HUA & LIU
[2015] FamCA 853
•6 October 2015
FAMILY COURT OF AUSTRALIA
| HUA & LIU | [2015] FamCA 853 |
| FAMILY LAW – PROPERTY – Partial property settlement – litigation funding – where the husband seeks partial property settlement in circumstances where there is controversy between the parties as to the value and extent of their interests – where there are no valuations of the property – where the wife has control of the parties’ interests – orders made dismissing the husband’s application for partial property distribution – interim orders made for the valuations of the property FAMILY LAW – CHILDREN – Best interests – parental responsibility – where the wife has been the child’s primary carer since birth – where the husband has spent no time with the child since separation – presumption of equal parental responsibility rebutted – interim orders made that the wife have sole parental responsibility |
| Family Law Act 1975 (Cth) |
| Gabel & Yardley [2008] FamCAFC 162; (2008) FLC 93-386 Strahan & Strahan (Interim property orders) [2009] FamCAFC 166; (2011) FLC 93-466 Zschokke & Zschokke (1996) FLC 92-693 |
| APPLICANT: | Mr Hua |
| RESPONDENT: | Ms Liu |
| FILE NUMBER: | MLC | 6285 | of | 2013 |
| DATE DELIVERED: | 6 October 2015 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Johns J |
| HEARING DATE: | 19 June 2015 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Dickson QC with Mr Werner |
| SOLICITOR FOR THE APPLICANT: | Baker Jones Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr O’Shannessy |
| SOLICITOR FOR THE RESPONDENT: | Peter Szabo Family Law |
Orders
IT IS NOTED that publication of this judgment by this Court under the pseudonym Hua & Liu 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 MELBOURNE |
FILE NUMBER: MLC 6285 of 2013
| Mr Hua |
Applicant
And
| Ms Liu |
Respondent
REASONS FOR JUDGMENT
Introduction
The matter was listed for hearing before me in a Judicial Duty List.
The proceedings have been on foot since 2013. So polarised were the parties’ positions at the time of the hearing that they were not even able to agree as to the mechanism for the valuation of their interests.
The husband seeks interim orders with respect to:-
·the valuation of real properties;
·the sale of shares;
·the sale of other specified real properties held by the parties;
·litigation funding;
·partial property settlement; and
·an injunction restraining the wife from dealing with assets.
The wife opposes those applications. In her response the wife seeks orders for:-
·property injunctions against the husband;
·disclosure by the husband;
·sale of the parties’ interests in gold nuggets and wrist watches;
·child maintenance in respect of the parties’ son who is aged three years; and
·parental responsibility for the day-to-day and long-term welfare of the parties’ son.
Material Relied Upon
The husband relies upon the following material:-
·Application in a Case filed 13 April 2015;
·Affidavit of the husband filed 13 April 2015;
·Affidavit of Dean Jones (the husband’s lawyer) filed 13 April 2015;
·Affidavit of the husband filed 19 June 2015; and
·Financial Statement of the husband filed 5 May 2015.
The wife relied upon the following material:-
·Response to an Application in a Case filed 26 May 2015;
·Affidavit of the wife filed 26 May 2015;
·Affidavit of Mr B filed 26 May 2015; and
·Financial Statement of the wife filed 26 May 2015.
The Parties
The husband is the applicant in respect of these interim applications. He is aged 47 years and lives in Country C although it is his position that upon finalisation of the parties’ competing property applications, he will return to live in Melbourne. He states his occupation to be company director.
The wife is aged 48 years and lives in Suburb D. She deposes that her occupation is company director/home duties. She lives with the parties’ only child in a property held by an entity controlled by her.
The parties married in 1992 and separated in December 2012.
There is one child of the marriage, E, aged three years. It is common ground between the parties that the child was born with significant health issues which have necessitated periods of hospitalisation and surgical intervention.
E has been in the sole care of the wife since the parties’ separation. The husband has spent no time with the child since the parties’ separation in 2012 and has paid no child support for the child since he commenced living in Country C following the parties’ separation.
The husband confirmed through senior counsel appearing on his behalf that he consents to an interim order that the wife have sole parental responsibility for the child’s care, welfare and development. In circumstances where the husband lives in Country C and the wife has been solely responsible for the child’s care since he was an infant, attending to all of his physical, emotional and psychological needs, I am satisfied that the presumption that the parties have equal shared parental responsibility for the child’s care is rebutted. I am satisfied that it is in the child’s best interests that an order be made that the mother have sole responsibility for making decisions regarding the child’s care; an order in those terms will reflect the reality of the child’s circumstances.
The Proceedings
Proceedings with respect to financial matters were commenced by the husband in this Court in July 2013. The orders sought by him in that application were that there be a “just and equitable division of property between the parties”.
