Mervyn and Mervyn and Ors

[2010] FamCA 817

FAMILY COURT OF AUSTRALIA

MERVYN & MERVYN AND ORS [2010] FamCA 817

FAMILY LAW – PROPERTY – settlement of property
FAMILY LAW – INJUNCTION – restraint from encumbering, selling or dealing with shares without leave of the court until further order
FAMILY LAW – SUPERANNUATION – Trustee not make any splittable payment without leave of the Court pending further order of the Court

Family Law Act 1975 (Cth)

APPLICANT: Ms Mervyn

1st RESPONDENT HUSBAND:	Mr Mervyn
2nd RESPONDENT:	Mervyn Pty Ltd
3rd RESPONDENT:	E Mervyn
FILE NUMBER:	SYC	1313	of		2007

DATE DELIVERED: 4 August 2010

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Loughnan J

HEARING DATE: 4 August 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Lee

SOLICITOR FOR THE APPLICANT:

1^st RESPONDENT HUSBAND: In person

2^nd RESPONDENT: No appearance

3^rd RESPONDENT: No appearance

Orders

1. Leave to the parties to inspect documents produced by the husband today.

2. That the Third Respondent, E Mervyn, be restrained from encumbering, selling or otherwise dealing with the 1,800 shares in Mervyn Pty Limited which she acquired from the First Respondent Husband without leave of the Court until further order of the Court.

3. Leave is granted to the Third Respondent, E Mervyn, to apply in relation to that order within two months from today’s date on giving at least seven days’ (7) written notice to each of the other parties.

4. Pursuant to s 90MU the Trustee of MLC Masterkey Business Super not make any splittable payment in respect of the interest of the husband (Account No: … and Customer No. …) without leave of the Court pending further order of the Court.

5. That the Trustee of that fund notify the husband and the wife c/- … within twenty-one days (21) of the next occasion when a splittable payment becomes payable in respect of that interest.

6. The proceedings are adjourned pursuant to s79(5).

7. Leave to any party to restore the matter to the list on giving at least seven days’ (7) prior written notice to each other party and to the Court.

8. In the event that no party restores the proceedings pursuant to that leave within twelve (12) months from today’s date upon the expiration of that twelve (12) months the wife’s Amended Initiating Application and the husband’s Response and the Response of the Second and Third Respondents stand dismissed.

9. The Court requested the Docket Registrar inquire of the parties in approximately six (6) months as to the status of the proceedings in the event that the proceedings are not restored pursuant to the leave granted today within that time in any event

10. That the costs of the parties of and incidental to the proceedings today are reserved.

11. That a sealed copy of these orders be served by the wife on the Trustee of MLC Masterkey Business Super and on the Second and Third Respondents by ordinary pre-paid post to their last known address within fourteen (14) days from today’s date.

IT IS NOTED that publication of this judgment under the pseudonym Mervyn & Mervyn and Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER:  SYC 1313 of 2007

MS MERVYN

Applicant

And

MR MERVYN

Respondent

REASONS FOR JUDGMENT

1. I propose to adjourn these proceedings under section 79(5) for the following brief reasons. 

2. After living together for more than 26 years, the wife and husband cannot agree on a settlement of their property.  The wife seeks orders in terms of an Amended Application for Final Orders filed 28 May 2010, as further amended by learned counsel for the wife on the first day of the hearing. 

3. The wife seeks, in summary,

   ·    that all previous orders be discharged.  I don’t think there are any previous property settlement orders.

   ·    Secondly, she seeks that within seven days, the husband take all steps and sign all documents to cause his 20 per cent share in the property at G to be transferred to her; 

   ·    that within 28 days he take all steps necessary to transfer his right in a Holden Berlina motor vehicle to the wife; 

   ·    that an independent business valuer be appointed by the court to value a company known as Mervyn Proprietary Limited as at the date on which the husband transferred his 9 per cent shareholding of that company, and that 9 per cent of the figure fixed by the valuer be paid by the husband’s mother into court and that it form part of the asset pool; 

   ·    that a splitting order be made on the basis of 100 per cent of the husband’s superannuation interest to the wife; 

   ·    that a property in Lebanon be valued and that an amount representing one half of the husband’s 20 per cent interest in that property be paid by the husband to the wife;  and

   ·    a section 106A order.

