Haley & Haley

[2019] FamCA 469

FAMILY COURT OF AUSTRALIA

HALEY & HALEY AND ANOR [2019] FamCA 469

FAMILY LAW – PROPERTY – claims for interim spouse maintenance, injunctions, reinstatement of husband as a director and appointment of Single Expert – capacity of husband to pay maintenance – what sources of income and/or capital are currently available in Australia and in Country A – interests of third party to continue to operate a land development

Family Law Act 1975 (Cth) ss 72,79, 80, 117

Redman & Redman (1987) FLC 91-805

Stein & Stein (2000) FLC 93-004

APPLICANT: Ms Haley

FIRST RESPONDENT: Mr Haley

SECOND RESPONDENT: B Pty Ltd 

FILE NUMBER: BRC 11880 of 2018

DATE DELIVERED: 18 July 2019

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Baumann J

HEARING DATE: 11 June 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr R Galloway

SOLICITOR FOR THE APPLICANT: Adrian Hawkes Lawyers

COUNSEL FOR THE FIRST RESPONDENT: Mr M Drysdale

SOLICITOR FOR THE FIRST RESPONDENT: Lander & Rogers

COUNSEL FOR THE SECOND RESPONDENT: Mr P Travers

SOLICITOR FOR THE SECOND RESPONDENT: Kardos Scanlan Lawyers

the court orders by consent

1. That the wife shall make a particularised request for further discovery to the husband within seven (7) days and the husband shall produce all documents in response to such request as are in his possession, power and control within twenty eight (28) days from such request.

the court orders until further order:

1. That the wife’s application for interim spouse maintenance be dismissed, on the basis that at this time it has not been established that the husband has the capacity to pay spouse maintenance.

2. That the wife’s application for partial property settlement and/or “dollar for dollar” costs orders be adjourned to a date to be fixed, with leave to the wife to seek that the application be re-listed upon sufficient sales of Lots in the Z Town development enabling the Second Respondent to be in a position to make a further repayment of the outstanding directors loan to the husband.

3. That the Second Respondent B Pty Ltd be restrained and an injunction issue restraining the Second Respondent from:

   (a)making any further payments to the husband personally, whether as a repayment of his outstanding directors loan account or otherwise without the prior written consent of the wife or order of the Court;

   (b)disbursing funds available upon the sale of further Lots in the Z Town development other than to pay:

   (i)secured creditors;

   (ii)the balance of the liability to the Australian Taxation Office for taxation assessed for the 2017/2018 financial year;

   (iii)legal costs properly incurred by the Second Respondent in:

   a.the Supreme Court proceedings; and

   b.these proceedings.

   (iv)proper and reasonable costs relating to the rates and charges arising from the holding and development of the Z Town property and its maintenance; and

   (v)marketing expenses not exceeding a total of $15,000,

   with the Second Respondent to provide the wife with an accounting of any expenses so paid on a monthly basis by the seventh day of each month.

   (c)borrowing, with security or otherwise, any further funds without the consent of the wife; and

   (d)declaring a dividend payable to the current shareholders.

4. That the Second Respondent shall inform the wife in writing and keep her properly informed as to:

   (a)any formal offers by potential purchasers of Lots in the Z Town development;

   (b)all contracts signed by purchasers, with a copy of such contracts to be provided within seven (7) days of execution by the Second Respondent; and

   (c)details of any settlements of sales effected, including copies of settlement statements which reveal the disbursements and adjustments made, to be provided to the wife within twenty four (24) hours of settlement.

5. That the husband shall inform the wife and keep her informed in writing about:

   (a)negotiations and arrangements with the BB Bank with respect to loan facilities with respect to the F Properties in D City, Country A; and

   (b)any offers to purchase apartments in the F Properties and contracts executed to purchase any apartments, within seven (7) days of such offers or contracts.

6. That the wife, as sole shareholder and sole current director of CC Pty Ltd, shall within seven (7) days convene a meeting of CC Pty Ltd and shall appoint the husband as an additional director of CC Pty Ltd, with the husband to sign all such necessary consents to facilitate his appointment.

7. That the wife’s application that the Second Respondent be restrained from lodging income tax returns or business activity statements be dismissed.

8. That the wife’s application for a Single Expert to be appointed at the husband’s initial cost, be adjourned to a date to be fixed.