The parties attended a Case Assessment Conference before Registrar Mestrovic on 12 February 2014. That day orders were made by consent which provided that:-
·the parties effect the sale of such properties within the F Pty Ltd as agreed;
·the requirement that the parties attend a Conciliation Conference be dispensed with on the basis of their agreement to attend a private mediation;
·in the event there was no agreement as to the value of any asset, the parties jointly appoint an expert valuer to provide a written valuation, the costs of such valuation to be shared equally between them;
·the husband have sole use and occupation of the property at G Street, Suburb H; and
·the wife have sole use and occupation of the property at I Street, Suburb D.
Notwithstanding the agreement between the parties as to the future conduct of the matter, including sale of properties, valuation of their interests and attendance at a private mediation, it seems that little happened in terms of preparation of the matter in the aftermath of those orders.
A year later, in February 2015, the matter was allocated to my docket. On 17 February 2015 I made orders returning the matter to the list of cases awaiting allocation to a trial docket. That order was made based on my assessment that the matter was not ready to be listed for final hearing due to the multitude of outstanding interim issues with respect to valuation, sale of property and the question of whether an application was to be made by the wife pursuant to s 106B of the Family Law Act 1975 (Cth) (“the Act”).
The husband filed his current Application in a Case approximately two months after those orders were made. The application was listed before me on 6 May 2015. That day the wife sought an adjournment of the hearing of the interim application. The application for an adjournment was granted and the matter was listed in the Judicial Duty List for hearing on 19 June 2015. Procedural orders were made with respect to the filing of material in response by the wife and any reply by the husband. It is those applications that are now listed before me.
Orders Sought
The husband seeks orders in the following terms:-
·That the parties do all things and sign all documents necessary to appoint J Group as the experts to prepare sworn valuations of the following real properties:-
(a)K Street, Suburb L;
(b)I Street, Suburb D;
(c)Each of the real properties listed in Schedule C to the husband’s Application in a Case filed 13 April 2015.
·That the Commonwealth Bank shares held in the name of the wife be sold immediately and the proceeds of sale be applied as follows:-
(a)First, in payment of all costs and expenses of the sale;
(b)Second, to discharge any secured debt;
(c)Third, in payment of the fees of the single expert valuer;
(d)The balance to be held by the husband’s solicitors on trust for both parties pending further order or agreement in writing between the parties.
·That each of the real properties listed in Schedule A to the husband’s Application in a Case be sold as soon as practicable subject to the following:
(a)The reserve price, advertising, terms of sale and mode of sale shall be at the discretion of the appointed selling agent, subject to the parties having liberty to apply;
(b)The question of whether to sell the property tenanted or with vacant possession shall be at the discretion of the appointed selling agent, subject to the parties having liberty to apply;
(c)The conveyancing shall be carried out by the husband’s solicitors.
·Procedural orders with respect to the sale of the identified real properties.
·That the proceeds of each sale be applied as follows:-
(a)First, in payment of all costs and expenses of the sale;
(b)Second, to discharge any secured debt;
(c)Third, an amount of $140,000 to the husband’s solicitors by way of a litigation funding order;
(d)Fourth, an amount of $200,000 to the husband by way of partial property settlement (to be paid directly to the husband’s solicitors);
(e)Fifth, an amount of $200,000 to the wife by way of partial property settlement (to be paid directly to the wife’s solicitors);
(f)The balance to be held by the husband’s solicitors on trust for both parties until further order or agreement in writing between the parties.
·That each party has liberty to apply for further orders in respect of the sale of any property.
·In the event that any party fails to sign any document reasonably required to complete the sales, pursuant to s 106A of the Act the document may be signed by a Registrar on behalf of any party.
·That the wife be restrained from dealing with the properties to be valued, such restraint to include:-
(a)Encumbering or further encumbering the properties;
(b)Entering into any lease with respect to any of the properties;
(c)Renewing any existing lease with respect to any of the properties;
(d)Otherwise doing any act which confers upon any third party any rights in respect of any of the properties.
·That until further order the wife be restrained from dealing with the properties to be retained, including restraints from encumbering, leasing, renewing any lease, doing any act to confer rights in respect of the properties to any third parties or dealing in any way with the assets held in F Pty Ltd in the M Trust.
The wife sought orders in the following terms:-
·That the husband’s Application in a Case be dismissed.
·That until further order she have sole care and responsibility for the day-to-day and long-term decisions regarding the child.
