Medlow and Medlow (No 3)

[2014] FamCA 760

FAMILY COURT OF AUSTRALIA

MEDLOW & MEDLOW (NO 3) [2014] FamCA 760

FAMILY LAW – PROPERTY – Interim – Stay – Where the husband seeks to enforce and vary aspects of previous interlocutory orders – Where the wife has filed an application for leave to appeal previous interlocutory orders – Where in aid of her appeal, the wife seeks a stay of aspects of the orders, and if not successful, interim financial orders – Where interim orders provided for the husband to receive $2,900,000 from joint funds – Where the husband is involved in significant litigation in other jurisdictions – Whether the interim orders made would contribute to the wife’s claims for property settlement being frustrated – Where orders are made aimed at ensuring joint funds are only paid out for necessary purposes – Where orders are made for interim property settlement and spousal maintenance to the wife – Where various orders are stayed on condition, pending the determination of the wife’s application for leave to appeal.

Family Law Act 1975 (Cth)

APPLICANT: Mr Medlow

RESPONDENT: Ms Medlow

FILE NUMBER: SYC 7742 of 2010

DATE DELIVERED: 11 September 2014

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Loughnan J

HEARING DATE: 5 September 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Gould

SOLICITOR FOR THE APPLICANT: Watts McCray Lawyers

COUNSEL FOR THE RESPONDENT: Mr Richardson SC

SOLICITOR FOR THE RESPONDENT: Barkus Doolan

Orders

1. Pending further order, orders are made in terms of the orders sought at paragraphs 4, 5 and 6 of the Application in a Case filed 21 August 2014 as follows:

   4.That upon settlement of the sale of B Street, Suburb C, and in addition to paragraph (1) 6 of the Orders dated 18 July 2014 but particularly (1) 6.4 of those Orders, the further amount of $1,250,000 be received by the Husband, such that the amount the Husband is to receive in total pursuant to those orders and these Orders is the amount of $2,900,000.

   5.That the Husband be at liberty to apply the funds to be received in accordance with paragraph 4 herein, and paragraph (1) 6.4 of the Orders dated 18 July 2014, and that for the purposes of this Order, paragraph 5.5 of the Orders dated 8 April 2014 be and is hereby varied to read as follows:

   “5.5Such other purposes, at the Husband’s discretion.”

   6.That the Husband shall by no later than 4.00 pm on the last Friday in each calendar month, ensure that documentary evidence as to the application of the funds to be received pursuant to the Orders dated 18 July 2014, be provided to the Wife.

2. Unless they otherwise agree in writing the parties are to forthwith do all things and sign all documents to cause the following payments to the wife from the net proceeds of sale of the property at B Street, Suburb C:

   (a)$150,000 by way of interim property settlement; and

   (b)$168,000 by way of interim spousal maintenance for the accommodation of the wife in Australia.

3. Pending the determination of the wife’s application for leave to appeal and if leave is granted, the appeal in the Notice of Appeal EA 106/2014 filed 12 August 2014, the operation of order 1(5) herein is stayed.

4. Pending the determination of the wife’s application for leave to appeal and if leave is granted, the appeal in the Notice of Appeal filed 12 August 2014, the operation of order 1.6.4 of the orders made on 18 July 2014 as otherwise amended by order 1 herein, is stayed to the effect that payments from the $2,900,000 fund established thereby shall, unless the parties otherwise agree in writing, only be paid out as follows:

   (a)Forthwith to:

   (i)P Business Advisers  $26,175.35

   (ii)The payees identified in the table  $82,529.73

   “Lawyers Accounts Outstanding” in annexure I

   to the affidavit of the husband filed

   3 September 2014

   (iii)The payees identified in the table  $1,040,110

   “Criminal Legal Fees” in that annexure

   (iv)The payees in accordance with   $278,954.90

   the table “[Ms Medlow] Maintenance”

   in that annexure, save for the last item

   in the table.

   (b)As and when they fall due:

   (i)under the orders of 16 March 2011 or otherwise to the payees in accordance with the table in that annexure “[Mr Medlow and Mr E and J] General Accounts” at $42,260.18 per month; and

   (ii)pursuant to the orders of 16 March 2011 to the wife for her maintenance at $81,000 per quarter but in the event that the husband is in default for 48 hours of his obligation to pay $81,000 each quarter to the wife for her maintenance is, then forthwith on the first such default from the date of these orders, the balance of the 12 months maintenance owing from the date of this order, will fall due and will be forthwith paid to the wife by the husband.

   (c)For legal fees for the husband’s criminal proceedings on invoice, on the due date, provided that the husband shall provide the wife with a copy of the applicable invoice as soon as practicable and in any event at least 14 days before the due date.

