Marlowe and Marlowe & Anor

[2018] FamCA 971

FAMILY COURT OF AUSTRALIA

MARLOWE & MARLOWE AND ANOR [2018] FamCA 971

FAMILY LAW – PRACTICE AND PROCEDURE – where there is a dispute about disclosure of documents – consideration of necessity to make an order – where obligation recognised and Court not satisfied wife recalcitrant.

FAMILY LAW – PROPERTY – interim or partial property dispute – where the wife already has orders giving her approximately $5 million on an interim basis – there the husband has control of various entities which hold the bulk of the assets worth much more than $5 million – where the wife seeks that the husband pay all of the valuation costs and the husband seeks she pay her half from her newly-received sourced – consideration of the principles in Strahan – where an order should be made.

Family Law Act 1975 (Cth)

Strahan & Strahan (Interim property orders) [2009] FamCAFC 166, (2011) FLC 93-466, (2009) 42 Fam LR 203

APPLICANT: Ms Marlowe

FIRST RESPONDENT: Mr Marlowe

SECOND RESPONDENT: B Pty Ltd (ACN ...)

FILE NUMBER: MLC 5267 of 2017

DATE DELIVERED: 23 November 2018

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 16 November 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr O’Shannessy

SOLICITOR FOR THE APPLICANT: Lander & Rogers

COUNSEL FOR THE FIRST RESPONDENT: Mr Matta

SOLICITOR FOR THE 

FIRST RESPONDENT:

Sayer Jones

THE SECOND RESPONDENT: No appearance

Orders

BY CONSENT IT IS ORDERED

1. That within seven days of the date of these Orders, the Applicant and the First Respondent do all acts and things and sign all documents necessary to appoint:

   (a) C Accountants as a single expert pursuant to Part 15.5 of the Family Law Rules 2004 (Cth) (the Rules) to prepare a valuation of the Marlowe Group entities;

   (b) D Group as a single expert pursuant to Part 15.5 of the Rules to prepare any necessary real property valuations required by C Accountants for the purposes of its valuation pursuant to sub-paragraph (1)(a) of these Orders; and

   (c) Any other valuer nominated by C Accountants, as a single expert pursuant to Part 15.5 of the Rules, to prepare any necessary valuations of plant, equipment, vehicles or any other valuations required by C Accountants for the purposes of its valuation pursuant to sub-paragraph (1)(a) of these Orders.

2. That further to paragraph (1,) the First Respondent within 7 days sign or instruct his solicitors to sign on his behalf the joint letters of instruction to C Accountants and D Group in the form of annexure and marked "Annexure A" and "Annexure B" respectively.

3. That the Applicant and First Respondent forthwith comply with any and all requests for information and/or documents required by C Accountants, D Group and/or such other agreed valuer, for the purposes of the single expert valuations to be prepared pursuant to paragraph (1) of these Orders.

4. That the parties do all acts and things and sign all documents necessary to appoint a joint single expert to value the Applicant's jewellery and artworks if any and the contents of the homes of the Applicant and the First Respondent ("the chattels expert") as follows:

   (a)       Within seven (7) days of the date of these Orders, the Applicant nominate three potential chattels experts in writing;

   (b)       Within seven (7) days thereafter, the First Respondent elect one of the three chattels experts nominated by the Applicant and convey his election in writing;

   (c)       Within a further seven (7) days thereafter, the Applicant and the First Respondent instruct the chattels expert nominated by the First Respondent to value the Applicant's jewellery and any artworks and the contents of the homes of the Applicant and the First Respondent and each party will:

   (i)        cooperate with the chattels expert to provide all access, documents and information as may be requested by the chattels expert to prepare their valuation; and

   (ii)be responsible for one half of the chattels expert's fee.