·That the husband be restrained from:-
(a)selling, transferring, encumbering or otherwise dealing with any real estate in his name or held on behalf of or in the name of specified companies and trusts;
(b)selling, transferring, encumbering or otherwise dealing with shares in private companies or public companies in his name or held on his behalf in the name of any company or trust;
(c)selling, transferring, encumbering or otherwise dealing with any unit trust in his name or held on his behalf or in the name of a company or trust;
(d)doing any act or thing to vary the existing share structure and/or shareholdings in any company;
(e)doing any act or thing to vary the terms of any deed of trust or doing any act or thing to vary the position held by the husband and the wife in any trust or unit trust;
(f)exercising any power of appointment pursuant to any deed of trust;
(g)resigning or renouncing any position or office held by him in any company or trust; and
(h)removing any funds from the parties’ private superannuation fund,
save with the consent in writing of the wife’s solicitors first being obtained.
·That the parties sell the property at G Street, Suburb H and that the husband withdraw the caveat registered by him against the title to that property prior to settlement of the sale.
·That the proceeds of sale of the property at G Street, Suburb H be applied as follows:
(a)to meet all costs and expenses of the sale; and
(b)the balance to be paid to the National Australia Bank and applied towards all outstanding default amounts and thereafter to reduce the loan obligations of F Pty Ltd to NAB.
·That the husband remove caveats lodged on his behalf in respect of properties held by F Pty Ltd and N Pty Ltd.
·That within 14 days the husband re-pay $13,500 to the parties’ private superannuation fund.
·That the husband within 21 days make available the gold nuggets, wrist watches and gold jewellery in his possession for valuation by a jointly appointed valuer.
·That the wife be at liberty to re-finance the financial obligations of the F Pty Ltd and N Pty Ltd.
·That the husband make, file and serve a further affidavit of documents.
·That the husband within 21 days file and serve an affidavit particularising his dealings with shares in his name or in the names of companies of which he is a director or shareholder since 1 January 2009.
·That the husband within 21 days of receipt of written questions by the wife’s accountant as to his financial affairs or those of any company or trust with which he has been associated since 1 July 2009 respond in writing to such questions.
During the course of the hearing, the parties’ positions altered. It was agreed between them interim orders should be made with respect to:-
·the wife’s application that she have sole parental responsibility for the day-to-day and long-term care of the child;
·injunctions restraining each of the parties from dealing with their interests until further order;
·the sale of the gold nuggets and wine collection currently in the wife’s possession, the proceeds of sale to be retained and applied towards the valuation of the remaining assets.
Further and significantly, the parties agreed that the following properties should be sold:-
·1 O Street, Suburb P;
·2 O Street, Suburb P;
·1 Q Street, R Town;
·2 Q Street, R Town.
In light of the agreement between the parties with respect to the above, I will make orders by consent in those terms.
It was conceded by counsel for the wife that she was not in a position to press her application for interim child maintenance. Accordingly, I will dismiss that part of the wife’s application.
The matter was conducted on the papers. Each party relied upon the material referred to above and their counsel’s oral submissions. Given the nature of the hearing, contentious facts cannot be determined without the evidence being properly tested. Accordingly, in determining the remaining issues I have relied upon those facts which are agreed or not in issue.
The Law
Section 80(1)(h) of the Act empowers the Court to make orders pursuant to s 79 of the Act for partial property settlement. The Full Court stated in the decision of Gabel & Yardley [2008] FamCAFC 162; (2008) FLC 93-386 at paragraph 57 that although there is only one exercise of power pursuant to s 79, that power may “be exercised by a succession of orders until the power… is exhausted”.
In Strahan & Strahan (Interim property orders) [2009] FamCAFC 166; (2011) FLC 93-466 (“Strahan & Strahan”) the Full Court acknowledged that there may be circumstances which justify the exercise of the power pursuant to ss 79 and 80(1)(h) prior to the final hearing. At paragraph 118 of their judgment, Boland and O’Ryan JJ noted that the approach to be taken to the hearing of an application for an interim property settlement order is as follows:-
… 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.
At paragraph 132 the Full Court, whilst acknowledging that it is preferable that there be one final hearing in s 79 proceedings, considered the circumstances in which the Court might exercise its power to make orders for partial property settlement and concluded:-
… in our view, when considering whether to exercise the power under s 79 and s 80(1)(h) of the Act to make an interim property order the “over-arching 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.
There are three heads of power under which an order for litigation funding could be made: ss 80(1)(h), 79 and 117 of the Act.
The Full Court observed in Zschokke & Zschokke (1996) FLC 92-693 at page 83,215 that the Court may use the power to “require the party who controls most of the assets of the parties to provide the other party with funds to conduct his or her case, with the provision of such funds then being a matter to be taken into account in the final settlement of property between the parties”.
Senior counsel for the applicant did not specifically identify which head of power was relied upon with respect to the husband’s application for litigation funding, although his submissions were principally directed to the powers pursuant to ss 79 and 80(1)(h) of the Act.
