Forlan and Forlan and Anor

FAMILY COURT OF AUSTRALIA

FORLAN & FORLAN AND ANOR

[2016] FamCA 469

FAMILY LAW – PROPERTY – interim – where the wife seeks litigation funding – where the husband and second respondent oppose the application – where the Court considers it premature to determine the application – where the parties are ordered to instruct a single expert in order to assess the financial viability of the entities – where various injunctive orders are made – where the Court considers it appropriate to make a dollar for dollar order.

FAMILY LAW – SPOUSAL MAINTENANCE – interim – where the wife seek an order that the husband pay spousal maintenance – where the application is opposed – where the Court finds the wife satisfies the threshold test – where the Court finds the husband has the capacity to pay – where an order is made for spousal maintenance.

Family Law Act 1975 (Cth) s 72, 75, 79, 117

Family Law Rules 2004 (Cth) r 15.45

G & T (2004) FLC 93-176
Iphostrou & Iphostrou and Ors [2011] FamCA 20
M v M (2006) FLC 93-283
McL & McL (unreported, Family Court of Australia, O’Reilly J, 30 January 2003)
Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578

Strahan & Strahan (Interim property orders) (2011) FLC 93-466
Zschokke & Zschokke (1996) FLC 92-693

APPLICANT:

Ms Forlan

FIRST RESPONDENT:

SECOND RESPONDENT:

Mr Forlan

Mr J Forlan

FILE NUMBER:

ADC

1582

2015

DATE DELIVERED:

10 June 2016

PLACE DELIVERED:

Adelaide

PLACE HEARD:

Adelaide

JUDGMENT OF:

Berman J

HEARING DATE:

29 April 2016 and 19 May 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Ms Lewis

SOLICITOR FOR THE APPLICANT:

Black & Wood Divorce & Family Lawyers

COUNSEL FOR THE FIRST RESPONDENT:

Mr O’Connor SC

SOLICITOR FOR THE FIRST

RESPONDENT:

COUNSEL FOR THE SECOND RESPONDENT:

SOLICITOR FOR THE SECOND RESPONDENT:

Mellor Olsson

Mr Richards

Hunt & Hunt Lawyers

Orders

That the husband pay or cause to be paid direct to the wife or as the wife may from time to time direct in writing interim spousal maintenance in the sum of $600 per week with the first payment to be made within seven (7) days of the date of this order and thereafter fortnightly in advance.
That pursuant to r 15.45 of the Family Law Rules 2004 (Cth) the parties jointly instruct a single expert forensic accountant to prepare a financial report directed to the following matters:-
(a)The financial viability of the F Group of companies;
(b)The extent to which the assets of I Pty Ltd should be utilised for the benefit of other entities in the F Group;
(c)The extent to which I Pty Ltd has any obligation in respect of the liabilities of the F Group in general or of any particular entity;
(d)The manner in which proceeds of the sale of plant and equipment in I Pty Ltd should be disbursed;
(e)To the issues associated with asset ownership, loan account balances and the contractual relationships between I Pty Ltd and the F Group.
That the parties do all things necessary to cause payment for the appointment of the single expert to be made by way of withdrawal from the nominated bank account of I Pty Ltd.
That the husband provide the wife within fourteen (14) days of this order a current group tender register showing all tenders and contracts currently being prepared, outstanding and those won and lost since 1 January 2016.
That the husband be restrained and an injunction granted restraining him in his capacity as sole shareholder of I Pty Ltd from voting to remove the wife as director.
That the husband be restrained and an injunction granted requiring the husband to provide to the wife through her solicitor with a copy of any contract of sale of any item and if no written document then a confirmation of an intention to sell any item not less than seven (7) prior to a contact being signed or an intention to dispose, sell or transfer any item and following any sale to confirm receipt of payment of such sale proceeds within seven (7) days of it having been received.
That the proceeds of the sale of any plant and equipment of I Pty Ltd be banked into I Pty Ltd account number ...
That the husband be restrained and an injunction granted restraining him from operating the I Pty Ltd account as referred to herein without the express consent of the wife first given.
That within seven (7) days after the payment by or on behalf of the husband of any money sourced from the F Group in payment of accounts rendered by his solicitors including in addition to expenses associated with the preparation of his case, the husband pay or cause to be paid the same sum of money to the solicitors for the wife.
That within forty eight (48) hours after payment by or on behalf of the husband of any money referred to in order 9 herein the husband cause to be given to the wife’s solicitors a memorandum stating the amounts so paid to his solicitors.
That all money paid to the solicitors for the husband pursuant to order 9 herein shall be held in trust by his solicitors and not applied in payment until such time as the same amount has been paid to the wife’s solicitors PROVIDED THAT if payment to the wife’s solicitors is not made within seven (7) days then the husband is to direct his solicitors to pay one half of whatever is received by them in trust to the wife’s solicitors.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Forlan & Forlan and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT ADELAIDE

