Oldham and Krantz

[2019] FamCA 990

FAMILY COURT OF AUSTRALIA

OLDHAM & KRANTZ [2019] FamCA 990

FAMILY LAW – PROPERTY – consideration of which party should be responsible for day-to-day operations and financial and management of a business – application for partial property settlement – Sole use & occupation of the former family home.

Family Law Act 1975 (Cth) ss.79, 90SS, 114

Strahan & Strahan (Interim Property Orders) [2009] FamCAFC 166

APPLICANT: Mr Oldham

RESPONDENT: Ms Krantz

FILE NUMBER: MLC 8578 of 2019

DATE DELIVERED: 20 December 2019

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Williams J

HEARING DATE: 16 December 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Salamanca

SOLICITOR FOR THE APPLICANT: Berger Kordos Lawyers

COUNSEL FOR THE RESPONDENT: Ms Harris

SOLICITOR FOR THE RESPONDENT: Mills Oakley Lawyers

Orders

1. The applicant is granted leave to rely upon the following affidavits filed in the Federal Circuit Court of Australia in proceeding MLC 8578 of 2019:

   (a)       affidavits of the applicant filed 1 August 2019, 23 September 2019 and 16 October 2019;

   (b)       affidavit of Ms B sworn 25 September 2019.

2. The respondent is granted leave to rely upon her affidavits sworn 17 September 2019 and 16 October 2019 filed in the Federal Circuit Court of Australia in proceeding MLC 8578 of 2019.

Operation of the business

1. The respondent be solely responsible for the day-to-day operations and financial and administrative management of the business, J Company.

2. The applicant forthwith do all acts and things and sign all documents required to give effect to order 3 hereof, including but not limited to providing to the respondent all passwords for access to the business bank accounts and management and financial software of the business.

3. The applicant be and is hereby restrained from drawing upon the Commonwealth Bank of Australia business transaction account of the business ending #…27 (“the business account”) and the K Bank business offset account ending #…82 (“the offset account”).

4. The respondent be and is hereby restrained from drawing on the K Bank offset account, except for deposits into the business account, in the event the viability of the business requires additional funds.

5. The respondent provide to the applicant 7 days prior notice, in the event she seeks to transfer funds from the K Bank offset account into the business account.

6. The respondent be at liberty to pay herself a weekly salary of $1200 from the income of the business.

7. The respondent forthwith deposit all-cash income received from the business into the business account, save that she be permitted to pay employee wages not exceeding $800 per week.

8. The respondent provide to the applicant via email, the following financial information  relating to the business:

   (a)       On a weekly basis, copies of all employee time sheets, particulars of all wage payments and  point of sale transaction records;

   (b)       On a monthly basis, reconciliations of all income received and payments made from the business account ; 

   (c)       On a quarterly basis, BAS statements.

9. The respondent forthwith provide to the applicant a list of three proposed accountants/bookkeepers , together with an estimate of their scale of fees and charges (if available), and within 14 days of receipt of such list, the respondent nominate an accountant/bookkeeper from the list.

10. In the event the applicant fails to nominate an accountant/bookkeeper, pursuant to order 11 hereof, the respondent be at liberty to nominate and appoint an accountant/bookkeeper.

Partial property distribution

1. The parties forthwith do all necessary acts and sign all documents required to pay to each of them $40,000 from the funds in the joint K Bank offset account ending #...71, a total of $80,000, by way of partial property settlement.

Sole Use and Occupation

1. The respondent be at liberty to continue to reside in and occupy the property situated at C Street, Suburb D, to the exclusion of the applicant.

Procedural Orders

1. The respondent’s application for costs of and incidental to the preparation, filing and service of the 14 subpoenas for the production of documents in these proceedings, is adjourned to trial.

2. Subject to paragraph 15 hereof, all extant interim applications be dismissed.

3. All extant applications for final orders be placed in the list of cases awaiting allocation of a trial, with priority from the date of these orders.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 8578 of 2019

Mr Oldham

Applicant

And

Ms Krantz

Respondent

REASONS FOR JUDGMENT

Introduction

1. On 9 December 2019, the applicant filed an Amended Initiating Application which sought interim financial orders. On the same day the respondent filed a Further Amended Response to Initiating Application.  The application was listed for hearing in the Judicial Duty List on 10 December 2019. The application was heard on 10 and 16 December 2019.

