Mulford and Mulford
[2019] FamCA 843
•19 November 2019
FAMILY COURT OF AUSTRALIA
| MULFORD & MULFORD | [2019] FamCA 843 |
| FAMILY LAW – PROPERTY – Interim Property Orders – Farming concern – net assets valued at approximately $3m made up of farms, cattle and horses, cash-at-bank and water rights – different assessments of wife’s likely division of property at trial – six year marriage – contributions in issue – $130,000 ordered – interlocutory orders made for disclosure and valuations. |
| Family Law Act 1975 (Cth) ss 79, s 80(1)(h) Family Law Rules 2004 Ch 13 |
| Finazzi & Finazzi [2012] FamCA 102 Gabel & Yardley (2008) 40 Fam LR 66 Strahan & Strahan (2009) 42 Fam LR 203 Zschokke & Zschokke (1996) 20 Fam LR 766 |
| APPLICANT: | Mr Mulford |
| RESPONDENT: | Ms Mulford |
| FILE NUMBER: | MLC | 6905 | of | 2019 |
| DATE DELIVERED: | 19 November 2019 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Wilson J |
| HEARING DATE: | 13 November 2019 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr N James |
| SOLICITOR FOR THE APPLICANT: | Taylor & Whitty Solicitors |
| COUNSEL FOR THE RESPONDENT: | Ms P Byrnes |
| SOLICITOR FOR THE RESPONDENT: | Blackwood Family Lawyers |
Orders
On or before 4pm on 26 November 2019 the parties bring in a minute that gives effect to these reasons.
The further hearing of this proceeding is otherwise adjourned to the Senior Registrar.
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 Mulford & Mulford has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 6905 of 2019
| Mr Mulford |
Applicant
And
| Ms Mulford |
Respondent
REASONS FOR JUDGMENT
Introduction
The issue over which the parties were unable to agree came before me when sitting in the judicial duty list on 13 November 2019. Conversely, the parties agreed on eight issues the details of which are recorded below.
The main arena of debate on 13 November 2019 related to the wife’s application for payment of $190 000. On her behalf, Ms P Byrnes of counsel contended that the sum of $190 000 could be raised in part from the amount of $50 000 of the amount of $61 000 currently held by P Company and the balance ($140 000) to be raised by the sale of water rights attaching to the real property at Property L.
Another issue related to the identity of the agent through whom several valuable horses would be sold.
On behalf of the husband Mr N James of counsel made a collection of submissions. He said –
a)the wife had already been provided with substantial sums;
b)this was a six year relationship in respect of which property should be divided in her favour in an amount equating to no more than 10%; and
c)$50 000 only by way of interim property settlement should be ordered.
Synopsis
For the reasons set out below, in my view an interim property order for $130,000 should be made.
Short factual recital
Being an interim application in the judicial duty list, the information that follows has been extracted from the affidavit material filed thus far and from submissions advanced by counsel. None of the material in affidavits has been tested by way of cross-examination. To the extent that factual discrepancies emerged in the versions of events given by the husband and wife I have proceeded on the basis that it is neither necessary nor desirable to express findings of fact on disputed evidence that has not been explored in cross-examination. With that in mind, let me narrate certain of the more important matters in this litigation.
The husband commenced this proceeding by initiating application filed 24 June 2019 supported by the affidavit of Mr Mulford sworn 24 May 2019. Financial issues only were raised in the initiating application. The following were the more important matters that emerged from the husband’s affidavit –
a)he was 60 years of age;
b)he and the respondent married in 2013, they separated between August and October 2016, reconciled then finally separated in December 2018;
c)he and the respondent had been previously married;
d)at or prior to his commencing his relationship with the respondent, the husband owned a collection of substantial land holdings made up largely of farming land in Victoria and New South Wales;
e)some of those farming concerns were sold subsequent to the husband and the wife marrying in 2013 while other farming concerns were sold in the year of their marriage;
f)the sum of $2 000 000 or thereabouts has been applied towards the reduction of debt with a balance of $5 000 000 remaining from the net proceeds of sale;
g)the corporate trustee for the Mulford Family Trust is Mulford & Co Pty Ltd;
h)the corporate trustee of the Mulford Superannuation Fund is Mr Mulford Superannuation Pty Ltd;
i)Mulford & Co Pty Ltd was the registered proprietor of certain farming land, water rights, cattle and plant and equipment;
j)Mr Mulford Superannuation Pty Ltd was the registered proprietor of certain real property, shares and cash-at-bank;
k)the husband owned certain horses and the wife others;
l)in total, the gross value of assets forming part of the property that fell for division in this case was $6 389 000 or thereabouts; and
m)the husband’s liabilities and those of Mulford & Co Pty Ltd aggregated $3 708 000 or thereabouts.
