NIXON & NIXON

[2012] FamCA 956

FAMILY COURT OF AUSTRALIA

NIXON & NIXON [2012] FamCA 956

FAMILY LAW – ORDERS - Enforcement of orders

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

Yunghanns & Yunghanns (2000) FLC 93-029)
Colgate-Palmolive Company and Anor v Cussons Pty Ltd (1993) 46 FCR 225

APPLICANT: Ms Nixon

RESPONDENT: Mr Nixon

FILE NUMBER: MLC 2061 of 2009

DATE DELIVERED: 19 October 2012

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Dessau J

HEARING DATE: 30 & 31 August 2012, 1 & 2 October 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Dr Ingleby

SOLICITOR FOR THE APPLICANT: Vadarlis & Associates

Orders

1. That the husband pay to the wife the sum of:

   (a)$1,500,000 being the amount due to the wife on 27 February 2012 pursuant to paragraph 3 of the 13 January 2012 orders;

   (b)Pursuant to s 117B of the Family Law Act 1975 and Rule 17.03 of the Family Law Rules 2004:

   (i) Interest from 27 February 2012 to 30 June 2012 in the sum of $52,654.11 (the prescribed rate of interest being 6% above the 7 December 2011 cash rate of 4.25% pursuant to rule 17.03(a));

   (ii) Interest from 1 July to 4 September 2012 in the sum of $25,767.12 (the prescribed rate of interest being 6% above the 5 June 2012 cash rate of 3.5% pursuant to rule 17.03(b)).

2. That the husband pay to the wife pursuant to paragraph 7(a) of the 13 January 2012 orders 22 weeks of spousal maintenance at $1,700 per week from 3 April 2012 to 3 September 2012 being $37,400.

3. That the husband pay to the wife, pursuant to paragraph 2 of the Binding Child Support Agreement executed 13 January 2012 arrears of periodic child support to 3 September 2012 in the sum of $22,118.90.

4. That the husband reimburse and pay to the wife, pursuant to paragraph 4(a) of the Binding Child Support agreement executed 13 January 2012:

   (a)The sum of $12,573.14 being F School fees paid by the wife on 24 April 2012;

   (b)The sum of $15,000 being F School fees paid by Mr and Ms M on behalf of the wife on 19 July 2012.

5. That the husband reimburse and pay to the wife, pursuant to paragraph 4(c) of the Binding Child Support Agreement executed 13 January 2012:

   (a)$1,040 being S’s viola lessons:

   (b)Fees owed to the Sports Academy of $1,645.00.

6. That the husband pay to Kliger Partners, pursuant to Order 10 of the 3 April 2012 Orders:

   (a)The sum of $15,200.00;

   (b)Pursuant to s 117B of the Family Law Act1975 and Rule 17.03 of the Family Law Rules 2004:

   (i) Interest from 10 April 2012 to 30 June 2012 in the sum of $350.02 (the prescribed rate of interest being 6% above the 7 December 2011 cash rate of 4.25% pursuant to rule 17.03(a);

   (ii) Interest from 1 July to 4 September 2012 in the sum of $261.11, (the prescribed rate of interest being 6% above the 5 June 2012 cash rate of 3.5% pursuant to rule 17.03(b)).

7. That C and the husband shall be and are hereby restrained by themselves, their servants or agents, from registering on the property known as B Street B Town and being the property described in Certificate of Title … Volume … (“B Street property”) any mortgage or other encumbrance relating to the loan agreement purportedly executed by them on 13 August 2012 or any other loan agreement or document.

8. That the husband shall be and is hereby restrained by himself, his servants or agents, from encumbering, selling, borrowing against or in any way dealing with or diminishing his interest in or damaging the condition of the B Street property or the paintings and artefacts identified in Annexure “A” to these orders (“the chattels”).

9. That upon the undertaking to the Court given by the wife through her solicitor Mr Eric Vadarlis that she shall pay all reasonable fees and expenses associated with the enforcement if they are greater than the amount recovered pursuant to the enforcement warrant issued in accordance with this order, an Enforcement Warrant shall be issued pursuant to Part 20.3 of the Family Law Rules 2004, directing  the Marshal of the Family Court of Australia or his nominee, as the enforcement officer, to do all acts reasonably required to seize and sell the B Street  property and the chattels and the proceeds of sale to be applied to:

   (a)All the fees and expenses associated with the enforcement;

   (b)The costs of the sale;

   (c)Discharge of the secured debt to K Capital Partners Pty Ltd;

   (d)Pay the balance to the wife in satisfaction of monies owed pursuant to paragraphs 2, 3, 4, and 5 of these orders;

   (e)The monies owing to Kliger Partners under paragraph 7 of these orders; and

   (f)Pay any remaining balance to Aitken Partners Solicitors Trust .Account for the benefit of the wife in satisfaction of monies owed pursuant to paragraph 1 of these orders.

10. That for the purposes of paragraph 9 of these orders, the husband shall by 5.00pm on 9 November 2012 vacate the B Street property and deliver all keys and security passwords to Vadarlis and Associates and shall thereafter be restrained from entering the said property by himself, his servants or agents.

11. That any rental or other monies received by the wife from the SW property referred to in paragraph 4 of the consent orders made by this Court on 3 April 2012 shall be applied by the wife to either Owners’ Corporation fees or the Westpac Commercial Facility Bill sums outstanding and she shall account in writing to the husband for any monies so received and expended by her within seven days of receipt.

12. That the parties or the enforcement officer shall have liberty to apply to the Court on short written notice.

13. That all applications shall otherwise be dismissed.

14. That a transcript of today’s proceedings shall be prepared and retained on the Court file.

1. That the husband shall pay the wife’s costs to be taxed, on a party-party basis for the original application filed on 10 August 2012 and the supporting material and first day of hearing on 30 August 2012, and thereafter on an indemnity basis.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Nixon & Nixon 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 MELBOURNE

FILE NUMBER: ,LC 2061  of 2009

Ms Nixon

Applicant

And

Mr Nixon

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. This is the second round of enforcement proceedings brought by the wife against the husband, to enforce:

   ·Final property and spousal maintenance orders made by consent between the parties on 13 January 2012

   ·A child support agreement entered at the same time and providing for periodic child support and private school and extra-curricular fees for the parties’ three daughters

   ·Enforcement orders made by consent on 3 April 2012.

2. The final orders were arrived at after nearly three years of bitter litigation, much of it centred on Mr Nixon’s non-compliance with orders, even orders to which he had consented.

3. Ms Nixon now seeks to enforce a total of $1,753,191 in unpaid amounts. 

4. It is comprised, first, of sums owing under the 13 January 2012 final orders as follows:

   (a)$1.5 million lump sum, plus interest of $78,421 to 4 September 2012

   (b)$37,400 in arrears of spousal maintenance to 3 September 2012

   (c)$7,500 due to Kliger Partners, plus interest of $476 to 4 September 2012

5. It is comprised, secondly, of sums arising from the parties’ child support agreement signed contemporaneously with the 13 January 2012 orders, as follows:

   (a)$22,118, as per the Child Support Agency certificate (Exhibit W 27) as at 13 September 2012

   (b)$12,573 due to the wife for F School fees paid by her on 24 April 2012

   (c)$15,000 due to Mr and Ms M for F School fees paid by them on 19 July 2012

   (d)$1,040 due to the wife for S’s viola lessons

   (e)$1,645 due to the Sports Academy for children’s sports lessons.

6. Finally, it is comprised of amounts owing pursuant to the 3 April 2012 orders, made to finalise the wife’s enforcement application at that time, as follows:

   (a)$40,000 due to the SW property body corporate, for owners’ corporation fees to 4 September 2012

   (b)$21,207 arrears to the Westpac bill facility in relation to the SW property, to 4 September 2012

   (c)$15,200 due to Kliger Partners plus interest of $611 to 4 September 2012, a total of $15,811.

7. In her amended application filed 4 September 2012, Ms Nixon seeks orders for Mr Nixon to pay the outstanding amounts, for her solicitor to be appointed sequestrator of a property in B Town, recently purchased by the husband and in which he is living, for her solicitor to collect and receive any income from that property, and to be authorised to sell it, so as to pay her the outstanding monies after the costs of sale, discharge of a secured debt, and payment of her costs of this application on an indemnity basis. 

8. Ms Nixon also seeks an enforcement warrant to take possession of various chattels, again to sell, meet the costs of sale, discharge the secured debt over the B Town property, and pay the balance owing to her.

9. In the event that Mr Nixon does not make the chattels available, Ms Nixon seeks an Anton Piller order so that the items can be seized. 

10. Ms Nixon’s case is that she simply needs compliance with orders.  Without the property settlement, spousal maintenance, school fees, and other outstanding sums being paid in accordance with orders, she is in desperate financial circumstances.  She rejects Mr Nixon’s claims that he has not been able to make the payments, and points to a number of instances that have shown his capacity but his neglect to do so.

11. She sets out the various difficulties that she has faced in realising the parties’ SW property and the husband’s business (“the L Group”), both of which she was permitted to sell by virtue of the 3 April 2012 enforcement orders.

