Machida and Machida

[2018] FamCA 585

FAMILY COURT OF AUSTRALIA

MACHIDA & MACHIDA [2018] FamCA 585

FAMILY LAW – Protection of the assets of the marriage.

Family Law Rules 2004 – r 12.02

APPLICANT: Ms Machida

RESPONDENT: Mr Machida

FILE NUMBER: CAC 945 of 2018

DATE DELIVERED: 23 July 2018

PLACE DELIVERED: Canberra

PLACE HEARD: Canberra

JUDGMENT OF: Gill J

HEARING DATE: 23 July 2018

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Farrar Gesini Dunn

COUNSEL FOR THE RESPONDENT: Ms N Sdraulig

SOLICITOR FOR THE RESPONDENT: Blackwood Family Lawyers

Orders

UNTIL FURTHER ORDER, IT IS ORDERED:

1. That for the purpose of s 90AE of the Family Law Act 1975, B Pty Ltd (CAN …) in its capacity as trustee (The Trustee) of the Machida Superannuation Fund (ABN …) is a necessary party for the making of these Orders and having been accorded procedural fairness as required by s 90AE(3)(c) of the Family Law Act 1975 is joined as a part to these proceedings.

2. The Husband and the Wife, in their personal capacity and as directors of the Trustee, are subject to written agreement by them to the contrary each restrained from: -

   (a)Instructing the accountants for the Machida Superannuation Fund to take any step, save with the authorising signature of the other party.

   (b)Selling, gifting or otherwise disposing of their shareholding in the Trustee.

   (c)Appointing any other person to be a director of the Trustee.

   (d)Appointing any other person or corporation to be an additional or replacement Trustee of the Machida Superannuation Fund in place of the Trustee that is now a party to these proceedings.

   (e)Selling any shares owned by the Trustee in its capacity as Trustee of the Machida Superannuation Fund. 

   (f)Withdrawing any amount from any bank account, or share trading account, or any other account held with an authorised deposit-taking institution in relation to the Machida Superannuation Fund.

   (g)Dealing with, charging, encumbering, or disposing of any of the investment property of the Machida Superannuation Fund.

   (h)Entering into any loan or borrowing in the name of the Machida Superannuation Fund or permitting or causing the Trustee to do so. 

3. Within 28 days the respondent Husband provide to the solicitors for the applicant Wife:

   (a)A statement detailing all transactions which have been undertaken in relation to the Machida Superannuation Fund since 1 July 2016, and the manner in which all funds withdrawn have been applied;

   (b)Copies of all bank statements relating to any account/s operated by or in the name of the Machida Family Trust, Machida Superannuation Fund, C Pty Ltd, B Pty Ltd, and any joint account of Ms Machida and Mr Machida, for the period 1 January 2017 to the date hereof.

   (c)Copies of all share trading account statements for the entities or persons referred to in (b) above for the period 1 January 2017 to the present;

4. That the Husband will file and service a Response to Initiating Application, a Financial Statement and any relevant affidavit by 17 August 2018.

5. Each party will, via his or her lawyer, e-mail PDF copies of the following documents to the lawyer representing the other party by no later than 31 August 2018:

   (a)If not already exchanged, a copy of all of the documents mentioned in r 12.02 of the Family Law Rules 2004;

   (b)Documents that support the information contained in the party’s financial statement;

   (c)Documents showing any inheritances, gifts or compensation payments received by the party during or after cohabitation;

   (d)Documents relating to any purchase or disposal of property in the 12 months prior to and since separation;

   (e)Documents relevant to any increase or decrease of liabilities since separation;

   (f)Documents showing the value of any superannuation interest of a party, included the basis on which the value has been calculated and any documents used to calculate the value;

6. That the Wife’s costs of these interim proceedings are reserved.

IT IS FURTHER ORDERED THAT

1. The matter is otherwise adjourned to 4pm on 12 October 2018 for directions.

2. In the event that either party seeks to appear by telephone on that day then they are to comply with the relevant rules in relation to telephone attendance.

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 Machida & Machida 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 CANBERRA

FILE NUMBER: CAC 945 of 2018

Ms Machida

Applicant

And

Mr Machida

Respondent

EX-TEMPORE REASONS FOR JUDGMENT

1. The parties have been part of a long marriage of which a significant aspect of the property pool is a self-managed superannuation fund.  An application is brought by the Wife for the protection of part of the subject matter of the litigation, being that self-managed superannuation fund.  That is, a fund that is in place for both the Husband and the Wife is governed by a trustee, which is a corporation of whom the shareholders and directors are both the Husband and the Wife.  The application is founded upon the Husband's dealings with and drawings upon the self-managed superannuation fund since separation.  There are also disclosure issues arising.

