Landau and Landau

[2016] FamCA 665

FAMILY COURT OF AUSTRALIA

LANDAU & LANDAU [2016] FamCA 665

FAMILY LAW – PROPERTY – INTERIM PROCEEDINGS – Competing applications for distributions from the proceeds of sale of the former matrimonial home – Where the wife’s proposed orders would extinguish the husband’s claim on a final basis – Where the wife has a need for liquid funds in circumstances where she has no income and has been out of the paid workforce for thirty years – Orders made for the wife to receive an interim property settlement for a lesser sum than sought – No orders made for the husband to receive an interim property settlement – Where the wife seeks urgent spousal maintenance pending the settlement of the sale of the former matrimonial home – Where the Court is satisfied that the wife has an immediate need for financial assistance for the purposes of section 77 – Where the Court is satisfied that the husband has the capacity to pay – Orders made for the husband to pay to the wife urgent spousal maintenance of $850 per week until the wife receives the interim property settlement.

Family Law Act 1975 (Cth) ss 77, 79, 80(1)(h)

APPLICANT: Mr Landau

RESPONDENT: Ms Landau

FILE NUMBER: MLC 142 of 2016

DATE DELIVERED: 15 August 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Melbourne

JUDGMENT OF: Stevenson J

HEARING DATE: 3 and 5 August 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Sweeney

SOLICITOR FOR THE APPLICANT: Taussig Cherrie Fildes

COUNSEL FOR THE RESPONDENT:	Mr Bartfield QC with Ms Renwick
SOLICITOR FOR THE RESPONDENT:	Kliger Partners

Orders

BY CONSENT:

1. The wife do all acts and things to facilitate the parties’ compliance with subparagraph (d) of Order 4 of the Orders made on 6 April 2016 including but not limited to signing all documents provided by ANZ to the parties within seven days of receipt by her solicitor.

2. Within seven (7) days the husband do all acts and things necessary to authorise the in-house accountant Mr B and Mr C and/or other representative from Mr D to confer with Ms E in relation to the matters addressed in her letter date 5 July 2016, with such meeting to be audio recorded and distributed to both parties.

BY THE COURT:

1. Within twenty-one (21) days the wife provide to the husband:

   (a)       Records of the F Trust, including but not limited to:

   (i)loan account ledgers

   (ii)unpaid beneficiary entitlement ledgers

   (iii)documents demonstrating the source/s of the trust corpus

   (iv)documents showing current trust assets and liabilities

   (v)details of any family trust election

   (vi)bank account statements associated with the trust and/or the corporate trustee, F Pty Ltd and

   (vii)director’s minutes for F Pty Ltd and

   (viii)as soon as available, the 2015/16 financial statement, including notes to accounts and depreciation schedules.

   (b)Tax returns and financial statements for the year ended 30 June 2015 in relation to the G Family Trust and tax returns and financial statements for the G Family Trust for the year ended 30 June 2016 as soon as practicable after preparation of such documents.

2. Both parties do all things and execute all documents required to cause payment to the wife of a sum of $400,000 from the proceeds of sale of the property

   
   

   H Street, Suburb I in the State of Victoria, with such money being characterised as an interim or partial property settlement.

3. The husband pay to the wife, pursuant to section 77 of the Family Law Act 1975 (Cth), urgent maintenance in the sum of $850 per week with the first such payment to be made no later than 19 August 2016 and with such payments to terminate upon receipt by the wife of the sum of $400,000 pursuant to Order 3 hereof.

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 Landau & Landau 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 SYDNEY

FILE NUMBER: MLC 142 of 2016

Mr Landau

Applicant

And

Ms Landau

Respondent

REASONS FOR JUDGMENT

The proceedings

1. By an Amended Application in a Case filed on 2 August 2016 the husband, Mr  Landau, sought a number of interim and procedural orders in relation to financial issues.  At the interim hearing on 3 August 2016 the husband pressed for the following orders:

   1.Within seven days, in accordance with rr 13.04 and 13.07 of the Family Law Rules 2004 (Cth), the wife make full and frank disclosure, including but not limited to the following:

   (a)       records of the [F Trust], including but not limited to:

   (i)loan account ledgers;

