Ganem and Ganem & Ors

[2013] FamCA 148

FAMILY COURT OF AUSTRALIA

GANEM & GANEM AND ORS [2013] FamCA 148

FAMILY LAW – PROPERTY – INTERIM SPOUSAL MAINTENANCE – ADULT CHILD MAINTENANCE – CHILD SUPPORT – Where wife has threshold requirement to spousal and over 18 maintenance – Where there is little evidence about the husband’s capacity to pay – Where the wife pressed interim applications while simultaneously pursuing contempt application against the husband – The serious nature of the contempt application and its factual nexus to the matters in dispute in the interim proceedings must be considered when evaluating the significance of the husband’s continuous disclosure obligation – The husband’s failure to provide up to date financial material and give complete disclosure on these issues should not be criticised – Where the wife has not applied for administrative assessment of child support – Child support application incompetent – Where the wife/or receivers have control of most assets acquired during the marriage – Where the totality of evidence has left the court unable to determine whether the husband has the capacity to pay spousal or child maintenance – Applications dismissed

FAMILY LAW – INTERIM PROPERTY ORDER – Where the husband agrees that the wife is entitled to a significant property settlement – Where the wife unable to demonstrate that the husband has access to $200,000.00 or that he can reasonably readily rearrange his financial affairs in order to raise it – Application dismissed. 

Family Law Act 1975 (Cth): ss 80(1)(h); 79; 75(2); 79A

Black & Kelner (1992) FLC 92-287
Gabel v Yardley (2008) FLC 93-386
Jones & Dunkel (1959) 101 CLR 298
Strahan & Strahan (2011) FLC 93-466

APPLICANT: Ms Ganem

FIRST RESPONDENT: Mr Ganem

SECOND RESPONDENT: Ganem Pty Ltd

INTERVENOR: F Partners

FILE NUMBER: SYC 931 of 2012

DATE DELIVERED: 1 March 2013

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Ryan J

HEARING DATES: 13 November 2012, 5 December 2012 & 13 February 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Siggins

SOLICITOR FOR THE APPLICANT: Mason Mia & Associates

COUNSEL FOR THE FIRST RESPONDENT: Mr Alexander appeared on 13 November 2012 only

FOR THE FIRST RESPONDENT: The respondent appeared in person on 5 December 2012 & 13 February 2013

FOR THE SECOND RESPONDENT: No appearance

FOR THE INTERVENOR: No appearance

Orders

1. That the wife’s application for interim partial property orders and interim maintenance (Orders 13, 14, 15 and 16) contained in her Further Amended Initiating Application filed 31 August 2012 is dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Ganem & Ganem and Ors 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 931 of 2012

Ms Ganem

Applicant

And

Mr Ganem

First Respondent

And

Ganem Pty Ltd

Second Respondent

And

F Partners

Intervenor

REASONS FOR JUDGMENT

1. This is the third judgment in relation to interim or procedural matters delivered by me in as many months.  My reasons for decision delivered on 5 December 2012 and 17 December 2012 provide relevant background material.

2. These proceedings came before me in a duty list on 13 November 2012.  On that occasion, the wife sought to pursue a contempt application against the husband which she filed on 3 September 2012.  Having taken all morning to accept my indication that it was not possible to hear 27 counts in a duty list, the wife said she wanted an outstanding application for interim spousal maintenance and child support.  Although that application took counsel who appeared for the husband by surprise, in circumstances where I was informed that the interim application was also listed for hearing that day, I permitted the application to proceed.  The matter was stood down over the luncheon adjournment which gave counsel for the husband a period within which to take instructions and prepare for the afternoon’s hearing.  When the matter resumed both counsel were able to address the relevant factual and legal issues.

3. Because counsel for the husband has not subsequently appeared, it is appropriate to record that on my subsequent review of the file, it became apparent that the wife’s maintenance and child support applications were not listed that day and to express my thanks to counsel for the husband for grappling with those issues and enabling something constructive to be done with the day.

4. The wife’s interim maintenance applications and application for partial property distribution were first filed by her Application in a Case on 6 March 2012.  As a consequence of that application, a series of interim orders were made on 26 March 2012 but did not address those matters.  In that application she sought $1,328.09 per week spousal maintenance, $501.00 per week over 18 maintenance in relation to the parties’ daughter G, $200,000.00 partial property settlement and $18,446.00 for their son J’s school fees.

5. In his Response, the husband agreed to pay one half of J’s school fees and $250.00 per week child support.  By the time the matter came before me, the husband had paid J’s school fees.  For an abundance of caution the wife asked the husband to agree to pay any money outstanding, which he did.

6. By her Further Amended Initiating Application filed 31 August 2012, the wife increased the spousal and over 18 maintenance sought to $1,988.35 and $540.00 per week respectively.