Interim Issues

1. The following interim issues are in dispute:

   a)whether both parties should jointly operate the business, J Company, with the applicant to manage and administer the operations of the business and the respondent to conduct the day-to-day operations of the business, save for administrative and management duties;

   b)whether the respondent should solely be responsible to manage, administer and conduct the day-to-day operations of the business;

   c)whether each party should be paid $1000 per week by way of salary from the income of the business or whether the respondent only should be entitled to an income of $1200 by way of wages from the business;

   d)Should there be a distribution of the funds in the parties’ offset account, by way of partial property settlement;

   e)Sole use and occupation of the Suburb D property.

Synopsis

1. I have determined as follows:

   a)The respondent will be responsible for both the day to day running and financial management of the business;

   b)The respondent will receive a wage from the business of $1,200 per week;

   c)The applicant will not receive any payments from the business;

   d)Both parties will receive $40,000 from the K Bank offset account as a partial property settlement;

   e)The respondent will be entitled to sole use and occupation of the Suburb D property. 

Background

1. The applicant is aged 56 years and the respondent is aged 52 years. The parties commenced cohabitation in late 2011 in a property in Suburb L owned by the respondent.  They moved into a property in Suburb D owned by the applicant in June 2013.

2. On 24 May 2019, the parties separated under the one roof.  In August 2019 the applicant changed the locks on the Suburb D property to exclude the respondent.

3. On 29 August 2019, the respondent obtained an interim intervention order against the applicant, which enabled her to resume occupation of the Suburb D property.

4. At the commencement of cohabitation both parties had an interest in property.  The respondent owned a property at Suburb L which was sold in August 2015, and which realised approximately $1 million, all of which was applied to the mortgage encumbering the applicant’s property in Suburb D. The applicant owned the Suburb D property which was subject to a mortgage.

5. There were various financial dealings and transactions between the parties during cohabitation, including undertaking a property development in Country H, purchases of various motor vehicles and lump sum deposits into the Suburb D mortgage made by the respondent.  The allegations and counter allegations of the parties relating to their various financial dealings will be a matter to be determined at trial.

6. In March 2019, the parties purchased a business in Suburb D, trading as J Company. They purchased the business via a company, E Proprietary Limited.  Both parties are directors of the company, however, the applicant is the only shareholder.  The respondent asserts that she was unaware that she was not a shareholder of the company until after the purchase of the business.

7. The purchase price of the business, $415,000, together with legal costs, was funded by a joint business loan from K Bank, which is secured against the Suburb D property.  The property is additionally encumbered by a housing loan from K Bank of approximately $955,000 - $960,000. The income from the business currently services both loan commitments.

8. The respondent asserts that the parties agreed that she would have the day-to-day operation of the business and that the applicant would pursue other employment.  She asserts that until separation on 24 May 2019, the applicant rarely attended the business premises, however, he had control of cash takings until July 2019.

9. In May 2019, the applicant attended the business and advised staff that he would be taking over the business and that the respondent was no longer welcome at the business and would not be responsible for cash takings of the business.

10. Thereafter, the applicant was admitted to the hospital on six occasions until June 2019.

11. On 30 July 2019, the respondent transferred $200,000 from the joint K Bank offset account into her own account to prevent dissipation by the applicant.  Subsequent to orders made on 5 August 2019, each party received $20,000 from the offset account for payment of legal fees and the balance of $160,000 was returned to the offset account.

12. The applicant alleges that the respondent has not properly accounted for the cash income of the business and the respondent alleges that she has applied the cash towards the staff wages and has lived off the balance of weekly cash receipts from the business, in the absence of her receiving a wage from the business.

13. Both parties sought an order for sole use and occupation of the Suburb D property, however, on 10 September 2019, pursuant to orders made at an interim intervention order hearing, the applicant provided the respondent with access to the Suburb D property.

