Eastman and Eastman & Anor

[2016] FamCA 864

FAMILY COURT OF AUSTRALIA

EASTMAN & EASTMAN AND ANOR [2016] FamCA 864

FAMILY LAW – PROPERTY – Application by wife for exclusive occupation of the former matrimonial home - Application by wife for the transfer of property into her name – Application by the wife for injunctive orders – Order that husband transfer his interest in the former matrimonial home to the wife – Orders that husband transfer his interest in a motor vehicle to the wife -

FAMILY LAW – SPOUSAL MAINTENANCE – Application by wife for lump sum and periodic spousal maintenance – Order made for payment of lump sum spouse maintenance arrears – Orders made for periodic spousal maintenance

Family Law Act 1975 (Cth)

Stanford & Stanford (2012) 247 CLR 108
Bevan & Bevan (2013) FLC 93-545
Chapman & Chapman (2014) FLC 93-592

APPLICANT: Ms Eastman

FIRST RESPONDENT:	Mr Eastman
SECOND RESPONDENT	B Pty Ltd ACN …

FILE NUMBER: SYC 3628 of 2015

DATE DELIVERED: 17 August 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Benjamin J

HEARING DATE: 17 August 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Bridger

SOLICITOR FOR THE APPLICANT: Barraket Stanton Lawyers

COUNSEL FOR THE 1^ST RESPONDENT: No appearance

SOLICITOR FOR THE 1^ST RESPONDENT:

COUNSEL FOR THE 2^ND RESPONDENT

SOLICITORS FOR THE 2^ND RESPONDENT

Orders

1. Within forty two (42) days of the date of these orders the husband sign all documents and papers necessary to transfer his legal and equitable interest in property at N Street, Suburb L being the whole of the land comprised in folio … to the wife.

2. Within forty two (42) days of the date of these orders the husband and the second respondent do all acts and sign all documents necessary to assign to the wife eighty four thousand ordinary shares held by him in the name of the second respondent B Pty Ltd ACN....

3. Pursuant to the Corporations Act2001 (Cth) IT IS DIRECTED the second respondent pay the wife the franked dividend of $272,000 within twenty eight (28) days of the date of this order.

4. THE COURT DECLARES that the Motor vehicle 1 registration number … is the property of the wife and transfers the whole of any legal or equitable interest that the husband claims in that vehicle to the wife.

5. THE COURT EMPOWERS the wife pursuant to the Family Law Act1975 (Cth) to sign on behalf of the husband and the Company, B Proprietary Limited ANC…, all necessary documents to transfer the car to the wife’s sole name.

IT IS NOTED

1. The husband is in arrears of lump sum and periodic spousal maintenance as at the date of this order in the sum of $51,458.

2. By way of enforcement the husband shall transfer to the wife one thousand one hundred and sixty one of his remaining shares in the second respondent company unless those spouse maintenance arrears are paid within twenty eight (28) days of the date of this order.

3. Unless otherwise specified in these orders such property as is in the possession or control of each party and in terms of the wife, such property as is in the former matrimonial home is declared the property of such party as against the other.

4. The maintenance order made on 30 September 2015 be way of periodic spousal maintenance shall continue until the earlier of:-

   (a)the payment of the dividend of $272,000 referred to in these orders; or

   (b)the transfer of the eighty four thousand shares as referred to in these orders.

5. Pending compliance by the husband with these orders the husband be restrained from selling, mortgaging, charging, transferring or in any way dealing with his interest in real property at N Street, Suburb L and the whole of his shareholding in the second respondent otherwise than in compliance with these orders.

6. All outstanding applications be dismissed except the question of costs.

7. In relation to any questions of costs, they can be made in accordance with the Rules of Court except that the Court extends the time limit for a period of six (6) months from the date of this order.

IT IS REQUESTED

1. That all exhibits remain on the Court file.

2. A copy of the reason for these orders be taken out and placed on the court file.

IT IS DIRECTED

1. Within fourteen (14) days of the date of this order, a sealed copy of this order be forwarded by ordinary pre-paid post to the husband at his last known address and to the second respondent at its registered office.