12. Mr Nixon’s case is that he has genuinely not been able to meet the payments under the orders. He says that he entered them on the understanding he was able to obtain a loan of $4 million from the ANZ bank, but ultimately he obtained only $1.5 million.  He says then that the auditors of the  L Group insisted that trade creditors needed to be paid, and that is how funds were predominantly used. In addition, on the understanding that the higher amount would be obtained from the ANZ, he had entered a contract to purchase the B Town property and had to meet the settlement of that property. 

13. He says he has at all times wanted to ensure that the wife receives monies due to her, and has tried in every way to co-operate. 

14. It is his case that in any event, via the 3 April 2012 enforcement orders, she has already received assets to cover the outstanding amounts.  She can sell the SW property and the L Group business interests, and that is the easiest and best option for her to be paid.  He also notes that she has received some income from the rental of the SW property.

15. Moreover, he argues, if the B Town home is sold, he and his new partner (whom he says is 13 weeks’ pregnant to him) will be homeless. In any case, he says that he has no equity in the B Town property, as if the orders as sought by Ms Nixon are made, they will trigger a default, so that both the secured creditor K Capital Partners Pty Ltd, and the ANZ bank, will seek to foreclose on his debts to them.  That is, the wife will get nothing.

THE DOCUMENTS RELIED UPON

1. Ms Nixon relies upon:

   (a)Her Amended Application in a Case filed 4 September 2012

   (b)Her affidavits filed 4 September 2012 and 10 August 2012

   (c)The affidavit of her solicitor, Eric Vadarlis filed 17 September 2012.

2. Mr Nixon relies upon:

   (a)His affidavits sworn on 29 August 2012, and 18 September 2012

   (b)His financial statement filed 23 August 2012.

3. Mr Nixon did not file a response as such, but no point was taken with that.  It is evident that he seeks a dismissal of the wife’s application. 

4. The case proceeded on the affidavit material, and an oral examination of Mr Nixon as permitted under the Rules.  It spread over a number of different appearances at Court, primarily because of his prevarication or failure to produce documents as reasonably requested.  He disagreed with that, saying he had been helpful and co-operative in producing a massive amount of material, and that he felt hard-done by for the time he had spent in the witness box.  I am satisfied that the time could have been shorter had his answers been more direct and co-operative, and had he produced the appropriate material as and when requested. 

5. When he did ultimately produce material to the Court, it was largely by way of annexure to his affidavit filed 18 September 2012.  It arrived in a box, and consisted of hundreds of pages.  There appeared to be duplication of some documents.

6. I was left with the impression that, having failed to produce some of the relevant material earlier, Mr Nixon chose to file this large pile of unfiltered material, as a form of obfuscation.  Throughout the examination, up to and including in final submissions, he was still volunteering to produce material. Despite ample opportunity, and his expressed keenness to assist with full disclosure, he failed to produce many relevant documents in a timely manner, or in some instances, at all.

7. Arising from Mr Nixon’s evidence on 31 August 2012, and the evidence of his mother Ms C, the case was adjourned for him to produce more material, and for the wife to file and serve an Amended Application in a Case and supporting material on “any interested party”, including Ms C, K Capital (the mortgagee of the B Town property), and the vendors of the B Town property. 

8. The wife did join Ms C, the vendors, and K Capital, but also the parties’ relevant entities, L Pty Ltd and G Pty Ltd. 

9. The vendors of the B Town property did not participate in the hearing.  By the time they were served, Mr Nixon had become the registered proprietor of the property: the vendors no longer had rights affected by the wife’s application. 

10. None of K Capital, L Pty Ltd or G Pty Ltd elected to participate. 

11. Mr Nixon’s mother, Ms C, ultimately chose not to appear.  She had given evidence on 30 August 2012 in relation to a loan to Mr Nixon of about $312,000, which she said was the subject of a loan agreement that she intended to secure by way of a mortgage over the B Town property.  She then filed two affidavits about that.  She swore that the L Group owed her just over $26,500 and Mr Nixon owed her just over $317,700.

12. It is fair to say that the evidence given by her was unimpressive.  The formalisation of the purported loan agreement occurred immediately after the service on Mr Nixon of the enforcement proceedings in this case. 

13. I need make no findings about that however, as on 24 September 2012, Ms C wrote to the Court saying that she had withdrawn her instructions to Lewenberg & Lewenberg, who were preparing the agreement and mortgage on her behalf.  She said that she proposed withdrawing a caveat that she had lodged on the B Town property on 18 September 2012.  She was not opposing the application by the wife, that she be restrained from registering any encumbrance over the B Town property. 

14. Otherwise, Ms C enclosed a copy letter sent to the wife’s solicitor, in which she purported to claim an interest in some of the chattels in the B Town property.  Thereafter, she did not appear or have any legal representative appear on her behalf.

15. For completeness, I note that the wife’s former solicitors, Kliger Partners, applied to intervene in the proceedings.  They have Supreme Court proceedings on foot against the wife, and the husband, for outstanding legal fees and disbursements.  I was satisfied that their position was properly covered by an undertaking made by the wife to the Supreme Court on 1 August 2012 that she would pay monies received by her to Aitken Partners, pursuant to an irrevocable authority dated 21 February 2012.  Accordingly, I dismissed their application to intervene.

16. Otherwise, Mr Nixon argued that the ANZ bank should be joined as a party.  I ruled against that.  I shall set out the reasons below. 

BACKGROUND

1. As I have noted previously, the parties married in 1997 and separated in 2008.  Their three daughters, aged 12, 11, and 7, live with Ms Nixon.  They stay with Mr Nixon four nights per fortnight, for half of school holidays and on special occasions. 

2. Mr Nixon is in his late thirties.  He has two university degrees.  He has been an investor and managing director of a financial services firm (“the L  Group”) which has managed up to $1 billion in funds.  He says that there has been a very dramatic downturn in business.   

3. Ms Nixon, aged in her early forties, works as a specialist valuer and advisor.

4. Essential context to the orders now sought by the wife is Mr Nixon’s conduct before the final orders, since then, and during his examination in the course of this proceeding. 

5. Although he has consistently stated – to the point of very obvious repetition – that he wants to co-operate with the Court, that he has wanted to pay all monies owing, and that he is making every honest effort at open disclosure and resolution, his conduct has consistently been to the contrary.

Mr Nixon’s conduct before the final orders

1. Before the final hearing, Ms Nixon brought several applications seeking arrears of spousal maintenance and payments ordered in her favour.

2. In October 2010, Senior Registrar FitzGibbon ordered that Mr Nixon cause to be paid to the wife arrears of more than $60,000 plus interest, found owing under orders of 27 March 2009, 10 June 2009 and 24 August 2009.

3. In his Reasons for Judgment (at para 193), the Senior Registrar referred to Mr Nixon’s “protestations about his straightened [sic] financial circumstances”, and observed that Mr Nixon had however continued to enjoy an “affluent and privileged lifestyle”.  He referred to the husband’s recent acquisition of a new motor vehicle – for which he was paying $805 per week – as sitting “uncomfortably” with his claim of financial constraint. 

4. In February 2011, the wife brought another application in relation to arrears of maintenance.  Shortly before the case was heard, Mr Nixon paid the arrears.    

5. On 8 September 2011, I made orders in relation to arrears of maintenance, fixed at $11,900.  I reiterated spousal maintenance orders, and restrained Mr Nixon from drawing a salary from the L Group of more than $320,000 per annum in addition to his drawings for superannuation, F School fees, his rent, various business expenses, tax, GST, fees connected with this case, child support and spousal maintenance.  I agreed to an order, at Mr Nixon’s request, to allow him to pay the $11,900 arrears of spousal maintenance in three tranches by 26 September 2011.  Despite that, he still did not pay them.

6. On 12 October 2011, Ms Nixon filed another application seeking enforcement of arrears of maintenance. 

7. On 14 November 2011, I found the arrears of maintenance to be $17,900.  I ordered the husband’s expensive dinner set and luxury car to be sold, to meet the arrears.  I ordered the husband to pay the wife’s costs of the enforcement application.  And I made orders to ensure that the spousal maintenance of $1,700 per week would thereafter be paid by the L Group.

8. At that November 2011 hearing, Mr Nixon claimed that the business was chronically short of working capital.  At para 18 of his affidavit filed 11 November 2011, he swore:

   The [L] business has since lost over $600 million in funds under management, is cash flow negative, has lost key staff, breached its AFSL licence conditions, had its banking facilities cancelled and had to transfer the [L]Fund to another firm.  [L] has endured catastrophic investment performance.  The outlook is for things to get worse, not better.

9. He said he could not afford to pay an American Express bill of $15,000.  He referred to trade creditors of $220,000, and that he owed the ATO $87,000.  He said the company had only $3,000 cash in the bank. 

1. Counsel for the wife emphasised that, despite that bleak overview, it was apparent from the affidavit of Mr Y, a business partner of Mr Nixon, that as recently as 26 July 2011, the L Board had resolved to increase Mr Nixon’s salary to $320,000 plus superannuation.  He also pointed out that on 15 July 2011, Mr J, the group’s compliance manager had sworn that Mr Nixon’s total remuneration for 2011 would be $651,000, including $410,000 from his loan account for “lifestyle expenditure”.