14. On 12 September 2019, the applicant transferred to himself a Motor Vehicle 1, which was registered in the respondent’s name.  The respondent alleges that the applicant signed the vehicle transfer without her knowledge and consent, however, this is disputed by the applicant.

15. In late September 2019 the applicant purchased a further Motor Vehicle 2 for $148,000 which was apparently financed by the proceeds of sale of the previous Motor Vehicle 1 and a lease/hire purchase loan from Westpac of $98,000.

Applications and Documents relied upon by the parties

The Applicant

1. The applicant sought orders in accordance with a minute of proposed orders which was handed up by his counsel, which may be summarised as follows:

   a)leave to rely on four affidavits which had been filed in the Federal Circuit Court proceedings;

   b)the applicant to continue to manage and administer the operations of the business and the respondent to continue conduct the day-to-day operations of the business, save for administrative and management duties;

   c)the respondent bank all income, including cash from the operation of the business, into the business’s CBA business account;

   d)the applicant and the respondent be paid the sum of $1000 per week salary from the business;

   e)the applicant and respondent be paid the sum of $40,000 from the K Bank offset account by way of partial property settlement;

   f)the respondent be restrained from denigrating and/or harassing the applicant.

2. The applicant relied on the following documents:

   a)Further Amended Initiating Application, filed 9 December 2019;

   b)two affidavits in support filed 9 December 2019 and sworn 9 December 2019;

   c)Financial Statement filed 9 December 2019;

   d)affidavits previously filed by the applicant, referred to in paragraph 19 hereof.

The Respondent

1. In her second Further Amended Response to an Initiating Application filed 9 December 2019, the respondent opposed the orders sought by the applicant. The respondent sought orders, which may be summarised  as follows:

   a)paragraphs 1 to 7 of the applicant’s Initiating Application be dismissed;

   b)the respondent continue to have sole use and occupation of the Suburb D property, with the applicant to pay and be responsible for all mortgage instalments and apportionable outgoings;

   c)the respondent be responsible for the day-to-day operations of the business, including financial administration;

   d)the applicant be restrained from attending the business;

   e)the applicant be restrained from drawing on the business account or the K Bank offset account;

   f)the applicant be responsible for payment of the K Bank home loan account secured against the Suburb D property and the loan encumbering the Motor Vehicle 1, which the respondent drives;

   g)from the funds in the K Bank offset account, the sum of $80,000 be paid to the respondent;

   h)a dollar for dollar order in relation to the applicant’s payment of the respondent’s legal costs;

   i)the applicant pay to the respondent interim spousal maintenance in the sum of $1200 per week, or alternatively she be paid a weekly salary of $1200 per week as manager of the business;

   j)the applicant pay the wife’s costs of and incidental to the preparation, filing and service of 14 subpoenas for the production of documents, on an indemnity basis;

   k)the respondent be permitted to rely on her affidavits filed in the Federal Circuit Court of Australia sworn 17 September 2019 and 16 October 2019.

2. The Respondent relied on the following documents:

   a)Further Amended Response to an Amended Application in a Case filed 9 December 2019;

   b)her affidavit filed 9 December 2019;

   c)her affidavits filed on 17 September and 16 October 2019.

3. I will address each of the category of orders sought by the parties, which are:

   a)operation of the business including a payment to each;

   b)partial property settlement;

   c)sole use and occupation of the Suburb D property.

4. As there were no submissions made pertaining to:

   a)an order restraining the respondent from denigrating or harassing the applicant;

   b)an order restraining the applicant from attending the business premises or otherwise denigrating the respondent;

   c)an order seeking the applicant be responsible for payment of the home loan and lease encumbering the vehicle driven by the respondent;

   d)an order for the applicant to pay the respondents costs.

   I do not intend to address these aspects of the application.

5. Neither party objected to the other relying on affidavits which had been filed in the Federal Circuit Court proceeding. I will accordingly grant leave to both parties to do so.

