Mutti and Mutti and Ors

[2015] FamCA 937

FAMILY COURT OF AUSTRALIA

MUTTI & MUTTI & ORS [2015] FamCA 937

FAMILY LAW – PROPERTY - INTERIM– where each party seeks a partial property settlement – where the wife seeks funds sufficient to purchase real property – where the husband resists this application

Family Law Act 1975 (Cth)

APPLICANT: Ms Mutti

FIRST RESPONDENT: Mr Mutti

SECOND RESPONDENT: Mr Perez

THIRD RESPONDENT: The Trustee for the B Trust (ABN …)

FOURTH RESPONDENT: C Pty Ltd (ACN …)

FIFTH RESPONDENT: D Pty Ltd (ACN …)

SIXTH RESPONDENT: The Mutti Family Discretionary Trust and the Trustee for the Spitzer Trust (ABN …)

SEVENTH RESPONDENT: Mr Spitzer

EIGHTH RESPONDENT: Ms Spitzer

NINTH RESPONDENT: Ms Stillman

TENTH RESPONDENT: Mr Moore

ELEVENTH RESPONDENT: E Pty Ltd (ABN …)

FILE NUMBER: BRC 6049 of 2013

DATE DELIVERED: 30 October 2015

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Hogan J

HEARING DATE: 26 October 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Hawkshaw

SOLICITOR FOR THE APPLICANT: Cornerstone Law Offices

COUNSEL FOR THE FIRST RESPONDENT: Mr Selfridge

SOLICITOR FOR THE FIRST RESPONDENT: Berck Solicitors

2^ND RESPONDENT, 3^RD RESPONDENT,
4^TH RESPONDENT, 5^TH RESPONDENT,
6^TH RESPONDENT, 7^TH RESPONDENT,
8^TH RESPONDENT, 9^TH RESPONDENT,
10^TH RESPONDENT & 11^TH RESPONDENT: Excused from this part of the proceedings

Orders

IT IS ORDERED UNTIL FURTHER ORDER THAT

1. The Order made 26 October 2015 by which the wife was restrained from dealing with the funds in her accounts with the Bank of Queensland and Bendigo Bank is discharged.

2. Save as is otherwise provided by this Order, the wife is restrained and an injunction issue restraining her from dealing with the proceeds of sale of the property at F Street, G Town, New South Wales, … or the sale of its furniture and chattels, the proceeds of which are currently held with the Bank of Queensland and the Bendigo Bank.

3. By 4.00 pm on Wednesday, 4 November 2015, the husband and wife do all things necessary to ensure that:

   (a)the funds held by the wife in Bank of Queensland account number …; and

   (b)       the funds held by the wife in Bendigo Bank account …; and

   (c)any other funds held by the wife which were received by her from the sale of the real property at F Street, G Town in the State of New South Wales and from the sale of the contents of that property wheresoever held; and

   (d)the funds held in the trust account of Clinch Long Letherbarrow Lawyers on their behalf or on behalf of either of them; and

   (e)the funds held in the trust account of H Conveyancing on their behalf or on behalf of either of them,

   are deposited into the trust account of Cornerstone Law (the wife’s solicitors), to be held on trust, invested on behalf of the husband and wife in a high interest-bearing account and, save as is provided for in this Order, not to be released without the written consent of the parties or further order of the Court.

4. The husband and wife shall do all things to direct and/or authorise Cornerstone Law to pay from the funds held in trust on their behalf:

   (a)the sum of $190,297.54 to Mr John Hamish Giles Finney of CBD Law in order to satisfy the Bankruptcy Notice, issued on 8 October 2015, by which I Pty Ltd is the notified creditor; and

   (b)the sum of $190,297.54 to the wife, with the characterisation of this sum to be reserved to the trial judge; and

   (c)the sum of $8,579.00 to J School in payment of outstanding school fees.

5. The Applicant’s costs of and incidental to the appearance on 26 October 2015 and the various interim applications, by whatever means initiated, heard on that day are reserved.

