Davids and Davids

[2018] FamCA 1046

FAMILY COURT OF AUSTRALIA

DAVIDS & DAVIDS [2018] FamCA 1046

FAMILY LAW – PROPERTY – Interim orders – Interim property settlement – Husband seeks litigation funding and partial property settlement – Where the wife opposes any further distribution of property prior to trial.

APPLICANT: Mr Davids

RESPONDENT: Ms Davids

FILE NUMBER: ADC 2298 of 2016

DATE DELIVERED: 11 December 2018

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide

JUDGMENT OF: Berman J

HEARING DATE: 26 November 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Jordan

SOLICITOR FOR THE APPLICANT: Jordan & Fowler Barristers & Solicitors

COUNSEL FOR THE RESPONDENT: Ms Lewis

SOLICITOR FOR THE RESPONDENT: Jacqui Ion Lawyers Pty Ltd

Orders

1. That by way of interim settlement of property the parties do all things necessary to forthwith cause the sum of FORTY THOUSAND DOLLARS ($40,000) to the withdrawn from their joint account at ANZ Banking Group Limited account number 015-056 299 991 557 and to be paid to the Trust Account of Jordan & Fowler for and on behalf of the husband.

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 Davids & Davids 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 ADELAIDE

FILE NUMBER: ADC 2298 of 2016

Mr Davids

Applicant

And

Ms Davids

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. On 30 August 2017 orders were made that Mr Davids (“the husband”) receive by way of interim property settlement the sum of $100,000 and that Ms Davids (“the wife”) also receive by way of interim property settlement the sum of $50,000.

2. By Application in a Case filed 20 September 2018, the husband sought a sum of $100,000 by way of interim settlement of property, or in the alternative the sum of $25,000 by way of urgent lump sum spousal maintenance and a further $25,000 by way of litigation funding.

3. At the hearing of the application the husband amended the orders that he sought to now reflect a payment of $27,000 by way of interim property settlement (or to be later characterised) and the sum of $25,000 by way of litigation funding.

4. The husband’s amended application is opposed.

BACKGROUND

1. By way of interim consent orders for property settlement made on 28 March 2018 each party received a further sum of $25,000 from the proceeds of the sale of the former matrimonial home at B Town.

2. The husband says the current balance of the joint ANZ account is $273,322.71.  It is from this sum that he seeks the total sum of $52,000.

3. A significant issue in the proceedings is the value of the wife’s interest in D Pty Ltd and the Davids Trust. The parties appointed Mr E as the single expert valuer. His initial valuation in 2016 valued the wife’s interest at $1,220,722. At the time there was surplus cash at bank of $619,707. The husband operated a business which was valued at $20,772.

4. The wife did not accept that the valuation of Mr E properly reflected her interest in the business. Her personal circumstances were such that much of the cash at bank had been expended, there had been a significant downturn in the business turnover and her ability to attend to the rigors of the business, its management and administration were substantially compromised by her poor health.

5. At the hearing the husband’s counsel tendered a copy of Mr E’s valuation of the wife’s business interests in D Pty Ltd and the Davids Trust dated 21 November 2018.

6. The value attributed to the wife’s interest is as follows:-

Consolidated Entity Value	$810,850
Less loans owing by Ms Davids to D Pty Ltd	-$468,474
Less loans owing by Ms Davids to the Davids Trust	-$ 58,000
Total	$284,376

1. Notwithstanding that the report was tendered on behalf of the husband, it is suggested that the report may be the subject of challenge and that the husband is currently seeking advice from his own valuer.

2. Whilst it is difficult to reconcile the husband’s refusal to accept the valuation figure as attributed by Mr E in circumstances where he refers to and relies upon the valuation of the wife’s interest at $810,850, I propose to accept the husband’s position as representing that the amount as determined by Mr E for the present purposes represents the minimum value to be attributed to the wife’s interest.

3. The gravamen of the husband’s application is to be understood by reference to his Affidavit filed 2 November 2018.

4. At [6] the husband sets out how the sum of $100,000 was disposed of.

5. The husband is currently employed on a full-time fixed term employment basis.

6. His appointment commenced on 26 March 2018 and will terminate on 26 March 2021.

7. His salary, excluding superannuation, is at the rate of $109,829 per annum with a possible increase to $114,187. In addition, the husband receives an appropriate superannuation guarantee contribution.

8. The husband contends that notwithstanding a substantial income his monthly expenses exceed his income by $3,770.53.

9. The husband has an outstanding overdraft balance which is almost fully drawn to its limit of $80,000. His credit cards are fully expended and he has been unable to pay his legal fees which as at 18 September 2018 totalled $19,655.48. It is likely that the total fees outstanding to date would be in or about the sum of $25,000.