4. An order had been sought in relation to repayment of moneys. It was one of the paragraphs numbered 9 in the application. That order is not pressed.

5. The husband appears on his own account.  He no longer seeks orders in terms of his Amended Response.  He told me that he seeks orders to the effect that:

   ·    there be a splitting order in the wife’s favour of his MLC superannuation based on 50 per cent of his interest;

   ·    that the parties otherwise retain the assets in their control and responsibility for the debts in their respective names; and

   ·    that otherwise, the wife’s application be dismissed. 

6. The wife relied on eight affidavits sworn by her from 2007 to date, two Financial Statements, one from 2007 and one more recent.  The husband relied on four affidavits sworn by him from 2007 to date and a Financial Statement which was sworn and filed in February 2010.

7. As at today, the wife is 48 years of age, and the husband is 52.  They lived together for about six months before marriage in 1980 and separated in 2006.  They have six children, who are 29, 25, 24, 23, 21, and 15 years of age, respectively.  These proceedings were commenced in 2007 and have been listed for final hearing on several occasions. Including those listings, the matter has been listed before the court on 27 occasions, including today. 

8. On 21 May 2010 Registrar Crawford ordered that the matter be listed for hearing over two days. The matter was subsequently listed before me.  Both parties are present. The wife is represented by counsel who is directly briefed;  the husband is unrepresented.

9. As to the substance of the matter, the wife has suspicions about the existence of assets in the form of an interest in a property at G, about an interest in property in Lebanon, about nearly $500,000 that was dispersed by the husband from equity in the parties’ home at Y to the company over the years 2002 to 2006; and about the husband’s transfer to his mother of his 9 per cent share in that company. 

10. The husband says that he doesn’t have any interest in the property in Lebanon, that his interest in the property at G, he variously says, either has some equity or is fully encumbered.  He says that the payments made to the company over 2002 to 2006 were all by way of reimbursement of loans, and he says really that the only asset he knows about is his interest in superannuation. 

The Problems with the Evidence 

1. The husband gave oral evidence yesterday.  He came to the hearing without many documents. He had none of his own documents and one or two of the documents relied on by his wife. We lost just about half a day yesterday while those circumstances were discovered and documents were photocopied.

2. As to the husband’s disclosure, it is his case that his family is a close one; that Mervyn Proprietary Limited was a family company in which he had a 9 per cent share and for which he worked as a builder’s labourer.  He says over the years, in addition to wages, the company paid deposits on houses, mortgage instalments, school fees, and paid for cars. He says that the company did the same thing for his siblings. 

3. Although the husband never saw any company document evidencing a loan account or formalising the advances, he says that those additional payments were by way of loan. It is his case that, starting in 2002, he borrowed money on the former matrimonial home at Y, to repay his loan to the company, when the company needed financial help.  He says that the most recent borrowing was in 2006, which was the time of separation. He says that that borrowing brought the mortgage to $412,500. Of that sum $276,000 was used to pay out the existing mortgage. The husband could not explain to me why he borrowed $412,500. During cross-examination he didn’t know whether he has paid out all of his debt to the company or paid out more than his debt to the company. 

4. The husband’s evidence is, that with the assistance of his then solicitor, he undertook a reconciliation of what he owed the company. That reconciliation is evidenced by exhibit 4 and was undertaken in 2008, long after he borrowed $412,500 to repay the company. The husband says that his brothers also nearly lost his home, but he says that that brother’s children chipped in, and they were able to save that home. The husband says that he and three brothers live in his parents’ house at M, with his mother. He says that the M home is also mortgaged. 

5. The husband said yesterday that litigation in respect of a property development undertaken by Mervyn Proprietary Limited was heard in the NSW Supreme Court about five weeks ago and that judgment had been reserved.  

