Horton and Horton

[2011] FamCA 529

FAMILY COURT OF AUSTRALIA

HORTON & HORTON [2011] FamCA 529

FAMILY LAW – PROPERTY – Appointment of single joint expert

Family Law Act 1975 (Cth)

APPLICANT: Ms Horton

RESPONDENT: Mr Horton

FILE NUMBER: SYC 7686 of 2009

DATE DELIVERED: 16 June 2011

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 16 June 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Messner

SOLICITOR FOR THE APPLICANT: K R Barnes & Co

COUNSEL FOR THE RESPONDENT: Mr Miller

SOLICITOR FOR THE RESPONDENT: Doolan Wagner & Callaghan

Orders

1. The husband shall pay one half of the instalments payable pursuant to the mortgage on the property known as M Street, Sydney Suburb 1, securing the Rocket Repay Home Loan and the Line of Credit redraw facility, as and when they fall due.

2. The husband shall pay to the wife’s Solicitors on behalf of the wife by way of interim property settlement the sum of $1,000.00 per week until the conclusion of the proceedings or until 50 such payments have been made, whichever first occurs.

3. Mr Y of Y Valuers be appointed as a single joint expert to prepare a valuation report in respect of the husband’s interests in any company, trust, partnership or business.

4. Mr N be appointed as a single joint expert to prepare a valuation of the properties at Sydney Suburb 1 and Sydney Suburb 2.

5. The husband is to meet the costs of the reports referred to in Orders 3 and 4 in the first instance but the wife is to pay to the husband one half of such costs upon final orders being made in the proceedings.

6. The husband and wife’s Solicitors shall prepare a joint letter of instructions to each expert within 7 days.

7. The husband shall provide all documents and information required by the expert in Order 3 within 7 days of a request being made by the expert.

8. The wife shall pay one half of the mortgage payments referred to in Order 1 as and when they fall due.

9. Parties have leave to obtain a date for a Conciliation Conference suitable to the parties.

10. Reserve costs of both parties.

11. The wife’s Application in a Case filed on 16 February 2011 be otherwise dismissed, noting that the wife did not pursue her application by way of interim spousal maintenance on the basis that the husband is now paying an amount of $570 per fortnight by way of child support.

12. Liberty granted to either party on 7 days notice to make an application in respect of any dispute that arises over the preparation of a joint letter of instruction to Mr Y.

It is noted that publication of this judgment under the pseudonym Horton & Horton is approved pursuant to s 121 (9) (g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 7686 of 2009

Ms Horton

Applicant

And

Mr Horton

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. In this matter there are a number of interim applications that have been made.  The wife sets out her applications in an Application in the Case that was filed on 16 February 2011.  In support of the applications that she has made, she relies upon affidavits filed on 16 February and on 4 May; an affidavit by her partner Mr T filed on 16 February and her financial statement filed on 16 February.

2. The husband in response has sought orders as set out in his Response to an Application in a Case filed on 3 May 2011.  He, in support of that application, filed two affidavits by himself, both on 3 May, and a financial statement on 3 May.  He also filed an affidavit by his accountant, Mr R, on 3 May.

3. The first thing that I have made a determination about is how the mortgage payments on the matrimonial home will be paid.  I am told that they are somewhere in the vicinity of $843 per week at the current time.  The parties have been separated for a significant period of time.  Until recent times, the husband has continued to pay the mortgage payments on the matrimonial home, notwithstanding the fact that the wife has been living in the home with her new partner, Mr T.

4. The husband has agreed for the purposes of today’s application that I can accept in the financial year ending 2010 his pre-tax income and that of the two companies which he wholly owns was in the amount of $620,000.  I am mindful that not all of the profits of those two companies were paid to the husband by way of dividend.  If they had been, however, then on the basis of an inquiry that I have made during the course of this hearing on the ATO website, a very rough estimate of the tax that would have been paid by the husband at top marginal rate would be about $256,000 in that year.  That would leave him with $364,000 in his hand as income for that year.  The position is in fact better than that because funds were retained in the company and paid to the husband by way of loan, which of course has to be repaid by him with interest over a seven-year period.  But taking those very raw assumptions, monies received by the husband for 2010 can be taken to be at least $364,000 or $7000 per week.  I am mindful that there is a vague assertion in a supporting affidavit that things may not be travelling as well in this financial year, but the husband, in his affidavit, has not asserted that there has been a significant downturn in his business.