5. The stays granted by these orders are conditional on the wife prosecuting her application for leave to appeal and if relevant her appeal, competently and with expedition.

6. The parties are at liberty to otherwise disburse the proceeds of sale of the Suburb C property as agreed between them in writing.

7. Leave is granted to the parties to apply on giving seven days notice to the Court and each other in relation to these orders.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Medlow & Medlow (No 3) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 7742 of 2010

Mr Medlow

Applicant

And

Ms Medlow

Respondent

REASONS FOR JUDGMENT

1. In the context of substantive proceedings for settlement of property between husband and wife, orders for interim property settlement and mandatory injunctions were made on 18 July 2014.

2. In further interlocutory proceedings, the husband seeks to enforce and vary aspects of those and earlier orders. After lodging an application for leave to appeal in relation to most of the orders of 18 July 2014 and in aid of her appeal, the wife seeks a stay of aspects of the orders. In the event that her application for a stay is not successful the wife seeks other interim financial orders.

3. The hearing was conducted on 5 September 2014 and for reasons given on that day, I made the following orders:

   1.By consent orders 1.4 and 1.5 made on 18 July 2014 are vacated.

   2.Orders 6.1 and 6.4 made on 18 July 2014 are stayed pending the determination of the application for a stay contained in the Response to an Application in a Case filed by the wife on 28 August 2014.

   3.During the currency of that stay the parties are at liberty, notwithstanding order 6.5 made on 18 July 2014 to otherwise disburse the funds invested pursuant to that order, as agreed by them in writing.

   4.The husband’s Application in a Case is dismissed insofar as the order sought pursuant to s 106A in paragraph 2 of that application.

   5.Otherwise judgment is reserved in respect of the Application and Response and the parties are excused on delivery of judgment.

4. What follows are the reasons for judgment as to the balance of the orders sought by the husband in his Application in a Case filed 21 August 2014 and by the wife in her Response filed 28 August 2014.

5. The background facts were not addressed in the limited evidence relied on by the parties. The following facts are known to me from previous hearings in these proceedings and may assist to understand the context of these reasons. I do not understand them to be controversial.

6. The parties commenced cohabitation in December 1990, married in 1992 and separated in December 2008. They have two children; Mr E who is now 21 years of age and J who is 16 years of age. At the commencement of cohabitation the wife was 22 years of age and had no significant property. The husband was 42 years of age and even after achieving a settlement of property with his first wife, had accumulated substantial wealth. Proceedings for settlement of property were commenced in 2010 and have yet to be heard.

7. In addition to these proceedings the husband is involved in other litigation as follows:

   a)The husband faces trial (“the criminal proceedings”). His trial was listed to commence on 25 August 2014 for 16 weeks. However, on 25 July 2014 the trial dates were vacated on the application of the husband and for reasons that are supressed under an order of the NSW Supreme Court made on 15 July 2014. It is the husband’s evidence that the trial will be set down on a date that has not yet been fixed but that he expects to be no earlier than late 2015 and perhaps early in 2016. The husband is applying for a permanent stay of the proceedings.

   b)A company associated with the husband is engaged in Supreme Court proceedings with persons or entities associated with Mr G (“the G litigation”). Those proceedings were commenced in 2009 in the Federal Court of Australia and were later transferred to the Supreme Court of New South Wales. In those proceedings the husband sought to recover in excess of $8 million from Mr G and his estate. There are a number of counterclaims in those proceedings. On 21 February 2011 orders were made in those proceedings, staying the proceedings pending the determination of the criminal proceedings, on condition that the husband retains in Australia, assets up to the unencumbered value of $15.5 million.

   c)A company associated with the husband is engaged in further proceedings in the Supreme Court of New South Wales with a company associated with Mr H Medlow, the husband’s brother (“the Medlow litigation”). Those proceedings relate to the joint interests of those companies in significant holdings of land at Suburb I and Suburb J on the outskirts of Sydney. On 14 March 2014 an injunction was granted by this Court to restrain the husband from causing or allowing his company to settle that litigation on particular terms.

8. A number of interlocutory orders have been in the proceedings before this Court. On 14 January 2011 orders were made in terms sought by the wife, whereby the husband was restrained in relation to his conduct or dealings with a number of companies and trusts. In effect the husband’s management of the affairs of those entities was restricted and certain disclosure obligations in favour of the wife were imposed on him.

9. On 16 March 2011 further interim orders were made in these proceedings, by consent, including: an order that the husband pay to the wife by way of interim spousal maintenance $324,000 per year; certain expenses in relation to the property at B Street, Suburb C (“the Suburb C property”); certain expenses in relation to a jointly owned property at K Town in Country L; adult child maintenance and child-support departure for the parties’ children. In those orders the parties asked the Court to note that they were cooperating in the sale of the Suburb C property and of 2 B Street, Suburb C and they provided for the disbursement of the proceeds of sale of those properties.

