Goey and Goey
[2019] FamCA 570
•14 August 2019
FAMILY COURT OF AUSTRALIA
| GOEY & GOEY | [2019] FamCA 570 |
| FAMILY LAW – PROPERTY – Interim orders – Where the parties seek competing orders to deal with the balance of an account in the interim – Where the matter is listed for trial – Where it is appropriate to make an order for interim distribution of property |
| Evidence Act 1995 (Cth) s 140 Family Law Act 1975 (Cth) ss 72(1), 74(1), 75(2), 75(2)(b), 75(2)(o), 79 |
| Brown & Brown (2007) FLC 93-316 Drysdale & Drysdale [2011] FamCAFC 85 Edgar & Strofield [2016] FamCAFC 93 Hall & Hall (2016) 257 CLR 490 Maroney & Maroney [2009] FamCAFC 45 Medlow & Medlow (2016) FLC 93-692 Stanford & Stanford (2012) 247 CLR 108 Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 |
| APPLICANT: | Ms Goey |
| RESPONDENT: | Mr Goey |
| FILE NUMBER: | ADC | 652 | of | 2018 |
| DATE DELIVERED: | 14 August 2019 |
| PLACE DELIVERED: | Darwin |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Berman J |
| HEARING DATE: | 23 July 2019 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr McGinn |
| SOLICITOR FOR THE APPLICANT: | Clelands Lawyers Adelaide Pty Ltd |
| COUNSEL FOR THE RESPONDENT: | Ms Wacyk |
| SOLICITOR FOR THE RESPONDENT: | Terese Wacyk Legal Pty Ltd |
NOTING THAT the sum of TEN THOUSAND DOLLARS ($10,000) is to remain in the joint Westpac account of the parties in anticipation of the single expert costs and disbursements.
Orders
That save as to TEN THOUSAND DOLLARS ($10,000) and the further consent of the parties, the order of injunction made 25 September 2018 in respect of the monies held in the Westpac joint account no. …74 be discharged.
That the parties do all things necessary to cause the following disbursements to be made from the Westpac joint account:-
(a)To the wife by way of lump sum spousal maintenance the sum of TWENTY SEVEN THOUSAND THREE HUNDRED DOLLARS ($27,300);
(b)To the husband by way of sum necessary to pay outstanding taxation the sum of TWENTY THOUSAND DOLLARS ($20,000);
(c)To the wife via her solicitors trust account the sum of SEVENTY THOUSAND DOLLARS ($70,000);
(d)To the husband via his solicitors trust account the sum of FORTY ONE THOUSAND TWO HUNDRED AND NINETY THREE DOLLARS ($41,293).
That the parties do all things necessary and sign all such documents as may be required to jointly instruct a single expert to prepare a report as to the assertion by the wife that in 75 transactions and by reason of other withdrawals the husband has accessed, disbursed, or transferred the total sum of $1,470,000.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Goey & Goey has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT ADELAIDE |
FILE NUMBER: ADC 652 of 2018
| Ms Goey |
Applicant
And
| Mr Goey |
Respondent
REASONS FOR JUDGMENT
Introduction
By Initiating Application filed 22 February 2018, Ms Goey (“the wife”) seeks orders that by way of property settlement the assets of the parties be adjusted 75/25 in her favour and that the superannuation entitlements of the parties be adjusted to equality.
By Response filed 3 April 2018, Mr Goey (“the husband”) seeks a general order that the property of the parties and their superannuation entitlements be the subject of a just and equitable distribution.
All applications for final orders have been listed for hearing to commence on 16 December 2019.
The Court file reflects that the parties have approached the proceedings with a high level of enthusiasm.
Attempts at mediation have been unsuccessful.
On 3 June 2019 the wife filed an Application in a Case seeking orders for urgent or interim spouse maintenance in the sum of $1,405 per week, and an order that the husband do all things necessary to cause the sum of $136,639 to be withdrawn from a joint Westpac Bank account set up pursuant to orders made on 25 September 2018 and paid to the wife’s solicitors trust account pursuant to ss 117, 79, 74 or 114 of the Family Law Act 1975 (Cth) (“the Act”).