It was evident from the submissions of counsel appearing for each of the parties that there is no dispute in this matter as to the Court’s power to make such order; rather the issue is whether that power should be exercised in this case.
The Husband’s Application for Partial Property Settlement
The husband seeks a payment in the sum of $200,000 by way of partial property settlement. He also seeks a payment of $140,000 by way of litigation funding order. He submits that those payments be funded from the proceeds of sale of the 11 properties listed in Schedule A to his Application in a Case, being:-
·1 T Street, Suburb D;
·2 T Street, Suburb D;
·1 O Street, Suburb P;
·2 O Street, Suburb P;
·G Street, Suburb H;
·2 Q Street, R Town;
·1 Q Street, R Town;
·Suburb D Road, Suburb D;
·U Street, Melbourne;
·V Street, Suburb W; and
·X Street, Suburb Y.
The husband asserts the value of those properties to be approximately $6,130,000 and that the debt secured against those properties to be approximately $2,349,000. However, it was common ground between the parties that those properties provide collateral security to the National Australia Bank in relation to mortgages secured against other properties held by the parties or entities controlled by them. At this time, in the event that the properties are sold, it is unknown as to what proportion of the proceeds of sale the bank will seek to retain to be applied to reduce the parties’ liabilities in respect of other borrowings. Hence, the parties are uncertain as to the likely net proceeds of sale in the event that the properties listed in Schedule A are sold.
The wife concedes that she would agree to a sale of the property at G Street, Suburb H, being one of the properties originally sought to be sold by the husband. However, the husband resiled from his proposal in relation to the sale of that property on the basis that such proposal was conditional upon him retaining the property held by the parties at K Street, Suburb L. The wife does not concede that the husband should retain that property, and in those circumstances, the husband did not press his application to sell the G Street property, which is currently occupied by members of his family.
The value attributed by the husband to the four properties which the parties agree can be sold is approximately $840,000 (net). That figure does not take into account costs of sale, nor does it make allowance for any additional funds retained by National Australia Bank to reduce other mortgage liabilities with respect to the properties held by the parties or their entities.
In addition to the properties noted in Schedule A (listed above), the parties or their entities have interests in a further seven properties, set out in Schedule B of the husband’s Application in a Case. Substantial funds have been borrowed by the parties’ entities from National Australia Bank to finance the acquisition of those properties.
It was submitted on behalf of the husband that the sale of properties listed in Schedule A to his Application in a Case would have a two-fold benefit for the parties. First, the sale of the properties would create a fund from which a partial property settlement and litigation funding order could be met. Second, it was submitted that the sale of those properties would obviate the need for their valuation.
The husband identifies 18 properties held either by the parties or entities controlled by them. At paragraph 42 of his affidavit filed 13 April 2015 the husband deposes that the cost of valuation of those properties is $660 per property. Hence, in the event that none of the properties were sold the parties would incur valuation fees of approximately $12,000. In my view, the avoidance of that expense is not a justification for a wholesale realisation of the parties’ property interests, particularly in circumstances where it is submitted on behalf of the wife that she seeks to retain the property portfolio as part of her property settlement.
The husband asserts that the net value of the parties’ interests is approximately $4.1 million. Those interests are held by the wife or entities controlled by her. The wife takes issue as to the values attributed by the husband to their interests. There is no valuation evidence before the Court and accordingly, I am not in a position to make any findings with respect to value of the parties’ interests. The wife further alleges that the husband has not disclosed his business interests in Country C, which she asserts have substantial value. The husband denies that allegation.
In support of his application for partial property settlement, the husband points to the following matters:-
·the parties’ marriage spanned a period of more than 20 years;
·at the time of the parties’ marriage they had only one asset of significance, being the property at G Street, Suburb H. Otherwise, the parties’ assets were accumulated during the course of their marriage;
·the parties’ interests are based in Australia and controlled by the wife;
·during the marriage the husband was employed as an interpreter for periods of time. He was also involved in business activities including property development and marketing.
·in his Amended Initiating Application filed 2 February 2015 the husband seeks an equal division of the parties’ assets. The husband seeks to retain the property at K Street, Suburb L free from encumbrances as part of his entitlements to a property settlement;
·the amount sought by way of partial property settlement by the husband represents approximately five per cent of the parties’ assets, assuming that the parties’ interests are valued at approximately $4.1 million.
The wife opposes the husband’s application for partial property settlement. In support of that position she:-
·denies the husband’s assertions as to the value of the parties’ interests;
·alleges that the husband has failed to disclose his off-shore interests. The wife alleges that the husband has interests in Country C which he has not disclosed;
·relies upon the husband’s admission that he has disposed of interests held by him in property to his business associates without her knowledge or consent. She alleges that the interests disposed of by the husband since separation are valued at not less than $750,000;
·challenges the husband’s assertions as to his contributions to the interests held by the wife or entities controlled by her.