9. That any party shall have leave to re-list the proceedings provided:

   (a)an Application in a Case, supported by Affidavit, has been filed seeking further relief; and

   (b)funds are likely to be available that would enable the Second Respondent, under the restraints imposed by these Orders, to make a repayment to the husband of his directors loan which will then allow the Court to consider:

   (i)any payments to the husband and the wife; and

   (ii)funding the appointment of Single Experts.

10. That the costs of the husband and the wife of the interim applications are reserved for determination at a final hearing, unless otherwise agreed.

IT IS NOTED:

A.    That the Court strongly encourages the parties to engage in private mediation to seek to resolve these proceedings on a final basis.

B.    That any further interim applications in these proceedings should be listed before the Honourable Justice Baumann if possible.

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 Haley & Haley and Anor 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 BRISBANE

FILE NUMBER: BRC 11880 of 2018

Ms Haley

Applicant

And

Mr Haley

First Respondent

And

B Pty Ltd

Second Respondent

REASONS FOR JUDGMENT

Introduction

1. The parties to this property dispute, the Applicant wife Ms Haley (45 years) and the Respondent husband Mr Haley (48 years) were married in 1999 and separated in July/August 2016. They are not yet divorced. The husband has re-partnered, whilst the wife has not.

2. Between 1999 and 2013, the parties lived in Country A where they ran a number of businesses and purchased property, returning to Australia in 2013 to allow their children, now aged 17 years and 14 years to complete their education.

3. Whilst maintaining some investments in Country A, the parties purchased a home in E Region to live in which has since been sold.  The two girls live with their mother (the wife) in E Region and attend local schools.

4. Relevantly, in late 2015 the husband and his friend Mr G became interested in land at Z Town capable of being developed and subdivided into 29 residential lots. The entity that acquired the land in 2015 for approximately $1,390,000 is B Pty Ltd. It is not in dispute that the whole of the purchase price as well as additional funds of approximately $285,000 (in August 2016), were supplied to B Pty Ltd for the development from joint funds of the husband and wife. Whilst the wife disputes that she knew about and agreed to the advances, the funds “supplied” have been recorded in the Financial Statements of B Pty Ltd as a loan by the husband.

5. It appears that as the development proceeded (and funds were secured by B Pty Ltd to complete the development), and when sales have resulted in funds being available after secured creditors and costs of managing the B Pty Ltd development, repayments have been made by B Pty Ltd to the husband.

6. A substantial and significant dispute exists as to where funds from the repayment of the said loan account and other funds available to the husband from a range of corporate entities in Country A, have been applied by the husband. For example, the wife asserts at paragraph six of her Affidavit filed 10 May 2019, that from late 2015 to May 2019, the husband “has taken, secreted, removed out of Australia or otherwise depleted from the matrimonial pool” a total of $4,435,383. Of this sum the wife asserts “a minimum of $1,423,376” was “falsely” withdrawn from the B Pty Ltd “Directors loan”. The amounts deposed to by the wife as totalling $4,435,383 actually only total $4,175,383. It is not entirely clear how this discrepancy arises. In these Reasons dollar amounts should be construed as Australian dollars, unless otherwise indicated.

7. However, in his Affidavit in reply filed 30 May 2019 (at paragraph 86), the husband takes issue with the allegation that he has “depleted” funds saying, inter alia that:

   a)although he admits to receiving approximately $1.4 million from repayments on his loan account, the wife has received $501,827 of those funds and nearly $849,000 was used towards mortgage payments on the “F Properties” owned by one of the parties’ corporate entities (H Limited) in Country A;

   b)further funds available to the husband were applied by him to:

   i)loan repayments on F Properties;

   ii)school fees for the children;

   iii)refurbishment costs on the F Properties;

   iv)costs of B Pty Ltd; and

   v)his personal living expenses and legal fees.

   c)some funds the wife attributes to being received by him, were funds actually received by B Pty Ltd and used for costs of development including payments to creditors of B Pty Ltd such as P Pty Ltd, land tax, Q Pty Ltd, R Company and others.

8. It is simply not possible, on an interim basis and where such significant disputes arise, to resolve these factual disputes at this time, and they are likely only in the future, with forensic accountancy assistance, to be clarified.