   (ii)unpaid beneficiary entitlement ledgers;

   (iii)documents demonstrating the source/s of the trust corpus;

   (iv)documents showing current trust assets and liabilities;

   (v)details of any family trust election;

   (vi)bank account statements associated with the trust and/or the corporate trustee, [F Pty Ltd]; and

   (vii)director’s minutes for [F Pty Ltd]; and

   (viii)as soon as available, the 2015/16 financial statement, including notes to accounts and depreciation schedules;

   (b)the will of [Mr G] and any associated letters of wishes;

   (c)in relation to the [G] Family Trust:

   (i)2012 financial statement;

   (ii)tax returns and financial statements for the years ended 30 June 2015 and 30 June 2016 (as soon as available); and

   (iii)bank statements from 30 June 2013 to date;

   (d)       in relation to [J] Pty Ltd:

   (i)        company constitution;

   (ii)bank statements from 30 June 2013 to date;

   (iii)tax returns and financial statements for the years ended 30 June 2013 to 30 June 2016 (as soon as available);

   (iv)details of all current assets owned and liabilities owed; and

   (v)shareholders agreements; and

   (e)       in relation to [K] Pty Ltd:

   (i)company constitution;

   (ii)bank statements from 30 June 2013 to date;

   (iii)tax returns and financial statements for the years ended 30 June 2013 to 30 June 2016 (as soon as available);

   (iv)details of all current assets owned and liabilities owed; and

   (v)shareholders agreements.

   2.The wife do all acts and things to facilitate the parties’ compliance with sub-paragraph (d) of Order 4 of the orders made 6 April 2016 (April Orders), including but not limited to signing all documents provided by ANZ to the parties within seven days of receipt by her solicitor.

   ...

   4.In the alternative, if this Honourable Court determines to hear the wife’s Part-property and Spousal Maintenance Application, upon settlement of the sale of the former matrimonial home, and within seven days of the satisfaction of the requirements of Orders 4 and 5 of the April Orders, the parties do all acts and things to release from the funds held on trust by Taussig Cherrie Fildes (Trust Monies) the sum of $300,000 to each of them.

2. By an Amended Response to Application in a Case filed on 29 July 2016 the wife, Ms Landau, also sought a number of interim orders.  A Summary of Argument document filed on behalf of the wife précised the orders which she sought at the interim hearing as follows:

   1.As particularised in the Amended Response to the Application in a Case filed 29 July 2016 (with minor amendments) and, in summary, that:

   a.the Husband pay the Wife $3,000 per week by way of periodic spousal maintenance;

   b.the Husband do all acts and things to transfer all funds in [L] negotiator account to [L] Overdraft account prior to the settlement of the sale of the former matrimonial home; and

   c.the Wife receive 45 per cent of the net proceeds of sale (and the deposit funds) by way of interim distribution, with the characterisation of such funds to occur at trial.

1. During submissions I was informed that the wife consented to the orders sought by the husband in paragraph 2 of the Amended Application in a Case, which read as follows:

   2.The wife do all acts and things to facilitate the parties’ compliance with sub-paragraph (d) of Order 4 of the orders made 6 April 2016 (April Orders), including but not limited to signing all documents provided by ANZ to the parties within seven days of receipt by her solicitor.

1. Order 4(d) made on 6 April 2016 provided as follows:

   4.That upon the settlement of the sale of [H Street], the proceeds of sale be disbursed as follows:-

   ...

   (d)fourthly, in deposit to an interest bearing account with the ANZ of such amount as is required to maintain the stand-by letter of credit facility in the name of [L Pty Ltd] in its own capacity and its capacity as Trustee of the [L Trust].

2. During his submissions, senior counsel for the wife clarified that she sought an order for urgent maintenance pursuant to section 77 of the Family Law Act 1975 (Cth) (“the Act”). This order would cover the period from early August 2016 until settlement of the sale of the H Street property on 20 September 2016 and payment to the wife of a lump sum from the net proceeds. The wife sought that she receive an amount equivalent to 45 per cent of the net sale proceeds at that time, with characterisation of such funds being reserved to trial.

