as an appointor of the Montagu Family Trust.

2. Neither party attempt to appoint any other appointor of the Montagu Family Trust without the written consent of both the husband and wife.

3. Within seven days the husband and wife do all acts and things necessary to sign all instruments, documents and writings required to:

   3.1.Cause B Pty Ltd as trustee of the Montagu Family Trust to transfer all the units held by the Trust in the C Trust to the Montagu Family Superannuation Fund;

   3.2.Cause all future distributions received from the C Trust to be deposited into the accounts of the Montagu Family Superannuation Fund.

4. The husband is forthwith restricted from dealing with any asset held by the following entities without firstly obtaining the consent of the wife in writing and her signature upon any documents required to implement any such transaction:

   4.1.Montagu Family Superannuation Fund;

   4.2.Montagu Family Trust;

   4.3.B Pty Ltd.

5. Within seven days the wife do all things and acts and sign all documents necessary to reinstate the husband’s access to the Montagu Family Superannuation Fund NAB bank account number …67 and any other bank account and any transactions on such accounts are to require the joint signatures of the husband and wife.

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 Crimmins & Montagu 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 8485  of 2016

Ms Crimmins

Applicant

And

Mr Montagu

Respondent

REASONS FOR JUDGMENT

1. The applicant seeks orders as set out in her Application in a Case filed 30 August 2017 in the following terms:

   1.    That within seven days the husband do all acts and things necessary and sign all instruments, documents and writings required to:

   1.1Irrevocably appoint the wife as a director of [B] Pty Ltd.

   1.2Irrevocably nominate the wife as an Appointor of the [Montagu Family Trust.

   1.3Cause B Pty Ltd as trustee of the Montagu Family Trust to transfer all the units held by the Trust in the C Trust to the Montagu Family Superannuation Fund.

   1.4Cause all distributions received from the C Trust to be deposited into the accounts of the Montagu Family Superannuation Fund, including such distributions issued in respect of such units as from 1 August 2016 to the extent that such distributions were not banked into the accounts of the fund.

   2.    The husband is forthwith restricted from dealing with any asset held by the following entities without firstly obtaining the consent of the wife in writing and her signature upon any documents required to implement any such transaction:

   2.1Montagu Family Superannuation Fund.

   2.2Montagu Family Trust.

   2.3B Pty Ltd.

   3.    The husband and wife shall, within seven days, instruct C Trust to pay all distributions into a bank account held with the National Australia Bank on behalf of the Montagu Family Superannuation Fund.

2. The orders sought by the wife are sought under s 79 of the Family Law Act 1975 (Cth) (“the Act”) as the wife conceded that in the context of this interim application, the pre-requisites for an order under s 106B of the Act could not be established.

3. The husband indicated he had no difficulty with orders being made in accordance with orders 1.1, 1.2, 2.1 and 2.3 as sought. He opposed orders being made in accordance with orders 1.3, 1.4, 2.2 and 3 as sought. Given the husband is agreeing that the wife become a co-director of B Pty Ltd, I do not understand the husband’s opposition to order 2.2 and I will make that order.

4. The husband otherwise seeks the wife forthwith sign in her capacity as trustee and beneficiary of the Montagu Family Superannuation Fund (“the superannuation fund”), an acknowledgement of trust and a transfer of shares so that the superannuation fund can receive back shares that the husband currently holds in D Pty Ltd. The husband also sought an order that the wife do everything necessary to reinstate his access to the Montagu Family Superannuation Fund bank account. The wife did not indicate that she opposed these orders being made.

5. The husband is 48 years of age. The wife is 46 years of age. They commenced cohabitation in November 2010 and married in 2012. They finally separated on 5 October 2016. There is one child of the marriage, E, who was born in 2013 and is currently four years of age.

6. The beneficiaries of the superannuation fund are the husband and wife.

7. The husband contributed $105,858 into the superannuation fund by way of rolling over an entitlement that he previously had from a previous superannuation fund. The wife contributed $55,000 from a partial rollover of a superannuation interest of about $200,000 she had in another superannuation fund.

8. The superannuation fund purchased 200 shares in F Pty Ltd trading as GPL for $90,000. This was a 20 per cent interest in the business with others.

9. In 2015 the superannuation fund paid $50,000 to C Trust trading as HPL to purchase 50 shares representing a 25 per cent interest in HPL.

10. In January 2016 the superannuation fund paid $20,000 to D Pty Ltd. A 20 per cent ownership in that company was then transferred to the husband. The husband asserts that that was a mistake and as indicated, he now seeks an order for the wife to sign a transfer so that those shares in D Pty Ltd are transferred back to the superannuation fund.