6. Both parties agreed that the respondent’s application for the applicant to pay the costs incurred by her arising from the issue of 14 subpoenas, would be determined at trial.

Applications pertaining to the business, J Company

1. When invited by me, Counsel for the applicant submitted that the power to make orders sought, in relation to the business, arose from s.90SS(1), s.90SS(5) of the Act. Additionally, he agreed that such an order could fall within the ambit of s.114 (2A)(c) of the Act.  Counsel for the respondent did not make any contrary submissions about the source of Court’s powers to make orders as sought. I am satisfied the Court has the requisite power to make the orders sought.

Which party should be responsible for the financial management and administration of the business?

1. Both parties sought orders that the respondent continue to manage the day-to-day operations of the business.  Where they differ, is that the applicant seeks an order that he continue to be responsible for the administrative and management duties of the business, whereas the respondent seeks an order that she be responsible for the administration and management of the business.

2. It was agreed by the parties that when the business was purchased in March 2019, the respective responsibilities were allocated between the parties in accordance with the proposal of the applicant.

3. The applicant seeks the continuation of the division of responsibilities for the running of the business for the following reasons:

   a)that was the original agreement between the parties and this was again agreed at a meeting between the parties and their accountant, Mr F on 13 October 2019;

   b)subsequent to separation he has continued to be responsible for the financial management of the business, and is best placed to continue to do so;

   c)the respondent’s failure and or refusal to bank the cash takings of the business should preclude her from assuming financial management of the business;

   d)the respondent lacks the necessary expertise to run the business;

   e)it would not be just to enable the respondent to effectively have the use and or control of all three substantial assets of the parties, namely the Suburb D property, the business, and the property located overseas which is registered in the name of the wife’s sister.

4. The respondent seeks to assume responsibility for both the day-to-day running in the financial management of the business for the following reasons:

   a)during the relationship she was subjected to financial control and abuse by the applicant and it is not feasible for her to continue to be dominated by him and subject to his control;

   b)she is unable to work cooperatively with the applicant to continue with the pre-existing roles and responsibilities;

   c)there was no agreement at a meeting with the parties accountant on 13 October 2019 that responsibility for the business would be divided, as asserted by the applicant;

   d)the integrity and value of the business may only be maintained if she is in control and responsible for all operations of the business;

   e)the applicant’s financial integrity cannot be trusted due to his lack of disclosure and transparency about:

   i)his employment terms and conditions;

   ii)the sale of a Motor Vehicle 1 registered in the respondent’s name, in breach of injunctive orders and without her permission or consent; and

   iii)the purchase of a new Motor Vehicle 2 in late September 2019, for $148,000.

5. There is no dispute that prior to separation the applicant was responsible for the financial and administrative management of the business and that respondent was responsible for the day-to-day management of the business.

6. Whether that arrangement was imposed on the respondent by the applicant, or whether she freely agreed to a division of responsibilities, is a matter for trial.  On an interim basis, I am unable to make any definitive finding in that regard.

7. What is not agreed is whether with the arrangement which was in place prior to separation should now continue given the increase in acrimony between the parties. Both acknowledge that it is impractical and impossible for them to reside in the Suburb D property under the one roof and that the conflict has now escalated significantly.

8. The applicant alleges that the respondent’s failure to bank cash into the company bank is an integral reason why the financial management of the business should rest with him.

1. Significantly, the applicant does not seem to allege that the respondent has failed to account for how much cash has been received by the business, rather that it has not been banked by the respondent.  Paragraphs 14, 15 and Annexure 2 and of his affidavit filed 16 October 2019 refers to total cash payments being processed through the business between 1 March 2019 and 7 October 2019 as $108,478.65.  In that affidavit he does not criticise the failure to record cash receipts, rather the failure to bank them into the account. At paragraph 16, he expresses his concern about the tax consequences which may arise from failure to properly account for cash takings.  There was no explanation provided why there would be adverse tax implications if the receipt of the cash was recorded in the business accounts, as apparently it has been.