10. The sale of 2 B Street, Suburb C settled on or about 30 January 2014 and the proceeds of that sale reduced a National Australia Bank facility secured on the parties’ properties to about $5.6 million.

11. Importantly, on 8 April 2014 orders were made in terms agreed between the parties to facilitate a borrowing which among other things, would establish a fund of $2.9 million to meet certain urgent expenses of the parties including provision in excess of $1 million for the legal fees of the husband in the criminal proceedings. The borrowing was to be undertaken by refinancing a debt secured on the Suburb C property. After the April orders were made but before they were complied with, the Suburb C property was sold for $37 million. Just pausing there, the aspects of the orders of 8 April 2014 that relate to the establishment of a fund of $2.9 million were never operative because the borrowing to establish that fund was never undertaken.

12. From the deposit paid by the purchasers, the existing mortgage of $6 million on the Suburb C property was discharged. Settlement of the sale was to occur on 10 September 2014.

13. The husband brought the proceedings which were determined by the judgment of 18 July 2014 because although there would be funds available from the sale of Suburb C to address the purposes of the planned $2.9 million borrowing, he argued that some of those purposes had to be met prior to the settlement of the Suburb C sale. For that reason he proposed borrowing $1.25 million in advance of the settlement of the sale, with the debt to be immediately repaid on that settlement.

14. On 18 July 2014, for reasons given that day, the following orders were made by me:

    (1)Orders and notations are made in terms of paragraphs 2, 4, 5 and 6 of the Application in a Case filed by the husband on 30 June 2014, as follows:

    2.The court NOTES:

    2.1That on 10 June 2014 the property situated at and known as [B Street, Suburb C] was sold for the amount of $37,000,000, with settlement of the sale of this property expected to occur on 9 September 2014.

    2.2That the Husband intends to procure from [Medlow Pty Ltd] and/or nominee of the directors of [Medlow Pty Ltd] a loan in the amount of $1,250,000, on the basis of interest being charged at a rate of 7.5 [per cent] per annum (“the loan”);

    2.3That the loan is proposed on the basis of the principal plus interest being discharged from the proceeds of the sale of the property situated at and known as [B Street, Suburb C]; upon settlement;

    2.4That the loan is intended to be applied in the manner and for the purposes provided for in the Orders made by Justice Loughnan dated 8 April 2014, pending settlement of the sale of the [B Street, Suburb C] property.

    4.That the Husband and Wife shall do all acts and things and sign all documents to ensure that the sum of $1,250,000 from the loan is paid into the trust account of Watts McCray Lawyers and such funds shall be invested in a controlled monies investment account for that purpose until applied in accordance with these Orders (“The Trust Monies”).

    5.Unless otherwise agreed in writing by the Husband and Wife, the Trust monies shall be applied in accordance with paragraph 5 of the Orders dated 8 April 2014.

    6.That upon settlement of the sale of [B Street, Suburb C], on or about 9 September 2014, the proceeds of the sale of the [B Street, Suburb C] property be paid and/or applied in the following manner and priority:

    6.1The amount required to discharge the loan secured by the second mortgage referred to in order 3 herein provided to the Husband by [Medlow Pty Ltd] and/or nominee of the directors of [Medlow Pty Ltd];

    6.2All costs and expenses of the sale including legal costs and disbursements for the conveyance, agents’ commission, and valuers’ fees;

    6.3The amounts required to pay all municipal and water rates outstanding with respect to the property;

    6.4Per Paragraphs 5 and 6 of the Orders dated 8 April 2014, in the further amount of $1,650,000, which further sum is intended to represent the balance of the moneys required and anticipated in those orders dated 8 April 2014;

    6.5With the balance (of an amount of not less than $15,500,000) to be held in an interest bearing account in the names of the parties, in compliance with paragraph 1(c) of the Orders made in the Supreme Court proceedings being Case Number … between [Medlow Pty Ltd] and [D Pty Ltd], such funds not to be disbursed except by further Order of the court.

    (2)Notwithstanding the above orders the husband and wife shall do all things and sign all documents necessary to authorise a payment from the funds the sum of $173,188.39 to the trust account of the solicitors for the wife by way of interim costs.

    (3)Otherwise the Court refuses to make orders at this time in accordance with the husband’s Application in a Case and the Response to an Application in a Case filed on behalf of the wife on 14 July 2014.

    (4)Leave is granted to the parties to restore the proceedings to the list in relation to the Application or Response or otherwise on giving the Court and each other at least 48 hours prior written notice.

