Hentley and Theobald

[2019] FamCA 1005

FAMILY COURT OF AUSTRALIA

HENTLEY & THEOBALD [2019] FamCA 1005

FAMILY LAW – PROPERTY – Final financial orders sought by consent before a Registrar who refused to make them – where the Registrar’s decision was reviewed and a hearing de novo conducted – where final financial orders were not made because not considered appropriate within the meaning of section 79.

Family Law Act 1975 (Cth)
APPLICANT:	Mr Hentley

RESPONDENT: Ms Theobald

FILE NUMBER: MLC 11922 of 2019

DATE DELIVERED: 11 December 2019

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Bennett J

HEARING DATE: 11 December 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Jenkins

SOLICITOR FOR THE APPLICANT: Blackwood Family Lawyers

COUNSEL FOR THE RESPONDENT: Ms Crocker

SOLICITOR FOR THE RESPONDENT: Carew Counsel Pty Ltd

Orders

1. This matter be adjourned before me for further case management to 17 February 2020 at 9.00 am.

2. My reasons for decision be transcribed and when settled placed on the Court file and a copy provided to the parties.

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 Hentley & Theobald 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 11922 of 2019

Mr Hentley

Applicant

And

Ms Theobald

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. This matter comes before me in the form of a review of the exercise of power by a Registrar who refused to make orders sought by consent to effect a final alteration of property interests between the husband and the wife to a de facto relationship.

2. I also refuse to make the orders sought but have adjourned the application to a date before me to give further directions.  I am satisfied that it is an appropriate course because the husband did not attend court personally today and the wife has to leave court now to catch a flight.  On the adjourned date I could also consider any other orders which the parties seek be made by way of a final alteration of property interests.  The adjournment is without prejudice to the right of either party to file a Notice of Appeal against this decision.

3. There is no dispute between the parties and I am satisfied that it is just and equitable for there to be an alteration of property interests between them.

4. The wife is 60 years of age.  She owns a business which is involved in tourism and receives at the moment an income of approximately $80,000 per annum from that enterprise.  The husband is 57 years old.  He is retired.  He was formerly a manager of his own properties and business interests.

5. There are no children of the marriage. 

   RECORDED : NOT TRANSCRIBED

6. The parties have lived between Country F and Australia.  They commenced cohabitation in 2005 and at approximately that time the husband’s mother passed away, leaving him a significant inheritance.  The inheritance has been valued by accountants retained by the parties at some $35 million.  Of that inheritance, some $25.67 million has been referred to by the parties as “financial resources”.  I regard that as somewhat of a misnomer.  It appears to be common ground and uncontested that the $25.67 million worth of property is held in such a way that it is not readily saleable or convertible into cash.  As such, I would refer to that as illiquid assets of $25.67 million to which the husband is entitled rather than a “financial resource”. 

7. The illiquid asset generates for the husband an income of approximately $15,000 per week, or $21,000 per week including franking credits.  That is in contrast to the wife’s income of approximately $1600 per week from personal exertion.

8. I have had thorough and helpful submissions by the solicitors for each of the parties. 

9. I acknowledge that each of the parties and their practitioners have clearly put in a lot of effort in the negotiation and the calculation of this settlement to finally alter the financial interests between the parties. I accord a significant respect to the two parties to order their own finances including their future finances. However, I need to be satisfied, in terms of the legislation, that the orders sought are appropriate within the meaning of section 79(1) of the Family Law Act1975 (Cth) (“the Act”).

10. The parties wrote to the court setting out the basis of their settlement and the proposed orders and the operation of the orders.  I mark that correspondence Exhibit “A” and direct it remain on the court file.  Both parties adhere to the statement.

11. The alteration of property interests as agreed would see the wife with real estate or proceeds of sale of real estate of the three real properties, being the two properties in Country F and the apartment in Suburb D, into which the parties invested during their relationship.  She would also maintain the invested funds which she has in her own name of $665,000, and also a further amount which will be paid by instalments totalling $494,000.  Those instalments will be paid quarterly in the sum of $38,000 per quarter.