9. Also, by way of background, the wife, who had lodged caveats against the individual allotments comprising the Z Town development (claiming, it appears, the existence of a resulting trust as a consequence of the funds provided to the company B Pty Ltd by the husband and wife), was engaged in proceedings in the Supreme Court of Queensland associated with seeking to maintain the Caveats. These proceedings culminated in an order by the Supreme Court made 30 January 2019, for the Caveats over Lots 7, 8, 9 and 10 to be removed on an undertaking of B Pty Ltd to hold the nett proceeds of the sale of those caveated Lots. The proceedings in the Supreme Court are at an end, with the wife and B Pty Ltd ordered to pay their own costs of the interlocutory application.

10. Suffice it to say, that the events that have transpired since the wife commenced property proceedings in the Federal Circuit Court of Australia by Application filed on 15 October 2018, have caused the parties significant cost – regrettably from what might be a pool of assets diminishing in value. It also arises from a strong belief by the wife, which on an interim basis can neither be confirmed or easily rejected, that the husband has used his control of the entities to apply available funds as he wishes without the consent or knowledge of the wife – the concern characterised by the wife’s Counsel at paragraph 14 of his written submissions as “the drift of money from B Pty Ltd to the husband, thence unreachably to Country A”.

11. The interim applications before me and argued by Counsel for the wife Mr Galloway; Counsel for the husband Mr Drysdale and Counsel for the third party B Pty Ltd Mr Travers, are identified below.

12. Before dealing with those separate applications, I provided context to my decision by noting the following previous orders made:

    d)On 21 February 2019, Judge Purdon-Sully joined B Pty Ltd as a party to the proceeding. In the submissions of this party, Counsel asserts that the “only link to the proceeding is through the director’s loan due to the husband and through any dividend payable to [CC Pty Ltd]” and that the company should not be put to the exposure of participating in the substantive portion of the proceeding;

    e)Judge Purdon-Sully ordered the wife to file a points of claim setting out the relief she seeks against B Pty Ltd, and for B Pty Ltd to respond. This order has been compiled with by these parties. Her Honour transferred the proceedings to this Court;

    f)On the first occasion the proceedings were listed in the judicial duty list in this Court, on 15 May 2019, the Court ordered by consent as follows:

    1.   That B Pty Ltd shall not further encumber the land at S Street, Z Town particularised as:

    a.   Lot 1 on SP…40;

    b.   Lot 2 on SP…40;

    c.   Lot 3 on SP…40;

    d.   Lot 4 on SP…40;

    e.   Lot 5 on SP…40; and

    f.   Lot 6 on SP…40;

    collectively called “the caveated lots.”

    2.   That upon the undertaking by B Pty Ltd to hold the net proceeds of the sale of the caveated lots on trust, the caveats be removed over the lands by the wife.

    3.   That B Pty Ltd be authorised to pay:

    a.   The Australian Taxation office: $309,844.70;

    b.   The EE Superannuation Fund: $140,000.00; then

    c.   The secured creditor DD Pty Ltd ACN …18 as trustee for two trusts,

    in such proportions as the Applicant can achieve from the funds held on trust pursuant to the orders of the Supreme Court in matter … of … 2019 and the net proceeds of sale of Lot ….”

13. The proceedings were otherwise adjourned to 11 June 2019 for further hearing.

Agreed current position

1. I identified for Counsel’s comment and submission after reading the extensive material, that it appeared clear that the only property and reliable source of income available to the parties in Australia arises from the remaining Lots to be sold in the Z Town development.

2. In this respect, although it seems there is a close working relationship between the husband and Mr G, the structure in respect of B Pty Ltd is as follows:

   a)B Pty Ltd is a company specifically incorporated for the purpose of the Z Town development;

   b)The husband and Mr G are the only directors of the company;

   c)the issued capital of the company is 100 shares held:

   i)as to 50 shares by GG Pty Ltd of which Mr G is the sole shareholder; and

   ii)as to 50 shares by CC Pty Ltd of which the wife is the sole shareholder. The husband was the sole director of this company, however the husband alleges he was unilaterally removed by the wife and she appointed herself to be the sole director. One of the applications I am required to consider is the reinstatement of the husband as either the sole director or as an additional director for CC Pty Ltd. I deal with that issue later in these Reasons.

3. Arising from the Orders of the Supreme Court, after settlements of those Lots were effected, funds remained in Trust. At the time of this Court’s Orders of 15 May 2019, six Lots still were unsold, with one Lot under contract and with settlement pending.