2. The respondent’s response to the criticism referred to in the previous paragraph, is that she applied the cash takings to pay employees their wages and to pay herself an amount to enable her to live.  It is axiomatic that even if the cash were banked, employees would then be paid their wages from the bank account.  This criticism may be readily addressed by making an order requiring the respondent to bank all cash, save a limited amount to pay the existing employees whose wages are paid in cash.

3. Counsel for the respondent submitted that during the time the respondent was overseas and the applicant had control of the cash of the business, he did not deposit the cash into a bank account.  This submission was not denied by the applicant.

4. The applicant did not adduce any evidence about what is actually required for the financial management and administration of the business, nor make any complaints that the respondent would be unable to financially manage and administer the business.  The gravemente of his submissions was that he had always assumed this role and he therefore should continue to do so.  There was also no evidence about any formal qualifications or expertise of the applicant in this regard.

5. Counsel for the respondent raised a number of criticisms of the applicant’s financial management of the business to date.  These may be summarised as follows:

   i)he had used the one credit card for personal and business expenditure and had failed to account to the respondent for the veracity of expenditure which he claimed related to the business;

   ii)he had failed to pay outstanding GST for the September 2019 quarter, despite the parties having agreed to deposit $20,000 into the business account from the offset account to enable the payment to be made.

6. The respondent was also critical of the applicant’s sale of the Motor Vehicle 1, which was registered in her name, without her consent.  This was cited as an example of a lack of transparency of the applicant in his financial dealings and was indicative of his capacity to manipulate and control the respondent.

7. The applicant submitted that some time prior to his sale of the Motor Vehicle 1, the respondent had signed a blank transfer which he used to sell the motor vehicle.  That will no doubt be an issue for trial.

8. It is clear that the sale of the motor vehicle occurred in breach of an order made by consent on 5 August 2019, and that the respondent was not advised prior to the sale of the vehicle which occurred on 12 September 2019.  The respondent was advised when the parties were at court on 25 September 2019

9. The respondent issued a subpoena to establish the sequence of events subsequent to the sale of the motor vehicle.  The applicant did not include as an asset in his Financial Statement filed 9 December 2019, the new Motor Vehicle I which he purchased in late September 2019, although he did include a loan to Westpac of $98,000.  The vehicle was not referred to in his affidavit filed on the same day.

10. The documents comprising exhibit R1 are documents produced pursuant to a subpoena to New South Wales roads and Maritime Services, which was issued by the respondent.  The documents establish that on 20 September 2019 the applicant purchased a new Motor Vehicle 2 for $148,000 from a motor vehicle dealer in New South Wales.  During the course of the hearing it transpired that the applicant had applied $50,000 towards the purchase realised from the sale of the Motor Vehicle 1 registered in the applicant’s name. He had also obtained a loan from Westpac Banking Corporation of $96,450, by way of a lease secured against the vehicle, to fund the balance of the purchase price.

11. Exhibit R2 is a document produced pursuant to a call by the respondent’s Counsel during the hearing.  The document is a copy of a Goods Loan Agreement between the applicant and Westpac bank, together with an Affordability Declaration.  The vehicle is ostensibly to be used for commercial purposes and in order to assist the purchase the applicant provided an ABN number, which I was advised, is not now actually used by him.

12. The effect of the respondent’s submissions in this regard, were that the applicant could not be trusted to be frank and transparent about his financial affairs generally and the management of the business.  That submission has significant merit.

13. As this is an interim hearing, neither party was cross-examined and I am unable to make any findings about the alleged financial abuse, to which the respondent asserts she was subjected.  That will be a matter for findings at trial.

14. However, it is abundantly clear that the parties are unable to cooperatively each manage a different aspect of the business and in my view the business is likely to be more stable if one of the parties has sole responsibility.  It is imperative for both parties that the business is able to prosper to service both loans secured against the Suburb D property, and thus preserve the equity in the property and the value of the business.

15. The applicant’s own evidence about:

    i)the disdain with which he is regarded by the business staff;

    ii)the income he is able to earn from his current employment;

    iii)his lack of experience in the day-to-day management of the business;

    iv)his health problems, including adjustment disorder and ongoing back pain all mitigate against him being solely responsible for both aspects of the business management.

