HORSLEY & HORSLEY

[2015] FamCA 593

FAMILY COURT OF AUSTRALIA

HORSLEY & HORSLEY [2015] FamCA 593

FAMILY LAW – PROPERTY – INTERIM PROCEEDINGS – Where the applicant wife sought interim spouse maintenance and payments for her future legal costs – Where the respondent husband sought orders to effect a sale of the former matrimonial home – Where the husband now intends to sell his accountancy practice – Where the wife has not been employed for nearly thirty years and resides in the former matrimonial home with the parties’ two foster children – Where the husband conceded that the wife has a need for spouse maintenance – Capacity of the husband to pay – Where the Court has doubts as to the accuracy of the husband’s reported income – Where the husband’s income is nevertheless substantial – Orders made for interim spouse maintenance – Orders made restraining the husband from selling his businesses.

Family Law Act 1975 (Cth)

APPLICANT: Ms Horsley

RESPONDENT: Mr Horsley

FILE NUMBER: SYC 1609 of 2015

DATE DELIVERED: 24 July 2015

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Stevenson J

HEARING DATE: 13 July 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Levy

SOLICITOR FOR THE APPLICANT: Gayle Meredith & Associates

COUNSEL FOR THE RESPONDENT: Mr Schonell

SOLICITOR FOR THE RESPONDENT: Walker Kissane & Plummer Solicitors

Orders

1. Pending further Order, the husband will make the following payments:

   1.1.a sum of $1,200 per week to the wife;

   1.2.all loan instalments in respect of mortgages secured on the titles to the properties B Street, Suburb A and C Street, Suburb D in the State of New South Wales (‘the Suburb A and Suburb D properties’);

   1.3.all outgoings referable to the Suburb A and Suburb D properties, including electricity, council and water rates, household and contents insurance, telephone, Foxtel and internet services; and

   1.4.lease payments, registration, insurance and maintenance referable to the German motor vehicle used by the wife.

2. Pending further Order:

   2.1Subject to Order 2.2, the husband is restrained from selling, transferring, encumbering or dealing with (either personally or via any company or trust) the business known as Horsley Pty Ltd and E Pty Ltd and from dealing with any entity including any company or trust which holds an interest in either of those businesses.

   2.2Order 2.1 herein is made conditionally upon the wife lodging with the Court a written undertaking as to damages within seven (7) days and providing a copy thereof to the husband.

3. Otherwise, all outstanding applications and responses seeking interim orders are dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Horsley & Horsley has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 1609 of 2015

Ms Horsley

Applicant

And

Mr Horsley

Respondent

REASONS FOR JUDGMENT

THE PROCEEDINGS  

1. By an application filed on 18 May 2015, Ms Horsley (“the wife”) sought the following interim orders:

   1.That pending further order on account of the spousal maintenance of the wife:

   1.1that the husband pay to the wife the sum of $1,500 per week;

   1.2that the husband pay all loan repayments as and when they become payable which relate to loans secured by mortgage on the properties [B Street, Suburb A], NSW (“[the Suburb A] property”) and [C Street, Suburb D], NSW (“[the Suburb D] property”);

   1.3that the husband pay all outgoings referrable to the Suburb A property and the [Suburb D] property including but not limited to electricity, council rates, water rates, household and contents insurance, telephone, Foxtel and the internet services (if applicable);

   1.4the premiums on a private health insurance policy which includes the wife;

   1.5the lease payments, registration, insurance and repairs and maintenance referable to the [German motor vehicle] in his name and used by the wife.

   2.That the husband pay on behalf of the wife to her solicitors the following sums to be used by her towards her legal costs and disbursements referrable to these proceedings:

   2.1within 14 days of the conclusion of the conciliation conference $50,000;

   2.2within 14 days of the conclusion of the conciliation conference $50,000;

   2.3within 14 days of the first listing before the document judge $95,000.

   3.        That the husband pay the wife’s costs.

   4.        That leave be granted to serve short notice of this application.”

2. By a Response provided to the wife and the Court on the day of the interim hearing, Mr Horsley (“the husband”) sought orders to the effect that the wife effect a sale of a property C Street, Suburb D and that each of the parties receive a sum of $50,000 from the net proceeds. These proposed payments to the parties were not characterised in the orders sought by the husband.

3. By way of a hand written document submitted during the course of the interim hearing on 13 July 2015, the wife sought the following further orders:

   “

   1.That the husband be and is hereby restrained from selling, transferring, encumbering or dealing with (either personally or via any company or trust) the businesses known as [Horsley Pty Ltd] and [E Pty Ltd] and from dealing with any entity including any company or trust that holds an interest in either of those businesses.

