HEWORTH & HEWORTH

[2019] FamCA 716

FAMILY COURT OF AUSTRALIA

HEWORTH & HEWORTH [2019] FamCA 716

FAMILY LAW – INTERIM PROPERTY – Where the wife seeks payment from the husband of $11,000 for a holiday with the children – Where this is a partial property settlement – Where it is not in the interests of justice for the wife to receive the funds – Where the wife seeks $100,000 for litigation funding – Where the husband is unable to draw on his corporate entities to provide such funding – Where the husband’s mother is able to provide $20,000 to the wife for litigation funding – Orders made for the wife to receive $20,000 – Where this is characterised as partial property settlement.

Family Law Act 1975 (Cth) ss 79, 80(1)(h)

Strahan & Strahan (2009) FLC 93-466

APPLICANT: Ms Heworth

RESPONDENT: Mr Heworth

FILE NUMBER: SYC 5556 of 2019

DATE DELIVERED: 9 October 2019

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Stevenson J

HEARING DATE: 18 September 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Campton SC

SOLICITOR FOR THE APPLICANT: Dorter Family Lawyers and Mediators

COUNSEL FOR THE RESPONDENT: Mr O'Ryan QC

SOLICITOR FOR THE RESPONDENT: Harris Freidman Lawyers

Orders

1. Within 14 days of the date of these Orders, the husband will cause to be paid to the trust account of the solicitors for the wife a sum of $20,000 on account of her legal costs, which payment is characterised as a partial property settlement.

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 Heworth & Heworth 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 SYDNEY

FILE NUMBER: SYC 5556  of 2019

Ms Heworth

Applicant

And

Mr Heworth

Respondent

REASONS FOR JUDGMENT

The proceedings

1. Ms Heworth and Mr Heworth are in dispute in relation to financial issues.  On 18 September 2019 the wife's application for orders concerning interim and lump sum spouse maintenance, child support departure, litigation funding and injunctions came before me in a Duty List.

2. The parties were able to reach agreement on a number of issues and I made the following interim orders by consent:

   1.The husband within 14 days shall do all things to transfer to the wife his interest in the Vehicle 1 in the possession of the wife registration number ….

   2.Pending further order the husband shall pay, as and when they fall due:

   2.1the registration and third party (green slip) compulsory insurance premium in respect of the said Vehicle 1.

   3.The husband undertakes to the court that he will continue to pay to the wife the sum of $5,500 per week by way of deposit to the wife's bank account in her name at:

   National Australia Bank

   BSB number:…

   Account No.:  …32

   on the basis that the wife applies those funds in payment of the expenses she contends for in her Financial Statement filed 21 August 2019.

   4.The husband shall do all things to disclose to the wife forthwith upon conclusion of the proposed meeting between he and his business partner and their respective solicitors scheduled for 1 October 2019 the terms of any outcome from that meeting.

   5.The husband provide to the solicitors for the wife 14 days' notice in writing of the receipt and proposed application of the repayment of loan funds due to The Heworth Family Trust by the No. 1 Trust recorded in the published financial statements of each trust for the year ended 30 June 2018 in the sum of $2,923,850.

   Corporate Business and Trust Valuations

   6.That within 48 hours the wife shall provide to the husband's solicitor a draft letter to each accountant referred to at Order 7 below which seeks a written costs estimate for work that may be undertaken by him/her, on a single expert basis, to prepare a short form valuation of the following companies and Trusts (inclusive of any and all associated subsidiary entities):

   i)U Pty Ltd

   ii)V Pty Ltd

   iii)W Pty Ltd

   iv)DD Pty Ltd

   v)CC Pty Ltd

   vi)BB Pty Ltd

   vii)FF Pty Ltd

   viii)No. 1 Trust

   ix)GG Pty Ltd and

   x)Heworth Family Trust.

   7.For the purposes of Order 6, the accountants to whom letters shall be addressed are:

   i)Mr E of HH Company

   ii)Ms F of JJ Company or

   iii)Mr G of H Company.

