Gadde & Gadde (No 2)

[2015] FamCA 1165

FAMILY COURT OF AUSTRALIA

GADDE & GADDE (NO. 2) [2015] FamCA 1165

FAMILY LAW – PROPERTY – INTERIM PROCEEDINGS – Where the parties appear to agree to a distribution of funds from a controlled monies account for the purpose of legal costs – Where the husband seeks a further distribution, part of which would be used to satisfy an outstanding costs order – Where the Court finds it just and equitable for such a distribution to occur – Orders made – Further distribution to the husband to be characterised as an interim property settlement.  

FAMILY LAW – SPOUSE MAINTENANCE – INTERIM PROCEEDINGS – Where the wife cannot support herself adequately for the purposes of section 72 – Where the Court finds the husband does not have the capacity to pay – Application dismissed.

Family Law Act 1975 (Cth) ss 72, 79

Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466

APPLICANT: Ms Gadde

RESPONDENT: Mr Gadde

FILE NUMBER: SYC 417 of 2015

DATE DELIVERED: 23 December 2015

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Stevenson J

HEARING DATE: Dealt with by written submissions

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Kearney SC

SOLICITOR FOR THE APPLICANT: Barkus Doolan Family Lawyers

COUNSEL FOR THE RESPONDENT: Mr Cummings SC

SOLICITOR FOR THE RESPONDENT: Swaab Attorneys

Orders pending further order

By consent:

1. That both parties do all things and execute all documents required to cause payment to each of the parties of a sum of $60,000 from the funds lodged in the National Australia Bank account number … (“the NAB account”) for the purpose of payment of legal costs.

Otherwise:

1. That the wife’s application for interim spouse maintenance is dismissed.

2. That both parties do all things and execute all documents required to cause payment to the husband of a sum of $64,830 from the NAB account.

3. That the husband pay to the wife, from the monies which he receives pursuant to Order (3), the sum of $16,830 on account of her costs pursuant to orders made on 15 July 2015.

4. That the husband take the sum of $64,830 which he receives pursuant to Order (3) as an interim or partial property settlement.

5. That the wife has liberty to apply, on seven (7) days’ notice, for an order that she receive a sum of $48,000 from the NAB account by way of interim or partial property settlement.

6. That, otherwise, the competing applications for interim financial orders are adjourned to 22 April 2016.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Gadde & Gadde (No. 2) 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 SYDNEY

FILE NUMBER: SYC 417 of 2015

Ms Gadde

Applicant

And

Mr Gadde

Respondent

REASONS FOR JUDGMENT

The proceedings

1. On 23 November 2015 the competing applications of Ms Gadde (“the wife”) and Mr Gadde (“the husband”) for interim orders in relation to parenting and financial issues came before the Court.  The parties agreed to adjourn the hearing of the interim parenting issues until 22 April 2016, when the Court should have the assistance of a Child Responsive Memorandum and, perhaps, the report of the single expert Dr P.

2. Insufficient time then remained on 23 November 2015 for me to deal with interim financial issues.  I directed that the parties file and serve written submissions in support of certain of those competing applications.  I received such submissions on 26 November 2015 and 4 December 2015 from senior counsel for the husband and the wife respectively.

3. The written submissions on behalf of the parties demonstrated that they now agree that they each receive a sum of $60,000 from funds held in a National Australia Bank account (“the NAB account”) for the purpose of meeting their legal costs.  Otherwise, the wife sought an order that the husband pay to her interim spouse maintenance of $2,956 per week.  The husband sought an order that he receive a sum of $76,830 from funds held in the NAB account.  The husband proposed that a sum of $16,830 from that amount of $76,830 should be paid to the wife in satisfaction of a costs order made in her favour on 15 July 2015.  The amount of $16,830 would be treated as a partial property distribution to the husband and the characterisation of the sum of $60,000 would be reserved to trial.