2. I noted in my Reasons for Judgment that Mr Nixon had failed to produce various ledgers as to various loans, as he had been requested to do, but it was apparent that he had paid a solicitor $9,000 on the day immediately after the 8 September 2011 hearing, whilst he had not paid anything at all towards what he owed to the wife.

3. Above Mr Nixon’s complaints that the wife had brought the matter back to court many times and, according to him, her applications were “vexatious, harassing and an abuse of process”, I noted his repeated failure to pay even when he had agreed to pay. 

4. I was satisfied at that time that although there were restraints on how much Mr Nixon could draw from the business, the restraints were “extremely generous”.  I noted that he was still able to draw enough to pay school fees, child support, his nearly $9,000 per month in rent, spousal maintenance, and various other expenses over and above his $320,000 salary plus superannuation. 

5. I noted that Mr Nixon’s expenditure in the course of 2011 had included $21,000 on Tom Ford clothes in February, $22,000 at Tiffany’s Hong Kong in March, and just under $9,000 in a Zenia store in Hong Kong in May 2011.  I noted too that he was renting his Q Street, R Suburb home, paying $8,800 per month on a month-to-month tenancy that he could have severed at any time to enable him to meet spousal maintenance, or at least some of it. 

6. I was satisfied that, despite his claim to the contrary, Mr Nixon was able to pay the spousal maintenance as previously ordered. 

7. Mr Nixon protested the selling of the expensive dinner set, claiming he would have nothing to eat from.  And he told me how much the car meant to him.  Nevertheless, I ordered that both be sold for the outstanding payments to the wife to be met. 

Mr Nixon’s conduct since the final orders

1. Although the final hearing was not scheduled until late March 2012, in late 2011 the parties negotiated a settlement, culminating in the 13 January 2012 final orders and child support agreement. 

2. Unfortunately, the previous pattern of Mr Nixon’s agreeing to orders but then not complying has been continued.  

3. The property orders provided that the husband would that day pay arrears of spousal maintenance in the sum of $6,800.  He was to pay costs to the wife’s solicitors within five days, including outstanding costs to a total of $12,195.  By 31 January 2012, he was to pay outstanding F School fees for the children, in the sum of $29,664.95.  He was to pay to the wife the sum of $1.5 million within 45 days. 

4. Otherwise, the orders provided that pending the payment of the $1.5 million sum, he would continue to pay the wife the sum of $1,700 per week by way of spousal maintenance, deposited into a specified bank account. 

5. Mr Nixon was to retain the various business entities to the exclusion of the wife, who was to give the appropriate transfers and resignations, and assign any loan accounts for that to occur.  Various orders were made to support that, and to indemnify the wife in relation to the liabilities of the entities. 

6. The orders also restrained Mr Nixon from dissipating assets and interests, including extending any borrowings or other liabilities. 

7. The binding child support agreement, also entered on 13 January 2012, provided for Mr Nixon to pay periodic child support in the sum of $400 per week per child, to be paid monthly in the sum of $5,200, the first payment being due on 15 January 2012, and on the fifteenth day of each month thereafter. 

8. The agreement also provided for Mr Nixon to pay all private school tuition fees and all fees for currently enrolled reasonable extra-curricular activities, as well as any reasonable additional extra-curricular activities in which the children may be enrolled from time to time.  He was also to maintain full private health insurance and hospital and extras coverage at the highest level.  

9. Mr Nixon failed to comply with several aspects of the property orders, including the payment to the wife of $1.5 million due in late February 2012.  He also failed to comply with the provisions of the child support agreement.

10. Ms Nixon filed an Application in a Case on 9 March 2012, to enforce the outstanding sums.  That was the application that resulted in the consent orders of 3 April 2012.  Mr Nixon did pay Ms Nixon the sum of $25,685, from monies paid into the trust account of Messrs Lander & Rogers (who had been acting for him).  However, mostly he again did not comply with the orders.

11. He was to pay the sum of $18,753.13 to F School by 13 April 2012, and a further sum of $13,573.77 by 30 April 2012, representing outstanding school fees and swimming fees.  On the day of the orders, he paid $6,000 to the school, but nothing more. 

12. On 16 April 2012, according to the wife, the school advised her that the children could no longer participate in extra-curricular activities and could not return to school in Term 2 if the outstanding fees were not paid.  On about 25 April 2012, she paid a total of $15,258.12 towards the school fees so that the children could stay at the school, and towards music and tennis lessons. 

13. On 26 June 2012, the husband emailed the wife asking if she could pay the current term fees as he was unable to do so.  She could not, having received no spousal maintenance or child support since 3 April 2012. 

14. On 17 July 2012, the school advised Ms Nixon that the outstanding fees were $42,494.36.  Mr and Ms M paid $15,000 on her behalf on 19 July 2012. 

15. On 30 July 2012, Mr Nixon paid $27,519.54 to the school.  Combined with the payments made by the wife and the Mr and Mrs M, the children’s school fees were then paid up until the end of this school year, save for $355, owing for swimming. 

16. Mr Nixon has not repaid Ms Nixon, or Mr and Ms M, for the school fees they paid on his behalf.

17. The 3 April 2012 orders also provided for Mr Nixon to direct the relevant business entities to deduct from his salary the sum of $1,700 per week ($7,367 per month) for spousal maintenance, to be deposited into the wife’s bank account.  If he ceased to receive a salary, he was to direct that spousal maintenance was to be paid against his loan account.  Despite that, Ms Nixon has received no spousal maintenance since then.

18. The 3 April 2012 orders also provided (in para 4) that as Mr Nixon had defaulted and failed to comply with the order for payment of $1.5 million, the SW property would be sold with the sale proceeds applied to pay the costs, commissions and expenses of sale, to discharge a particular commercial bill facility, and to pay the balance to the wife.  He was also to return all the furniture previously located at the SW property, and to pay outstanding Owners’ Corporation fees, as well as meeting the commercial bill facility pending settlement of a sale.

19. Otherwise, in order to meet the outstanding property payment, it was agreed that the husband would within 24 hours retire from certain roles, and transfer his share to the wife on trust for her to sell the business of the L Group.  He was restrained from doing any act or thing as director or employee of the relevant entities to obstruct or impede the sale of the business. 

20. The wife was to appoint a merchant banker to sell what was effectively the parties’ 91 per cent interest in the L Group, for the sale proceeds to be applied first to pay all the costs, commissions and expenses of the sale, including the expenses of the merchant banker, and secondly to pay to her the outstanding portion of the $1.5 million payment with interest, with the balance to be retained by the husband. 

21. Otherwise, the orders re-iterated that the husband was to meet all outstanding payments, and pay the wife’s costs of that application fixed at $15,200.

22. The orders permitting Ms Nixon to sell the SW property, and the business, were stayed for a period of one month. 

23. By the end of the stay, the husband had not paid the $1.5 million owing to the wife, had not returned the SW furniture, and had not paid the outstanding SW Owners’ Corporation fees or bill facility.  In addition, he had not done what was required, to sign over control of the business, and had failed to comply with various other supporting orders.

24. So far as the SW property was concerned, in late April 2012 Mr Nixon had been dealing with someone interested in purchasing the property for $1.1 million.  That sale fell through.  Each party blames the other for that.  I shall return to it below.  For current purposes I note that the parties expected, for the purposes of their negotiations, that the wife would receive about $600,000 from the sale of SW, but it has still not sold. 

25. Also in late April 2012, the parties negotiated through lawyers and agreed that the wife would grant the husband a further extension of time for payment, until 4 June 2012, and that in return she would receive an additional payment of $25,000. 

26. On 4 June, the wife’s solicitors wrote to the husband reminding him that settlement was due that day.  The following day, Mr Nixon replied, seeking another variation, whereby he would pay a total of $750,000, with the outstanding balance in 12 months. 

27. Ms Nixon swore that at that stage she was “panic stricken”.  Amongst other things, she owed Kligers $760,000 in fees and disbursements. 

28. On 6 June 2012, Mr Nixon sent an email to the wife’s solicitor, attaching two pages of the L Group bank account statement, showing a current balance of $216, and claiming that he and the companies were “deeply in debt” and that he didn’t “have any more money.”

29. Since then, Kligers have commenced proceedings against the wife and the husband in the Supreme Court of Victoria, seeking any proceeds from this case, including any sale proceeds from SW to be frozen and first applied to their fees.  Ms Nixon has made an undertaking to pay any money (other than “spousal or child maintenance payments”) received by her, into a trust account, pending conclusion of that Supreme Court case. 

30. For completeness, I note that Ms Nixon has not been able to sell the business.  I shall also return to that.

Mr Nixon’s conduct during this hearing

1. Pursuant to r. 20.11, Mr Nixon was called for examination.  He gave evidence briefly on 17 August, on 30 August, for part of 31 August, on 1 October, and briefly on 2 October 2012.