FILE NUMBER: ADC 1582 of 2015

Ms Forlan

Applicant

AND

Mr Forlan

First Respondent

AND

Mr J Forlan
Second Respondent

REASONS FOR JUDGMENT

Introduction

Following an interim hearing on 26 November 2015 judgment was delivered and orders made that provided for the interim proceedings to be adjourned for further hearing to 29 January 2016 with further orders made intended to maintain some stability in respect of the parties complex financial circumstances. In particular during the period of the adjournment the husband was required by mandatory injunction to provide the wife with notice of any intention to enter into a contract for the sale, disposal or transfer of any item of property, plant or equipment and thereafter to confirm receipt of payment of any sale proceeds received.
Interim orders were made that would assist the wife in receiving an income tax refund for the 2015 financial year and a lump sum payment to the wife of $25,000.
On 29 January 2016 the wife’s application for urgent spousal maintenance was adjourned for hearing to 23 February 2016 with the balance of the interim orders sought in the Further Amended Initiating Application filed on 25 January 2016 to be listed for mention on 2 February 2016.
Those matters were further adjourned to 29 April 2016 together with the wife’s application for spousal maintenance and her litigation funding application seeking a lump sum of $100,000.
Following argument judgment was reserved on 29 April 2016 but before the delivery of judgment the wife sought to rely upon further affidavit material and the matter was further considered on 19 May 2016.
Accordingly the issues for determination are as followings:-
(1)The wife’s application for interim spousal maintenance.
(2)The wife’s application for lump sum litigation funding in the sum of $200,000.
(3)Injunctive relief to restrain the husband from selling, disposing or transferring the commercial plant and equipment of the F Group in general or I Pty Ltd in particular.
(4)Whether an order should be made putting in place a “dollar for dollar” order in respect of the wife’s ongoing legal fees.

BACKGROUND

By way of supplement to the circumstances of the parties as set out in my reasons delivered 30 November 2015 it is of assistance to set out with some particularity the relevant entities in respect of the matters currently before the Court.
There has been ready reference to the F Group or Forlan Group.
The reference to the F Group refers to the following entities:-
·E Pty Ltd (“E”)
·F1 Pty Ltd (“F1”)
·F2 Pty Ltd (“F2”) as trustee for the Forlan family trust (“FFT”)
·F Pty Ltd (“F Pty Ltd”)
·I Pty Ltd (“I Pty Ltd”)
·Forlan Investment Pty Ltd (“Forlan Investments”)

The shares in E are owned 70 per cent by Forlan Investments and 10 per cent by third parties unrelated to the husband and wife.

This entity owns plant and equipment which is used by E trading as F Access. The shares in F1 are held in the same manner as the shares in E.

This entity is the trustee of FFT. Its shares are held by the husband.

F Pty Ltd

F Pty Ltd was the original trading entity of the group of companies and is controlled by Mr J Forlan (“the husband’s father”) as to 75 per cent with the remaining 25 per cent of the shareholding held by the husband.

FFT

This entity provides equipment and labour to businesses and distributes profit to F Pty Ltd.

I Pty Ltd

For the purposes of the current proceedings this entity owns valuable equipment some of which has been sold with further sales both sought and anticipated. The husband holds the shareholding with the wife being the sole director.

Forlan Investments

This is an investment entity with the shareholding equally held by the husband and the wife.

Separate position of parties

There is a complexity to the financial relationship between the parties and the second respondent with the F Group. The husband, wife and second respondent have borrowed in excess of $3 million dollars from the NAB which has been utilised for the benefit of the F Group. The loan has been guaranteed by F Pty Ltd, F2, I Pty Ltd and Forlan Investments. There is further personal security that has been provided by the parties and the second respondent in terms of commercial premises at Suburb K but also their interests in private real estate.
The wife is mistrustful of the husband and considers that he has behaved deceptively. She alleges that he has been reluctant to make full and frank disclosure which would enable her to more clearly understand the ongoing commercial transactions of the F Group. She further considers that the husband is able to access the resources of the F Group generally both in respect of the payment of some of his legal fees, disbursements in terms of forensic accounting assistance and to supplement his own income which the husband alleges is derived entirely from the periodic payments received by him following a claim on his income protection insurance.
The husband counters the wife’s assertions by highlighting what he says is the precarious financial position of the F Group and its obligation to meet the NAB loan commitments with the consequences of a breach likely to impact on the personal property of the parties and the second respondent. Far from any suggestion that the husband is seeking to disadvantage the wife, he says that without his continued focus on the sale and disposal of plant and equipment and the management of the substantial debt of the group and the parties a default of their commitments to the NAB is inevitable.