4. Senior counsel for the wife opposed the making of any interim orders in relation to financial issues in favour of the husband due to his non-compliance with various orders, including the costs order of 15 July 2015.  The husband now proposes, however, that he pay these costs from funds which ultimately will be treated as a component of his share of the matrimonial property.  This proposal does not excuse his prior conduct in failing to honour the order for costs but it does at least address this outstanding issue.

5. The history of the proceedings demonstrates that the husband has been somewhat recalcitrant and uncooperative with both the Court and the wife.  On the other hand, I have no reason to doubt his evidence that he suffered significant emotional pain at the breakdown of the marriage and that the death of his father in mid-2015 was another traumatic event in his life.  I do not excuse his conduct but I hope that he will now focus on the issues and deal effectively with the litigation.  I doubt that denying the husband access to all of the funds in the NAB account for the foreseeable future would assist in that purpose.  As noted, in any event the wife now agrees that he receive a sum of $60,000 from that fund to meet his legal costs.

6. For these reasons I intend to deal with the husband’s application for a release to him of the sum of $76,830 from the funds held in the NAB account.  I have adjourned the interim proceedings part-heard to 22 April 2016 and, lest there be any doubt, I propose to deal on that day with both interim parenting and financial issues.

Background

1. The husband and the wife are aged 43 and 41 respectively and began to live together in Sydney on July 2006.  The husband was born in Country F and moved to Australia in 2001.  The wife was born in Australia but lived in Country F for several years prior to the commencement of cohabitation.  The parties married in Sydney in 2007 and separated in March 2014.

2. The wife has a daughter from a previous relationship, G, who was born in 2004 and is now eleven years of age. G lived with the parties until their separation in March 2014.  The parties have one child, L, who was born in 2009 and is presently six years old.  L lives with the wife and arrangements for him to spend time with the husband will be determined after the interim hearing on 22 April 2016.

3. The husband deposed that he had the following assets, superannuation and liabilities as at the commencement of cohabitation:

Asset	Value
Motor Vehicle 1	50,000
Household contents and furniture (est)	50,000
Artwork (est)	40,000
V Bank – sign on bonus US $675,000 (A$900,000) pre tax	900,000
Superannuation	76,510
R Town 25 per cent	110,700
C’s Share Portfolio	203,000
Total assets	1,430,210
Tax	418,500
R Town Mortgage	91,020
Total liabilities	509,520
Net assets at cohabitation	$920,690

1. The wife deposed that she had the following assets and liabilities at the commencement of cohabitation:

Asset	Value
The D Trust (which Trust I controlled and which Trust was the registered proprietor of D Street, City E, Country F)	NZD850,000
Household contents and furniture	80,000
Motor Vehicle 2 sale proceeds and savings	N/K
Liability
Loan to my parents’ trust (the T Trust).  Annexed hereto and marked “A” is a copy of reconciliation of the loan account I had with the U Trust as at 31 March 2011.  I was a beneficiary of each of these Trusts.  These loans have subsequently been transferred to the Z Trust, a new Trust established by my parents of which I am also a discretionary beneficiary.	NZD$654,515.98
Financial resource
Discretionary beneficiary of the U Trust	Nil

The husband disputes that the wife had any liability to her parents’ trust.

1. In February 2007 the parties purchased a property at H Street, Suburb I for $2.4 million.  There was a dispute as to the source of the purchase money and acquisition costs.  It was common ground, however, that the parties borrowed approximately $299,000 from the wife’s father.  She contended that her father advanced an additional sum of $13,197.  The husband alleged that he applied a sum of US$675,000 from a sign-on bonus derived from his employment with V Bank to reduce a Westpac Bank mortgage of $2,048,500.  The wife claimed that she contributed approximately $712,000 from the proceeds of sale of her property in City E.

2. In April 2009 the parties purchased a property at J Street, Suburb K for $4.355 million.  They spent approximately $200,000 on renovations to this property.  There was some issue as to the source of the purchase money and acquisition costs but it seemed to be common ground that a substantial portion of the funds came from a mortgage from V Bank.