6. The Respondent’s costs of and incidental to the appearance on 26 October 2015 and the various interim applications, by whatever means initiated, heard on that day are reserved.

7. The Application in a Case filed 13 October 2015 is otherwise dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Mutti & Mutti and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

THE FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 6049 of 2013

Ms Mutti

Applicant

And

Mr Mutti 

Respondent

REASONS FOR JUDGMENT

1. A number of interim applications were listed for determination on 26 October 2015 in the judicial duty list. Some of those resolved by agreements which are reflected in the terms of orders made by consent that day; others were allocated a further hearing date so as to afford the Second to Eleventh Respondents the opportunity properly to be heard in relation to foreshadowed applications that they be removed from the proceedings between the Applicant wife and the Respondent husband.

2. A number of matters, however, required judicial determination. As these did not involve the Second to Eleventh Respondents directly (in that no relief was sought against them by either the wife or the husband) they were given leave to withdraw before I heard submissions from the legal representatives for the wife and husband respectively.

   Payment of amounts outstanding

3. A Bankruptcy Notice, issued 8 October 2015, was served on the husband on 15 October 2015.[1]  That Notice identifies the creditor as I Pty Ltd, informs the husband that he is required to pay the creditor the amount of the debt within 21 days or make arrangements to the creditors satisfaction of the settlement of the debt and identifies that payment of the debt can be made to Mr John Hamish Giles Finney.

   [1]          Annexure ‘FM7’, affidavit of husband filed 21 October 2015.

4. When the matter was reached, each Counsel provided the Court with written submissions and a Minute of the orders sought by their respective clients. Whilst reference to those proposed orders establishes that the parties are agreed that the sum of $190,297.54 be paid to Mr Finney, of CBD Law to satisfy the Notice, this position appears contrary to that advanced in the written submissions provided by Counsel on her behalf.  

5. Any agreement by the wife to the payment of the funds for the purpose of meeting the Bankruptcy Notice is not to be taken to reflect an agreement between the parties that this amount is a debt in respect of which they should share: I record this because the wife’s material contains her position that  the debt to I Pty Ltd is a debt in respect of which the husband alone should be responsible and the husband acknowledges that the characterisation of the payment can properly be left for determination at trial.[2]

   [2]          Paragraph 27, husband's affidavit filed before October 2015.

6. Given the terms of the respective proposed orders, I am persuaded that the interests of justice require that the payment is made to Mr Finney and that it is just and equitable and proper that this occur on an interim basis. A failure to ensure that this payment is made from funds now available is likely to result in bankruptcy proceedings being commenced against the husband. Additionally, if either party’s assertion as to the value of the property of the parties is made out, any necessary adjustment can be made at trial.

7. The parties also remained in disagreement about two further matters relevant to the payment of funds to Mr Finney, namely:

   a)the source of the funds; and

   b)the manner by which the funds should be transmitted to Mr Finney.

8. The wife proposed that any funds to be paid to Mr Finney be sourced in funds held in the H Conveyancing trust account (being an amount of $125,421.00) and funds held in the Clinch Long Letherbarrow Lawyers trust account (being an amount of $69,439.00) and that the payment is made directly to Mr Finney. She also proposed that, after the payment to Mr Finney is made, the balance of the funds then remaining in the Clinch Long Letherbarrow Lawyers trust account (namely, $4,562.46) be applied to the partial payment of fees outstanding to J School (which total $8,579.00).

9. The husband proposed that the funds be paid to Mr Finney from funds held in a Bank of Queensland account (in the wife’s name) and that they be paid first to him and then transmitted to Mr Finney. He initially proposed that the funds held in the trust accounts of H Conveyancing and Clinch Long Letherbarrow Lawyers are used to pay the debt to J School and that the balance be divided equally between the parties, with the characterisation of the same to be reserved to the trial. However, Counsel for the husband ultimately submitted that the husband did not cavil with the proposition that the wife receive the same amount ($190,297.54) as is to be paid in respect of the Bankruptcy Notice, either from funds held in bank accounts in her name or in trust and that the balance be held in trust for the parties.