4. I accept the evidence of Mr G that after the Orders made 15 May 2019, B Pty Ltd paid:

   a)$140,000 to EE Superannuation Fund – a secured creditor; and

   b)$277,840.87 to the Australian Taxation Office (“ATO”) in part payment of assessed income tax liabilities for the financial year ended 30 June 2018. A remaining tax debt of $32,003.83 for that financial year remains unpaid.

5. At paragraph 12 of his Affidavit filed 30 May 2019, Mr G estimates the current liabilities and contingent liabilities over the next 12 months which can be categorised as follows:

   a)Balance of tax liability for the 2017/2018 year - $32,003.83;

   b)Secured liability to DD Pty Ltd - $360,000;

   c)Estimated land maintenance ($15,000), land holding costs ($20,000), bookkeeping fees ($2,000), marketing and other expenses ($19,000) – a total of $58,000 over 12 months of approximately $5,000 per month;

   d)Directors loans – nett amount of $185,000 being $275,000 owed to the husband less $90,000 owed by Mr G. The basis of, and history relating to loans made to Mr G by B Pty Ltd is not clear – nor does Mr G in his Affidavit give any evidence of when he expects to repay the loan;

   e)Estimated liability for tax for 2018/2019 of $279,699. Considering that the company has still not fully paid its 2017/2018 liability yet during this period, in preference to that liability, it made substantial repayments of the husband’s loan account and possibly also made the loans to Mr G totalling $90,000, I query why now B Pty Ltd expects to give priority to an unassessed tax liability which, depending on the lodgement of its tax return, might not even crystallise for payment until calendar year 2020; and

   f)legal defence costs of $80,000.

6. I accept the submission of B Pty Ltd that it must have the capacity to pay its debts as and when they fall due. The secured creditor DD Pty Ltd, will be discharged over the next two sales of Lots. Then funds will be available to pay unsecured creditors as set out above.

7. I also accept that although based on the evidence of real estate agent Mr T, B Pty Ltd is likely to be able to pay a dividend to shareholders eventually, that can only occur once the company had paid (or made prudent allowance) for payment of its liabilities and expenses.

8. I do not ignore that the wife continues to assert that B Pty Ltd holds the Z Town development as Trustee of a resulting trust for the husband and wife – a fact disputed, as a matter of law, by the company and the husband. That issue needs to be determined – with the shareholders being the persons most affected by such a finding. This is simply because, even if a resulting trust were established, in the absence of evidence of maladministration of the “Trust”, all that would be available to the beneficiaries of the Trust would be the nett proceeds of the development.

9. For these reasons, and noting that no creditor of B Pty Ltd has sought to intervene in these proceedings to date, I am satisfied that orders can, and should, be made to regulate how funds available to B Pty Ltd are to be disbursed – before any distributions to shareholders can be undertaken or considered.

10. To finalise this part of the analysis, if the remaining Lots are sold for the prices indicated by Mr T, and after allowing for the collection of $90,000 from Mr G; payment of debts and anticipated taxation as set out above, a surplus would likely be available exceeding $600,000. Such surplus, of course, depends on many factors including how long it takes to sell all lots.

Applications to be decided

1. The wife by her Application in a Case seeks and pressed the following orders:

   a)Interim spouse maintenance in the sum of $1,500 per week;

   b)Interim costs order;

   c)That B Pty Ltd “not incur further debts, nor create liabilities, including by lodging income tax returns or business activity statements without the consent of the wife;

   d)There be a Single Expert appointed at the husband’s initial cost to produce a financial report in respect of B Pty Ltd; and

   e)there be a Single Expert of the F Properties/H Limited building in D City, Country A.

2. The husband by his Responses and Application in a Case seeks and pressed:

   a)an order for release of funds from B Pty Ltd, as such monies become available, in repayment of directors loans due to the husband, and the application of those monies to:

   i)meet liabilities, past and future of F Properties; and thereafter;

   ii)$120,000 to each of the husband and wife by way of partial property settlement.

   b)an order that the husband be reinstated as a director of CC Pty Ltd;

   c)on the basis of the payment by way of partial property settlement proposed, the husband says the wife’s Applications for interim spouse maintenance and “dollar for dollar” costs orders be dismissed.