16. I am also concerned about the allegations, which I acknowledge have yet to be tested, of the applicant’s conduct and lack of transparency in his financial dealings.

17. I propose to make orders providing for the respondent to be responsible for both the day-to-day operations of the business, together with the financial and management responsibilities.  The relevant orders will include:

    a)the respondent being required to deposit all cash into the business’s business account, except the current wages which she pays in cash, which are estimated to be $800 per week;

    b)the applicant immediately provide to the respondent all passwords to enable her to access the business accounting and management software and bank accounts;

    c)the respondent appoint a new accountant/bookkeeper;

    d)the respondent providing financial information to the applicant on a regular basis.

18. During submissions Counsel for the respondent submitted that the new accountant/bookkeeper should be appointed by the respondent providing three names to the applicant, who can then choose from the list.  I agree with that proposal.

19. The respondent’s Counsel submitted that the respondent should provide to the applicant on a weekly basis the timesheets and calculation of wages, together with more detailed financial information of the business on a monthly basis.  I agree with that proposal and will make orders for the regular provision of financial information to the applicant, which will enable him to monitor the financial position of the business.

20. I will also make orders restraining:

    i)the applicant from accessing both the business transaction account and the K Bank offset account; and

    ii)the applicant accessing the K Bank offset account, except for  deposits  into the business transaction account, in the event the viability of the business requires additional funds.

21. The proposed order referred to in paragraph 55(ii), will require the respondent to provide the applicant with 7 days prior notice, in the event she seeks to transfer funds. Both orders are required to preserve the funds in the offset account, which will be of obvious benefit to both parties. I consider such restraints necessary in the context of the mutual allegations and litigious history pertaining to withdrawals from the offset account by both parties. Such orders will ensure financial transparency.  

What drawings, if any, should each party be permitted to draw from the business

1. Both parties seek an order that the wife be paid an amount from the business to compensate her for the day-to-day management of the business.  The applicant seeks that she be paid $1000 per week and the respondent seeks that she be paid $1200 per week.

2. There was no evidence adduced by the applicant as to why $1000 per week would be suitable remuneration for the respondent.

3. The respondent’s submissions were that the former manager of the business was paid a wage of $1200 per week, and now that the respondent has assumed those duties, and additionally seeks to assume the financial management of the business, a wage of $1200 per week should be paid to her.

4. The applicant seeks that he also be paid a wage of $1000 per week for the financial administration of the business.  There were no submissions about an appropriate quantum of wage/drawing to be paid to him in the event I determined that it was the respondent who should be responsible for the financial management of the business.

5. The respondent submitted that she worked in the business 7 days a week from 6.00 am to 5.00pm. This was not challenged by the applicant and I accept that evidence. The applicant's counsel submitted that the time spent by the respondent attending to the financial management of the business was between 10 and 11 hours per week. That was not disputed by the respondent and I accept that submission.

6. The applicant sought to present his case in a manner analogous to a spousal maintenance application, although it clearly was not. I was directed to the applicant’s Financial Statement filed on 9 December 2019 and in particular, to Part G, as to his necessary expenditure.

7. A closer examination of the financial statement established that the Motor Vehicle 2 which had been purchased in September 2019 for $148,000 was not included as an asset although the corresponding liability to Westpac of $98,000 was referred to as a hire purchase/lease at paragraph 52.  This was explained as an unintended omission.  There was also no reference to the lease obligations encumbering the Motor Vehicle 2 registered in the applicant’s name.

8. At paragraph 9 of the financial statement, the applicant deposed to a weekly income of $1371.  At paragraph 11 he deposed to receiving $750 per week from the business.

9. Counsel for the applicant submitted that the applicant’s current employment with G Pty Ltd required him to work 25 hours per week, for which he received $1371.

10. The respondent issued a subpoena to the applicant’s employer, G Pty Ltd, seeking production of documents including an employment agreement between the applicant and his employer.

