Kehoe & Seden (No 5)
[2023] FedCFamC1F 844
•5 October 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Kehoe & Seden (No 5) [2023] FedCFamC1F 844
File number(s): SYC 7833 of 2018 Judgment of: HARPER J Date of judgment: 5 October 2023 Catchwords: FAMILY LAW – SPOUSAL MAINTENANCE – Interim orders – Where orders previously made for husband to pay wife interim spousal maintenance – Husband sought to discharge spousal maintenance orders – Where husband argued he no longer has the financial resources to meet his spousal maintenance obligations – Where husband and second respondent are directors of the corporate trustee of a testamentary trust – Where husband argued that testamentary trust would no longer loan him funds – Where husband’s financial resources were subject of recent judicial determination – Husband did not satisfy the Court he did not have capacity to pay spousal maintenance or “just cause” exists to discharge spousal maintenance –
Application dismissed.Legislation: Family Law Act 1975 (Cth) Pt VIII, ss 72(1), 83
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 68
Cases cited: Hall v Hall (2016) 257 CLR 490; [2016] HCA 23
Kehoe & Seden (No 2) [2022] FedCFamC1F 346
Kehoe & Seden (No 4) [2023] FedCFamC1F 753
Kehoe & Seden [2019] FamCA 989
Seden & Kehoe [2020] FamCAFC 294
Division: Division 1 First Instance Number of paragraphs: 26 Date of hearing: 22 September 2023 Place: Sydney Counsel for the Applicant: Ms Kennedy Solicitor for the Applicant: Rubin Blight Hardy Family Lawyers & Mediators Counsel for the First Respondent: Mr Kasep Solicitor for the First Respondent: Coleman Greig Lawyers Counsel for the Second, Third, Fourth, Fifth, Sixth, Seventh, Ninth, Tenth, Eleventh, Twelfth, Fourteenth, Fifteenth, Sixteenth and Seventeenth Respondents: Ms Jeliba Solicitor for the Second, Third, Fourth, Fifth, Sixth, Seventh, Ninth, Tenth, Eleventh, Twelfth, Fourteenth, Fifteenth, Sixteenth and Seventeenth Respondents: Barkus Doolan Winning Solicitor for the Eighth and Thirteenth Respondents: Mr Wahhab of York Law Family Law Specialists Solicitor for the Eighteenth Respondent: No appearance ORDERS
SYC 7833 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS KEHOE
Applicant
AND: MR SEDEN
First Respondent
MS G SEDEN
Second Respondent
MR L SEDEN (and others named in the Schedule)
Third Respondent
ORDER MADE BY:
HARPER J
DATE OF ORDER:
5 OCTOBER 2023
THE COURT ORDERS THAT:
1.The Response filed by the First Respondent on 20 July 2023 be dismissed.
2.Costs be reserved.
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 Kehoe & Seden has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HARPER J:
INTRODUCTION
These are complex property proceedings under Pt VIII of the Family Law Act 1975 (Cth) (“the Act’) between the applicant wife, Ms Kehoe (“wife”) and the first respondent husband, Mr Seden (“husband”).
The relevant background in these proceedings is comprehensively set out in a number of earlier judgments (Seden & Kehoe [2020] FamCAFC 294 (“Seden & Kehoe”) and Kehoe & Seden (No 2) [2022] FedCFamC1F 346 (“Kehoe & Seden (No 2))).
This judgment should be read with my earlier judgment in Kehoe & Seden (No 4) [2023] FedCFamC1F 753 (“Kehoe & Seden (No 4)”). It is unnecessary to rehearse the background matters which are covered in Kehoe & Seden (No 4) and earlier judgments.
The proceedings had been listed for final hearing to commence on 27 November 2023, however, it became apparent that the final hearing would be unable to proceed on the allocated dates in the absence of various valuations. Those dates have since been vacated and the matter does not presently have fresh final hearing dates allocated.
