Neame & Neame
[2023] FedCFamC1F 693
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Neame & Neame [2023] FedCFamC1F 693
File number(s): PAC 3201 of 2021 Judgment of: SCHONELL J Date of judgment: 18 August 2023 Catchwords: FAMILY LAW – FINANCIAL – Where the husband sought a suite of financial orders including the appointment of a bookkeeper for the company and the sale of the former matrimonial home – Where the husband contended that there were irregularities in the bookkeeping – Where the Court is of the view that such irregularities would be identified by the single expert – Where the husband contended that the former matrimonial should be sold because the wife had been in default of repayments – Where the wife had applied for a pause in the payments – Where the husband has not made a case for the sale of the home as an interim measure – Where the husband sought orders regarding a letter to the single expert account - Orders made regarding single expert accountant. Legislation: Family Law Act 1975 (Cth) ss 79, 80 Cases cited: Medlow& Medlow (2016) FLC 93-692; [2016] FamCAFC 34
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466; [2009] FamCAFC 166
Division: Division 1 First Instance Number of paragraphs: 49 Date of hearing: 16 August 2023 Place: Sydney Counsel for the Applicant: Mr Grey Solicitor for the Applicant: Barkus Doolan Winning Counsel for the Respondent: Mr Daniels The Independent Children’s Lawyer: Did not participate ORDERS
PAC 3201 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR NEAME
Applicant
AND: MS NEAME
Respondent
INDEPENDENT CHILDREN'S LAWYER
ORDER MADE BY:
SCHONELL J
DATE OF ORDER:
18 AUGUST 2023
THE COURT ORDERS THAT:
1.Within seven (7) days from the date of these orders, the respondent wife (“the wife”) shall inform the applicant husband’s (“the husband’s”) solicitors in writing of any additions or amendments she seeks to the draft letter of instruction addressed to the single expert, Ms B of C Accounting, with such changes to be shown in mark-up in the draft letter.
2.If the wife does not set out any additions or amendments to the draft letter of instruction to Ms B within 7 days from the date of these orders, the husband is permitted to instruct his lawyers, Barkus Doolan Winning, to release to the single expert accountant, being Ms B of C Accounting, a letter of instruction in the form appearing at Annexure “A” attached to these orders.
3.If the wife requests additions or amendments to the draft letter of instruction to Ms B, the parties shall confer to settle, finalise and send a collaboratively prepared and agreed letter of instruction addressed to Ms B, with such letter to be provided to Ms B by no later 10 September 2023.
4.If there is any issue or issues arising which prevents an agreed joint letter of instruction being sent to Ms B, such issue or issues shall be the subject of submissions at the listing on 22 September 2023.
5.All further instructions to the single expert accountant appointed pursuant to these orders shall be in writing and neither party shall communicate directly with, or provide any instructions orally to, the single expert accountant, other than by way of an agreed teleconference between the parties and the single expert accountant.
6.For the purposes of Ms B’s valuation, the valuation date to be adopted shall be 30 June 2023 and each party shall forthwith do all acts and things, and provide all necessary instructions and documents to the accountants engaged to undertake work for D Pty Ltd to bring up to date and to have finalised all financial accounts, returns and records of D Pty Ltd and the Neame Trust to 30 June 2023.
7.The husband and wife shall each pay, as and when the same falls due and payable, one half of all costs and disbursements invoiced to the parties by the single expert accountant.
8.The husband’s application for the relief sought in paragraphs 2.1, 7 and 8 (in so far as it relates to a bookkeeper), 9, 10 and 11 of Exhibit 4 is dismissed.
9.The balance of the orders sought in Exhibit 4 filed 16 July 2023 be adjourned to 22 September 2023.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Neame & Neame has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
By way of an Application in a Proceeding filed 13 July 2023, the applicant husband (“the husband”) sought a suite of financial orders including orders related to the company D Pty Ltd and the sale of the former matrimonial home.
These interim proceedings are part of wider proceedings between the parties involving parenting and financial matters. There are no final hearing dates currently allocated in this matter as it was the position of both parties that the proceedings before this Court cannot be determined until completion of husband’s criminal proceedings that are listed for hearing in mid-2023. This issue will be addressed at the further hearing of the application on 22 September 2022.
