McDermott & McDermott
[2017] FamCA 376
•19 May 2017
FAMILY COURT OF AUSTRALIA
| MCDERMOTT & MCDERMOTT AND ORS | [2017] FamCA 376 |
| FAMILY LAW – PROPERTY – Where subsequent to separation Receiver and Liquidator appointed to parties’ corporate and partnership entities – Where significant adverse credit findings as to the husband’s evidence – Where husband retained significant funds the property of the receivership/liquidation – Where issues as to the proper “pool of assets” for adjustment purposes – Where husband’s financial and other misconduct adversely affect the ongoing receivership/liquidation and the costs thereof. FAMILY LAW – CHILDREN – Where parties agree as to equal shared parental responsibility – Where parties agree that children to live primarily with the mother – Where discrete issue for determination the children’s time with the father – Consideration of the children’s best interests. |
| Family Law Act 1975 (Cth) ss 60B, 60CA, 60CC, 60CC(2), 60CC(2)(a), 60CC(2)(b), 60CC(3), 61DA, 61DA(2), 61DA(3), 61DA(4), 65DAA, 65DAA(6), 75(2), 79, 79(1), 79(2), 79(4), 90SM(4) |
| Bevan & Bevan [2014] FamCAFC 19 |
| APPLICANT: | Mr McDermott |
| FIRST RESPONDENT: | Ms McDermott |
| SECOND RESPONDENT: | B Pty Ltd (In Liquidation) |
| THIRD RESPONDENT: | Mr M (Liquidator) |
| FILE NUMBER: | SYC | 70 | of | 2014 |
| DATE DELIVERED: | 19 May 2017 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 29 February 2016, 1, 2, 3, 4 and 7 March 2016, 13 December 2016 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Hodgson & Ms Picker |
| SOLICITOR FOR THE APPLICANT: | Hancock Alldis & Roskov Lawyers & Notaries Public |
| COUNSEL FOR THE FIRST RESPONDENT: | Mr Lethbridge SC & Ms Eldershaw |
| SOLICITOR FOR THE FIRST RESPONDENT: | Campbell Paton & Taylor |
| COUNSEL FOR THE THIRD RESPONDENT LIQUIDATOR: | Mr Miller SC & Ms Stanton |
| SOLICITOR FOR THE THIRD RESPONDENT LIQUIDATOR: | Collin Biggers & Paisley |
Orders
PARENTING
That all previous parenting orders be discharged.
That the father and mother have equal shared parental responsibility for the children K born … 2006 and AA born … 2009.
That the children live with the mother.
That the children spend time with the father as agreed between the father and mother in writing such writing to include SMS or email communication and failing agreement as follows:
a)during school term each fourth weekend for a block of four nights from 4.00 pm Thursday to 4.00 pm Monday and for the purpose of implementing this order:
(i)with the first of such blocks shall coincide with the third weekend after the resumption of school term;
(ii)provided always that should such time coincide with the Mother’s Day weekend or sports club (as opposed to sports club camp) the children’s time with the father shall be changed to the following weekend without interruption to the sequence of weekends that otherwise would apply and for the purposes of implementation of this order the wife shall inform the father by SMS or email not less than seven days prior to the weekend in question of any forthcoming sports club event that would interfere with the children’s time with the father as provided above.
b)during school holidays:
(i)in even numbered years from 9.00 am on the first Saturday following the conclusion of school term to 4.00 pm on the Saturday closest to the midpoint of the school holiday period; and
(ii)in odd numbered years from 9.00 am on the Saturday falling closest to the midpoint of the school holiday period to 4.00 pm on the last Saturday of the school holiday period;
(iii)if the children are to spend time with the father during a period that conflicts with sports club camp then that week of the children’s time with the father being the week from Saturday to Saturday shall be changed to the week that follows on from the last week of the holiday period that the children would spend with the father in even numbered years or the week that immediately precedes the holiday period that the children spend with the father in odd numbered years.
That notwithstanding the above orders:
a)the children shall spend time with the father on the children’s birthdays from 3.30 pm to 7.00 pm if the birthday falls on a school day and from 1.00 pm to 7.00 pm if the birthday falls on a non-school day provided always that the father shall advise the mother by SMS or email communication not less than 72 hours prior to the birthday whether he proposes to spend time with the children as provided;
b)the children shall spend time with the father on Father’s Day from 10.00 am to 7.00 pm provided always that the father shall advise the mother by SMS or email communication not less than 72 hours prior to Father’s Day whether he proposes to spend time with the children as provided;
c)except when Easter occurs during a school holiday period the children shall spend time with the father on Easter Sunday in even numbered years from 10.00 am to 7.00 pm provided always that the father shall advise the mother by SMS or email communication not less than 72 hours prior to Easter Sunday whether he proposes to spend time with the children as provided.
The mother and father shall be at liberty to have telephone communication with the children while they are in the care of the other parent each Monday, Wednesday and Friday between 6.00 pm and 8.00 pm and on Christmas Day, Easter Sunday, Father’s Day, Mother’s Day, each party’s birthday and the children’s birthdays by placing a call to either of the children’s mobile phone numbers.
That the mother and father shall ensure that the other is kept informed as soon as is reasonably practicable of:
a)any serious medical problems or illnesses suffered by the children or either of them, including the details of any hospital or medical centre to which the children have or child has been taken in case of an emergency;
b)any medication that has been prescribed for the children or either of them that needs to be taken during the time the child is in the care of the other;
c)any appointments with any specialist medical doctor, dentist or other health professional and the name and contact details of such professional;
d)unless the appointment was attended by both, the outcome of any attendance by the children or either of them on any specialist medical or other health professional, including copies of any medical reports provided by that professional within 3 days of receipt of such report;
e)any changes to their residential address and other contact details within 48 hours of the change occurring;
f)any other relevant matter to the welfare of the children or either of them.
That both the mother and father are permitted to liaise directly with the children’s education provider, sporting bodies and/or extracurricular organisations to obtain any necessary information about their progress and both are to do all things necessary to authorise the school, sporting bodies and/or other organisations to release such information as may be requested by the other to the extent permitted by law.
That both the mother and father shall provide authorities to any education provider that provide services to the children to provide to both parents copies of the children’s school reports, school circulars, newsletters, school photograph order forms and invitations to attend any school activities to which parents are invited to attend and for both parents to be named on all school and extracurricular records as emergency contacts.
That both the mother and father shall do all acts and things to authorise any medical practitioner, dentist, counsellor or other health professional who treats the children or either of them to provide information to the other upon request by the other to the extent permitted by law.
That both the mother and father are permitted to attend on parent teacher interviews, concerts, carnivals, sporting matches, training sessions, prize days, and other events involving the children or either of them at school or in the context of extra-curricular activities to which parents are ordinarily invited, notwithstanding that such event occurs at a time when the children are in the care of the other parent pursuant to these orders.
That both the mother and father are restrained from criticising or denigrating the other or member of the other’s household and from discussing these proceedings in the presence or hearing of the children.
That except as otherwise agreed by the mother and father in writing such writing to include SMS or email communication the father shall collect the children from the gate at the D Street property at the commencement of his time with the children and return the children to the front gate of the D Street property at the conclusion of his time with the children.
That the mother provide to the father not less than two months’ notice in writing such writing to include SMS or email communication of any proposal by her to relocate the residence of the children outside the state of New South Wales.
PROPERTY
That within 28 days from the date of these orders the husband do all things necessary to transfer to the wife his interest in the properties known as “D Street” and “Property BB”, E Town NSW.
That within 28 days from the date of these orders the husband do all things necessary to transfer to the wife his interest in any lease holding, Crown Grant, water licence, clearing permit relating or attaching to any parcel or parcels of land comprised in D Street including Leases …, …, …, ….
That within 28 days from the date of these orders the husband do all things necessary to transfer to the wife his interest in the property known as “Property CC” NSW being Certificate of Title Folio Identifiers … and ....
That the wife be declared as against the husband the sole beneficial and legal owner of assets, equipment and stock owned by either of them situate on the property at D Street.
That the partnership “Mr & Ms McDermott” be dissolved at midnight on the date the Receiver/Manager’s notification is sent to the parties and that thereafter the wife be declared against the husband the sole legal and beneficial owner of the assets, including plant and equipment, of the said partnership including but not limited to:
a)Tractor;
b)Excavator;
c)Scraper;
d)Backhoe;
e)Back Plough;
f)4WD Regn ...
That within 28 days from the date of these orders the husband pay to the wife the sum of $226,000.00.
Pursuant to section 106A of the Family Law Act 1975 in the event that the husband refuses or neglects to comply with any direction or order to execute a deed or instrument as required by or to give effect to these orders within seven days of a written request by the wife or the receiver/liquidator, the wife is appointed to execute the deed or instrument in the name of the husband and to do all acts and all things necessary to give validity and operation to the deed or instrument.
That in the event of any application for costs in relation to these proceedings then the applicant for any such costs order file and serve written submissions in support of such application within 28 days from the date of these orders and the respondent to any such application file written submissions in response within a further 14 days and that thereafter, absent any application for the Court to hear oral submissions judgement be reserved to Chambers.
That otherwise applications before the Court are dismissed and proceedings removed from the active pending cases list.
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 McDermott & McDermott and Ors 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 PARRAMATTA |
FILE NUMBER: SYC 70 of 2014
| Mr McDermott |
Applicant
And
| Ms McDermott |
First Respondent
And
| B Pty Ltd (In Liquidation) |
Second Respondent
And
| Mr M (Liquidator) |
Third Respondent
REASONS FOR JUDGMENT
The ongoing property and parenting disputes between the applicant husband in these proceedings and the respondent wife following their separation got off to a somewhat inauspicious start when in a seemingly senseless act the wife filled the fuel tank of the family light plane worth an estimated $300,000.00 with water, removed the valves from the plane’s tyres and chained the plane to a shed on the family rural property some distance north of E Town NSW.
The early background of the proceedings was the subject of an interim determination and orders made on 18 March 2014: McDermott &McDermott [2014] FamCA 245.
Context: A Quick Overview
The husband and wife began living together in 1985/6, were married in 1990 and separated in December 2013.
It was only a few weeks after separation that the parties commenced litigation, not only in this Court, but also in their Local State Court where apprehended domestic violence order proceedings for the asserted protection of the wife were listed for hearing. In the apprehended domestic violence proceedings the husband was subject to interim Orders not to approach or contact the wife, except through legal representatives, as agreed in writing or pursuant to orders made by this Court.
The wife is aged 46 and the husband is aged 50.
There are two children of the relationship, now aged almost eight and 11. The children reside with the wife on the parties’ rural property outside E Town, NSW.
During the latter years of the parties’ relationship the wife primarily conducted a farming enterprise on the parties’ property in the north-western area of New South Wales. That property is owned by the parties in their joint names.
The husband operated a construction business from the property and from another property in I Town Queensland that was acquired for that purpose. The construction businesses were conducted by the parties to the marriage in part through their Partnership and also through the company B Pty Ltd (B).
