Davidson and Hunt

[2016] FamCA 829

FAMILY COURT OF AUSTRALIA

DAVIDSON & HUNT [2016] FamCA 829

FAMILY LAW - INTERIM PROPERTY SETTLEMENT – interests of creditors.

APPLICANT: Ms Davidson

RESPONDENT: Mr Hunt

FILE NUMBER: SYC 4292 of 2016

DATE DELIVERED: 30 September 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 27 September 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Johnston

SOLICITOR FOR THE APPLICANT: Armstrong Legal

COUNSEL FOR THE RESPONDENT: Mr Millar

SOLICITOR FOR THE RESPONDENT: Pearson Emerson Meyer Family Lawyers

Orders

IT IS ORDERED

1. That the Amended Application in a Case filed by the wife on 19 September 2016 seeking orders pursuant to s90MT(4) of the Family Law Act 1975 (Cth) be dismissed.

2. That the Wife do all acts and things necessary to cause the sale of the “Caribbean timeshare” being  the 3 weeks of timeshare owned by the parties jointly being in respect of contract numbers …, … and .. held at the Caribbean resort, and to give effect to such Order each party shall:

   (a)       list the Caribbean timeshare for sale on the websites within 14 days of date of these Orders ("the listing") at a sale price agreed upon between the parties ("the asking price");

   (b)       if the Caribbean Timeshare has not been sold within 30 days of the listing that the asking price shall be reduced by 10 per cent at monthly intervals for a period of 3 months;

   (c)       if the Caribbean Timeshare remains unsold after compliance with Order (2)(b) the listing shall be removed for a period of 2 months and it shall be relisted at the last asking price for a further period of 3 months; and

   (d)       if the Caribbean Timeshare has been not been sold at the end of this period unless the parties are able to otherwise agree in writing the parties may relist the matter to seek orders in relation to the further sale of the Caribbean Timeshare.

3. The parties shall each cooperate in every way with the sale of the Caribbean timeshare including (without limiting the generality of the foregoing):

   (a)       doing or saying nothing to hinder or prevent a sale being effected; and

   (b)       signing all documents in relation to the sale of the Caribbean Timeshare including but not limited to the Right of First Refusal Form and Change of Ownership Form.

4. On completion of the sale of the Caribbean Timeshare the parties shall ensure that the proceeds of sale shall be paid in the following manner and priority:

   (a)       all costs and expenses of sale (including repayment of any such expenses as have been paid by either or both of the parties);

   (b)       the amounts required to pay all maintenance fees due and owing; and

   (c)       the balance of the proceeds to be divided equally between the parties.

5. That from the date of these orders the wife do all acts and things necessary to cause any unused Caribbean Timeshare weeks from prior years (“banked weeks”) to be rented to third parties.

6. That any money received from such rental be applied by the wife upon receipt towards the currently outstanding Caribbean resort maintenance fees, and that the Wife be authorised to retain any funds received in excess of the maintenance fees by way of part property settlement.

7. That on receipt of the funds on each occasion the banked weeks are able to be rented out the wife shall provide notice to the husband and details of the funds received.

8. That within 14 days of date of these orders the applicant Wife, in so far as she has not already done so, shall provide full and proper responses to the letters addressed to her lawyers dated 1 August 2016 and 24 August 2016.

9. That within 14 days of date of these orders the Wife, in so far as she has not already done so, shall provide to respondent husband copies of the following documents:

   (a)       The Wife's HSBC #... credit card statements for the period 1 October 2014 to date.

   (b)       The Wife's David Jones Amex #... credit card statements from 7 February 2016 to date.

   (c)       All documents identifying the disposal/sale of any furniture or any other items by the Wife or on her behalf for the period 1 October 2014 to date.

   (d)       The Wife's Medicare claims summary from 1 January 2015 to date.

   (e)       The Wife's BUPA claims tax statement from 1 January 2015 to date.

   (f)       All tax invoices, statements of account and receipts from any health professional that the Wife has consulted from 1 January 2015 to date.

   (g)       Copies of all correspondence received by the Wife from Medicare from 1 January 2015 to date.

   (h)       The Wife's Income Tax Returns and Notices of Assessment filed in Australia and/or overseas for the financial years ended 2015 and 2016.

   (i)        Copies of the Wife's bank statements in respect of the following accounts:

   (i)CBA #...;

   (ii)CBA #...; and

   (iii)St George #...

   (j)        Copies/originals of any documents the Wife has in her possession or control belonging to or relating to the husband whether they be the original documents or copies of such documents made by or held by the Wife.

10. That Order 3.4 of the orders made by consent on 8 August 2016 be discharged and substituted for the following order:

    That should Caribbean Investments Pty Ltd and Davidson Pty Ltd declare and pay a dividend to the husband, he shall forthwith pay to the wife one half of the amount he receives by way of dividend.

11. That the Wife, in so far as she has not already done so, do all acts and things necessary to cause the husband's name to be removed from the lease on her current residence.