The husband relied upon the following documents:
(1)Application in a Proceeding filed 13 July 2023;
(2)Affidavit of husband filed 13 July 2023;
(3)Affidavit of Mr E filed 9 August 2023;
(4)Financial Statement of husband filed 13 July 2023; and
(5)Case Outline document filed 16 August 2023.
The wife relied upon the following documents:
(1)Affidavit of wife filed 13 August 2023;
(2)Affidavit of Ms G filed 14 August 2023;
(3)Financial Statement of wife filed 15 August 2023; and
(4)Case Outline document filed 15 August 2023.
The husband sought various orders regarding D Pty Ltd including that he be appointed as an additional director of the company; that he be permitted to attend the business premises of D Pty Ltd trading as H Company – Suburb J at certain times with the wife to be restrained from attending the premises at those times; and that a bookkeeper and financial manager be appointed for D Pty Ltd. He sought orders for the sale of the former matrimonial home at Town K (“the Town K property”), with the net sale proceeds to be applied towards removing a caveat on the Town K property, both parties receiving $50,000 and the balance being held in the husband’s solicitors trust account. The husband also sought orders permitting him to provide the single expert accountant, Ms B, with a letter of instruction and for the valuation date of 30 June 2023 to be adopted by the single expert.
For her part, the wife sought a dismissal of the husband’s application.
Annexed to the wife’s affidavit was a letter from the franchisor of the franchise conducted by D Pty Ltd that contended that any change in control or management of D Pty Ltd would be deemed by the franchisor as an assignment of the franchise agreement. The late receipt of that letter and the potential for conflict with some of the relief sought by the husband meant that the husband did not press some of the relief in his Minute of Order attached to his Case Outline and otherwise sought an adjournment so he could investigate the assertions in the letter. That position was not opposed by the wife and those parts were stood over to 22 September 2023.
The husband otherwise pressed for the appointment of a bookkeeper, sale of the Town K property and execution of the letter to the single expert.
BACKGROUND
The parties married in 2010 and separated on a final basis on 3 April 2021.
The parties have three children together, namely X aged 8, Y aged 6 and Z aged 4. The children live with the wife at the Town K property and spend time with the father for four nights a fortnight as well as time during the holidays.
In early 2012, D Pty Ltd was established and the husband was the sole director. The shares in D Pty Ltd are held by the parties’ investment company Neame Pty Ltd in its capacity as the corporate trustee for the Neame Trust. The husband is the sole director of Neame Pty Ltd and both parties are equal shareholders of the company.
In around 2012, the husband acquired a half share interest through D Pty Ltd in the franchise business H Company – Suburb J (“H Company”).
The husband deposed that during the marriage he worked at H Company, attending to operational and managerial aspects of the business. He contended that the wife did not work at H Company save for about two weeks.
In early 2020, the husband ceased being the director of D Pty Ltd and the wife was appointed as the sole director of D Pty Ltd thereafter. The husband contended that he obtained separate employment and ceased being the director for the D Pty Ltd so that it would be easier for the parties to raise funds for a second business. The wife deposed that the husband resigned as the director and franchisee because he was considered by the franchisor to be non-compliant and was at risk of the franchise being revoked.
The husband contended that despite obtaining separate employment, he continued to take an active role in the business up until separation.
Sometime prior to the parties’ separation in April 2021, D Pty Ltd acquired the other half share of H Company.
In mid-2021, a provisional apprehended domestic violence (“ADVO”) order was issued against the husband for the protection of the wife. The final hearing with respect to this ADVO is listed for hearing before the Local Court in mid-2023. The terms of the provisional ADVO are such that the husband is restrained from attending the wife’s workplace. Consequently, the husband is prohibited from attending the business premises.
The husband deposed that since June 2021, the wife has been solely operating H Company.
On or around late 2021, a caveat was lodged over the Town K property by L Limited, being the trustee for M Financial Services. The husband contended that he only became aware of this caveat when obtaining a title search of the property for his affidavit. The wife contended that the husband was informed and that she obtained a loan from M Financial Services to respond to applications made by the husband.
