Joubert & Bottari
[2022] FedCFamC1F 761
Federal Circuit and Family Court of Australia
(DIVISION 1)
Joubert & Bottari [2022] FedCFamC1F 761
File number(s): SYC 4450 of 2022 Judgment of: WILSON J Date of judgment: 30 September 2022 Catchwords: FAMILY LAW – PROPERTY – interim orders – application for part property orders – wife ordered to pay lesser amount than the sum sought – application otherwise dismissed. Cases cited: Cao & Trong (No 2) [2019] FamCA 941
Eaby & Speelman [2015] FamCAFC 104
Gabel v Yardley (2008) 40 Fam LR 66
In the Marriage of Zschokke (2009) 42 Fam LR 203
Marvel v Marvel (2010) 43 Fam LR 348
Redmond & Redmond [2014] FamCAFC 155
SS & AH [2010] FamCAFC 13
Selena & Montez [2017] FamCA 583
Strahan v Strahan (2009) 42 Fam LR 203
Verdon v Verdon (2020) 62 Fam LR 573
Division: Division 1 First Instance Number of paragraphs: 31 Date of last submissions: 16 September 2022 Date of hearing: 16 September 2022 Place: Melbourne Counsel for the Applicant: Mr G. Gould Solicitor for the Applicant: Bridges Lawyers Counsel for the Respondent: Mr P. Cummings SC Solicitor for the Respondent: Karras Partners Lawyers ORDERS
SYC 4450 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR JOUBERT
Applicant
AND: MS BOTTARI
Respondent
order made by:
WILSON J
DATE OF ORDER:
30 SEPTEMBER 2022
THE COURT ORDERS THAT:
1.On the husband’s application for a part property order, I order the wife to pay the husband $61,000 by 14 October 2022.
2.Otherwise, paragraphs 1, 2 and 3 of the husband’s amended application sealed 15 September 2022 are dismissed.
3.The further hearing of this proceeding is adjourned to the Honourable Justice Harper.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Joubert & Bottari has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
WILSON J
INTRODUCTION
The husband has applied for interim orders –
(a)for a part property settlement in the sum of $3 million;
(b)alternatively, for the sale of real property in Suburb B, New South Wales; and
(c)for spousal maintenance in the sum of $10,000 pending the sale of certain shares.
The wife opposed each of the husband’s applications contending that she was willing to pay the husband an amount in the vicinity of $50,000.
As these reasons record, in my view, the husband failed to demonstrate his entitlement to any of the relief he sought. Having regard to the wife’s proposal to pay him $50,000, an order will be made largely but not precisely in those terms.
SALE OF SHARES
In paragraph 1 of his amended application in a proceeding sealed the day before I heard this application on 16 September, the husband sought orders compelling the wife to sell shares she owned in C Pty Ltd to the value of $3 million and to pay that sum forthwith to the husband.
THE HUSBAND’S EVIDENCE ON THIS ISSUE
In support of that application, the husband relied on two affidavits made by him, the first sworn 28 June 2022 and the second sworn 28 July 2022. Certain information in those affidavits was contested on this application. As well-entrenched authority provides,[1] findings of fact on a contested interlocutory application should only be made with great circumspection. So far as the uncontroversial material is concerned on this application, drawn from the husband’s two earlier mentioned affidavits or from the wife’s affidavit sworn 8 August 2022 and her affidavit sworn 16 September 2022, the following relevant matters emerged –
[1] Marvel v Marvel (2010) 43 Fam LR 348, Eaby & Speelman [2015] FamCAFC 104, SS & AH [2010] FamCAFC 13 and Redmond & Redmond [2014] FamCAFC 155.