7. Unfortunately, the wife made no attempt to distinguish between her and the children’s expenses and in her Financial Statement claimed various expenses twice.  This prompted an enquiry about whether there was a child support assessment.  Informed that there was, the wife was directed to provide it within 48 hours.  As it transpires, there is no child support assessment and to the extent that the wife’s application could be interpreted as a departure application in relation to the younger children, it is incompetent.

8. The wife’s application is further complicated as a consequence of her contempt application.  Front and centre to that application is the husband’s receipt and distribution of funds earned by Ganem Pty Ltd and the Suburb H Partnership.  As will be discussed, the wife is able to establish a threshold entitlement to spousal maintenance, in a much smaller amount than that claimed, but adduced a paucity of evidence in relation to the husband’s capacity to pay.  In this regard, although she was able to point to income received in the business and partnership, she presented no evidence in relation to expenses.  As a consequence, counsel for the husband argued that the husband’s disclosure obligations and his failure to meet them, engaged the principles which emerged from cases such as Black & Kelner (1992) FLC 92-287. In addition, counsel for the husband argued that a Jones & Dunkel (1959) 101 CLR 298 inference would be available. But for the wife’s contempt application, there is considerable force to these arguments. However, the serious nature of the contempt application and its factual nexus to the matters in dispute in these interim proceedings must be considered when evaluating the significance of the husband’s continuous disclosure obligation. When the wife’s insistence that the matter run even although it was not listed is taken into account, the husband’s failure to provide up to date financial material and give complete disclosure on these issues should not be criticised. In short, until the wife’s contempt applications (more have been filed) are finalised, I am not persuaded that the principles in Black & Kelner, nor a Jones & Dunkel inference, is available to assist the wife.

Spousal and over 18 Maintenance

1. Although the husband ultimately conceded that the wife’s evidence disclosed that on her present income she is unable to adequately support herself, it was also submitted that as a consequence of her many years full time work in the parties’ business as a bookkeeper, she had an untapped earning capacity.  There is a paucity of evidence in the wife’s case about her attempts to secure paid employment.  However, her childcare responsibilities, that she works part-time, and the attention she must give to this litigation, means that it is reasonable that she does not immediately pursue full-time work.  Thus, the threshold requirement (s 72) is made out.

2. The wife is 47 years of age and in good health. 

3. The parties commenced cohabitation in 1991 and separated on 5 May 2010.  They are divorced.

4. There are three children of the marriage; K aged six, J who was born in December 1994 and is now 18, and G who will shortly turn 20.

5. After the parties married, the wife gave up her administrative position with a State government agency and commenced work in the family business as a bookkeeper.  Subject to short breaks on account of the children’s births, she worked in the business until 27 January 2012.  During that time she also completed a TAFE Certificate in an administrative discipline.

6. The wife and children reside at a farming property, which the parties own at Town L.  During university term G lives away.

7. It would seem that the wife discovered that she was to be excluded from the business when, on 27 January 2012, she was unable to gain access to the business’s accounts.  This would appear to be the catalyst for these proceedings.  It is accepted that until that date she had unfettered access to the business’s records and accounts.

8. On 3 February 2012, the wife commenced to receive a family tax benefit in the amount of $287.00 per fortnight.

9. On 26 March 2012, a suite of interim orders were made in accordance with the wife’s application.  Relevantly, these included provision for her to receive the net income from a property at Suburb H.  It would appear the wife has not received the income from that property to which she was entitled.

10. At some stage between the commencement of proceedings and when the wife filed her further amended Financial Statement on 1 August 2012, she obtained part time work in a healthcare role with a healthcare provider.  From this she earns $160.00 per week before tax.

11. Before the proceedings came before me in the duty list, the transportation company who retained the parties’ transportation industry services business lost its contract.  Thus, although there is a hotly contested issue about whether the husband submitted a tender for transportation industry services under another name, the failure of the transportation company to itself retain the government tender, at this stage, makes this something of a dry argument.  Nonetheless, the business continued to provide services to the transportation company until 1 November 2012.

12. On the wife’s application, on 5 December 2012, I made orders for the appointment of receivers of the income and property of the parties’ business and the Suburb H property.  The order in relation to the business was made in circumstances where the wife claimed irregularities in relation to the operation of the business, the husband had applied for its deregistration and neither wanted to take responsibility for its operation.  The effect of this is essentially that excluding the home in which the husband resides, the wife or the receivers have possession and/or control of all assets acquired during the marriage.  It also means that the husband no longer has access to the income generated from assets acquired during the marriage. 

13. Further orders were made on 13 February 2013.  Relevantly they relate to the receiver’s remuneration.  The records note that the husband and wife agree that the wife is to have control of the partnership assets.  Thus, she will receive the Suburb H income and will pay that property’s outgoings.  The husband previously agreed she could retain the balance.  It is not clear what that might be, but as a rough guide and excluding tax, somewhere in the vicinity of $380.00 - $400.00 per week could be available to the wife.  Given the other orders made that day, it is possible the receivers will claim the excess, in which case the wife will not take anything from Suburb H.

