Geall & Geall

[2021] FamCA 565

FAMILY COURT OF AUSTRALIA

Geall & Geall [2021] FamCA 565

File number(s):	SYC 2641 of 2021
Judgment of:	REES J
Date of judgment:	3 August 2021
Catchwords:	FAMILY LAW – INTERIM PROPERTY – Application by the husband for interim financial relief – Where wife proposes the sale of investment property and each party receive a $300,000 distribution – Where wife seeks the husband’s entitlements be crystallised prior to making spouse maintenance orders – Orders made as sought by the husband.
Number of paragraphs:	42
Date of hearing:	2 August 2021
Place:	Sydney
Counsel for the Applicant:	Ms Christie SC
Solicitor for the Applicant:	Greg Alfonzetti Solicitor
Counsel for the Respondent:	Mr Kearney SC
Solicitor for the Respondent:	Pearson Emerson Family Lawyers

ORDERS

SYC 2641 of 2021

BETWEEN:

MR GEALL

Applicant

AND:

MS GEALL

Respondent

ORDER MADE BY:	REES J
DATE OF ORDER:	3 AUGUST 2021

THE COURT ORDERS:

1.That, pending further order, the wife pay to the husband by way of spousal maintenance the sum of $1,500 per week, to be paid to the husband’s nominated bank account, the first payment to be made within two days of the date of this order and thereafter weekly.

2.That in the event that the husband receives payments from B Insurance, the amount of spousal maintenance that is to be paid pursuant to Order 1 is reduced by the equivalent weekly amount received by the husband from B Insurance.

3.That within 21 days of the date of this order the wife cause to be paid to the husband, by way of interim property settlement, the sum of $500,000.

Note:   The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

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

REASONS FOR JUDGMENT

Rees J:

1. Mr Geall (“the husband”) and Ms Geall (“the wife”) separated in July 2018. They have two adult children.

2. The husband now seeks an order for interim spousal maintenance of $2,200 per week and an order for interim or partial property settlement in the sum of $500,000.

3. The application for interim spousal maintenance is opposed by the wife. The application for interim property settlement is not opposed but she seeks orders which are differently structured.

   INTERIM SPOUSAL MAINTENANCE

4. It is not in dispute that the husband is unable to support himself from his own exertion, he having suffered various afflictions that have rendered him incapable of performing his previous profession.

5. Rather, it is the wife’s case that the husband has an entitlement pursuant to various insurance policies to income protection payments exceeding $5,900 per week. In the alternate, the wife contends that the husband’s application for spousal maintenance should be adjourned until such time as the husband’s entitlements have crystallised.

6. The wife concedes that she has the ability to pay the amount sought by the husband.

7. The husband claims, as one of his expenses, $700 per week interest on an outstanding credit card debt of about $98,000. On his behalf, it is conceded that, in the event that he receives an interim property settlement of $500,000, then that debt will be able to be paid and that expense will no longer be incurred.

8. The husband also concedes that, if he is in receipt of income from the insurer, the spousal maintenance would no longer be payable.

9. There was no challenge to the reasonableness of the balance of the husband’s claimed expenses of $1,500 per week.

10. The wife deposed that the husband instituted his claim against the income insurance policies with B Insurance on 16 February 2021, however that was not the first occasion on which the husband attempted to press his claim. The wife deposed to correspondence from the husband’s solicitors on 11 February 2021 where they advised that the husband had previously been told that his claim would not be honoured.

11. The husband tendered an email exchange with the insurer in late July 2021 where the husband expressed frustration at the delay in approving his claim and the insurer, as at 29 July 2021, was awaiting an updated report from a psychiatrist.

12. The husband is currently unable to support himself. Until that situation changes, the wife has an obligation to support him.

13. Orders will be made as sought by the husband.

    INTERIM PROPERTY SETTLEMENT

14. The husband seeks payment of $500,000 from cash resources controlled by the wife.

15. The wife opposes that application but proposes that the parties sell an investment property at C Street, Suburb D (“the Suburb D property”) and that, from the proceeds of sale, each party receive $300,000. That property is owned by a unit trust, the units of which are owned by a discretionary trust.

16. The husband does not concede that it is necessary to sell the Suburb D property.

17. The wife concedes that the husband’s ultimate entitlement to property settlement well exceeds the sum of $500,000 which he seeks. By implication, she also concedes that it is appropriate and otherwise reasonable to make an interim order in favour of the husband. Why that sum should be $300,000 as she contends rather than $500,000 as he seeks is not explained.

18. Nor is there evidence in the wife’s case that establishes that there should be an exercise of the power pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) in her favour on an interim basis rather than only one exercise of that power in the making of a final order.

19. The wife has not established that it is just and equitable that there be an interim property settlement in her favour, having regard to the assets she controls.

20. It is the wife’s position that, if she were required to satisfy the order that the husband seeks from the resources she controls, the ability of the corporate entities to fund the ongoing business enterprises would be compromised.

21. In order to determine that issue, it is necessary to understand something of the corporate structure and its control.

22. It is not in dispute that the wife controls all of the relevant entities and that she determines how the profits which are derived from the business are distributed.

23. The primary business is owned by E Pty Limited (“EPL”). Since 2005, EPL has provided the bulk of the parties’ income. In 2010, the husband was the sole shareholder and director of EPL.