2. His evidence was unimpressive.  He was manipulative, evasive and untruthful. 

3. There were occasions when he was at pains to say that he did not want to upset the Court in any way.  What the transcript cannot disclose is that on many of those occasions, he was smiling or laughing as he said it.  That in itself would not be a cause for adverse comment.  People can smile for all sorts of reasons, including nervousness.  That is indeed what he claimed when ultimately I referred to that behaviour.  I make the observation only in the context of the broader picture of his conduct described above, and all of his evidence.  In combination, I was left with the impression that he was “playing” with the Court, as opposed to genuinely trying to be helpful or honest.

4. Mr Nixon’s prevarication and evasiveness was most apparent when, on numerous occasions, he was asked simple straightforward questions, to which he gave complicated answers that did not address the question, did not contain useful or responsive information, or appeared to be an attempt to “snow” the Court with irrelevant material.  In the course of the examination, I referred to it as “mumbo jumbo”.  He said that he simply was a “fluid” thinker, and did not think in the “simple” way that Dr Ingleby, the cross-examiner, thought.  That struck me as a disingenuous answer.  So did his claims from time to time that he did not understand some of the legalities of the situation, or that he was overwhelmed by the process. 

5. I accept that although Mr Nixon studied law, he has not practised as a lawyer.  He has however developed and run a large and extremely successful financial services business.  During the examination, he certainly displayed his extensive knowledge of complex regulatory schemes, banking practice and commercial negotiation.  This is not a man inexperienced in the commercial world, or naïve to complex commercial concepts.  Yet he tried to portray himself as quite out of his depth in these proceedings.  I did not believe him.

6. For example, when he tried to disclose some confidential negotiations that had occurred with Dr Ingleby in the course of the hearing, he professed ignorance about “without prejudice” negotiations.  That did not sit with someone who had been such a major player in the business world, but more particularly it was in stark contrast to another part of his evidence, on a different topic, when he readily sought to claim that particular correspondence was “commercial in confidence”. 

7. Similarly, despite his claim of little understanding of legal matters, at one point, various legal terms about the priorities between equities rolled off his tongue.  In reference to his mother’s purported claim over the B Town property he volunteered that “apart from the equity in time concept…all mortgages are equal”, and explained that his mother’s mortgage would be “subordinated to the first mortgage provider [K Capital].”

8. Although I shall come to some of the unimpressive aspects in Mr Nixon’s evidence when dealing with substantive issues below, there are some matters I can cite here by way of illustration.  They are by no means exhaustive.

9. Mr Nixon had given evidence that his German luxury car was currently impounded under “hoon” legislation.  He said it was damaged, presently un-roadworthy, and although its value when new was $210,000, he estimated the current value at $70,000, and its sale would not realise the amount owing on it.  According to his financial statement, he presently pays $870 per week on that vehicle. 

10. Mr Nixon swore that he could not afford to have the car fixed, although he had no proof of what if anything needed to be done, or how much it would cost.  It was unimpressive.

11. What was more unimpressive was that when he was asked how he travelled from B Town to Melbourne, on the two to four days per week that he said he worked in the city, he said that sometimes he was given a lift, otherwise he had a driver.  He said that he could not say how much he paid the driver per week.  The driver had “not sent a bill for awhile”.  He also could not say how much he was charged for a trip to Melbourne.  He “guessed” $100 to $200.  After lunch he volunteered that he had called the driver, and found that the car ride that morning was “free”. 

12. When it became apparent to Mr Nixon that his answers about the driver’s fees were unlikely to impress, he gave a version that sometimes there was a “contra” between him and the driver.  He cited an example, when he gave the driver a ticket to the Moto GP, and the driver drove him to that event. 

13. Mr Nixon then said that the “contra” was that the driver could use the German luxury car, and in return would drive him in it.  That begged the question as to whether the vehicle was or was not un-roadworthy, whether or not Mr Nixon was going to keep it and continue to pay the very high costs in relation to it, and what costs if any would be required to have it made roadworthy.

14. His evidence about the driver, and his vagueness about it, was simply not credible.  Similarly, his lack of detail and information about the current status of the car was unbelievable.  What was clear was that he continues to pay $870 per week in relation to it, although he has not been making any payments to the wife.  

15. A stark example of Mr Nixon’s lack of veracity arises from a consideration of the BankWest “Loan Summary Checklist”, signed by him on 17 July 2012, in order to obtain the loan from K Capital of $1.3 million, to be secured over the B Town property. 

16. According to the completed Loan Summary Checklist, he owned shares in the L Group worth $12 million.  That sum exceeded by millions of dollars any valuation prepared for the property case.  According to Mr Nixon, the single expert had put the value between $8.171 and $8.956 million.  His own expert had put it at between $5.990 and $7.046 million.  Whichever, there was no valuation at $12 million, and the figure did not sit well with his claims in this case – made both before and since the final orders – that the business is “stuffed” and in dire financial circumstances.  I shall return to his varying accounts as to the value of the business.

17. He also told the bank that he had self-managed superannuation of $200,000.  Again that was not true. 

18. Although he declared in the application that he had read and understood the application and that it was true and correct, he now claims he had not been through it in detail.  He said “I relied on people around me”.  He said he had no reason to believe that the form was not accurate. 

19. I note that although the Loan Summary Checklist was dated 17 July 2012 – that is, several weeks after the $1.5 million ANZ loan that Mr Nixon now claims is secured over all of his assets, including B Town – he did not include it as money owed, when he completed the Checklist document.  Nor did he give any indication that by then, some $660,000 of the ANZ facility had already been applied to the B Town purchase.  That shows the lack of veracity, and selective nature of his disclosure, in this instance to his financiers.

20. I have already noted that his mother, having sworn her loan was to be secured over the B Town property, (and having filed an affidavit showing the debt was in fact higher than $312,000), ultimately did not pursue it.  Mr Nixon’s evidence on the topic though is relevant, again as to his truthfulness.

21. At page 21 of the transcript of Mr Nixon’s evidence on 17 August 2012, Dr Ingleby asked Mr Nixon if the debt to his mother – described by Mr Nixon as a “hard cash debt” and one of “multiple security interests” over the B Town property – had been brought to the attention of K Capital.  He replied, “Yes.  They’re well aware of it.”  Dr Ingleby then asked: “Have you personally brought that debt to the attention of [K Capital]?”  Mr Nixon replied, “Yes”.  He went on to say that he had also disclosed it to the ANZ.  He volunteered, “I make very good disclosure to my bankers.  That’s why they like dealing with me.”  He went on to say “I spill my guts”, adding, “It creates trust.”

22. When the K Capital loan application was shown to Mr Nixon, and it was apparent that the debt to his mother was not referred to by him, again he said that he did not fill out the form.  He only signed it.  When he was asked if he had read it, he said he was in a hurry and did not read it.  Noting that the loan was not referred to in the application, he said it was “an oversight”, and he said, “I apologise for that.”

23. One of the representations made by Mr Nixon in the loan agreement with K Capital, signed by him on 21 June 2012, was that there was no litigation or other proceedings before any court against him, or that would have a “material adverse effect upon the business, assets or financial condition of the borrower.”  He failed to mention the outstanding issues in this Court.  He said that he thought quite simply they had been resolved by the January orders.  That is a disingenuous answer.  He knew at that time that the debts were unpaid, that he owed money under the orders, that the debt had not been resolved, and that the L Group auditors had advised that the litigation with his wife was a major risk factor for the business.  It was not disclosed in that context, nor in the Checklist document as to monies owed.

1. Despite repeated attempts to distance himself from the contents of the loan Checklist, I note that the form is not a complex one, and not difficult to read and assimilate.  It is hard to accept that Mr Nixon would not have read the application and easily been fully aware of what was being asserted in it.

2. An example of Mr Nixon’s manipulation of the truth to suit his own ends can be seen in the email, (Exhibit W4), sent by him to Ms Nixon on 6 June 2012.  He attached a bank statement showing a balance of only $216, and saying that he could not pay the monies outstanding.  The very next day, $62,000 was deposited into that same account.  On 20 June, the sum of $200,000 came in, on 22 June, $150,000 and on 28 June another $60,000. 

3. In fairness, Mr Nixon did say in the email that “...we are receiving management fees in a couple of days …”  Nevertheless, he gave the clear impression of a desperate state of financial affairs when he wrote:

   I am keen to reciprocate your courtesy and satisfy your requirements.  However, [L Pty Ltd] only has $216 in its bank account.  I have attached a copy of the bank statement to evidence this.  I don’t have any more money.  Both the companies and I are deeply in hock.  We are receiving some management fees in a couple of days, but I don’t have the money to pay the [F school] fees.  If I did, I wouldn’t hesitate to pay the fees.  I’ll pay what I can when the fees come in – if this isn’t too late.

4. The financial position of the business was very shortly substantially different.  Although he said the funds were used to pay trade creditors, he did not produce and could not point to direct proof of that. 

5. Moreover, on 14 June 2012, only eight days after that letter was sent, Mr Nixon received the ANZ commercial bill facility of $1.5 million ($1,474,548 after pre-paid interest).  That same day he drew-down $168,028 to pay the deposit on his new B Town property (see Exhibit W5).

MR NIXON’S CLAIM THAT HE HAS NOT BEEN ABLE TO PAY THE WIFE

1. Mr Nixon claims that he has not been able to pay the wife.  He has various excuses, including blaming her for the ANZ’s indicative offer of $4 million only coming in at $1.5 million, and for the sale of the SW property falling through in April 2012.

