JOLIFFE & JOLIFFE

[2020] FamCA 146

FAMILY COURT OF AUSTRALIA

JOLIFFE & JOLIFFE [2020] FamCA 146

FAMILY LAW – PROPERTY – partial property settlement – where the husband and wife will both receive a sum of money to be characterised as a partial property settlement – where the parties entitlements in a final property settlement are sufficient to cover the advances they are each to receive – where it is just and equitable in all of the circumstances to make orders for partial property settlement.

FAMILY LAW – SPOUSAL MAINTAINANCE – where the current orders for spousal maintenance are suspended – where instead the wife will receive a further lump sum that is to be characterised at trial.

Family Law Act 1975 (Cth) s79(4)

Strahan & Strahan (Interim Property Orders) (2011) FLC 93-446; [2009] FamCAFC 166

APPLICANT: Ms Joliffe

RESPONDENT: Mr Joliffe

FILE NUMBER: MLC 7613 of 2019

DATE DELIVERED: 6 March 2020

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: 12 February 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Barbayannis

SOLICITOR FOR THE APPLICANT: Hargreaves Family Lawyers

THE RESPONDENT: In Person

Orders

IT IS ORDERED BY CONSENT UNTIL FURTHER ORDER:

(1)Paragraph 12 of the Orders made on 1 August 2019 (as amended on 23 August 2018) be suspended.

(2)That the husband pay the wife’s costs of and incidental to the hearing on 14 January 2020 fixed in the sum of $5,824.

(3)That the parties do all such acts and things and sign all documents as may be required (electronic or otherwise) to direct BB Company to make the following payments from the net proceeds of the sale of the property at B Street Suburb D (“B Street”) held on trust by BB Company:

(a)Payment of $150,000 to the wife by way of a partial property settlement to  be paid to the trust account of the wife’s solicitor Hargreaves Family Lawyers; and

(b)Payment of $50,000 to the wife to be characterised by the trial judge into a bank account nominated by the wife.

IT IS FURTHER ORDERED:

(4)That the parties do all such acts and things and sign all documents as may be required (electronic or otherwise) to direct BB Company to pay the sum of $20,000 to the husband by way of a partial property settlement into a bank account nominated by the husband less the sum of $5,824 to be paid to the wife’s solicitors Hargreaves Family Lawyers, in satisfaction of the costs pursuant to paragraph 2 of these orders.

(5)Upon the payment of the amounts in paragraph 3 & 4 of these orders the husband and wife forthwith do all acts and things and sign all documents as may be necessary (electronic or otherwise) to establish a joint interest bearing account with DD Bank (“the DD Account”) AND within 7 days of the “Trust Account” having been established BB Company and CC Company shall be directed to pay the balance of deposit monies of B Street to the DD account.

UNTIL FURTHER ORDER:

(6)That the parties forthwith do all such acts and things and sign all documents as may be necessary (electronic or otherwise) to direct FF Company (whether directly or via EE Company) to direct debit the monthly P Street Mortgage repayments of approximately $5,187.33 per month from the “Trust Account” and the parties shall be at liberty to provide a copy of this Order to EE Company as evidence of the same.

(7)That if either party refuses or neglects to sign any documents required to give effect to these Orders, or any other Orders made in these proceedings within 14 days of being requested to do so, then pursuant to section 106A of the Family Law Act 1975 (Cth) a Registrar of this Honourable Court is authorised to sign on behalf of the defaulting party upon the request of the non-defaulting party in writing and an Affidavit from the solicitor for the non-defaulting party shall constitute sufficient evidence of the default.

(8)All question of costs in relation to the Application in a Case filed by the wife on 17 December 2019 and the husband’s Response to the Application in a Case filed 5 February 2020 be reserved for determination in chambers.

(9)By 4.00pm on 27 March 2020 the applicant wife and respondent husband file and serve any written submissions in support of any application for costs arising out of or incidental to the Application in a Case filed by the husband on 22 February 2019, the Amended Application in a Case filed by the wife on 1 March 2019 and the husband’s Application in a Case filed 16 April 2019.

(10)By 4.00pm on 15 April 2020 the applicant husband and respondent wife file and serve any written submissions in reply to any application for costs.

(11)That any submissions as to costs should be limited to 10 pages.