The wife seeks to retain the properties held in Australia (as identified in the husband’s Application in a Case) as part of her final property settlement. Accordingly, she opposes the sale of those properties on the basis that an order in those terms will defeat that claim.
The wife alleges the husband is disingenuous and in support of that claim relies upon the husband’s disposal of his interests in M Pty Ltd (“M”) and Z Pty Ltd (“Z”) to third parties. The wife alleges that the value of those interests was approximately $750,000.
The husband did not disclose his transfer of those interests until swearing his affidavit on 18 June 2015, being the day prior to the hearing of his interim application before me. The husband set out the history of those transfers at paragraph 18 of that affidavit. He there deposed that:-
·the shares held by entities controlled by him in M and Z were transferred to his business associates on 14 June 2013;
·he ceased to be a director of M and Z on 14 June 2013;
·the units held by his entities in the M Trust were transferred to his business associates on 14 June 2013;
·the units held by his entities in the Z Investments Australia Unit Trust were transferred to his business associates on 14 June 2013;
·he did not disclose those transfers prior to swearing his affidavit as he “did not until recently appreciate the distinction between transferring shares in the trustee companies and transferring the units in the trusts themselves”;
·he transferred those interests in repayment of debts owed to his business associates.
The wife was highly critical of the husband’s failure to disclose his disposal of those interests. She pointed to the affidavit of the husband sworn 18 June 2013 (and filed 30 July 2013) which was an affidavit sworn by him four days after the transfer of his interests in those entities. At paragraphs 5 and 6 of that affidavit the husband deposes that the assets of the marriage included his interests in M, the M Trust, Z and the Z Investments Australia Unit Trust. The husband also confirmed that those entities held property at Suburb P (in the case of M Trust) and at Suburb L (in the case of Z Investments Australia Unit Trust).
Given the resignation by him of his directorships in those entities and his transfer of shares and units held in those entities some four days prior to swearing that affidavit, the wife’s criticisms of the husband’s non-disclosure appear to be warranted.
Those issues are compounded when one considers the husband’s evidence in his first affidavit sworn in support of his Application in a Case filed 13 April 2015. At paragraphs 27 to 33 inclusive of that affidavit, the husband again deposes as to his interests in M, Z and the Unit Trusts, notwithstanding the fact that he had disposed of those interests almost two years earlier.
In his affidavit sworn 18 June 2015 the husband deposes that he transferred those interests to his former business partners in repayment of loans advanced by them. The husband alleges that the monies advanced to him by his business partners were paid to the wife or entities controlled by her between January and December 2012. The wife challenges those assertions.
The financial statements for Z Pty Ltd as trustee for the AA Trust for the years ending 30 June 2011 to 30 June 2013 (Exhibit R5) inclusive do not disclose any movement in the beneficiary loan accounts for the relevant period. Similarly, the financial statements for M Pty Ltd as trustee for the M Trust for the years ending 30 June 2011 to 30 June 2013 inclusive (Exhibit R4) are silent with respect to loans to the husband’s entities.
I am unable to make findings with respect to those allegations. Ultimately, it will be a matter for the trial judge after hearing the evidence of all parties to make findings in relation to the allegations raised by each of the parties as to the extent of the husband’s off-shore interests and as to the manner in which he has dealt with his interests in Australia.
In her affidavit filed 26 May 2015 the wife challenges the husband’s assertions as to his impecuniosity. She points to the husband’s successful business ventures as a member of the M group, to that group’s substantial portfolio of property projects, to the group’s expansion into Sydney, Brisbane, New Zealand, Country C and Country BB, and to the husband’s representations that his income between 2002 and 2010 was “never less than $3 million per year”.[1]
[1] Paragraph 33 of the wife’s affidavit filed 26 May 2015.
At paragraph 46 of her affidavit filed 26 May 2015 the wife deposes as to the husband’s involvement in projects in Country C. It is the wife’s position that the husband does have access to income and assets. For example, later in her affidavit at paragraph 149 she alleges that the husband will likely receive income from his involvement in the marketing and sales commission derived from the “CC project”.
It was conceded by the husband at paragraph 11 of his affidavit sworn 18 June 2015 that he is involved in a joint-venture agreement (through his interest in DD Pty Ltd) in the re-zoning and development of a property at DD Street, Suburb EE. The husband is guarantor for a loan from National Australia Bank in the sum of $8,314,000 in respect of that development. The husband deposes that the property at DD Street is valued at approximately $15,850,000.