E Pty Ltd under administration

The Australian Taxation Office (“ATO”) issued a statutory demand on 29 March 2016 requiring the payment of the amount of $380,890.57 within 21 days of the notice or by 22 April 2016.
The husband says that E Pty Ltd is not able to pay the outstanding amount and as a result the husband placed E Pty Ltd into voluntary liquidation on 28 April 2016.
The actions of the husband have not in any way satisfied the wife that his conduct is transparent and therefore in the best interests of E and the F Group in general.
The husband gave one days’ notice to the wife of his intention to place E into voluntary liquidation. He accepts that he should have given her more notice and agrees that on reflection it was at least a consideration as to whether he should have sought an extension of time from the ATO.
Correspondence forwarded to the husband on behalf of the NAB would appear to confirm that the F Group has a difficult trading relationship with the bank. The husband says that the bank were not prepared to advance any further money in respect of the statutory demand in circumstances where the F Group had not honoured its ongoing commitment to servicing the NAB loan.
The wife alleges that the employees of E have not had their employment terminated as might be expected with an entity under voluntary administration but rather the employees have simply transferred to other positions within the F Group.

The husband’s actions

The husband has determined that plant and equipment and the Suburb K premises should be sold in order to reduce liability of the F Group and to give the business an opportunity to trade out of its financial predicament and either enable the prospects of sale of the group to be enhanced by a return to profitability or at least enable an orderly sale of the assets of the group rather than a sale required by liquidation.
The husband alleges that he was mindful of the order made 30 November 2015 which required that he provide advance notice of any contract for sale.
The husband acknowledges he did not act in compliance with the order in that he signed a contract for the sale of L Pty Ltd without notice to the wife.
By letter dated 4 April 2016 the wife expressed her concern at the manner in which the husband had entered into the contract of sale in purported breach of the order and highlighted that she considered it reasonable in any event to be consulted given her significant shareholding in the relevant entities that comprise the F Group.
Whilst the wife did not seek to interfere with the sale she was concerned as to how the proceeds of sale would be disbursed.
She sought an undertaking from the husband that he would not disburse proceeds without her approval and consent.
It would appear apparent that whilst the husband will give greater attention to providing the wife with appropriate notice of any intention to sell significant quantities of plant and equipment he resists any suggestion that the wife should have a say in how the proceeds are utilised.

The M reports

In the hearing before me on 26 November 2015 the status of the report became a matter of some dispute between the parties.
Counsel for the husband at the earlier hearing referred to the M reports as a process intended to assist the minority shareholders in the F Group to better understand the financial predicament of the various entities.
It was asserted by the husband that the fees for the preparation of the report were still outstanding. That does not now appear to be the case. The husband concedes that the fees for the payment of the M report had been paid from F Pty Ltd.
Moreover the report became an important first step on which the husband relies. It appears at annexure JGG1 to the affidavit of the husband’s solicitor filed 1 February 2016.
The wife complains that whereas she has had to pay for her own separate accounting advice (from Mr N) the husband has been able to utilise the resources of the F Group to supplement his ongoing legal fees and disbursements.
On the basis of a negative outlook for the business and the potential for the assets of the F Group if sold to fall short of meeting the NAB liability the M report recommends that the group give serious consideration to the liquidation of plant and equipment.
A second M report dated 23 February 2016 appears in the affidavit of the husband filed 29 April 2016 at annexure MF8.
The second report is a supplement to the earlier preliminary report and contains a revised position based upon some further information received from a minority shareholder.
It was the opinion of the author, Mr O that:
There is insufficient cash flow being generated by the [F Group] to allow the shareholders or related party lenders to draw any monies for other purposes. If shareholders were to call upon monies owned to them by the [F Group] to be repaid it is likely that such action would trigger the need to liquidate core business assets, which would undoubtedly impact the trading activities and accordingly the operational cash flows.