15. Thus the orders contemplated that the fund of $2.9 million envisaged by the parties in their orders of 8 April 2014, would be established by borrowing $1.25 million in the weeks before settlement and on settlement, paying out that debt and isolating a further $1.65 million to make up the balance of the $2.9 million fund.

16. The borrowing of $1.25 million referred to in the notations and in orders 4 and 5 did not proceed.

17. This matter comes before the Court on the husband’s application. In essence the husband seeks orders to give effect to the orders of 18 July 2014; to make amendments to the orders to allow for certain intervening events, including importantly, a change to the wording of order 1(6) made on 18 July 2014 to accommodate the fact that the $1.25 million borrowing did not proceed and to ensure that the husband would nevertheless receive $2.9 million from the net proceeds of sale of the Suburb C property. He also sought orders in aid of the settlement of the sale on 10 September 2014; and orders to identify and secure certain items of personalty. For completeness I should record that albeit expressed in an affidavit rather than his application, the husband proposed in his affidavit sworn 3 September 2014, as an alternative order in respect of interim financial matters, that $2.9 million be paid to each of the parties, presumably from the Suburb C proceeds, and that the orders of 16 March 2011 for the financial support of the wife by the husband, be discharged.

18. By her Response the wife opposed the husband’s application in its entirety and sought a stay of the orders of 18 July 2014 pending the determination of her application for leave to appeal in respect of those orders. In the event that her stay application is unsuccessful, she sought the payment of the sum of $590,000 from the proceeds of sale of the Suburb C property. That application was refined during the course of the hearing and albeit without the formality of seeking leave to amend her claim, ultimately, the wife’s counsel identified her claim, which I understood to be to the following effect:

    1. In the event that a stay is refused:

    (a)that the husband pay to the wife, from the $2.9 million to be received by him from the proceeds of sale of the Suburb C property, $770,594 and that on the basis of that payment the operation of Order 1 made on 16 March 2011 be suspended; and

    (b)that the parties cause the wife to receive $150,000 from the proceeds of sale of the Suburb C property for the purpose of retaining the services of a forensic accountant in connection with the property settlement proceedings.

19. Through her counsel the wife rejected the alternate proposal of the husband for $2.9 million to be released to both parties and for the husband’s maintenance obligation to the wife being discharged.

20. As with earlier interlocutory proceedings in this matter it is not entirely clear to me what jurisdiction is invoked by the parties’ applications. There are proceedings to give effect to and to amend the orders of 18 July 2014 and there are proceedings for a stay of those orders. Somehow interwoven into those applications are proceedings which would have the effect of changing the obligations in respect of spouse maintenance between husband and wife. On the husband’s alternate proposal the wife would be provided with the wherewithal to meet her own expenses and thereupon the 2011 maintenance obligation would be discharged. On the wife’s case the 2011 periodic maintenance obligation to her would be capitalised for 12 months and albeit as foreshadowed in orders of 16 March 2011, there would be an increased obligation for separate rental accommodation for her in Sydney. She seeks a payment of $168,000 being for 12 months rent, paid in advance.

1. The problem is that there could be some overlap between maintenance relief and the conditions on which a stay is granted, for example. Similarly, there is a link between the husband’s application to amend the orders of 18 July 2014 to allow for the fact that the borrowing of $1.25 million did not proceed and the application for a stay.

2. I will start with the application of the husband.

3. The first relevant matter is the order sought at paragraph 4. Here the husband seeks to address the fact that the borrowing of $1.25 million, foreshadowed in the notation 2.2 and orders 4 and 5 of the 18 July 2014 orders did not proceed. The import of the orders of 18 July 2014 was that a fund of $2.9 million would be established from the proceeds of Suburb C. That in turn gave effect to the parties’ agreement reflected in the consent orders of 8 April 2014. By his most recent application the husband is simply seeking to facilitate that same outcome. Absent the stay application and the arguments in aid of it, that application should be granted.

4. The orders sought at paragraphs 5 and 6 seek a variation of consent orders made on 8 April 2014 as to order 5.5 which deals with the way in which the $2.9 million dollars to be paid into the trust account of the husband’s solicitors, would be applied. Although the immediate source of those funds changed from the expectation of the parties as reflected in the orders of 8 April 2014, this is the same $2.9 million that was to be received by the husband pursuant to the orders of 18 July 2014. Order 5.5 of the April 2014 orders provided that other than the payments identified in 5.1 to 5.4 inclusive, disbursements from the fund were to be made only with written agreement. In his application before me, the husband seeks to have that requirement changed and that further disbursements be at his discretion. The order sought at paragraph 6 would put in place a reporting mechanism to the wife about the disbursed funds. In aid of that application the husband relies on the fact that since April 2014, agreement between the parties has proved virtually impossible. I note the tortuous negotiations in relation to the wording of the documents to facilitate the aborted $1.25 million borrowing, evidenced in the annexures to the parties’ affidavits.