Revenue from the parties’ business activities was paid into that company and payments were made out of the company in respect of each of the businesses in the ordinary course of such business and for the support of the family. Either party was able, either through the internet or by cheque, to make payments from the company as they each saw fit relating to the businesses conducted by each of them.
At cohabitation:
It was common ground between the parties that at the commencement of their cohabitation in about 1986 there were no assets of any significance: the husband owning a car and the wife having about $5,000.00 in savings.
Thereafter the accumulation of assets has occurred over what has been a lengthy cohabitation. Save for an inheritance received by the wife in late 2008 of about $100,000.00, it is agreed that there is little to distinguish between the parties’ contributions over the long cohabitation to date of separation.
Much of the factual background that would otherwise have been the subject of issue at trial was the subject of earlier determinations by the Court in the various interlocutory decisions: See McDermott &McDermott [2014] FamCA 245; McDermott &McDermott [2015] FamCA 87; McDermott &McDermott [2015] FamCA 574; McDermott &McDermott [2016] FamCA 613.
The parties jointly acquired their first property in 1989 in N Town, NSW. That property was sold in 1991 for about $50,000.00.
“D Street”
Subsequently and in about March 1993 the parties purchased a lease holding in relation to the property at D Street, E Town NSW for about $150,000.00. The property comprised about 64,000 ha and is situate about 84 km north of E Town.
In 1998 the parties purchased for $240,000.00 Property CC NSW that adjoined the D Street property. Part of this property was sold off in March 2004 for $432,000.00. The remaining part, now known as “Property BB”, consolidated the parties’ substantial rural landholding.
The properties, at present are primarily a farming enterprise that commenced in about 2008 when about 4000 livestock were purchased from income derived from the parties’ construction partnership. The parties operated the enterprise as a partnership known as “Mr & Ms McDermott”.
In 1998 the husband commenced a business involving the hiring of plant and equipment. Initially this business was conducted through the partnership trading as “B” but in about 2010 the partnership was incorporated as B Pty Ltd (B) although some aspects of the businesses continued to be operated through the partnership. The construction business to some extent underwrote the expenses of the farming business conducted by the wife on the D Street property. As will be seen, there has been an intermingling of the affairs of the partnership and B.
It is common ground that the wife was mainly responsible for the conduct of the farming business and the husband devoted most of his time and attention to the management of the construction business.
The company and partnership owned various significant items of plant and machinery as well as an aeroplane referred to in the opening words of this judgment. Business was conducted in Queensland, the Northern Territory and Western Australia. The husband was required to travel extensively for the purposes of the construction business.
The wife’s inheritance
In September 2008 the wife received an inheritance from her late father of $99,100.00. She later advanced the funds to the parties’ business for the purchase of machinery. The loan was paid back over a period of years prior to separation.
S Street, I Town Queensland
The construction business was recently mainly conducted from premises located at S Street, I Town Queensland. That property was purchased jointly by the parties in 2012 for about $253,000.00 as vacant land on which the parties constructed a large machinery shed with accommodation. The construction was funded with B funds and done without proper approvals. The parties also purchased a caravan for about $60,000.00 that was placed on site.
The husband spent significant time in Queensland in relation to the business.
Separation and thereafter
Subsequent to separation the children remained residing with the wife at the D Street property and after some initial ructions in relation to the children’s time with the father he commenced spending reasonably regular fortnightly time with the children from Friday afternoon until Sunday afternoon and school holidays.
The wife asserts the husband removed items of plant and equipment from the rural property at separation. This is referred to below.
Since separation the husband has paid no child support for the children, contending that he has not had and does not earn any income, such contention notwithstanding, as discussed below, he has had significant sums of money at his disposal, the disposition of which is unexplained.
The course of events shortly before and after separation is the nub of this matter and is dealt with in detail below.
After the parties’ separation in December 2013, the husband obtained accommodation elsewhere with friends. He returned to the property a few days after separation to collect machinery and parts for the purpose of the business conducted by him to find that the plane used by him in connection with the family businesses had been rendered inoperable by the actions of the wife. The whereabouts of the machinery and parts remains unknown.
In late 2013, before separation, the wife commenced having financial concerns as to the Company that operated two trading accounts, one with the NAB that incorporated an overdraft facility and the other with the CBA. These concerns are detailed below.
In September 2013 the husband purchased a motor cycle from business funds without the wife’s knowledge.
She became aware of various unpaid creditors including unpaid insurances as to machinery subject to finance contracts. The husband conceded in oral evidence that in allowing insurances to lapse he was “reckless in the extreme”.
The husband purchased for the rural enterprise a tractor for $437,800.00 notwithstanding the wife’s objection. When the deposit cheques he presented were dishonoured the tractor was repossessed.
Otherwise, the husband acknowledged that he had in late 2013 purchased a truck for $255,000.00 on finance and later at the time of separation a 4WD for $88,000.00 subject to finance.
It was the husband’s expectation that the financial obligations entered into would be met from outstanding company invoices for work done.
On 12 December 2013 the NAB overdraft was $845,435.00, the next day it was $1,018,000.00.
Unknown to the wife until mid-March 2014, the husband had in mid-October 2013 opened a joint account with his nephew with the ANZ Bank (…43) in addition to an ANZ account (…52) in his own name opened on about 17 December 2013 that had a balance of $253,260.00 as at 20 December 2013.
Yet in the period from late 2013 to March 2014 the husband had issued invoices directing payments for work undertaken by the Partnership or B totalling about $740,000.00 to the ANZ accounts.
Thereafter with B having no revenue to meet creditors, the wife commenced to receive various default notices in relation to finance contracts entered into by the Company and she became aware that the Company overdraft was at its limit.
To protect her position the wife arranged that operation of the B account required signatures of both she and her husband and cancelled the parties’ joint credit card. The wife says that she did so out of concern for their businesses’ financial situation and the husband’s spending and disposition of funds at the time.
Subsequently, she endeavoured to obtain access electronically to banking records only to find that the account password had been changed by the husband.
Z Pty Ltd (Z):
In response to the actions taken by the wife the husband, complicit with the parties’ accountant Mr F, on 23 January 2014 set up a second company Z Pty Ltd (Z) to which he directed B and Partnership revenue. He commenced to deposit income properly payable to B into his new company and his own ANZ accounts and make certain payments out of that income in the course of the business or for his own purposes. The application of these “misappropriated” funds is dealt with below.
At the same time as he set up Z the husband changed the internet banking password for the B accounts, thus preventing the wife from ready access to banking information and disguising his dealings with funds.
Subsequently, the wife became aware of a B taxation liability of $257,903.00 due by 17 March 2014. The wife had not previously been aware of any accumulating taxation liability.
Significant funds totalling about $1,380,847.00 have been paid into and disbursed from the Z account and also through the husband’s personal ANZ and Suncorp Bank accounts. It is the use and disposition of those funds that has been a significant matter in issue between the parties.
The husband acknowledged in oral evidence that when he diverted funds that there were substantial creditors of B and the Partnership that were paid by direct debit period payments from B accounts. His conduct in diverting funds shows an astonishing lack of regard to his responsibilities as a director of B and a partner in the Partnership and exposed him and the wife to significant prospective personal liability pursuant to personal guarantees given for various finance arrangements.
The subsequent history of this protracted dispute is readily discernible from the various interlocutory skirmishes that thereafter ensued.
The litigation commences:
The husband shortly after separation commenced proceedings by way of Initiating Application filed 8 January 2014 seeking orders in relation to the children AA born in 2009 and K born in 2006. He sought orders that the children live with him.
The wife’s Response filed 21 February 2014 sought orders that, in summary, relevantly provide:
a)that she have sole parental responsibility for the children and that they live with her;
b)that the husband provide to her documents as to the trading of Z;
c)for the husband be restrained from trading through Z and transfer funds held by Z or him to B and that he deposit all income to B and not otherwise;
d)the parties’ drawings from B be for business expenses and agreed personal drawings only;
e)that the husband adequately insure plant and equipment;
f)that the husband be restrained from attending at the parties’ property “D Street” without giving 72 hours prior notice to the wife and from removing chattels and equipment and machinery from the rural property without the consent of the wife.
The wife in an Amended Response filed on 11 March 2014 relevantly sought orders as follows:
a)that the husband be restrained from continuing to trade through “Z” and that he trade solely through “B”;
b)that the husband deregister the company “Z”;
c)that the husband provide to the wife’s solicitors all documents evidencing work undertaken by him in relation to the business of construction either on his own account or through any other entity for the period from 1 July 2013 and account for monies by payment into the “B” bank account;
d)that the wife continue to have the day-to-day management of the rural enterprise and the husband continue to have the day-to-day management of the construction business in the ordinary course of those businesses, with income to be paid into the “B” account and that all payments from that account be authorised by both parties;
e)that drawings be authorised from the company account to pay the children’s governess fees, a periodic payment to the wife and a periodic payment to the husband; and
f)that the husband be restrained from removing any chattels, equipment and machinery from the rural property without the consent of the wife.
The husband in his Amended Application filed on 12 March 2014 sought orders that relevantly provide:
a)that the husband provide disclosure of all documents relating to the trading affairs of “B” in relation to the construction business conducted by the company for the previous 12 months;
b)that upon the wife facilitating the husband to solely operate the banking account of “B” the husband pay into that company’s account all monies held by him in relation to the construction business and thereafter the husband ensure that the business is conducted through “B”;
c)that the wife continue to manage on a day-to-day basis the rural farming enterprise as had been previously conducted by her;
d)that the husband continue to manage on a day-to-day basis the construction business previously conducted by him;
e)that the wife open a separate account for the farming enterprise and thereafter conduct that enterprise solely through that account;
f)that otherwise each of the parties be restrained from selling or disposing of or encumbering any of the parties’ assets otherwise than in the ordinary course of business and without first giving to the other party seven days’ written notice;
g)that the husband be at liberty to be accompanied by an employee to collect a truck and bulldozer from the rural property; and
h)that the husband be at liberty to arrange for a mechanic to attend at the rural property to inspect and repair the aeroplane and that, accompanied by an employee, the husband be at liberty to remove that plane from the rural property upon three days’ notice to the wife.
The interim proceedings were before the Court on 17 March 2014 and then again on 18 March 2014.
The 18 March 2014 Orders:
On 18 March 2014 interim orders were made as follows:
(1)That within seven days from the date of these orders the Husband shall provide to the Wife’s solicitors the following information and do the following things in relation to any work from 1 July 2013 to date that the Husband has undertaken on his own behalf, on behalf of [B] Pty Ltd (“the company”) or on behalf of any other entity that is of a similar nature or type of work to the work undertaken by the company in the normal course of its business:
(a) A list of particularising all such work undertaken including the name of the person or entity for whom the work was undertaken, the dates between which the work was undertaken, the amount of money paid or to be paid for all such work and particulars of the financial institution and account into which the money was or was intended to be paid;
(b) A list of all amounts of money which remain to be paid and direct the person or entity responsible for payment to make those payments into the company’s account at the National Australia Bank are being account …20 (“the NAB Bank account”);
(c) Pay into the NAB account all the money presently held by him or under his control with respect to the work particularised by him in the list provided pursuant to (a) above less money paid from funds held by him or under his control properly expended in the usual course of business of the company.