(12)That all extant interim applications be otherwise adjourned for mention to the Conciliation Conference at 11.00 am on 1 May 2020.

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 Joliffe & Joliffe has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 7613 of 2019

Ms Joliffe

Applicant

And

Mr Joliffe

Respondent

REASONS FOR JUDGMENT  

1. This matter was listed for hearing before me in the Judicial Duty List on 14 January 2020, the first return date of the wife’s Application in a Case filed 17 December 2019. On that date the husband not having filed any answering material and his solicitor not being present at court, I made orders for the husband to file and serve a response to the wife’s Application in a Case and an affidavit by 4.00pm on 5 February 2020 and adjourned the matter for hearing in the Judicial Duty List on 12 February 2020. I also made orders requiring the husband’s solicitor to personally appear on that date and fixed and reserved the wife’s costs of that hearing.  

2. On 5 February 2020 the husband filed a Response to the wife’s Application in a Case and on the day of the hearing he filed an affidavit and a Financial Statement. On 11 February 2020 the wife filed an Amended Application in a Case and a further affidavit updating her evidence and in reply to the husband’s affidavit. It is clear that although the husband did not file his affidavit and Financial Statement until 12 February 2020 the documents had already been served upon the wife.  

3. The wife in her Amended Application in Case sought a variety of orders however her counsel submitted that the pressing issues were a further partial property settlement of $150,000 to enable her to pay her outstanding costs and fund the ongoing proceedings and an order for lump sum spousal maintenance of $50,000 in circumstances where he submitted the husband had failed to comply with the orders made on 1 August 2019. On that date I made orders that the husband pay urgent spousal maintenance of $750 per week. The husband consented to orders that he pay mortgage payments for the property at B Street, Suburb D (“B Street”) together with all council and water rates and utilities including but not limited to gas, electricity, water, insurances, internet and landline telephone expenses, that he maintain the wife’s private health insurance cover at the current level and that he pay her mobile phone and motor vehicle expenses.

4. The wife also sought orders requiring the parties to establish a joint interest bearing account with DD Bank to hold the balance of the proceeds from the sale of B Street. She also sought an order requiring the parties to set up a direct debit from that account for payment of the monthly mortgage payments for P Street, Suburb D (“P Street”); the property in which she and the child of the marriage are currently living.

5. The husband changed his position several times during the hearing and it was sometimes difficult to understand how he put his case. However he ultimately did not oppose the wife’s application for a partial property settlement, albeit he said that he should also receive $30,000 by way of partial property settlement. Although the husband did submit that he could not afford to pay the wife spousal maintenance he also said that he would not resist the wife’s application for a further $50,000 if that payment were to be characterised at trial rather than spousal maintenance. The wife agreed to accept the payment on that basis. It was further agreed that on the basis of that payment the orders for spousal maintenance would be suspended.

6. In his Response to the Wife’s Application in a Case the husband sought a partial property settlement and that the proceeds of sale of B Street be further applied to meet both personal expenditure,  outstanding and ongoing, and various expenses relating to the husband’s business, C Company. They included orders for the repayment of the hire purchase agreements for his motor vehicle of $15,597 and the wife’s motor vehicle of $18,195, payment in advance of the child’s private school fees to the completion of his secondary education, a payment of $10,000 to the ATO to reduce C Company’s outstanding tax debt, credit card debt in the name of the wife and C Company of approximately $90,000, and the balance due and owing to G Pty Ltd by an entity controlled by the husband being the balance remaining after the sale of E Street, Suburb GG (“E Street”).

7. The husband further proposed that the balance of the proceeds of sale of B Street be used to pay interest in advance to FF Company with respect to the mortgage over P Street. Perhaps not surprisingly the husband did not seek any orders with respect to any balance likely because if the payments he said should be made were to be ordered there would be little left to be invested.

8. The husband was also seeking to discharge the orders requiring him to provide weekly reports in relation to C Company and the injunctive orders restraining him from dealing with his interest in C Company or borrowing any funds or incurring any further debt other than in the normal course of business.

Background And History Of The Proceedings

1. The husband and wife in this case commenced cohabitation in 1998 and were married in 2002. There is one child of their marriage X who is 16 years of age and lives primarily with the wife. The parties separated finally in early 2016.