5. In my reasons for judgment of 18 July 2014 at about paragraphs 59 to 65, I predicted the problem and foreshadowed an approach to address it. Indeed it is that very approach that the husband now proposes. Apart from the stay application and the arguments in aid of it, nothing has happened since 18 July 2014 that would cause me to change the view expressed in those reasons. I will make those orders but must consider them again in the context of the wife’s stay application.

6. The order sought at paragraph 7 deals with access to the Suburb C property in connection with the removal of the parties’ personalty from the property and I understand that the issue no longer requires Court attention.

7. The orders sought at paragraphs 8 and 9 relate to the need for a record to be established of the personalty in the possession or control of the wife and evidence as to the present location of that personalty. In large part this is said to be a repetition of the obligations of the wife under orders made on 9 May 2013 and on other dates. I understood from a submission of the wife’s senior counsel that there was a proposal to have an inventory taken by a third party. Courts should not simply repeat prior orders and I will not make any order in this regard.

8. Finally, the husband seeks that the wife be restrained from dealing with personalty, without his prior written consent. Apart from a triumph of hope over expectation, the order is impractical because of the phrase “otherwise dealing with”, because no attempt has been made to isolate by type or value of the personalty to be affected and because of the requirement for written consent. The order as framed would prevent the wife throwing out a pair of socks. I have no confidence that the parties could make a sensible agreement about anything. It is not for me to redesign the husband’s application. No such order will be made. Of course the parties remain accountable to each other and have obligations under the Rules of Court, for their dealings with joint property.

9. Turning to the orders sought by the wife.

10. The wife seeks a stay of orders 1(4), (5), and (6), 3, 4 and 5 made on 18 July 2014 pending the determination of her application for leave to appeal in respect of those orders. I do not follow why a stay would be sought in relation to paragraphs 6.2 and 6.3 of order 1 and it may be that was simply an error in the wife’s application. There is no reason not to make the disbursements for the costs of sale and the rates adjustments. In any event I think the stay of those provisions would simply revive order 6 of 16 March 2011 which makes similar and unremarkable provision. Similarly, staying the operation of orders 3, 4 and 5 would seem to be meaningless.

11. A stay of order 1.6.5 would be of no direct practical effect. If the balance of the proceeds of sale are not otherwise disbursed then they will be held for the parties. By default, thereby more than $15.5 million would be secured against the obligation created in the G litigation. Again, although no submissions were made on the point, presumably a stay of order 1.6.5 would revive order 6.4 of the orders of 16 March 2011. Under that order the balance of the proceeds of sale of the Suburb C property are to be lent by the parties to the CS No. 1 Trust. The order provides that thereafter the husband shall use the funds to invest in nominated ways including “using the funds to meet expenses required to be paid pursuant to” the orders of 16 March 2011. That means that for expenses including the maintenance of the wife and children; school and university fees; the costs of the Country L property; agreed or ordered relocation and accommodation expenses for the family, including the cost of utilities and house staff; the husband will have access to the entire net proceeds of sale, the earnings on that fund and any net profits from his trading activities. I will not stay order 1.6.5.

12. The focus then turns to order 1.6.4. I have indicated that prior to consideration of the stay application, I will grant the husband’s application to achieve the parties’ original intention of establishing a $2.9 million fund rather than just the $1.65 million specified in the subject order. If the operation of order 1.6.4 and of that amending order is stayed, then there is no new fund which could be applied to the purposes of the disbursements specified in the orders of 8 April 2014. If I am correct that would however, revive order 6.4 made on 16 March 2011.

13. A stay is a discretionary remedy. The wife bears the onus of establishing a basis for a stay. She does not have to establish special circumstances for granting a stay. The husband is entitled to the benefit of the orders he secured on 18 July 2014 and is entitled to presume that judgment was correct. Some assessment is required of the strength of the case to be argued on appeal. It is important to weigh the risk that the refusal to grant a stay may render the wife’s appeal nugatory. Similarly, the court should consider the potential detriment to the husband of granting a stay. Stays can be limited and can be granted on conditions. The likely duration of the stay, that is the likely time within which the application for leave and if successful, the resultant appeal, may be heard and determined, can be relevant.

14. On the last question there is no probative evidence about the likely timing of the disposition of the appeal. There has as yet been no application to expedite the appeal.

15. Leave is required before the wife can appeal. As to the prospects of success of the application and appeal, the wife included in the Notice of Appeal filed 12 August 2014, reference to the basis on which leave will be sought. It will be the wife’s case that the orders in respect of which leave to appeal is sought, work a substantial injustice to her and that if she succeeds in her arguments at a final hearing, the interim orders will have caused her a substantial, irreversible loss. It will be argued that the issues in the appeal are of wide application and general importance. The concession on behalf of the husband was to the effect that the wife had a case to argue on appeal. Of course if leave is granted, the wife will have to demonstrate error. The first instance judgment is presumed to be correct.