14. So that it is clear, the business no longer trades.  Although the wife is suspicious that the husband may have an interest in a transportation industry services contract undertaken in the name of another person, she did not establish that this is so. 

15. I will now turn to the wife’s most recent Financial Statement dated 31 August 2012.  Excluding the items double-counted and the children’s expenses, the wife has established reasonable weekly expenses in the amount of $754.00.  Excluding family tax benefits, which must be disregarded, and taking into account her salary, the wife has a shortfall of $594.00 per week.  So that it is clear, this assumes she receives nothing from Suburb H.

16. G’s expenses are claimed at $500.00 per week.  It is accepted that the wife is unable to afford to contribute and that in order to complete her tertiary education G needs financial support. 

17. I will now turn to the husband’s capacity to pay spousal or child maintenance. 

18. For his part, the husband says he is unemployed.  So that it is clear, as I understand it for the duration of the marriage the husband worked in the business (or as a sole trader before incorporation).  It would be mere speculation to infer he has an earning capacity beyond transportation industry services or as a business owner.  There was confusing reference to him buying a food processing business, the details of which are not in evidence.  Whether it is operational and how the purchase was funded is not known to me. 

19. The husband has remarried and has a young child by his second wife.  They are financially dependent on him. 

20. His Financial Statement was sworn on 23 March 2012.  It discloses a total average weekly income of $2,124.00 comprised of $1,200.00 business income, $200.00 salary and $754.00 per week rental income from Suburb H.  His average weekly expenses are $365.00.  He incurs $230.00 per week for his current wife.  In addition, the husband claims expenses in the amount of $1,169.00, which essentially relate to the Suburb H mortgage, tax, car expenses and insurances in relation to Suburb M.  His Financial Statement reveals that at that time he was able to afford J’s school fees and still have about $160.00 per week excess income.  Although he originally offered $250.00 per week child support his case was presented on the basis that this was no longer offered.

21. It is what has transpired since then which is particularly contentious.  The husband’s Financial Statement is presented on the basis that the business continued to trade.  Doing the best that I can, it would seem that the business continued to undertake contract work for the transportation company until 1 November 2012. 

22. During the hearing, counsel for the wife demonstrated that throughout 2012 the business continued to receive payments from the transportation company, which it is inferred related to transportation industry services provided by contractors engaged by the business.  What was not established is the extent to which payments made by the business related to ordinary business expenses compared to monies received by the husband. 

23. The receiver’s report attached to the affidavit of Mr A filed 6 February 2013 sheds some light on the situation.  The receiver spoke with the transportation company who confirmed that the business ceased to provide services as at 1 November 2012.  According to the receiver, the only assets of the company are office equipment and cars with an auction value ranging between $46,200.00 and $55,200.00.  By then, the receivers had taken control of the Suburb H income.

24. In relation to the business’s expenditure the receiver said:

    Our analysis of the Company’s profit and loss statements revealed a significant increase in subcontractor payments for the financial year
    30 June 2011 (“FY 2011”) compare to the payments made in the financial year end 30 June 2010 (“FY 2010”).  In the FY 2010 the Company paid $183,573.00 to subcontractors compare to $304,321.00 in the FY 2011, representing a dollar increase of $120,748.00.  This represents a percentage increase of 66% in payments to subcontractors even though the percentage increase in income is only 9.2%.  In the FY 2012 the Company paid $378,423.00 to sub-contracts representing a dollar increase of $74,102.00 and a percentage increase of 24% compared to FY 2011.

    The increase in sub-contractor payments directly contributed to the increase in total expenses of the Company from $399,584.00 to $565,313.00 representing an increase of $165,729.00 in expenses.  This resulted in a reduction in the operating profit of the Company from $129,364.00 to $12,478.00.  We believe this is an irregularity due to the significant increase in sub-contractor payments and expenses compared a 9% change in income (Report to the Family Court of Australia on [Ganem Pty Ltd] and [Mr and Ms Ganem], 30 January 2013, p 14). 

25. It is appropriate to observe that the wife’s involvement with the company was curtailed by the husband in early 2012.  Thus, she was involved and had access to all company records during the 2011 financial year, a period during which, as I understand her evidence, she makes no complaint about expenditure on sub-contractors.  The increase in sub-contractor expenses for the 2012 financial year also related to a period during which the wife was, for a significant period , still involved with the company.  As the bookkeeper, it is inferred that she was intimately involved in payments to the sub-contractors.  If there are questions to be answered, these are as much the wife’s as the husband’s responsibility.  The same must be said about the questions asked by Mr N (who prepared a report on the business for the wife).  The point being, each of the husband and the wife should have been able to provide me, the receivers and Mr N with an accurate account of payments to the sub-contractors.