The husband gave evidence about his involvement in the livestock industry, his ownership of water rights, the cattle he owned, and his ownership of a stock and station agency franchise. He also deposed to what he described as the wife’s behaviour becoming increasingly erratic, citing how the wife obtained an intervention order against the husband and how she accused him of having an affair. He says the application for an intervention order is without foundation. It is fair to say that the state of hostilities currently exhibited between the husband and wife is elevated.
The wife made an affidavit on 2 September 2019. She gave as her occupation tradesperson. She said in paragraph 3 of her affidavit that she made her affidavit in support of applications for orders –
a)for valuations of the property that she, the husband and associated entities owned;
b)the sale of horses owned by Mulford Pty Ltd;
c)for the husband to pay the wife spousal maintenance of $1 100 each week, plus a lump sum of $150 000, plus litigation funding; and
d)for discovery.
Pausing there, soon after announcing that discussions had been only partially fruitful, Ms Byrnes informed me that her client’s preferred position was for an interim property payment in the sum of $190 000 to be funded as to $50 000 from cash-at-bank and the balance from the sale of water rights. Mr James on behalf of the husband opposed that payment.
Consent orders on certain issues were reached by Mr James and Ms Byrnes on behalf of their clients. They were as follows –
1.Within 7 days the lawyers for the parties confer with Mr C accountant and provide him with any documents requested by him in order for Mr C to prepare financial statements and taxation returns for Mulford & Mulford Family Trust; and then for the husband for the last 3 financial years, and thereafter the husband lodge taxation returns for the entities and himself no later than 30 December 2019 and provide copies to the wife’s solicitor.
2.Until further order the husband be responsible for the cattle and horses held at the property at D Street, Town E including veterinary care and farmer care upon the property being vacated by the lessee Mr F.
3.That no later than 30 January 2020 the plant and equipment held at the properties at Property Q, D Street, Town E and Town G be valued by H Real Estate and the costs be paid at first instance by funds held by P Company (“the P monies”) and ultimately paid equally by the parties.
4.Within 30 days the cattle held on the Property Q, D Street, Town E and Town G properties be counted and valued by an agreed valuer employed by J Valuers and the cost of such valuations be paid at first instance from the P monies and ultimately paid equally by the parties.
5.While denying the necessity for the order, until further order the wife by herself, her servants and agents be restrained from approaching or providing any impediment to the husband or his agents or employees carrying out stock work and/or farm labouring on the Property Q.
6.The parties attend for a private mediation as provided in paragraph 7 of the orders 2 September 2019 by no later than 31 February 2020 such mediation to be conducted by Mr K or other agreed mediator.
7.Each party to provide the other with a copy of any document requested within 14 days of receiving the written request or provide an explanation in writing why it cannot be provided.
8.All interim applications otherwise be dismissed.
9.The proceeding be placed into the list of cases awaiting trial.
Ms Byrnes proposed a collection of orders that included but went significantly beyond interim property orders. The minute provided by Ms Byrnes was in the following terms –
UNTIL FURTHER ORDER IT IS ORDERED THAT
Spousal maintenance
1.The husband pay the wife by way of spousal maintenance for the wife the sum of $1,100 each week pursuant to section 74 of the Family Law Act 1975. The husband will pay the amount to the wife on Monday of each week by electronic bank transfer into an account nominated by the wife in writing.