The N report

The wife sought assistance from Mr N to consider the following:-
(1)The mechanism by which funds could be sourced to enable the payment of spousal maintenance; and
(2)The financial capacity of the Forlan and/or F Group to make such payments.
At that time a decision had not been made to place Forlan into voluntary administration.
Mr N considered the following areas as possible sources of funds to assist the wife either by way of spousal maintenance or lump sum payment:-
(1)Husband’s income
(2)Unused employee leave
(3)Loan accounts
(4)Trust distributions
(5)Dividends
Mr N did not consider that he had sufficient information to draw a firm conclusion as to the financial capacity of the group to meet any order made in favour of the wife.
It is reasonable to summarise the opinion of Mr N as not necessarily being able to accept what might be considered a dire view of the financial integrity and viability of the F Group as suggested by Mr O. Reference was also made to various cash flow projections which Mr N did not consider Mr O had brought to account.
To be fair, six months has now elapsed from the first M report and a clearer picture of the financial viability of the F Group and the accuracy of the projections can now be assessed.
There seems to be a general consensus however that cash flow pressures need to be alleviated by the orderly sale and disposal of equipment.
Following the appointment of an administrator to E Pty Ltd, Mr N was asked to further consider the following issues:-
(1)Who owns what plant and equipment
(2)The balance of group loan accounts
(3)Employee entitlements
(4)The financial viability of the remaining entities
Of importance to the wife is her responsibilities as the sole director of I Pty Ltd. Mr N considered that the current circumstances were complex and that ongoing uncertainty exists as to the disbursement of proceeds received from the sale of equipment in particular held by I Pty Ltd. He makes a number of recommendations generally designed to ensure that the obligations of the wife as sole director are not the subject of breach and that proper consideration is given as to how the proceeds of sale of equipment are utilised.
There is agreement between the parties that Mr N can be appointed as a single expert and in any event he should be instructed to comment on the financial viability of the group, the consequences following the voluntary administration of E and the manner in which funds received from the sale of equipment in respect of the commitments of other entities comprising the F Group.
It is noted that the fees charged for the M reports were paid from the resources of the F Group whereas the fees paid for the N report were paid privately by the wife.

LITIGATION FUNDING

The wife seeks the sum of $100,000 to assist in her current and future legal fees.
The order as drafted in the Further Amended Initiating Application is in the following terms:
That the husband pay to the wife the sum of $100,000 by way of contribution to her anticipated legal expenses, either personally or from the resources and assets of the [F Group] and/or the [Forlan Group].
The husband and second respondent strongly argue that the Court should not have recourse to resources and assets of the various corporate entities comprising the F Group. In respect of at least some of the entities there are third party interests that would need to be considered and in any event it is difficult to see the financial pathway that could be put in place that would see assets converted into cash and then transferred or distributed to the parties.