24. The wife deposed in her affidavit sworn on 7 June 2021:

    39.EPL is now structured such that the business is owned by EPL Holdings Trust (“EPL Holdings Trust”) and the real property from which the businesses are run at City F and City G are owned by EPL Asset Trust (“EPL Asset Trust”). The real property from which the business is run at [H Town] is owned by J Pty Limited as bare trustee for K Pty Limited as trustee of the K Superannuation Fund - our self-managed superannuation fund of which [the husband] and I are the members, and K Pty Limited is the registered owner of the property at L Street, H Town. Both the EPL Holdings Trust and EPL Asset Trust are unit trusts. E Pty Ltd is the trustee of both the EPL Holdings Trust and the EPL Asset Trust. I am the sole director and shareholder of this trustee company.

    40.As both EPL Holdings Trust and EPL Asset Trust are unit trusts, any income from these Trusts must be distributed to the unit holder each financial year. Any cash in the EPL Holdings Trust is used to cover the business' expenses and any surplus is then distributed to the unit holder.

    41.The sole unitholder of each of the EPL Holdings Trust and EPL Asset Trust is the Q Trust.

    42.I am the appointor and a specified beneficiary of the Q Trust. The income from EPL is paid to the Q Trust (as the sole unit holder of EPL) and then typically distributed to me (as a specified beneficiary), [the husband], Ms R and also two other entities: S Pty Ltd and T Pty Ltd, as general beneficiaries.

25. As to her achieving the control of the entities, the wife deposed:

    59.In around August 2019, as a result of my repeated requests to [the husband] which went unanswered and my concerns about [the husband’s] health and his impact on the business, I exercised the Power of Attorney and arranged for [the husband’s] interest in EPL to be transferred to me so that I could continue to run the practice and comply with the necessary financial and taxation regulations.

26. In an affidavit sworn on 30 July 2021, the wife deposed that the business income generated by EPL “has decreased significantly” in light of the recent restrictions imposed because of the pandemic.

27. However, the wife does not put into evidence the financial statements of the relevant entities in order to prove that assertion. Rather she relies on a table she prepared with the assistance of her book keeper and accountant which, she asserts, demonstrates that by the end of September 2021, the cash balance available to the business will be $127,079.

28. The wife asserts that she has not been able to tender the financial statements for the relevant entities because the husband has not co-operated in the preparation of the 2019 end of financial year returns. That does not explain which other available evidence was not made available in circumstances where, since August 2019, only the wife has been in a position to provide that information.

29. The husband tendered the Profit and Loss statement for the EPL Holdings Trust for the year ended 30 June 2020 which shows a net profit for that year of $1,261,758. The husband also tendered the Profit and Loss statement for the EPL Holdings Trust for the period ended March 2021 which shows a net profit for the nine months to date of $1,797,840 which suggests an overall improvement in performance over the 2020 year.

30. Nothing in the material upon which the wife relied discloses the distributions made in 2020 and 2021 to the wife, the entities she wholly owns and controls, in particular, T Pty Limited, or to the parties’ adult children.

31. However, the table relied upon by the wife in her affidavit sworn 30 July 2021 shows that EPL Holdings Trust will pay the quarterly tax liability for T Pty Limited; for the wife and for the parties’ adult daughter in the sum of $116,706 despite the fact that the tax liability is not the liability of EPL Holdings Trust.

32. There are no financial statements in evidence for T Pty Limited for the financial years ended June 2020 or June 2021.

33. That the wife uses the bank account of EPL Holdings Trust as she chooses is demonstrated by the statements of the account of that company with Commonwealth Bank ending #...12.

34. The wife’s legal fees in relation to these proceedings, or some of them, have been paid from that account.

35. On 13 October 2020, $900,000 was transferred into the wife’s offset account with NAB leaving a balance in the #...12 account of $78,296. It is conceded that the sum of $900,000, which has now grown to $925,132, according to the wife’s Financial Statement sworn 7 June 2021, is available for her to redraw. On her behalf, it is contended that those funds are shown in the accounts as having been borrowed by her from EPL Holdings Trust and that, if it is necessary, she will refund money to EPL Holdings Trust to ensure that it can meet its expenses. 

36. On 16 October 2020, $44,014 was paid to the ATO in relation to tax owed by the parties’ adult daughter.

37. By the end of October 2020, the balance of the #...12 account had increased to $442,427.

38. As at 2 June 2021, the balance of the #...12 account was $649,553.

39. At the present time, there are three possible sources for payment of the sum of $500,000 to the husband:

    ·The $925,132 in the offset account.

    ·The #...12 account (or any combination of the two)

    ·The proceeds of sale of the Suburb D property.

40. I do not accept the primary contention on behalf of the wife that the expenses of the business cannot continue to be funded from its income. If I am mistaken in that finding, EPL Holdings Trust has $396,834 in the #...12 account as at 1 August 2021 and can draw on the money in the offset account if needed. Even after the payment of $500,000 to the husband, EPL Holdings Trust will have reserve funds of some $800,000.

41. I do not accept that the wife has established that it is necessary to sell the Suburb D property. Further, the parties are not in agreement about the tax implications of the sale of Suburb D or about how the proceeds should be held pending the final determination so as to minimise the tax consequences and the evidence does not permit the determination of that issue.

42. Orders will be made as sought by the husband.

I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Rees.

Associate:

Dated:       3 August 2021