IT IS FURTHER ORDERED BY THE COURT

1. That without limiting the obligations of the First Respondent pursuant to paragraph (3) of these Orders, the First Respondent:

   (a)       Cause the Applicant's solicitors and C Accountants to be provided with true copies of the management accounts for each of the Marlowe Group entities for the financial year ending 30 June 2018 and true copies of bank statements for all accounts held by each of the Marlowe Group entities or the First Respondent personally for the period 1 July 2017 to date on or before 20 December 2018;

   (b)       Do all things, sign all documents and give all necessary and property instructions to F Group to prepare and complete the Financial Statements and Taxation Returns for each of the Marlowe Group entities for the financial year ended 30 June 2018 and to provide true copies thereof to the Applicant's solicitors and C Accountants on or before 28 February 2019.

2. That within seven (7) days the First Respondent authorise, and do all things necessary to authorise, the accountants for the Marlowe Group entities, F Group, to provide to the Applicant's accountant, Mr E such financial records and information relating to the Marlowe Group as Mr E requests with such authority to be in the form attached hereto and marked " Annexure C" ("the Authority").

3. That until further order the First Respondent do all things to cause the Authority to remain in place.

4. That the First Respondent provide to the Applicant a copy of the executed Authority and the letter email confirming delivery of same. 

5. As and when required to do so, the First Respondent pay the valuation expenses arising from the single expert valuation exercises undertaken by C Accountants and D Group.

6. The issue of the obligation of the Applicant to make any contribution towards the expenses referred to in paragraph (9) be an issue for the final hearing.

7. To the extent necessary, both the First Respondent and the Applicant do all things necessary to enable the First Respondent to draw the expenses referred to in paragraph (9) from the Marlowe Group Entities.

8. That paragraphs 2 to 4 of the Applicant’s further amended application in a case filed 12 November 2018 are dismissed save that any adjustment between the parties for such payments be an issue for the final hearing.

9. Paragraph 15 of the Applicant’s further amended application in a case filed 12 November 2018 is dismissed.

10. Paragraphs 1 and 2 of the First Respondent’s response filed 14 November 2018 are dismissed.

11. That save as to any issues of costs, and the orders made by consent (or without opposition), the Applicant’s further amended application in a case filed 12 November 2018 and the First Respondent’s response to that application in a case, filed 14 November 2018, are otherwise dismissed.

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 Marlowe & Marlowe and Anor 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 5267  of 2017

Ms Marlowe

Applicant

And

Mr Marlowe

First Respondent

And

B Pty Ltd (ACN ...)

Second Respondent

REASONS FOR JUDGMENT

1. In interlocutory proceedings between Mr Marlowe (“the husband”) and Ms Marlowe (“the wife”), the Court was asked to determine four issues.  Those were, should orders be made:

   a)requiring the husband or the parties’ entities to pay for the valuation of  “the Marlowe Group entities” to be undertaken by two single experts or should the wife contribute one-half;

   b)About who should pay for the “reasonable and necessary costs and expenses” of and incidental to the sale of (specifically) 1 G Street, Suburb H;

   c)For the “default” of the husband if he “refuses or neglects” to comply with a payment obligation such that he then transfer to the wife the parties’ Town L property to enable the wife to use it as security to raise money to cover any unpaid commitments under orders; and

   d)For discovery or disclosure to be made against the wife.

2. For the reasons outlined below, the answer to those four questions is as follows:

   a)The husband should pay all of those expenses but orders should also be made that each party do all things necessary to give effect to the order if the husband desires the payment come from the parties’ entities;

   b)The wife should pay;

   c)No such order should be made; and

   d)No such order should be made.

3. It is sufficient to say two things about this case.  First, despite the parties having been married for more than 40 years, the litigation in this Court is complex as it revolves around 25 corporate entities.  Secondly, the simple four questions above belie the fact that most of the myriad of other contentious interlocutory issues were resolved on 16 November 2018 between the parties themselves and orders have been made by consent.

4. Of the disputed issues in the hearing on 16 November 2018, two orders are to be made by the Court (thus, not by consent) but without opposition from the husband. In addition, the husband sought an order for withdrawal by the wife of caveats and although not pressed on the day, the husband’s counsel stressed that that issue remains unresolved. 