   8.Within 48 hours of receipt by the husband's solicitors of the draft letter to each accountant and accompanying documents referred to at Order 7 above, the husband shall instruct his solicitors to make any amendments to such letters as the husband might require and thereafter he shall cause for such amended letter to be forwarded to the solicitors for the wife.  Within two business days thereafter, the parties shall collaboratively settle and release to each accountant an agreed form of letter.

   9.Within seven days of the parties receiving written costs estimates from all of the accountants referred to at Order 7 above, the husband shall choose one of the accountants referred to at Order 7 who shall be appointed as the agreed single expert accountant to prepare a single expert report as to the value of each of the companies and Trusts outlined in Order 6 (inclusive of any and all associated subsidiary entities).

   10.Within 14 days from the parties receiving written costs estimates from all of the accountants referred to at Order 7 above, the parties shall release a collaboratively prepared joint letter of instruction to the single expert accountant selected by the husband pursuant to Order 9.

   11.The parties shall provide to the single expert accountant copies of all documents in his/her possession, custody or control within ten days of being requested to do so by the single expert accountant.

   12.The husband shall pay the costs of obtaining the single expert valuer's report in the first instance.

   Property Valuations

   13.Within 48 hours the husband shall choose one of the following valuers who shall be appointed as the agreed single expert valuer to prepare a short form single expert valuation report for each of the properties listed at Order 14:

   i)Mr J of L Company

   ii)Mr K of D Company or

   iii)Mr M of KK company.

   14.For the purposes of Order 13, the following properties are the subject of the single expert valuation:

   i)T Street, Suburb Z NSW

   ii)Suburb LL owned by the Heworth Family Trust (with address details to be provided by the husband forthwith)

   iii)Suburb P Property owned by the Heworth Family Trust (with address details to be provided by the husband forthwith)

   iv)Suburb N Property owned by the Heworth Family Trust (with address details to be provided by the husband forthwith)

   v)Suburb MM owned by the Heworth Family Trust (with address details to be provided by the husband forthwith) and

   vi)all other real estate in which the husband, or any entity or Trust on his behalf, has an interest.

   15.If the husband fails to select one of the valuers referred to at Order 14 to be the single expert valuer within the time periods prescribed by these Orders, the wife shall be at liberty to select and appoint the single expert valuer.

   16.Within seven days the parties shall release a collaboratively prepared joint letter of instruction to the single expert valuer selected by the husband pursuant to Order 14, or in default, selected by the wife pursuant to Order 15.

   17.The parties shall provide to the single expert valuer copies of all documents in his/her possession, custody or control within ten days of being requested to do so by the single expert valuer.

   18.The husband shall pay the costs of the single expert valuations in the first instance, and the wife shall pay to the husband 50% of such costs from her final property settlement.

   Mediation

   19.The parties shall attend private mediation with a mediator to be agreed between the parties on a date to be fixed but not later than 35 days after all single expert valuations required by the parties have been obtained and released.  The husband shall pay the mediator's fees in the first instance.

   20.Within 21 days after all single expert valuations have been released, each party shall file and exchange a completed Financial Questionnaire.

   21.Within 28 days after all single expert valuations have been released, the parties shall exchange written Offers of Settlement and they shall ensure that their Offer of Settlement remains open for acceptance until the commencement of their participation in private mediation.

   22.The parties shall collaborate and prepare a joint balance sheet prior to the mediation in Order 19 above.

   23.The husband and wife have liberty to apply to vary Orders 6-22 above.

3. On 18 September 2019 the wife withdrew her application for child support departure orders, as no Administrative Assessment had been issued to the husband.  The wife did not press her application for a "dollar for dollar" costs order.

4. Accordingly, the only two issues which remained for determination were the wife's applications for orders as follows:

   1.That the husband pay the sum of $11,000 to the Wife on or before 1 November 2019 for the purposes of a holiday for the wife and children to North Queensland from 28 December 2019 for a period of 10 days, with such sum to be characterised at final determination by the trial Judge.

