Hathaway and Hathaway and Ors

[2016] FamCA 1186

FAMILY COURT OF AUSTRALIA

HATHAWAY & HATHAWAY AND ORS [2016] FamCA 1186

FAMILY LAW – PRACTICE AND PROCEDURE – expedited final hearing vacated – details of property holdings – adjournment of joinder application – joinder of parties – valuation of real property – joinder of parties and valuation of some real property to be opposed – adjournment

APPLICANT: Ms Hathaway

RESPONDENT: Mr Hathaway

PROPOSED CORPORATE THIRD PARTIES: Z Pty Ltd, AA Pty Ltd, DD Pty Ltd and BB Pty Ltd

OTHER PROPOSED THIRD PARTY: Ms FF

FILE NUMBER: MLC 8027 of 2015

DATE DELIVERED: 2 September 2016

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Bennett J

HEARING DATE: 2 September 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Dickson QC with Mr Nehmy

SOLICITOR FOR THE APPLICANT: Lakey Family Law & Mediation

COUNSEL FOR THE RESPONDENT: Mr North SC

SOLICITOR FOR THE RESPONDENT: Glezer Lanteri & Associates

COUNSEL FOR THE PROPOSED CORPORATE THIRD PARTIES Mr Smith

SOLICITOR FOR THE PROPOSED CORPORATE THIRD PARTIES	TSA Lawyers
COUNSEL FOR THE OTHER PROPOSED THIRD PARTY	Mr Goldsmith

SOLICITOR FOR THE PROPOSED CORPORATE THIRD PARTIES Goldsmiths Lawyers

Orders

IT IS ORDERED THAT

1.The husband’s Application in a Case filed 7 July 2016 and the wife’s Amended Amended Response to the Application in a Case filed 31 August 2016 be listed in the Judicial Duty List on 8 November 2016 estimated to take one half day NOTING THAT the parties have been advised that the maximum duration of the hearing may be not longer than two hours.

2.I vacate the final hearing set down before me to commence on 12 December 2016.

3.The wife provide the proposed personal and proposed corporate third parties with preliminary contentions of fact and law by not later than 26 September 2016.

4.Until further order, each party is at liberty to cause subpoena(s) to issue returnable in any subpoena list until a final hearing (“the court date”)

5.Where a party seeks to inspect and/or take copies of documents produced in compliance with a subpoena before the court date, I dispense with compliance by the issuing party with rule 15.22(1)(a) for service of the documents referred to in (i) and (ii) thereof to be effected on the named person by hand (as opposed to ordinary service) and for an Affidavit of Service to be filed pursuant to rule 15.30(3) where:-

a.   the document(s) are produced by or on behalf of the named person prior to the court date;

b.   no notice of objection has been given pursuant to rule 15.31(2);

c.   rule 15.30(1) has been otherwise complied with evidenced by a letter signed by a lawyer for the issuing party.

6.That by 12.00 noon on 26 September 2016 the wife provide discovery of any documents or things in relation to accounting, income and taxation of any accommodation/rental business operated by her and/or on premises of which she is in possession.

7.Within 7 days Mr Goldsmith, for the proposed personal Third Parties advise the wife’s lawyers in writing of the details of any legal practitioner who has advised him that he/she has instructions to accept service of proceedings or of a subpoena on Ms EE Hathaway and if not all process, what process.

8.I reserve costs of this day.

IT IS DIRECTED:

9.That the unsealed and unfiled draft Amended Initiating Application of the wife (which refers to the third parties) be marked Exhibit “W1” and remain on the Court file.

AND IT IS NOTED that the wife seeks to join the personal and corporate third parties which joinder is opposed by the husband.  There was insufficient time allocated to hear from the husband and / or the third parties this day so no decision was made on the issue of joinder.

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 Hathaway & Hathaway and Ors 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 MELBOURNE

FILE NUMBER: MLC 8027 of 2015

Ms Hathaway

Applicant

And

Mr Hathaway

Respondent

And

Z Pty Ltd; AA Pty Ltd; DD Pty Ltd and BB Pty Ltd

REASONS FOR JUDGMENT

ex tempore

Introduction

1. This matter comes before me as the first day of the final hearing of the competing financial applications between the husband and the wife appointed pursuant to paragraph 5 of the Order made 5 November 2015 in anticipation of a final hearing fixed to commence on 12 December 2016 and estimated to take three to five days.

2. Certain other aspects of the Order made on 5 November 2015 relating to the wife’s sole use and occupation of the property at B Street, Suburb C, and a dismissal of the husband’s application to remove her from the property are subject to a Notice of Appeal which was filed on behalf of the husband on 8 July 2016. The appeal is not relevant for the purposes of today’s hearing. I do not know when it is likely to be heard by the Appeal Division although it would seem not to be in this calendar year.