(2)That within seven days from this date the Husband and Wife authorise and direct the appropriate officer of the National Australia Bank to permit the Husband and the Wife to operate the NAB account independently of each other for the purposes of the usual course of business of the company and do all things necessary to facilitate each of them having internet banking access to the said account.
(3)That the Husband and Wife shall pending further order facilitate all income received by the company in the usual course of business being paid into the NAB account from which payments in the ordinary course of business or pursuant to these orders shall be made.
(4)That pending further order the Wife shall have the conduct of and manage on a day-to-day basis the farming enterprise conducted at the [D Street, E Town] property and the Wife shall be restrained from conducting the said farming enterprise other than in the ordinary course of business and through the company.
(5)That pending further order the Husband shall have the conduct of and manage on a day-to-day basis the [construction] enterprise conducted during the course of the marriage by the company and the Husband shall be restrained from conducting the said [construction] enterprise other than in the ordinary course of business and through the company.
(6)That pending further order the Husband is restrained on his own behalf or on behalf of any other entity save for the company from undertaking any work of the type or nature of the work that has been at any time prior to the date of these orders undertaken or engaged in by the company in the ordinary course of its business.
(7)That pending further order the Husband is at liberty to draw from the company’s NAB account $2660 per week gross with such sum to cover his general living expenses and a contribution by him to one half of the cost of the governess employed by the parties for the children of the marriage with the characterisation of those drawings reserved to trial or as agreed by the parties.
(8)That pending further order the Wife is at liberty to draw from the company’s NAB account the sum of $2660 per week gross with such sum to cover her general household living expenses and a contribution by her to one half of the cost of the governess employed by the parties for the children of the marriage with such sum to be reduced by an amount equivalent to any child support assessment liability in respect of which the Husband is assessed from time to time and is paid by him when due and payable with the characterisation of those drawings reserved to trial or as agreed by the parties.
(9)That both the Husband and Wife shall be at liberty to draw from the company’s NAB account sums not exceeding $100,000 in total for each of them with such sums to be paid exclusively for their legal fees in these proceedings and that there shall be no drawings in excess of that sum without leave of the Court or the parties agreement in writing,
(10)That the Husband and Wife shall authorise and direct Mr [F] of [G & F], Accountants to provide to the Wife’s nominated accountant such documents as he or she may reasonably request and to answer any reasonably le enquiries made about the accounts of the business or the party’s personal taxation affairs as made by the Wife’s nominated accountant with the costs of [G & F], Accountants in relation to such requests and the costs of the Wife’s nominated accountant to be paid by the company.
(11)That the Husband and Wife shall authorise and direct Mr [F] of [G & F], Accountants to provide to the Wife’s solicitors such documents as they may reasonably request in writing and to answer any reasonable enquiries made about the accounts of the business and the parties personal taxation affairs made by the wife’s solicitors with the costs of [G & F], Accountants in relation to such requests to be paid by the company and the Wife shall ensure that a copy of such request is provided to the Husband’s solicitors.
(12)That pending further order and save and except for any items of property agreed in writing by the parties to be sold each of the parties is restrained from selling, transferring or otherwise disposing of or mortgaging, charging or encumbering or further mortgaging, charging or encumbering any property of the company or the partnership, or any property held in their sole name is or jointly with each other or with any other person or entity otherwise than in the ordinary course of business without first giving the other party seven days’ notice in writing of their intention to do so.
(13)That on not less than a calendar monthly basis, and in the event of disagreement as to the date on or before the third Friday of each month, the parties shall disclose by exchange any relevant documents in respect of any transaction that has taken place in the ordinary course of operation of the separate business enterprises managed by each of them in the company in the preceding calendar month.
(14)That in the event that the Husband incurs any debt or authorises any expenditure on behalf of the company or the farming partnership to a value in excess of $25,000, the Husband must provide to the Wife not less than 48 hours’ notice of his intention to do so save and except in urgent circumstances involving the replacement or urgent repair of plant and machinery that is on site.
(15)That in the event that the Wife incurs any debt or authorises any expenditure on behalf of the company or the farming partnership to a value in excess of $5000 the Wife must provide to the Husband not less than 48 hours’ notice of her intention to do so save and except in urgent circumstances involving the replacement or urgent repair of plant, machinery or other equipment that is required for the ongoing operation of the farming partnership.
(16)That in the event that the Husband has since 1 July 2013 sold or otherwise disposed of any plant, equipment or machinery owned by him or in which the company had any interest whatsoever then he must promptly but no later than 28 days from the date of these orders provide to the Wife:
(a) A list of items sold and all documents instruments and writings in relation to wall such sales; and
(b) In the event that sale proceeds were not paid into the NAB account pay within 28 days from this date such sale proceeds received by him into the NAB account and do all necessary things to direct the purchaser of any items sold for which any amount remains unpaid to make remaining payments for the purchase into the NAB account.
(17)That the Husband is hereby restrained from attending at or upon the property at [D Street, E Town] without giving to the Wife not less than 72 hours prior notice of his intention to do so and on any such attendance the Husband shall be accompanied by Mr [H] and no other person or persons except as provided for in these orders or with the written consent of the Wife.
(18)That the Husband is restrained from flying in or through the air space over the [D Street, E Town] property except with the consent in writing of the Wife.
(19)That, save as hereinafter provided, the Husband is hereby restrained from removing any chattels, equipment and machinery from the property at [D Street, E Town] without the written consent of the Wife.
(20)That upon the Husband giving not less than 72 hours’ notice to the Wife he shall be at liberty to arrange for a suitably qualified mechanic to attend at the [D Street] property to inspect and attend to rendering airworthy the aeroplane thereon and that thereafter upon giving to the Wife not less than 72 hours’ notice the Husband shall be at liberty to attend at the said property provided always that he is accompanied by Mr [H] to collect the aeroplane and remove it from the said property and for the purposes of this order the Husband’s notice to the Wife shall be in writing which shall include SMS or email communication.
(21)That the Husband and Wife shall keep in good order and repair and shall be restrained from causing any damage (or further damage) to any building or a construction on the [D Street] property (including but not limited to the homestead) or the [I Town] property and any plant or equipment of the company or partnership “including vehicles” and any other property in their respective possession.
(22)That the Wife is restrained from allowing any other person, save for herself to operate [the utility] or [4WD] motor vehicles in her possession unless those persons are properly licensed to do so in the State of New South Wales and/or any other state or territory of Australia and the Husband shall ensure that the said vehicles are at all times registered and insured.
(23)That within one calendar month from the date of these orders the solicitors for the Husband and Wife shall on the parties instructions confer for the purpose of endeavouring to reach agreement as to the value of assets, liabilities, financial resources and superannuation entitlements of the parties and if there is no agreement as to the valuation of any such items then a single expert witness shall be appointed to determine the value of any disputed item and the Husband shall nominate three single expert’s to prepare written valuation reports as to the market value of:
(a)The real estate held by the parties, whether solely, jointly, with any other person or entity or whether held by any entity in which the parties have a proprietary interest;
(b)The plant, equipment motor vehicles and machinery of the company including the partnership and otherwise the enterprises of the parties or as may be held in their names whether solely or jointly with any other person or entity;
(c)The livestock of the company, including the partnership and otherwise the enterprises of the parties or as may be held in their names whether solely or jointly or with any other person or entity;
(d)The furniture, furnishings and effects of the parties;
(e)The interests of the parties in the company including the partnership.
(24)That within 14 days from the Husband nominating three valuers as provided for hearing the Wife shall select one of the nominated valuers for such purposes.
(25)That within a further 14 days from the Wife selecting a valuer or valuers as provided for herein the parties shall instruct their solicitors to forward an agreed joint letter of instruction to the single expert to be appointed and the parties are granted liberty to relist the matter on seven days notice to the Court and to the other party in respect of any issue arising in relation to the joint letter of instruction to the single expert to be appointed.
(26)That the parties shall pay in the first instance in equal shares for the payment of the reasonable fees and disbursements of any single expert appointed pursuant to these orders with the ultimate liability for such reasonable fees and disbursements reserved to trial or agreement between the parties.
(27)That for the purposes of the appointment of the single experts and the tasks to be undertaken by the appointed single experts:
(a)The Wife shall provide to any single expert appointed, in a timely manner, copies of all documents in her possession, custody or control as may be requested by that single expert with copies of such documents to be provided to the Husband’s solicitors;
(b)That the Husband shall provide to any single expert appointed, in a timely manner, copies of all documents in his possession, custody or control as may be requested by that single expert with copies of such documents to be provided to the Wife’s solicitors;
(c)That each party shall make available for inspection by any appointed single expert all items that are to be valued pursuant to these orders and each party shall provide access to each item without restriction for the purposes of such inspection by the single expert;
(d)That at all times all instructions to any single expert appointed shall be in writing and issued jointly on behalf of both parties.
(28)That for the purposes of any written notice to be provided by either of the parties to the other then such notice shall be in writing with such writing to include SMS or email communication or correspondence or email communication between the parties respective solicitors.
(29)That otherwise interim applications before the Court are dismissed.
(30)That these proceedings be adjourned to a listing before the Docket Registrar on Thursday 29 May 2014 at 9:30 am and on such a listing the Docket Registrar make such other further orders or directions as may be appropriate for the matter to proceed to a Conciliation Conference at a time when there remains no outstanding valuation issue between the parties.
IT IS NOTED THAT:
(a)The Husband has on 17 March 2014 advised the Court that he has exchanged contracts to purchase an apartment at [J Town], Queensland at a purchase price of $910,000 with the intention that no monies accumulated during the course of the marriage or to date will be used in the purchase and that the Husband will be borrowing the whole of the purchase price and that it is intended that of the sum of $2660 to be drawn by the Husband from the companies NAB account it is inclusive of mortgage expenses in relation to that property in the lieu of rent.
(b)The Wife has today advised the Court that it is her proposal to cause the sale of a portion of the [livestock] presently on the [D Street, E Town], New South Wales property at an appropriate time following recent rains.
(c)These proceedings are suitable for private mediation having regard to the nature of the pool of assets and the financial issues for determination and reserves the question of referral for mediation for further consideration in due course.
(d)The Court has been informed by the parties that final draft financial statements and tax returns for the company and draft personal tax returns for each of the parties will be available for consideration by the parties within seven days from this date.
(e)To the extent of the operation of any of the orders herein would be inconsistent with the terms of the provisional AVO made on 9 January 2014 in the [E Town] Local Court as between the parties, then the terms of these orders shall prevail.
The husband was ordered to provide details of work undertaken on his own behalf or by him through any other entity other than the Company in the period from 1 July 2013 to 18 March 2014. No such information was provided. Otherwise, the husband has failed to comply with various other obligations as to disclosure pursuant to the above orders.