16. The appeal and indeed the proceedings before me, largely turn on the question of whether the interim orders made would cause a diminution in the available pool of assets, so as to lead or contribute to the wife’s claims for property settlement being frustrated.

17. The issue is complicated. the subject orders were in large part, simply facilitating arrangements put in place over several years pursuant to the parties’ agreement – in particular orders of 16 March 2011 and of 8 April 2014. It is the wife’s case that she was mislead about a number of matters leading to her agreeing to the 8 April 2014 orders and about a number of matters since. In particular she says her agreement was procured without her knowing that $15.5 million from the Suburb C proceeds would be held hostage for the G litigation. She also says that the husband failed in his obligations of disclosure to her and that he has had access to and has failed to disclose the fate of more than $400,000 in recent times.

18. The problem for the wife is that it is difficult to see how her legitimate claims could be frustrated by the dissipation of that part of the $2.9 million fund that will be applied to the husband’s own purposes. In that regard $700,000 or more of the fund is earmarked for the support of the wife, the parties’ children, support for the Country L property and storage and removalists costs in Australia. I suppose it could be the wife’s argument that the husband will not be able to make a claim to any of the $2.9 million but if that was the case then presumably she would seek access to her own funds for her own support. For the purposes of this argument, I note the reference in the reasons for judgment of 18 July 2014 to the wife making a claim for 35 per cent of the property pool. Say, as has been earlier referred to in the wife’s case, the pool of assets was found to be of the order of $107 million. Say, as was also asserted in her case, that the husband has impermissibly dissipated or retains $50 million of that fund. In my view, in each case the weight of authority and probability is strongly against those findings. For the wife’s fears to be realised even given those unlikely scenarios, much of the other assets would need to be lost. Not just lost but lost in a way that was, in the property settlement context, sheeted home to the husband alone. Some or all of the $15.5 million held against the G litigation would need to be lost. Much of the parties’ claimed interests in the Suburb I and Suburb J properties would need to be lost in the same way.

19. The principle on which this issue turns is important and obvious – the Court should avoid, if possible, doing something at an interlocutory stage that cannot be undone at a final hearing, where that jeopardises a significant and arguable claim of one of the parties. At the end of the day, it is about preserving the subject matter of proceedings. I found that the establishment and application of the fund agreed to by the parties in April, which was facilitated by me on 18 July 2014, would not jeopardise the wife’s property claim.

20. However, the wife has a case to argue on appeal and seeks to have the subject matter of that appeal preserved, in case she succeeds. Notwithstanding that the argument did not find favour with me, it is agreed that the wife has a case to argue on appeal. That is not the end of the enquiry however. The wife is not the only person affected by the orders of 18 July 2014. The husband is entitled to the benefit of those orders and harm could be done to him if the orders are stayed.

21. One of the orders sought by the husband, which will be made by me for the reasons given earlier, will exacerbate the problem concerning the wife. If I remove the requirement of the wife’s consent to disbursements from the fund beyond the categories specified in the orders of March 2011, then rather than the fund being further diminished only under the wife’s watchful eye and with her consent, it would be within the husband’s power to dissipate it immediately.

22. In my view the effect of the orders of 18 July 2014, as amended by these orders, should be stayed in a way that reduces the disbursements of the fund to payments that I deem necessary. Importantly, the provision for the husband to disburse the fund at his sole discretion must be stayed. The devil is in the detail of the type of expenditure and when the expenditure must be made. Current indications are that the parties will not be able to compromise any resultant controversy and so the matter may need to come back to Court.

23. In annexure I to his affidavit sworn 3 September 2014 the husband identifies the expenditure he anticipates in the next 12 months, totalling $3,258,892.10. Of that sum he identified the following amounts that are owed now:

Expense	Amount
P business advisers	$26,175.35
Legal fees and disbursements that have already fallen due for the G and Medlow litigation, mainly to Harris and Company and Munro Lawyers	$82,529.73
Legal fees and disbursements for the criminal proceedings	$1,040,110
Past due under the obligations of the husband to support the wife pursuant to the orders of 16 March 2011	$278,954.90
Total	$1,427,769.98

1. In my view those amounts should be paid immediately and will not be the subject of a stay. The wife complains about the husband’s conduct of the G litigation and is suspicious about the Medlow litigation itself as well as the husband’s conduct of it. In each case the litigation is on foot and it is beyond the scope these interlocutory proceedings to investigate the wife’s complaints. That is not to say that it will be appropriate or possible to do so on final hearing. For the time being, legal costs associated with those proceedings are a proper basis for the application of matrimonial funds. Leaving payments overdue will simply invite satellite litigation and or interest charges and costs.