3. Today, Mr Dickson QC and Mr Nehmy appear on behalf of the applicant wife. Mr North SC appears on behalf of the respondent husband. There are appearances by prospective third parties. Mr Smith of counsel appears on behalf of personal third parties who are Ms D Hathaway, one of the four children of the husband and wife. The husband’s mother, Ms EE Hathaway, is also sought to be joined by the wife but Ms EE Hathaway has not been served.  Mr Goldsmith, solicitor, appears on behalf of the proposed corporate third parties who are Z Pty Ltd, AA Pty Ltd, DD Pty Ltd and BB Pty Ltd.

Vacating the final hearing on 12 December 2016 and loss of priority

1. It is common ground that the matter is far from ready to proceed to a final hearing so I will vacate the date which I had reserved for the final hearing, being 12 December 2016.  This family has lost significant priority in final hearing. That is not the fault of the court.

The applications

1. On 7 July 2016, the husband filed an application in a case in which he seeks sole use and occupation of a property at J Street, Suburb K, that the wife remove any possessions from that property at her expense, and be restrained from further entering the property.

2. The property at J Street, Suburb K is a property upon which the wife has worked extensively for a number of years and she considers it to be her home into the future. She has sworn a lengthy affidavit attesting to her emotional attachment which evidence is corroborated by her treating psychologist.  Pending completion of works to J Street, Suburb K (which it appears will not be any time soon) the wife is residing at the property of which she has sole use pursuant to the Order of 21 June 2016, B Street, Suburb C.

3. On 16 August 2016, the wife filed a response to the husband’s application in a case. She then filed an amended response and now relies upon a further amended response which was filed on 31 August 2016. She seeks various orders including a dismissal of the husband’s application in a case filed 7 July 2016, that there be a formula for retaining appropriately qualified persons to value real property, leave to amend her application for final orders to join certain parties, restraints against the husband and other parties and orders by way of discovery. The wife’s application for joinder of parties, valuation of certain properties and restraint is opposed by the husband. I was not able to embark on that hearing today.

4. Unfortunately, it was not possible to progress the matter in any real respect, given that I had allocated only an hour for this matter as a first day of final hearing. We were distracted by the husband’s application in a case filed 7 July 2016 and the wife’s response thereto which were fixed for hearing at the same time, but not on the basis that either would actually be dealt with.

5. Ms D Hathaway and the husband’s sister, Ms FF, were each served with the wife’s amended amended response to the husband’s application in a case and accordingly they appear today personally and with legal representation. The husband’s mother, Ms EE Hathaway, has not been served. My understanding is that she is not in good health. It is implicit in the submissions by counsel for the husband that Ms EE Hathaway is an individual of fixed views and strong personality and that she shares these attributes with other members of her family.

6. The wife also seeks access by way of disclosure to various documents including the financial statements, tax returns and trust deeds relevant to GG Pty Ltd and HH Pty Ltd and also II Pty Ltd. The husband asserts that he has no direct or indirect entitlement and nor has he derived any benefits from those entities and/or the trusts of which they are trustee. He also says that notwithstanding that he is a director of the trustee companies and has previously owned shares in the trustee companies, he does not have power to produce the relevant trust deeds. It appears that recourse will have to be had to the husband’s sister, Ms FF, and/or the husband’s mother to get the documents. The husband’s sister is in court today with counsel who says that she has no trust deeds but believes her mother does.

7. I have pronounced orders but want to put on the record some context to the Order, particularly in relation to the properties.

The properties

1. I have sought to ascertain what real property the husband says is relevant for a division of property between the husband and the wife. The husband’s case, as I understand it, is that some real properties are not relevant to an alteration of property interests between the wife and himself notwithstanding that those properties were acquired solely or partially from funds generated by the parties. The husband, through his counsel, contends that certain properties were acquired for three of the four children of the marriage with funds generated by the husband but ought not be taken into account as between himself and the wife notwithstanding that the wife did not know or consent to the disposition of funds for that purpose. A collateral issue is that the husband disputes that there is any need to obtain valuation evidence about any property which he contends is outside the basket of properties which are relevant or divisible between himself and the wife. A further issue is that the wife properly seeks leave to join certain parties to the proceedings. When I say “properly” I refer to the fact that this was listed as a first day of hearing so leave does need to be sought. I understand that all joinders will be opposed. 

2. I have discerned the following in relation to property interests, which I now record with particular reference to ownership, acquisition and whether the husband concedes that the property is relevant for the purpose of a final alteration of property interests between himself and the wife.