3. In her Amended Response to an Application in a Case, the wife also sought a discharge of Order 4 made on 6 April 2016 and a different order for the disbursement of the proceeds of sale of the former matrimonial home.  As that issue was dealt with as recently as April 2016, I will not again traverse the fate of these funds.

4. Accordingly, the issues for determination at the interim hearing on 3 August 2016 essentially were as follows:

   1.Disclosure by the wife in relation to the F Family Trust, G Family Trust, J Pty Ltd, K Pty Ltd and the will of her father Mr G.

   2.Interim distribution of funds to the wife or both parties from the net proceeds of sale of the former matrimonial home.

   3.Payment by the husband of urgent maintenance to the wife.

   4.Adjustments between the negotiator and overdraft accounts of L Pty Ltd prior to the settlement of sale of the former matrimonial home.

Background

1. The husband and the wife, who are aged 54 and 53 respectively, married in 1985 and separated under one roof on 5 November 2015.  The husband vacated the former matrimonial home on 11 June 2016 and rents a serviced apartment.  He has spent considerable time with his family in Country R since the separation and intends to return to that country on 20 August 2016.

2. The parties have three adult children:

   ·B born in 1988;

   ·N born in 1990; and

   ·O born in 1994.

   O is a university student who lives with the wife and B and N each have independent accommodation.  N has lived in London since 2013.  The wife deposed that each of the children suffers with health problems.

3. The husband operates and controls a business known as L Pty Ltd (“L”) which acts as agent for Company P.  According to a preliminary report of forensic accountant Ms E, the company’s income consists of commissions paid by Company P and service fees from agents and direct customers.  The husband acts as managing director of L, which employs five other staff.

4. Ms E prepared a report dated 8 February 2016, which was expressed to be intended for use only as a tool to assist settlement negotiations.  She provided estimates of the values of various entities, including L Pty Ltd, but stated with absolute clarity that these figures are nothing more than preliminary opinions.

5. The wife has been out of the paid workforce since approximately 1987.  She deposed that she has a number of health problems and a need for regular medical consultations and treatment.

6. The parties executed a contract for the sale of the former matrimonial home H Street, Suburb I (“the H Street property”), on 22 June 2016 for a price of $5,725,000.  Settlement will take place on 20 September 2016, with the net proceeds estimated to be approximately $3,761,000.  Consent orders made on 6 April 2016 contained provision for the distribution of the proceeds of sale of the H Street property.

7. The orders of 6 April 2016 also made provision for the parties to raise ANZ bank finance of $80,000 (“the interim finance”).  This sum of $80,000 was raised by way of an increase in the balance of an overdraft.  These funds have been applied to rates, utilities, private health insurance premiums, the cost of a house cleaner and gardener, motor vehicle finance payments and a sum of $850 per week to the wife.  In her affidavit of 29 July 2016 the wife deposed that the balance of this interim finance account was $5,055 as at 27 June 2016 and the funds would be depleted in the very near future.

8. On 15 February 2016 the F Trust was established with the wife’s mother, Ms G, as appointor.  A copy of the Deed of Trust was not in evidence but some information can be gleaned from the parties’ affidavits.  It appears that the corporate trustee is F Pty Ltd, of which the wife was a director until 5 February 2016.  On that date, according to the husband, the parties’ son B was appointed a director of the company in her stead.

9. It appeared to be common ground that the parties’ three children are the principal beneficiaries of this Trust.  It was also common ground that the wife is a beneficiary of this Trust, although she maintained that she does not expect to receive dividends.  According to the wife, this Trust was created to provide funds to meet the medical expenses of the parties’ children.  The wife deposed that each of the children have received a sum of $5,000 from the Trust and that N has received funds to cover the cost of surgery which is due to take place later this year in London.

Consideration

Disclosure by the wife

1. The husband deposed that the wife is a beneficiary of the G Family Trust, of which J Pty Ltd is the corporate trustee.  The husband deposed further that J Pty Ltd holds a one-third shareholding in K Pty Ltd.  Otherwise, there was no evidence as to the wife’s connection with these entities.