3. The Suburb I property was sold for $2.43 million in May 2009.  The parties sold the Suburb K property for $5 million in 2014.  They discharged the V Bank mortgage, a joint Amex debt and paid the husband’s 2013 income tax from the sale proceeds.  The parties each received a sum of $50,000 and an amount equal to three months’ rent from the sale money and the balance was then deposited into the NAB account.

4. On the sale of the Suburb K property, a deposit of $175,000 was paid into the husband’s Westpac account.  The wife alleges that the husband retained these funds for his own use.  The husband maintained that he transferred $130,000 to the firm C Partners in Country F and repaid a loan of $20,000 from his friend.  This matter is but many issues to be resolved at the final hearing of these proceedings.

5. In December 2014 the husband and his mother sold their property at R Town for NZ$725,000.  The husband received NZ$50,255, which he claimed to have applied to discharge a Country F credit card debt of $10,000 and to deposit the sum of $20,000 into his account with C Partners.

6. In mid-2012 the parties acquired a 5.5 per cent interest in a hotel business at O Town in Country F for NZ$97,000.  This property is on the market for sale, with the tender process having closed on 3 December 2015.

7. The husband deposed that the parties’ assets, superannuation and liabilities at present are as follows:

Assets	Ownership	Husband’s Estimate ($)
1	Nab Account … – controlled monies account (after payment of monies pursuant to Orders 27.8.15 and receipt of $7143.84 for [Ms Gadde’s] bond being $10k less rent owing of $2856.16)	J	572,798
2	Westpac Joint – … as at 11.11.15	J	Nil
3	Westpac Mr Gadde account … as at 11.11.15	H	Nil
4	Artwork Wedding	W	40,000
5	Artwork – Husband Pre Marriage	H	60,000
6	Furniture and Household contents (in W’s possession)	W	120,000
7	Furniture and Household contents (in H’s possession)	[H]	15,000
8	Jewellery	W	50,000
9	Bond Wife’s Apartment Suburb N (*Used to meet wife’s rental arrears)	H	Nil
10	Bond Husband’s Apartment Suburb K	H	3,300
11	Motor Vehicle 3. Written off early Sept due to persistent leaking sunroof irrepairably damaging car computer.  value subject to insurance claim and currently uncertain	H	20,000
12	Motor Vehicle 4	W	40,000
13	Westpac …	W	56
14	Westpac … as trustee for L	W	21
15	Westpac … as trustee for Q	W	77
16	Westpac Simple Saver (Q)	W	9,679
17	Westpac Electronic Account	W	3,409
18	Westpac Simple Saver Account …	W	48,551
19	Westpac NZ (Mr Gadde) …	H	Nominal
20	CBA account no. …	H	Nominal
22	V Bank Deferred Stock Awards vested settling in 2016 and 2017 (USD $220,068) FX 0.72	H	305,650
23	Gadde Family Trust comprises:	J	1,048,111
24	(a) 5 per cent share O Town Hotel (FX 0.92c). Sale process commenced in Oct closes on Dec 3 = $124,200	J
25	(b) O Town Property (FX0.92c) = $744,000	J
26	(c) C Partners equity account no. 416927 (after payment of in C Partners legal fees). Incl CIP cash mgt bal = $179,911	J
28	Funds wasted by the wife due to financial mismanagement and excessive expenditure and unnecessary legal action/costs	W	NK
29	Funds released to wife by orders dated 15.7.15 and 27.8.15	W	77,256
30	Funds released to wife by orders dated 15.7.15 pursuant to orders of 11.3.15 already paid from Nab A/c on 15.4.15	W	20,000
31	Funds received by husband pursuant to orders dated 27.8.15	H	25,000
32	Gleneagles account GE2501 (19 Oct 2015). The $347,954 balance is invested subject to the loan from the Ms W Trust (NZ 250,000 plus 10 per cent interest) and the agreement with Damon Radich (AUD 380,000)	H	Nil
Total	2,458,908
Liabilities	Ownership	Husband’s Estimate ($)
51	Provision for tax on CS benefits settling in 2016/2017 (46.5 per cent)	H	142,127
52	Mr Gadde FY14 Personal income tax	J	89,297
53	Accounting fees to prepare 2014/2015 accounts/tax returns for Gadde Family Trust ($5000) and legal fees ($2600)	J	7,600
54	Residual on BMW X5 as at 11.11.15	H	30,604
55	Loan from Mr X – paid into Wpac joint a/c on 17.7.14 on understanding it would be repaid 2 weeks later upon settlement of J Street on Aug 1	J	50,000
56	Loan (Ms W) *pre separation February 2014	J	40,000
57	Mr Gadde Personal Loans – Ms W (legal fees & living expenses) (101,000) plus advance (40,060)	H	141,060
58	Mr Gadde Personal Loans – Sam Porter (NZ $10k on 5 Jan 2015)	H	9,200
59	Mr Gadde Personal Loans – Andrew Findlay (A$5k on)	H	5,000
60	Z Trust	W	Nil
61	Z Trust	W	Nil
62	Westpac Earth Platinum Mastercard – Jo	W	NK
63	American Express credit card	W	NK
64	American Express – Mr Gadde	H	29,580
65	Westpac Visa – Mr Gadde	H	18,135
66	Westpac NZ Mastercard Est. FX 0.92c	H	12,961
67	Westpac Mastercard Ms Gadde	W	NK
68	Gleneagle debt owed being 50 per cent of losses incurred on the trading book I was running wound up at adverse prices Q15	H	150,000
69	CGT R Town	H	4,912
70	Gleneagle
Nil
72	Loan from Ms Y to pay rent and legal fees	W	Nil
73	Costs owed to Meyer Partners as at 12.12.15 excl interest at 6 per cent	H	30,019
Total	760,495
Net Assets	Ownership	Husband’s Estimate ($)
Assets	2,458,908
LESS Liabilities	760,495
Total	1,698,413
Superannuation	Ownership	Husband’s Estimate ($)
100	Gadde Superfund (Established with husband’s Super. No contribution from wife since late 2014)	H	63,867
101	AMP Signature Superannuation – Mr Gadde (Residual left with AMP to maintain death/disability/income protection insurance $516pm)	H	8,912
Total	72,779
Resources	Ownership
AA, Z Trust, T Trust	W	NK
Net Assets & Resources	Ownership	Husband’s Estimate ($)
Net Assets	1,698,413
PLUS Resources	72,779
Total	1,771,192