On 23 March 2014 the husband and another male attended at the rural property and without the consent of the wife removed from that property a bulldozer. Notwithstanding requests to do so the husband has failed to return that machinery to the property.
The wife continued to receive various default notices in relation to financial contracts entered into by B and on 12 May 2014 received notification from the National Australia Bank that loan facilities were $290,000.00 in arrears.
The husband, in breach of orders made 18 March 2014, deposited further funds to his ANZ account in the period from 18 March 2014 to 1 July 2014 totalling about $548,000.00. He continued to direct payments to his ANZ accounts.
The ANZ Bank orders: 9 May 2014
As a consequence of the husband’s financial misconduct revealed by documents produced on subpoena, the wife on 9 May 2014 made an ex parte application to the Court for injunctive orders to restrain the husband from dealing with certain funds and accounts with the ANZ bank.
On that date orders were made as follows:
1.That the Husband and the Manager of the ANZ Bank [I Town] Queensland and its servants, agents and nominees be restrained from transferring monies or making payments from the ANZ accounts held in the name of [MR MCDERMOTT] being ANZ account … 52 and in the names of [MR MCDERMOTT] and [MR R], being ANZ account …43 to any person or entity other than to the National Australia Bank account being held in the name of [B] PTY LTD, being account …20.
2.A sealed copy of the orders made today be served on the manager ANZ Bank [I Town] Queensland by fax or email and that the solicitor for the Wife have leave to forthwith notify the Manager of the said Bank of the terms of these orders by telephone before the close of business today.
3.Otherwise any rules preventing the Court from dealing with this matter ex parte be dispensed with.
The wife’s application was before the Court again on 12 May 2014 on which date the husband appeared with his solicitor and counsel. The husband thereafter continued to act in breach of the court orders dealing with funds of about $250,000.00 through his accounts including $50,000.00 he transferred to a newly opened Suncorp Bank account. In an astonishing assertion he maintained that “he did not understand” the orders.
There is suspicion that the ANZ bank acted complicit with the husband in breaching the orders that were served on the bank on 9 May 2014.
The Appointment of a Receiver to B Pty Ltd and other orders: 28 May 2014
It became readily apparent that the parties were unable to reach agreement as to the ongoing conduct of their corporate entity B Pty Ltd and that the company was insolvent in that it failed to meet statutory demands for payment from creditors including the Australian Taxation Office.
The wife was unable to access funds for herself and the children and was facing ever increasing demands from creditors.
The wife made further application to the Court which included orders being sought for the appointment of a Receiver to B.
On 28 May 2014 relevantly orders were made by consent, as follows:
…
3.The Wife do all acts and things necessary to repair, initially at her expense, the … aeroplane located at the [D Street] property at [E Town] in New South Wales and thereafter to sell the aircraft for its fair market value and on completion of that sale to pay the net sale proceeds to the National Australia Bank Ltd in reduction of the parties’ and the company [B] Pty Ltd indebtedness to that bank.
4.The Husband do all acts and things necessary to enable the Wife to comply with Order 3 otherwise that in relation to the costs of repair which must in the first instance be met by her.
5.Pursuant to Rule 6.03 of the Family Law Rules 2004 [B] Pty Ltd (ACN …) be added as a party to these proceedings.
6.That [Mr M] of [M Advisory], … Sydney be appointed as Receiver and manager of the income and property of [B] Pty Ltd.
7.Pursuant to section 420B of the Corporations Act 2001 the Receiver shall conduct and manage the business known as [B] Pty Ltd.
8.In exercising any of his duties under these orders, the Receiver shall have all the powers ordinarily available to him pursuant to section 420 of the Corporations Act 2001.
9.That the Receiver’s remuneration be paid firstly by [B] Pty Ltd and in default of sufficient funds being available from the said company by the Husband and Wife jointly and such remuneration be calculated in accordance with the standard rates effective from time to time of the Receiver [Mr M].
10.There be no security given by the Receiver.
11.The Receiver is required to provide to the Court and to each of the parties an interim report at the expiration of two months from the date of these orders as to the financial circumstances of [B] Pty Ltd with such report to include any recommendation that in the opinion of the receiver is appropriate as to the ongoing conduct of the business or its liquidation or winding up.
12.The Husband and Wife do all necessary things and sign all necessary documents so as to cooperate with the Receiver and shall provide such documents, financial records, bank statements/books, tax records and any other financial document as required by the Receiver within 24 hours of a request by the Receiver and provide any other information sought by the Receiver which relates to the income, property or liabilities of [B] Pty Ltd.
13.That the Receiver shall submit accounts to the Husband and Wife on a monthly basis.
14.That the Receiver and either of the parties have liberty to apply to the Court in Chambers to re-list proceedings on short notice in appropriate circumstances.
15.Order 1 made on 9 May 2014 be varied by inserting at the end thereof the following: “save for a payment of one half to each of the Husband and Wife equivalent to the balance of the said account as at 28 May 2014.”
16.A sealed copy of orders made today be served on the Manager ANZ Bank [I Town] Queensland by fax or email as soon as practicable.
17.A sealed copy of the orders made today be served on the Manager National Australia Bank at the branch at which the company normally conducts its account or accounts.
18.That Order 17 and Order 20 made on 18 March 2014 be discharged.
19.That the Husband is hereby restrained from attending at or upon the property at [D Street, E Town] NSW except with the written consent of the Wife with such consent to include email or SMS communication.
Both parties were obliged to assist and cooperate with the Receiver in the performance of his duties. Subsequent events reveal as submitted on behalf of the wife that “it cannot be said that the husband has provided no help to (the Receiver) but it has been occasional and significantly outweighed by mischief and interference”. Ultimately, it was clear that the Receiver’s task was made all the more difficult by the husband’s misconduct, failure to provide information (especially his laptop) and poor and incomplete accounting and record keeping.
The consequence was that the Receiver’s costs were greatly increased as discussed below, in particular, in having the husband examined on oath over three days. The parties’ accountant must bear some responsibility for the sad state of the company books.
Various items of plant and equipment were, with the consent of the Receiver, in the interim to remain in the possession of the wife for the purposes of the ongoing conduct of the business operated by the wife on the rural property.
The wife has continued to operate the business on the rural property and has sold stock and agisted stock to derive income over the years since separation. That income has been used to meet the cost of running the property, the household and living expenses for the wife and children and some legal fees of the wife.
The Receiver’s Subsequent Application to the Court: Orders 21 July 2014 -
Winding up of B and a Receiver to the Partnership
Subsequent to the appointment of the Receiver to B and pursuant to leave granted, the Receiver, Mr M made an urgent application to the Court by Application in a Case filed on 21 July 2014 for orders, in summary, as follows:
a)for the Court to give directions to the Receiver of the income and property of B as to whether:
i)it would be appropriate to appoint a liquidator to that company;
ii)whether it would be appropriate for the Receiver to be appointed receiver and manager of the property, assets and undertaking of Z and if so for the Receiver to be appointed forthwith; and
iii)whether it would be appropriate for the Receiver to be appointed as receiver and manager of the property, assets and undertaking of the partnership of the applicant husband and the respondent wife trading as “B” and if so for the Receiver to be appointed forthwith.
b)that the husband be ordered to deliver up certain items of heavy equipment to the Receiver forthwith; and
c)other procedural orders.
The following is apparent from the reasons for judgment: McDermott & McDermott [2014] FamCA 245.
The company B was incorporated in November 2010. Both the husband and wife are directors of the company. The business of the company had previously been operated through the Partnership of the husband and wife trading as “B”.
The B business was conducted via three entities, B, the Partnership and Z. The principal business was conducted in New South Wales, Queensland and Western Australia.
The business was cash flow negative with no realistic prospect of being cash flow positive in the foreseeable future. Given the current poor state of the industry, the Receiver noted that since his appointment, there have been customer cancellations.
Three of the 23 identified company machines and vehicles were then being hired. One of the machines was hired by the Partnership to a third party and the Receiver was unaware of any contractual arrangement for the Partnership to reimburse B for the use of the machine.
Nine vehicles had been disclaimed by the Receiver as assets as they are not generating income and the asset value was less than the finance agreements payout.
The Receiver estimated at that time that the financial position of the company B based on an orderly wind-down of operations and the sale of assets, would result in an estimated best case scenario shortfall of $662,000.00 to unsecured creditors, and on a worst case scenario an estimated shortfall of $2,300,000.00. The best-case scenario assumed repayment by the Partnership of a loan of $1,013,000.00 to B, as evidenced in the company accounts as at 31 December 2013.
In addition to the 23 machines or vehicles referred to above, there were also seven items of machinery included on the company’s depreciation schedule for the year ended 30 June 2013, however, the Receiver had been unable to establish the location and status of those machines.
B and or the Partnership plant and equipment has been financed by way of hire purchase agreement and there are seven financiers holding security over 17 items of plant and equipment. Otherwise, the National Australia Bank has a general security agreement over the assets of the company.
There was uncertainty as to whether some items of plant and equipment are owned by B or the Partnership. The Receiver was engaged in resolving this issue on an asset-by-asset basis.
The directors of B did not maintain a manual or computerised accounting system. The company’s external accountant prepared accounts for the company from bank statements marked by the directors with narratives to explain the transactions. The loan account owed by the partnership to the company as identified in draft financial statements and financial statements reveals the following balances:
a)30 June 2012 – partnership owes company–$10,000.00;
b)30 June 2013 – partnership owes company–$869,000.00;
c)31 December 2013 (draft) – partnership owes company–$1.013 million.
The Receiver had been provided by B’s external accountant journals for the period 2011 to 2013. The Receiver has been unable to reconcile these journals and has not been provided with any rationale supporting the commercial benefit to B of entering into the loan transactions with the partnership. The Receiver had been informed that there was no documented loan agreement between the company and the Partnership nor has the Receiver been provided with an explanation of the loan account.
There had been an intermingling of the trading of the partnership and B. There is $945,000.00 worth of assets not listed in either the Partnership or B depreciation schedules.
The Receiver asked the husband to advise as to which entities owned each of the assets and provide supporting documentation. The husband’s response was that the assets were owned by the Partnership but he was unable to provide documentation supporting his advice. The husband otherwise asserted that there are two assets with a market value of $192,500.00 on the B depreciation schedule that were assets of the Partnership.
On 1 June 2014 the Receiver met with the husband in relation to B work in progress. The husband informed the Receiver that the company currently had a construction job at N Town, New South Wales. However, subsequently the husband informed the Receiver that this job was Partnership work in progress. The Receiver ascertained that the quote for this work was on company letterhead and that both company and partnership assets were used in the job. The Receiver had invoiced the job but has received no payment.
On 10 June 2014 the Receiver travelled to I Town, Queensland to inspect company assets. A valuer and a locksmith accompanied him. With the consent of the wife, the Receiver entered a shed at I Town to identify and value company assets. Prior to his attendance at I Town, the Receiver had attempted to contact the husband and was informed that he was in Asia.