12. That the husband be authorized to do all acts and things necessary to cause the parties D Bank accounts, being the bank accounts held in the parties joint names, being account numbers #... and #… to be closed unless the wife provides written notice to D Bank within 10 days of date of these orders of her direction to have the D Bank accounts transferred into her sole name and simultaneously provides written notice to 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 Davidson & Hunt 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 4292 of 2016

Ms Davidson

Applicant

And

Mr Hunt

Respondent

REASONS FOR JUDGMENT

1. Ms Davidson (“the wife”) is the applicant in an Application in a Case seeking orders requiring the trustees of specified superannuation funds to allocate those funds to her pursuant to s90MT(4) of the Family Law Act1975 (Cth) (“the Act”) by way of a splitting order. Although the jurisdictional basis for that order is not specified, the wife is asking the Court to make the order on the basis that the payment be characterised by the Trial Judge. Counsel for the wife specified that the application was an application for interim property settlement.

2. Mr Hunt (“the husband”) opposes that application. By way of response he seeks additional orders which will be dealt with separately in these reasons.

3. The wife specified three funds in the husband’s name with a total value of $78,700.

THE WIFE’S APPLICATION FOR A SPLITTING ORDER 

1. The wife must establish that the pool of property available for division is such that, having regard to all of the factors to be taken into account, she will receive, on the final hearing, an amount which equals or exceeds the amount for which she now contends.

2. It was the wife’s case that she intends, when in possession of the funds, to make an application for release of funds to her on compassionate grounds and to use the funds to pay her legal expenses in relation to the proceedings and to pay her day to day living expenses. It was not her case that the funds would be invested or otherwise available to be refunded in the event that it was ultimately determined that she had received funds in excess of her entitlement.

3. That matter is relevant, having regard to the asserted net asset position of the parties.

4. This hearing is interlocutory and conducted on the papers and without cross-examination. It is not therefore possible to resolve issues of fact which are contested in the absence of conclusive documentary evidence.

5. Each party has filed a Financial Statement. The husband has annexed to an affidavit sworn 1 September 2016 a document entitled “Balance Sheet” in which he sets out what he asserts to be the assets and liabilities of the parties for the purposes of these proceedings. The husband asserts that the parties have net liabilities of approximately $19,000. The husband, in coming to that figure, includes his superannuation interests as an asset.

6. In relation to his superannuation interests, the husband deposed to four separate interests:

   Hunt Superannuation Fund (self-managed)  $340,694

   MLC  $21,175

   AustralianSuper Member  $38,345

   Plum Member  $19,164

   Total  $419,378

7. The non-superannuation assets of the parties are said by the husband to be a time share in the Caribbean (“Caribbean Timeshare”) which he values at $150,000, a prestige car which has been sold by the wife, the furniture and household effects of each of them, the wife’s jewellery and small bank accounts. Those assets are estimated to have a value of $224,823.

8. In a written Case Outline dated 6 September 2016, counsel for the wife stated “it seems on the face of the Financial Statements that the only significant assets are the husband’s three superannuation accounts totalling $419,378”.

9. That assertion appears to ignore the existence of significant liabilities asserted by the husband to be some $643,000.

10. The wife disputes the quantum of the liabilities asserted by the husband. In particular, counsel for the wife submitted that there is no evidence in relation to an advance from B Pty Ltd and an advance from the C Trust.

11. In relation to the advance from B Pty Ltd, the husband tendered a copy of the Deed of Loan dated 11 January 2015 which evidences advances totalling $200,000 commencing on 22 January 2015 and ending on 6 January 2016. The Deed specifies a repayment date of 31 January 2020 and an interest rate of 6 per cent per annum.

12. Counsel for the Wife submitted that, because the husband gives no evidence of the receipt of the funds or the purpose for which they were applied, the liability should be ignored for the purpose of this application. I do not accept that submission. The husband has established, at least on a prima facie basis, that the liability exists.

13. In relation to the loan from the C Trust, the husband tendered a Deed of Assignment of Lability dated 12 May 2011 whereby he assumed responsibility for the debt. In answer to specific questions posed by the wife, the husband swore an affidavit on 1 September 2016 which annexed spreadsheets and source documents which he asserted provided a reconciliation of funds received and the use of those funds. The husband deposed that the funds were used for living expenses and for the purposes of a business which the parties operated and then sold in the United Kingdom.

14. The husband has established, on a prima facie basis, that he owes the amount of $297,500.

15. There were no specific challenges to the balance of the liabilities claimed by the husband which included liabilities of the wife in the sum of $36,055.

16. I accept that, for the purposes of this application, the liabilities of the parties are as asserted by the husband.

17. The husband opposed the wife’s application for a splitting order on two bases. Firstly, counsel for the husband submitted that there is no power to make an interim splitting order in relation to superannuation. Secondly, counsel for the husband submitted that the Court would not make the orders sought by the wife for other reasons. I propose to deal with the second leg of counsel’s submission first.

18. Firstly, it was submitted that the husband seeks to retain his superannuation interests in any final division of property. It is not clear on the husband’s case as it is presently articulated that this is a realistic possibility and I give no weight to that submission.