1. The wife did not, at this stage, press an order that the husband’s daughter and her partner be joined as parties to the proceedings (they being vested as the owners of one Lot)

2. B Pty Ltd by its Application in a Case filed 13 May 2019, pressed for an order that the order for joiner, already made by a Judge of the Federal Circuit Court of Australia, be for the limited purpose of preserving any monies that be payable to:

   a)the husband in repayment of the director loan; and

   b)CC Pty Ltd in its capacity as a shareholder.

3. As is the case for any interim or interlocutory procedure where the evidence relied upon is not tested by cross-examination (and all parties agreed that the current applications be heard “on the papers”), issues of credit and findings about factual issues in dispute are difficult to make. The hearing is necessarily truncated – as this one was.

4. However, within these limitations I have concluded the Court’s position on the interim relief to be as follows.

Spouse maintenance claim

1. Such a claim requires the threshold test established by s 72 of the Family Law Act 1975 (“the Act”) to be met – namely that the wife is unable to adequately support herself. In undertaking this analysis, the Court is not required on an interim basis to conduct as exhaustive enquiry as would be the case for a final hearing (Redman & Redman (1987) FLC 91-805). The wife’s most recent Financial Statement filed 10 May 2019 deposes to the following weekly expenses which were not seriously challenged in submissions by Counsel for the husband, namely:

Discretionary personal expenses at Part N	$1,170
Rent	$490
Health insurance	$45
$1,705

and the wife asserts her nett income as a property stylist (where she has been employed for two years), is $713 – leaving a shortfall of $992 a week.

1. The wife says she has been meeting this shortfall from funds that she had received since separation from the husband, but again as her Financial Statement reveals, she has no savings at her disposal. It is noted that the wife discloses no liability for legal costs in her Financial Statement, which I infer means funds that she did receive (the husband says but the wife challenges this figure) of $501,827 (as per the spreadsheet marked as an Exhibit) were used partially for legal costs as well as living expenses.

2. The spreadsheet reveals payments from 24 August 2016 to 29 May 2019 and clearly includes payments said to be for “child maintenance” and school fees. The husband, as a non-resident taxpayer is not the subject of any administrative assessment for child support under Australian law – however this does not, in my view, entitle the wife to use an interim spouse maintenance application as a method to obtain child support (see Stein & Stein (2000) FLC 93-004).

3. The husband does not seriously contend that the wife has other sources of income available to her or that, considering her desire and role to maintain primary care of the children, or that she has at this time unused earning capacity.

4. In these circumstances, I find the wife is unable to adequately support herself.

5. It is then necessary to assess the husband’s capacity to pay – and in so doing, the financial position overall of the husband at this time bears scrutiny – albeit again within the limitations already identified.

The husband’s capacity to pay spouse maintenance and financial position generally

1. In undertaking this assessment, I do not repeat the earlier observation that the Z Town development represents on the evidence, the only asset or likely cash funds in Australia and the limits to accessing any of those funds is already made apparent – even before the applications and submissions of B Pty Ltd are considered.

2. At the centre of the wife’s concerns is that, to date, the husband has removed funds from Australia to Country A from the Z Town development in which she has not equitably shared. It seems the wife either chose to ignore or dismisses as irrelevant the husband’s assertion that the parties’ interest in the F Properties in Country A needs to be preserved and mortgage payments on secured loans to the BB Bank need to be made as required.

3. The wife’s view is that the husband is living in a luxurious beachfront penthouse in Country A with his new partner, and has shown little regard for his legal obligations to either her or the children. If the spreadsheet is accurate, it could not be argued the wife has received no support from the Z Town development. Certainly however, on the husband’s own evidence, over $900,000 has been paid since separation towards improving or preserving the F Properties.

4. I accept as well that substantial costs have possibly been incurred in undertaking discovery to date – a process the wife asserts yet the husband rejects, as not having been properly attended to by the husband. I am simply unable to make any findings on this issue, but note that Mr Galloway did not press for any orders for further discovery before me at this time.