2. The wife shall file an affidavit of compliance in relation to order 15 above.

IT IS CERTIFIED

1. Pursuant to Rule 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.

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 Eastman & Eastman and Anor 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 3628 of 2015

Ms Eastman

Applicant

And

Mr Eastman

First Respondent

And

B Pty Ltd ACN...
Second Respondent

EX TEMPORE REASONS FOR JUDGMENT

INTRODUCTION

1. These are proceedings between Ms Eastman (‘the wife’) and Mr Eastman (‘the husband’) in relation to property and spousal maintenance arising from the failure of their very long marriage.  This is a case in which the proceedings were commenced almost a year ago on 3 September 2015.  They were proceedings brought by a wife who had been married since 1963, a considerable period of time, and where on the evidence it appears that she was left to care for and provide a home for the 10 children of the parties, and in circumstances where the husband created a significant wealth in business. 

2. The husband has chosen not to engage in these proceedings.  The matter came before Watts J in September of last year and injunctions were made.  The initial application joined a company in which the husband has significant shareholding, B Proprietary Limited (‘B’).  The wife’s primary application is for an adjustment of property between herself and the husband and for the payment of maintenance pending the arrival of those funds.  There is in place a maintenance order. 

3. On 30 September 2015, Watts J enjoined the husband from dealing with property and enjoined B from dealing with property.  He ordered the payment of lump-sum spousal maintenance of some $16,258, and periodic spousal maintenance of $800 per week, the first payment was to be made within seven days.  The evidence of the wife is that no maintenance has been paid by the husband, whether periodic or lump sum.  The wife seeks orders transferring shares in B to herself, and essentially seeks distribution of property on the basis of 31 per cent to the husband and 69 per cent to herself. 

4. The material relied upon by the wife was set out in her case outline, which is Exhibit 2, and it lists:-

   (a)the initiating application filed 3 September 2015;

   (b)the wife’s affidavit filed the same day;

   (c)the affidavit of the wife sworn and filed 27 July 2016;

   (d)the affidavits of Ms J of 27 July 2016 and 2 September 2015;

   (e)the wife’s financial statement sworn the 27 July 2016;

   (f)the affidavit of Mr O affirmed 1 August 2016, who endeavoured to value B and another corporation in which the husband has controlling interests. 

5. Tendered in evidence were the wife’s case outline and balance sheet, which were Exhibits 2 and 1, respectively.

BACKGROUND

1. The husband was born in Country F in 1942 and is now aged 74.  The wife was born in Australia in 1944 and is aged 71.  In about 1949, it seems, the husband came to Australia and the parties married in 1963.  There are 10 children of the marriage:  Mr P, Mr Q, Mr H, Mr R, Ms J, Ms S, Ms T, Ms U, Mr V and Mr W.  They range in ages from 52 to 26.  I note for the purpose of the consideration of contributions of the wife that she had babies over about a 25-year period, so that when her youngest was born, her eldest was 25, so it is a long-term engagement by her in terms of caring for these 10 children.  The parties separated in June or July 2012 and their marriage was dissolved by an order made on 6 August 2015. 

2. I do not tend to go through in detail the history of the notifications to the husband.  They have been numerous, and they are contained in the wife’s affidavit, the affidavit of her daughter, and the wife’s solicitor, Jessica Aquilina.  The husband and B are well aware of these proceedings, and the evidence before me is that they have completely rejected the notion that this Court has any meaning in terms of their operations of B and the division of the property.  It was particularly stark in terms of the wife’s affidavit.

3. The parties have been separated for some years.  The wife is living in what could only be described as hand-to-mouth existence, where there is property worth millions of dollars and the husband acknowledges that she has made no contributions.  So he knows what is occurring.  He chose not to become involved or remain in these proceedings.  Accordingly, after one year in this Court, or just under one year, it is time these proceedings were concluded. 