2. Under cover of a letter dated 9 March 2016 the wife’s solicitor provided copies of various documents in relation to the G Family Trust to the husband’s lawyer.  The documents made available were the Trust Deed dated 21 September 1976 and tax returns and financial statements for the years 2012, 2013 and 2014.  The deed recited that J Pty Ltd is the trustee of the G Family Trust.  The names of the other beneficiaries were redacted from the tax returns and financial statements were redacted “for privacy reasons” in these copy documents.

3. On behalf of the wife, it was submitted that the husband’s evidence failed to establish a proper basis upon which she should be compelled to provide any of the documents specified in paragraph 1 of the Application in a Case.  I accept that submission in relation to K Pty Ltd, as the evidence did not establish a clear connection between the wife and this entity.

4. As noted, the wife’s solicitor provided copies of certain documents in relation to the G Family Trust to the husband’s lawyer.  The husband now seeks copies of the 2015 and 2016 tax returns and financial statements.  Given that the wife has voluntarily provided copies of these documents for the 2012, 2013 and 2014 financial years, I see no basis upon which she could validly object to making available the most recent information.  I will order that the wife provide to the husband the 2015 tax return and financial statements for the G Family Trust within twenty-one days.  I will order further that the wife provide to the husband the 2016 tax return and financial statements for the G Family Trust as soon as is reasonably practicable after the preparation of these documents.

5. I will not order that the wife provide to the husband “bank statements from 30 June 2013 to date” in relation to the G Family Trust.  There was no evidence as to the number of bank accounts which are operated by this Trust;  the likely volume of such documents nor the probable cost of compliance with such an order.

6. I was not taken to any evidence which established that the wife is in a position to provide copies of the documents sought in relation to J Pty Ltd or K Pty Ltd, nor the will of Mr G.  Accordingly, I will not make the orders sought by the husband in relation to these two entities and the wife’s father.

7. I take a different view in relation to the F Trust. I accept the submission on behalf of the husband to the effect that the wife, as a recent director of F Pty Ltd, is entitled to specified documents pursuant to section 198F of the Corporations Act 2001 (Cth). Further, this Trust was established very soon after the parties’ separation and some months after the wife withdrew $68,000 from the term deposits in August 2015. I refer to those withdrawals below in these Reasons. It seems to me that the husband has a proper basis for seeking information in relation to this Trust.

Distribution from the proceeds of sale of the H Street property

1. The wife sought orders to the effect that she receive an amount equal to 45 per cent of the net proceeds immediately upon settlement of the sale.  The husband opposed any interim distribution to either party but, in the alternative, he proposed that both he and the wife receive a sum of $300,000.  His counsel submitted at the interim hearing that each of the parties should receive a sum of $100,000.

2. I am satisfied that the wife has an imminent need to secure accommodation for herself.  I accept that she, and also the husband and the parties’ three children, are an observant orthodox religious family.  Accordingly I accept that the wife does not drive on religious days and wishes to live within walking distance of her religious centre and family members.  The wife deposed that she has located a suitable rental property, at a price of $1,500 per week.  The husband contended that $1,500 per week is an excessive amount and maintained that his enquiries revealed that the wife could rent a suitable property for a price in the range of $695 to $1,100 per week.

3. For reasons which appear below, I will order that the wife receive a lump sum from the net sale proceeds of the H Street property. This order will be made as an interim or partial property settlement pursuant to sections 79 and 80(1)(h) of the Act. In these circumstances, it is a matter for the wife as to how she elects to apply those funds. Accordingly, I give no consideration to the appropriateness or otherwise of the wife’s proposed expenditure of $1,500 per week upon rental accommodation.

4. In her affidavit of 18 March 2016 the wife deposed that she withdrew a total of $68,000 from term deposits in August 2015.  The wife maintained that she spent these funds on costs relating to the wedding of the parties’ son B, medical expenses for herself and the children, food and general living expenses.  The wife deposed further that she has borrowed approximately $118,000 from her brother.  She annexed to her affidavit a copy of a loan agreement between herself and her brother.  Apparently the wife has expended all or most of this money, as her Financial Statement of 29 July 2016 made reference to bank accounts with a total balance of approximately $1,800.