11. On 2 August 2016, nine weeks before the separation, the husband established the Montagu Family Trust (“the family trust”). The trustee of the family trust is B Pty Ltd. The husband solely controls the family trust. The family trust was set up by the husband for the purposes of transferring the shares which the superannuation fund held in C Trust (and the interest in HPL) to the family trust. The husband asserts that the purpose of doing that was so that income earned by the C Trust would be available for distribution between the husband and wife rather than having that income locked in the superannuation fund and unavailable for distribution.

12. At paragraph [35] of the wife’s affidavit, she sets out the text of part of a letter forwarded by the husband’s lawyers on 12 October 2016 which indicates that the superannuation fund was a 20 per cent owner of the business GPL; a 25 per cent owner of the business HPL; held a 25 per cent interest in D Suburb J and a 22.5 per cent holder in D Suburb K.

13. On 31 August 2016, five weeks before the separation, the interest that the superannuation fund held in the C Trust was transferred to the family trust for a consideration of $50,000. The husband signed the transfer form moving the shares in the superannuation fund to the family trust in his capacity as trustee of the superannuation fund without the knowledge or consent of the wife. The husband says that he raised the $50,000 by borrowing about $20,000 from a friend; $25,000 from the HPL business and contributing about $5,000 from his own funds. At paragraph [40] of the wife’s affidavit, she refers to a letter sent by the husband’s lawyers on 12 May 2017 which enclosed a share transfer form. The letter advised that the husband and the wife had sold 50 units in HPL to the family trust and that the transfer took place on 31 August 2016. The wife says that this was the first that she was aware that the husband had done that. That purported transfer by the husband on 31 August predated the assertion in the husband’s lawyer’s letter of 12 October 2016 that the superannuation fund owned the 25 per cent interest in HPL.

14. It does not seem controversial that what the husband has purported to have done was to transfer assets of the superannuation fund into a new family trust entirely under his control.

15. After the separation the husband thereafter received dividends from HPL through the family trust at a rate of about $4,000 per week. He paid those monies into his personal account as the husband did not establish any separate bank account for the family trust. The husband says that he offered to provide monies to the wife from the dividends that he personally received from the HPL business but she has declined to accept any of those funds.

16. By January 2017 the wife had frozen the bank account of the superannuation fund.

17. On 3 February 2017 the husband resigned as director and secretary of GPL and sold the superannuation fund’s shares in F Pty Ltd (trading as GPL) for $40,000. He initially deposited those funds into his personal account. Some weeks later he transferred those funds into the superannuation fund. The wife says that she only found out about the sale of the interest in GPL when she read the husband’s financial statement which he filed on 17 February 2017. The wife asserts that she had no previous notification that the husband had sold the superannuation fund’s interest in GPL. The husband asserts that the wife knew about the possible sale of GPL. He says that there was a conversation between he and the wife on 28 September 2016 where he informed the wife as to how badly GPL was going and asserts that the wife inquired “can we sell?”.

18. The husband subsequently asserts that all he did was to implement the wife’s suggestion that the interest in GPL be sold in circumstances where he did not have the available capital to contribute to a necessary infusion of capital into that business. I am unable on an interim basis to make any determination as to what conversations the parties had in September 2016.

19. The husband also asserts that it was he who made the financial decisions in relation to all the entities and it was he who was involved in running the café and food businesses.

20. There is however no indication in the husband’s evidence that there was a conversation in February when the GPL asset was actually sold out of the superannuation fund or that the wife had any knowledge that the deal was being done at that time and it follows the wife had no input into the possible sale price of that asset. The husband does not assert that the wife had any specific notice or given any specific detail about the proposed sale in February.

21. Also in the husband’s financial statement filed 17 February 2017 he asserted that the superannuation fund owned 20 per cent of shares in a company called D Suburb J Pty Limited. Whilst the wife is aware that a business known as D operates two retail hamburger outlets, an ASIC search discloses no company by the name referred to by the husband.

22. In his financial statement filed 17 February 2017 the husband asserted that he had a financial resource in the “B Trust” and that this trust was a 25 per cent owner of HPL and a 20 per cent owner of D Suburb K. The husband agrees that there is no trust known as the B Trust.

23. As indicated, the husband has agreed to an order that the wife be appointed as director of the trustee company for the family trust and that the husband irrevocably nominate the wife as the joint appointor of the family trust. In oral submissions sought that she be the only other appointor besides the husband and I shall make that order.

24. The wife by way of order 1.3 seeks that the husband (and/or it will be the husband and wife if the order that the wife be appointed as a director of B Pty Ltd is made) cause that company as trustee of the family trust to transfer all units held by the trust in the C Trust (HPL) back to the superannuation fund.

25. The reasons the wife wants the HPL asset put back into the superannuation fund are:

    25.1.There are taxation benefits in having the income from that asset received by the superannuation fund as opposed to being received into the family trust where income needs to be distributed and tax paid at a higher rate. The husband’s financial statement filed 18 September 2017 discloses that the income received by way of “dividends” is in the sum of $4,000 per week.