5. The husband deposes, at paragraph 71 of his Affidavit filed 30 May 2019 that:

   a)his weekly income is $1,722, being a salary from U Ltd ($1,100) and a dividend from L Limited ($610) and marina berth rent ($12). How a dividend is still being paid to the husband is a mystery when the parties’ interest was sold in 2019 (see Reasons at paragraph 45(h)(ii). The wife challenges the accuracy of these statements but, at present, there is no evidence from these Country A based enterprises that reveal the husband’s sworn evidence is not correct;

   b)the husband in his Financial Statement filed 25 January 2019, did not complete Part N – which he should have, as the wife’s application for spouse maintenance has been pending yet he asserts he has, against his income above the following personal expenses:

Personal living expenses	$1,000
Life Insurance	$142
“Levies and rates”	$31
$1,173

1. Accepting he resides in one of the F Properties (but he claims not the penthouse), he does not currently pay rent. There is no evidence as to what a reasonable rent would be in Country A – however on the basis of the husband’s evidence, he has limited capacity to pay spouse maintenance on his current income – at best (allowing notionally for the same rent figure currently being paid by the wife of $490 per week) – less than $100/week. I accept he is obtaining the benefit of the rent free accommodation, but with such a shortfall in the income of the F Properties, he has a duty to at least apply some funds to that investment of the parties. The Court has limited information about the terms of cohabitation between the husband and his new partner.

2. It is clear however that the husband’s funds since separation have been significantly applied to the F Properties and his financial position, he claims, reveals an overwhelming inability to meet his own living expenses and contribute to the expenses of the F Properties, which are not met by the rent.

3. It is these other investments and interests in Country A which must be considered not only to determine whether, as the husband contends, he does not have the capacity to pay spouse maintenance, but also to what extent (if at all) obligations in Country A should be met from the funds that will become available to the parties from the Z Town development.

Country A investments/holdings

1. It is a commonly applied principle in family law jurisprudence that the parties to a marriage are generally obliged to take the “good with the bad” arising from particularly decisions of a financial nature made during their relationship. A party should not be able to walk away from their commitments and leave the burden that arises from their commitments to be carried only by one party.

2. To put this general proposition into the context of this case and accepting as I do, there are many factual disputes as to whether full discovery about these overseas operations has been made and the value of any such interests, I record the following matters:

   a)H Limited owns four strata title apartments known as “F Properties” in D City, Country A. The husband and a business partner Mr V are the directors of H Limited. The husband says he holds 66.66% of the shares, with the remaining shares owned by Mr V;

   b)The parties were involved with the management, construction, and I infer, financing of the development in 2012/2013;

   c)The husband says that the units have a valuation of approximately $6 million and a secured debt of approximately $4,448,000 – leaving an equity for H Limited of $1,552,000 approximately – with, by analysis, the 2/3 shareholding meaning a nett investment of around $1 million. It is not possible to assess, without more information about the company structure; financial statements and evidence of the ability (and taxation consequences) to move any nett funds in H Limited to the husband as shareholder, what funds might ultimately pass to the parties personally if the F Properties were sold.  Furthermore, there is no evidence offered by Mr V as to the effect on him (as shareholder or director) of orders which the wife seeks the Court make;

   d)The husband says, but the wife disputes, that the F Properties are “listed and are actively being marketed for sale”.  Furthermore, (at paragraph 30 of his Affidavit filed 30 May 2019) the husband claims the current tenant in the penthouse has expressed an interest in purchasing the penthouse.  If, of course, a sale of the penthouse was effected, the “debt to equity” ratio would improve;

   e)The husband says that the mortgage over the F Properties to the BB Bank is “interest only” (at instalments of $22,400 per month) and if the loan is not extended, then loan repayments increase to $41,132 per month “principle and interest”.  The interest only arrangement, due to expire on 31 July 2019, is the subject of a request to extend, which is awaiting a response.  The husband and Mr V have provided personal guarantees to the bank;

   f)The husband further asserts that H Limited has other expenses payable for the apartments, including:

   i)$6,064 monthly outgoings (paragraph 34);

   ii)outstanding building insurance of $15,625 (paragraph 35(a)); and

   iii)maintenance and replacement of items totalling $62,457 (paragraph 35(b)).