5. The evidence thus indicated that the wife has available at present liquid funds of only about $1,800.  In these circumstances it seems to me to be in the interests of justice that the wife receive a portion of the sale proceeds of the H Street property.  She has no income and has been out of the paid workforce for almost 30 years.  The reality is that the wife has no funds available to her other than a portion of the sale proceeds of the former matrimonial home.  The next issue is the quantum of such a lump sum payment.

1. As noted, the wife seeks immediate payment of an amount equal to 45 per cent of the net proceeds upon settlement of the sale of the H Street property.  The net proceeds of sale will amount to approximately $3,761,000, thus the wife requires an immediate payment to her of some $1,692,450.

2. By way of final orders, the wife seeks that she receive the whole of the proceeds of sale of the former matrimonial home.  The husband seeks final orders to the effect that he and the wife receive amounts equivalent to 55 per cent and 45 per cent of the net sale proceeds respectively.  Such an outcome would mean that the husband receives about $2,068,550 and the wife would take some $1,692,000 from the net proceeds of sale.

3. In an Outline of Case document submitted on her behalf, the wife contended that the parties’ assets, superannuation, liabilities and financial circumstances are as follows:

Non-superannuation assets
Personal assets	Ownership	Value
net proceeds of the sale of the Former Matrimonial Home after the payment of secured liabilities	Joint	E$3,761,000
Funds secured for L’s (sic) Line of Credit	The Husband	$648,000
Land in Q Town, Country R	The Husband	E$50,000
L (sic) Entities	Joint	Unknown
Motor vehicle (2003)	The Wife	E$12,000
Motor vehicle (2005)	The Husband	E$15,000
Motor vehicle (2010)	The Husband	E$10,000
ANZ Joint bank account (as at 16.03.16)	Joint	E$1,061
The Husband’s bank accounts	The Husband	unknown
Household contents	Joint	$33,000
Total gross assets (excluding super)	E$4,530,061

1. The interim orders sought by the wife would completely extinguish the husband’s claim that he receive 55 per cent of the net proceeds of sale of the H Street property on a final basis.  On the wife’s version of the balance sheet, there is no other asset from which an equivalent amount could be made available to the husband.

2. At this early stage in the proceedings, it is impossible to make any detailed assessment of the contributions of the parties and section 75(2) factors, nor the likely outcome of the proceedings.  It seems to me, however, that the following observations can be made with some safety:

   ·The marriage subsisted for approximately thirty years, during which the husband and wife adopted traditional roles of breadwinner and principal homemaker and parent to the parties’ three children respectively.

   ·The husband’s parents provided the parties with substantial amounts of money during their cohabitation.

   ·The principal asset available for distribution between the parties is the net proceeds of sale of the former matrimonial home.

   ·There is no other asset from which a substantial cash payment could be made to the husband.

   ·Ms E has offered a preliminary opinion that the L business is valued at approximately $148,000.

   ·The wife has not engaged in paid employment for almost thirty years.

   ·Significant contributions have been made by or on behalf of each of the parties.

   ·Prima facie at least, section 75(2) factors would appear to favour the wife.

3. In these circumstances, I am not prepared to make orders which would immediately remove some $1,700,000 from the pool of assets available for distribution between the parties and vest this money in the wife.  It seems to me that a distribution of such a significant portion of the net pool should not occur before proper consideration is given at trial to issues of contribution and section 75(2) factors, in the absence of agreement between the parties.

4. Nonetheless, I accept that the wife has a need for liquid funds in the immediate future and that justice and equity requires that she receive a payment from the net proceeds of sale of the H Street property.  I will order that she receive a sum of $400,000 from that source.  I am of the view that such an interim distribution is capable of readjustment at trial.  The amount of $400,000 is approximately 10 per cent of the net proceeds of sale of the former matrimonial home.

5. I will order that the wife receive this sum of $400,000 pursuant to sections 79 and 80(1)(h) as a partial or interim property settlement. Experience indicates that difficulties often arise when characterisation of such distributions is reserved to the trial judge, at some considerable time into the future.

6. The husband sought that he too receive a portion of the net proceeds of sale of the former matrimonial home.  I will not order that the husband receive any payment from the net sale proceeds at this stage of the proceedings.  He has access to funds generated by L, whether by way of a salary or payments made for his benefit.  The husband’s evidence was that he has not drawn a periodic salary from L since 2015 but he has charged personal expenses to a business credit card.  The company has then paid these expenses on his behalf.