(a)the husband is 45, the wife is 51, they met in late 2005, married in 2007 and separated in November 2021;
(b)they have a daughter born 2012 making her nine years of age, who lives with the wife and spends time with the husband;
(c)the husband estimated the gross value of assets for division in this litigation to be approximately $70 million;
(d)tax is owed of about $15 million;
(e)the Suburb B property the subject of paragraph 2 of the husband’s amended application was estimated to be valued at $25 million;
(f)that property is owned by the husband and wife as tenants in common as to 99 shares by the husband and as to one share by the wife;
(g)at the commencement of the relationship, the husband was employed earning $80,000 per annum, living in rented accommodation with superannuation between $10,000 to $20,000, cash-at-bank of about $30,000 and an interest in real estate in Country D;
(h)at the commencement of the relationship the wife then had recently sold her one third interest in a company called E Pty Ltd which, after discharging loan finance, derived for her after tax the sum of $7,500,000 or thereabouts;
(i)she had also a motor vehicle the husband said was worth $100,000, cash-at-bank of between $100,000 and $200,000, superannuation and an interest in a company called F Pty Ltd (“F Pty Ltd”);
(j)C Pty Ltd was incorporated in early 2007 of which the wife was the sole director and in which F Pty Ltd is its shareholder;
(k)G Pty Ltd (“G Pty Ltd”) was incorporated in mid-2007 in respect of which the wife is the sole director and shareholder;
(l)G Pty Ltd is the trustee of the H Trust;
(m)J Pty Ltd (“J Pty Ltd”) was incorporated in mid-2008 in respect of which the wife is the sole director and shareholder; and
(n)J Pty Ltd is involved in litigation in the High Court of Australia on appeal from Federal Court decisions.[2]
[2] On appeal from the decisions in [2021] FCAFC 163 and [2021] FCAFC 180.
The husband did not offer any information (whether qualified or unqualified) about the value of C Pty Ltd.
THE WIFE’S EVIDENCE ON THIS ISSUE
So far as the wife’s evidence of C Pty Ltd was concerned, she deposed in her 8 August 2022 affidavit to being its sole director for 10 years prior to the husband’s appointment. However, she did not depose in that affidavit to the value of C Pty Ltd. In her affidavit made 16 September 2022, the wife deposed to the following in relation to C Pty Ltd –
(a)it conducts a share portfolio with K Financial Services in relation to a margin loan in excess of $2.8 million;
(b)the portfolio is made up of convertible securities, debt instruments, equities, exchange traded funds, cash and cash equivalents;
(c)the portfolio is divided into liquid assets and illiquid assets, the latter being assets located overseas or which can only be realised upon trigger events such as the sale of a corporation in which the investment is held;
(d)as at 16 September 2022 the liquid share portfolio was worth approximately $10.49 million;
(e)if she was required to realise a share tranche so as to generate $3 million, the wife has not had the opportunity of obtaining advice about the financial and tax consequences of that;
(f)a capital gains tax liability will arise from the distribution of proceeds in relation to any sale of shares;
(g)if C Pty Ltd sells the shares and distributes the proceeds to the wife or to the husband, that distribution will give rise to an additional tax liability depending on franking credits;
(h)the shares in C Pty Ltd have been earmarked to meet building costs on the Suburb B property, estimated in the vicinity of $2.5 million;
(i)in addition to those building costs, the wife has earmarked the shares in C Pty Ltd to meet in excess of $3.1 million in legal fees and a further $500,000 for legal representation in Country L;
(j)she has been advised that if the High Court litigation in which she is involved[3] fails, her legal costs may total $3.5 million; and
(k)if litigation in the Federal Court of Australia is unsuccessful, she has been informed that she must earmark a further $1 million.
[3] [2022] HCATrans 94, 13 May 2022.
The wife deposed to her reliance upon the share portfolio in C Pty Ltd in order to meet financial commitments as they fall due, and if her share portfolio were to be reduced, she would need expert advice to ascertain the impact of that on her commercial enterprises.
THE HUSBAND’S SUBMISSIONS ON THIS ISSUE
The submissions by the husband’s counsel on the share sale were imprecise to say the least. He was unable to direct my attention to any evidence advanced by the husband explaining why the husband relied on an amended application in a proceeding dated 15 September 2022 in which the sale of $3 million worth of C Pty Ltd shares was sought. In other words, no explanation was proffered by the husband by which I could ascertain why that application worth $3 million from the sale of C Pty Ltd’s was made so inexplicably late. At all events, counsel for the husband submitted that the application for the sale of the C Pty Ltd shares so as to generate $3 million was sought to achieve “a level playing field”. Several times I asked the husband’s counsel what he meant by that turn of phrase because the words “level playing field” has been the subject of extensive examination by me in Verdon v Verdon,[4] but not in the context of a partial property order and instead in the context of a dollar-for-dollar funding order which I told the husband’s counsel I was of the view was legally erroneous for the reasons given in Verdon v Verdon.