3. The property at J Street, Suburb K is a large dwelling which stands in the name of the wife. It was acquired principally as a result of earnings of the husband and accumulated by the husband and the wife during the marriage. It has a value of in excess of $6 million. On the wife’s case it is uninhabitable, a work in progress and the home in which she aspires to live and to which she is emotionally attached. This is the property of which the husband now seeks sole use and occupation although he agrees that, entitlements permitting, the wife can receive it on a final alteration of property interests. The husband agrees that this property is a property which will be taken into account on a final alteration of property interests between himself and the wife. He agrees that it should be valued for these proceedings.

4. L Street, Suburb M is a property of which the wife is the registered proprietor. The husband alleges, and I am uncertain as to whether the wife admits, that the property was acquired using funds emanating from himself and the wife and his mother, Ms EE Hathaway. As best I recollect, the alleged contribution by Ms EE Hathaway was not mentioned by Mr Sweeney of counsel who appeared for the husband at the last hearing before me. The husband agrees that this property is relevant to a division of final property interests between himself and the wife and should be valued. There isn’t a quantification of Mrs Hathaway Snr’s monetary contribution nor any characterisation of what interest, if any, she has in the property.

5. N Street, Suburb O is a property of which the wife is the registered proprietor. The husband alleges, and I am uncertain as to whether the wife admits, that the property was acquired using funds emanating from himself and the wife and his mother, Ms EE Hathaway although there is no quantification of her contribution nor characterisation of her entitlement (if any) in the property. The husband agrees that this property is relevant to a division of final property interests between himself and the wife and should be valued. As best I recollect, the alleged contribution by Ms EE Hathaway was not mentioned by Mr Sweeney of counsel who appeared for the husband at the last hearing before me. The wife seeks to join Ms EE Hathaway as a party to her application for final property orders. Mrs Hathaway Snr has not yet been served. Hopefully some sense will prevail in relation to appropriate service on this respondent.

6. Q Street, Suburb C is a property owned by Z Property Trust No. 2 which is wholly owned by the family superannuation fund in which the husband, wife, Ms E Hathaway (the son) and Ms D Hathaway (daughter) have superannuation interests. The husband concedes that this real property is relevant to a final alteration of property interests between himself and the wife to the extent of the value of their superannuation interests in the private fund. In that context, the husband agrees that the property should be valued.

7. B Street, Suburb C is a property which is owned by Z Pty Ltd as trustee of the Z Property Trust No. 3 which is a unit trust in which all of the units are owned by the Hathaway & Co Service Trust of which the children Ms E and Ms D Hathaway are guardians. This is the property which is discussed extensively in my reasons for decision delivered on 21 June 2016 [2016] FamCA 619. The husband maintains that this real property is not relevant to a final alteration of property interests between himself and the wife because it is, for all intents and purposes, a property to which Ms D is solely entitled. The husband does, however, acknowledge that the family lived in this property and that the previous use of the property may give rise to some equitable claim relevant to financial proceedings between the husband and wife.  He does not agree with the wife’s claim but concedes that the land and dwelling should be valued for this proceeding.  This property is occupied by the wife. The wife seeks to join Z Pty Ltd ACN … as a party to her application for final orders.

8. 2 R Street, Suburb S is a property owned by AA Pty Ltd as trustee of the Hathaway Family Trust No. 2 which is a discretionary trust of which the children Ms E and Ms D Hathaway are guardians. I was advised by the husband through his counsel that all four of the parties children are the objects of the Hathaway Family Trust No. 2, but that the general beneficiaries are described in such a way as to include the husband and the wife. The husband contends that this property is not a property which is relevant for the purpose of the final alteration of property interests between himself and the wife. He opposes the order sought by the wife to have it valued by a single expert witness. The wife seeks to join AA Pty Ltd ACN … to the proceedings but I understand that the joinder is opposed.

9. T Street, Suburb U is a property which is owned by AA Pty Ltd as trustee of the Hathaway Family Trust which is discretionary trust of which the children Ms E and Ms D Hathaway are guardians. I was advised by the husband through his counsel that the children are the objects of the Hathaway Family Trust, but that the general beneficiaries are described in such a way as to include the husband and the wife. The husband contends that this property is not a property which is relevant for the purpose of the final alteration of property interests between himself and the wife and should not be valued as proposed by the wife. The wife seeks to join AA Pty Ltd ACN … to the proceedings but I understand that the joinder is opposed.

10. V Street, Suburb W is the husband’s business premises and is a property owned by JJ Pty Ltd as trustee of the KK Trust which is discretionary trust of which the children Ms E and Ms D Hathaway are joint appointors. I was advised by the husband through his counsel that the parties’ children are the objects of the KK Trust, but that the general beneficiaries are defined in such a way as to include the husband and the wife. The husband contends that this property is not a property which is relevant for the purpose of the final alteration of property interests between himself and the wife and it ought not be valued as proposed by the wife.