5. The background to the contentious issues set out in (a) and (b) above, flow from the orders made on 1 August 2017. There, Johns J made these orders:

   Interim settlement of property

   (5)That until further Order, the Husband pay or cause to be paid to the Wife by way of interim property settlement of property the sum of $5,000,000 as follows:

   (5.1)    the sum of $1,000,000 within 14 days; and

   (5.2)the further sum of $4,000,000 within 150 days or upon settlement of the sale of the real property at [1 G Street, Suburb H], whichever is earlier, with any remaining balance from that sale to be retained by the Husband by way of interim property settlement.

   (6)In default of the payment in paragraph 5.2, the Husband do all things and sign all documents required to cause the sale of the real properties at [1 and 2 G Street, Suburb H], in such manner and upon such terms as the Wife may direct, with the proceeds of each sale to be disbursed.

   (6.1)    Firstly to pay all costs, commissions and expenses of the sale;

   (6.2)Second to pay to the Wife the sum of $4,150,000 as and by way of interim settlement of property;

   (6.3)third to pay the balance to [J Lawyers] to be held upon trust in an interest bearing account upon trust for the parties until further order or written agreement of the parties.

6. It is common ground that in respect of paragraph (5.2) of those orders, the wife is only now (that is 15 months later) about to get her $4 million. However, she will then have significant capital. It was a contentious point that she had not set out precisely what had happened to the money she had already received, but I consider that a discovery issue, as the sale of one of the two properties has already settled and the second property is about to settle which will give her a substantial sum of money pending trial. At trial, to the extent necessary, an adjustment can be made to achieve a just and equitable outcome, but for that to occur, disclosure must occur. 

7. On 11 April 2018, Johns J made the following orders:

   (2)That pursuant to paragraph 6 of the Orders made by the Honourable Justice Johns on 1 August 2017 ("the Orders") the husband forthwith do all acts and things and sign all documents so as to permit the wife to sell the real properties situate at [1 G Street Road, Suburb H] and [2 G Street, Suburb H] ("the [Suburb H] properties") and for that purpose within 7 days the Respondents execute and deliver to K Lawyers the Power of Attorney annexed hereto and marked "Annexure A".

   (3)The proceeds of the sale of the Suburb H properties be applied as follows:

   (3.1)Firstly, to pay all costs, commissions and expenses of and incidental to the sales;

   (3.2)    Secondly, to pay to the wife the sum of $4,150,000; and

   (3.3)Thirdly, to pay the balance into an interest bearing account with K Lawyers on trust for both parties with such funds not to be released save as in accordance with written agreement between the parties or pursuant to Court order.

   (Annexure A omitted)

   It will therefore be seen that the August 2017 orders were not completed necessitating a return to Court.

8. The background to issue (c) above is almost self-evident. The wife accuses the husband of thwarting her attempts to resolve the dispute and seeks an order giving her an opportunity to avoid having to use her capital. She maintains that the parties other assets should be used to cover the relevant costs and expenses. Again, any adjustment can be made at trial.

9. The background to issue (d) above is not so clear. The husband filed a response to an application in a case on 14 November 2018; that is two days before the date of hearing. He sought a raft of orders, including that the wife produce bank records and tax returns. Curiously, both parties along with the Marlowe group entities use the same accountant.

10. The wife’s taxation returns cannot be completed until the accountant works out the relevant distributions of profits, income and dividends. Thus the husband has access to all of the wife’s financial position.

11. It is the wife’s case, not seriously denied by the husband, that the husband has the control of the finances of the group. Counsel for the wife said that the wife was not unhappy about that. Indeed, such is her trust and confidence in the husband that the following order appears in the orders of 1 August 2017:

    (7)That until further Order, the Husband be and is hereby restrained both personally and in his capacity as a director, shareholder, secretary, appointor, trustee or other office bearer of any company or trust comprised in the [Marlowe] Group from causing, suffering or permitting:

    (7.1)the sale, disposal or transfer of any assets of the parties individually or jointly or the assets of the [Marlowe] Group without giving 14 days' prior written notice to the Wife's solicitors and in any case, provide to the Wife's lawyers within 7 days of the execution a copy of any contract of sale of any such assets;