In the alternative, the wife seeks a “dollar for dollar” order pursuant to s 117.
The husband’s Response filed 23 July 2019 does not speak against the orders sought by the wife, however, doing the best that I can, I extrapolate from the husband’s affidavit filed in support of his response that he opposes the wife’s orders.
For reasons that will be discussed, I propose to dismiss paragraphs 1, 2 and 3 of the husband’s Response.
Paragraph 4 has relevance to the interim proceedings insofar as the source of the lump sum sought by the wife are monies remaining in the joint Westpac account (“the inheritance account”) with a current balance of $168,593. For his part, the husband seeks that the injunction restraining the disbursement of funds in the inheritance account shall be discharged to enable the remaining funds to be disbursed as follows:-
(1)The parties’ obligation to pay monthly interest payments and arrears thereof due to Westpac, Commonwealth Bank of Australia and National Australia Bank.
(2)Repayment of all costs and amenities associated with the twelve (12) real estate properties owned by the parties.
(3)The Australian Taxation Office debt for the year ending 2017/2018 in an amount of approximately $60,000.
(4)The personal expenses of the wife referred to in paragraph 1 of the Orders made 24 April 2018.
The wife’s evidence is that she will incur fees of between $6,435 and $8,635 to instruct a single expert (in this case Mr B) to undertake a tracing exercise in respect of 75 transactions that she alleges are reflected in the husband’s accounts between 6 June 2017 and 25 July 2017 totalling $1,470,000.
The parties concede that the exercise should be undertaken and for reasons that follow, I propose to make orders for the joint instruction to and appointment of a single expert.
Background
The parties met in 1975. The husband came to Australia in 1978 and following the completion of his secondary school education was accepted into the J University in 1980.
He and the wife commenced a relationship and were married in 1987. There is some disagreement as to the date of separation. The wife considers that there were irreconcilable differences for a significant period leading up to the date of physical separation in or about July 2017. The husband considers that the separation was some months later, but it appears nothing turns on the difference.
The parties have been married for over 30 years and there are now three adult children of the relationship namely Mr F aged 31 years, Mr C aged 28 years and Mr E aged 25 years.
During the course of the marriage the husband provided financial support for the family working as a health professional. The wife provided the primary care for the children and whilst the subject of dispute, contends that she assisted in the management of the husband’s business by attending to administration and bookwork.
It is not controversial that for 30 years the wife has not been in paid employment and certainly not outside the husband’s business.
The parties are in significant disagreement as to the property that should be included in the pool of assets available for consideration by the Court.
The wife contends that the husband has disbursed, transferred or potentially spent a substantial sum which may well be the subject of an “add-back” application.
The parties have had the benefit of a valuation of the husband’s business and associated trust entities from Mr D.
The husband considers that whilst the parties hold significant property interests both in Australia and as to the wife, in Country G, there has been no misappropriation of funds by him and the wife ignores that the high level of debt places the parties in a parlous financial position.
It is conceded by both parties that the likely legal fees, costs and disbursements to be incurred by the parties will be not less than $400,000.
An initial observation is that even on the most generous view of the assets of the parties, the anticipated legal fees will represent a substantial percentage of the total property and the inability of the parties to resolve their differences may impose a pyrrhic consideration to any outcome following a contested hearing.
Assets and liabilities of the parties
The most recent iteration of the assets and liabilities of the parties is set out in the wife’s Affidavit filed 30 May 2019.
At [37] she assesses the net assets at $3,943,000 and superannuation entitlements of $1,600,000.
On closer inspection, the pool of assets includes an “add back” of $1,470,000 together with a further $600,000 representing the wife’s contention that the husband has retained gold bullion, diamonds and jewellery.
I am not able to determine at this stage of the proceedings the merit or otherwise of the wife’s claim as to money, jewellery and gold retained by the husband.
I am able to find that the husband does not concede the wife’s allegations and his response is set out in his Affidavit of 22 November 2018.