   g)The current rental income is approximately $18,995 per month – which compute to a shortfall of $9,469 per month which the husband seeks to meet from the capital return from the Z Town development.  The husband says that Mr V makes no contribution to mortgage repayments or other expenses with the F Properties “as he does not have the financial means to do so”, and with the husband further asserting that there is an agreement to make adjustments when “the apartments are sold”;

   h)Whilst the husband says the F Properties “have been a poor investment”, he says he has no other source to pay the shortfall on the F Properties (without any contribution by Mr V), without access to funds from the Z Town development.  To confirm this is the case from his perspective, he further asserts in the following paragraphs of his said Affidavit, that:

   i)he made an investment in U Ltd in February 2017, which entity owns a license for a radio station.  However, without the wife’s consent or prior knowledge, he sold his 50% interest in the station on … 2019 for USD$100,000 “to assist paying the expenses of U Ltd but also because [Ms Haley] and I needed to raise capital to meet ongoing liabilities in relation to the F Properties”.  This transaction will possibly require further analysis and consideration considering the timing of the transaction (see paragraphs 41 to 44);

   ii)the parties’ Country A entity L Limited, had an interest in N Limited (Country A), which it sold on 20 April 2019, receiving funds of $127,660 which has been disbursed (including the husband says by a payment to the wife of $5,149 on 20 May 2019).  No income is now being received and an “aspirational” insurance claim for $450,000 might be the only hope for a further return of a capital (see paragraphs 45 to 47);

   iii)the parties, the husband asserts, have a minority 20% interest in a company M Limited, that holds an interest in a property at Suburb W in Country A, which the husband claims has a value of approximately AUD$30,000.  The husband says it was agreed the interest be effectively held on trust for the parties’ children (see paragraphs 48 to 50);

   iv)finally, the husband claims to hold a 5% interest in a new business known as X Business, with 95% held by Mr Y (his “partner” in the Z Town development).  The husband says the “business does not have any equity as it was fully funded by borrowings” (see paragraphs 51 to 53).

Conclusion on Country A interests

1. The husband would ask the Court (and the wife) to accept he has interests in some business in Country A without any value, and that all he really has is a 66.66% interest in the H Limited entity which has no nett income and a business partner who has no capacity to help preserve the asset.

2. The wife has not, she claims, been kept fully informed about the husband’s business activities in Country A and, as a result, does not accept that the only way that the equity in the F Properties can be preserved is by continuing to support that investment by funds flowing from the Z Town development overseas to Country A.

3. At this time, I share some of the wife’s concerns – with the adage “spending good money after bad” coming to mind.  The Court has limited powers to make orders in Australia, enforceable in Country A – and the futility of doing so, where limited property remains in Australia (and the rights to that property are in dispute) are obvious.

4. Frankly, it seems that if H Limited cannot pay its debts as and when they fall due, they will have to meet the market and sell the units, whilst at the same time, negotiating arrangements with its bankers.

5. I am, at this time, not prepared to make orders that permit funds from the Z Town development to be used for the Country A obligations directly, in circumstances where:

   a)substantial repayments of the husband’s loan account to date have been used for this purpose, as well as funds and income from the Country A property;

   b)no proper evidence has been offered by Mr V as to why the parties should continue to meet his 1/3 share of financial responsibilities;

   c)even in this apparent desperate financial situation, the husband has continued to buy and sell businesses and raise finance.  An examination of loan applications for such transactions, not available to the Court, could make interesting reading; and

   d)the wife has no capacity to effectively control the husband’s business activities in Country A, without, I infer, commencing proceedings in Country A, which her current financial circumstances may not permit.

Conclusions on current applications

1. In my view, on the evidence available to the Court at this time, the H Limited entity will have to find a solution in Country A to its financial challenges without the husband being able to access funds from the Z Town development directly.  The husband must keep the wife informed about:

   a)negotiations with the BB Bank; and

   b)offers for purchase of any of the F Properties;

2. The Court is not satisfied:

   a)When, any funds will be available to B Pty Ltd from the sale of Lots, that would enable payment to the husband of the remaining balance of his loan account.  However no repayments are to be made without the wife’s consent;

   b)what the nett funds are likely to be in any event, considering that B Pty Ltd must, as a separate business entity be entitled to pay its legitimate and reasonable expenses of conducting the business;

   c)whether and when Mr G will repay his loan of $90,000 made more curious by his acquisition, during a period when he apparently owed this sum to B Pty Ltd, of his 95% shareholding in X Business;

   d)even if, as B Pty Ltd asserts, the funds credited to the company from joint savings by the husband and wife were properly recorded by the company as a loan account, this means the shareholding by Mr G is immune from attack.  In any event, it seems likely to be some time before the company B Pty Ltd is in a position to declare a dividend, and before it can do so, it will be required to make allowance for any contingent liabilities, such as income tax.