Lump sum payment
2.The husband pay the wife the sum of $190,000 (“the payment”) as follows:
a.The sum of $50,000 within 7 days of the date of these orders from the monies held by P Company (presently $61,000);
b.The sum of $140,000 upon the receipt of the sale proceeds pursuant to Order 3 of these order or part thereof to a maximum of $140,000
The payment to be characterised by the trial judge.
Other
3.The parties forthwith do all things necessary to sell the water rights held in conjunction with the property at Property L to a maximum of net $140,0000 (sic) and upon receipt of the proceeds of sale that money be paid to the wife pursuant to Order 2(b) of these orders.
4.The parties no later than 30 March 2020 do all things necessary to sell all horses owned by them or their partnership, Mulford Pty Ltd, through R horse sales other than following horses:
a.Horse No.1
b.Horse No.2
c.Horse No.3
d.Horse No.4
and upon the sales the net proceeds be paid to the parties equally.
5.Within 30 days the parties jointly engage appropriately qualified valuers as agreed and in default of agreement valuers proposed by R horse sales to value the horses identified in Order 4 of these Orders and the cost of those valuations be paid for from the P funds in the first instance.
6.Neither party will encumber Property Q, D Street, Town E or Town G without the written consent of the other party.
7.Each party will hold their interests in Property Q, D Street, Town E and Town G on trust pursuant to these Orders.
8.The Wife return to the lease company the Motor Vehicle S presently driven by her upon request for the return by the leasing company.
9.The Wife do all things necessary to lodge the 2019 tax return for Mulford Pty Ltd no later than 15 December 2019 and upon lodging the return she provide a copy to the Husband.
10.The wife be permitted to sell the Boat and trailer and retain the proceeds of sale.
11.Each party provide to the other such other and further documents by way of discovery as may be requested by the other party's legal representative (sic) within 21 days of any request.
Returning to the wife’s affidavit that she made in response to the husband’s, the matters set out below are accurate distillations of her evidence. She said –
a)she and the husband commenced cohabitation in 2013 in Town E in order to establish a farming business;
b)the husband proposed marriage to the wife on her birthday in 2013 and they married in 2013;
c)this marriage was the wife’s second and the husband’s third;
d)they were in a relationship for five and a half years;
e)she became concerned that one of the husband’s employees was keeping “surveillance” on her (her word) so she obtained an interim intervention order against the husband on 17 May 2019;
f)the wife has had no source of income since separation;
g)the husband ceased paying her Commonwealth Bank credit card, he prevented her from accessing a feed account at M Pty Ltd, he cancelled her ANZ cheque account and he cancelled her private health insurance;
h)the wife withdrew $136 000 from the ANZ superannuation account on 8 March 2019 because (so she said) the husband left her with no funds to support herself;
i)she has been living on the sum of $136 000 and the sum of $78 000 or thereabouts remained;
j)since 8 March 2019 she has expended almost $60 000 on legal fees, horse maintenance costs and her personal living expenses;
k)she said the husband has at least $150 000 cash-at-bank and he has access to credit card facilities;
l)she said she needs funds so as to pay her legal fees for this litigation, to meet ongoing expenses associated with horses and her personal financial needs;
m)she estimated that the husband or entities owned or controlled by him owned property the gross value of which was $6 100 000 or thereabouts;
n)his liabilities (or those of entities owned or controlled by him) amounted to a little over $3 257 000;
o)superannuation stood at $486 000 or thereabouts;
p)she seeks orders for valuation of the parcels of real estate involved in this case;
q)she has guaranteed loans entered into by Mulford & Co Pty Ltd, a company owned and controlled by the husband;
r)the husband’s children are specified beneficiaries under the Mulford Family Trust and their spouses are general beneficiaries;
s)the wife’s tax returns for the financial years 2014 and 2015 stated that she received distributions from the Mulford Family Trust yet she did not receive any payments;
t)the wife is a director of Mr Mulford Superannuation Pty Ltd as is the husband;
u)in July 2016 the husband, the wife and Mr F the wife’s son from an earlier marriage entered into a partnership agreement in relation to a business known as N Pty Ltd;
v)in late October 2016 the husband, the wife and Mr F agreed that their partnership would dissolve, that Mr F would assume sole control of the business name N Pty Ltd and that the husband and the wife would commence a new partnership not involving Mr F to be called Mulford Pty Ltd in respect of which the ownership of certain horses would be transferred from N Pty Ltd to Mulford Pty Ltd; and
w)subsequently thereto, N Pty Ltd provides agistment only and Mulford Pty Ltd became registered with B Pty Ltd on 15 December 2016.