2. The criminal proceedings remain on foot and there is no suggestion that they have been contrived at by the husband for the purposes of defeating the wife’s claim. They are the most serious type of proceedings and have involved and will likely involve significant further costs. The catalyst for the orders of 18 July 2014 was to secure the costs of the criminal proceedings. Having made that order I cannot by granting a stay, reverse it.

3. Those payments should be made forthwith.

4. Then there are the following recurrent obligations:

Expense	Amount per month
J school fees	$5,149.84
Mr E university fees	$833.00
Mr E and J maintenance payment (Rent and Bills)	$6,333.33
The husband’s office rent	$3,300
The husband’s apartment rent	$8,473
Husband’s motor vehicle	$1,871
Husband’s drawings	$10,000
Mr M Medlow wages	$3,800
Insurance other	$2,500
Total	$42,260.17

1. These obligations run at $42,260.17 per month or $507,122.12 per annum. I am not aware of any reason why those payments should be made in advance. For the duration of the stay, unless the parties otherwise agree, those payments can be made as they fall due. In the event that one or more of those obligations must be paid in advance then I would expect the wife not to unreasonably withhold her consent to that course.

2. Next there is the future obligation of the husband pursuant to the orders of 16 March 2011 to support the wife by quarterly payments totalling $324,000 per annum. The wife seeks, in addition to other moneys, that payment in advance in the event that she is unsuccessful with her stay application. She will not be totally successful in that application. The husband includes that as a single figure in annexure I to his affidavit but except on the basis that the maintenance obligation is terminated by a payment of capital to the wife whereby she would be responsible for her own support, his counsel argued against the capitalisation of the husband’s periodic obligations. The orders of 16 March 2011 included a mechanism whereby if the husband was in default for 48 hours of his obligation to pay $81,000 each quarter, then the wife was entitled to draw the missing payment from other funds. That mechanism is no longer available because the other funds are no longer available. I will leave the provision for quarterly payments in place but will provide that in the event that the husband is in default for 48 hours of his obligation to pay $81,000 each quarter, then on the first such default, the balance of the 12 months maintenance owing from the date of this order, will fall due and will be forthwith paid to the wife by the husband.

3. The remaining component of the husband’s estimate of future expenses is $1,000,000 being the husband’s estimates of the future costs associated with the criminal proceedings. Consistent with the parties’ earlier agreements and the reasoning for the orders of 18 July 2014, the costs of the criminal proceedings are a necessary expense. With the stay of the criminal proceedings there may be a slowing of the rate at which the husband’s legal fees are incurred. By way of stay of the orders of 18 July 2014 I will provide for disbursements for those costs to be made only as they fall due. Future payments of legal fees for the criminal proceedings may be made by the husband on invoice and on the due date, provided that the husband shall provide the wife with a copy of the applicable invoice as soon as practicable and in any event at least 14 days before the due date. In that way the wife will have some notice of the disbursement of the funds and an opportunity to intervene if necessary.

4. The intended result is that the husband will receive and may invest $2,900,000. For the duration of the stay, unless the parties agree to the contrary in writing, or the Court otherwise orders, that fund will be drawn on, only as and when necessary for the above purposes.

5. The balance of the wife’s application was based on her application for a stay being unsuccessful. I will assume that she meant “not wholly successful”.  

6. In the event that her application for a stay is unsuccessful, she seeks that the husband pay to her, from the $2.9 million to be received by him from the proceeds of sale of the Suburb C property, $770,594 and that on the basis of that payment, the operation of Order 1 made on 16 March 2011 be suspended. Senior counsel for the wife revealed that the $770,594 she now claims represents a 12 month capitalisation of the husband’s obligation to support the wife pursuant to the orders of 16 March 2011 at $602,954.90[1] together with $168,000 being the wife’s estimate of the cost of 12 months rent for her new accommodation in Australia. The wife separately seeks that she receive from the proceeds of sale of the Suburb C property, $150,000 for the purpose of retaining the services of a forensic accountant in connection with the property settlement proceedings.

   [1] A figure adopted from annexure (i) to the husband’s affidavit of 3 September 2014

7. The husband opposes the wife’s claims. He objects to the wife receiving a capitalisation of her maintenance entitlement because it is not justified and it will diminish the funds available to him. In that regard he asserts that the fact that he is late in making the June quarterly maintenance payment is explained by his financial circumstances, including the delays in securing the $2.9 million referred to in the April 2014 orders, some or all of which he attributes to the wife and should not justify a capitalisation of the maintenance obligation. He says that he will need all of the $2.9 million and more. It is the husband’s evidence[2] that he will need $3,258,532 over the next 12 months. He expects to in part make up the shortfall with interest on the balance of the fund. There will be less interest if he pays out his recurrent obligations, in advance.