    (7.2)the creation of any further encumbrance or the procurement of any debt secured upon the title to any assets of the parties individually or jointly or the [Marlowe] Group without giving 14 days' prior written notice to the Wife's solicitors;

    (7.3)causing, suffering or permitting any interference with the Wife's quiet use and enjoyment of the Wife's ... motor vehicle;

    (7.4)resigning as a director, appointor or from any other positon of office in any entity comprised in the [Marlowe] Group, without providing 14 days' prior written notice to the Wife's lawyers of his intention to do so;

    (7.5)causing, suffering or permitting the appointment of any further or other directors, appointors or office bearers in any entity comprised in the [Marlowe] Group without providing 14 days' prior written notice to the Wife's lawyers of his intention to do so;

    (7.6)selling, transferring, disposing of or otherwise encumbering any shares held by him in any company comprised in the [Marlowe] Group;

    (7.7)selling, transferring or otherwise encumbering any shares held by any company comprised in the [Marlowe] Group in any corporate subsidiary.

    That is, the wife was happy for the husband to give her 14 days’ notice of any activity that might prejudice her financial interests.

12. In respect of issue (d) above, the focus was on whether the wife has been recalcitrant, careless or indeed compliant in respect of her disclosure obligations. In his affidavit filed 14 November 2018, the husband said that his solicitors wrote to the wife’s solicitors in February 2018 asking politely for a number of documents which were set out in the letter. He said that that same request was repeated in a letter dated 9 April 2018. In July 2018, a further letter was sent indicating that disclosure had not been completed. In August 2018, another letter was sent requesting financial disclosure and some of those documents were provided by the wife in September.

13. After discussion, counsel for the husband limited the dispute to bank records after 1 October 2017 and “details” of what work was proposed to be done on the relevant Suburb H property including an “indication” of the timeframe; details and documents of invoiced amounts up to that time; and, disclosure of the wife’s expected price of the sale of the Suburb H property.

14. A fair inference from the husband’s affidavit, along with the respective submissions of the parties’ counsel, is that there really is no problem here in relation to bank records. As the wife’s counsel submitted, up until October 2017, there had been complete disclosure and there was no logical reason why that would not follow now. In respect of the various requests, it was pointed out that the husband could get those details from the parties’ joint accountant in any event. It is the husband’s evidence that some of the documents he wanted had been received, but I remain unclear as to whether there are things missing. In other words, I am unsure whether the wife is ignoring the husband deliberately in which case it would be recalcitrance, or whether these matters have just been overlooked in all of the many things that have been going on. It remains unclear whether these documents would assist the interlocutory issues in any event.

15. In some ways avoiding the issue, Counsel for the wife pointed out that the husband’s response had only been filed two days before the particular hearing. He submitted there had been no correspondence after August 2018 and therefore I should infer there was no problem. As the issue did not seem to feature in the litigation earlier, I consider I should accept the wife’s counsel’s assurance that the wife is aware of her obligations and will be responsive to them. Those obligations are enshrined in r 13.07 of the Family Law Rules 2004 Cth (“the Rules”) and therefore an order is only necessary where the Court is concerned that obligations are not being met. I was assured by counsel for the wife that is not the case, and accordingly, I have declined to make the order. I return then to what is contentious, namely how the parties desire to spend (or not spend) their own money in respect of this litigation.

16. The parties’ wealth in this case is tied up in the Marlowe Group entities. The husband’s sole source of income seems to be dividends from that group. It was difficult to get a sense of how much of his own money is available to him, as distinct from his capacity to use his interest (with the wife) in the group as he sees fit.

17. The husband’s financial statement is a year old. In that document, he said there was real property valued at $27.7 million, but it appears that is property of, and owned by, various entities. The evidence suggests that both the husband and the wife are the “owners” of these entities. The value (a year ago) appears also to have changed, because one property, a nursing home development included in the $27.7 million total, was shown as having an unknown value. It seems to have recently been sold for $33 million so there is likely to be more divisible capital in the overall assets. There must certainly be more than $27.7 million and the husband has not said otherwise.