THE LAW

1. The law regarding the treatment of property has been clarified by the High Court decision in Stanford v Stanford.[1]  Before that decision the general  approach was the four step process as reflected in cases such as Hickey v Hickey and the Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143.

   [1] (2012) 247 CLR 108.

2. Following Stanford v Stanford (supra) the approach is that a Court must firstly be satisfied that before making any order it is “just and equitable”[2] to do so. Then consider what orders, if any, should be made having regard to s 79(4) of the Act.

   [2] Section 79(2).

3. This approach was later adopted in Bevan v Bevan,[3] where Bryant CJ and Thackray J noted that the Stanford and Stanford (supra) decision:-

   … serves to refocus attention on the obligation not to make an order adjusting property interests unless it is just and equitable to do so. [4]

   [3] (2013) FLC 93-545.

   [4] Ibid at para 65.

4. In Chapman v Chapman[5] the Full Court considered the independence of ss 79(2) and 79(4) and confirmed that Bevan v Bevan correctly stated the law in relation to the Courts consideration of s 79(2), whether the making of an order is just and equitable.  At paragraph 19 of their joint reasons Strickland and Murphy JJ said:-

   Section 79 demands a consideration, separately, of all of its requirements without conflation. 

   [5] (2014) FLC 93-592

5. However, their Honours disagreed with any intention of plurality in Bevan v Bevan, in that the Court must consider the matters in s 79(4) when addressing s 79(2) of the Act in terms of what order is to be made.  To clarify, Bryant CJ said in a separate judgment:-

   Whatever differences may exist as to the meaning of [84] and [85] of Bevan, I am in agreement with Strickland and Murphy JJ that it is not a requirement to take account of the matters in s 79(4) when considering the question of whether it is just and equitable to make any order under s 79(2). But as long as they are seen as separate and not conflated, the factors in s 79(4) have the potential to inform the decision under s 79(2) …

6. Accordingly, the approach I will adopt, when determining a division of property, is:-

   1.     Identify, in the context of ordinary legal principles, the existing legal and equitable interest of the parties in the property;

   2.     Consider whether in the circumstances of the parties it is appropriate and just and equitable for any order to be made having regard to s 79 of the Act; and

   3.     To consider and take into account any contributions and other matters, as are relevant, having regard to the provisions of s 79(4) of the Act and make such order as is appropriate. It is the function of the court to consider those relevant factors in the context of what is appropriate in all of the circumstances, provided always that it is just and equitable to do so

7. I am satisfied that the parties are separated, and I am satisfied, given all the material before me, that it is just and equitable to make a property order of some form.  The first step I have to undertake is to determine the legal and equitable interest in property of the parties.  That, in this case, is very difficult.  The wife has not been provided with any discovery, let alone any adequate discovery of the husband’s wealth. 

8. She knows, because she visited the property, that he has a property in Country F.  He has a business in Country BB, but she is not aware of other property.  She knows that the husband developed, with others, some properties which he either sold or gave to his children and informed her about that afterward.  One of those properties, I think, was transferred for about $200,000, and I note the material contained in the affidavit in that respect.  There has been a clear and determined approach by the husband not to provide disclosure to the wife.  Sadly, this has been supported by the sons who have interests in B, who are also anxious to transfer very considerably high-valued property in that business, or that company, to them without proper consideration of the wife. 

9. There is no evidence as to how about 50 per cent of a company which, it seems, has a likely value of between $13 million and $17 million was transferred to the children of the parties.  It may well have been legitimate; it may well have not been legitimate.  Neither the husband nor B have come to this Court in any meaning way at all to try and explain those circumstances, so I can only do the best I can with what I have.  There is some limited evidence as to the value of the former matrimonial home, which is at N Street, Suburb L.  This property was purchased many years ago and the parties built a house on it.  It has been the home for the wife, the husband and their children for decades.