The wife addressed in some detail aspects of contributions, both direct and indirect and both financial and non-financial.
Ms Byrnes contended that on her assessment, the likely division of property in this case was not on a fifty-fifty basis but rather it was on a percentage “somewhere between 25 and 35 percent”. That was to be contrasted with the assessment made by Mr James who contended that the wife’s likely percentage distribution was in the order of 10%. Of course, the net asset position of the parties was a necessary starting point in any discussion about percentages of division. Ms Byrnes contended that “on a worst case”, 10% of a $3m pool was $300 000. She argued that she was seeking less than that by way of partial property settlement. I took her to mean that no issue presented itself on the reversibility of any interim property order when authorities such as Strahan & Strahan[1] as well as Finazzi & Finazzi[2] were taken into account in the manner canvassed in Zschokke & Zschokke[3] as well as Gabel & Yardley.[4] Conversely, Mr James submitted that –
a)the wife withdrew $136 000 from the superannuation fund;
b)horses were sold deriving either $87 000 or $47 000 (depending on which version of events was preferred);
c)the wife has retained $12 000 in respect of taxation;
d)no other source of funds beyond the money in the P account has been identified as being capable of meeting the sum sought by the wife; and
e)in any event, when one adds $50 000 (in the P account) to the $136 000, together with $47 000 as well as $12 000 then the wife has already been the recipient of funds equating to if not eclipsing (so said Mr James) an amount that the wife could reasonably expect to receive on this application for an interim property adjustment order.
[1] (2009) 42 Fam LR 203
[2] [2012] FamCA 102
[3] (1996) 20 Fam LR 766
[4] (2008) 40 Fam LR 66
Applicable legal principles
Certain statements of law that guide courts on these applications may be stated as being uncontroversial. They include the following –
a)the majority of the court in Strahan held that when consideration is being given to the appropriateness of an order being made for an interim property settlement order, more is required than the mere fact that upon a final hearing the applicant would receive the property being sought (or an amount in excess of the funds being sought) from the other party;
b)balance must be given to the risks of unduly limiting the final orders that can be made against the circumstances said to show that it is just and equitable to make interim orders;
c)in Strahan it was held that the first stage of any consideration of an application for a partial property settlement order requires a determination of whether the interests of justice require the exercise of power under s 79 and s 80(1)(h) on an interim basis;
d)compelling circumstances need not be shown by an applicant for a partial property settlement order, as was held in Strahan;
e)ordinarily an order under s 79 is made once only after a final hearing, as was held in Strahan at [132];
f)consideration must be given to the reversibility of the order, as was held in Zschokke & Zschokke[5] and Gabel & Yardley;[6]
g)in addition, a court entertaining an application for a partial property settlement should consider the need for and effect of interim orders weighed against the risks that the exercise of the power on an interim basis will interfere with the power of the court to make just and equitable orders on a final basis;
h)further, a court entertaining an application for a partial property settlement order should consider that the order is just and equitable according to at least a preliminary view of the likely range of outcomes;
i)further, a court entertaining an application for a partial property settlement order should balance the risks by considering not only the quantum of the orders but also the risk of unduly limiting the final orders that can be made or even potentially defeating parties’ claims; and
j)a court entertaining an application for a partial property settlement should take into account that a party should not be denied the ability to liquidate assets where there are real needs for those resources such as meeting debts due to creditors.
[5] (1996) 20 Fam LR 766
[6] (2008) 40 Fam LR 66
Several things must be observed.
First, both parties contended that the approach by the other towards discovery has been deficient. It is not possible to express a definitive view about that. Ms Byrnes was particularly trenchant in her criticism of the husband in that regard citing the absence of documents about the security held by various lenders, about company returns, about water rights and about all issues relevant to a spousal maintenance claim. She said –
the easiest way to defeat a spousal maintenance claim is to just produce nothing and let the party seeking it (to) try and find whatever they can.