2. I shall return to the SW sale issue, below.

3. As to his criticism of her in relation to the ANZ loan, he appeared to be complaining that she had retained various documents at the former matrimonial home and failed to disclose them, such that it adversely impacted the loan.  I note though that he was the one with the close relationship and dealings with the bankers, and the one running the business, including the staff who, under him, managed its financial affairs.  He did not point to any cogent evidence to support his complaints against the wife about this loan.

4. Mr Nixon’s assertion that he entered the 13 January 2012 consent orders upon his belief that he was able to secure a loan of $4 million from the ANZ bank, was a disingenuous claim.  As a very intelligent and experienced businessman, Mr Nixon would have been well able to understand the nature of the bank’s letter dated 23 December 2011 (Exhibit SHN 1 to his affidavit of 18 September 2012).

5. In that letter, Mr V, the ANZ relationships manager, indicated that he was enclosing the bank’s Indicative Facilities and Conditions Quote “for discussion purposes.”  The letter continued:

   As you will appreciate, we will require further information from you to enable us to complete a full assessment of the arrangements under consideration.  Accordingly, this letter only provides an indication of the type of facilities and conditions that may be available.

6. The “indicative facilities letter” itself reiterated that the letter was provided “for discussion purposes only”, and that it did “not represent an offer of facilities.”

7. Ultimately, Mr Nixon obtained a loan of $1.5 million from the ANZ bank.  What became clear during his examination was that insofar as at least $500,000 of the proposed loan was concerned, it was reduced by the bank upon Mr Nixon own instruction to them in an email sent on 23 April 2012.  In it, he advised that as he had a purchaser for the SW property, $500,000 of the agreed financing was no longer required. 

8. Mr Nixon also claims that he was not able to pay the monies outstanding to Ms Nixon because the L Group’s auditors, Ernst & Young, had made it clear that the business was in trouble and that he was obliged to pay trade creditors. 

9. He referred to a letter from Ernst & Young to him, dated 20 April 2012 (SHN 17 to his affidavit of 18 September 2012).  In that letter, the auditor did write of issues surrounding the company’s ability to continue as a going concern and the Group’s cash-flow problems, as follows:

   …I understand that the company resources are being used to meet your personal obligations, particularly to fund the divorce proceedings and to meet the directions of the Family Court.  It is most important that you first apply the company’s cash-flows to meet the business liabilities, particularly to pay overdue creditors, including amounts due to Ernst & Young.  You should consider whether you are appropriately meeting your fiduciary obligations to the companies and to their creditors in making payments that relate to your personal liabilities before paying overdue liabilities.  I recommend that you seek independent legal advice on this matter.

10. The auditor went on to say that he understood that Mr Nixon was seeking to finalise a loan facility with the ANZ bank to assist in meeting the obligations of the company as well as personal liabilities.  He gave the opinion that it was important for at least $1 million of that facility to be available to the Group to meet liabilities and provide working capital.

11. Part of the same exhibit was another letter written from Ernst & Young to the directors of L Pty Ltd more than a year earlier, on 21 March 2011, referring to the risks for the company arising from the Family Law proceedings. 

12. Although he now claims he could not pay Ms Nixon because of the auditor’s warning in April 2012, Mr Nixon seemed to readily overlook the auditor’s warning in many respects, most particularly when, as can be seen below, he used more than $670,000 of the $1.5 million from the ANZ monies, towards the purchase of the B Town property in his own name.

13. Despite Mr Nixon’s claims of his parlous financial position, the business records show that since December 2011, but mostly since the final orders on 13 January 2012, he has drawn about $660,000, in salary and loans from L Pty Ltd. 

14. In his financial statement of 23 August 2012 he showed his salary as “nil”, with a notation:

    Ceased drawing a salary from March 2012, drew some loan accounts, since ceased.

15. Importantly, paragraph 3 of the April enforcement orders, entered by consent, provided for Mr Nixon to direct the L entities to deduct $1,700 per week from his salary to pay into the wife’s bank account for her spousal maintenance.  He was also to direct the entities to pay that sum against his loan accounts, in the event that he ceased to receive any salary.  Despite those orders, Ms Nixon has not received any spousal maintenance payments.

16. In addition to his salary and the loans drawn on the business, this year Mr Nixon has borrowed $1.5 million from the ANZ bank and $1.3 million from K Capital.  That is, in the nine months since the final orders were made, he has had access to a total of about $3.4 million.

17. Mr Nixon’s failure to make full and frank disclosure, and to produce many of the relevant documents, despite numerous requests, make it impossible to trace the movement of all the monies that he has received.  There are though two very telling transactions.  In neither instance did he produce all the relevant documents that would have made it easy to ascertain information about them.

18. The first relates to a $750,000 bank cheque withdrawn against the ANZ loan facility on 15 June 2012, in favour of Aitken Partners Trust Account. 

19. Ms W, who works for Mr Nixon, gave evidence in response to a subpoena from the wife’s solicitors.  She said that the cheque was arranged by her upon Mr Nixon’s instructions.  It was her handwriting on the ANZ transactional print-out document that showed it as the “Initial Settlement Chq ([Ms Nixon]) [Aitken Partners] ”.

20. What was only discovered by the wife’s solicitors when they inspected subpoenaed documents from the ANZ bank, was that the bank cheque was then cancelled, and other cheques were drawn against it: none to the wife.

21. Ms W’s evidence was that on 22 June 2012, Mr Nixon instructed her to cancel the bank cheque and to draw other cheques on the account.  She did so.  She had a cheque drawn in the sum of $308,000, and another in the sum of $365,000-odd – a total of $674,340 – which was paid towards the settlement fee for the B Town property.  Although the bank printout (Exhibit W 24) shows another three cheques in the sum of $1,650, $1,190, and $72,779, it is not clear, and Mr Nixon did not reveal, to whom those cheques were made payable.

22. The significance of the change in the bank cheque arrangement is that although Mr Nixon had in any event borrowed $1.3 million from K Capital (in two tranches of $900,000 and $400,000 respectively) towards the purchase of the B Town property (purchased for about $1.7 million, with stamp duty bringing it to about $1.8 million), and although the cheque for $750,000 was drawn on the ANZ facility specifically towards paying out the property orders in the wife’s favour – in accordance with the parties’ negotiations in early June 2012 – it was not used for that purpose.  Instead, it was largely used towards the purchase of the B Town property.

23. When, in the course of the application now before me, the wife’s solicitor, Mr Vadarlis became aware of the cancelled $750,000 cheque, he wrote to Mr Nixon, seeking further documents and disclosure.  Mr Nixon’s response is instructive.

24. On 12 September 2012, Mr Nixon replied to Mr Vadarlis (Exhibit W 26) in an email as follows:

    Do some basic learning about wholesale bank statements.  You are not going to see an ‘on-off’ $750k transaction – ie gross.  You will see entries on a net basis.

    Get some help.  It’s not my role to provide financial services 101 tuition.

25. The email was in itself offensive and unresponsive.  It was also an excellent illustration of Mr Nixon’s failure to respond to a simple question with a direct answer, leaving me to infer that he was attempting to distract from the simple fact of the matter of substance.  It was a device he employed many times in the course of his evidence.  In this instance, I can infer it was directed towards obfuscating the fact that he had been caught out having obtained a bank cheque to pay the wife, but never having paid it to her.

26. Mr Nixon was cavalier about having cancelled the cheque that would have seen Ms Nixon receive half of the outstanding lump sum payment, in favour of using the money himself.  At one point he suggested that he was not permitted to use the ANZ loan for that purpose.  That begged the question then as to why he had the cheque drawn.  In any event, he was sufficiently garrulous that, in the course of questions and answers on the topic, he revealed what was probably his real reason for changing the cheque, in saying that at the time he was about to pay it to the wife, she had been very “aggressive” in some of her negotiations, and therefore he did not pay it to her.  That gave a clear window into his thinking, which overlooked the fact of a Court ordered obligation to pay her. 

27. Combined with the fact that he failed to produce any documents that showed what he had done with the ANZ bank cheque, his offensive behaviour towards the wife’s solicitor, who was simply making a proper enquiry on the topic, as well as the absurdity in his evidence as to the distinction between issuing the cheque and presenting it, made this aspect of the evidence telling, as to Mr Nixon’s conduct and character in these proceedings. 

28. The other transaction Mr Nixon has effected, in preference to meeting the Court ordered obligations, is the payment of a sum of $100,000 (possibly $250,000) to purchase shares from T Pty Ltd, a company controlled by Mr D, effectively the minority shareholder in L Group.  

29. It was only when Ms Nixon’s solicitor conducted an ASIC search, on 4 June 2012, that Ms Nixon became aware that the parties had effectively obtained Mr D’s minority shareholding, by paying T Pty Ltd for its shares in L Group. 

30. Mr Nixon gave evidence that the transfer was necessary to secure the ANZ funding.  He could have and should have, but I accept he did not advise Ms Nixon of the transaction, even though under the April 2012 orders he had been required to resign as director of and transfer to the wife his shareholding and interest in G Pty Ltd for her to sell the business.