10. The wife seeks to have that matrimonial home transferred to her.  Its value is somewhere between $1,000,000 and $1,150,000 million.  For the purpose of this exercise, having regard of the material before me, I treat its value as being $1,150,000. 

11. The husband set up a business in Country BB called K Pty Ltd in which the husband has the majority of ordinary shares totalling some 2,700,835 ordinary shares.  In that respect, I note the evidence of the expert doing what he could with what he had in terms of those shares concluded that the husband’s shares had a value of some …  which, at the current exchange rate, is approximately $541,951.

12. On the calculations, I understand that the value which the wife asserts which is supported by the single expert, in Australian dollars is $541,951.  The expert, doing the best he could, in his report valued X Proprietary Limited, which was registered in 1988 and in which the husband owns 100 of its shares and one of its assets is real estate.  Based upon that valuation, it is asserted by the wife that the value of the husband’s interest in that company, having regard to his 100 shares, is some $792,915.

13. B was established in December 1986.  The husband is one of four directors.  It has an issued capital of some 300,002 and two shares, being 300,000 ordinary one dollar shares; one E class share owned by the husband and one F class share owned by the wife.  The wife owns 30,000 ordinary shares.  Between them, the husband and wife own 150,000 and two shares.  The E and F class shares do not attach any voting rights.  The remainder of the shares are owned by the husband as to 5000 as Trustee.

14. His son, Mr R, has 25,000 shares. Mr Q has 35,000 shares. Mr P and Mr Eastman:  50,000 shares and Mr H: 35,000 shares.  The primary asset of B is real estate to which the valuer has alluded.  Having considered the company, he formed a view that its value was somewhere between $13,289,854 and $17,289,854.  Thus, the husband’s share is currently worth about $5.3 million; the wife’s share: about $1.3 million.  I have not included the E and F shares because they would be part of a distribution, but they would fall into the de minimis type approach given the number of shares and the calculations involved.

15. The expert noted that there was declared dividends to the wife where tax had been paid, but no distribution had been made and it is regarded as a liability in B’s balance sheet in terms of the wife.  Thus, the wife has an asset of some $272,000 being the money due to her from B 

16. The wife has about $40,000 in the bank and a motor vehicle which is of limited value.  I note that the car is some 14 years of age, so I conclude that it is not of significant value having regard to the other assets in this matter.  The pool of assets is thus some $9,441,747 of which the wife seeks an adjustment of 70 per cent or just under 70 per cent.

17. There is no evidence of superannuation or any other benefits to the husband.  In terms of the contributions, the wife has made contributions over a lifetime from 1963 until separation in 2012 which, I think, if my arithmetic is correct, is just short of 52 years.  She had the care of the children and I note the material set out in her affidavits.  The husband has been effective in creating assets over the period of the marriage.  That must have meant he worked hard.  Consequently, that must have meant that the wife worked hard in caring for their children and maintaining a home for him.

18. Normally this Court would, with those contributions, be erring towards an equal distribution.  However, we do not know what the other assets of the husband are.  We do know they exist.  We do know from the expert’s report that there are other companies.  We do know that he has a company in Country AA and real estate in Country F.  We don’t know where the other assets are, if there are other assets, or their value.

19. The husband had an obligation to tell this Court, and sticking his hands in his pockets and pretending that this was not going on for a year doesn’t assist.  Accordingly, there ought to be a significant allowance to the wife because we do not know what other assets there are.  I take and I have regard to the numerous comments by the Full Court in relation to failure to make full and frank disclosure, and the failure to provide details of the values of property.  It would seem to me that that, whilst a little on the high side, it is acceptable given what we know of the husband, given the matters to which I have referred to in these reasons and, frankly, the exchanges between myself and counsel during the course of this defended hearing.

20. Given where the parties will be, there ought to be no 75(2) factors.  Each of them are at the autumn of their lives and each will end up with significant amounts of money.  On the adjustment that I propose, which is about 31 per cent to the husband and 69 per cent to the wife, she will end up with some $6.5 million approximately, and the husband will end up with some $2.9 million in addition to his home in Country F, and whatever other assets he has not disclosed.