18. The husband also disclosed that the only money he had in bank accounts in 2017 was $3.5 million, but when a schedule was examined showing the finer details, those monies were held in company accounts. Accordingly, relying on the husband’s financial statement which has not been updated for a year, I do not know what he owns.

1. What the Court has been told is that the wife is about to receive $4 million over and above the $1 million that she has already received. That comes from her disposal of the properties because of the 2017 orders.

2. Issues (a) and (b) in paragraph [1] above, revolve around the power of the Court to make any orders at all.  Much of the argument in this case revolves around the principles set out by the Full Court of this Court in Strahan & Strahan (Interim property orders) [2009] FamCAFC 166, (2011) FLC 93-466, (2009) 42 Fam LR 203. The Full Court examined the question of the approach to interim payments of various types prior to final trial in property proceedings. The plurality, Boland and O’Ryan JJ discussed all of the various historical authorities, some of which are still relevant, and it is unnecessary for me to repeat them here.

3. It is uncontroversial that the exercise of the power under s 79 of the Family Law Act 1975 (Cth) (“the Act”) requires the Court to keep in mind that there is only one exercise of power under this section and that it is “preferable” that there be one final hearing. However, there may be circumstances in which it is just and equitable to exercise the power other than in one order.

4. Counsel for the wife relied upon both ss 79 and 80 of the Act as the source of power. The Full Court confirmed that in proceedings under Part VIII of the Act, s 80(1)(h) of the Act is certainly a source of power to make an interim property order in circumstances where there is an extant application under s 79 of the Act as there is here.

5. The plurality in Strahan (Supra) said at [118] that there were two stages of the hearing where the power was to be exercised pursuant to s 80 of the Act. As the Full Court said, that was recognised by the fact that although the power under s79 of the Act should ordinarily be exercised on a once only basis, there may be circumstances that arise before a final hearing where it can be exercised. As their Honours observed, the first step is to resolve whether to exercise the power before a final hearing, and if it is resolved to do so, then the second step involves the exercise of that power.

6. In relation to the first stage, the interests of justice are the “overarching consideration”[1]. Their Honours observed that all that is required is that in the circumstances, it is appropriate to exercise the power. In exercising it, the Court has to keep in mind that the usual order under s 79 of the Act is a once-and-for-all order made at a final hearing.

   [1] See [132] of Strahan (Supra)

7. The plurality in Strahan referred back to Harris and Harris (1993) FLC 92‑378 where that Full Court referred to the circumstances under which it might be appropriate to exercise the power to avoid injustice. In Strahan, their Honours went one step further and said:

   [133] Another example is where, as in this case, one party requires funds to assist in defraying the costs of litigation without which funds an injustice may be caused.

   (my emphasis)

8. It could not be said in this case that the wife requires funds if that word is used in the sense of need. However, as observed above, the Full Court was simply giving an example. There could not be a situation here, with the wealth of these parties, that any clawback consideration is required.

9. Counsel for the husband submitted that there should not be a payment made to the wife on the basis that she would be receiving property when the matter was ultimately dealt with at trial.  He pointed to the observation of the plurality where their Honours said:

   [139]We also emphasise that in order to establish an appropriate case 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 amount in excess of the funds being sought) from the other party. 

10. In my view, that paragraph cannot be read in isolation. At [137], the plurality observed that once a Court proceeds to exercise the power in s 79 of the Act, it is required to undertake consideration of the matters in s 79(4) of the Act, even if briefly so. Their Honours then said:

    [137]…(I)f it is established that “it seems likely to the Court that … the applicant … will be likely receive by way of property settlement a sum sufficient to cover the advance, that would seem to be sufficient to enable the order sought to be made”: Zschokke; Polletti and Polletti per Nygh J and Wenz v Archer. 