A further consideration is the valuation exercise undertaken by Mr D as to the value of the husband’s business and related entities comprising the following:-
Mr Goey (business), Mr Goey Family Trust and H Trust as at 30 June 2017
Subject to the value of relevant properties having changed in value and a variation in the trading results of the business (noting that Mr D brought to account the trading results to 30 June 2018) his summary raises the possibility that there is a deficiency of assets of $654,363.
Given the issues in dispute, the legal fees of the parties may well represent a significant further liability to be brought to account.
I assume that the report of Mr D will either be accepted and he will not be required for cross examination, or the parties will agree that his valuation exercise needs to be updated to better reflect the current circumstances.
The other principal consideration centres upon the wife’s allegation that the husband has withdrawn $1,470,000 from the accounts of the parties both jointly and severally. Given the assertion of the wife and the denial of the husband, the matter is likely to be either resolved or assisted by the evidence of a single expert. It should be a tracing exercise in respect of the 75 transactions that the wife highlights.
It appears that the wife has sought assistance from Mr B in terms of her case preparation. Whilst a matter for the husband, I assume that he would seek that if a single expert is to be appointed it should be other than Mr B.
I propose to order that the parties jointly instruct a single expert accountant to undertake a tracing exercise in respect of the monies alleged by the wife to have been withdrawn and/or retained by the husband.
Based upon the wife’s quote from Mr B to undertake the task that she considers is necessary, I propose to allow the parties to use $10,000 from the inheritance account to pay the costs and disbursements of the jointly instructed single expert.
Wife’s application for spousal maintenance
In the decision of Hall & Hall (2016) 257 CLR 490, the High Court set out the appropriate approach in considering an application for interim spousal maintenance as follows:-
[3]…The gateway to the operation of Pt VIII in relation to spousal maintenance is in s 72(1). That sub-section provides that “[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, the other party is unable to support herself or himself adequately … having regard to any relevant matter referred to in [s] 75(2)”.
[4]The liability of a party to a marriage to maintain the other party that is imposed by s 72(1) is crystallised by the making of an order under s 74(1). That sub-section provides that “[i]n proceedings with respect to the maintenance of a party to a marriage, the court may make such order as it considers proper for the provision of maintenance in accordance with this Part”.
[5]A court exercising the power conferred by s 74(1) is obliged by s 75(1) to take into account the matters referred to in s 75(2) and only those matters. Those matters are presented as a comprehensive checklist. They include what s 75(2)(b) refers to as “the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment”. They also include, by virtue of s 75(2)(o), “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”.
…
[8]Unlike a court exercising the power to make an urgent order conferred by s 77, a court exercising the power to make an interim order under s 74(1) must be satisfied of the threshold requirement in s 72(1) and must have regard to any matter referred to in s 75(2) that is relevant. No doubt, on an application for an interim order “[t]he evidence need not be so extensive and the findings not so precise” as on an application for a final order. But there is nothing to displace the applicability to an exercise of the power conferred by s 74(1) of the ordinary standard of proof in a civil proceeding now set out in s 140 of the Evidence Act 1995 (Cth). A court determining an application for an interim order under s 74(1) cannot make such an order without finding, on the balance of probabilities on the evidence before it, that the threshold requirement in s 72(1) is met having regard to any relevant matter referred to in s 75(2).
(footnotes omitted)
The applicant bears the evidentiary burden as set out in s 140 of the Evidence Act 1995 (Cth). This can be particularly challenging in the context of an application for interim spousal maintenance. As Kent J said in Edgar & Strofield [2016] FamCAFC 93 at [15]:-
[T]he limits to an interim hearing are well known. Disputed issues of fact cannot be resolved at an interim hearing…
In this case I find that the husband has conceded that the gateway requirement referred to in Hall & Hall (supra) is satisfied. That is as a result of the wife’s age, the length of the relationship and the period that she has been out of the workforce, she is unable to support herself adequately as contemplated by s 75(2)(b).
The wife does not have any condition or obligation created by the care of children under the age of 18.