21. I have had regard to his gift of properties to his children without the wife’s knowledge and consent.  What I intend to do is: order the transfer of N Street, Suburb L, to the wife; and leave the shares in X Proprietary Limited with the husband. 

22. Of the husband’s 120,000 ordinary shares in B, I will direct the transfer of 84,000 of those shares to the wife.  The consequence of that will be that the wife will have a shareholding in that company with a value of some $5,050,000.  The husband will have just under $1.6 million in those shares.

23. The wife will retain the $272,000 in dividends, and B will be directed to pay that sum.  The husband will retain his interest in the K Pty Ltd business in Asian Country BB.  The wife will retain $40,000 in her Westpac savings account.  Thus, the wife will have Suburb L, $1,150,000; B $5,050,110; dividend from B, $272,000; and money in the bank, $40,000.  This will total $6,512,110. 

1. The husband will have shares in B, $1,594,771; shares in X Proprietary Limited, $792,915; shares in K Pty Ltd, $541,951; making a total of some $2,929,637.

2. I have considered each of the relevant factors under s 75(2) of the Act.  I have also considered the age and status of the health of the parties as such information is to hand.  I have clearly considered the property and financial resources of the parties, and the wife’s income.  She has no significant earning capacity, although she will once this money is invested presumably.  I note the husband’s ability to earn income, although I note his age and that he is coming to the end of his working life. 

3. Neither party has the care and control of a child under the age of 18 years.  Their only commitments are to support themselves, as far as we are aware, though we are not aware of the husband’s circumstances elsewhere, whether that is in Country BB or in Country F.  They have no responsibility to support other persons.

4. The wife’s standard of living has probably remained the same.  She has lived a very modest and cautious life, and that is reflected in the assets that have been accumulated over this time.  The effect of this order will mean that she is not likely to need maintenance, although I intend to leave the spousal maintenance order in place until such time as either the shares are transferred over or $272,000 is paid, in which case with either of those events the spousal maintenance will cease, as the wife will have the resources to maintain herself.

5. I have considered the contribution of the wife, the duration of the marriage and all of the other relevant factors.  When I reflect upon all of the evidence before me, I am satisfied that that division is, in all of the circumstances, just and equitable.  I had contemplated discharging the maintenance order.  However, the husband has shown a reluctance to pay maintenance, and engage in these proceedings.

6. The reality from the wife’s point of view is when she leaves the Court she will have an order but not much else.  There is a possibility that an application will be made in terms of these orders which may mean that the wife does not see a property settlement for longer than may be anticipated, or it may take some time to implement these orders.  She is entitled, and she has needs to live.  Watts J made a determination 12 months ago, and I see no reason why that ought to change, or to be changed pending either the payment of $272,000 or the transfer of the shareholding.

7. There is also the question of the arrears of spouse maintenance.  That ought to have been paid by the husband in the last, just under, 12 months.  I am concerned that that amount may not be met and that the wife will be forced to come back to court and expend yet more funds in terms of achieving that.

8. It seems to me that if the husband chooses not to pay it, then there ought to be an order by way of a enforcement transferring some of shares in B to the wife at a price of $44 per share which will be approximately 1,100 shares.  If the husband does not attend a payment of that sum within a relatively short period of time, then I will make a direction that those shares be transferred and that the sum be rounded down rather than rounded up in terms of how that occurs.

9. Given that B has been reluctant to pay the dividend, I will be directing B to do so pursuant to the powers that this Court has under the Corporations Act 2001 (Cth). It was asked for by the wife, and it is clear that she seeks and is entitled to that sum. Given that B is not here, I will give them a period of time to raise the funds to pay that amount.

10. I will leave in place the injunction restraining the husband from dealing with the property at Suburb L and his shareholding in B pending compliance with the orders. 

I certify that the preceding forty one (41) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin delivered on 17 August 2016.

Associate:     

Date:              11 October 2016