1. The wife deposed to a balance sheet as follows, with the proviso that she is unaware of a number of matters in relation to the parties’ financial position:

Assets			Ownership	Value
(a)	Gadde Family Trust		Joint	NK
(b)	O Town property (held by the Gadde Family Trust)		Joint	$680,000
(c)	Net proceeds of the Suburb K property (remaining was $1,423,000)		Joint	E$656,607.53
(d)	Superannuation		Joint	NK
(e)	Mr Gadde’s savings and share portfolio		Husband	NK
(f)	Wife’s savings		Wife	$50,460* and **
(g)	Artworks		Joint	$120,000
(h)	Motor vehicle 2		Wife	$45,000
(i)	Motor vehicle 3		Husband	NK
Liabilities			Ownership	Value
(j)	Loan to Z Trust		Wife	$15,000
(k)	Loan to Z Trust		Wife	$875,791
(l)	American Express		Husband	Nil
(m)	Credit card		Wife	$5,868
(n)	Rental arrears		Wife	$10,000
Financial Resources			Ownership	Value
(o)	Z Trust		Wife	Nil
(p)	AA Trust		Wife	Nil
(q)	Gadde Family Trust		Husband and wife	NK
*not including funds held on trust for the children.
** the savings will shortly be depleted as I have to immediately meet the following:
1)	Rental arrears	$10,000
2)	Rent for next month	$10,000
3)	Legal fees	E10,000
4)	Credit card	$5,868
Plus day to day expenses for the children.

1. The husband received a sum of $97,000 in May 2015, on account of settlement of deferred benefits from V Bank.  He maintained that he has exhausted these funds by way of payment of legal costs, car finance instalments and living expenses.  He claimed further that he spent part of this money on expenses which he incurred in the course of his father’s terminal illness and death.