10. The parties agree that the characterisation of the funds provided to each of them should properly be reserved to the trial.

11. I am persuaded that it is just and equitable that $190,297.54 be paid to the wife from the funds held in the various bank accounts referred to above. In that way, she will have access to funds to meet expenses – including legal expenses. It is also appropriate that the characterisation of the funds is reserved to the trial.

12. I am also persuaded that it is appropriate for all of the funds currently held on behalf of the parties in the various accounts identified in the material before the Court to be consolidated into one account and that this should be the trust account of the wife’s solicitors. I am also persuaded that it is appropriate for the payment to Mr Finney to be made directly by the wife’s solicitors from those funds so as to eliminate any possibility of future disagreement about the disbursement of those funds.

    What should happen to the remaining funds?

13. The remaining issue which requires determination relates to the balance of the funds (after the payment out of the amounts outlined above) held by the wife in accounts with the Bank of Queensland and Bendigo Bank. These funds – which total about $963,936.23 - were received by the wife following the sale of real property at G Town and, according to her[3], the contents of that real property.

    [3]           This being an issue which is, perhaps, in dispute between the parties.

14. The evidence before the Court comfortably establishes that the wife sold the G Town property and contents without prior notice to the husband.  She says she did so because she was concerned that, if he became aware of her intention to sell the property, he would have interfered with the same. It is accepted that the contract for the sale of the property was executed about one month before the wife swore an affidavit filed[4] in support of an interim application. Additionally, it appears she did not inform him of the fact that she had entered into a contract for the sale of the G Town property until this issue was raised with her. After this issue was raised, she initially refused to provide an undertaking not to deal with the net proceeds of the sale unless agreed or consequent upon Court order.

    [4]          The affidavit sworn 11 August 2015.

15. After he became aware of the sale of the G Town property, the husband applied urgently to the Court seeking orders to restrain the wife from disposing of the proceeds of sale. Orders have been made (by Kent J on 21 October 2015 and, subsequently, by me on 26 October 2015) to ensure that, pending the finalisation of this interim application, the sale proceeds remain in the bank accounts referred to.

16. The wife proposes to use up to $700,000.00 of the funds from the sale of the G Town property and its contents to purchase a property for her and the children to live in. She also proposes that the balance of the funds in the Bank of Queensland and Bendigo bank accounts (in the amount of about $263,000.00) be made available to her so that she can:

    a)meet future living expenses for herself and the children; and

    b)pay the balance of the fees outstanding to J School; and

    c)use the same to pay outstanding and future legal costs associated with the proceedings.

17. The husband opposes the wife’s proposal that all of the funds obtained from the sale of the G Town property and its contents be made available for her use. Instead, as noted, his Counsel submitted that $190,297.54 (being the same amount as it is agreed will be paid to Mr Finney) should be paid to the wife, about $97,300.00 be paid to him (the husband) to assist him to meet legal costs and that the balance should be paid into the trust account of the wife’s solicitors, to be held on trust for the parties[5] and invested in a high interest-bearing account.

    [5]           By which I mean the husband and wife.

18. The matters to which regard must be had in determining the wife’s application are well known and do not need extensive restatement.[6] In order to determine whether the interests of justice require that the Court exercise the power to make an interim order – taking into account that such interests are ‘normally’ served by a single, final determination of orders - it is, of course, necessary to have regard to the factual matrix within which that decision is to be made.

    [6]          Strahan v Strahan (2011) FLC 93-466.

    Brief summary of relevant matters

19. The husband and wife met in 1985, married in 1991 and separated finally in April 2012. They have two children: Mr K, who is 18 years old and L, who is 8 years old. A divorce order issued in respect of their marriage on 26 October 2013.

20. The wife did not engage in paid employment outside the home during the parties’ relationship but is qualified as a hypnotherapist.

21. It seems the parties initially owned and operated various hairdressing salons. They later engaged in property development by or through various corporate entities which comprised the I Pty Ltd network.