   [2] Para 25 of the affidavit of the husband sworn 3 September 2014

1. As to the quantum of the wife’s claim, the husband is concerned that the wife has taken unilateral steps to substantially increase the cost of supporting her and the parties’ sons. The boys, and when in Australia, the wife, were accommodated at the Suburb C property. In anticipation of the sale of the Suburb C property the wife arranged to accommodate the boys in rental accommodation, paying six months rent in advance at a cost of $27,000. It is the wife’s evidence that she will require something in the order of $168,000 to secure her own accommodation in Sydney for 12 months. It is the wife’s evidence that for reasons including the criminal proceedings she cannot secure appropriate accommodation otherwise. I gather from his evidence that the husband argues in part that the wife should live in the Country L property and that she should not live in Australia. The consent orders of 16 March 2011, contemplate the “family” having accommodation in Australia as well as the Country L property. Upon the sale of the Suburb C property, order 2 requires agreement or a court order to the families’ “alternative accommodation”. Reference is made to the appropriate standard of that accommodation being the standard of accommodation at the time the order was made – presumably the Suburb C property. The order also noted that agreement on the new accommodation should be made 42 days before relocation. Unfortunately that was not done.

2. On both sides perhaps the argument on this issue has something to do with maintaining or discharging of the orders of 16 March 2011.

3. Unless the parties arrive at a different arrangement, I will order that the wife’s $168,000 in rent, in advance, also come from the balance of the proceeds of sale and not from the fund of $2.9 million. As I have indicated, the orders of 16 March 2011 contemplated the husband supporting the wife in accommodation both in Country L and in Australia. There is no basis put to me to interfere with that approach. No doubt there would be any number of possible accommodation options for the wife. The husband’s apparent solution of her living in Country L is inconsistent with the existing orders. The wife has set out a proposal and given the Suburb C property sale, she needs accommodation in short order. If there is an argument that this aspect of support by the husband is unnecessary or only partly necessary, that could be made under s 79(4)(e) in the property proceedings.

4. It seems to me that the parties have deliberately avoided obvious areas of compromise in these proceedings. Given that the husband proposed that the wife receive $2.9 million from the Suburb C proceeds I am at a loss as to why he would resist her having the sum of $150,000 from the same source, whatever she intends to do with it. I note the argument made at paragraph 11(c) of his affidavit of 3 September 2014 but imagine that the wife would prefer to take her own advice about the preparation of her case.

5. I will provide for the wife to receive $150,000 directly from the proceeds of the Suburb C property. There is no doubt that she will receive more than that by way of property settlement and she has identified a reason for the advance.

6. The wife rejected the alternate proposal of the husband for $2.9 million to be released to both parties. Again that is presumably because the proposal is made on the basis of the discharge of part of the orders of 16 March 2011.

7. As to the balance of the wife’s claim, I have indicated the approach I intend to take to the recurrent obligations under the March 2011 orders. I was not assisted in relation to the import of the cessation of the husband’s obligation to maintain the Suburb C property and the commencement of new obligations for the family in Sydney. It is not clear to me what the relationship is between the fact that the wife paid the parties’ sons’ rent and the husband’s asserted obligation to pay their “rent and bills”.

8. Over the next 12 months the husband will have over $3.2 million in expenses to meet with $2.9 million from the Suburb C proceeds. Assisting to bridge the above shortfall, the husband will earn interest on the diminishing balance of the $2.9 million fund. Reference was made during submissions to the interest that could be earned on the balance of the proceeds of the Suburb C sale. More than $20 million will be available to invest. The parties will no doubt turn their minds to the application of the resultant income.

Conclusion

1. Orders were made on 18 July 2014 in aid of a scheme of support and application of joint funds, established largely by orders made over time in terms agreed by the parties. By their applications the husband sought orders consistent with the scheme and the wife sought to interfere with it. The orders of 18 July 2014 were largely made in accordance with the husband’s application. Events have intervened and the husband seeks that the scheme again be restored and the wife seeks a stay of the operation of the orders, in aid of her appeal against them. I have decided to again restore the scheme but by way of stay pending the wife’s appeal, to make orders aimed at ensuring that joint funds are only paid out for necessary purposes and when required.

2. For the avoidance of doubt I will also make an order that the parties are at liberty to otherwise disburse the proceeds of sale of the Suburb C property as agreed by them in writing

I certify that the preceding sixty four (64) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Loughnan delivered on 11 September 2014.

Associate:

Date:  11 September 2014