The wife’s legal fees are substantial and she has been provided with an estimate of costs to trial of $40,000 plus GST together with counsel fees in the range of $20,000 to $30,000.
In addition there are substantial fees required for valuations and expert witness disbursements.
Given the intensity of the litigation to date I suspect that the wife’s assessment of her future costs is optimistic.
The manner in which the husband pays for his legal fees is uncertain. He considers that his legal fees are also substantial. The sum of $46,107.50 has been paid to his solicitors by a payment from F Pty Ltd. The basis upon which those monies were provided to the husband is not known. He says that in addition to monies paid there are significant sums outstanding both to his solicitors and to counsel. It is noted that the husband also has proceedings in the Suburb P Magistrates Court which required attention.
The husband annexes a schedule of payment of counsel fees to his affidavit filed 13 May 2016.
Similar to the wife, the husband has also been advised that the future legal fees for the Family Court proceedings are likely to be in the vicinity of $100,000 inclusive of counsel fees.
The husband says that he has now exhausted his resources and has resorted to credit card advances in order to meet his legal fees.
He says at paragraph 74:
I am hopeful that the parties can come to an arrangement in the future for sale of assets of the businesses, whether that be plant or real estate, to give us access to money if the businesses continue to operate so poorly.
The husband opposes the wife’s application and relies upon the M reports as to the parlous financial position of the F Group.
In Strahan & Strahan (Interim property orders) (2011) FLC 93-466 the Full Court said at [79]:
The need for a party to proceedings under the Act to seek an order for the provision of funds to enable the payment of his or her legal costs of participating in the proceedings has been recognised for many years. It is a reflection of an important matter that distinguishes litigation under the Act from civil litigation between parties who are not parties to a marriage, namely that “very often the wealth of the parties is controlled by one rather than both of them”: Blueseas Investments Pty Ltd v Mitchell (1999) FLC 92-856 at 86,128 per Full Court (Nicholson CJ, Lindenmayer and O’Ryan JJ).
Following the decision of Zschokke & Zschokke (1996) FLC 92-693 the heads of power the permit the making of an interim order are summarised as follows;
(1)a maintenance order (either periodic or lump sum) under ss 72 and 74;
(2)an order under s 79 as allowed pursuant to s 80(1)(h); and
(3)a costs order under s 117.
In Zschokke (supra) the Full Court said at 83,217:
If the order is to be made under s 117(2) then, in our view, the matters contained in s 117(2A) must be addressed, and this would seem to have been recognised, if not expressly at least by implication, by the Full Court in Poletti. In saying this we acknowledge that a number of the paragraphs in the sub-section (notably paragraphs (d) failure by one party to comply with court orders; (e) total lack of success by one party in the proceedings; and (f) existence and terms of an offer for settlement) may not have relevance in an application for an order of the type in question. We also acknowledge that it may well be necessary in such an application for the Court to have regard to a range of relevant matters other than those specified in the sub-section, as is permitted by paragraph (g).
In Strahan (supra) the Full Court said at [90]:
In Zschokke at 83,217 the Full Court said that “whether the matter was determined as an interim property settlement order under s.80(1)(h), or as an interim costs (or security for costs) order under s.117(2), or indeed even a maintenance order”, three matters would all be relevant, namely:
1.a position of relative financial strength on the part of the respondent;
2.a capacity on the part of the respondent to meet his or her own litigation costs;
3.an inability on the part of the applicant to meet his or her litigation costs.
In Strahan (supra), the Full Court at [96] referred to the remarks of Brereton J in Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578 as follows:
In Paris King Investments Brereton J at [30] and [31] said that in addition to the three matters described in Zschokke, where the order was made pursuant to either s 74 or s 117 of the Act:
·an applicant should have “at least an arguable case for substantive relief which deserves to be heard”: Chester v Chester (1995) FLC 92-612 (“Chester”) at 82,107 per Moss J;
·there should be evidence of the applicant’s “likely costs of the litigation”: see Wilson and Chester;
·“it is not an essential precondition” that the applicant’s legal representatives will not continue to act unless the costs are paid or secured on an ongoing basis: Columb and Columb (unreported, Family Court of Australia, Fogarty J, 27 November 1987); see however Coomes and Coomes (1995) FLC 92-558 per Cohen J;
·an order may “make a provision for litigation expenses at a rate that appears reasonable in all the circumstances”;
·an order can be made “in respect of costs already incurred as well as of future costs”;
·“whether the order is to be in respect of costs already incurred or costs to be incurred, and whether the applicant’s lawyers will continue to act in the absence of provision for costs to be incurred, may be relevant to the discretion to make an order, and its’ quantum”;
·“any such order should be framed to protect the parties from any risk of injustice arising from the manner in which the funds are expended” and this may be done “by requiring that the funds be administered solely by the applicant's solicitors and applied only to meet the expenses referred to in the order, with detailed records being maintained to permit review by the Court at the time of the exercise of its discretion in the substantive property proceedings or on the final determination of the issue of costs”: Breen.
If the order is to be made by way of partial property settlement then the exercise of power must be pursuant to the provisions of s 79 but given that it is an interim hearing, the exercise is necessarily confined to the evidence reasonably presented to the Court. It is well understood that whilst the circumstances are not required to be compelling before an award can be made, regard must be had to the general principle that the Court and parties are better served by one hearing under s 79 than multiple hearings.
Accordingly what is required is the determination that it is appropriate and proper to exercise the power taking into account the following:-
·That any order made under s 79 must be just and equitable and provide some underlying consideration of the matters expressed in s 79(4);