22. There is a significant dispute about the nature of the business – if any – currently conducted by the husband. The interim nature of this hearing makes resolution of the factual issues surrounding that impossible and the findings expressed in these Reasons are necessarily limited and only for the purpose of disposing of the competing proposals in respect of the sale proceeds of the G Town property and its contents.

    The wife’s position

23. The wife seeks to use the funds obtained from the sale of the G Town property and its contents to support herself and the children. She says she sold the G Town property because the funds she was using to support herself and the children after separation were rapidly depleting. One of the matters which has caused her funds to diminish is that she rented premises for some time. Additionally, she says that the rental premises in which she and the children are now living is on the market for sale and she has received an indication that a potential buyer may want vacant possession.[7]

    [7]Email correspondence dated 13 October 2015 from professionals real estate to the wife: within Annexure ‘FM2’, affidavit of husband filed 21 October 2015.

24. The wife is not engaged in employment out of the home and is responsible for the primary care of the children. She receives family benefit payments and $71 per week by way of child support. She has no other source of regular income. Counsel submitted that, in these circumstances, it will be difficult for the wife to obtain new rental premises if this is necessary. The wife’s current rent is $31,720.00 per year (being $610.00/week): an expenditure she argues will be eliminated if she is able to use the funds at bank to purchase a property.

25. Counsel submitted that the wife’s proposal involves nothing more than a substitution of one piece of matrimonial property for another and that  matrimonial debt has been reduced as a consequence of the sale of the G Town property and its contents.

26. Counsel also submitted that husband has control over all significant matrimonial assets and entities, including those that generate an income for him : it was submitted that he has retained all the benefits from the business to the wife’s exclusion and is financially able to rent premises.

27. Counsel submitted that the wife asserts that the value of the property of the parties is in the vicinity of at least $4.5million. It appear she does so on the basis that:

    a)when applying to the National Australia Bank for finance in 2012, the husband asserted his nett wealth was approximately $4.5million: in fact, the husband accepts that, in or about June 2012, he told the National Australia Bank that the value of the property was $4,555,855.30; he says that when he provided that information he believed it to be true and correct but has subsequently become aware, as a consequence of receiving valuation information from Vincent’s Accountants, that he overestimated some of the values of the assets when he provided that information to National Australia Bank; and

    b)since separation in April 2012 the husband has purchased multiple luxury vehicles; and

    c)the husband is currently the guarantor of loans approximating $3.4million for his current business partners and, inferentially, a bank would not accept such guarantee for facilities provided by it if it had not assessed the husband as having the capacity to meet the guaranteed indebtedness if called upon pursuant to the guarantee; and

    d)the husband is currently able to service credit card facilities with a maximum limit of $30,000.

28. Counsel for the wife also submitted that it is “better” that the funds received from the sale of the G Town property and its contents are “invested” in a house rather than in what is described as a low interest-bearing trust account because the value of real property will most likely increase. There is no evidence to support this submission.

29. Counsel submitted that the husband will not be prejudiced if the wife is permitted to use up to $700,000.00 of the funds from the sale of the G Town property and contents because, because, whatever asset is acquired by her using the sale proceeds, that asset will form part of the property available for consideration in the property settlement proceedings between them. Additionally, the stamp duty associated with the acquisition of real property at a cost of up to $700,000.00 was said to be no more than about $17,000.00, an amount less than the wife’s annual rental payments.

    The husband’s position

30. The husband’s affidavit filed on 24 October 2015 contains his proposal that both he and the wife receive $97,430.00 to assist with the payment of legal fees to litigate the matter. However, as noted above, Counsel who appeared on his behalf advised the Court that the husband had no difficulty with the wife receiving funds in the same amount as those paid to Mr Finney to deal with the Bankruptcy Notice.

31. The husband’s position is in stark contrast to that of the wife: he asserts that the funds held by the wife in her Bank of Queensland and Bendigo Bank accounts form the majority of the pool of assets available for consideration in the property settlement proceedings between the parties[8]and/or represent a significant portion of the matrimonial pool.[9]

    [8]          Paragraph 6, husband's affidavit filed 13 October 2015.