2. The orders sought by the Wife are contained at exhibit W1.  In large part, those orders were not opposed (see exhibit H1 which sets out the Husband's position). 

3. To the extent that they were opposed, the opposition was to adjourn the opposed aspects for hearing at a later time on the basis that the Husband has an inability to respond to the proceedings and therefore there is a deficit in the material. 

4. The timeline for the proceedings follows the Wife's application filed on 21 May 2018 at which time she also filed a financial statement and an affidavit.  No response has been filed by the Husband, although he has filed an affidavit on 11 July 2018 which centred upon his request for an adjournment of the proceedings.  He has also filed an affidavit by the accountant for the self-managed superannuation fund on 20 July 2018.  The basis that he puts forth for there being a lack of responding material on his part are, firstly, that he asserts that he is mentally unwell, although that assertion is absent supporting material.  He further asserts that this has hindered his ability to respond.  That assertion is not supported by any expert opinion, but is supported by his subjective assertions as to his position.  Secondly, he asserts that this year he has suffered from a particular instance of suicidal ideation and attempted suicide which follows years of suicidal ideation experienced by him.  The third aspect is that he is currently overseas.  He has travelled overseas predominantly for a holiday and conference, although in part, he says, to help with his mental condition.  That trip is taking place from 5 July 2018 and he is due to return to Australia on 27 July 2018.  It is notable that he had a small time short of two months prior to engaging in the travel from the point at which the Wife filed her application. 

5. I will return to the adjournment issue later as that is in part reliant on the nature of the application made by the Wife. 

6. As was properly conceded by the solicitor for the Wife, her application stands or falls on the issue of the Husband's dealings with the self-managed superannuation fund to his benefit and to the detriment of the Wife.  In support of that she in particular relied upon [7] through [17] of her affidavit.  Her affidavit sets out that the control aspects of the self-managed superannuation fund by which C Pty Ltd is the trustee for C Family Trust of which the Husband and Wife are the directors, shareholders and the beneficiaries. 

7. She asserts that there is $416,000 cash as the current asset.  She says that between May 2017 (which is when the parties separated) and the present, the Husband has been withdrawing assets from the entity.  Her allegation is that in May 2017 he asserted to her that the trust had a value of $1.3 million.  As of June 2017 the Wife saw details of the transactions that had been undertaken in respect of the entity and sought an assurance from the Husband he would not deal with the assets of that entity any further.  She advised him that she gave no consent to his dealings.  She says that no subsequent assurance was given and that there has been a lack of disclosure since that point of the dealings by the Husband.  Further, she relies upon the accountant for the fund providing material which indicated that in the 2016/2017 financial year the assets of that fund had fallen by $400,000 in a context of $623,000 being recorded as paid out to members. 

8. She says in relation to these particular matters there was no consultation with her, no agreement by her and no permission given by her.  She further alleges that there is a false assertion on the part of the Husband that financial statements were approved at a meeting, necessarily a meeting that would have involved her and the Husband.  She says that no such meeting took place.  She further alleges that the self-managed superannuation fund is now non-compliant with its obligations. 

9. It may be tentatively concluded, but only for the purpose of the interim proceedings, that the self-managed superannuation fund is a significant asset of the parties and on the Wife's case has been improperly dealt with by the Husband in the face of requests not to deal with the property.  What may be inferred from that is that the fund is currently at risk of further dealings absent a restraint. 

10. It should be noted that the Husband has not put on material to contradict the matters raised by the Wife aside from an affidavit from the accountant for the self-managed superannuation fund which records that an audit for the fund has taken place.  However, as was pointed out by the solicitor for the Wife, there is no indication what information the auditor was made aware of to indicate that there was a dispute as to whether or not the meeting was recorded took place as referred to earlier. 

11. It may well be the case that the Husband struggles with his mental health, particularly in respect of depression and anxiety and suicidal ideation.  It may be accepted for the purpose of the interim proceedings that is his current experience.  However, he has failed to adduce cogent evidence as to why this meant that he was unable to put material on particularly when he had plenty of time to do so. 

12. That leaves the Wife's position, at present, un-contradicted in large part by the Husband.  The subject matter of the dispute between the parties, that is the degradation of one of the significant assets of the marriage, absent cogent evidence in response or cogent evidence to show why that evidence has not been put on, requires that the issue at stake, being the protection of the self-managed superannuation fund, requires a prompt dealing by the Court.  That is, it is necessary for the protection of the assets that the proceeding should go ahead notwithstanding the matters that are being raised by the Husband as to the deficits in him dealing with that particular matter today. 