2. Historically, the husband has earned a substantial income as a stockbroker but he maintained that his work pattern has been erratic since the separation.  He attributed his unstable employment situation to the Global Financial Crisis and the impact upon him of the breakdown of the marriage.

Consideration

1. I am dealing with the question of provision for the financial support of each of the parties for the period of approximately four months until the resumption of the interim hearing on 22 April 2016.  In her Financial Statement of 20 November 2015 the wife deposed to a total weekly income of $836, consisting of salary from part-time employment of $584 and child support of $252 from Q’s father.  She asserted a total expenditure of $3,697 per week.

2. The husband contended that the wife is in receipt of funds sourced in Country F.  He annexed to his affidavit a copy of a statement for Westpac Bank account operated by the wife in Country F for the period 1 July 2014 to 1 August 2014.  The husband pointed to a deposit of $100,000 on 8 July 2014 from the AA Trust.

3. In so far as I am aware, the only evidence in relation to the AA Trust was contained in the wife’s affidavit of 23 January 2015, wherein she deposed as follows:

   102.I am also a discretionary beneficiary of the [AA Trust] together with my children.  There are no assets in that Trust.  There were funds in that Trust however I caused NZ$50,000 to be transferred to a bank account in my name to meet expenses and legal fees.  These funds will be depleted shortly.

   Obviously, therefore, a total sum of $150,000 has been transferred from the AA Trust to the wife.

4. According to the husband, the wife has taken holidays in Country F, the United States and Country BB and Country CC between July 2014 and October/November 2015.  She has received payments of $27,239, $25,017 and $45,000 from funds held in the NAB account pursuant to various orders of the Court.

5. In his Financial Statement of 20 November 2015 the husband deposed to a total weekly income of $190, being half of the interest generated by the funds in the NAB account, and expenditure of $3,152.  It may be that the husband has threatened that he will not engage in gainful employment until the conclusion of these proceedings as contended by the wife.  In an email dated 13 May 2015 the husband wrote to the wife:  “I will not be returning to work until we have this resolved definitively.”

6. Annexed to the written submissions on behalf of the wife were copies of bank statements in relation to three accounts operated by the husband, which were said to show deposits totalling $151,395 between 30 March 2015 and 17 July 2015.  These deposits were listed as follows in the wife’s written submissions:

Account	Date	Amount $	Description of deposit
CBA Netbank Saver (…)	30 March 2015	2,809.00	Salary V Bank
30 July 2015	57,382.00	Salary V Bank
CBA Smart Access …	7 Sept 2015	10,000.00	direct credit … Citigroup Pty Limited
21 Oct 2015	1,200.00	Cash deposit
29 Oct 2015	2,000.00	direct credit 002962 Citigroup Pty Limited
Westpac online banking account	9 April 2015	10,000.00	RTGS High Value Payment
19 May 2015	4,100.17	C Partners
28 May 2015	40,465.88	C Partners
18 June 2015	9,855.79	C Partners
9 July 2015	11,908.09	C Partners
17 July 2015	1,675.00	C Partners
Total	$151,395.93

The husband offered no explanation for these deposits, although it should be noted that his written submissions were filed prior to those of the wife.

1. It thus appears to me that there is considerable uncertainty as to the present financial position of each of the parties. If it is assumed that the wife is unable to support herself adequately for the purposes of section 72 of the Family Law Act 1975 (Cth) (“the Act”), the issue is whether the husband has the capacity to pay spouse maintenance in the sum of $2,956 per week. On the basis of the evidence currently before me I am unable to conclude that the husband currently has the capacity to pay such interim spouse maintenance. It may be the case that such a capacity can be demonstrated at trial, after the gathering of further evidence and cross-examination. Accordingly, I decline to order that the husband pay interim spouse maintenance to the wife.

2. As noted, the husband sought an order that he receive a sum of $76,830 from the funds held in the NAB account.  A sum of $16,830 thereof would be paid to the wife on account of the costs order of July 2015 and treated as a partial property settlement in favour of the husband.