   2.That within seven (7) days of the date of the making of these Orders, the Husband pay or cause to be paid into the trust account of the solicitors for the Wife, the sum of $100,000 for her initial costs and disbursements in these proceedings.

Background

1. The husband and the wife, who are both aged 39, began to cohabit in approximately 2002 and married in 2010.  They separated on 6 December 2018 or 12 December 2018, according to the husband and the wife respectively.  Since the separation the wife and the parties' children Y and X, who are aged six and three respectively, have continued to live in the former matrimonial home at Suburb Z.  The husband has lived at the home of his mother in Suburb R.

2. The husband is a director and shareholder in a company known as BB Pty Ltd, which operates a number of businesses in New South Wales.  This company is the trustee of the No. 1 Trust.

3. The husband operates these corporate identities in conjunction with his business partner, Mr S.  The husband and Mr S are each directors and equal shareholders of the company and their respective family trusts hold an equivalent number of units in the trust.

4. It was common ground that the husband and Mr S are currently in dispute concerning their corporate and business interest.  They have each given written notice to the other that "no action is to be taken on behalf of BB Pty Ltd or No. 1 Trust without my express consent and approval in writing".  Further, the husband as trustee for the Heworth Family Trust has called for repayment of a loan of $2,923,850 from the No. 1 Trust.

5. The husband deposed that he and Mr S scheduled a meeting on 1 October 2019 in an attempt to resolve their dispute.  If they are unable to do so, it may be that litigation will be commenced in relation to these issues.

6. The wife deposed that she has booked a ten-day holiday to North Queensland with the parties' children during the upcoming Christmas holidays.  She indicated that she has paid a deposit of $600 for accommodation and has yet to book flights.  She gave an estimate of $11,000 as the total cost of this proposed holiday.

7. Since the separation the husband has deposited a sum of $5,500 per week into the parties' joint account.  The wife deposed that these funds are used to meet mortgage repayments and outgoings in respect of the Suburb Z property and household and living expenses for herself and the children.  The husband deposed that he has borrowed funds from his mother so as to sustain these since the dispute arose with his business partner.

8. There was no evidence from the husband's mother, Ms B Heworth, but I was informed by senior counsel that she was present during the interim hearing when submissions to that effect were put to the court.  The husband deposed to post-separation borrowings from his mother in both his affidavit and Financial Statement.  On the balance of probabilities, and for present purposes, I accept that the husband has borrowed these funds from his mother and will continue to do so so as to sustain the payments of $5,500 per week as contemplated in the Orders of 18 September 2019.

Consideration

1. $11,000 payment to the wife for North Queensland holiday

1. I agree with the submission on behalf of the husband that this proposed payment to the wife must be in the nature of a partial property settlement, rather than lump sum spouse maintenance.  That being so, the following principles as set out in Strahan and Strahan (2009) FLC 93-466 are applicable to the present proceedings:

   [118]  We agree with the submissions of senior counsel for the wife in relation to the approach to be taken to the hearing of an application for an interim property settlement order.  There are two stages to the hearing of such an application where the power is to be exercised pursuant to s 80(1)(h) of the Act.  This is recognised by the fact that although the power under s 79 should ordinarily be exercised on a once only basis, "circumstances may arise before there can be a final hearing" where the power is exercised.  Thus the first step is to resolve whether to exercise the power before a final hearing and if it is resolved to do so then the second step involves the exercise of that power.

   ...

   [132]  In relation to the first stage, in our view, when considering whether to exercise the power under ss79 and 80(1)(h) of the Act to make an interim property order the "overarching consideration" is the interests of justice.  It is not necessary to establish compelling circumstances.  All that is required is that in the circumstances it is appropriate to exercise the power.  In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing."

2. I am not satisfied that "the interests of justice" require that the wife receive the payment of $11,000 to fund a holiday for herself and the parties' children.  The wife booked accommodation after the separation and in circumstances where there were unresolved financial issues between the parties.  She gave no evidence that the $600 deposit is non-refundable and she has yet to incur the cost of flights.  The husband denied that he agreed to meet the cost of this proposed holiday.