Whilst both parties are obviously proud of their children and provide them with a high level of support both emotionally and at times financially, those decisions are not relevant considerations that I bring to account.
The following considerations apply:-
(1)What are the wife’s reasonable needs?
(2)What capacity does the husband have to meet a spousal maintenance order if such order is to be made? and
(3)If (1) and (2) favour an order for spousal maintenance being made by the Court, what order is reasonable having regard to s 75(2) of the Act?
The Full Court in Brown & Brown (2007) FLC 93-316 considered the meaning of the word “adequately”. The Court considered that adequate means more than at a subsistence level and where possible should allow the parties to live after separation at a level that is reasonable.
Whilst it is not necessary for the applicant for maintenance to use up all of their capital, I find that whilst the wife attributes approximately $600,000 to assets she controls in Country G comprising property and shares, they are at present illiquid and are not able to be utilised for her own support.
In support of the wife’s application, she has filed a Financial Statement on 30 May 2019 which provides by way of financial summary that the wife does not receive any income but has expenses in the sum of $1,405.
There is a typographical error in Part D of the financial statement in that item 10 records income from the wife’s Country G shares in the sum of $100 per week which is not reflected in her income.
The wife does not disclose any personal expenditure in Part G. It is assumed that the comprehensive nature of previous orders made are such that the entirety of those expenses are paid for by the husband.
The gravamen of the sum sought by the wife is as set out in the Part N average weekly expenses.
The husband has previously conceded that he would regard a weekly amount of about $1,100 as a reasonable reflection of the wife’s expenditure in circumstances where all other expenses are paid for.
I do not propose to be unnecessarily intrusive in the discretionary expenditure of the wife in circumstances where the husband’s solicitors have effectively ignored the issue in its entirety.
It is however I think reasonable for the Court to consider certain items of expenditure that would not be considered as “a necessary commitment” or even as an appropriate reflection of the previous lifestyle of the parties in circumstances where there will be a final hearing towards the end of 2019.
In the absence of any explanation, I propose to exercise my discretion in respect of the wife’s claim of expenditure for fares and car parking, holidays and entertainment and hobbies. I reduce the wife’s expenditure for the purposes of the order that she seeks by $300. Given that she receives $100 by way of share dividend income and by deducting a further $300, I propose to make an order by way of interim spousal maintenance that equates to $1,050 per week.
The further consideration is the extent to which the husband is able to meet that further impost.
The issue of spousal maintenance has been considered in earlier proceedings. The order of 24 April 2018 is prefaced by a notation in the following terms:-
UPON NOTING THAT the husband has to date met the reasonable expenses of the adult children of the marriage and intends to continue to do so in accordance with his current practice and UPON FURTHER NOTING paragraphs 7 and 8 of the Orders of 5 April 2018 are continuing.
The parties consented to an order that pending the finalisation of the proceedings the husband pay to the wife in the form of lump sum spousal maintenance and/or partial property settlement the total sum of $100,000.
In addition to the lump sum payment, paragraph 1.3 of the orders required the husband to pay a raft of expenses in relation to all outgoings pertaining to the property, expenses in respect of the Motor Vehicle 1 retained by the wife and the payment of ancillary costs and charges arising out of maintenance of the former matrimonial home and all other real estate.
It is to be noted that paragraph 8 of the order of 5 April 2018 restrains the husband from disposing of or otherwise encumbering any of the property in his name or under his control and paragraph 7 restrains the wife from disposing of or otherwise encumbering the former matrimonial home and her interest in property in Country G.
The wife contends that the husband earns between $300,000 and $400,000 per annum. The husband argues that whilst his income may well be substantial, the burden of maintaining all of the loans and outgoings over the properties and other expenses is not able to be sustained from his income and that a further payment to the wife of period spousal maintenance would be a bridge too far.
It was reasonable to assume that the focus of the husband’s response would be to set out with some clarity his current financial position by reference to income from all sources and expenditure both in terms of his own reasonable expenses but also the cumulative effect of expenses arising from paragraph 1.3 of the orders.