11. H Street, Suburb I is a property which stands in the name of BB Pty Ltd as trustee for the BB Trust which is a discretionary trust of which Ms D is the sole appointor. This property is extensively discussed in my reasons for decision delivered on 21 June 2016, in particular at paragraphs 12, 18(i), 18(j), 18(k), 18(l), 18(m) and 27. I was advised by the husband through his counsel that the parties’ four children are the objects of the BB Trust, but that the general beneficiaries are defined in such a way as to include the husband and the wife. The husband contends that this property is not a property which is relevant for the purpose of the final alteration of property interests between himself and the wife and ought not be valued.

12. LL Street, Suburb CC is a property registered in the name of BB Suburb CC Pty Ltd as trustee of the Suburb CC Trust. This is the property in which the parties’ son, Ms E, and his wife reside. It was purchased at auction for the Suburb CC Trust by the father in 2015. I was taken to the last financial returns for the husband’s business which indicate that some $1.5 million was paid to the trustee of the Suburb CC Trust from the husband’s income in the last financial year, although it is said that significantly less than that amount was applied to acquire an interest in this property and that some at least $500,000 of that sum was used by the trustee of the Suburb CC Trust to pay outstanding taxation liabilities, presumably those of the trust. I was advised by the husband through his counsel that the four children are the objects of the Suburb CC Trust, but that the general beneficiaries are described in such a way as to include the husband and the wife. The husband contends that this property is not a property which is relevant for the purpose of the final alteration of property interests between himself and the wife and should not be valued.

13. MM Street, Suburb NN is a property owned by BB Trust of which BB Pty Ltd is the trustee. This property was purchased in 2012 and settled in 2013. Ms F is the sole appointor of this trust. It is currently being rented out as Ms F is travelling and not in Australia or in need of accommodation. I was advised by the husband through his counsel that the children are the objects of the BB Trust, but that the general beneficiaries are described in such a way as to include the husband and the wife. The husband contends that this property is not a property which is relevant for the purpose of the final alteration of property interests between himself and the wife and should not be valued as proposed by the wife. The wife has sought to join BB Pty Ltd ACN … as a party to her final property application but I understand the joinder will be opposed.

Discussion

1. The information set out above constitutes a refinement by the husband from his position as described by me at paragraph 16 of my reasons for decision delivered on 21 June 2016. At that hearing, his counsel (Mr Sweeney) did not demur from the proposition put by Mr Dickson (for the wife) that it was common ground that all real properties had been accumulated during the marriage as a consequence of the effort, funding and various contributions of the husband and the wife and, particularly, that there had been no gifts, loans or bequests from the parents or family of either party and nor had there been any windfalls.

2. Insofar as properties are held in discretionary trusts of which the husband and the wife can be categorised as general beneficiaries, with the exception of the property at H Street, Suburb C, the husband says that the interest of the husband and the wife in those properties amount to nothing more than a right to be considered by the trustees.

3. There was no agreement today on what properties could be valued and how that would be funded or by whom the valuations would be conducted. That does not seem to me to be much of a loss because, by virtue of the parties deciding to run the proceedings in the way they have, the matter cannot possibly be made ready by 12 December.

4. Three of the parties’ four children are mentioned above, in the context of the properties. Ms G is 18 years old. She lives independently of the parties. Whereas the husband has purported to settle real property on Ms E (25 years old), Ms D (23 years old) and Ms F (21 years old), nothing has been done for Ms G. Into the future, there is an application foreshadowed by the wife to set aside the settlements in favour of Ms E, Ms D and Ms F as dispositions made by the husband.

5. There was a distinct lack of curiosity or preparedness by the parties to consider how the husband’s elderly mother, Ms EE Hathaway, might conveniently be served. She is an elderly woman. It seems to me to be appropriate that the parties cooperate in some way to see if someone can accept service of a subpoena and/or other process on behalf of Ms EE Hathaway, and I will make an order to that effect.

6. I have adjourned the further hearing of these applications to the judicial duty list on 8 November 2016. The parties appear to be of the view that the matter will take at least half a day. I have told them to assume that they can have the regular two hours maximum allocated to matters in the judicial duty list. I do not know whether the matter will be before myself or a different judicial officer. However, in anticipation of some judicial officer having to come to terms with the property holdings and entities and other personalities in the case, I have set out some of that information in these reasons for decision which the parties were no longer present to hear but which I hope may conserve time on the adjourned date. If I have misconstrued what has been said or submitted on behalf of a party, it would be helpful, and also efficient, for that party to seek to clarify and correct the error with each other party to the proceeding.

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Bennett.

Associate:

Date: 2 November 2016