On 5 August 2022, a series of financial orders were made by consent, which included orders requiring the wife in her capacity as the sole director of D Pty Ltd to pay the mortgage on the Town K property, make repayments on the business loan, make repayments to N Finance for the motor vehicles purchased through the company, pay the franchise fees, and pay rent to the landlord.
The husband contended that the wife has not complied with these orders. The wife denied that she had been in breach of orders. In his affidavit, the husband deposed, amongst other things, of the mortgage, business loan and loan for the motor vehicles being in default with the wife failing to make repayments as required.
DISCUSSION
These are interim proceedings and there has been no cross-examination. Accordingly, I am unable to make findings in relation to the disputed factual allegations of which there are many.
The husband sought an order that a bookkeeper be appointed for the purposes “of keeping the company books and financial records of [D Pty Ltd]” (husband’s Case Outline). He contended that the evidence reveals that the company records are not being kept in a satisfactory manner. His counsel pointed to what are said by the husband to be various irregularities in records kept by the accountant for the company.
The husband relied in part on the evidence of an accountant retained by him. The wife relied on the evidence of the company accountant.
I note the wife’s accountant has been retained by the company since 2018. That is, it predates the separation of the parties. It would seem therefore that the husband’s dissatisfaction arises relatively recently.
The husband’s accountant relied in part for many of his assertions as to inadequate accounting records on the information sourced from the accounting software. Further, the accountant for the husband conceded that he has had access to only selected documents albeit he then drew conclusions that there may be inadequate bookkeeping on the part of the company.
The accountant for the company urges caution in the use of the accounting software. She said in her affidavit:
9. The balance on [P Accounting’s] director [Ms O] account is not the final figures. As the company’s nominated registered accountants, we perform ordinary duties to adjust journals when working on the end of year financial returns and financial report on our software.
10. This is done in order to include wages to the director, interest, or other business expenses paid from personal accounts of the director, that are not reconciled until we started working on the end of financial year financial reports and company tax return.
…
12. [P Accounting] is accounting software that is a live and “working” bookkeeping tool.
13. The [P Accounting] tool should not be relied upon as final or fixed evidentiary of any financial status of the company. Only the finalised and lodged company financial reports and tax return may be relied upon.
There has been no cross-examination of the accountants and I am not able to resolve any of the disputed assertions. The husband bears the onus of proof for the orders that he seeks. I am not satisfied that the husband has established that there is a basis for the orders that he seeks for the appointment of a bookkeeper.
I am fortified in my conclusion not to grant the relief sought by the husband by the orders I will make for the appointment of the single expert accountant Ms B. I am confident that if there are irregularities in the bookkeeping of the company, then those matters will become apparent from the single expert accountant report. If that comes to pass, then such report would provide a more solid evidential foundation for the relief he presently seeks than that presented so far.
The husband also seeks orders for the sale of the former matrimonial home. He proposed that the home be sold, the mortgages be discharged and that from the proceeds of sale there be an interim payment to each of the parties. He did not identify a head of power to effect the relief he seeks but by the terms of his orders it is by way of partial property settlement, namely s 79 of the Family Law Act 1975 (Cth) (“the Act”).
The jurisprudence on the circumstances in which the Court can make an order for what is colloquially called interim property is well settled. The authority to make such an order is found through a combination of ss 79 and 80(1)(h) of the Act. Section 79 is the source of power, while s 80 enables the making of the order.
The Court must initially be satisfied that it is appropriate to make an order and that it is it in the interests of justice to make an order. If so, the Court then has to consider whether a case been established for the making of an order under s 79. An exhaustive assessment of the s 79 considerations is not required.
In Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466, the Full Court observed that:
132.In relation to the first stage, in our view, when considering whether to exercise the power under s 79 and s 80(1)(h) of the Act to make an interim property order the “overarching consideration” is the interests of justice. It is not necessary to establish compelling circumstances. All that is required is that in the circumstances it is appropriate to exercise the power. In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.