26. Of greater interest is the receiver’s report relating to payments from 5 June 2012 to 19 December 2012 from the business account.  According to the receiver, the bank statements reveal 68 payments totalling $322,895.62 with no description in the bank statements as to where the monies were paid.  Of these, 24 payments totalling $96,849.93 were made at or after the receiver’s appointment.  The receivers have demanded the husband provide invoices to support the transactions, in relation to which they say he claims confidentiality.  The husband informed me the documents requested have now been provided.  He also produced the result of a recent audit of the business undertaken by the Australian Taxation Office.  The letter from the ATO shows that it is satisfied about payments made to sub-contractors are properly documented.  In particular that the payments were made to people whose details, ABN’s and the like are all in order.  In short the ATO was satisfied with the results of its audit.  

27. Unfortunately this hearing was completed in circumstances which have made it difficult to make a comfortable assessment of the circumstances surrounding the husband’s acquisition of the food processing business and use of business income post January 2012.  While there are questions he must answer, at the wife’s behest the hearing has been finalised in circumstances where the Court could not compel him to give evidence on these topics.  The totality of the evidence has left me unable to find that the husband has the capacity to pay either spousal maintenance or maintenance for G.      

Partial Property

1. The approach to an application for an interim property order is described in Strahan & Strahan (2011) FLC 93-466. Essentially, this involves two stages, neither of which requires that an applicant establishes compelling circumstances. First, it must be established that s 80(1)(h) of the

   
   Family Law Act 1975

   (Cth) (“the Act”) is enlivened to allow an interim property settlement pursuant to s 79.  In determining to depart from the usual approach that there is a once and for all final order, it is necessary that it is appropriate to make an interim order, with the overarching consideration being the interests of justice.  In determining what interim property order might be in the interests of justice, a preliminary assessment of the application of s 79 and s 75(2) is required.  The imprecise nature of this component of the exercise makes it appropriate to exercise a degree of caution so that the ability to achieve a just and equitable final property settlement is not compromised by the earlier order.  In other words, as Bryant CJ and Coleman J observed in Gabel v Yardley (2008) FLC 93-386, the interim order must be amenable to variation or reversal without resort to s 79A or appeal.

1. As earlier referred to, the wife seeks $200,000.00 from the husband by way of partial property settlement.  Because the wife will use these funds for legal expenses, which she is otherwise unable to pay, she says the order is just and equitable. 

2. Although the parties’ property has not yet been valued, there seems to be agreement that their gross assets are worth about $2.4 million.  There is approximately $487,000.00 secured by a NAB mortgage over Suburb H.  Both parties claim a series of small liabilities which do not materially affect their net worth.

3. In the husband’s Response filed 26 March 2012, relevantly, he proposed that the wife receive the property at O Street where she and the children reside, he receive Suburb M where he lives, that Suburb H is sold and after payment of the NAB loan and selling costs, the balance remaining is distributed equally.  In relation to the business, he proposed that the wife take it.  The parties would each take responsibility for any liabilities attached to assets they received.

4. The wife says O Street is less valuable than Suburb M, whereas the husband claims O Street is the more valuable property.  Whatever the valuations might ultimately reveal, it is clear that at all times the husband has agreed that the wife is entitled to a significant property settlement.  It follows that there is no dispute that by way of final order the wife should receive assets worth at least $200,000.00.

5. What the wife has not been able to demonstrate is that the husband has access to $200,000.00 or that he can reasonably readily rearrange his financial affairs in order to raise it.  Reference was made to the husband’s attempt to purchase a food processing business during 2012 which, as I understand it, may have occurred.  Because the husband was facing the wife’s contempt applications, I decided it would be inappropriate to require him to give evidence about that matter.  However, the wife did not establish that the transaction resulted in the husband having access to funds which could support a $200,000.00 payment to her.  In short, I am not persuaded that it would be just and equitable to make a partial property settlement order. 

6. I am conscious this means that along with the husband, the wife may now become unrepresented. 

7. It is appropriate to observe that in the receiver’s report, they say:

   [The wife] has advised that she suspects the payments [being 68 payments totalling $322,895.62] were made in order to defeat payments to her which were ordered by the Court on 26 March 2012.  [The wife’s] claim will form the main part of the Liquidator’s investigation to determine whether these payments were made in preference of [the wife], whether the payments are voidable and the recoverability of these payments (Report to the Family Court of Australia on [Ganem Pty Ltd] and [Mr and Ms Ganem], 30 January 2013, p 16).    

8. The point being, this issue will be examined notwithstanding that the wife’s partial property settlement application has failed.

9. The wife’s applications will be dismissed.

I certify that the preceding forty-five (45) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ryan delivered on 1 March 2013.

Associate:     

Date:              1 March 2013