   2.That [Mr F] of Deloitte is hereby appointed pursuant to Chapter 15 of the Family Law Rules as the Court’s expert for the purposes of valuing all entities and businesses in which the husband, either directly or indirectly, owns an interest.

   3.That the husband supply to [Mr F] all documents her requires for the purpose of his valuation and give all other information requested by [Mr F] within 14 days of any such request.

   4.That the husband initially meet all fees and cost of [Mr F’s] valuation and that the ultimate liability for those costs be a matter for the trial Judge.

BACKGROUND

1. The husband and the wife, who are aged sixty-seven and sixty-four respectively, married in 1976 and separated on 28 September 2013. They have two children, Ms G and Mr H, who are now adults. Mr H has paid employment and lives in the former matrimonial home at Suburb A with the wife.

2. In May 2000, the parties assumed care of their foster children, J and K, who are presently sixteen and fourteen years of age. They have continued to live in the former matrimonial home with the wife since the parties’ separation. In approximately 2009, the parties commenced adoption proceedings in relation to J and K but no orders have been made to date.

3. J and K both suffer from ADHD and, additionally, he has an intellectual disability and behavioural problems. K has regular appointments with a paediatrician and a psychologist and requires specially fitted shoes because one of his legs is shorter than the other.

4. The wife has been the full time carer for J and K. She last held paid employment in 1987; hence she has been out of the paid workforce for some twenty-eight years.

5. The husband is a chartered accountant who conducts a practice known as Horsley Pty Ltd. He deposed that the full name of the practice is Mr Horsley and Co Incorporating Mr L. The husband’s evidence was that he purchased a practice known as L Pty Ltd for $696,000 in 2007.

6. The husband established a trust known as the Horsley Family Discretionary Trust or the Horsley L Unit Trust. In 2011, he caused the Trust to acquire fifty percent interest in a company known as E Pty Ltd. The husband deposed that he receives a “salary” of $40,000 and “additional payments” of $300,000 per year from this entity.

7. On the day of the interim hearing, the wife and her legal advisors became aware, for the first time, that the husband proposes to sell his accountancy practice for $300,000. This proposal raised alarm in their minds because the husband had attributed a value of $1,000,000 to the practice in an insurance proposal dated May 2012 (Annexure B to the wife’s affidavit of 18 May 2015). As noted above, the husband’s own evidence was that he purchased the practice known as L Pty Ltd for $696,000 in 2007. It was against this background that the wife sought the orders set out in the handwritten document, to which reference is made above in these reasons.

8. After the separation, the husband paid to the wife a weekly sum of $1,200. He also caused the Trust to pay mortgage instalments in respect of a loan secured on both the Suburb A and Suburb D properties. He and/or the trust paid the outgoings in respect of the former matrimonial home and the Suburb D property, together with lease payments for a German car used by the wife.

9. In February 2015, the husband informed the wife that he was no longer prepared to pay some of these expenses. Subsequently he stopped paying rates, telephone, internet and Foxtel expenses.

10. The wife acquired the Suburb D property, as an inheritance on the death of her brother, in about 1994. The parties acquired the interests of her two siblings in the property, using borrowed funds. They renovated the premises in 2006, again utilising borrowed money. The property was leased following these renovations and the wife receives the rental income.

11. On 21 June 2015, the husband married Ms M, who is a student, aged approximately 40 years. They have undergone three unsuccessful IVF treatments.

CONSIDERATION

1. At the commencement of the interim hearing, counsel for the husband stated that his client alleged that the wife “has the capacity to support herself” and, further, that he is “unable to meet to the orders sought”. At a later time in the hearing, however, counsel for the husband conceded that “the wife has a need, the issue is the extent of that need.”

2. In her Financial Statement of 18 May 2015, the wife deposed to a total weekly income of $2,232, which consisted of the following:

   ·Rental from the Suburb D property            $630

   ·Family Tax Benefit A  $58

   ·Payment from the husband   $1,200

   ·Foster care allowance  $344

3. In Part N of her Financial Statement, the wife set out her average weekly expenses, which totalled $1,662 for herself only and $2,819 for her and the parties’ foster children. The Financial Statements of each of the parties stated that the husband has paid the sum of $1,200 per week for the benefit of both the wife and the foster children. It thus seems appropriate to have regard to the combined expenses of the wife’s household for present purposes.

4. A number of the wife’s weekly expenses, as set out in Part N, include amounts which she seeks from the husband. These expenses include the following:

   ·Electricity  $138

   ·Telephone  $75

   ·Suburb D Rates  $29

   ·Suburb A Rates  $105

   Additionally, some of her asserted expenses appear excessive on their face, for example:

   ·Entertainment/hobbies   $275

   ·Holidays   $200

5. In his Financial Statement of 13 July 2015, the husband deposed to a total gross weekly income of $7,463, which was said to consist of a sum of $769 from the practice Horsley Pty Ltd and $6,583 from E Pty Ltd. Additionally, the husband asserted that various benefits paid by those two entities formed a component of his alleged weekly income.