5. On the other hand, in the wife’s household there are two persons who have an income, the wife and Mr T.  The wife’s income is currently about $32,600 per annum.  It is asserted by counsel for the husband that she should be assumed to have an earning capacity as a full-time employee, and if I accepted that submission, based on her current payslip her income would be about $46,500 per year.  In addition, Mr T, who is a member of the household, has an income of about $110,000 a year.  He has commitments of about $20,000 towards the payment of child support for children of a prior relationship.  Counsel for the husband submits that I should take into account the fact that the wife and Mr T have occupancy of the former matrimonial home.  I have no actual evidence as to what a fair market rent of the current home would be.  Mr T is said to make a contribution to the wife of $200 per week towards occupancy.

6. I find that there should be some sharing of the costs of the accommodation between the people who are actually occupying the property on the one hand and the husband who is one half of the equitable owner of the property; has an ongoing responsibility to make mortgage payments and who has a significantly greater earning capacity on the other.  I intend to make an order that the husband pay one half of the current mortgage on the matrimonial home.  That will leave the wife and Mr T to pay a contribution to the mortgage of somewhere in the order of $420 per week.

7. In relation to the issue of the valuation of the two properties, there has been a consent agreement that Mr N do that valuation.

8. In relation to the dispute about who should value the two companies, I have in evidence from the wife the full CV from Mr Y, who seems appropriately qualified to carry out the valuation.  I have a concession by counsel for the wife on the other hand that the valuer proposed by the husband, Mr B of B Valuers at Sydney Suburb 3, is appropriately qualified to carry out the valuation.  The objection raised against Mr B being the chosen single expert is that there has been communication between the husband’s lawyer and Mr B which, inter alia, provided Mr B with a copy of Mr R’s affidavit.  Mr R has taken a particular position in relation to the current circumstances of the K companies and has expressed what can only really be seen as a partisan view, in relation to the methodology that should be adopted in relation to valuing the companies.  Mr R uses as a basis of valuation a transaction that took place between the husband and a former partner, whereby part of the interest in the companies was sold by that departing partner to the husband.

9. Counsel for the wife says that the joint letter of instruction to Mr Y would be careful in terms of not predisposing Mr Y to any particular view about what methodology should be used in the valuation.  They suggest it might be perceived that Mr B would be influenced by knowing Mr R’s approach.  Although it’s not great, I can see that there might be some basis for the wife being apprehensive about Mr B being in some way influenced by the communication that he has already received, and accordingly, even though Mr Y is slightly more expensive and might take a week longer, I would select Mr Y as the single expert to carry out the valuation of the K companies.

10. The wife has also made an application for a lump sum amount of $50,000. It’s quite clear given what I have already said about the husband’s gross income being in the order of $620,000 per year, that he has the ability on that basis to fund his own legal fees. The fact that he’s not paying them at the moment is a matter between him and Mr Barnes. I am satisfied that he has the capacity to pay that $50,000. I treat the application as an interim property application by the wife. An application that the wife is making for interim property is for the purpose of putting her in a position to properly prepare her case and pursue her application in these proceedings. Quite clearly, she will receive a final order, pursuant to s 79 Family Law Act well in excess of $50,000.  The husband controls the two companies and has the capacity that I have already referred to.  I will not make him pay the $50,000 in a lump sum.  He can pay it at a rate of $1000 per week out of the $7000 per week that he has on the 2010 figures.  It may be that the matter will settle before the 50 payments are made and in those circumstances he won’t end up paying $50,000, but he can pay $1000 per week by way of interim property settlement to the wife for a period of 50 weeks or until the matter is otherwise settled, whichever first occurs.

I certify that the preceding ten (10) paragraphs are a true copy of the ex tempore reasons for judgment of the Honourable Justice Watts delivered on 16 June 2011.

Associate:   

Date:  1.7.2011