BACKGROUND
On 7 July 2023, the wife filed an Amended Application in a Proceeding seeking a range of interim orders. I heard the most of the application on 26 July 2023 and delivered Kehoe & Seden (No 4) on 1 September 2023, the findings of which bear on the issues the subject of this judgment.
However, on 26 July 2023, it became apparent from the wife’s case outline filed 24 July 2023 that the wife sought the sale of the property known as W Street, Suburb E (“Suburb E property”) and the husband in his Response filed 20 July 2023 sought the discharge of an order made on 13 December 2019 which required him to pay the wife $1,000 per week in interim spousal maintenance. By reason of the late notice of both applications, those interim issues were stood over for further hearing on 22 September 2023, in the event the parties wished to press their respective applications.
The parties reached an agreed position with respect to the sale of the Suburb E property and I made orders accordingly. I made further orders vacating the November final hearing dates and requiring the parties to attend mediation by no later than 29 November 2023.
The wife tendered an email from Coleman Greig Lawyers dated 19 September 2023, which became Exhibit B, informing the wife’s lawyers that the husband was “unable to pay the single expert valuer’s fees pursuant to the Orders made 1 September 2023” (Exhibit B). But the orders for sale of the Suburb E property will result in funds being held for the payment of experts’ fees. Consequently, the burden of those fees will not fall upon the other resources of the husband.
This left the husband’s application for discharge of existing spousal maintenance orders for determination.
Spousal Maintenance
Following an interim hearing in October 2019, Stevenson J made orders on 13 December 2019 for the husband to pay $1,000 per week by way of interim spousal maintenance (Order 1) as well as an order for the husband to pay the wife $100,000 to be categorised as a partial property settlement. Her honour took into consideration the husband’s voluntary child support payments of $3,500 per month in determining that a quantum of $1,000 per week should be paid to the wife “on the basis that he will continue to provide an amount of $3,500 per month” (Kehoe & Seden [2019] FamCA 989 at [35]). It was noted that at the time there was a dispute with respect to the categorisation of the voluntary payment of $3,500 per month, which has since been resolved.
The husband relied upon s 83 of the Act to discharge or vary spousal maintenance orders, whether interim or final, for “just cause”. The threshold or gateway, as the High Court called it in Hall v Hall (2016) 257 CLR 490 at [3] (“Hall”), to making a spouse maintenance order is specified in s 72(1) of the Act in the following terms “[a] party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately ... having regard to any relevant matter referred to in [s] 75(2)". In Hall at [10] the High Court pointed out “just cause” in s 83 imports a need for the Court to be satisfied of circumstances which justify the Court considering that threshold requirement again.
The husband argued that Order 1 of the 12 December 2019 orders should be discharged because the financial resources that may have once been available to meet his spousal maintenance obligations no longer existed. The primary thrust of this argument appeared to be that the N Family Trust (“Testamentary Trust”) will not continue to provide the husband with the financial assistance that had been available to him in the past. The husband argued that this change in financial circumstances left him devoid of capacity to pay spouse maintenance and satisfies the “just cause” requirement in s 83. He did not argue the wife had capacity to support herself adequately.
In Kehoe & Seden (No 4) at [18]–[35], I came to the conclusion that the husband had sufficient financial resources through loans from the Testamentary Trust to meet his spouse maintenance obligations, pay for experts fees according to existing orders and meet a dollar for dollar costs order in favour of the wife. In short, the pattern of loans and distributions to or in favour of the husband from the Testamentary Trust since at least 2017 demonstrated this position.
Although his mother gave evidence that she would not lend him any further funds, there was no evidence that the Testamentary Trust either lacked funds to make further loans to the husband or would decline to do so.
In particular in Kehoe & Seden (No 4) I said:
33.Bearing in mind that the husband and the second respondent control the trustee, it is noteworthy that neither states in their evidence that for some reason they would cause the trustee to decline a request from the husband for further support by way of loan. They do not claim that the Testamentary Trust would be unable to meet a call for further loan monies from the husband. There is no evidence that the trust intends to call for immediate repayment of the monies owed by the husband, and any such suggestion would be unconvincing, considering the husband is one of the directors controlling the trustee.