[4] (2020) 62 Fam LR 573.
At all events, counsel for the husband argued that the pool was to be read as aggregating between $50 million and $55 million. He said the husband owns 99 per cent of the Suburb B property at the estimated value of $25 million.[5] Beyond submitting that the case was overwhelmingly in favour of the husband, the husband’s counsel relied on Strahan v Strahan[6] in passing, but on no other authority.
[5] That figure seemed to have no provenance in fact and was, instead, a guess by the husband.
[6] (2009) 42 Fam LR 203.
I was not much assisted by the submissions of counsel for the husband. His repeated use of phrases such as “scorched-earth policy” and “level playing field” did not advance the matter at all.
On behalf of the wife, Mr Cummings SC advanced a collection of submissions in opposition to the husband’s application for the payment of $3 million from the sale of C Pty Ltd shares. Relevantly synthesised, Mr Cummings SC submitted as follows –
(a)on the husband’s evidence the amount for which funds are to be applied is significantly less than $3 million;
(b)it is not the case that at trial the husband will be ordered to be paid $3 million in cash;
(c)the court may be justified in making a costs order in the sum of approximately $50,000;
(d)the husband’s application for the payment of $3 million from the proceeds of sale of C Pty Ltd shares is in the alternative to his application for orders for the sale of the Suburb B property;
(e)counsel for the husband made no submissions as to why the Suburb B property should be sold;
(f)it is uncontroversial that the house is incomplete and the wife wants to retain it on a final basis;
(g)so far as the C Pty Ltd shares are concerned those shares are in a highly volatile market at present making the attribution of a value in such a fluid market extremely difficult;
(h)additionally, the shares are subject to a margin lending facility requiring the security for the loan to be maintained at a particular level, particularly if a call were to be made;
(i)capital gains tax implications on the sale of any shares in C Pty Ltd are unknown nor is it known why so many shares must be sold so as to generate $3 million;
(j)top-up tax will also need to be paid;
(k)in the case of the house, reversibility of a part property order is an important consideration;
(l)so far as illiquid shares were concerned they were located overseas or were unable to be realised;
(m)so far as the liquid share portfolio is concerned, it was said to be worth $10.4 million, yet no details were available about the taxation consequences of realising shares to the value of $3 million; and
(n)the wife’s loan facility requires the reservation of funds to meet the costs of litigation in Country L and to meet the costs of litigation in the Federal Court of Australia in an intellectual property dispute.
So far as the relevant case law was concerned, Mr Cummings SC addressed aspects of Verdon & Verdon.[7] There it was held as follows –
[7] (2020) 62 Fam LR 573.
88.In Cao & Trong (No 2)[8] I distilled the relevant principles mostly from Strahan. They were as follows –
[8] [2019] FamCA 941.
34.In relation to interim property orders, certain guiding principles are applicable to the facts of this case. They include the following –
(a)the majority of the court in Strahan & Strahan[9] held that when consideration is being given to the appropriateness of an order being made for an interim property settlement order, more is required than the mere fact that upon a final hearing the applicant would receive the property being sought (or an amount in excess of the funds being sought) from the other party;
[9] [2009] FamCAFC 166; (2009) 42 Fam LR 203.
(b)balance must be given to the risks of unduly limiting the final orders that can be made against the circumstances said to show that it is just and equitable to make interim orders;
(c)in Strahan it was held that the first stage of any consideration of an application for a partial property settlement order requires a determination of whether the interests of justice require the exercise of power under s 79 and s 80(1)(h) on an interim basis;
(d)compelling circumstances need not be shown by an applicant for a partial property settlement order, as was held in Strahan;
(e)ordinarily an order under s 79 is made once only after a final hearing, as was held in Strahan at [132];
(f)consideration must be given to the reversibility of the order, as was held in In the Marriage of Zschokke[10] and Gabel & Yardley;[11]
(g)in addition, a court entertaining an application for a partial property settlement should consider the need for and effect of interim orders weighed against the risks that the exercise of the power on an interim basis will interfere with the power of the court to make just and equitable orders on a final basis;
(h)further, a court entertaining an application for a partial property settlement order should consider whether the order is just and equitable according to at least a preliminary view of the likely range of outcomes;
(i)further, a court entertaining an application for a partial property settlement order should balance the risks by considering not only the quantum of the orders but also the risk of unduly limiting the final orders that can be made or even potentially defeating parties’ claims; and
(j)a court entertaining an application for a partial property settlement should take into account that a party should not be denied the ability to liquidate assets where there are real needs for those resources such as meeting debts due to creditors.