Shortly after the Receiver’s attendance at the premises at I Town, police arrived alleging that there had been a break-in. The Receiver explained his appointment and the police departed. The Receiver changed the locks on the shed and locks on the gates to the property.
The husband asserts that the shed at I Town is an asset of the Partnership. However, the balance sheet of B includes a shed as an asset valued at $951,528.00. The Receiver is not aware of any other shed owned by the company to which this could refer and was satisfied that the reference in the balance sheet is to the shed at I Town, Queensland.
The Receiver deposed as to the following matters relating to the company:
a)Debtors: The estimated realisable balance of debtors appeared to be between $445,000.00 and $624,000.00. The Receiver had forwarded letters requesting payment and responses received indicate the company’s tardy debtor control. Records after 30 June 2013 are poorly kept and there is no aged debtors ledger.
b)WIP: Subsequent to the Receiver’s appointment, the husband and wife provided information to him as to unbilled charges totalling $262,000.00. These have been subsequently billed by the receiver.
c)Insurance: Insurance obtained by the company lapsed from November 2013 due to non-payment of insurance premiums. The Receiver had since obtained insurance of all of the company fixed assets.
d)Books and Records: The Receiver had requested the company’s external accountant and directors provide updated management accounts to the date of the Receiver’s appointment. The Receiver has not received the requested information and the significant discrepancy between 31 December 2013 book values and current estimates of value remains subject to the Receiver’s investigation.
e)Management Information Systems: The company did not utilise a double entry general ledger accounting package to account for its transactions. Rather, the husband periodically marked the company’s bank statements and forwarded them to the external accountant who prepared financial statements. The external accountant, Mr F, had informed the Receiver that he has experienced difficulty in obtaining timely, accurate and complete information from both the husband and wife.
f)Unsecured creditors: There are 19 unsecured creditors owed $665,000.00 known to the Receiver. The company is unable to pay those creditors. Some creditors have submitted informal proofs of debt.
g)Financiers: There are 11 finance agreements for seven different financiers whose asset security value is less than the likely payout. The deficiency is unsecured and is approximately $1,100,000.00.
h)National Australia Bank: The NAB holds a general security agreement in respect of all the assets of the company. The company has a $1,000,000.00 overdraft limit, which was currently drawn to $979,000.00 as at 30 May 2014.
i)Superannuation contributions: The company has not paid employee superannuation contributions from as early as July 2013, with a debt of $12,000.00 owing for one employee.
The Company: Z
This company was incorporated in December 2013. The husband is the sole director and shareholder of the company.
On 1 June 2014 the husband informed the Receiver that the company was opened on the advice of the company’s external accountant, Mr F, to ensure that the husband could operate the business and maintain trading given his dispute with his wife. The Receiver has confirmed this advice with the external accountant.
This company had two passenger vehicles financed by Motor Vehicle Finance. This company operates a bank account with Commonwealth Bank of Australia (CBA).
This company invoiced $255,632.00 during the period December 2013 to May 2014 with these invoices being in relation to assets held by B and directing payment to the husband’s personal ANZ account. This company’s invoices have resulted in payments to the husband’s personal ANZ account of $216,191.00.
The Receiver was satisfied that this arrangement was implemented for the purpose of diverting payment directly to the husband.
B Invoices
A sum of $1,900,000.00 has been billed/invoiced by the company from 30 November 2013 to 28 May 2014. Of these invoices, $333,000.00 was directed to and paid into the company’s NAB account, $702,000.00 and was directed to and paid into either the Partnership CBA account or the husband’s personal ANZ account, and $865,000.00 was directed to accounts other than those of the company and remain outstanding.
The funds redirected or banked elsewhere totalled $1.56 million. The Receiver has subsequently redirected the customers invoiced to pay into the receivership account.
B Insolvent
The Receiver concluded that a review of the company’s position as at 28 May 2014 shows that the company was insolvent and this circumstance was reported by the Receiver to the NAB on 30 June 2014.
The Receiver was of the opinion that the company remains insolvent as at 18 July 2014.
The Receiver concluded that the ongoing trading of the business of the company is not sustainable.
On 10 June 2014 the Australian Taxation Office (“ATO”) issued a further statutory demand with respect to debts of $374,478.00. The Receiver had been informed that if the Receiver did not wind up the company, the ATO would do so. The Receiver concluded that the company cannot pay this debt to the ATO.
On 27 June 2014 a further statutory demand was issued by one of B’s financiers with respect to debts totalling $58,231.00. The Receiver concluded that the company could pay this debt.
The Husband’s conduct
On 12 June 2014 the Receiver wrote to both the husband and wife requiring further information as to company plant and equipment, particularly as to the whereabouts of certain missing assets.
On 1 June 2014 the Receiver had met with the husband and made enquiries of him as to whether company monies were going through his personal account. The husband falsely assured the Receiver that company funds were going through the B bank account.
Subsequently, on 20 June 2014 the husband disclosed to the Receiver that he had, indeed, paid company funds into his ANZ account from December 2013.
The Receiver was able to find a purchaser for a machine owned by the company for $325,000.00 including GST. The NAB, as holder of general security, approved the sale of the company asset. It was anticipated that on sale of the machine and discharge of the finance facility secured thereon there would be a small equity of about $12,000.00 remaining.
The Receiver asserted that the husband has wilfully obstructed the sale of this machine and, as a consequence, the sale did not proceed.
Some assets of the company, including a prime mover, a dolly and a trailer with a combined value of $740,000.00, were engaged on work at N Town, New South Wales. In early July 2014 the Receiver gave instructions for those company goods to be collected. The Receiver was subsequently informed by his agent that the husband had removed the subject goods without the Receiver’s authority and has transported those goods to I Town in Queensland. The Receiver subsequently received information that the goods were, as at 17 July 2014, in E Town, New South Wales. The Receiver has thereafter received further information that these goods had been moved again to an unknown address. They were later recovered by the Receiver.
The husband has also removed or obstructed the recovery of a number of further assets as detailed below.
The husband removed a bulldozer and excavators from the I Town property without the consent of the Receiver. His oral evidence on 13 August 2014 revealed their whereabouts on yard premises of a Mr FF, an associate of the husband. These machines were allegedly subsequently stolen. The Dozer was later found hidden in bushland 1.8km from where it was “stolen”. The excavator has never been found and was the subject of an insurance claim referred to below.
On 13 August 2014 the husband gave sworn evidence that a bulldozer had been stripped for parts and no longer existed. The machine in working order was found later at GG Town with its identification plate removed. The stamped chassis number properly identified the machine. The husband’s evidence was wilfully false.
The Receiver requested the husband to provide details of amounts owed by the debtors and what had been paid to date. The husband has provided no such information to the Receiver.
The Receiver’s Conclusions
The Receiver expressed an opinion that a liquidator should be appointed to the company as the company was insolvent and such appointment would facilitate the liquidator investigating the following and providing reports to creditors and the Australian Securities and Investments Commission:
a)actions of the director using company funds for personal or non-company related purposes;
b)the company’s financial interest in other assets;
c)the company’s interest in assets claimed as owned by the partnership;
d)the company’s interest in jobs claimed to be partnership;
e)compliance with the directors statutory duties;
f)payments that may be recoverable by a liquidator of the company;
g)any insolvent trading claims; and
h)the conduct of examinations and the issue of summonses for the production of documents or orders for production addressed to the directors and any other relevant third-party.
As to the question of appointing a Receiver to the Partnership and Z, the Receiver was appointed to conduct and manage “the business known as [B] Pty Ltd” and as part of the process the Receiver has endeavoured to identify and secure property of the company.
However:
a)there was uncertainty as to the identity of the owner of some items of plant and equipment;
b)there had been an intermingling of the business and the assets of the company, the partnership and Z;
c)there had been inconsistency in the books and records and information provided by the husband and wife; and
d)as a consequence of this uncertainty, inconsistency and intermingling, the Receiver had been impeded in his ability to identify and secure the property of the company and that of the construction business (which is conducted not only by B but also by the Partnership and Z).
In the circumstances outlined above, the Receiver was prepared to be appointed as the Liquidator of the company and Receiver of the Partnership and Z.
On 21 July 2014 the following orders were made:
UPON THE COURT BEING SATISFIED:
A.That it would be appropriate for the Receiver to apply to the Court to wind up the Company and to appoint him or such other person as the Court considers fit as liquidator of the company;
B.That it would be appropriate for the Receiver to apply to the Court for him or such other person to be appointed as the Court considers fit without security as receiver and manager of the property, assets and undertaking of [Z] Pty Ltd together … with such other order necessary to give effect to same
C.That it would be appropriate for the receiver to apply to the Court for him or such other person as the Court considers fit to be appointed without security as Receiver and Manager of the property, assets and undertaking of the partnership of the Applicant and Respondent in the substantive proceedings trading as “[B]” together with such other order necessary to give effect to same.
THEN THE COURT ORDERS THAT:
2.Leave is granted to the receiver to apply to the Court to wind up the Company and to appoint him liquidator of the company.
[Z] Pty Ltd
3.That [Mr M] of [M Advisory], … Sydney be appointed as Receiver and manager of the income and property of [Z] Pty Ltd.
4.Pursuant to section 420 of the Corporations Act 2001 the Receiver shall conduct and manage the business known as [Z] Pty Ltd.
5.In exercising any of his duties under these orders, the Receiver shall have all the powers ordinarily available to him pursuant to section 420 of the Corporations Act 2001.
6.That the Receiver’s right to be paid in respect of the matters the subject of the indemnity as defined in the orders made today be paid firstly by [Z] Pty Ltd and in default of sufficient funds being available from the said company by the Husband and Wife jointly and his remuneration be calculated in accordance with the standard rates effective from time to time of the Receiver [Mr M].
7.There be no security given by the Receiver.
8.The Receiver is required to provide to the Court and to each of the parties an interim report at the expiration of two months from the date of these orders as to the financial circumstances of [B] and [Z] Pty Ltd with such report to include any recommendation that in the opinion of the receiver is appropriate as to the ongoing conduct of the business or its liquidation or winding up.
9.The Husband and Wife do all necessary things and sign all necessary documents so as to cooperate with the Receiver and shall provide such documents, financial records, bank statements/books, tax records and any other financial document as required by the Receiver within 24 hours of a request by the Receiver and provide any other information sought by the Receiver which relates to the income, property or liabilities of [Z] Pty Ltd.
10.That the Receiver shall submit accounts to the Husband and Wife on a monthly basis.
“B”
11.That [Mr M] of [M Advisory], … Sydney be appointed as Receiver and manager of the income and property of “[B]”.
12.Pursuant to section 420 of the Corporations Act 2001 the Receiver shall conduct and manage the business known as “[B]”.
13.In exercising any of his duties under these orders, the Receiver shall have all the powers ordinarily available to him pursuant to section 420 of the Corporations Act 2001.