Discovery has been selective, to say the least. That must change. The parties must address their obligations towards discovery in a manner consistent with all of the requirements of Chapter 13 of the Family Law Rules.
Better discovery and disclosure will undoubtedly enable a better insight to be gained to the parties’ overall position. But whether the parties in fact abide by their obligations under Chapter 13 of the Family Law Rules remains to be seen. Moreover, any attention to their discovery obligations will be prospective and will not assist in the determination of this application for an interim property order. It seemed to me that it was necessary to do the best I could with existing information in order to make a determination on the question of whether to make an interim property order and if so in what amount.
Logically, it was necessary to address first the point raised by Mr James to the effect that the wife had already received significant sums and therefore she did not need more at this stage. I do not accept that contention as a valid basis for rejecting the wife’s application for interim property orders. I say that for two reasons. First, the husband recognised that the wife was entitled to $50 000. He challenged his liability to pay any greater sum. Yet he acknowledged that the wife was entitled to some amount. It seemed to me to be antithetical to good sense that once the husband acknowledged his liability for a modest sum he could say he bore no liability at all for a greater sum. The husband was correct to concede his liability for an amount. However, it seemed to me to be little more than convenience that he fastened on the amount of $50 000, that sum being an amount to which immediate access might be gained from cash-at-bank.
The second reason for rejecting the husband’s primary position of refusing orders for an amount beyond $50 000 related to the wife’s contention of need. She stated, quite properly on the facts, that she had an existing amount of legal fees to pay. She swore that in the running of her equine operations daily feed bills for the horses under her control were significant and ongoing. She will have considerable legal bills to pay on a prospective basis. While I accept that the wife has already taken a significant amount from the superannuation account, on the figures mentioned above in respect of superannuation, the proceeds of horse sales and a tax amount ($136 000 plus somewhere between $47 000 and $87 000 plus $12 000) that aggregates to an amount around $200 000. The husband’s own 10% assessment of the wife’s claim means that 10% of $3m is $300 000. Of course, the commencing premise advanced by the husband to the effect that the wife’s entitlement is 10% may not be correct. To reach a concluded view in that regard, considerable focus will need to be given to the precise nature and content of her contributions.
Discovery is deficient, as has already been observed. It may transpire that when better discovery is given the amounts that are canvassed above will change.
Turning next to the husband’s point about the source of the funds in order to make any payment beyond the cash-at-bank, Mr James is correct when submitting that complications attended orders for the sale of water rights. Ordinarily, water rights attaching to rural property landholdings are secured in favour of a lender which holds a security interest over the land to which the water rights attach. Ordinarily, it is not possible to sell those rights, if secured, without the consent of the security holder. It is conceivable that land to which water rights attach is more valuable than land from which water rights have been alienated.
Other chattels are likely to be more readily realisable. In this category I place cattle and horses, rolling stock, disposable farming equipment, motor vehicles and shares (to the extent that any are owned solely by the husband). Ms Byrnes suggested that the husband could raise the funds her client seeks by additional borrowings. That may be one method. Yet the undesirability of increasing the liabilities that need to be brought to account in this case need no more than be stated for its self-evident reality to be discernible. Recourse should first be made to more readily realisable assets, such as the chattels described above.
Returning to the threshold point of whether to make an interim property order at all at this juncture of the litigation, in my view such an order should be made. It is true that the wife has already appropriated amounts in the vicinity of $200 000 from joint assets. But using an approximation of the arithmetic advanced by Mr James, applying the percentage division of the net property pool (presently estimated to be in the vicinity of $3 000 000) then a further $130 000 is in the range of funds that could legitimately be sought by the wife by way of interim property division. Of that $130 000 the sum of $50 000 is available standing in credit in the P account. A further $80 000 should be realised from chattels to be paid to the wife. Thereafter, once the parties’ more quantifiable financial position is known after disclosure, the true state of the asset position between them can be more closely examined. If upon closer examination the wife applies for further funds, the asset position will be better known. Of course, the wife’s contributions in this case will be a critical factor given the relatively short duration of the marriage.