·That the application is a proper reflection of the disparity between the parties in respect of their relative financial strengths and an incapacity on the part of applicant to meet his/her own legal costs;
·The financial circumstances of the parties;
·The extent of the property settlement likely to be received by the applicant and whether it will be sufficient to cover the interim lump sum sought.
It must be said that at present the financial position of the parties is at best uncertain.
Whilst the parties have both real and personal property, it has been utilised as security for the NAB loan of $3.5 million. The husband, wife and the second respondent each have substantial credit loan accounts in the F Group, but the realisation of that entitlement and the release of their real property as security for the NAB loan is entirely dependent upon the viability of the entities comprising the F Group.
In the wife’s affidavit filed 25 January 2016 concern was raised as to the manner in which it was proposed to dispose of equipment forming part of the plant and equipment of the F Group.
The wife’s concern was raised notwithstanding order 6 of orders made 30 November 2015 requiring the husband to provide the wife with advance notice of any intention to enter into a contract for the sale of plant and equipment. It is to be noted that the order was to apply during the period of the adjournment.
Nonetheless the parties generally considered that they would be bound by the underlying rationale of the order namely, that in order to better promote transparency in terms of the operation of the F Group and to give effect to the consensus that plant and equipment needed to be sold in order to reduce debt, the husband considered that it was sensible for him to comply with the terms of the original order.
Unfortunately the issue of the sale of plant and equipment has provided further fuel for dispute.
The mistrust between the parties has not lessened by the husband selling a significant quantity of equipment without giving the wife advance notice.
The husband’s solicitors forwarded correspondence dated 21 March 2016 enclosing a signed contract in respect of equipment evidencing a sale and purchase agreement between F1 and Q Pty Ltd for an agreed price of $243,973.60. The wife did not have any say in the contract nor was any opportunity given to her to object as to its terms and conditions or have input as to how the net proceeds of the sale of the equipment would be utilised.
The status of the equipment sold and the relevant vendor entity within the F Group was further confused by correspondence from the husband’s solicitors which suggested that the equipment was not owned by F1 but rather by F2 as trustee for the FFT.
By affidavit filed 13 May 2016 the husband acknowledges that “there appears to have been presentation of an incorrect position in relation to the ownership of the [equipment]”. The husband now says that F1 is not the owner of the equipment. It is owned by I Pty Ltd.
A further area of confusion has arisen in respect of incorrect information provided to the wife as to the account into which the net proceeds of the sale would be provided. It would now seem to be the case that the relevant NAB account for I Pty Ltd is account ...
The wife generally accepts that at present it is difficult to find a source of funds from which an order requiring a lump sum to be paid to the wife could be sourced.
Whatever funds may remain in I Pty Ltd accounts or may be the subject of future deposit is clearly property of that entity. Whilst it is agreed that the wife is the sole director and the husband the sole shareholder of I Pty Ltd, that does not mean that funds that flow into that account can be used at the discretion of the parties.
Whilst it may be possible to convert money held in an account to the husband by way of a dividend, that requires a direction from the director of the company and could only be made after a proper assessment has been undertaken as to the primary obligations of I Pty Ltd.
There are likely to be liabilities that I Pty Ltd is obliged to service and also the extent to which any money available should be prioritised to the NAB loan secured generally across the group is a relevant consideration.
The husband considers that his obligation to support a number of outgoings and liabilities across the group is a paramount consideration and a first priority before any surplus funds could be considered for distribution to the wife. The wife does not agree with that contention. She queries what obligation I Pty Ltd has in respect of those entities that are poorly performing. In particular she can see no good reason why money should be diverted to the liabilities of E now under voluntary administration or indeed in respect of any other entity that has a liability to a third party.
I raised with counsel the desirability of an expert being appointed pursuant to r 15.45 of the Rules. To some extent the assistance that would flow from that appointment is the subject of discussion in the second N report. Whilst that document was directed to the wife’s obligations as a director of I Pty Ltd nonetheless the underlying consideration is to better understand the F Group, how the various entities are interrelated and in particular the manner in which those entities that hold valuable plant and equipment should be utilised generally to service the needs of the F Group.
Accordingly, I consider it premature to determine the wife’s application seeking a lump sum.
In a general sense I am sympathetic to the parties having sufficient funds available to them to be able to fund their litigation. I also accept that as matters presently stand there is no trust that remains between the parties and that the wife is unlikely to accept the position as may be adopted by the husband from time to time without seeking her own separate advice.
Accordingly, it seems a sensible way forward that the parties jointly instruct a single expert in order to assess the financial viability of the F Group, the interrelationship between the entities and the extent to which any income derived from the sale of plant and equipment should be utilised to reduce debt.
Given the manner in which I Pty Ltd is set up and in the absence of either party having sufficient resources to pay the costs of the proposed single expert appointment, it seems reasonable that the resources of I Pty Ltd should be utilised to satisfy the disbursement costs of the single expert noting that it is a matter for the parties to take accounting advice as to whether whatever is required should be considered by way of an advance to the wife and it thereafter being reflected in her loan account or by way of dividend to the husband.