    (Citations omitted)

11. At [139] of Strahan, the Full Court was referring to a situation where a party simply seeks an order on the basis that they will ultimately receive a property settlement. As the Court observed in [137], and after consideration of the matters in s79 of the Act, it seems likely that any advance sought would be covered by the property settlement, that would be “sufficient” to enable the order to be made. That was because, as the plurality observed, in those circumstances, the applicant would only be receiving what he or she was entitled to receive when the power was ultimately exhausted.

12. There are two issues addressed by the wife’s application. The first is that she wants not to have to use her capital for the forthcoming exercise of having the valuations undertaken for all the property that the parties own. The second issue relates to the question of either compensating her or paying out debts, as yet unpaid, for the two properties that she has sold pursuant to the orders of 2017. In my view, the two issues are not connected for the purposes of the exercise here.

13. In respect of the money for the forthcoming valuations, the rules of the Court provide that each party should pay one half. That issue can be addressed at trial. Any adjustment that is necessary can be easily undertaken in the final stages of the exercise of the power under s 79 of the Act. Here, the wife points to the fact that the husband has the control of all of the assets and she ought not to have to dip into her capital to fund those expenses in circumstances where she will ultimately benefit by receiving more than that which she currently has. Notwithstanding what I had earlier said in relation to the question of how the husband portrayed the financial position in his financial statement a year ago, I see this particular issue in the same category as the matters mentioned in [137] of Strahan (supra). However, that needs to be qualified by the Court being satisfied about the two-step process to which their Honours referred.

14. Before turning to those two steps, the second issue is in relation to the expenses incurred by the wife as a result of the sale of the Suburb H property. These are properties that the wife already owns; she benefits by any improvements that she undertakes. Those efforts may very well be contribution issues at trial. To the extent that the husband insists that the wife should now pay those expenses, he can hardly argue the wife is not making a significant contribution under s 79 (4) of the Act in her endeavours to increase the value of the properties so sold if she pays them from her own resources.

15. I return then to the two-step process. In Strahan, their Honours observed:

    [115]The first step requires consideration as to whether the jurisdiction will be entertained. The second step arises if the jurisdiction is entertained and requires consideration of the factors which are relevant to the exercise of power under s 79 to make an order.

16. The wife points to the fact that she should not have to spend her money when the husband has the control of all of the assets and it is clear that she is entitled to more than she currently has. In other words, the husband has her assets. The husband does not argue otherwise. In my view, the overarching consideration here, is that the husband is in a much stronger financial position, notwithstanding the wife is not impecunious, and to the extent that he argues that each party should pay one half, he has the control of the interests of the wife so he has control of her one half of the funds that would go towards that exercise in any event. This is a situation in which the jurisdiction should therefore be entertained and I am satisfied there are no clawback issues arising. As I earlier observed, the brief evidence to which my attention was drawn by counsel for the wife as set out in her affidavit, is sufficient to satisfy the criteria in s 79(4) of the Act. In those circumstances, the second step is satisfied as well.

17. In the circumstances, an order in terms of (a) set out above as pursued by the wife should be made, but because of the fact that I am concerned about the assets of both parties being tied up in entities, it is appropriate to make an order as well that each party do all things necessary to give effect to the order so that the husband is assisted in drawing funds expeditiously from the entities to make any necessary payments on behalf of both parties.

18. I have already indicated a distinction between the two issues and in my view, no order should be made in terms of that sought by the wife in issue (b) above. It was unnecessary therefore to deal with issue (c) above and I will decline to make an order on the basis that once ordered, as I now intend, the husband will have the obligation to comply.

19. In this case, there is sufficient evidence for me to deal accept both steps involved.

20. As the Full Court said in relation to that first question at [132]:

    …(W)hen considering whether to exercise the power under s 79 and s 80(1)(h) of the Act to make an interim property order the “overarching consideration” is the interests of justice… All that is required is that in the circumstances it is appropriate to exercise the power.

    I find it is appropriate in the circumstances here.

21. In respect of issue (d) relating to discovery by the wife, I have dealt with that above.  I propose not to make such an order.

I certify that the preceding thirty-nine (39) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 23 November 2018.

Acting Associate:

Date:  23 November 2018