Turning now to the minute handed up by Ms Byrnes, in view of the wife’s position that the application for spousal maintenance was essentially interchangeable with the application for a lump sum payment, upon my determination that the wife should receive a lump sum payment of $130 000 (made up of $50 000 in cash-at-bank and $80 000 from the sale of chattels), then the application for spousal maintenance falls away. Paragraphs 3 and 4 of the minute produced by the wife represented mechanisms by which funds beyond the cash-at-bank could be realised. In my view, the husband should be permitted to choose how he will realise the sum of $80 000 beyond the money in the P bank account.
Next it was relevant to examine the vexed issue of the sale of horses. In debate on 13 November 2019 I was told that on one occasion a particular horse was sold through an auction house and complications arose in accounting for the proceeds of sale so the husband is unwilling to use that auctioneer. To my mind, if agreement cannot be reached on the identity of an auctioneer in respect of horses, then the parties should request an independent person to nominate an auctioneer. The solicitors in this case are well experienced so as to be able to identify a person who can nominate an auctioneer, whether for cattle or horses.
Another point addressed by Mr James related to what he said was the paucity of information relating to the quantum of the sum the wife sought. Mr James said the sum sought by the wife was little more than an ambit claim, especially in relation to legal costs. It seemed to me that he was correct. Nowhere did the wife’s solicitors quantify the sum already rendered to the wife in legal fees nor did they break down how the sum of $140 000 was made up, especially in respect of anticipated legal fees, irrespective of whether those fees were reasonable. That was a large factor in my decision to not allow the wife on an interim property application, the full sum claimed of $190 000 (being $50 000 plus $140 000).
Valuations must be undertaken. In the interim orders sought by the wife in her response filed on 2 September 2019, the wife sought orders for the parties to jointly engage appropriately qualified valuers to value –
a)The Mulford Family Trust;
b)Mulford & Co Pty Ltd;
c)Mulford Superannuation Fund;
d)Mr Mulford Superannuation Pty Ltd;
e)the property known as “Property Q” being the whole of the land more particularly described in certificates of title volume;
f)the property known as “D Street, Town E” being the whole of the land described in certificate of title volume;
g)the property known as “Town G” being the whole of the land described in certificates of title volume;
h)the water rights associated with Town G;
i)the plant and equipment located at Property Q, D Street, Town E and Town G;
j)the cattle located at Property Q, D Street, Town E and Town G; and
k)the property known as O Street, Town T being the whole of the land described in certificate of title volume.
That evidence will be required in this case. Those valuations should be obtained sooner than later.
The wife sought orders in her response for the sale of a boat. That should be the subject of discussions between solicitors.
Conclusion
For those reasons, in my view the proper orders to be made reflect a combination of orders that have been agreed plus those that I now impose. I shall leave it to the parties to email my associates a precise form of order but I shall require it by 4pm on 26 November 2019 that gives effect to the following –
a)the sum of $50 000 presently in the P account is to be disbursed forthwith to the solicitors for the wife to be held by them so as to be applied to pay the wife’s outstanding legal fees;
b)on or before 4pm on 17 December 2019 a further sum of $80 000 is to be paid to the wife’s solicitors by the husband, such sum to be raised from the sale by the husband of cattle or horses or other chattels;
c)for the purpose of effecting the sale of cattle or horses or other chattels so as to raise the sum of $80 000, where dispute exists over the identity of the relevant auctioneer, the parties are to obtain the nomination of an auctioneer by 4pm on 3 December 2019 –
i)in respect of horses, from the chairman for the time being of the B Pty Ltd; and
ii)in respect of cattle, from the president for the time being of the Australian Livestock & Property Agents Association Limited;
d)discovery to be completed in accordance with Chapter 13 of the Family Law Rules by 4pm on 17 December 2019; and
e)I otherwise adjourn the further conduct of this proceeding to the Senior Registrar.
I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 19 November 2019.
Associate:
Date: 19 November 2019