Whilst conceding that he is a guarantor for that loan and is a party to the joint-venture agreement through DD Pty Ltd, the husband’s evidence was that he was unclear as to whether he or entities controlled by him would receive income as a result of involvement in that project . At page 7 of the affidavit sworn 18 June 2015 the husband deposes as follows:-
(p)If and when the property is sold DD Pty Ltd may receive a payment (for the management services provided to LL Pty Ltd) depending on the equity in the property at settlement in return for providing a removal of caveat at settlement;
(q)I am unsure of the value of services provided by DD Pty Ltd to LL Pty Ltd as such services were provided by Mr GG and not by me.
(r)The financials for the company have not been prepared as the company has not yet been paid and Mr GG has not yet provided an invoice for his services to the company which Mr GG estimates to be in the sum of $250,000.
(s)I do not expect HH Holdings to receive any money from DD Pty Ltd as Mr GG provided all of the management work on behalf of DD Pty Ltd.
The husband’s evidence in relation to his involvement in that development is extraordinary. As guarantor to loans valued at in excess of $8 million, his evidence that he has no knowledge of his entitlements to income arising from that development is implausible. When pressed during the course of his submissions, senior counsel for the husband was not able to advance any further information as to the extent of the husband’s entitlements from that venture.
The husband’s evidence with respect to his entitlements from that venture coupled with his ‘late-in-the-day’ disclosure of his transfer of assets to his business partners invites a cautious approach with respect to his current interim application.
The wife submits that it is not in the interests of justice that an order for partial property settlement be made at this time. The wife takes issue with the husband’s assertion as to the value of the parties’ interests. Further, it is submitted by her that the husband will not likely receive by way of property settlement the sum now sought in his interim application. It is her case that it may not be possible to make the necessary adjustment back to her at a final hearing. That submission is based upon what the wife says are her contributions and s 75(2) factors, including her on-going responsibility for the child for whom the husband has provided no financial support since separation.
It was conceded by senior counsel for the husband that in order to adjust in favour of the wife at final hearing, it may be necessary for the wife to seek relief pursuant to s 106B of the Act.
I cannot be satisfied on the evidence before me that the husband has an entitlement to partial property settlement in circumstances where there is such uncertainty and controversy between the parties as to the extent and value of their interests.
Having regard to the extent of the controversy between the parties I am not satisfied that were I to make an order as sought by the husband that such orders would be capable of adjustment in favour of the wife at the final hearing.
Further, the orders sought by the husband for the sale of properties would defeat the wife’s claim that she be permitted to retain them as part of her property settlement. I am not satisfied, having regard to the uncertainty as to the value of the parties’ interests and where I am not in a position to make any findings as to the extent of the wife’s entitlements, that it would be appropriate to make orders at this time, the effect of which would be to thwart the wife’s application to retain those properties.
Accordingly, I am not satisfied that it would be appropriate to exercise the power pursuant to s 79 to make an order for partial property settlement as sought by the husband.
In all of the circumstances, I propose to dismiss the husband’s applications for sale of the properties and partial property settlement.
Litigation Funding
The husband seeks an order for litigation funding in the sum of $140,000. The wife opposes that application.
For the reasons set out above, I am not satisfied that there is evidence that would justify the making of such order pursuant to the provisions of ss 80(1)(h) and 79 of the Act.
If the power is to be exercised pursuant to s 117 of the Act, the husband must identify circumstances which justify the making of an order, particularly having regard to s 117(1) which provides that each party is to bear their own costs.
The husband relies upon the affidavit of his lawyer, Mr Dean Jones, filed 13 April 2015 in support of his application. Mr Jones deposes in that affidavit that to date the husband has been billed a total of $89,612.20. Further, Mr Jones deposes that in order to progress the case to trial, he estimates the husband’s future costs to be in the order of $56,970. That estimate includes provision for a four-day final hearing. The costs up to and including mediation are anticipated to be in the order of approximately $20,000.
The orders made by Registrar Mestrovic on 12 February 2014 contain a notation that the parties intend to attend mediation. To date that mediation has not occurred due to the unwillingness of either party to commit funds to the preparation of valuations of their interests. Notwithstanding orders made by consent by Registrar Mestrovic in February 2014 which provide a mechanism for valuation of their interests, neither party has sought to obtain valuations to date. The husband’s position is that he has no resources to fund such valuations. Similarly the wife, until now, has maintained that she is not in a position to fund valuations.
This is the third occasion the matter has been listed before me this year. On each occasion I have made observations as to the importance of the parties attending to the valuation of their interests to enable the matter to progress to hearing. On each occasion the parties have been represented by their lawyer, counsel or senior counsel. I have no doubt that the amounts expended by the parties on their legal practitioners representing them at those Court events far exceeds the costs of valuation of the parties’ interests.