INJUNCTIVE RELIEF

There is no opposition by the husband to the reinstatement of paragraph 6 of the orders made 30 November 2015.
It also seems appropriate that the husband be restrained from taking any action in his capacity as sole shareholder of I Pty Ltd to remove the wife from her appointment as director.
It is also reasonable that the wife be consulted in respect of the manner in which the net proceeds of sale of any equipment should be utilised. There is no reason to suggest that the wife does not have the best interests of the F Group foremost in her mind. A default by the group would see the bank foreclose on the security proffered by the parties in respect of the outstanding loan. This would directly impact upon the wife’s home at Suburb D.
It is only by the provision of transparency that the parties may well be able to focus on how best to manage, preserve and enhance their various resources both personal and commercial.
The husband agrees that the proceeds of the sale of any equipment should be paid into the I Pty Ltd account being account ...
It is the husband who summarises his position at paragraph 50 of his affidavit filed 13 May 2016:
In summary, I say that:
(1)The equipment on the “job balance” document is owned by I Pty Ltd.
(2)When sold the funds received in a bank account of which I Pty Ltd is the owner.
(3)I am not using the funds received other than in the ordinary course of business which includes mandatory interest payments to the NAB of $14,236.74 per month which occurring on the 17^th and 19^th day of each month as can be seen from the annexure MF5 hereto.
(4)There was no intention on my part to mislead the wife in any way about the ownership, sale and proceeds of that transaction.
It seems therefore that an order should be made requiring proceeds from the sale of any plant or equipment owned by I Pty Ltd to be banked into the nominated account and any withdrawal or transfer shall occur with the consent of both parties save and except for the payment of the mandatory interest payments to the NAB in the sum of $14,236.74.
The wife may well argue that there are other entities within the F Group which also have the ability to contribute towards the NAB loan. That may well be the case but hopefully the nominated single expert can provide some clarity in respect of the totality of the financial resources of the group.

DOLLAR FOR DOLLAR ORDER

Upon the matter returning for argument on 19 May 2016, an application was made on behalf of the wife for a “dollar for dollar” order. The basis of the application is that she contends the husband is able to pay his solicitors whereas the wife’s resources are effectively exhausted.
The position is not so straight forward as far as the husband is concerned. Whilst it is admitted that significant funds were withdrawn from the F Group to meet some of his legal fees and he confirms that the M reports were paid for from the company resources, he argues that he no longer has that option and his position at present is similar to that of the wife.
A dollar for dollar order is not a remedy to be applied in all cases where one party is able to pay his or her legal fees but the other is not. The husband may well have a generous benefactor and to that extent it may well be an advantage that is denied to the wife. A dollar for dollar order would not be appropriate in that circumstance.
The concern of the wife is that the husband is using the resources of the F Group where his ability to do so is not superior to that of the wife. Put simply, given the significant involvement of the parties in the F Group and taking into account their substantial credit loan account jointly with the second respondent in excess of $2.3 million if it is considered appropriate for the F Group to make funds available to the husband then there is no reason why there should not be an equivalent sum made available to the wife.
In G & T (2004) FLC 93-176 O’Reilly J referred to the decision in McL & McL (unreported, Family Court of Australia, O’Reilly J, 30 January 2003) where his Honour found that there was sufficient power to make a “dollar for dollar order” pursuant to s 117(2) and (2A) of the Act.
As was found by Cronin J in Iphostrou & Iphostrou and Ors [2011] FamCA 20 at [60]-[61]:
As has been said before, cases involving complex commercial family disputes are often not a level playing field. It is important that if possible, an attempt is made to level that field. The best way to do that in this case is to ensure that wherever a payment is made to the husband’s lawyers for the preparation of material, an equal amount is paid to the wife’s practitioners.
I am satisfied that the wife has no other source of funds other than family and friends and without this sort of assistance, there will not be a level playing field. I propose to make orders according.
I consider it reasonable that if the husband is able to access funds for his litigation from the F Group that an equivalent amount is payable to the wife’s solicitors.

INTERIM SPOUSAL MAINTENANCE

Section 72(1) of the Act provides:
Right of spouse to maintenance
(1)A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a)by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b)by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c)for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).
The wife seeks an order that the husband pay to her the sum of $1500 per week plus the expenses are referred to in paragraph 4(a)(ii)(e) of the interim orders sought in the Further Amended Initiating Application filed 25 January 2016.
By reference to the interim orders sought it is difficult to understand how the wife can be seeking spousal maintenance in respect of payments that she seeks to be made from the F Group. It is unlikely that spousal maintenance would be considered to include her statutory superannuation entitlements calculated on an income of $1500 per week, petrol costs limited to $50, AMP life and trauma insurance and the mortgage in respect of the Suburb D property.