31. Although the ASIC documents (Exhibit W 2) show that the total paid for the shares was $250,000, Mr Nixon insists that the sum of $100,000 was paid.  Again he says that the ASIC documents were completed by other people, and he has no knowledge as to why they would reflect a payment of $250,000.  The way he put it was, “I don’t do detail.  If you haven’t worked that out.  I’m too big picture...” 

32. A cheque butt in the sum of $100,000, dated 3 July 2012 is the one he says paid out the $100,000.  That cheque has written on it “[T Pty Ltd] ”

33. The evidence on this topic was somewhat unclear.  Mr Nixon could have made it clear, with simple cogent evidence and the production of documents about the transaction.  All that is clear is that, unbeknownst to the wife, he paid at least $100,000 for the company to purchase the minority shareholder’s interest, at a time when he had not met outstanding orders to the wife, and without informing her about it.

34. Otherwise, Mr Nixon at one point in his evidence proffered that he had the capacity to borrow money from friends.  He said he could “approach people and have discussions and borrow more money.”  He said “I’ve got a deep base of support, I’ve got lots of supporters…”  He said that there are “people who are prepared to lend me money.”  He described them as “highly trusted”. 

35. On 30 August, he said in examination that he could:

    …hold a number of discussions which can be reasonably expected to materialise into loan facilities but I’ve got no certainty attached to those.  I think provided there was some certainty the matter would be resolved.  I’ve got a reasonable degree of confidence I could rustle some funds up, particularly on the terms of the consent orders that you propose…  

36. On the same day, Mr Nixon also volunteered that he had another potential source of income when he said:

    I will go and play [sport] full-time; I can make a great living as a [sportsman].

37. As Mr Nixon’s financial statement shows his current income as “nil”, and he is apparently not earning a living as a professional polo player, how he lives day to day was not really clear.  He said his new partner was meeting the B Town property loan repayments.  He produced no proof, although she sat in court for some days of the hearing.

SW PROPERTY AND THE BUSINESS

1. As noted, the 3 April 2012 enforcement orders provided that the husband was to do certain acts so that the wife would become sole director of the relevant entity, in order to be able to sell the parties’ interest in the SW property.  He was also to return furniture removed from the property, to stay away from the property, to pay all outstanding owners’ corporation fees, and until settlement of the property, he was to be liable for the commercial bill facility secured over the property. 

2. The orders provided for the proceeds of sale from SW to meet all costs, commissions and expenses of the sale, to discharge the commercial bill facility, and for the balance then to be paid to the wife.

3. It is clear from correspondence between the parties that they anticipated the wife would receive about $600,000 from the property.

4. It is Mr Nixon’s case that by late April 2012 he had negotiated a sale of the property to Mr P, at a price of $1.1 million.  He says that the wife interfered with the transaction and she lost the buyer. 

5. Ms Nixon’s version is that Mr Nixon failed to comply with the April orders, failing to return the furniture to SW, and failing to pay outstanding owners’ corporation fees or the Westpac bill facility.  He also removed all living room window furnishings and curtains. 

6. Secondly, although she agreed that Mr Nixon had been dealing with Mr P, who had shown interest in purchasing the property for $1.1 million and had deposited that sum into his solicitor’s trust account, it was in no way her fault that the sale fell through.  It was after an inspection of the property that Mr P had changed his mind about the purchase, alleging that the property was “not as represented”. 

7. Her version is supported by a letter dated 14 May 2012 from lawyers for Mr P (Exhibit W 25).  It stated:

   Our client conducted an inspection of the property last week.  We are instructed that our client is not satisfied with the condition of the property.  Further, the property was not in the condition that our client expected given the representations that had been made. 

   Accordingly, our client is not proceeding with the transaction and withdraws from negotiations.

8. When confronted with that, Mr Nixon said that Mr P was simply being “diplomatic”.  In the absence of any independent evidence to support that interpretation, I accept the wife’s sworn account that Mr P withdrew for the reasons plainly set out in his solicitor’s letter.

9. I accept that Ms Nixon remains keen to sell the property to effect part-satisfaction of the outstanding orders.  In her affidavit filed 10 August 2012, she deposed that she had re-furnished the apartment, as advised by the real estate agent as necessary for selling purposes.  She had been told not to expect a quick sale, and had rented the property for a sum of $31,500, which she had applied towards the purchase of the replacement furniture and curtains, and to a small extent towards the commercial bill facility.  I accept that.

10. I shall ensure that any future rental however is properly accounted to the husband and that it reduces the sum owing to her. 

11. The orders of 3 April 2012 also provided for Ms Nixon to be put into a position to effect a sale of the L Group.  Following various steps to make her sole director and shareholder of the relevant entity, she was permitted to appoint a merchant banker to sell what was then effectively the parties’ 91 per cent interest in the business, and to apply the proceeds of sale to pay all the expenses of sale, to pay to her so much of the $1.5 million property lump sum as was owing, plus interest, with the balance to be retained by Mr Nixon.

12. In her affidavit of 10 August 2012, Ms Nixon set out in detail the difficulties in realising anything from the business.

13. First, she said she was recently advised by the husband, and the company’s compliance officer, that on 20 June 2012 the business lost one of its major superannuation clients.  Further, the business cannot be carried on without Mr Nixon as he is the only person appropriately qualified to run the business, that he is impecunious, and there is effectively no business to sell.

14. She swore:

    45.I have endeavoured to engage a Merchant Banker to sell the [L Group] business, as provided for in the April Property Orders with no success.  The main obstacle has been the loss of the main institutional client.  I am in a catch-22 situation.  For a merchant banker to take it on, I also need to find an appropriately qualified person to run the business whilst it is being advertised for sale, which I have been unable to do as no one wants to take it on.

    45.[sic]Because the business’ clients and funds under management have drastically reduced, I and the merchant banker I approached, [Mr Z], after extensive enquiries, have been unable to entice any such appropriately qualified person to run the business were I to take control of it.

1. Although Mr Nixon has frequently talked about the fact that the business is seriously struggling, or as he put it, that it is “stuffed”, and although he has repeated many times that it is within a highly regulated industry requiring a licensed and skilled practitioner, he insists that since the April 2012 orders, the wife has had control of a very valuable asset to sell.  He described it as an asset that could be sold, as the most “direct and immediate route” to get the payment to her.

2. In evidence on 30 August 2012, Mr Nixon described the business as “cheap at $12 million.”  On 31 August 2012, in submissions, Mr Nixon remained “bullish” about its value, saying that he could easily sell it, but this time he referred to its value at $5 million.  In the course of discussion he said that in his “best estimate” he could sell the business for $5 million. He said that he was “happy to enforce on her [the wife’s] behalf because I can get that…”

3. When he was conscious that he was about to return to the witness box, Mr Nixon volunteered: “Sorry, and just to be clear, I’ve got no idea what it would sell for really.”  He added:

   However – no, no, but I think – look, you don’t know.  You don’t know what these things are worth until you get a keen buyer and you need time and you’ve got to do a bit of a love dance with the purchaser, but, no, I think that’s a reasonable …

4. On oath, Mr Nixon prevaricated.  He agreed that he had said he could get $5 million for the business.  He said though that those numbers were “in a range”, that they were “inherently uncertain”, a “median”.  When pressed as to the range, he said:

   Well, it depends on how a purchaser might think about the business and how they may access financing, and I guess what happens with these businesses is you actually have to buy them twice; buy the firm once and then you buy the staff again…

5. Although in discussion, Mr Nixon had been indicating the ease of selling the business, when pressed on oath, he spoke of various complications in how quickly it could be achieved.  He said it could take from one month to one year although he could “hustle” for a faster sale.

6. When Mr Nixon was asked the process that he would set in train to sell the business, he replied:

   …I would open my Rolodex and pick up my telephone.  It’s a very small industry and there are very hard barriers to entry.  Everyone knows everyone and I would be able to form a view relatively quickly about some go-to people…

7. Mr Nixon described the “go-to people” as people with “huge balance sheets”.  He said the “go-to” category would be around five people and then added “Probably less actually.”  He said that it would depend on whether he liked them or not and wanted to work with them.  Shortly after, he said that “…if they’ve got a big enough cheque book I can work with anyone.”  When pressed, Mr Nixon offered one name –Mr R– as someone who might be interested, but he could not think of others.

8. In his final submissions, Mr Nixon pointed to the KPMG forensic valuation prepared for trial, valuing the business at between $8.171 million and $8.956 million.  He emphasised that the valuation had not been challenged by the wife. 

9. That was an interesting argument, as effectively, the valuation had been challenged by Mr Nixon who, for the purposes of the trial, had obtained his own expert report that valued the business lower, albeit between $5.99 million and $7.046 million. 

10. It was also an interesting argument when his position is that he is impecunious and the business is “stuffed”. 

11. He cannot have it both ways.  It cannot be that the business is “stuffed” and he is therefore impecunious, but that it remains a very valuable asset, and one readily realisable by the wife.  And it is unimpressive for him to submit that this is a readily realisable asset, to indicate that he knows someone who might be interested to buy it, and yet to make no positive proposal in that regard. 