3. For all these reasons, in a practical sense, the Court should:

   a)make no orders for interim spouse maintenance where it is not satisfied the husband has the capacity from income or capital to pay anything to the wife at this time;

   b)make no order for interim property payment (under s 79 and s 80(h) or interim costs (under s 117), where an available and certain sum to make any such payment has not been established – although funds might become available in time;

   c)allow B Pty Ltd to continue to pay reasonable business expenses and outgoings associated with the land development to be paid, with the wife to be fully informed of all such payments and further sales and settlements;

   d)restrain B Pty Ltd from:

   i)making any repayment to the husband of its obligations under the loan account, without the wife’s written consent or order of the Court; and

   ii)declaring a dividend to shareholders, without the wife’s written consent or order of the Court.

   e)make orders reinstating the husband as a director of CC Pty Ltd.  Without requiring to determine at this stage whether the wife’s action as sole shareholder was lawful, it is apparent the purpose of the action was simply to give the wife control of the entity.  It would, in my view, be appropriate for both the husband and wife to remain as directors of CC Pty Ltd – although as a shareholder of B Pty Ltd, the rights of the directors on behalf of the shareholder could be limited.  Nonetheless, already actions in the Supreme Court of Queensland were initiated, and considering the clearly diminishing asset base, it is better for disputes between the husband and wife (even as shareholders), to be determined in this Court either in its original statutory jurisdiction or in its associated jurisdiction.

Form of orders

1. For the reasons given, I make the orders which appear at the commencement of these Reasons.

2. For completeness, in respect of the orders pronounced which appear at the commencement of these Reasons, I further record that:

   a)the intention is that when (and if) funds are likely to become available from the Z Town development for a repayment to the husband of his directors loans, and the parties are unable to agree on how is the funds should be disbursed, then the matter can be re-listed (noting the husband contended for an order that each party receive $120,000 in respect of such funds becoming available);

   b)the Second Respondent, as a separate legal entity, is entitled to pay its lawyers for its representation in both these proceedings and the Supreme Court proceedings;

   c)the Court is not, at this time, satisfied that the costs of a Single Expert conducting some form of “audit” of B Pty Ltd are justified when the company continues to properly, and as is required, complete its financial statements according to law.  It is not a complicated operation;

   d)the Second Respondent should not be inhibited or restrained from complying with its legal and statutory obligations to complete and file returns.  As I understand the wife’s position, she did not wish returns to be filed as it would likely crystallise at least a taxation liability for B Pty Ltd for the 2018/2019 financial year.  It would be appropriate for returns to be lodged in the usual way, as any taxation liabilities will need to be taken into account before the company can lawfully consider declaring and paying a dividend to shareholders; and

   e)the issue of whether or not B Pty Ltd holds the Z Town development interests under a resulting trust is a triable issue, but in practicable terms, only affects the capacity to pay dividends not the ongoing obligation to pay legitimate expenses.  It is to be hoped that the parties may find a sensible commercial solution to this issue.

1. I express a concern about the costs these parties are likely to incur in further steps in this ongoing litigation – both in Australia and potentially overseas.  Whilst I accept that, to some degree, and although the husband says he has made full disclosure, more questions raised in these Reasons require an answer, the relationship of the parties has been shaped by business decisions and now is likely to be a good time, whilst frankly few funds are available to be distributed, to try to resolve the matter by negotiations – I would suggest at least a bona fide attempt at mediation.

2. This case, from the Court’s current perspective of the issues (and in that regard I have not ignored the wife’s maintained claim that B Pty Ltd holds the interest in the Z Town development as Trustee under a resulting trust) at present has all the hallmarks on a matter which could create legal costs that might be disproportionate to the ultimate nett divisible interests.  Whilst it night be though that a “saviour” will be the assertion of “notional addbacks”, both the legal and geographical challenges in this case for both the husband and wife (and others) should not be ignored.

3. The matter will return to the Registrar’s list of cases for management, with a notation that any Application in a Case, Enforcement Application or request to re-list, should ideally be listed before Justice Baumann.

4. Because of the nature of the orders made, I regard it as appropriate that an order be made reserving all costs of all these parties to the final hearing.

I certify that the preceding fifty-nine (59) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Baumann delivered on 18 July 2019.

Associate:

Date:  18 July 2019