11. In response to the subpoena, an Employment Agreement was produced. That was tendered as exhibit R3. That document dated 12 July 2019 provides as follows:

    a)commencement date 17 July 2019;

    b)hours of work between 15 to 30 hours a week from Monday to Friday, with provision for hours to be extended after 31 October 2019,

    c)remuneration of $150,000 plus superannuation per annum, which is pro rata according to the hours worked.

12. There were no submissions or explanations why the applicant was paid $1371 for 25 hours work, which is not in accordance with the terms of the remuneration referred to in the employment agreement produced by his employer.

13. The evidence of the husband’s income can only be regarded as unreliable and deficient. I have no evidence upon which I can confidently conclude his actual salary, in the context of what is submitted, is insufficient to adequately support himself.

14. Despite submissions that the applicant is currently capable of working 25 hours per week for his employer and between 10 to 11 hours per week attending to the financial administration of the business, a total of 35 to 36 hours per week, Counsel for the applicant sought to rely on a report from the applicant’s treating psychologist and his pain specialist, as evidence of the applicant’s capacity for employment.

15. It was evident from the report of the treating psychologist, who diagnosed the applicant as suffering from an adjustment disorder, that the report was obtained for the purposes of an application for sole use and occupancy of the Suburb D property. The author of the report did not purport to offer any opinion about the applicant’s current capacity for work, or whether the diagnosed adjustment disorder had any impact on his capacity to work.  The report from the pain specialist was obviously obtained in the context of the applicant seeking that the TAC meet the costs of further treatment for pain management.  The author of that report did not purport to offer any opinion about his capacity for employment. I do not consider either report to be particularly relevant to the interim dispute.

16. I am satisfied, primarily on the basis of the applicant’s own evidence that he works 35 to 36 hours per week that he is able to continue that level of employment, albeit he works 10 to 11 at times convenient to him.

17. Most surprisingly, there was no evidence of the current financial position of the business.

18. When I queried the lack of evidence about the business’s financial position, Counsel for the applicant referred to a document prepared by the former business accountant, Mr F.  That document is exhibit A1, and comprises an email from Mr F dated 23 October 2019, which encloses a document which purports to reconcile business expenses which were paid on the applicant’s personal credit card, with business expenses paid from the business bank account.  The document does not provide any assistance to ascertain the current financial position of the business.

19. Both parties have expressed their concern about the viability of the business and the necessity to draw on funds in the offset account to pay recurrent expenditure such as staff superannuation, PAYG tax and GST.

20. Paragraph 18 of the applicant’s affidavit sworn 5 December 2019 refers to the necessity to deposit $20,000 from the K Bank offset account into the business bank account, to enable payment of staff wages.

21. The respondent expresses similar concerns about the business liquidity and indeed during the course of her Counsel submissions about a partial property settlement, it was stressed that funds were required to remain in the offset account to:

    a)defray and reduce interest costs which the business would otherwise be required to meet; and

    b)as a backup fund to enable payment of financial obligations of the business, if there were insufficient funds to pay creditors.

22. Both Counsel agreed, that despite $20,000 having been deposited into the business account in early December 2019, GST and PAYG tax was still outstanding for the quarter ending September 2019.

23. Counsel for the applicant submitted that the liquidity problems experienced by the business should be alleviated by the respondent banking all cash receipts into the business bank account. However, the respondent’s response to that proposition was that the cash had been applied to pay staff and a wage to the respondent, and that if this had not been the case, payments would had to have been made from the business bank account. There was no suggestion that either party had failed to declare the receipt of the cash in the books of the business.

24. There was no reconciliation provided by the applicant to establish that the wages which the respondent asserted had been paid by cash were improper or exceeded what the actual wage liability would have been. I assume the financial management of the business has recorded all the payments of wages and proper arrangements made for the payment of tax by staff.  Neither was there any reconciliation of the takings of the business with the expenses to establish the net profit or loss position of the business.  As the applicant has been the financial manager of the business, it is difficult to understand why no such evidence was adduced, which would have assisted me to decide whether making an order for payment to him was viable.