89.Elsewhere the following appears –
The Full Court has cautioned single judges hearing interim applications against making findings of fact that should more properly be made at trial once all the evidence has been adduced and all relevant witnesses have been cross-examined
[10] [1996] FamCA 79; (1996) 20 Fam LR 766.
[11] [2008] FamCAFC 162; (2008) 40 Fam LR 66.
Mr Cummings SC emphasised the observation that more is required than the mere fact that upon a final hearing an applicant for a part property order would receive the property sought. He also emphasised the need to consider the reversibility of any part property order. He said that this consideration was particularly important where a sale of the Suburb B property was involved.
Mr Cummings also submitted that a reasonable sum for costs (up to $61,000) is appropriate as a part property order because this litigation returns before Harper J in November this year and Mr M KC will conduct a mediation before that. Such an approach was consistent with the approach taken by McClellan DCJ in Selena & Montez.[12]
[12] [2017] FamCA 583.
CONSIDERATION OF the application for a PART PROPERTY ORDER
Even though the application to sell shares in C Pty Ltd to realise $3 million took up the majority of the debate before me on 16 September 2022, it was expressed to be alternative to the application to sell the house at Suburb B. Logically, the application to sell the Suburb B property came first in time, so I address that first.
In my view the application to generate funds from the sale of the Suburb B property fails. If granted, the home would be sold and converted to cash. The wife tells me she seeks orders at trial that she have the home. If sold before then, she will be denied the possibility of that order being made. If sold, the order cannot be reversed. Such an approach is an affront to the statements of principle in In the Marriage of Zschokke[13] and Gabel v Yardley.[14] I refuse the application in paragraph 2 of the husband’s amended application in a proceeding.
[13] (1996) 20 Fam LR 766.
[14] (2008) 40 Fam LR 66.
So far as the sale of shares was concerned, I am willing to grant that application but only as to $61,000. I refuse the application for the shares in C Pty Ltd to be sold so as to generate $3 million. I say that for several reasons.
First, the mere fact that a party contends that at trial he or she will obtain a division of property in the sum sought is not sufficient to warrant a part property order being made ahead of trial.
Second, the C Pty Ltd shares are secured by a margin lending facility so any sale of those shares or part thereof is likely to trigger a call on the margin loan.
Third, beyond his statement that he needs funds to meet certain expenses in the nature of legal fees, the husband proffers no satisfactory explanation for his application for $3 million.
Fourth, if funds from the sale of the shares in C Pty Ltd are realised, substantial tax consequences will follow on which the wife would need sophisticated taxation advice, none of which is presently available to her.
Fifth, the husband’s counsel’s justification for his client’s application on the basis of “level playing field” or “scorched-earth policy” was meaningless and nonsensical.
Sixth, the part property order of $61,000 will provide to the husband funds to enable him to get to the next stage of this litigation, namely a mediation before Mr M KC then the return of the proceeding before Harper J in November 2022.
Seventh, if the husband on proper material subsequently wishes to apply for a further part property order, he can.
Eighth, very substantial expenses may very well befall the wife in costly litigation in Country L, in the Federal Court of Australia and in the High Court of Australia that is likely to account for a large proportion of the liquid component of the shares, namely $10 million.
PARAGRAPH 3 OF THE AMENDED APPLICATION
In that paragraph, the husband sought an order for the payment of $10,000 pending the sale of shares in C Pty Ltd.
Several things must be said of that application.
First, that application was barely pressed by counsel for the husband.
Second, it is premised on the sale of shares or the sale of the Suburb B property, both of which applications have been refused.
Third, as Mr Cummings SC pointed out, the application was no longer sought because the husband is now in gainful employment. That application is refused.
I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wilson. Associate:
Dated: 30 September 2022
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