    [9]          Paragraph 16, husband's affidavit filed 13 October 2015.

32. The husband’s affidavit filed 21 October 2015 contains his assertion that the net value of the matrimonial pool is in the vicinity of $1,100,000.00, included in which is the value of “nominal” (by which I assume he means “notional”) assets.[10] However, his affidavit filed 24 October 2015 contains the assertion that the net value of the property amenable to the property settlement proceedings between the parties (inclusive of about $78,000 in superannuation entitlements) is $601,561.19. That is, his case involves assertions that there are significant liabilities which properly should be considered in the proceedings between the parties.

    [10]Given that, in paragraph 23 (a) of his affidavit filed 21 October 2015 he identifies this as money the wife took at separation.

1. Given what he advances as the nett value of the property of the parties, the husband opposes the wife’s application on the basis that there is a very real risk that his just and equitable entitlement in the property settlement proceedings between the parties may be adversely and irrevocably affected if the funds are used to purchase another property and/or for the financial support of the wife in the manner she proposes.

2. It was submitted that, as the wife intends to buy a house for a price of up to $700,000.00, this is likely to equate to more than her likely overall entitlement to property in the proceedings, with the consequence that it may be necessary after trial for any such property to be sold to satisfy the husband’s just and equitable entitlement to property. If this was the case, the costs associated with this course would further reduce the value of the property available to the parties.

3. The husband also submits that, as there are outstanding debts of significant amounts, it could be beneficial for both parties if some of these are discharged using funds received as a consequence of the sale of the G Town property and its contents.

4. It is also submitted, at least inferentially, that, given the wife’s behaviour in selling the G Town property and its contents without reference to the husband and, on his account, failing to account to him initially for the fact that she had received $200,000.00 for the sale of chattels, the Court should act cautiously in permitting the parties to dissipate the proceeds received from the sale of the G Town property and its chattels and/or contents.

   Further discussion

5. I am not persuaded that it is just and equitable for an interim order to be made permitting the wife to use up to $700,000.00 of the funds received from the sale of the G Town property and its contents to purchase real property. Given the disparity in the value of the property of the parties asserted by the husband and wife, I am persuaded that it is appropriate to act cautiously at this time so as to avoid the possibility that an asset acquired by the wife using these proceeds as she seeks may have to be sold later.

6. I am persuaded that it is just and equitable to make an order that the wife receive funds in the same amount as will be paid to deal with the Bankruptcy Notice. In that way, she will have available to her a source of funds from which to support herself, pay the costs of accommodation and meet her legal expenses. As the parties are agreed that the characterising of these funds should properly occur at trial, the wife will be able to argue then the manner in which the Court should regard her receipt of such funds.

7. The husband sought that $97,430.00 be paid to him from the monies discussed above to assist him to meet his legal expenses. He did so on the basis that he says he does not have the capacity to fund his costs of the litigation. However, having regard to his income and the funds currently held by him in banks, building societies, credit unions or other financial institutions[11], I am not persuaded that it is just and equitable or proper or that the circumstances justify the making of such an order at this time.

   [11]         as outlined in his Financial Statement filed 24 October 2015.

8. Additionally, as the issue of the continuing presence in the litigation of the Second to Eleventh Respondents remains outstanding and will return on 16 November 2015, it may be necessary to ensure that funds remain available to the parties.

9. The consequence of the payments to be made from the funds referred to in these Reasons is that, after the orders are implemented, an amount of about $759,622.15 should remain in the wife’s solicitors’ trust account to be held on trust and invested on behalf of the parties pending further agreement or order.

10. Given that many of the matters underlying the parties’ respective positions in respect of the matters dealt with by the orders made today can only be resolved at trial, I will order that each party’s costs of and incidental to the appearance on 26 October 2015 and the respective Applications in a Case considered then are reserved.

I certify that the preceding forty-two (42) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hogan delivered on 30 October 2015.

Associate:     

Date:              30 October 2015