25. As previously referred to in these reasons I have determined:

    a)the respondent should be responsible for the day-to-day operations of the business together with the financial management, subject to her providing to the respondent all weekly employee timesheets and expenditure and her banking all cash takings, other than those currently paid to employees;

    b)The respondent should be paid a wage for running the business and assuming the financial management obligations, commensurate with the wage previously paid to the manager.

26. Having so determined, I am unable to make any informed decision as to whether the business can reasonably make any payment to the applicant, without imposing serious liquidity problems on the business which could potentially undermine the solvency of the business. I therefore do not propose to make any order for payment of any sum to the applicant.

Application for a partial property settlement

1. The applicant relies upon the statements in Strahan & Strahan (Interim Property Orders) [2009] FamCAFC 166 to identify the court’s power to order interim funding.

2. The Full Court in Strahan (supra) stated at [132] and [137]:

   [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.

   [137]  Once a court proceeds to exercise the power in s 79 of the Act, being in the substantive phase, a court is required to undertake consideration of the matters in s 79(4) including by reference to s 79(4)(e) the matters in s 75(2) so far as they are relevant. However consideration of such matters may be brief and if it is established that "it seems likely to the court that … the applicant … will be likely receive by way of property settlement a sum sufficient to cover the advance, that would seem to be sufficient to enable the order sought to be made” …

3. In their respective affidavits, both parties canvassed in considerable detail the relevant s.79(4), including s.79(4)(e) factors, which I do not propose to repeat in these reasons.

4. Counsel for the respondent was invited to make submissions about the applicant’s application for a partial property settlement. Other than the respondent submitted it was necessary for some balance to be maintained in the offset account, in order to support the business if liquidity problems were experienced, she did not make any substantive submissions in response.

5. The applicant’s proposed Minute of Orders, at paragraph 5, seeks that the applicant and the respondent each be paid the sum of $40,000 by way of partial property settlement.

6. The Further Amended Response to Initiating Application filed on 28 November 2019 by the respondent, seeks that the K Bank offset account of approximately $160,000 be divided equally between the parties by way of interim property settlement.

1. The Further Amended Response to Initiating Application filed on 9 December 2019 by the Respondent seeks the respondent receive $80,000 from the K Bank offset account of a proximally $140,000.

2. The two responses filed by the respondent demonstrate that the respondent does not oppose the concept of a partial property settlement, except that no distribution of funds should be made to the applicant.

3. After considering the relevant s.79 (4) factors, it is likely that the applicant will receive a property settlement sufficient to cover the advance of $40,000. I propose to make orders providing for a partial property settlement of $40,000 to each of the applicant and the respondent which will result in the offset account having a balance of $60,000 in the event the business requires a further injection of capital.

Sole use and occupancy of the Suburb D property

1. Both parties initially sought an order for sole use and occupation of the Suburb D property.

2. At paragraph 14 of her affidavit sworn 9 December 2019 the respondent deposes:

   a)she was not aware the applicant was no longer seeking an order for interim sole use and occupation of the Suburb D property, until her solicitors received an email from the applicant solicitors on 6 December 2019;

   b)the applicant entered into a lease of a property on 14 October 2019 and moved into the property on 19 October 2019. 

3. The applicant’s Minute of Proposed Order did not seek any order in relation to the sole use and occupation of the Suburb D property.

4. Counsel for the respondent, in her submissions, sought that the court make an order for sole use and occupancy, of the Suburb D property in favour of the respondent, to formalise the parties current living arrangements. Counsel for the applicant did not oppose any such order being made, and in order to give certainty to the parties, reduce conflict and avoid further litigation, I propose to make an order that the respondent be entitled to sole use and occupation of the Suburb D property.

5. As I have previously referred to in these reasons, I do not propose to make any orders providing for either party to be responsible for payment of the mortgage and business loan secured against the Suburb D property. During the course of submissions there was consensus that the business was paying the mortgage and loan payments and there were no submissions from either party seeking a change to this arrangement.

I certify that the preceding ninety six (96) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Williams delivered on 20 December 2019.

Date:  20 December 2019