    25.2.The wife says that this preserves the asset because the husband in his financial statement filed 18 September 2017 discloses that he is spending $2,000 per week on credit cards and that he is expending $4,641 per week.

26. The wife submits that even if order 1.3 is not made then order 3 should otherwise be made so that any income received from the C Trust by way of distribution should be paid into the superannuation fund bank account.

27. There is an issue as to the amount the husband is earning by way of personal exertion income. His financial statement filed 18 September 2017 indicates that he is working for “L Pty Ltd” and he is receiving a wage for that work in the estimated sum of $1,058 per week. The additional sum of $4,000 by way of income that the husband receives from the family trust by way of receiving dividends from HPL is described at paragraph [75] of his affidavit in the following terms:

    If [the wife] is successful in her Application that all dividends from [HPL] be paid into the Fund, I will not have enough money each week to meet my rent and living expenses and the 20 or so hours per week that I work for the business to receive those “dividends”, I will not be getting paid at all.

28. Counsel for the husband asserted that the husband was not employed by HPL and that the income that he was receiving was as a result of his position as being a shareholder of the company which owns HPL but that submission makes little sense. The statement by the husband in his affidavit casts doubt over whether or not the payments to the husband by the company which runs HPL are by way of dividends or by way of salary or if they are partly by way of dividends and partly by way of salary, what proportion of the $4,000 per week should be attributed to each.

29. The parties have otherwise engaged a forensic accountant to provide a report as to the interests the parties hold in various entities including the superannuation fund.

30. I accept that some information in documents filed by the husband to date confuses and/or misstates the names of various entities in which the parties may have an interest.

31. The husband’s basic opposition to assets being put back into the superannuation fund is that the income stream will then become untouchable and not be available to either the husband or wife for their personal purposes.

32. The husband asserts that just shortly prior to the separation he had a conversation with the wife about moving assets out of the superannuation fund into a family trust so that the income from the assets of the superannuation fund would be available to the parties.

33. The husband submits, without the income he receives from HPL, he will be unable to meet his outgoings in circumstances where the wife would continue to have occupation of the matrimonial home and support from her parents.

34. The husband asserts that he has offered to pay the wife some of the income stream that he receives from HPL and the wife has told him that she does not need that payment to support herself. The husband submits that if he is unable to receive the dividend stream of $4,000 per week he will be unable to meet his outgoings and that he would be placed in a precarious financial position. There was some suggestion by counsel for the husband that his personal exertion earning was at a rate of $800 per hour. That was a mathematical miscalculation by counsel for the husband ($4,000 ÷ 20 = $200 per hour). The husband’s assertion that he requires over $2,000 per week to pay off credit cards cannot be maintained and was not seriously pressed during submissions by counsel for the husband.

35. The wife’s financial statement discloses that she is in a vulnerable financial position. She works part time and receives an average weekly income of $574 per week. Her expenses are basically currently covered by Mr Crimmins, the wife’s father.

36. The husband also points to the fact that he contributed $105,000 to the superannuation fund whereas the wife contributed only $55,000 and to Exhibit 1 which is a minute of a meeting of the trustees of the superannuation fund on 3 July 2013 which resolve that if there needed to be a vote between he and his wife, he would have the majority of the votes and would be able to determine what happened with assets of the superannuation fund. There is of course no evidence that there was ever a meeting or a vote.

37. The husband says that there is no evidence that he has the capacity to reimburse dividend payments that he has received since August 2016. Counsel for the husband asserted without contradiction, that that payment would require an amount of about $130,000 to be paid by the family trust or the husband back to the superannuation fund. The husband’s financial statement indicates that on its face he would have no capacity to do that at the current time. I am mindful that the husband put $50,000 in cash into the superannuation in order for the trust to purchase the interest in HPL. Those monies shall remain in the superannuation fund. Otherwise, I shall not make an order for reimbursement arising from what the husband has done. It does emphasise however the wife’s point that moving forward, assets need to be preserved so far as is possible.

38. I conclude that there is sufficient evidence to establish that the husband’s transfer of assets out of the superannuation fund was not done with the wife’s specific knowledge or consent. The assets should be transferred back to the superannuation fund. This can be achieved by making order 1.3 as sought. Order 3 as sought then becomes redundant.

39. If in fact the husband is genuinely generating part of the current “dividends” from HPL as a result of his personal exertion, then that should be regularised so that if the husband needs to augment the salary that he is otherwise receiving from elsewhere in order to meet his reasonable living expenses, he does so from that source. The wife is entitled to the orders that she seeks apart for the retrospective repayment to the superannuation fund of monies received from HPL to date. As indicated, the $50,000 paid to the superannuation fund should remain there. Any adjustment in the wife’s favour arising from the husband’s receipt of these funds can await the final hearing.

I certify that the preceding thirty-nine (39) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 25 September 2017.

Associate: 

Date:  25.9.2017