Pelton and Banbury and Anor
[2019] FamCA 712
•7th October 2019
FAMILY COURT OF AUSTRALIA
| PELTON & BANBURY AND ANOR | [2019] FamCA 712 |
| FAMILY LAW – INTERIM PROPERTY – Sale of Business – where the parties are ordered to appoint a business broker to place the business on the market for sale – where the most significant area of dispute between the parties is in relation to the business owned and operated throughout the marriage – where there have been ongoing and complicated disputes with respect to the management of the business post-separation – where the business has been valued by a Single Expert – where the wife seeks orders that the business and other assets of the relationship be sold – where the husband submitted that the business should not be sold prior to the final hearing in order to allow there to be an audit – where the husband’s application for an audit of the business was misconceived – where there is a real possibility that the value of the business will be further diminished if the sale is delayed – where the sale of the business is intended to preserve the asset pool –orders are made restraining the parties from using the intellectual property of the business and client data base following its sale – given level of disputation orders made pursuant to s 106A of the Family Law Act 1975 (Cth) – the husband’s application for spousal maintenance is dismissed – the matter is set down for final hearing. |
| Family Law Act 1975 (Cth) |
| Strahan & Strahan (Interim Property Orders) (2011) FLC 93-446; [2009] FamCAFC 166 AG v Adelaide Steamship Co (1913) 18 CLR 30; 19 ALR 405 Ledarn & Ledarn [2013] FamCA 858 Jackson and Sterling Industries Limited (1987) 162 CLR 612; [1987] HCA 23 |
| APPLICANT: | Ms Pelton |
| RESPONDENT: | Mr Banbury |
| SECOND RESPONDENT: | Mr Hellis |
| FILE NUMBER: | MLC | 10051 | of | 2018 |
| DATE DELIVERED: | 7th October 2019 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Macmillan J |
| HEARING DATE: | 2nd and 3rd September 2019 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Dickson QC |
| SOLICITOR FOR THE APPLICANT: | Hargreaves Family Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Ribbands of counsel and Mr Mort of counsel |
| SOLICITOR FOR THE RESPONDENT: | Morgan Legal |
| COUNSEL FOR THE SECOND RESPONDENT: | Mr Mellas of counsel |
| SOLICITOR FOR THE SECOND RESPONDENT: | Gadens Lawyers |
Orders
Interim Financial Arrangements
That within 7 days the parties do all things and sign all such documents as are required to cause:
(a)$100,000 to be transferred from the Commonwealth Bank Account #...37 into the jointly held Commonwealth Bank Account #...87 ("the Joint Account'); and
(b)Q Group to cause the Husband's monthly rental payments to be direct debited from an account in the Husband's sole name and, in the event any rental from the date of these Orders is direct debited from the Joint Account, the Husband shall reimburse the Joint Account within 24 hours of the payment being debited.
Sale of Business
That within 7 days the parties forthwith do all such acts and things and sign all such documents as are required to appoint Mr L of M Business ("the Business Broker"), or such other business broker as agreed between the parties to market for sale the business operated by C Pty Ltd, and known as C Pty Ltd (“C Pty Ltd") for sale.
That in relation to the sale of C Pty Ltd:
(a)The parties shall sign the Engagement Letter appointing the Business Broker within 7 days;
(b)The Wife obtain the written recommendations of the business broker as to the way in which to market C Pty Ltd for sale;
(c)The sale be by Expressions of Interest, unless otherwise recommended by the business broker;
(d)An independent solicitor be appointed to prepare the contract of sale and effect the sale of the business;
(e)The Wife have conduct of the sale;
(f)The Wife keep the Husband apprised in relation to all recommendations and/or advice received from the business broker and/or the independent solicitor;
(g)The Husband be at liberty to contact the business broker and obtain any information in relation to the sale of C Pty Ltd, and the Wife provide any authorisation required to enable the Husband to do so;
(h)The contract of sale for C Pty Ltd will include the sale of intellectual property and database of the business; and
(i)Neither the Wife nor the Husband will be required to enter into a non-compete clause.
That at settlement of the sale of C Pty Ltd the proceeds be distributed:
(a) To pay all costs, commissions and expenses of the sale; and
(b) To deposit the balance into the Joint Trust Account.
Restraint
Until further order neither the husband, the wife nor Mr. Hellis (“the second named respondent”) shall be permitted to retain a copy of the database of C Pty Ltd or utilize such database in any subsequent business operation.
(a)Any asset of D Pty Ltd as trustee for the E Trust including, but not limited to, any funds held in any bank account.
Division 7A Loan Accounts
That within 14 days of the sale of the K property and/or the J property, the parties obtain the written advice of Mr G of F Company as to how the funds held in the Commonwealth Bank account numbers #...89 (Everyday Offset), #...7 (K property Offset), #...70 (J property Offset), #...08 (… Offset), and #...07 (Motor Vehicle 1 Offset) ought be applied to discharge the Division 7A Loans owing within the Banbury/Pelton Group and the professional fees of F Company incurred in preparing that advice be paid from the Joint Account within 7 days of F Company's invoice being issued.
Banbury/Pelton Group Income Tax Returns
That the Husband and the Wife do all such acts and things and sign all such documents as are required to instruct Mr G of F Company within 14 days to:
(a)Finalise any outstanding taxation matters, including any return in respect of Fringe Benefits Tax, for the 2018 financial year; and
(b)Prepare the 2019 income taxation returns and financial statements of the "Banbury/Pelton Group" including the H Fund and any return in respect of Fringe Benefits Tax.