10. His solicitors have conceded that if the fees outstanding to date are paid they will continue to represent the husband to the conclusion of the final hearing.

11. The wife opposes the orders sought by the husband and argues that based upon her assessment of the current pool of assets in the total sum of $664,690, the husband has retained or received property to the total sum of $340,398. Accordingly, the wife argues that the husband has already received approximately 35 percent of the property of the parties and if more payments are made to the husband it is unlikely that there will be sufficient assets available to the husband to enable the wife to claw-back any sum ordered to be paid to her by way of settlement of property.

12. The wife continues to operate her business but considers that given her deteriorating health the value may significantly reduce as profits decline.

13. In addition, the wife is responsible for the children’s expenses, in particular their school fees, personal costs including clothing and health insurance.

14. The wife has not made any payments to herself from the F Pty Ltd business since 19 February 2018. However, she does receive income maintenance consequent upon a claim being made on her income protection insurance and she has received trauma insurance by two payments of $127,533 and $281,420.07.

15. Unrelated to her insurance claims is a claim made by the wife on 4 October 2017 on her home and contents insurance following a robbery. She received $87,102 which was transferred to her personal account and expended.

16. The wife considers that her trauma insurance payments should not be included in the property pool.

17. The husband counters the wife’s argument that he has already received his entitlement by reference to the following:-

    (1)That in the wife’s asset pool she did not include monies received by her pursuant to Court Orders.

    (2)That the value of her interest in F Pty Ltd should be at least $810,850 in the absence of any explanation as to how she expended monies borrowed from F Pty Ltd in the sum of $526,474.

    (3)That the wife received a substantial insurance payout following the robbery at her home.

18. Each of the parties seek to highlight the financial position of the other. The husband considers that the wife has the advantage of being able to use the financial resources of the F Pty Ltd business to her advantage and points to her 2018 tax return which lists her total taxable income as $246,349 taking into account Trust distributions of $96,551 and other income of $155,048.

19. The wife counters the husband’s observations by referring to the significant expenses incurred in paying for the children’s education and personal expenses without contribution by the husband, but also refers to what she considers is the husband’s profligate lifestyle including significant liability incurred as a result of his ownership of a new motor vehicle and a motorbike.

INTERIM PROPERTY DISTRIBUTION

1. I adopt my remarks in the judgment delivered 30 August 2017.

2. I am not able to evaluate the evidence and determine at this stage what is likely to be the pool of property available for division and the extent to which interim distributions received by the parties may be added back into the pool.

3. I propose to adopt a conservative approach as to the resources available to the parties at a final hearing to accommodate any adjustment that may be required.

4. Whilst the husband’s application is opposed by the wife based upon her assessment that he is profligate in his spending and has taken no effective steps to ameliorate his financial predicament, it is an important consideration that at least in part, the husband’s solicitors are prepared to represent the husband through to the conclusion of the proceedings provided their current fees in the sum of $25,000 are paid. That appears to be a reasonable concession and on the basis that the Court is likely to be better assisted by the husband being represented, I propose to make the order as sought as to the lump sum payable to his solicitors.

5. The balance of the monies sought by the husband appears to be related to his anticipated expenditure exceeding his income by $3,770.53 per month being a total sum of $26,393.17 for the seven month period between November 2018 and May 2019.

6. I am not able to determine whether the monthly expenses as set out in [8] of the husband’s Affidavit filed 2 November 2018 are reasonable. I note the matters raised by the wife and in particular the not inconsiderable payments in relation to his motorbike and motor vehicle finance.

7. The husband’s financial position is exacerbated by credit card payments and overdraft interest totalling $1,700 per month.

8. Doing the best that I can, I consider that by way of interim settlement of property the sum of $40,000 should be made in favour of the husband. In circumstances where I am not able to determine whether any adjustment will be required in favour of the wife and observing that the husband may be able to ameliorate some of his outgoings, the amount as determined is appropriate in all the circumstances.

COSTS

1. Each party seeks their costs of and incidental to the interim proceedings.

2. I do not consider that either party has been wholly unsuccessful.

3. Whilst the husband’s application has met with substantial success, it must be tempered against a consideration that the orders sought in his application in a case was for the sum of $100,000. The wife’s detailed response was predicated on her having to meet a more substantial application than was pursued at the hearing.

4. I propose to make no order as to costs.

5. I make orders as appear at the commencement of these reasons.

I certify that the preceding forty-two (42) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 10 December 2018.

Associate:

Date: 11 December 2018