2. The husband, who is 48 years of age is a professional and is the sole director of C Company. The practice professional services. Although in my reasons delivered on 1 August 2019 I refer to the practice employing three professionals, including the husband, the husband said from the bar table that he now has only one employee.  

3. It is common ground that the wife, who is 59 years of age, has not been in the workforce since the birth of the child of the marriage save for a few weeks when she worked for a friend and that she and the child have been financially dependent on the husband throughout the marriage and since separation. Although the husband does not dispute that the wife was diagnosed as having a Major Depressive Disorder following the birth of the child, the husband disputes the wife’s evidence that she currently has a Major Depressive Disorder /Clinical Depression.  

4. Having made orders for urgent spousal maintenance on 1 August 2019, the wife’s application was adjourned for further hearing in the Senior Registrar’s Duty List on 19 September 2019. Prior to that hearing the parties consented to orders for the sale of properties owned by their self-managed superannuation fund and E Street which the wife alleges was purchased without her knowledge or consent.

5. On 19 September 2019 orders were also made by consent for the sale of B Street. The property sold on 4 November 2019 for $1,620,000 and it settled on 28 January 2020. The orders provided that the net proceeds of sale after discharge of the mortgages to the Commonwealth Bank be applied as follows:

   a)To discharge the arrears to the State Revenue Office in respect of Land Tax;

   b)To pay outstanding school fees to HH School;

   c)To pay the husband $20,000 by way of partial property settlement from which he was required to pay the wife $3,750 being the arrears then owing by way of spousal maintenance and further spousal maintenance owing at settlement;

   d)To pay the wife  the sum of $50,000 to be characterised at trial; and

   e)The balance to be deposited into an interest bearing account in joint names, with the parties to be restrained from accessing those funds without agreement in writing or further Order of the Court.

6. As B Street was to be sold it was further agreed that the wife would have sole use and occupation P Street.

7. The husband was ordered to pay the wife’s costs of the hearing on 19 September 2019 fixed on an indemnity basis in the sum of $5,700.

8. The proceedings were otherwise adjourned to a Directions Hearing before Registrar Field on 18 October 2019. On that date the parties consented to orders requiring them to accept a Postponement Agreement as required by the mortgagee of P Street and for the proceeds of sale of B Street to be used to pay any deferred monthly interest payments and mortgage arrears as at the date of settlement. Furthermore the husband was ordered to provide financial disclosure and the matter was listed for a Conciliation Conference on 25 February 2020. The orders for urgent spousal maintenance remained in force.

Legal Principles

1. Although it is accepted that it is preferable for the court to make one set of property orders at a final hearing, the court does have the power to make the partial property settlement orders that both parties in this case seek if it is satisfied that in the circumstances it is appropriate to exercise the power. [Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466. (“Strahan”). As submitted by counsel for the wife a party seeking such an order does not have to establish that it is “necessary” and as the Full Court said in Strahan referring to the requirement that the court consider the matters in s79(4) said at [137]

   …consideration of such matters may be brief and it is established that “it seems likely to the Court that ... the applicant … will be likely receive by way of partial property settlement a sum sufficient to cover the advance, that would seem sufficient to enable the order sought to be made.”

Partial Property Settlement And Other Orders

1. Although there is still some uncertainty with respect to the value of the asset pool in particular in relation to the value of the parties self-managed superannuation fund it is clear that the remaining assets of any significance are P Street which the wife says is valued at approximately $1,500,000, subject to the mortgage of $1,050,000 to FF Company, and the $417,000 remaining of the proceeds of sale of B Street. Significantly for the purposes of the determination I must make when the wife inherited P Street from her parents it was unencumbered. As P Street is registered in the wife’s name she is also named as the mortgagor. However it is her case in circumstances where she says the husband has not provided full and frank disclosure that she does not know how the funds obtained by way of a loan secured over P Street have been applied. Although the husband submitted that the wife received legal advice with respect to the mortgage that does not mean that she knows how the funds were applied. I also note that on a number of occasions during his submissions the husband said that he could provide documents, however these proceedings have been on foot for some time and arguably he should already have provided the wife with any relevant documents.  

2. According to the wife there is approximately $600,000 in the parties’ self-managed superannuation fund and that she presently holds approximately 80 per centum of the member entitlements in the fund. The exact value of the entitlements in the fund is uncertain primarily because the husband made loans to other parties from the fund, the wife says without her knowledge or consent, and it is not clear to what extent those loans are recoverable.  