14.That the Receiver’s right to be paid in respect of the matters the subject of the indemnity as defined in the orders made today be paid firstly by “[B]” and in default of sufficient funds being available from the said company by the Husband and Wife jointly and his remuneration be calculated in accordance with the standard rates effective from time to time of the Receiver [Mr M].
15. There be no security given by the Receiver.
16.The Receiver is required to provide to the Court and to each of the parties an interim report at the expiration of two months from the date of these orders as to the financial circumstances of “[B]” with such report to include any recommendation that in the opinion of the receiver is appropriate as to the ongoing conduct of the business or its liquidation or winding up.
17.The Husband and Wife do all necessary things and sign all necessary documents so as to cooperate with the Receiver and shall provide such documents, financial records, bank statements/books, tax records and any other financial document as required by the Receiver within 24 hours of a request by the Receiver and provide any other information sought by the Receiver which relates to the income, property or liabilities of “[B]”.
18.That the Receiver shall submit accounts to the Husband and Wife on a monthly basis.
IT IS FURTHER ORDERED THAT:
19.The Husband be ordered to deliver up to the Receiver the following forthwith:
a.[Prime Mover];
b.[Dolly];
c.[LowLoader];
20.An order nunc pro tunc that the Receiver is entitled to be indemnified out of the Company’s property (other than any security interest within the meaning of the Personal Property Securities Act 2009 and to which that Act applies, other than a transitional security interest within the meaning of that Act (PPSA Security Interest), that is perfected within the meaning of that Act for:
a.Debt he incurs, in the performance or exercise, or purported performance or exercise, of any of his or her functions and powers as Receiver, for:
i.Services rendered;
ii.Goods bought;
iii.Property hired, leased, used or occupied, including property consisting of goods that is subject to a lease that gives rise to a PPSA Security Interest in the goods;
iv.The repayment of money borrowed;
v.Interest in respect of money borrowed;
vi.Borrowing costs;
vii.Liability under section 220AAE, 220AAM, 220AAR, 221F (except 221F(12)), 221G (except 221G(4A)), 221YHDC(2), 221YHZD(1) or (1A), 221YN(1) of the former provisions of the Income Tax Assessment Act 1936 or any of the provisions of Subdivision 16-B in Schedule 1 to the Taxation Administration Act 1953;
b.Any other debts or liabilities incurred, or damages or losses sustained, in good faith and without negligence, by the Receiver in the performance or exercise, or purported performance or exercise, of any of his or her functions or powers as Receiver; and
c.His remuneration.
21.An order nunc pro tunc that the administrator has a lien on the Company’s income and property, with priority over another security interest only in so far as the Indemnity has priority over debts secured by the other security interest, to secure the Indemnity.
22.An order nunc pro tunc that order 7 of the orders made on 28 May 2014 be varied to substitute “420B” of the Corporations Act with “420”.
23.An order nunc pro tunc that order 9 of the orders made on 28 May 2014 be varied to replace the word “remuneration” in the first line with “right to be paid in respect of these matters the subject of the Indemnity as defined in the orders of 21 July 2014” and the word “such” in the third line be replaced with “his”.
Orders 13 August 2014: including the sale of the plane by the wife
Subsequent application was made for oral examination of the husband by the Receiver and the wife sought further interim orders.
Orders were made on 13 August 2014 relevantly in the following terms:
…
4.That Orders 7, 8 and 9 made 18 March 2014 be stayed.
5.That Order 3 made 28 May 2014 be varied and read as follows:
“3.The wife do all acts and things necessary to repair, initially at her expense, the … aeroplane located at the [D Street] property at [E Town] in New South Wales and thereafter sell the aircraft for its fair market value and on completion of that sale to pay the net proceeds in the following manner and priority:
(a)costs of sale of the aircraft including an agent’s commission of $15,000;
(b)$100,000 to the wife’s solicitors in lieu of the amount due to the wife pursuant to Order 9 made 18 March 2014;
(c)$75,000 to the National Australia Bank Ltd in reduction of the debt secured on [D Street]; and
(d)the balance to be retained by the wife.
6.That Order 11 of the orders made 21 July 2014 be varied and read as follows:
“11. That [Mr M] of [M Advisory] … Sydney be appointed Receiver and manager of the income and property of the Partnership between the Applicant and the First Respondent being the Partnership save and except in relation to the following:
(a)the real property known as [D Street], [E Town] in New South Wales; and
(b)income derived from the farming activities conducted at [D Street]”.
6A.Subject to Order 10(a), the Court is asked to note that the wife has and may retain possession of items 26, 35, 25, 33, 39, 40 and 12 in the Schedule annexed to the affidavit of [Mr M] sworn 31 July 2014.
6B.The Court is asked to note that the wife intends to pay out the finance debt on Item 12 in 6A above upon receipt of the proceeds of sale of the … aeroplane.
7.That Order 12 of the orders made 21 July 2014 be varied and read as follows:
“12. The Receiver shall conduct and manage the business of the Partnership save and except for the farming activities occurring at “[D Street]” [E Town] in New South Wales.”
8.That Order 4 made 18 March 2014 be varied to read as follows:
“4. That pending further order the Wife shall have the conduct of and mange on a day to day basis the farming enterprise conducted at the [D Street, E Town] New South Wales property and the wife shall be restrained from conducting the said [farming] enterprise other than in the ordinary course of business”.
9.That the wife be permitted to retain for her exclusive use all income derived by her in relation to the farming activities conducted by her at [D Street, E Town] in New South Wales.
10.Pending further order, the Receiver shall:
a.not dispose of any assets of [B] (“the Partnership”) without first providing the husband and wife with 7 days written notice of the asset(s) to be sold, method of sale and anticipated sale price;
b.not take any steps to place on the market for sale the property known and situate at [S Street, I Town] in Queensland without first providing the husband and wife with 28 days written notice of the proposed method of sale and anticipated sale price;
c.use his best endeavours to ensure that any income of the Partnership from its activities in the business of plant and equipment hire is paid to the Partnership or for its benefit; and
d.permit the wife to do all acts and things to give effect to Order 2 above.
11.That the husband forthwith do all acts and things and execute all documents as requested of him by the wife for the purpose of completing the sale and transfer of the … aircraft including but not limited to signing a “F027 form” for the purpose of complying with the requirement of the Civil Aviation and Safety Authority.
12.For the purpose of giving effect to Order 1 made 9 May 2014 and Order 15 made 28 May 2014:
a.by not later than midday on 21 August 2014, the husband forthwith do all acts and things and execute all documents as requested of him by the wife for the purpose of transferring one half of the balance as at 28 May 2014 of an ANZ Bank Account standing in his name to the wife; and
b.a sealed copy of these orders be served on the Manager ANZ Bank [I Town] Queensland by fax or email as soon as practicable.
13.Pursuant to s106A of the Family Law Act 1975 (Cth), in the event that the husband has refused or neglected to execute a deed or instrument in accordance with these orders, then a Registrar of the Family Court of Australia at Parramatta is appointed to execute the deed or instrument in his name and do all acts and things necessary to give validity and operation to the deed or instrument and the husband shall bear the cost of such application.
14.Each party has liberty to relist on 24 hours’ notice.
15.[B] Pty Ltd (ACN …) (Receiver & Manager Appointed) be wound up pursuant to section 461 of the Corporations Act 2001 (Cth).
16.[Mr M] be appointed as liquidator of [B] Pty Ltd (ACN …).
17.It is declared that the appointment of [Mr M] as Receiver & Manager of B Pty Ltd (ACN …) has completed.
18.The appointment of [Mr M] as Receiver & Manager of [B] Pty Ltd (ACN …) is terminated.
19.The orders above shall not affect such rights that have accrued to [Mr M] at common law and by operation of the orders made on 28 May 2014 (including order 9) and 21 July 2014 (including orders 20 and 21).
The husband’s oral examination continued on 14 August 2014 during which he was reminded of the restraints placed upon him as to trading in his own right in competition with the activities of B and the Partnership. It was made clear that such orders did not restrain him from obtaining employment in the industry (T14.08.2014 at 264.47ff). What transpired thereafter is referred to below.
The Receiver’s Further Application: McDermott & McDermott [2015] FamCA 87:
On 24 November 2014 the Receiver and Liquidator made further application to the Court for orders facilitating the carrying out of his responsibilities in those capacities.
The application was heard on 18 December 2014 on which date the husband was cross-examined.
On 18 December 2014 (as amended under the slip rule) consent orders were relevantly made as follows:
1.A declaration that it would be appropriate for the Mr M as Receiver and Manager of [Z] Pty Ltd ACN … (Receiver and Manager Appointed) ([Z]) to apply to the Court to wind up [Z] and to appoint him or such other person as the Court considers fit as the Liquidator of [Z].
2. [Z] Pty Ltd (ACN …) (Receiver & Manager Appointed) be wound and that [Mr M] be appointed its liquidator.
…
5.The [Motor bike] and if and when made available for sale the … [Motor vehicle 1] (Rego: No. …, VIN: …), described more fully in the Schedule to the Application in a Case, be sold by the Receiver and the proceeds be distributed 65 [per cent] to [B] Pty Ltd (Company) and 35 [per cent] to the partnership conducted by the Applicant Wife and the Respondent Husband known as [B] (the Partnership) or as the Court otherwise determines to be fit and proper.
6.An order pursuant to section 483 of the Corporations Act 2001 (Cth), for delivery of the Respondent Husband’s laptop computers and iPad tablet devices, that contain books and records of [Z], the Partnership and the Company and that was used by the Respondent Husband in the conduct of the businesses of the Company, [Z] and the Partnership.
7.An order that any income derived from any assets of the Partnership, the Company or [Z] be paid to [Mr M] in his capacity as Receiver and Manager of the Partnership, Liquidator of the Company and Receiver and Manager of [Z].
8.An order that [Mr M]:
a.As Receiver and Manager of the Partnership may distribute the funds received by him in respect of the Partnership in accordance with the priorities set out in section 556 of the Corporations Act 2001 (Cth); and
b.To the extent that it is possible, by adopting the methodology for distributing the Partnership assets as if Corporations Regulations 2001 (Cth) Regulation 5.6.67 and Division 6 of the Corporations Act 2001 (Cth) applied.
9.The costs of and incidental to the application made are reserved for the Receiver, Manager and Liquidator and the Wife.
At the commencement of the final hearing it was contended by counsel for the wife that overall the Court would regard contributions to the time of the parties’ separation as substantially equal (Exh “W”).
Such contention was adopted by counsel for the husband in his final submissions.
It is clear from the Receiver and Liquidator’s reports that at the time of separation the parties’ construction business operated through B was, in fact, a house of cards. Financial records prepared by Mr F, who was later complicit in the husband’s appropriation of funds, reveal entries that were illusory with journal entries falsely inflating the book value of the partnership and B and geared to minimise taxation and permit borrowings. The ultimate fate of the company was inevitable once real income continued to drop.