6. The husband says that building work formerly undertaken by Mervyn Proprietary Limited is now undertaken by members of his family through a new company, R Proprietary Limited. The husband says that he doesn’t do any work for R Pty Ltd because of his health. It is an agreed fact in these proceedings that the husband does not enjoy good health, at least in relation to diabetes and hypertension. 

7. There is a dispute between the husband and wife as to the location of a Holden Berlina motor vehicle. Through her counsel yesterday, the wife conceded that she has the vehicle. That is different to a proposition put to Registrar Crawford on 21 May 2010. The wife was asked about that today in cross-examination and says that she made a mistake yesterday, that she thought the reference was to a Mitsubishi Lancer motor vehicle. It is her evidence that she does not have the Holden Berlina motor vehicle. 

8. In relation to loans raised by the company and by the husband, it appears that the lending authority may have been told that his income was as much as $90,000 a year. The husband denies making those representations. He brought to court today, and they became exhibit 3, income tax returns for the years following 2004. The 2005 return declared an income of the order of $54,859 for that year. Part of the material apparently presented to a lending authority included a document purporting to be a tax return of him for 2005. That document showed him with an income in excess of $90,000 a year. 

9. It is the husband’s case that despite his father’s will providing for 20 per cent of certain assets going to each of the sons and probate being granted of that will, he does not have an interest in a property in Lebanon. It is his assertion that a document, that appears on its face to be a Power of Attorney, had the effect of transferring title to his interest in that property, to one of his brothers. 

10. Through her counsel, the wife seeks that the matter be adjourned. In the circumstances and given the state of the evidence, I am not confident that there are any significant assets of this marriage. 

11. The husband says that he understands that Mervyn Proprietary Limited, (which he says is in liquidation), nevertheless has some status for the purposes of prosecuting litigation in respect of the property development project. In that litigation he understands that the company is pursuing a debt, of $6 or $7 million.  If the husband is correct, and if the litigation is successful an asset may be brought into being which could be the subject of a property settlement between the husband and the wife. The evidence about the Lebanese property would not pass muster to establish that the property exists or that the husband has any interest in such a property. There are some concessions about it, but this is a property outside the jurisdiction. There are limits on the court’s power to deal with that property.

12. There is a fact available to be identified in relation to the G property. Namely, what amount is secured on that property. That information is not in evidence and the husband’s evidence about it is entirely inconsistent. He says he simply doesn’t know. At one point he gives evidence to the effect that there is security given over both that property and his mother’s property for a $1.3 million facility. At the same time he asserts that there is a debt in relation to the G property in respect of which he owes $80,000. Those two pieces of evidence cannot stand together. Nevertheless that is something that could readily be established.

13. At the heart of the case is whether there is an asset in the form of some value in Mervyn Proprietary Limited. If so and if the husband’s 9% interest can be resurrected by the reversal of a transfer to his mother, then there may be a matrimonial asset. That depends upon the outcome of the NSW Supreme Court proceedings. The issue of whether there is equity in the G property will require evidence about the amounts secured on that property.

14. Beyond those matters the only significant asset is the husband’s MLC superannuation. It might stands at about $36,000. There is no evidence of the terms of the fund in relation to the capacity to access it now. An application is now made for a flagging order in relation to that interest. I have asked counsel to prepare a minute of such an order for me. Similarly, an application is made for a restraint on the husband’s mother from disposing of the 9 per cent shareholding that the husband transferred to her. The husband’s mother has no notice of that application, but she is a party to the proceedings. She has indicated to the court that she will abide any proper order made by the court. Nevertheless, there is a natural justice issue. I propose, on the balance of prejudice, to make the order sought, but give her the opportunity to come back to Court if she is aggrieved about it. Again, if Mervyn Proprietary Limited has no assets then that order is a waste of time.

15. I should also note that it is an agreed fact between the husband and wife that their contributions were equal.  There is a dispute about adjustments for the “other matters” in section 79(4).  The wife is seeking an adjustment of the order of 5 to 10 percent at this stage and the husband argues that there should be no adjustment. 

I certify that the preceding twenty five (25) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Loughnan

Associate: 

Date:  15 September 2010