I ultimately found that:
44.The husband’s evidence satisfies me that the Testamentary Trust is more likely than not to lend him sufficient funds to continue to meet his spouse maintenance obligations. The more difficult question is whether the trust is in a position to lend him as substantial an amount as $500,000 for the wife’s interim costs and to meet the payment of expert’s fees, which together would total about $800,000.
45.I do not consider that the husband has demonstrated a sufficient basis to discharge the existing order for him to meet the expert fees. He must comply with that order.
As at 22 September 2023, it was conceded that the husband’s obligation for spouse maintenance was approximately $10,000 in arrears. It was argued by counsel by the husband that the arrears were indicative not of an attempt to avoid his compliance but rather of his financial distress. It was common ground that the husband has not paid any legal fees subsequent to the dollar for dollar orders made on 1 September 2023.
The husband estimated that his weekly living expenses exceed his weekly income by $1,622 per week (Husband’s affidavit filed 16 August 2023, paragraphs 39–40). Counsel for the wife challenged this assertion arguing that a number of the husband’s asserted expenses should be disregarded by the Court as they are either being paid by others on his behalf or is discretionary expenditure. Accordingly, the wife contends the husband’s shortfall is only $529 a week or $25,000 per year, which should be disregarded in circumstances where he is due to receive a distribution of something less than $100,000 for the 2022-2023 financial year.
The husband argued that the Testamentary Trust could not continue to be treated by the Court as a financial resource available to him. In support of this argument, he tendered two emails exchanged between himself and his mother dated 14 and 18 September 2023 with the subject line “Court Orders”, the emails were marked Exhibit A. With the exception of some updating material, including Exhibit A, the husband otherwise relied predominantly upon the material that was before the Court on 27 July 2023 and which informed the findings in Kehoe & Seden (No 4).
The husband contended that the emails proved that his mother was “not prepared to loan any more money to you personally or approve a loan to you from the [N Family Trust]” (Exhibit A). I note that Exhibit A is not a formal resolution of the corporate trustee, J Pty Ltd, but rather is at its highest an informal expression of the second respondent’s position as one of the two directors of the corporate trustee.
It was accepted by the parties that the Testamentary Trust has at least $570,000 available to it at reasonably short notice. The capacity of the Testamentary Trust to assist the husband was not in issue, according to counsel for the husband, rather the Testamentary Trust has simply resolved not to make any further funds available to the husband.
HIS HONOUR: Do you say there’s some reason why I should not find that your client is at least one of the controlling minds of the corporation that’s the trustee?
[Counsel for the husband]: Well, directors can only act together. He’s not by himself a controlling mind of anything. Directors can only act jointly in relation to a corporate trustee, so it’s not in my submission, an accurate description to say that he is a controlling mind of the trust. There can only be, in my submission, one controlling mind of the trust and this is collectively [the husband] and his mother.
HIS HONOUR: So if they can’t agree there’s no controlling mind.
[Counsel for the husband]: No, not necessarily. The point is simply that the trust has not resolved to make additional funds available to [the husband]. That’s the only conclusion, in my submission, should be drawn from the material. The trust is simply unwilling to make funds available to [the husband]. That’s the conclusion that should be drawn and in those circumstances my submission is that the testamentary trust is not a financial resource to [the husband]. This is not [the husband’s] money. It is the corpus of a testamentary trust of which [the husband] does not control and is an object of the trust in circumstances where my friend suggests, although I understand it to be disputed, where, in fact, it’s [Ms G Seden] who is a preferred beneficiary of some kind in relation to it.
(Transcript 22 September 2023, p.32 lines 25–45)
It was asked of the counsel for the husband and the second respondent whether the Court should infer that there is a deadlock regarding the corporate trustee of the Testamentary Trust:
[Counsel for the husband]: Your Honour, my first submission is that there no deadlock in relation to the corporate trustee of the company. There’s no resolution that two directors can’t agree on. All that has happened is that [the husband] has asked his mother whether the trustee would resolve to loan some money and she has said no. It’s not really a deadlock, certainly not in the corporations law sense but - - -
HIS HONOUR: Well, if it’s not a deadlock, why would I infer that the pattern of loans and distributions which has obtained for seven years past won’t continue?