Yet even clearer is that the husband’s lack of financial expertise and his ultimately precipitate conduct in diverting company and partnership funds expedited and exacerbated the ultimate demise of the company. This consideration is more properly dealt with in the context of s 75(2) factors.
Post separation the wife has had the full time care of the two young children of the marriage and continued to operate the rural enterprise from which she has in fact serviced and reduced the parties’ debt and provided for the financial support of the children in the absence of any such support from the husband.
Counsel for the husband contended that the post separation contributions to trial should have regard to the wife’s continuing occupation of the rural property and her receipt of income therefrom. Whilst such a contention has some merit, any significance is reduced by reason that the wife’s income was from her personal exertions in the conduct of the rural enterprise and from such income she reduced the parties’ joint credit card and NAB indebtedness.
In assessing contributions the Full Court said in Harris (1991) 104 FLR 458:
the task of the court in proceedings under section 79 (and thus s90SM(4)) is not akin to an accounting exercise. To borrow a phrase used by McClelland J in Davey v Lee (1990) DFC 95-084; (1990) 13 Fam LR 688 at 689 in relation to section 20 of the De Facto Relationships Act 1984 (NSW) ''the Court is required to make a holistic value judgment in the exercise of a discretionary power of a very general kind”.
In Kessey and Kessey (1994) FLC 92-495 at 89,151 the Full Court made clear that ultimately all that is necessary is to evaluate the weight that should be given to each party’s contributions relative to the contributions of the other party:
... In many – indeed probably in most – property settlement cases the Court has to evaluate and assess contributions to property in the absence of precise valuations of the contributions in question. Indeed, where the contributions to property are indirect or non-financial, precise valuation is impossible, and even where the contributions are direct or financial so that a valuation might be provided, other factors (not capable of precise mathematical statement) may well have eroded the initial value of such contributions. In a case such as the present, it is not necessary to arrive at precise mathematical valuations of the parties’ contributions – all that is necessary is to evaluate the weight that should be given to each party’s contributions relative to the contributions of the other party.
Years later in Lovine & Connor and Anor (2012) FLC 93-515, the Full Court said:
42. As part of the process of ultimately determining just and equitable orders under s 79 there is included a complex of discretionary assessments and judgments of many components of contribution, only some of which are capable of measurement in money terms and then often only in historical, rather than present, money terms. Any dictate to the effect that in the course of assessment each disparate component part or kind of contribution must be assigned a discrete and identifiable value or percentage is antithetical to the nature of the discretion involved.
The wife’s contributions post separation as discussed above must be seen to date of trial to be more significant than that of the husband.
In all the circumstances, contributions are assessed as favouring the wife 55/45.This creates a disparity between the parties of about $267,000.00.
Section 75(2): relevant considerations.
The wife is aged 46 and the husband 50. There are no relevant health issues for either.
The wife hopes to continue to work the rural property and her income such as is known is referred to above. In the 2015 year her income was about $110,000.00.
The husband asserts that he does not work. He clearly has the capacity to do so. The entity X is a significant financial resource for him that remains unexplained and in respect to which he has failed to make disclosure.
Otherwise, the property and financial resources of the parties are discussed and set out above.
The wife will retain primary care of the two children, now aged almost eight and 11, with them spending time with the husband. The wife’s role as primary carer is in circumstances where she resides remotely from her nearest town and its services. She is at present home schooling the children and expending significant funds in the employment of a governess to assist. The wife has years of future primary care ahead of her.
The wife has the primary obligation to maintain and support the children in the absence of support from the husband. The wife receives some government benefits for school camps and education payments.
Both parties have extremely modest superannuation entitlements.
The wife resides with Mr DD, her partner. The circumstances of that cohabitation are set out above.
The husband pays no child support notwithstanding a minimal assessment liability. His history in this regard must cast significant doubt as to whether the wife will receive any payments from him into the future.
A most significant consideration is the husband’s conduct in relation to the parties’ entities. The adverse consequences in relation to the cost of the receiverships and liquidations and related legal expenses are self-evident from the matters set out. Such costs as incurred have been met from the assets of the entities and resulted in a greater shortfall to creditors and a significant diminution of partnership assets that will remain upon conclusion of the Receivership.
Otherwise, there is significant suspicion as to the husband’s denials as to any involvement by him in relation to X with that entity notwithstanding his asserted non-involvement representing to him a significant financial resource since separation with the inference that it may continue to do so into the future.
The husband’s failure to make full and frank disclosure means that “the Court need not shy away from a robust exercise of discretion in favour of the wife”: Kannis and Kannis (2003) FLC 93-135.
As the Full Court said earlier in Chang and Su [2002] FamCA 156:
101. Of course it is the obligation of parties to make a full and proper disclosure of the financial circumstances, either as to assets, liabilities or income (Marriage of Black and Kellner (1992) 15 Fam LR 343 and Marriage of Weir (1992) 16 Fam LR 154). As the latter case makes clear, where there has been non-disclosure by one party, the Court should not be ‘unduly cautious’ about making findings in favour of the other party…
Regard should also be had to the similar sentiments in Stein v Stein [1986] FamCA 27; Mezzacappa v Mezzacappa [1987] FamCA 20; Black and Kellner (1992) FLC 92-287; and Weir v Weir (1993) FLC 92-338.
Overall, a consideration of the above factors should lead to a most significant further adjustment in favour of the wife of 25 per cent. This adjustment in money terms being about $667,000.00.
Overall
Thus the wife is entitled to 80 per cent of the “property pool” set out above to the value of about $2,136,000.00.
In that event, she retains the assets of value set out in the pool above save for the husband’s superannuation and the funds retained by him. They total $1,910,778.00. This will require the husband to pay to the wife further cash adjustment of about $226,000.00.
The husband will retain the funds had and expended by him, the resource of X, items of personalty including perhaps missing machinery and spares and his superannuation.
In all the circumstances, it is considered that orders to such effect are just and equitable.
Parenting
It appears a common expectation that the wife will retain the D Street property and reside there with the children. She will continue to run the property as her own.
The primary parenting issues as to parental responsibility, live with, school holidays etc. were resolved by the parties in the terms of Exh “C” subject to discrete issues referred to below.
As to final parenting orders the husband and wife proposed in Exh “C”:
a)that the husband and wife have equal shared parental responsibility for the children K born in 2006 and AA born in 2009:
b)that the children live with the mother;
c)that the children spend time with the father as agreed between the father and mother but failing agreement:
i)during school terms every four weeks for a block of four nights from 4.00 pm Thursday to 4.00 pm Monday;
ii)during school holiday periods in even numbered years from 9.00 am on the first Saturday to 4.00 pm on the mid Saturday of such holiday periods and in odd numbered years from 9.00 am on the midpoint Saturday to 4.00 pm on the last Saturday of the school holiday period;
iii)otherwise, there was agreement as to discrete issues as to the children’s time with the father on birthdays, Father’s Day, Easter and the children being available to the mother on Mother’s Day;
iv)further agreement in relation to each party’s telephone communication with the children when the children are with the other party, mutual exchange of information relating to the welfare of the children and the provision of information to each other.
Subsequently, the Court was informed that discrete issues between the parties had now become:
a)the father requiring two months’ notice in writing of any intention by the mother to relocate the residence of the children interstate;
b)that the children’s time with the father be each alternate weekend as contended for by him or each third weekend as contended for by the mother;
c)that changeovers, if the father retains the Property BB property, will be affected by him to and from the children’s residence with the mother and in the event that he does not retain the Property BB property then at the conclusion of the children’s time with him the mother collect the children from him at either N Town or PP Town.
The relevant principles in relation to parenting and interim proceedings are well settled Goode and Goode [2006] FamCA 1346. The High Court in MRR v GRR [2010] HCA 4 affirmed those principles.
Section 60B of the Act outlines the objects and principles underlying Part VII of the Act.
(1) The objects of this Part are to ensure that the best interests of children are met by:
(a) ensuring that children have the benefit of both of their parents having a meaningful involvement in their lives, to the maximum extent consistent with the best interests of the child; and
(b) protecting children from physical or psychological harm from being subjected to, or exposed to, abuse, neglect or family violence; and
(c) ensuring that children receive adequate and proper parenting to help them achieve their full potential; and
(d) ensuring that parents fulfil their duties, and meet their responsibilities, concerning the care, welfare and development of their children.
(2) The principles underlying these objects are that (except when it is or would be contrary to a child's best interests):
(a) children have the right to know and be cared for by both their parents, regardless of whether their parents are married, separated, have never married or have never lived together; and
(b) children have a right to spend time on a regular basis with, and communicate on a regular basis with, both their parents and other people significant to their care, welfare and development (such as grandparents and other relatives); and
(c) parents jointly share duties and responsibilities concerning the care, welfare and development of their children; and
(d) parents should agree about the future parenting of their children; and
(e) children have a right to enjoy their culture (including the right to enjoy that culture with other people who share that culture).
Section 60CA provides that in deciding whether to make a particular parenting order, the Court is to regard the best interests of the child as the paramount consideration.
Section 60CC then outlines the primary (sub-s (2)) and additional (sub-s (3)) considerations that the Court is to take into account in determining what is in the best interests of the child.
Section 61DA of the Act provides that when making a parenting order, the Court must apply a presumption that it is in the best interests of the child for the child’s parents to have equal shared parental responsibility. The presumption does not apply where:
a)there are reasonable grounds to believe a parent has engaged in abuse of the child or family violence [s 61DA(2)];
b)in interim proceedings where the Court considers that it would not be appropriate in the circumstances for the presumption to be applied when making that order [s 61DA(3)].
The presumption may be rebutted if the Court is satisfied that an order for equal shared parental responsibility would not be in the child’s best interests [s 61DA(4)].
If the presumption in s 61DA is to apply and the Court makes an order for equal shared parental responsibility, this “triggers” the operation of s 65DAA which requires the Court to consider whether equal time or substantial and significant time with each parent is in the child’s best interests and reasonably practicable.
If a parenting order is to be made by consent and the order provides or is to provide for equal shared parental responsibility the Court may but is not required to consider equal or substantial and significant time [s 65DAA(6)].
Best Interests:
The Primary Considerations: s 60CC (2)
The primary considerations are:
a)the benefit to the child of having a meaningful relationship with both of the child's parents; and
b)the need to protect the child from physical or psychological harm from being subjected to, or exposed to, abuse, neglect or family violence.
In applying the considerations set out in subsection (2), the Court is to give greater weight to the consideration set out in paragraph (b).
Section 60CC(2)(a) – “meaningful” relationship:
In Mazorski v Albright [2007] FamCA 520; Brown J considered ordinary definitions of the term “meaningful” and observed:
[26] What these definitions convey is that “meaningful”, when used in the context of “meaningful relationship”, is synonymous with “significant” which, in turn, is generally used as a synonym for “important” or “of consequence”. I proceed on the basis that when considering the primary considerations and the application of the object and principles, a meaningful relationship or a meaningful involvement is one which is important, significant and valuable to the child. It is a qualitative adjective, not a strictly quantitive one. Quantitive concepts may be addressed as part of the process of considering the consequences of the application of the presumption of equally shared parental responsibility and the requirement for time with children to be, where possible and in their best interests, substantial and significant.