12. He also cannot negate the difficulties the wife has sworn that she has personally confronted in trying to sell the business.  I have every reason to accept that she has genuinely wanted to sell it, in order to obtain the outstanding payments. 

13. Dr Ingleby made it patently clear in final submissions that in the event that Mr Nixon made such a proposal, and brought forth a genuine buyer, it would be welcomed by the wife, and the sale of his home could be avoided.

MR NIXON’S ARGUMENT THAT THERE IS NO EQUITY IN THE B TOWN PROPERTY

1. Mr Nixon claims that the B Town property should not be sold because it has no equity in it, his version being that between the K Capital and the ANZ loans, a sale would reap nothing to the wife, once those creditors are first paid out

2. He also claims that a sequestration order should not be made as, according to him, even an order whereby the wife’s solicitor can take possession of the property and arrange for its rental, would trigger a default under both the K Capital and ANZ loans.

3. I shall deal with the K Capital loan first.  That is a loan formally secured by way of a registered mortgage.  There is no argument that K Capital would be paid out before the wife could receive any monies from the sale proceeds. 

4. Although served with the amended application of the wife filed 4 September 2012, with her supporting material, K Capital chose not to appear or participate in the proceedings.  That most likely reflects the confidence that the loan is properly secured.  

5. This issue provided another illustration of Mr Nixon’s approach with broad-brush and bald unsubstantiated assertions designed to obfuscate the simple truths.  He said it was apparent from the loan documents that the sequestration order would trigger a default.  When pressed as to which provision of the loan agreement made that clear, he mostly bandied about general references.  Although there was one reference to a default being triggered if a creditor took possession of Mr Nixon’s assets, I note that K Capital took no role in the proceedings.  That fortifies me that it is not an issue that would preclude orders in this case.

6. As to the ANZ loan, Mr Nixon was insistent that the wife’s legal representatives had failed in not joining the bank as an interested party.  He pressed for that to occur.  I ruled against it.

7. Again, Mr Nixon spoke in the broadest generalities about ANZ’s interest in the B Town property, based on the personal guarantee he had given in relation to the $1.5 million loan.  His stance ignored that when it came to the B Town property, ANZ is not a secured creditor, and certainly Ms Nixon’s claim under the final orders arose first in time. 

8. Moreover, it is significant that Mr Nixon, for all his ardour about the bank being joined – and I note that there would have been inevitable further delay as a result –had taken no steps himself to join it, and above all, the bank had not sought to intervene when, I am satisfied on the evidence, they knew of these proceedings. 

9. Mr Nixon did not volunteer that the bank knew of these proceedings, but it became clear when he was examined on the topic by Dr Ingleby. 

10. Mr Nixon had met with Mr V from the bank as recently as 16 September 2012.  He agreed that he had told Mr V that he was returning to court.  When asked if he had given Mr V a copy of the wife’s amended application he said that he “may have”.  When pressed, he said he told the bank about it, and Mr V asked for it.  Mr Nixon said he was “not sure” if he sent it to him.  That in my view was an evasive answer.  He was dealing with matters that had occurred only recently.

11. Again there was an absolute lack of clarity surrounding any terms and conditions of the ANZ loan or guarantee that impacted on the B Town property.  Mr Nixon could not even be sure which of several documents he produced was in fact the final loan agreement with the ANZ.  At least, that is what he said.

12. I also evaluate his evidence on this topic against his evidence early in the oral examination when he was adamant that his mother was owed over $300,000 by him, and that such loan would need to be met from the B Town property.  I have received no real explanation as to why that position has changed.  I am left with the impression that Mr Nixon has tried to create whatever picture is necessary of a property that has no equity in it, when that is not the case.

CHATTELS

1. Mr Nixon says that no orders can be made against chattels because the 13 January 2012 orders provided for each party to retain their own chattels and that is the end of that. 

2. As Dr Ingleby correctly pointed out in submissions, paragraph 11 of the 13 January 2012 orders, providing for each party to retain the chattels in their possession, was specifically expressed “…save for the purposes of enforcing any monies due under these or any subsequent orders:…”

3. Otherwise, Mr Nixon argues that the enforcement warrant sought by Ms Nixon relates largely to chattels, being artworks, that he says are owned by the business, not him.  Again he says that the ANZ bank has an interest in that property pursuant to the loan agreement.  Neither he, nor the bank through him, following his discussions with Mr V about these proceedings, brought forward any cogent material about that.  In any event, I make the same observation in relation to the ANZ unsecured interest, as above. 

4. As for the business, I also note that neither L Group nor G Pty Ltd sought to participate in these proceedings, even though served with the wife’s application seeking orders in relation to these chattels.  

5. Nothing in Mr Nixon’s evidence satisfied me of any impediment to the chattels being sold to pay outstanding monies.

CONCLUSION

1. An obligation to pay money, including child support, can be enforced under the Family Law Rules by sequestration, or seizure and sale of real or personal property under an enforcement warrant. 

2. I am satisfied that between the lump sum of $1.5 million and spousal maintenance due to Ms Nixon under paragraph 3 of the final orders, child support (as per the Certificate – Exhibit W27), school and extra curricular fees (as per the Child Support Agreement filed on 19 January 2012), monies owing for the SW Owners’ Corporation and Westpac bill facility under the 3 April 2012 orders, and monies due to Kliger Partners under both the final and 3 April 2012 orders, plus interest as sought by the wife, the sum of $1,753,191 remains outstanding. 

3. Apart from a small amount of income received from rental of the SW property dealt with above, and although the 3 April orders provide for her to obtain control of assets against which she could enforce, it is clear that Ms Nixon has not received payment of the outstanding sums.

4. Mr Nixon argues that as the 3 April 2012 orders have already provided a means for Ms Nixon to receive the outstanding sums, this application must fail.  I do not accept that.

5. First, the orders of 3 April 2012 were enforcement orders, not property orders, and accordingly are capable of variation. 

6. Secondly, although Mr Nixon spoke of the ease with which the business could be sold, he did not challenge Ms Nixon’s evidence as to the difficulties she has encountered in selling it.  In his evidence, he did say it could take up to a year to sell, and he emphasised some of the complexities.  In addition, his very many references to the heavy responsibilities on him as the licence-holder in the business, served to support her claim that he is the business, and that her capacity to sell the business without him has genuinely proven impossible for her and her agents.  I am left with no doubt at all as to her sincere motivation to sell it.

7. Similarly, I am satisfied that her efforts to sell the SW property have been genuine but have so far failed.  As it is a seasonal property, it may be many months before significant interest is shown.  I do note though that if she continues to gain any income in the meantime, it should be applied against the expenses of SW that the husband has otherwise been ordered to pay.   There must be a regular accounting to him of any such income. 

8. Mr Nixon was correct when he claimed in his final submissions that the fastest and easiest way for the wife to be paid would be if the business were sold.  Indeed, on his account, once the monies owing to the wife are paid, he would still have some millions of dollars that he could retain for his own purposes.  Given how he portrays his own financial circumstances, and his desire to retain the B Town property, he may be well motivated to do whatever is necessary to assist the wife to effect a sale. 

9. In that sense, Mr Nixon is the master of his own financial destiny.  Dr Ingleby for the wife made it clear in final submissions that Ms Nixon would welcome and co-operate with any such sale.  However, I am satisfied that no further delay should be built into the execution of the orders for that to occur.  It is an option open to Mr Nixon.  If he effects a prompt sale, he may thereby retain his home, the chattels and the SW property.

10. Otherwise, I note that in June 2012, the parties agreed that a sale of SW should reap about $600,000, once the various expenses, including the commercial facility, are met.  The B Town property is likely to reap no more than $400,000, it having been purchased for a little more than $1.7 million, with a $1.3 million loan from K Capital.  The chattels, as valued by Leonard Joel, would reap about $109,000.  Combined, that is a total of about $1.109 million, still well shy of the monies owing to Ms Nixon. 

11. An enforcement warrant under Part 20.3 of the Family Law Rules is sought so that the B Town property and the listed and pictured paintings and artefacts can be sold to pay the expenses of sale, the K Capital secured debt, spousal maintenance, arrears of child support, (both periodic and non-periodic, including school fees paid on behalf of Mr Nixon), with the balance towards the lump sum owing to Ms Nixon to be paid into the Aitken Partners Trust Account (in accordance with Ms Nixon’s undertaking in the Supreme Court proceedings with Kligers).

12. Ms Nixon has also applied for the enforcement warrant to apply to the contents of B Town property, and the contents of the SW property.

13. As replacement contents of SW have in fact been purchased recently by the wife – and paid for from SW rental money received by her – I do not propose making that order.  Any furniture currently in SW belongs to her and can be sold by her if she chooses.

14. As to the contents of B Town property, I know very little about it.  It is likely to include basic items such as clothing and bedding.  I do not propose including the contents of B Town property in these orders, unless they are the paintings and artefacts as identified in the wife’s application.  All other items can be removed and retained by Mr Nixon when he vacates the property.