The wife’s entitlement to spousal maintenance will be confined to her claim in her application that the husband pay to her the sum of $1500 per week.
To some extent the history of benefit received by the wife explains the manner in which she seeks to craft her orders.
She complains that in a peremptory fashion her fuel card was cancelled following the hearing on 26 November 2015 and her mobile phone was disconnected on 1 January 2016.
In addition, the monies paid to the wife following separation were unilaterally reduced by the husband until ultimately she was given notice that her weekly payments would cease.
The wife is not currently employed. Other than what the husband describes as her token employment with the F Group, the wife has little or no relevant employment history.
Moreover, the wife is 52 years of age and lists her usual occupation as a company director.
She resides in the Suburb D property which is used as security for the NAB loan.
She has the use of a motor vehicle which is currently the subject of dispute.
The husband remains opposed to any order for spousal maintenance. He has been steadfast in his opposition to the ongoing financial support of the wife.
That the husband is not kindly disposed to the wife and remains generally unconcerned as to her circumstances.
Section 72 places an obligation on the wife to establish that she cannot support herself not that she is unable to do so in a particular area of employment or occupation.
In determining the extent to which an applicant wife can support herself, I must have regard to matters as set out in s 75(2) of the Act. In M v M (2006) FLC 93-283 the Court held at [31]-[32]:
The question whether an applicant can support his or herself “adequately” is not to be determined by reference to any fixed or absolute standard but by having regard to the matters referred to in s 75(2): Mitchell (above at Fam LR 59; FLR 308; FLC 81,995).
The question is not to be determined upon a “subsistence level” but upon consideration of whether the applicant can support himself or herself “adequately” importing a standard of living reasonable in the circumstances: Mitchell (above); Evans and Evans (1978) FLC 90-435; Brady and Brady (1978) FLC 90-513 at 77,701; Gamble and Gamble (1978) FLC 90-452; Wilson and Wilson (1989) 13 Fam LR 205 ; FLC 92-033 and Bevan and Bevan (1993) 19 Fam LR 35 ; (1995) FLC 92-600.
Further at [35]:
Thus in our view the trial judge was required to consider:
(a) whether employment was available to the wife having regard to the practical realities of her age, experience and confidence having been out of the workforce for a number of years; and
(b) if so, the level of income the applicant might earn from such employment and whether in the circumstances of this case such income fell below adequate support and thus met the requirements of s 72.
I consider that the wife has been out of the workforce for a number of years and it is unlikely that her more recent involvement with the F group would in any way provide her with a skill set from which she could seek employment.
Whilst it may be said that the wife does not appear to have explored all employment opportunities, I consider that in the circumstances in which the wife finds herself in, it is reasonable that she be permitted to bring an application for spousal maintenance.
It may well be the case that the wife will need to look more critically at her circumstances and to explore more widely any opportunity for employment that may exist but at present and on an interim basis I consider that she satisfies the threshold test.
The most recent information in respect of her financial circumstances is set out in the Financial Statement filed 25 January 2016.
In terms of her Part G expenses I am satisfied that the total of $396 per week is reasonable.
A focus on the Part N expenses would warrant a reduction of food by $50 to $150 and removal of the amount of $3,301 representing pet expenses, gym membership and legal fees. Accordingly, the Part N expenses are $763 making a total of $1,159. The wife earns modest income of $34 and accordingly the net deficit appropriate expenses of the wife over her income is $1,125.
The focus must then turn to the capacity of the husband to meet the wife’s claim.
The husband’s income is principally comprised by way of an AMP income protection policy in the sum of $2,249 per week. In addition, the husband earns modest bank interest of $20 per week making a total of $2,269 per week. In his Part G expenses the husband claims $500 per week to his father for himself and the two children of the parties. No evidence has been presented that the payments are made and it is also noted that both of the children are adult and are in part time employment. Ms B earns $500 per week and Ms G $300 per week.
It seems reasonable that they contribute to their own expenses at least to some level.
I propose to allow a payment by the husband to his father of $350 per week.
I do not propose to allow life insurance premiums which the husband seeks to instigate in the absence of any explanation as to why it is necessary at this time.
I note that the husband has substantial credit card borrowings which are required to be paid at least as to the minimum payment.
I do not propose to make any reduction in respect of the minimum payment that the husband makes.
I do not propose to include Item 28 being the amount paid by the husband in respect of the daughter’s motor vehicle expenses.
In considering the husband’s Part N expenses I propose to ignore monies expended by him in respect of the adult children.
Whilst it is unlikely that the extent of the holiday component claimed by the husband could be considered as a necessary commitment nonetheless the expenses claimed are modest and I bring to account Part N expenses in the sum of $435. A total of the husband’s expenses are therefore $1,603 as against income of $2,229 leaving a surplus of $626. Accordingly I consider that the husband has available to him at least $600 per week to satisfy the wife’s claim for spousal maintenance.

CONCLUSION

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

I certify that the preceding one hundred and forty (140) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 10 June 2016.

Associate:

Date:

[2016] FamCA 469

10 June 2016

Key Legal Topics

Areas of Law

Family Law

Equity & Trusts

Legal Concepts

Injunction

Procedural Fairness

Expert Evidence

Consent

Remedies