3. It is the husband’s case that P Street is valued at approximately $1,600,000 with an equity of approximately $550,000 and that the self-managed fund has assets of approximately $800,000 to 850,000 subject to the loans that have been made by the fund being recoverable.

4. The wife has already received $50,000 from the proceeds of sale of B Street which is to be characterised at trial. The husband received a partial property settlement of $23,433 from the proceeds which was paid directly to the wife in satisfaction of the arrears of spousal maintenance and private health insurance that the husband was required to pay pursuant to the orders made on 1 August 2019. Orders were also made for the payment of land tax of $4,412 and HH School Arrears of $37,822 out of the proceeds of sale of B Street which counsel for the wife submits had always been paid by the husband and should and could have been paid by the husband out of income and not capital. On 14 January 2020 the husband also consented to an order that he receive a further part property settlement of $5,700 to be paid to the wife’s solicitor on account of the order for her costs made 19 September 2019 fixed in the sum of $5,700.

5. What this means is that if as the parties agree the wife receives $150,000 by way of partial property settlement and a further lump sum of $50,000 to be characterised at trial there will be only $217,000 apart from the wife’s equity in P Street and the party’s superannuation entitlements. Although the wife is considering appointing an expert to value C Company, counsel for the wife did acknowledge that it might be of limited value.  

6. Put simply the wife’s case is that if it is possible she wants to retain P Street the property she inherited from her parents and now lives in with the child. Counsel for the wife submitted that in circumstances where the husband has not explained the level of debt that was secured against B Street or how he applied the $1,050,000 secured over P Street, has loaned funds from the parties self-managed superannuation fund without the wife’s knowledge or consent, has had the benefit of expenses  paid out of capital that should and could have been paid out of income and the wife having inherited an unencumbered property  now worth on her case  $1,500,000 that she is arguably entitled to the lion’s share of the remaining assets. It is the wife’s case that it is essential in these circumstances that the remaining assets are preserved.  It is on this basis that I am satisfied that her entitlements are sufficient to cover the amount she now seeks by way of partial property settlement and that adjustments could be made for any amount she receives at trial if that were to be necessary and that it is just and equitable in this case to make the order for partial property settlement the wife seeks and to which the husband now consents.

7. Counsel for the wife submitted, for essentially for the same reasons, that the court could conversely not be satisfied that any payment the husband receives by way of partial property settlement could be adjusted at trial and that to make the other orders he seeks could prejudice the wife’s chances of retaining P Street.

8. The husband submits that the order for spousal maintenance was based upon him having an income of $180,000 per annum and that C Company no longer has the capacity to pay him a salary. On that basis he says that he does not have the capacity to pay spousal maintenance or to meet the other amounts he says should be paid out of the balance of the proceeds of sale of B Street. The husband deposes that he has been unable to devote much time to the practice because of the proceedings, that he has been spending time with and caring for his mother who has cancer and that his mental health issues are impacting upon his capacity to work. He tendered  draft management accounts for the period 1 July 2019 to 31 December 2019 in support of his assertion that C Company is unable to afford to pay him a salary however  as submitted by counsel for the wife these are management accounts the husband has prepared and must be viewed with some caution. I accept that submission. In my view more importantly the husband’s explanation with respect to the cash he has drawn from C Company and the evidence the wife has adduced as to his lifestyle is far from satisfactory.

1. C Company has until now been meeting the motor vehicle hire purchase payments and I was told by counsel for the wife, which was not disputed by the husband, that there are no arrears.  There is similarly no evidence as to the urgency for payments to be made to the ATO and in my view the evidence with respect to how that liability has arisen and the capacity of C Company and/or the husband to make those payments out of income generated by the practice  needs to be tested. Half of the credit card debt is in the wife’s name and she has made arrangements with the bank for payment. Even if I could be satisfied on the evidence before me that C Company does not have the capacity to pay the outstanding credit card debt in its name, it is reasonable to infer that the husband could make arrangements for the repayment of this debt as the wife appears to have done. Given the questions about the cash the husband has been removing from C Company and the evidence of his lifestyle at a time when he has not been meeting his obligations, I am not satisfied that any of these payments sought by the husband should, at least at this time be paid out of capital.