It is inexplicable that it has not been done, but the reality is that the husband has not filed either an update financial statement or an affidavit that would assist the Court in that determination.
By reference to the most recent Financial Statement filed 19 April 2018, the husband discloses his total income of $6,427. This equates to an annual income of $334,204 which is not dissimilar to the wife’s best estimate.
The total expenditure is claimed at $10,140 per week. It is made up of the following:-
Income Tax
2,607
Life insurance
348
Health insurance
86
Health insurance
35
Motor vehicle registration fees
105
Motor Vehicle 1 Lease
394
Total
$3,575
I am told that the Motor Vehicle 1 Lease has now expired and accordingly it is not proper to claim the lease repayment resulting in the total amount of fixed expenditure being reduced to $3,181.
The husband claims the total of all other expenditure at $6,565. Of that sum $2,065 is explained in Part N as the husband’s average weekly expenses, but there is then a further sum of $4,500 under the heading of Other Adults. I assume that the purported expenditure relates in some way to the financial support of the adult children.
At this stage there is no concession by the wife that there should be any ongoing financial support for the children and I propose to ignore that amount of claimed expenditure. In any event, without more detail the bald assertion does not satisfy even the most basic evidentiary requirement.
In the same way that consideration was given to the discretionary expenditure of the wife, it is reasonable that some consideration be given to the husband’s expenditure.
In exercising my discretion, I have considered the extent of the husband’s consumption of food, household supplies, clothing, entertainment and holidays. Doing the best that I can, I propose to reduce the average weekly expenses of the husband by $505 to $1,560.
The total expenses of the husband are $4,741 and if this sum is deducted from the husband’s income of $6,427 there is a surplus of $1,686.
Paragraph 14 of the husband’s affidavit filed 23 July 2019 provides an assessment of the loan liabilities to the Westpac Bank for 10 properties, the Commonwealth Bank for the Suburb F property and the costs associated with the city apartment in the total sum of $20,621 per month or $5,155 per week.
If it is intended that the loan repayments are currently to be paid by the husband from his income then I accept that there is likely to be a substantial shortfall of $3,469 per week.
I consider it unsatisfactory that the presentation of the husband’s case is lacking any detail which would make the exercise more certain in terms of the basic consideration necessary to determine whether a party is able to meet a proposed order namely, by reference to income from all sources and the related expenditure. The husband’s affidavit was not responsive.
It is a matter for the wife to establish on the balance of probabilities all aspects of her claim. It is not a low bar but rather requires significant attention to the matters considered relevant to an order of interim spousal maintenance.
In the decision of Maroney & Maroney [2009] FamCAFC 45 the Full Court said at [56]:-
Once a party…establishes an entitlement to interim spousal maintenance, and such entitlement is quantified in accordance with that spouse’s reasonable needs, an order may be made notwithstanding that the liable spouse could only satisfy the order out of capital or borrowings against capital assets.
In that context, in Drysdale & Drysdale [2011] FamCAFC 85 Coleman J in exercising the appellant jurisdiction of the Full Court said:-
40.It is the nature of an interim spousal maintenance order that, as here, it is made after a circumscribed hearing, in reliance upon evidence which is incomplete and/or unable to be fully tested. Whilst different to urgent spousal maintenance pursuant to s 77 of the Act, orders for interim maintenance are as their title implies. The Court hearing and determining financial proceedings between the parties on a final basis, as clearly will occur in this case in the absence of any intervening settlement, has abundant power to accommodate within its final orders, whether by way of settlement of property or spousal maintenance, any anomalies which full agitation of disputed issues of fact may reveal to have resulted from an earlier interim spousal maintenance order. …
I do not propose to order that the husband pay a periodic sum of $1,050 but rather, I will order that the wife receives the lump sum of $27,300 from the inheritance account representing a period of 26 weeks.
Lump sum payment
The wife seeks a lump sum payment of $136,639 on account of her legal fees.
As at 30 May 2019 the wife has paid a total of $70,984 towards solicitor’s fees and $24,767 towards disbursements including counsel fees and other charges.