3. As noted in the written submissions on behalf of the husband, the principles in relation to interim property distribution are well settled and set out in the authority of Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466. The first step is for the Court to consider it whether it would be “appropriate” to make an interim order, with “the overarching consideration” being the interests of justice. The second step involves a consideration of relevant matters set out in section 79 of the Act.

4. The Full Court said inter alia in Strahan (supra):

   132. In relation to the first stage, in our view, when considering whether to exercise the power under s 79 and s 80(1)(h) of the Act to make an interim property order the “overarching consideration” is the interests of justice. It is not necessary to establish compelling circumstances. All that is required is that in the circumstances it is appropriate to exercise the power. In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.

   …

   137. Once a court proceeds to exercise the power in s 79 of the Act, being in the substantive phase, a court is required to undertake consideration of the matters in s 79(4) including by reference to s 79(4)(e) the matters in s 75(2) so far as they are relevant. However consideration of such matters may be brief and if it is established that “it seems likely to the Court that … the applicant … will be likely receive by way of property settlement a sum sufficient to cover the advance, that would seem to be sufficient to enable the order sought to be made”: Zschokke; Polletti and Polletti per Nygh J and Wenz v Archer.  As senior counsel for the Wife submitted, “provided scope can be found within the assets of the parties for an order of the size sought … then that should be the end of the matter”. In other words, in such circumstances the applicant would only be receiving what he or she was entitled to receive when the power was exhausted.

5. I am satisfied that it would be appropriate and in the interests of justice that the husband be permitted to access a relatively small proportion of the funds held in the NAB account.  In fact, I would take the same view in relation to the wife if she had advanced such a case.

6. The evidence does not satisfy me that either party is presently in a position to meet day-to-day living expenses from income.  As referred to above, however, there is doubt on both sides as to the true financial position of the parties at the present time.  It seems to me to be just and equitable, in these circumstances, that they would each be permitted access to their joint property so as to fund their day-to-day living expenses between today’s date and the resumed hearing.  As noted, there was a mutual concession to the effect that it would be just and equitable that they each access those funds for the purpose of meeting legal costs.

7. As to the relevant section 79 considerations, on the available evidence each of the parties introduced assets into their relationship and they jointly amassed wealth during their cohabitation. The husband engaged in gainful employment and earned a substantial salary as a stockbroker during the relationship. The wife made non-financial contributions, most significantly as homemaker and parent. The parties made these complimentary contributions during their eight years of cohabitation.

8. If a very conservative approach to the matrimonial pool is adopted, the assets would comprise at least the sum of $572,798 in the NAB account and the O Town property.  An amount of $76,830 equals approximately 0.13 per cent of the current balance of the NAB account.  It seems to me to be highly unlikely that the husband will receive less than that sum by way of a final outcome to the proceedings.  I appreciate that the wife contends for a relatively large debt to her parents’ Trust but, on the other hand, there exists additional property and superannuation benefits.

9. The selection of the quantum of an interim property distribution is a somewhat arbitrary exercise.  The sum of $60,000 sought by the husband would be the equivalent of approximately $3,750 per week for a four-month period between now and the resumed interim hearing.  I am prepared to make orders which would allow the husband to receive a sum of $48,000, which equates to about $3,000 per week for that period.

10. Accordingly, I will order that the husband receive a sum of $64,830 from the funds held in the NAB account.  That sum equates to approximately 0.11 per cent of $572,798.  In my view, it is extremely unlikely that the husband would receive less than that amount by way of a final distribution of property.  I will treat this total sum as an interim property distribution to the husband.  I see no utility in reserving its characterisation to trial, when I can make that decision at this stage and eliminate at least one issue for final determination.

11. I propose to allow the wife liberty to apply on seven days’ notice for an order that she also receive a sum of $48,000 by way of partial property settlement.  Of course, the wife is not obliged to make any such application but it seems to me to be appropriate that she be afforded the opportunity to do so.

I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 23 December 2015.

Associate: 

Date:  23 December 2015