19. The husband has life insurance policies linked to those superannuation policies. The premiums for the life insurance are paid from the superannuation funds. The husband does not have the ability to fund the premiums. If the superannuation funds are transferred to the wife, the policies will lapse causing a financial loss to the husband which, having regard to the quantum of the assets available for distribution, may not be compensable.

20. Tendered in the husband’s case were documents from MLC and from AustralianSuper setting out the criteria for the release of funds on compassionate grounds. Both funds advise that the relevant legislation provides that funds, totalling $10,000 gross in any one year, can only be released on grounds of financial hardship if the applicant has been in receipt of Centrelink benefits continuously for 26 weeks before making an application.

21. The wife does not meet the criteria for release. There is thus no utility in making the splitting order.

22. The final matter on which counsel for the husband relied was the interest of the creditors. The husband’s superannuation interests are the most significant and only substantial asset of the parties. Any funds which the wife receives pursuant to an interim property settlement order are intended to be used by her for her living expenses and her legal fees. It is not suggested that those funds would remain available if, in the final determination, it was determined that the creditors have an interest in them.

23. It is not possible, on an interim basis, and without giving the creditors an opportunity to be heard, to determine that the wife’s claim to the funds should have priority over that of the creditors.

24. For those reasons, I am not satisfied that it is just and equitable to make the orders sought by the wife and her application will be dismissed.

25. It is therefore not necessary to consider the submission that there is no power to make a splitting order on an interim basis.

INTERIM PROPERTY SETTLEMENT

1. The order which the wife seeks would have the effect of transferring to her the whole of the presently identified asset pool.

2. Nothing in the affidavit material of the wife establishes that after a marriage of almost 30 years, where both parties made significant contributions, the wife is entitled to the whole of their jointly acquired assets and the husband to nothing.

3. Nothing in the affidavit material of the wife establishes that, in the final determination of the matter, the creditors of the marriage will be ignored and the claims of the wife preferred to those of the creditors.

4. The wife’s application for interim property orders must fail.

THE HUSBAND’S APPLICATION

1. The husband seeks a suite of orders. The wife consents to some but not others. It is convenient to deal with them in the order they were sought.

Sale of the Caribbean Timeshare

1. The husband seeks orders to sell the interest in the time share and divide the proceeds. The wife agrees to the sale but disputes the price suggested by the husband. The orders will provide for the sale of the Caribbean Timeshare at a price agreed upon between the husband and the wife.

2. The wife also consents to the orders proposed by the husband for the renting of the Caribbean Timeshare and division of the proceeds.

Sale of antique furniture

1. The husband seeks orders to sell the furniture currently in storage and divide the proceeds. The wife opposes that orders. She wishes to retain some of that furniture.

2. This order will not be made.

Medicare and Bupa Claims

1. The husband seeks orders that would require the wife to claim any refunds due to her from her health insurers. The wife in response says that she has reached her claim limit and cannot make any further claims.

2. That order will not be made.

Disclosure

1. The husband asserts in his affidavit sworn 23 September 2016 that the wife has failed to make full disclosure in relation to certain matters. The wife disputes that claim and she asserts that some, if not all, of the documents have been provided.

2. The wife consents to an order that, in so far as documents have not been produced, they be produced.

3. Orders will be made in those terms.

Injunctions

1. The husband seeks the discharge of an order, made by consent on 8 August 2016, restraining two companies, Caribbean Investments Pty Limited and Davidson Pty Limited, from declaring or paying a dividend other than as agreed.

2. The husband seeks an order to the effect that dividends can be declared and paid provided they are paid equally to each party.

3. The wife disputes the wording of the husband’s application but agrees to the effect.

4. Orders will be made to give effect to the husband’s proposal.

Wife’s apartment lease

1. The husband seeks an order which would require the wife to remove him as a lessee of her apartment. He does not wish to be liable for her rent which he submits is excessive in the circumstances of the parties’ financial position.

2. Counsel for the wife, from the bar table, told the Court that she instructed that the husband was not a lessee and that she therefore would not oppose an order to the effect that the husband is to be removed as a party to the lease.

D Bank Account

1. The parties have a joint account at D Bank with high holding fees. The husband does not want to retain the account and proposes that the wife take it over.

2. The wife does not oppose that order.

Discharge of the costs order

1. On 8 August 2016, Johnston J made an order of the type commonly referred to as a “dollar for dollar” order which required the husband, on each occasion he paid money to his lawyers, to pay the same amount to the wife’s lawyers on account of her costs.

2. The husband has deposed to paying $94,077 in total, pursuant to that order. He has done so by borrowing $30,000 from his brother and by using credit cards. His credit card debt is now in excess of $94,000 and he deposed that he has no further capacity to borrow.

3. If, as the husband asserts, he has no capacity to borrow further funds, then he will not be in a position to pay further money to his lawyers and will have no obligation to pay the wife’s lawyers pursuant to the orders. There is, therefore, no utility in discharging the order.  

I certify that the preceding fifty-three (53) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 30 September 2016.

Associate:  SNK

Date:  30/9/2016