As at the same date the husband had paid $150,493 by way of legal fees and $28,946 by way of counsel fees. There remained a further $7,463 in the husband’s former solicitor’s trust account. That sum may well have been disbursed.
The wife has received an estimate of her total anticipated fees and disbursements up to and including a five day trial of $136,639. That figure includes $8,635 anticipated for Mr B. That further cost may not now be necessary in circumstances where I propose to order a single expert be involved.
The husband does not cavil with the wife’s anticipated legal fees. It is likely that the husband’s future fees will not be dissimilar to those of the wife.
There are essentially two stages to the consideration of an application for interim property orders:-
(1)The first stage is a “procedural step” which requires an analysis of whether the circumstances of the case triggers the Court’s power to invoke s 81(h) to make an order for interim property settlement before a final hearing. At this stage the “overarching consideration” is the interests of justice.
(2)The second stage is the “substantive step” where the provisions of s 79 must be considered and applied but with limitations, given that it is not the final hearing (see Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466).
In Medlow & Medlow (2016) FLC 93-692 at [69] the Full Court considered that the starting point in respect to any property application including an application for interim property orders is “the identification of the parties’ property and of their interests in it”.
The onus is on the applicant to establish that there were sufficient assets from which an order could be made and which would not at least defeat the respondent’s property claim.
Whilst the net property of the parties may not be as generous as the parties currently think, nonetheless it is not argued that the amount that the wife seeks together with that which she has received would place at risk any order to which the husband might ultimately be entitled.
In Stanford & Stanford (2012) 247 CLR 108 at [2] the High Court stated:-
Under s 79(2) of the Act, a court shall not make a property settlement order unless satisfied that it is “just and equitable” to do so. …
It is not necessary that I embark on a detailed inquiry as to the purpose for which the funds are to be used. I am generally satisfied that if available the wife intends to utilise the amount sought to pay her legal fees.
If the power to make the order sought by the wife is to be pursued by way of an interim costs order, then the basis upon which such an order can be made is to be determined by reference to s 117(2A) of the Act.
The wife accepts that other than the monies remaining in the inheritance account, there are no other funds that would be available to satisfy her proposed order.
Moreover, the husband seeks to also utilise the remaining funds for the payment of his tax and also to provide some relief in respect of the loan repayments on the outstanding mortgage loans pertaining to the various properties held by the parties.
Whilst I reject the husband’s contention that his tax returns need to be filed now, I accept that when filed there will be an immediate tax liability of $60,000. I do accept that there is a current liability of $20,000 that the husband needs to pay.
I propose to order that the husband receive $20,000, such sum to be used to pay the fourth quarter of his BAS liability.
Given that it is likely the husband has little or no surplus income over and above his own reasonable needs and that which is required to maintain the costs arising from previous orders, I propose to divide the balance of the monies in favour of the wife, but with a sum payable to the husband.
It is a matter for the wife as to how she utilises the money. I consider that given the manner in which the parties’ solicitors have conducted the proceedings, they have confidence that their clients will receive a settlement outcome in excess of their legal fees.
It is important that both parties be represented and there is no suggestion that either parties’ solicitors are not prepared to act unless they are paid up-front. I accept that that is not the test but is a matter of balance where the money that might be available to cover their future legal fees is limited.
As far as the husband is concerned, I bring to account that he has some monies left in his personal account.
It is a matter for the husband as to how he utilises either any surplus income and/or accumulates further liability, but in the absence of a common position, the current level of expenditure in favour of the adult of the children is not likely to be a factor that will be brought to account or for which either the husband or the wife will be given credit.
Accordingly, orders will be made to reflect the following calculation:-
Total sum available
168,593
Less lump sum spousal maintenance to the wife
27,300
Amount payable to single expert
10,000
Husband’s outstanding taxation liability
20,000
Lump sum payment to wife
70,000
Lump sum payment to husband
41,293
I make orders as appear at the commencement of these reasons.
I certify that the preceding ninety eight (98) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 14 August 2019.
Associate:
Date: 14 August 2019
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