12. Only one of those properties was bought with joint funds and it was into that property that the wife put her direct financial contribution of $450,000.  The balance was paid for by the husband from his resources and property, that is, the apartment on C Street in Suburb D in Victoria.  It has a current value of approximately $1.3 million. 

13. There is also the proceeds of sale of a property in Country F at E Street, which is approximately $850,000 in Australian currency, and there is a real property in Country F at G Street, which has a value of somewhere between $1.26 million and $1.375 million.  The parties are apart on that valuation, but it is not a discrepancy that I would think is going to create much of an impediment.

14. The alteration of property interests proposed by the parties would see the wife retaining somewhere in the vicinity of $4.66 million, and the husband retaining somewhere in the vicinity of $34 million, of which $25.67 million are the illiquid assets to which I have referred. 

15. During the marriage, each party would made contributions.  The husband has made significant direct financial contributions to the acquisition and maintenance of the assets which are liquid.  In particular, to the assets now retained by the wife, the husband paid for both of the properties in Country F, of one of which she retains the proceeds of sale.

16. I was not addressed on any contributions made by the wife to the illiquid assets.

17. Notably the parties do not specify pursuant to section 77A of the Act what part of the $4.46 million to be retained by the wife is provision for her maintenance and is, within the meaning of s 77A(1)(d) attributable as such.

18. I acknowledge that there has been some allowance made within the $4.66 million to be retained by the wife of the adjusted factors under section 75(2) of the Act. However, that is merely an adjustive factor rather than a payment of lump sum maintenance within the meaning of s 77A(1). Section 77A(3) provides that, absent a specification, the settlement of $4.66 million for the wife “shall be taken not to make provision for the maintenance of a party to the relevant marriage”.

19. The division of capital under the proposed settlement does not bother me, having regard to the fact that the vast bulk of the husband’s wealth is in illiquid assets.  What bothers me is the ongoing maintenance needs of the wife. 

20. Going forward, the husband receives, it would appear, a passive income of some $20,000 a week, whereas the wife has an income by way of personal exertion of $1600 per week.  The wife’s income status is cushioned to a great extent by the fact that the wife is to receive $530,000 of her entitlement under the settlement, reflected in the proposed order and a binding financial agreement, on top of her interest in the real properties and the proceeds of sale and that amount is payable by instalments.

21. The issue is whether receipt by the wife of $4.66 million still leaves her with an entitlement to spousal maintenance.  That is, whether the combination of lump sum and instalments totalling $530,000 are sufficient to meet her entitlement under s 72 (“Right of Spouse to Maintenance”) noting that the binding financial agreement will have the effect of extinguishing her right to seek maintenance in the future.

    RECORDED : NOT TRANSCRIBED

22. What concerns me about this settlement is, going forward, the disparity in income and the wife’s ability to support herself in a manner which is reasonable within the meaning of s 75(2)(g) and generally. But for the binding financial agreement into which the parties have entered or will enter which will extinguish the wife’s right to maintenance, I would have no hesitation in making orders in the terms sought in the orders. However, it is apparent to me that, in some four years’ time, the wife’s her entitlement to receive the capital payments of $38,000 per quarter will be extinguished and she will then be reliant wholly on her own property and her own modest income from personal exertion.

23. It has been stressed by Ms Jenkins for the husband that the wife will have options.  She may still have money invested in her own name by the time the quarterly instalments of $38,000 cease so the wife would not be without access to cash.  I accept that the wife will have had the use of the proceeds of sale of the less valuable unit in Country F (which at the moment are about $850,000), and the two other unencumbered properties both worth in excess of $1.3 million, and one being in Country F and one being in Australia.  The wife is not going to be impoverished, but in my view the settlement is somewhat lacking in ongoing support for her.

24. I have stressed to the parties that the exercise of discretion to make final property orders is broad and it is wide. It is a matter on which reasonable minds may differ. In this instance, I do not consider the settlement to be appropriate in the terms of s 79 of the Act. It follows that I am not prepared to make the orders sought.

    RECORDED : NOT TRANSCRIBED

25. I adjourn the proceedings to 17 February before me at 9.00am.

I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Bennett delivered on 11 December 2019.

Associate: 

Date:  23 December 2019