Their Honours in Medlow& Medlow (2016) FLC 93-692 observed:
86.The onus was clearly upon the husband to establish that there were sufficient assets available for the interim distribution and that the effect of any interim order was capable of being reversed as part of the final hearing or at least would not defeat the wife’s property claims. The onus was not on the wife to adduce such evidence.
Therefore, the authorities establish that Court should act conservatively and consider the following in making an interim property order:
(a)Is it in the interests of justice to make an order?
(b)Is a case established to make an order under s 79 order? A detailed assessment of the s 79 considerations is not required.
(c)Are there sufficient assets available for an interim distribution? However, it is not necessary to point to an immediate fund.
(d)Is the order capable of being reversed or taken into account at the final hearing?
(e)Albeit that the matter can be determined pursuant to a particular section of the Act, the ultimate categorisation of the amount to be paid can be left to the final trial judge.
I was not taken to any document that recorded the values of the parties’ assets nor was I taken to a balance sheet.
The home is occupied by the wife and children and is security for the borrowings of the business. The parties have owned the property since 2016.
The husband in his affidavit identified that the wife’s current proposal in her Further Amended Response to Initiating Application is to retain the former matrimonial home. Thus, a sale of the home would have the effect of defeating the relief she seeks on a final basis. The husband contended that the wife cannot afford to maintain the former matrimonial home. I also infer from his application that it is not a result that could be achieved by her on a final hearing. In circumstances where there remains an issue as to value of the parties’ business, I am unable to reach the affirmative conclusion that the husband invites that she would fail to retain the home on a final basis.
The basis for the husband’s application for a sale of the home appears to be predicated upon a contention that the wife is in default of mortgage payments and, in that respect, he contended that she failed to make the mortgage payments in April, May and June 2023. He said that her non-payment of the mortgage is in breach of orders and that she has made an application to the bank on hardship grounds which is inconsistent with the financial records of the company.
The wife’s evidence in relation to the home loan is that she has applied for a pause in payments. That pause expires in August whereupon she will resume making payments.
I am not satisfied that the husband has made a case for the sale of a home as an interim measure. There is no evidence of any intention by the bank to foreclose on the mortgage, and the wife has provided an explanation as to why it is that the mortgage payments were not met and that she will make the payments thereafter. The order, if made, defeats the wife’s application on a final basis and is incapable of being reversed.
The husband also seeks orders in relation to the letter of instruction to the jointly appointed single expert accountant. The husband’s evidence is that his solicitors on 1 December 2022 forwarded to the wife’s then solicitors a draft letter of instructions for the purposes of appointing a single expert valuer. Despite sending that letter to the wife’s solicitors, the wife or her solicitors have not responded to the correspondence. The consequence is that the single expert remains unengaged.
By not signing the letter, the competing applications for financial adjustment remain unsatisfied and thus the completion of these proceedings is delayed. In relation to the letter the wife said the following in her affidavit:
9. …
d)The letter drafted for [Ms B] by the Applicant’s lawyer is highly biased and prejudice by way of its addressing and detailing incorrect and false allegations of my alleged misuse of company funds. The letter does not address the matter of the Self-managed Superfund and the assets it holds.
She further contended that the advice of her former lawyer was that it would be advantageous to await the 2023 financial accounts before engaging the single expert. In that respect, she contended that the 2023 financial accounts are currently being finalised.
The draft letter is annexed to the husband’s Case Outline. There is nothing remotely biased or prejudicial about the form of the letter or the assertions that are made in it. A delay in engaging the single expert will only delay the finalisation of these proceedings. The issue of valuation of the superannuation fund can be addressed by a further letter of instruction. Her counsel sought a further three weeks to consider the letter. She has had more than six months. There is no basis to delay any further the engagement of the single expert.
CONCLUSION
The Minute of Orders attached to the husband’s case outline will be Exhibit 4.
I will make orders in terms of paragraphs 12 to 18 of Exhibit 4.
I decline to make orders in terms of paragraphs 2.1, 7 and 8 (in so far as it relates to a bookkeeper), 9, 10 and 11 of Exhibit 4.
I adjourn the balance of the relief sought in Exhibit 4 to 22 September 2023.
I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 18 August 2023
Annexure A
Annexure omitted to comply with s 121
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