The parties now agree that four of their properties are to be sold. Further, they agree that their wine collection and collection of gold nuggets be sold. The wife also concedes that she will pay $20,000 to her lawyers’ trust account to be applied towards the costs of valuations. In default of that payment the wife proposes that her portfolio of Commonwealth Bank shares be sold.
In addition to the portfolio of shares in the Commonwealth Bank, the wife has an entitlement to an inheritance in the sum of $50,000 from the estate of her late brother. Accordingly, the wife would appear to have an ability to meet the costs of litigation.
On the face of the husband’s material he has no such source of funds with which to meet his legal expenses. However, the evidence before me as to the husband’s financial circumstances is most unsatisfactory. In his Financial Statement filed 5 May 2015 the husband deposes that he has no income, yet has personal expenses of $803 per week. His weekly expenses include telephone expenses of $191 per week, yet he deposes that he is currently unemployed. The amounts expended by the husband on telephone and other expenses appear inconsistent with the expenses of someone who is unemployed. The husband’s evidence as to his income and expenses appears implausible. However, I am unable to make any findings with respect to these matters in circumstances where the evidence has not been tested.
Based on the material filed to date, I am satisfied as to the complexity of this matter. There is no question of the desirability of the parties continuing to have legal representation in order to prepare and conduct their case. However, whilst such outcome is desirable, that does not establish circumstances that justify the making of a costs order pursuant to s 117 of the Act.
I am satisfied that it is appropriate that the proceeds of sale from the chattels and the properties be applied to the preparation of valuations. The preparation of valuations will enable the parties’ applications for final relief to proceed to final hearing. In the event that parties elect to attend mediation as foreshadowed at the time of the Case Assessment Conference, there will be funds available to them from the proceeds of sale to fund such mediation.
Otherwise, I do not propose to make any further orders regarding the application of sale proceeds at this time; given the uncertainty as to the quantum of the proceeds of sale of the properties and chattels, I am not persuaded that it is appropriate to make any further order in respect of litigation funding at this time.
Historically each of the parties has secured funds to meet their expenses. That this is so is confirmed by the husband’s evidence that his business associates were prepared to advance him in excess of $1 million over an 11-month period in 2012, those funds being applied by the husband towards his family’s expenses. As noted above, it is evident from the wife’s material that she has a capacity to meet her legal costs.
Until such time as there is evidence as to value of the parties’ interests, I am satisfied that there should be no further dissipation of their interests.
Injunctions
It was agreed between the parties during the course of submissions by counsel representing them that there should be orders for mutual injunctions restraining them from dealing with assets. Accordingly I will make orders in those terms.
Other Matters
In her Response to an Application in a Case filed 26 May 2015, the wife also sought orders that the husband cause a withdrawal of caveat to be lodged in respect of the titles to the G Street property and other real properties held by entities controlled by the wife. The wife also sought that the husband re-pay to the parties’ private superannuation fund the sum of $13,500 being an amount withdrawn by him and permission to re-finance loans in the names of entities controlled by her. Finally, the wife sought orders that the husband file a further affidavit of documents and that he file an affidavit particularising the specific transactions. Ultimately, those matters were not pressed by the wife at the hearing of the matter. Accordingly, I will dismiss those parts of her application.
The Orders
Subject to submissions from Counsel as to the form of the orders, I propose to make orders in the following terms:
BY CONSENT IT IS ORDERED
That until further order the wife have sole parental responsibility for the care, welfare and development of the child E born … 2012.
That until further order the husband and the wife each by themselves, their servants and agents be and are hereby restrained from:-
(a)Selling, transferring, encumbering, leasing, renewing any existing lease or otherwise dealing with any real estate in his or her name or held in the name of any company or trust in which he or she has an interest, including (but not limited to):-
(i)II Family Trust;
(ii)M Holdings Pty Ltd;
(iii)HH Holdings Pty Ltd;
(iv)F Pty Ltd;
(v)N Pty Ltd;
(vi)HH Family Trust;
(vii)AA Trust;
(viii)M Pty Ltd;
(ix)M Trust;
(x)M Financial Services Pty Ltd;
(xi)DD Pty Ltd; and
(xii)KK Group Pty Ltd
(“the Entities”).