3. In these circumstances, I am not prepared to make the orders sought by the wife.  I do not suggest that she was required to demonstrate "compelling circumstances" but I am not satisfied that she established that "the interests of justice" required that she receive the benefit of such an order.

1. $100,000 payment to the wife for litigation funding

1. On behalf of the husband, it was indicated that he accepted that such an order would an appropriate exercise of power but the dispute was as to the quantum and the source of funds.  The wife deposed that the proposed payment could be met from the following sources:

   52.I say that there are the following sources available to meet the Orders sought by me:-

   a)Dividend that may be received by [Mr Heworth] (which I understand to be through the GG Pty Ltd);

   b)[Mr Heworth]'s substantial income;

   c)[Mr Heworth]'s personal account held in the Heworth Family Trust with a balance of $1,236,659 (as disclosed in the Financial Statement for 30 June 2018);

   d)Total equity U Pty Ltd of $2,305,916 that I say can be distributed to [Mr Heworth];

   e)Total equity in QQ Pty Ltd of $1,706,360 that I say can be distributed to [Mr Heworth];

   f)Accumulated profit in V Pty Ltd of $1,848,420 that I say can be distributed to [Mr Heworth];

   g)Total equity in DD Pty Ltd of $473,942 that I say can be distributed to [Mr Heworth];

   h)Total shareholders equity in W Pty Ltd of $1,261,796 that I say [can] be distributed to [Mr Heworth];

   i)Total equity in FF Pty Ltd of $524,427 that I say can be distributed to [Mr Heworth];

   j)Total shareholder's equity in NN Pty Ltd of $4,530,837 that I say can be distributed to [Mr Heworth];

   k)Heworth Family Trust distribution payable to each of [Mr Heworth] and I (which I have never received) of $1,051,351;

   l)No. 1 Trust net profit of $41,603.

2. I accept the submission on behalf of the husband, the effect that he is unable presently to access money from the corporate entities which he co-owns with Mr S on account of their current dispute.  Mr S has indicated that he will not consent to the release of any funds to the husband at this stage.

3. The husband deposed that he currently receives only a salary of $629 per week and no other benefits from the corporate entities.  As noted, I accept that the husband has borrowed funds from his mother since the separation to continue the payments of $5,500 per week into the parties' joint account.  I accept also that the husband has paid his legal fees with money borrowed from his mother.  I do not imagine that the husband would resort to borrowing funds from his mother, if he had access to money from an alternative source.

4. There was no evidence to the effect that the husband in fact could access funds held in his "personal account held in the Heworth Family Trust", nor in any of the corporate entities to which the wife referred in her affidavit.  Essentially, the wife relied upon her own speculation that these funds could be accessed by the husband to enable the payment to her of $100,000.

5. I am of the view that a further difficulty with this aspect of the wife's case was the lack of evidence as to calculation of the sum of $100,000 which her lawyers allegedly require to continue to conduct her litigation.  As recently as 19 July 2019 the wife's solicitor requested from the husband a payment of $10,000 on account of her legal costs (page 240 exhibits to the wife's affidavit.  In the space of about five weeks, however, that quantum increased to $100,000 when the wife filed her Initiating Application.

6. The wife's evidence as to the requirement for a sum of $100,000 included an estimate of $50,000 to $100,000 for valuation fees.  These costs will be met by the husband in the first instance pursuant to the Orders of 18 September 2019.

7. Senior counsel for the husband indicated that Ms B Heworth would make available to the wife a sum of $20,000 in order to progress the proceedings to the mediation which is contemplated by the Orders of 18 September 2019.  As noted, the husband's mother was present in court during the interim hearing and I accept that she would make these funds available to the wife.

8. In the present circumstances, I cannot identify a source of funds from which the husband could pay a sum of $100,000 to the wife.  The situation may well be different if and when the husband resolves his dispute with Mr S.  It would then be open to the wife to make an application for litigation funding or a partial property settlement.

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 9 October 2019.

Associate:

Date:  9 October 2019