[Counsel for the husband]: Well, the circumstances are simply such that the trustee – the trust will not loan [the husband] any more funds given the state of his - - -
HIS HONOUR: Well, sorry. That’s the whole heart of it, …. You’ve tendered exhibit A to demonstrate that the trust won’t lend because the directors won’t agree.
(Transcript 22 September 2023, p.28 lines 29–44)
I am not satisfied that husband’s financial situation has materially changed such that he lacks capacity to comply with the spousal maintenance order made on 13 December 2019. My earlier finding (above at [15]) is not changed by the emails in Exhibit A. These were not attached to any affidavit of the second respondent. I infer the emails were sent in light of what I said in Kehoe & Seden (No 4) at [33], in an attempt to demonstrate that the husband cannot rely upon financial support from a trust in which he is beneficiary and one of two directors of the trustee, and from which he has received financial support for many years. I do not find this unsworn evidence persuasive, even at an interlocutory stage.
Moreover, there was no evidence of the constitution of J Pty Ltd or the Testamentary Trust deed. However, I infer the husband could call a meeting of director’s of J Pty Ltd and propose a resolution that he be lent as a beneficiary sufficient funds to meet his spouse maintenance obligations both to clear arrears and hold sufficient for future payments. But he declines to do so. It may be that he could not obtain agreement from his mother to pass such a resolution, but I am unable to form a view about what mechanisms are available to J Pty Ltd to resolve a deadlock between directors.
As I pointed out in Kehoe & Seden (No 4) at [41] the husband and his mother are parties bound by the statutory obligations to act consistently with the overarching purpose (s 68 of the Federal Circuit and Family Court of Australia Act 2021 (Cth)). On one view, they have taken a course in relation to the Testamentary Trust designed to frustrate existing Court orders for spouse maintenance, in place for some four years. However, I make no finding to that effect, at least at this stage.
Nonetheless I am not satisfied the husband has demonstrated he lacks the capacity to pay spouse maintenance, or “just cause” to discharge the existing spouse maintenance order.
I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Harper. Associate:
Dated: 5 October 2023
SCHEDULE OF PARTIES
SYC 7833 of 2018 Respondents
Fourth Respondent:
MR K SEDEN
Fifth Respondent:
MS HALEY
Sixth Respondent:
MR M SEDEN
Seventh Respondent:
MS AC SEDEN
Eighth Respondent:
Z PTY LTD
Ninth Respondent:
P PTY LTD
Tenth Respondent:
SEDEN GROUP HOLDINGS PTY LTD
Eleventh Respondent:
AD PTY LTD AS TRUSTEE FOR THE MR K SEDEN FAMILY TESTAMENTARY TRUST
Twelfth Respondent:
AE PTY LTD AS TRUSTEE FOR THE H SEDEN FAMILY TESTAMENTARY TRUST
Thirteenth Respondent:
J PTY LTD AS TRUSTEE FOR THE H SEDEN FAMILY TESTAMENTARY TRUST
Fourteenth Respondent:
AF PTY LTD AS TRUSTEE FOR THE MR M SEDEN FAMILY TESTAMENTARY TRUST
Fifteenth Respondent:
AG PTY LTD AS TRUSTEE FOR THE MS AC SEDEN FAMILY TESTAMENTARY TRUST
Sixteenth Respondent:
AH PTY LTD AS TRUSTEE FOR THE MS HALEY FAMILY TESTAMENTARY TRUST
Seventeenth Respondent:
SEDEN FAMILY RETIREMENT FUND PTY LIMITED AS THE TRUSTEE FOR THE SEDEN FAMILY SUPERANNUATION FUND
Eighteenth Respondent:
MR SEDEN FAMILY PTY LTD AS TRUSTEE FOR THE N FAMILY TRUST
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