6. It is somewhat difficult to reconcile these figures with the husband’s 2014 tax return and that of the Trust (Exhibit 3).These returns assert taxable incomes of $55,736 for the husband and $573,366 for the Trust. The picture is further clouded by the 2013 and 2014 profit and loss statements for the Trust and E Pty Ltd (Exhibits 1 and 2)

7. The 2013 profit and loss statement for the Trust indicated that the accountancy practice received gross fees of $663,614 in that year and made a net profit of $105,696. The 2014 profit and loss statement for E Pty Ltd indicated that the husband received a profit share of $297,877 and a “consulting fee” of $40,000, making a total of $337,877 in 2014.

8. It seems to me that the husband’s actual income cannot be ascertained with any degree of certainty on the available evidence. It appears to be clear, however, that he receives relatively substantial sums from the accountancy practice and the Trust.

9. The husband deposed to personal expenditure totalling $14,829 per week. As was pointed out by counsel for the wife, however, the following expenses are in fact paid by the trust for Horsley Pty Ltd (Exhibits 4 and 5).

   ·ANZ Bank Liability  $5,482

   ·Bank West  $335

   ·Hire purchase in respect of

   Japanese motor vehicle                  $100              

   $5917

10. The husband claimed as a recurring expense an amount of $892 per week on account of “death insurance policies”. Emails dated 8 April 2015 between the husband and an insurance broker (Exhibit 6) suggest, however, that these policies were cancelled before the husband swore his Financial Statement.

11. The husband alleged a recurring weekly expense of $800 on account of loan repayments to one Ms N. There was no evidence whatsoever to corroborate the existence of this alleged debt. Additionally, the husband’s own evidence was that he ceased making payments to O Finance in March 2015, which would reduce the expenses set out in his Financial Statement by an amount of $800 per week.

12. The husband claimed as a weekly expense a sum of $530 on account of IVF treatment. There was no evidence that he and his wife intend to continue this treatment after three unsuccessful attempts.

13. All of these considerations leave me with considerable doubts as to the accuracy of the husband’s Financial Statement, both as to his income and expenditure. By the husband’s own admission, however, he paid the sum of $1,200 per week to the wife “from my own income and resources” for some two years after the separation. Further, he was able to meet other expenses of a recurring nature for the benefit of the wife and the parties’ foster children.

14. The husband’s only explanation for his alleged lack of capacity to continue these payments appeared to be his contention that his income from preparation of tax returns for P Corp employees has reduced by twenty percent. I am not persuaded that this change in circumstances is sufficient to warrant the husband in now ceasing all payments for the benefit of the wife and the foster children. The husband in fact produced no evidence to corroborate this allegation in any event.

15. In my view, it is unreasonable for the husband to expect the wife to find gainful employment at this stage in her life for two reasons. At sixty-four years of age, she lacks employment skills and experience and has been out of the paid work force for almost thirty years. Additionally, she continues to be a responsibility for the care of the foster children. The parties jointly assumed that responsibility some fourteen years ago.

16. I am not persuaded that the wife should be compelled to sell the Suburb D property at this stage of the proceedings. She seeks to retain that asset as part of a final distribution of matrimonial assets. A sale now would create an irreversible situation at the final hearing.

17. The wife sought orders for staged lump sum payments from the husband to meet her legal costs. There was no submission in support of this proposed order and no source of these payments was identified in the evidence.

18. Accordingly, I will make orders which will require the husband to continue to make the payments which he has made for the benefit of the wife and the parties’ foster children since the breakdown of the marriage.

Sale of the Accounting Practice

1. As noted, the wife sought orders which would restrain the husband from alienating or encumbering the accounting practice. Further, she sought an order for the appointment of a single expert to carry out a valuation of that practice.

2. I have referred above to the reasons why the wife sought to restrain the husband in this manner. The purchase price and the husband’s assessment of the practice, for insurance purposes, at first glance would suggest that a sale price of $300, 000 would be a significant under-valuation of the business. I will make order 1 as sought by the wife, conditional upon her lodging with the Court a written undertaking as to damages within seven days.

3. In my view, it would be premature to appoint a single expert valuer at this stage of the proceedings. That exercise would be expensive and it would be inevitable that an updated valuation would be required prior to trial, which event would be well into the future.  

I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 24 July 2015.

Associate:

Date:  24 July 2015.