7. Additionally the husband’s evidence was that he has available rent-free accommodation in Country R where he has spent considerable time since the parties’ separation.  The husband deposed that his father is paying his legal fees and contended that he has an obligation to repay these advances.  It thus appears that the husband has no immediate need for funds to finance his litigation.

Spouse maintenance

1. The wife sought an order that the husband pay to her a sum of $3,000 per week by way of urgent maintenance pursuant to section 77 of the Act. The husband contended that he lacks to the capacity to pay spouse maintenance, whether from income or capital.

2. As submitted by counsel for the husband, Ms E observed in her report that loans to the parties from the S Family Trust and L Pty Ltd were “made to fund the lifestyle of the parties”.  It appears that their lifestyle was also subsidised by funds which came from the husband’s parents.  I am inclined to accept the submission on behalf of the husband that the parties “lived beyond their means”.

3. It may be that the husband’s parents will continue to provide money to him in the future, despite the contents of his father’s letter of 4 February 2016 to his solicitor (Annexure GL3 to the wife’s affidavit of 18 March 2016).  The husband’s father there wrote to his solicitor, inter alia:  “[Mr Landau] has received far more financial support from me than all my other children combined.  He is aware that he has now crossed the red line and that I have determined that under no circumstances will he receive any further funds whatsoever during my lifetime or afterwards from me or any entity associated with me.”

4. I am satisfied that the wife is in immediate need of financial assistance for the purposes of section 77. She seeks an order for urgent maintenance to cover the period until 20 September 2016, when settlement of the sale of the H Street property takes place and she receives a lump sum payment. That period will be of approximately six weeks’ duration, allowing time for the mechanics of the distribution of the sale proceeds.

5. The husband’s Financial Statement of 2 August 2016 sets out expenses which he would not appear to be paying at present.  For example, correspondence annexed to the wife’s affidavit of 29 July 2016 would suggest that the husband is not presently paying interest of $721 per week to the ANZ bank.  The husband deposed in his affidavit of 2 August 2016 that he lived in a serviced apartment at a cost of $1,015 per week.  He gave no evidence of the nature of this arrangement.  In particular, the husband was silent on the question whether he maintains this accommodation when he lives in Country R.

6. In these circumstances, I will order that the husband pay to the wife a sum of $850 per week by way of urgent maintenance.  These payments will subsist until the wife receives the sum of $400,000 from the net sale proceeds of the former matrimonial home.

L Pty Ltd overdraft account

1. Order 4(c) made on 6 April 2016 provided that the parties cause the company’s overdraft account to be discharged from the proceeds of sale of the H Street property.  The wife now seeks the following order:

   6.That 24 hours prior to the settlement of the sale of [H Street] the husband do all acts and things and sign all such documents as may be required to transfer all funds standing to the credit of the ANZ Negotiator account no. … held in the name of [L Pty Ltd] to the ANZ Business Overdraft Account no. … held in the name of [L Pty Ltd].

2. Apparently, the wife brought this application as a result of observations made by Ms E in a letter dated 5 July 2016, in which she noted “the average balance of the overdraft account has increased significantly since

   
   

   1 January 2016”.  Ms E noted “A meeting with the in-house accountant would be very helpful in this regard”, in the context of her recommendation for a “cut-off audit” of the account balances at the time of settlement.

3. I agreed to the request of the legal practitioners of the parties that the interim proceedings be re-listed before me on 5 August 2016, for the purposes of consideration of a meeting between Ms E and the in-house accountant of the company.  Subsequently orders to the following effect were agreed to:

   Within seven days the husband do all acts and things necessary to authorise the in-house accountant [Mr B] and [Mr C] and/or other representative from [Mr D] to confer with [Ms E] in relation to the matters addressed in her letter date 5 July 2016, with such meeting to be audio recorded and distributed to both parties.

   In these circumstances I do not consider it necessary that any further consideration now be given to this issue.

I certify that the preceding forty-seven (47) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on

15 August 2016.

Associate: 

Date:  15 August 2016