In McCall & Clark the Full Court at 83,476 accepted as appropriate this interpretation by Brown J of “meaningful relationship”.
The children have been in a settled arrangement in terms of their primary residence and time with the husband since early 2014. He has during that time facilitated the collection of the children from the front gate of the property occupied by the wife and children and the return of the children at the conclusion of the time with him.
The arrangements proposed by both the mother and father will on either proposal see the children continue to have a meaningful relationship with both parents into the future. This consideration is of not much assistance in determining the discrete issues for resolution.
Section 60CC(2)(b) – need to protect.
This consideration is also of no assistance in determining the discrete issues, save for the relevant circumflex stands that there will need to be little interplay between the mother and father in terms of changeovers such that the children will not be exposed to any ongoing conflict.
The Additional Considerations:
Section 60CC(3) sets out the additional considerations:
a)any views expressed by the child and any factors (such as the child's maturity or level of understanding) that the court thinks are relevant to the weight it should give to the child's views;
b)the nature of the relationship of the child with:
(i) each of the child's parents; and
(ii) other persons (including any grandparent or other relative of the child);
c)the extent to which each of the child's parents has taken, or failed to take, the opportunity:
(i) to participate in making decisions about major long-term issues in relation to the child; and
(ii) to spend time with the child; and
to communicate with the child;
ca)the extent to which each of the child's parents has fulfilled, or failed to fulfil, the parent's obligations to maintain the child;
d)the likely effect of any changes in the child's circumstances, including the likely effect on the child of any separation from:
(i) either of his or her parents; or
(ii) any other child, or other person (including any grandparent or other relative of the child), with whom he or she has been living;
e)the practical difficulty and expense of a child spending time with and communicating with a parent and whether that difficulty or expense will substantially affect the child's right to maintain personal relations and direct contact with both parents on a regular basis;
f)the capacity of:
(i) each of the child's parents; and
(ii) any other person (including any grandparent or other relative of the child);
to provide for the needs of the child, including emotional and intellectual needs;
g)the maturity, sex, lifestyle and background (including lifestyle, culture and traditions) of the child and of either of the child's parents, and any other characteristics of the child that the court thinks are relevant;
h)if the child is an Aboriginal child or a Torres Strait Islander child:
(i) the child's right to enjoy his or her Aboriginal or Torres Strait Islander culture (including the right to enjoy that culture with other people who share that culture); and
(ii) the likely impact any proposed parenting order under this Part will have on that right;
i)the attitude to the child, and to the responsibilities of parenthood, demonstrated by each of the child's parents;
j)any family violence involving the child or a member of the child's family;
k)if a family violence order applies, or has applied, to the child or a member of the child's family--any relevant inferences that can be drawn from the order, taking into account the following:
(i) the nature of the order;
(ii) the circumstances in which the order was made;
(iii) any evidence admitted in proceedings for the order;
(iv) any findings made by the court in, or in proceedings for, the order;
(v) any other relevant matter;
l)whether it would be preferable to make the order that would be least likely to lead to the institution of further proceedings in relation to the child;
m)any other fact or circumstance that the court thinks is relevant.
A consideration of the Family Report: June 2015 (Exh “E”) in the context of the additional considerations set out above is of some utility.
As to the progression of the children’s time with the father the family reporter noted:
3.Ms [McDermott] and the children have been living in the former family home since around the time of the parental separation. The children spent no time with Mr [McDermott] between December 2013 and February 2014. The children commenced spending time with Mr [McDermott] in February 2014 which initially included supervised day only time. The children’s time with Mr [McDermott] has since incrementally progressed to being unsupervised and include each alternate weekend from 4pm Friday until 4pm Sunday and for half of each school holiday period…
5.Consent Orders were made by Judge Monahan, on 27 February 2014, for the children to live with their mother and spend time with their father, for a period of two months, on the Saturday and Sunday of each alternate weekend from 10an until 4pm at the [QQ] property ‘[RR]’, thereafter for a period of three months, from 10am Saturday until 4pm Sunday each alternate weekend at ‘[RR]’ and thereafter on each alternate weekend from 4pm Friday until 4pm Sunday either at ‘[RR]’ or ‘[SS]’ (paternal grandparent’s residence in [N Town]). These Orders also provided that after five months, from the date of the Orders, the father may elect to spend time with the children for half of each school holiday period.
6.The location of Mr [McDermott’s] residence was unclear. He stated that he was not currently in paid employment but intended on recommencing his [construction] business when the Court permitted. Mr [McDermott] indicated that he was not in a current relationship.
The parties’ proposals for the children’s time with the husband were noted by the family reporter in the following terms:
10.On interview, Mr [McDermott] sought shared parental responsibility; for the children to live with Ms [McDermott] and spend time with him from 4pm Thursday until 4pm Monday one weekend a month and for half of each school holiday period…
12.On interview, Ms [McDermott] sought sole parental responsibility. She initially proposed for the interim spend time Orders to become final Orders but said that she would agree to Mr [McDermott’s] proposal of the children spending time with him from 4pm Thursday until 4pm Monday one weekend a month and for half of each holiday period…
And later:
34.Ms [McDermott] initially stated that she sought for the current ‘spend time’ arrangements to continue because they were “working” and it would be difficult for the children to spend any more time with Mr [McDermott]. However, when Ms [McDermott] was asked for her thoughts on the proposal Mr [McDermott] had made during the family report interviews, she indicated that she would be prepared to agree to such.
35.Ms [McDermott] stated that children’s school hours had flexibility but that she tended to try to get the children to work during normal school hours. She that the children’s lesson schedule was available at the commencement of each school Term. Ms [McDermott] stated that currently the children each had three one hour virtual lessons per week. Ms [McDermott] said that the children would also have a telephone call/session with their teacher each week. She indicated that Mr [McDermott’s] ‘spend time’ proposal would work in terms of the children’s schooling commitments.
No rational reason was put forward at trial as to why their proposals varied.
As to the children’s views the family reporter noted:
[K] (aged 8 years and 7 month):
62.[K] described it as “okay” when she spent time with her father. She said that he had bought them motor bikes that stayed at his parent’s place. [K] said that ‘[TT]’ and ‘[UU]’ were her father’s parents but appeared a bit confused when asked if these were her grandparents. She said that she had been to the Gold Coast with her father and said it was fun (however, her voice lacked any enthusiasm when discussing this holiday).
63.[K] said that her father was good at “lifting us up” and “piggy backs”. When asked what else he was good at, [K] thought for a while and said “I’m not really sure because he was not really around that much”. She explained that her father had been away with work frequently before the separation.
64.[K] said that her father was “kind of okay with most things” but could sometimes get a bit angry.
65.[K] said that she could remember when her parents lived together and stated that they used to argue a lot. She stated that she was unsure what her parents were arguing about. [K] said that she was not surprised when her parents separated.
66.[K] explained that she would spend time with her father every few weeks. She stated that she thought that the current parenting arrangements were “good”. However, [K] commented that [AA] liked it better when they just spent the day with their father because he did not like being away from their mother.
67.[K] was asked about her thoughts on her father’s proposal of four nights per month and she said “but I have school” and “that is quite) stupid to do that”…
[AA] (aged 5 years and 10 months:
71.[AA] was not able to explain the current frequency that he saw his father.
72.[AA] said that he did not like sleeping at his father’s house and said this was “cause we can’t do as much fun”. He said that he would prefer to see his father less often “because we don’t do as much” and that the time he spent with his father would be better if his father made it more fun. He commented that his father had only gone on the ‘Scooby Doo’ ride at a fun park, whereas his mother had gone on all the rides at “Wet and Wild”. However, [AA] said it would be okay to see his father the same amount as he currently did. [AA] said it would be his preference not to see his father more than he currently did.
The family reporter relevantly expressed the following opinion:
92.The children were not of an age or stage of development whereby they were able to express meaningful views in regards to parenting arrangements. The children have an established relationship with both parents. Both parents indicated that the children had adjusted to the current spend time arrangements.
93.Mr [McDermott’s] proposal of blocking the children’s time with him into four nights per month to reduce the children’s travelling would be likely to be less burdensome on the children. It did not appear sustainable for the children to continue to travel such significant distances on a fortnightly basis.
94.The children may take some time to adjust to spending a longer period of time in Mr [McDermott’s] care. However, if Ms [McDermott] suitably supported this time is likely to significantly assist the children’s adjustments. Additionally, Mr [McDermott] actively engaging with the children and planning child focussed activities for the children whilst they were in his care would assist with their adjustment…
95.Ms [McDermott] and Mr [McDermott] were in agreement about the children living with Ms [McDermott] and spending four consecutive nights per month and half of each school holiday period with Mr [McDermott]. It is noted that such a spend time arrangement would involve the children being in Mr [McDermott’s] care during two school days each month. It will be the responsibility of both parents to make enquiries of the children’s school requirements to ensure that this will not disadvantage them educationally and make arrangements either for the children to complete their work during their time in Mr [McDermott’s] care or prior to or after the weekend when they are in Ms [McDermott’s] care.
Notwithstanding the children are now older than when interviewed by the family reporter, their views must be secondary to reasonable and practical arrangements for their time with the husband.
It was never explained at trial as to why the consensus reached during the family report interviews had unravelled. There is some suspicion that it is simply reflective of the ongoing conflict between the parties and the husband’s wish to be relieved of some of the travel. Yet it appears that his living circumstances at present are indeterminate and that in reality he could make arrangements to live in reasonable proximity to the children so as to alleviate travel obligations.
Both children have a good relationship with their parents and arrangements for time to date have continued substantially without difficulty.
The primary obligation to maintain and provide for the children has fallen on the wife since separation with the husband making in effect no financial contribution. Such a circumstance is not indicative of the wife being obligated to undertake extensive travel when that would put her to significant expense.
There is no practical difficulty in implementing changes to the children’s time with the husband. He has been able to manage alternate weekend time and school holiday time, it appears, without complaint. He presently asserts he is not working and it is open to him to seek paid employment where he chooses. Hopefully his choice will alleviate significant travel for him in implementing his time with children.
There are no relevant family violence issues.
It is clear that the children’s arrangements for time with the father will need to be reviewed at a time when high school commences. It is hoped that any change to arrangements at that time will not see further litigation.
In all of the circumstances it is in the best interests of the children to spend one block period per month with the husband or as otherwise agreed between the husband and wife and for him to undertake the travel necessary to implement same. It is expected that, as contended by senior counsel for the wife in submissions, should the husband be residing in reasonable proximity to the E Town area there would be no resistance to a continuation or reimplementation of the current alternate weekend arrangement.
It is not in issue that the wife should provide reasonable notice in the event that she proposes to relocate the residence of the children from their present circumstances.
Orders will be made accordingly.
I certify that the preceding three hundred and forty two (342) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 19 May 2017.
Associate:
Date: 18 May 2017
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