(b)Selling, transferring, encumbering or otherwise dealing with any share in a private proprietary or public company in his or her name or held on his or her behalf in one of the Entities;
(c)Selling, transferring, encumbering or otherwise dealing with any unit in a unit trust in his or her name or held on his or her behalf in one of the Entities;
(d)Doing any act or thing (or abiding the doing of any act or thing) to vary the existing share structure and/or shareholdings in any company in which he or she is a director or shareholder;
(e)Doing any act or thing (or abiding the doing of any act or thing) to vary the terms of any deed of trust or doing any act or thing to vary the position held by the husband or the wife in any trust or unit trust, including but not limited to the II Family Trust, HH Family Trust, AA Trust and M Trust (Collectively “the Trusts”);
(f)Exercising any power of appointment pursuant to any deed of trust;
(g)Resigning or renouncing any position or office held by him or her in any company or trust;
(h)Removing any funds from HHPTL Superannuation Fund;
save as otherwise agreed in writing between the husband and the wife or until further order.
That forthwith the husband and the wife do all such acts and things and sign all such documents as may be required to effect sales of the following properties:-
(a) 1 O Street, Suburb P in the State of Victoria;
(b) 2 O Street, Suburb P in the State of Victoria;
(c) 2 Q Street, R Town in the State of Victoria;
(d) 1 Q Street, R Town in the State of Victoria;
(“the sales”).
That for the purposes of effecting the sales:-
(a)The selling agent be as agreed between the parties within 14 days and failing agreement be as nominated by the President of the Real Estate Institute of Victoria or his nominee;
(b)The reserve price and mode of sale be as agreed between the parties in writing and failing agreement shall be as nominated by the appointed selling agent;
(c)That there be liberty to apply with respect to the terms and conditions of the sales.
BY THE COURT IT IS ORDERED
That the proceeds of the sales be applied as follows:-
(a)First, in payment of all costs and expenses of and associated with the sales;
(b)Second, to discharge any secured mortgage liabilities;
(c)Third, the balance then remaining to be held upon trust for the husband and the wife in an interest-bearing account held by the wife’s solicitors (“the Trust Account”) until further order or agreement in writing between the husband and the wife.
BY CONSENT IT IS ORDERED
That forthwith the husband and the wife do all such acts and things and sign all such documents as may be required to affect a sale of their collection of:-
(a) Wine;
(b) Gold nuggets
(“sale of chattels”).
That the proceeds of the sale of chattels be applied as follows:-
(a)To pay any costs and commissions of and incidental to the sale of chattels;
(b)The balance then remaining to be held upon trust in the Trust Account until further order or agreement in writing between the parties.
That there be liberty to apply with respect to the sale of chattels.
BY THE COURT IT IS ORDERED
That within 21 days the wife do all such acts and things and sign all such documents as may be required to pay into the Trust Account the sum of $20,000 (“the payment”).
That in the event that the payment is not made by the due date the wife do all such acts and things and sign all such documents as may be required to sell her portfolio of Commonwealth Bank shares and the proceeds of the sale be applied as follows:-
(a)First, in payment of all costs and commissions of and incidental to the sale;
(b) Second, to discharge any debts secured over the shares;
(c)Third, the balance then remaining to be paid into the Trust Account and held until further order or agreement in writing between the husband and the wife.
That the husband and the wife do all such acts and things and sign all such documents as may be required to appoint single expert valuers to value the properties identified in Schedule A annexed hereto and for the purposes of appointment of valuers:-
(a)Within 7 days the husband provide to the wife a list of three proposed valuers together with particulars of their qualifications and cost estimates to value the properties;
(b)Within 14 days of receipt of the husband’s list of nominated single expert valuers, the wife confirm in writing the valuer from the husband’s list to be appointed by the parties as single expert valuer;
(c)Within 7 days of notice of the wife’s selection of single expert valuer, the husband cause joint letter(s) of appointment of valuer to be prepared and provided to the wife’s solicitor;
(d)That within 7 days of receipt of the draft letters of appointment, the wife do all such acts and things as may be required to cause letters of appointment to be provided to the single expert valuers.
That the costs of and incidental to the preparation of valuation reports pursuant to order 11 hereof be paid from the Trust Account.
That the Application in a Case filed 13 April 2015 and Response to an Application in a Case filed 26 May 2015 be otherwise dismissed.
SCHEDULE A
| Property | Title Particulars |
| 1 T Street, Suburb D | … |
| 2 T Street, Suburb D | … |
| G Street, Suburb H | … |
| Suburb D Road, Suburb D | … |
| U Street, Melbourne | … |
| V Street, Suburb W | … |
| X Street, Suburb Y | … |
| K Street, Suburb L | … |
| I Street, Suburb D | … |
| LL Street, NZ | … |
| MM Street, NN Town | … |
| OO Street, Brisbane | … |
| PP Street, Brisbane | … |
| QQ Street, Suburb L (50 per cent interest only) |
I certify that the preceding eighty (80) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Johns delivered on 6 October 2015
Associate:
Date: 6 October 2015
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Jurisdiction
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