15. Sequestration of the B Town property is also sought, pursuant to 20.43 of the Family Law Rules.

16. Although I can appreciate that sequestration is sought so that rental can be achieved pending a sale, I am concerned that if the sequestration order is made in addition to the enforcement warrant, it could lead to uncertainty as to whether or not the property will be sold as promptly as possible.  Under the rules, I must be satisfied that a sequestration order is “the most appropriate method of enforcing the obligation” (r.20.43(1)(c)).  I am not so satisfied.  It would confuse the issue for the enforcement officer.

17. The wife’s application is for her solicitor to take the role of the enforcement officer. Mr Nixon was uncomfortable with that, and submitted that it should be someone independent. I agree. It should be the Marshal of the Family Court of Australia or the Marshal’s nominee. It is then not only someone independent of the parties, but someone equipped with the capacity to do what is necessary to seize the property and effect its sale. Ms Nixon must give the written undertaking as to the payment of reasonable fees and expenses, pursuant to Rule 20.16(3) of the Family Law Rules.

18. For clarity, and to assist the execution of the enforcement warrant, I shall set a date for Mr Nixon to give vacant possession of the B Town property.  I shall hear submissions about that date. 

19. As to the paintings and artefacts, they should be delivered by Mr Nixon upon a date and to a place as directed by the enforcement officer.  Given the number and the size of the chattels, it is not practical for them to be delivered to Ms Nixon’s solicitor, or any place where she would need to pay for storage.  

20. I do not propose making the Anton Piller order as sought.  It risks cutting across the powers of the enforcement officer, who I am satisfied has, in any event, sufficient powers in relation to obtaining the chattels.  For completeness, I shall also make an order that Mr Nixon not sell, deal with or diminish those assets pending the sale. 

21. Ms Nixon seeks interest on the $1.5 million outstanding sum.  I am satisfied that is fair and appropriate given the delay in receiving the money and the circumstances surrounding Mr Nixon’s failure to pay.  Similarly, interest should be paid on the outstanding monies to Kliger Partners by way of two different orders whereby Mr Nixon was to meet the wife’s costs. 

22. I note that an order was sought against the husbands mother (C) as well as the husband, restraining them from registering a mortgage or any other encumbrance to secure her purported loan agreement of 13 August 2012.  In her correspondence to the Court, advising that she would not participate, C indicated that she agreed to that order.  It shall be made.  I shall also make an order to ensure that, for Mr Nixon’s part, he does not encumber the B Town property in any manner whatsoever and that he is restrained from dealing with it in any way. 

23. Ms Nixon has sought indemnity costs in relation to this application. 

24. The question of costs is a discretionary one, taking into account the matters set out in s 117(2A) of the Family Law Act.  It is also a discretionary matter as to whether the facts and circumstances of a particular case warrant the making of a costs order other than on a party-party basis (see the Full Court decision in Yunghanns & Yunghanns (2000) FLC 93-029).

25. The circumstances for indemnity costs are not spelt out exhaustively in any authority.  In Colgate-Palmolive Company and Anor v Cussons Pty Ltd (1993) 46 FCR 225, the Federal Court held that circumstances for indemnity costs include wilful disregard of known facts, the making of allegations which ought never have been made, or the undue prolongation of a case by groundless contentions.

26. Although I have referred to the broad matters of principle, I am conscious that I did not specifically hear submissions on the matter and shall permit that before I make a decision.

27. I note that although Ms Nixon’s amended application did not deal with the outstanding SW Owner’s Corporation fees or Westpac Bill Facility, her affidavit included them as outstanding sums, as did Dr Ingleby in his submissions.  I will allow a further submission, to clarify what appears to be an anomaly.

28. Finally, I shall give the parties liberty to apply to the Court upon short notice.  That is important, not just in case any procedural issues arise from these orders, but also because it may be necessary for example to effect the sale of the business or, for example to transfer SW back into the husband’s control if the outstanding monies are otherwise paid.

THE ORDERS

1. The orders that I propose, subject to submissions as to a date for the husband to vacate the B Town property, the outstanding SW payments, indemnity costs and generally as to the form of the orders, are as follows:

   1.That the husband pay to the wife the sum of:

   (a)   $1,500,000 being the amount due to the wife on 27 February 2012 pursuant to paragraph 3 of the 13 January 2012 orders;

   (b) Pursuant to s 117B of the Family Law Act 1975 and Rule 17.03 of the Family Law Rules 2004:

   (i)Interest from 27 February 2012 to 30 June 2012 in the sum of $52,654.11 (the prescribed rate of interest being 6% above the 7 December 2011 cash rate of 4.25% pursuant to rule 17.03(a));

   (ii)Interest from 1 July to 4 September 2012 in the sum of $25,767.12 (the prescribed rate of interest being 6% above the 5 June 2012 cash rate of 3.5% pursuant to rule 17.03(b)).

   2.That the husband pay to Kliger Partners:

   (a)   The sum of $7,500 pursuant to Order 1(b)(iii) of the 13 January 2012 orders ordered to be paid to Kliger Partners;

   (b) Pursuant to s 117B of the Family Law Act 1975 and Rule 17.03 of the Family Law Rules 2004:

   (i)Interest from 18 January 2012 to 30 June 2012 in the sum of $347.52 (the prescribed rate of interest being 6% above the 7 December 2011 cash rate of 4.25% pursuant to rule 17.03(a));

   (ii)Interest from 1 July to 4 September 2012 in the sum of $128.84 (the prescribed rate of interest being 6% above the 5 June 2012 cash rate of 3.5% pursuant to rule 17.03(b)).

   3.That the husband pay to the wife pursuant to paragraph 7(a) of the 13 January 2012 orders 22 weeks of spousal maintenance at $1,700 per week from 3 April 2012 to 3 September 2012 being $37,400.

   4.That the husband pay to the wife, pursuant to paragraph 2 of the Binding Child Support Agreement executed 13 January 2012 arrears of periodic child support to 3 September 2012 in the sum of $22,118.90.

   5.That the husband reimburse and pay to the wife, pursuant to paragraph 4(a) of the Binding Child Support agreement executed 13 January 2012:

   (a)   The sum of $12,573.14 being F School fees paid by the wife on 24 April 2012;

   (b)   The sum of $15,000 being  F School fees paid by Mr and Mrs M on behalf of the wife on 19 July 2012.

   6.That the husband reimburse and pay to the wife, pursuant to paragraph 4(c) of the Binding Child Support Agreement executed 13 January 2012:

   (a)   $1,040 being S’s viola lessons:

   (b)   Fees owed to the Sports Academy of $1,645.00.

   7.That the husband pay to Kliger Partners, pursuant to Order 10 of the 3 April 2012 Orders:

   (a)   The sum of $15,200.00;

   (b) Pursuant to s 117B of the Family Law Act1975 and Rule 17.03 of the Family Law Rules 2004:

   (i)Interest from 10 April 2012 to 30 June 2012 in the sum of $350.02 (the prescribed rate of interest being 6% above the 7 December 2011 cash rate of 4.25% pursuant to rule 17.03(a);

   (ii)Interest from 1 July to 4 September 2012 in the sum of $261.11, (the prescribed rate of interest being 6% above the 5 June 2012 cash rate of 3.5% pursuant to rule 17.03(b)).

   8.That C and the husband shall be and are hereby restrained by themselves, their servants or agents, from registering on the property known as B Street, B Town and being the property described in Certificate of Title Volume … Folio … (“[B Street]property”) any mortgage or other encumbrance relating to the loan agreement purportedly executed by them on 13 August 2012 or any other loan agreement or document.

   9.That the husband shall be and is hereby restrained by himself, his servants or agents, from encumbering, selling, borrowing against or in any way dealing with or diminishing his interest in the B Street property or the paintings and artefacts identified in Annexure “A” to these orders (“the chattels”).

   10.That an Enforcement Warrant shall be issued pursuant to Part 20.3 of the Family Law Rules 2004, directing  the Marshal of the Family Court of Australia or his nominee, as the enforcement officer, to do all acts reasonably required to seize and sell the B Town property and the chattels and the proceeds of sale to be applied to:

   (a)   All the fees and expenses associated with the enforcement;

   (b)   The costs of the sale;

   (c)   Discharge of the secured debt to K Capital;

   (d)   Pay the balance to the wife in satisfaction of monies owed pursuant to paragraphs 3, 4, 5 and 6 of these orders; and

   (e)   Pay any remaining balance to Aitken Partners Solicitors Trust for the benefit of the wife in satisfaction of monies owed pursuant to paragraph 1, 2 and 7 of these orders.

   11.That for the purposes of paragraph 10 of these orders, the husband shall vacate the B Street property and deliver all keys and security passwords to Vadarlis and Associates and shall thereafter be restrained from entering the said property by himself, his servants or agents.

   12.That any rental or other monies received by the wife from the SW property referred to in paragraph 4 of the consent orders made by this Court on 3 April 2012 shall be applied by the wife to either Owners’ Corporation fees or the Westpac Commercial Facility Bill sums outstanding and she shall account in writing to the husband for any monies so received and expended by her within seven days of receipt.

   13.That the parties or the enforcement officer shall have liberty to apply to the Court on short written notice.

   14.That all applications shall otherwise be dismissed.

I certify that the preceding two hundred and twenty (220) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dessau delivered on 19 October 2012.

Associate:

Date:  19 October 2012