13. It should be noted that in proceeding to act protectively of the self-managed superannuation fund the notion of the protection of the fund is not opposed by the Husband, even though the mode of protection sought by the Wife is opposed by him. 

14. Of those orders that are sought by the Wife it may be observed that order 1 of exhibit W1 is not opposed. 

15. Order 2 is opposed, but particularly opposed in respect of death benefit nominations. 

16. The context of the Husband's opposition is that he accepts that there should be a restraint, however, on the parties’ ability to draw upon the assets. 

17. Order 3 is also opposed as it deals with restraint of trading in a particular account. 

18. Order 4 did not appear to be seriously opposed in large part – that is, an order which dealt with the provision of material.  What was opposed is the timeframe of the provision of material, but also whether or not item (d) for which a privilege claim is tentatively made should be produced at this stage. 

19. Orders 5 through 9 are not opposed.

20. Order 10, which dealt with interim costs being reserved, is opposed. 

21. It may also be seen that the orders deal with the provision of material, again in the context where there is both a disclosure obligation and an acceptance on the part of the Husband, that there is an obligation to provide disclosure. 

22. Examining the orders that are proposed by the Wife it may be observed that her order better protects the self-managed superannuation fund than what is proposed by the Husband, which is, for his part, a simple restraint from drawing upon that fund by the parties.  What is proposed by the Wife both maintains the assets and maintains the structure and control of the self-managed superannuation fund and is preferable in its terms, at least generally to that which is proposed by the Husband.

23. A question however, remains about the death benefit nominations.  The upshot of the restraint proposed by the Wife is it will have the effect of neither the Husband nor the Wife being able to determine from this point on, where the share should rest should either of them die.  There is no evidence before the Court where any death benefit nomination directs the payment at present.  There is no evidence therefore to determine whether the current status is or is not protective of the self-managed superannuation fund interests held by either of the parties.  That is, I do not know if the nominee selected by the Husband remains the Wife as one might suspect it did during the currency of their relationship, or whether it has changed from that position. 

24. Similarly, I do not know who it is that the Wife has nominated or when she has made a nomination.  A restraint on nomination does, as is pointed out by counsel for the Husband, undermine his ability in the context of the ending of the relationship to determine where such an interest should lie.  I do not know how any current nomination (given that the structure of the orders proposed by the Wife is to maintain the current nomination) may undermine her claim or may undermine his claim.  That is, I am unable to determine on the current evidence who would or would not gain a protection by making the order sought by the Wife in respect of the death benefit nomination. 

25. Absent evidence which demonstrates that such a move would be protective such an order should not be made. 

26. I should also observe that in relation to the balance of order 2, which is an order that I otherwise intend to make, it should be made with a particular change which is to condition it that such transactions are not to take place without the written agreement of both of the parties.  The benefit of making such a qualification is it means that the parties will not be forced back to the Court to deal with the administration of the self-managed superannuation fund if they are otherwise able to agree with what transactions should take place.

27. Order 3 sought by the Wife is in fact a notation.  As far as I am able to discern at present there is no evidence to show whether or not that notation is or is not actually the case.  I do not intend to make that notation on that basis, although I note that if that is in fact the effect of the orders then the notation does not take the matter any further in any event.

28. Order 4 sets out a timeframe for disclosure of particular matters.  I note that the parties are subject to disclosure requirements whether or not such an order is made.  However, to the extent that specificity in the production of material is helpful in the context where there have been, on the account of the Wife, repeated requests for material then the order should be made.  However, there is nothing pointing to an urgency such that the disclosure of material should be made within 14 days and I propose that it be made within 28 days. 

29. I do not make an order for disclosure as sought with paragraph (d) of Order 4 sought as I am advised that there is an outstanding privilege issue.  It may be that production is pressed and ruled upon eventually but at this point it is premature to deal with that particular matter. 

30. I note that for Order 6(g) it was agreed by the parties that there should be an amendment to that so that it refers to decreasing as well as increasing of liabilities. 

31. I do not make Orders 7, 8 or 9 as proposed on the basis that those are matters that will be revisited if the parties take part in a private mediation which may obviate the need for a conciliation conference.

32. I propose to reserve the question of the Wife's costs to the final hearing of the matter. 

I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Gill delivered on 23 July 2018.

Associate: 

Date:  2 August 2018