2. It is the wife’s case that it was only as a result of an index search by her solicitor that she became aware that the husband had purchased E Street and that she has not been provided with any documents with respect to the alleged shortfall following the sale of E Street. Absent the evidence with respect to the alleged shortfall I am not satisfied that I should use what is left of the proceeds of sale of B Street to meet that shortfall.   

3. I also am not satisfied in circumstances where the husband has always met the school fees and the evidence as to why he says he now cannot do so has not been tested, and given the diminishing pool, that those school fees should be paid in advance and out of capital. I also note that the husband, as a consequence of the orders I propose to make, will be relieved of his obligation to pay spousal maintenance and no longer has to meet the HH School arrears as they were paid out of the sale proceeds of the B Street property as per Order 1(f)(v) of the Orders made by Senior Registrar Fitzgibbon on 19 September 2019.

4. The husband agreed that the costs of the hearing on 14 January 2020 fixed in the sum of $5825 should be paid to the wife’s solicitors out of his property entitlements by way of a partial property settlement and I propose to make that order. However the husband also submitted that he needs funds to meet his living expenses and in particular to secure accommodation. Although there is some force in counsel for the wife’s submissions that the court could not be satisfied given all the circumstances of this case that the remaining property is sufficient to make whatever adjustment that it might need to make when the matter is dealt with on a final basis I am satisfied that if I make an order for $20,000 which will include the wife’s costs that any such adjustment should be possible.  This is particularly so in circumstances where I do not propose to make the orders the husband seeks with respect to the hire purchase agreements, the school fees, the credit cards, any monies owing to the ATO and any balance owing to G Pty Ltd in relation to E Street.  

5. I am also satisfied that I should make the order the wife seeks with respect to the parties setting up an account to hold the balance of the proceeds of sale of B Street and a direct debit for the payment of the P Street mortgage pending the final hearing. Although the husband agreed that the P Street mortgage payments should be paid out of the proceeds of sale of B Street it was his case that a payment should be made in advance. I see no reason for the mortgage to be paid in advance and am satisfied that although any interest earned on those funds may be modest it is better than not earning that interest at all.  

6. The husband also sought orders discharging the orders made by consent requiring him to provide weekly reports recording all income and expenses paid by the husband and/or his agents and restraining him from transferring selling disposing of or encumbering any asset in which he or the wife or any entity they control or in which they have an interest. The husband complained about the time required and the cost incurred to prepare these weekly reports. Leaving aside the fact that the husband consented to this order if one accepted his evidence about the state of his company arguably there would be limited transactions and it would not be the onerous task he suggests. It is also difficult to see how he can complain about the time or cost when he has not been providing those reports as he was ordered to do. There is prima facie evidence that the husband has been withdrawing monies from C Company to meet personal expenditure and in these circumstances I am satisfied that he should be required to provide the weekly reports.

7. The husband submitted that the injunctive orders were preventing him from taking steps to sell the practice. As submitted by counsel for the wife there is nothing stopping the husband seeking the wife’s consent in the event of there being an offer made to purchase the practice and in these circumstances no basis for his complaint or for the orders to be discharged. I note that the orders allow the husband to borrow funds and incur further debt in the ordinary course of business and in these circumstances I am satisfied that the current orders are also unlikely to interfere with the operations of C Company.

8. In his Response to an Application in a Case filed 5 February 2020 the husband also sought an order splitting the superannuation fund. In circumstances where the wife says she holds 80 per centum of the members entitlements a split as proposed by the husband and given the questions that remain to be answered about the parties respective entitlements to property settlement, would be premature. The husband also conceded that once the sale of the last property owned by the fund is finalised there is no reason why the fund cannot be maintained at relatively little cost until the final hearing.

9. Finally I note that it was the wife’s case that as the husband has not as yet met his obligation to provide full and frank disclosure, the Conciliation Conference on 25 February 2020 should be vacated. This was opposed by the husband who said he wanted to bring the matter to a head however he did at various times during the hearing refer to documents that he could provide and I am satisfied that I can infer on this basis that those documents have not been disclosed. The wife is entitled to proper disclosure and on that basis I vacated the Conciliation Conference on 25 February 2020 and made orders for a Conciliation Conference at 11.00am on 1 May 2020.    

I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 6 March 2020.

Associate: 

Date:  6 March 2020