That the fees of F Company to prepare the income tax returns and financial statements referred to in paragraph 14 be paid from the Joint Account within 7 days of F Company's invoice being issued.
Section 106A Order
If either party refuses or neglects to sign any document required to give effect to these Orders within 14 days of being requested to do so, then pursuant to Section 106A of the Family Law Act a Registrar of this Honourable Court is authorised to sign on behalf of the defaulting party upon the request of the non-defaulting party in writing and an Affidavit for the solicitor for the non-defaulting party shall constitute sufficient evidence of the default.
Costs
All questions of costs be reserved for determination.
By 4.00 pm on 16 October 2019 the first and second respondents file and serve any written submissions in support of any application for costs arising out of or incidental to the Amended Application in Case filed 29 August 2019.
By 4.00 pm on 30 October 2019 the applicant file and serve any written submissions in reply to any applications for costs.
That any submissions as to costs should be limited to 10 pages.
The wife’s Amended Application in a Case filed 29 August 2019 and the first and second respondents responses thereto, save and except for any applications for costs, be otherwise dismissed.
Trial Directions
All extant applications for final orders be adjourned for hearing before Justice Macmillan at 10.00 am on 28 January 2020 as a 4 day matter.
By 4.00 pm on 5 December 2019 the applicant file and serve upon all other parties:
(a)any further affidavits of evidence in chief of all witnesses relied upon (noting that affidavits relied upon for previous hearings cannot be relied upon as evidence in chief without leave); and
(b)a financial statement that complies with Chapter 13 of the Family Law Rules.
By 4.00 pm on 21 November 2019 the first respondent file and serve upon all other parties:
(a)any further affidavits of evidence in chief of all witnesses relied upon (noting that affidavits relied upon for previous hearings cannot be relied upon as evidence in chief without leave); and
(b)a financial statement that complies with Chapter 13 of the Family Law Rules.
By 4.00 pm on 5 December 2019 the second named respondent file and serve upon all other parties any further affidavits of evidence in chief of all witnesses relied upon (noting that affidavits relied upon for previous hearings cannot be relied upon as evidence in chief without leave).
By 4.00 pm on 19 December 2019 the applicant file and serve any affidavit in reply to the affidavits of the respondent.
No party file any further material other than as provided by these orders without leave of the Court.
If either party takes objection to any evidence of the other party:
(a)any objection be taken no later than 14 days prior to the trial by service of written notice on the solicitor for the other party;
(b)The party so served shall notify the objecting party in writing no later than 7 days prior to the trial of which objections so taken are the subject of agreement and which require determination.
All parties have leave to issue subpoenas for the production of documents by arrangement with the registrar docketed with the management of the file.
All parties have liberty to approach the registrar responsible for the management of the court file to vary the obligations under these orders to ensure readiness for trial.
Should any party fail to comply with these orders or the ensuing amending directions of the docketed registrar, the party who has complied may immediately thereafter file an application in a case supported by an affidavit seeking for the matter to proceed on an undefended basis.
The applicant pay all setting down and trial fees by 4.00 pm on 20 January 2020 or obtain the requisite waiver thereof.
The practitioners and/or the parties in the event that they are not legally represented file electronically to … and serve upon all other parties by 4.00 pm on 22 January 2020 the following:
(a) a concise set of orders to be sought if different from those already filed;
(b)a list of the applications and affidavits filed pursuant to these orders to be read and, if not the whole affidavit, the relevant paragraphs relied upon;
(c)a list of the parties’ respective legal and equitable interests in property and liabilities;
(d)a list of objections to evidence upon which rulings are required, if any; and
(e)a bullet-point summary of argument in relation to the legal and factual issues in dispute.
(f)Each party provide to the court at the commencement of the hearing, a statement setting out the costs incurred to that date and from what source those costs have been paid and what costs are expected to be incurred until the completion of the hearing.
The practitioners and/or the parties in the event that they are not legally represented be at liberty to approach Justice Macmillan’s Associate via email for an urgent listing of the matter if required.
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 Pelton & Banbury and Anor 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 10051 of 2018
| Ms Pelton |
Applicant
And
| Mr Banbury |
Respondent
And
| Mr Hellis |
Second Respondent
REASONS FOR JUDGMENT
This matter was listed for final hearing before McEvoy J commencing 2 September 2019. In circumstances where there appeared to be little prospect of the matter being able to proceed on that date it was listed for a mention before his Honour on 15 August 2019. On that date the final hearing was vacated, however the wife, who is the applicant in the substantive proceedings, had also filed an Application in a Case which was listed for hearing at 9.00am on 2 September 2019. In anticipation of that hearing his Honour also made orders requiring:
a)The husband to file and serve any cross-application and any affidavit in support by 4.00pm on 22 August 2019;
b)The wife to file and serve an affidavit in reply but 4.00pm on 29 August 2019; and
c)The second respondent to file and serve and cross-application and any affidavit in support by 4.00pm on 29 August 2019.
On 29 August 2019 the wife filed an Amended Application in a Case and an affidavit in reply to the husband’s affidavit. In the outline of the case, counsel for the wife summarised the issues in dispute as follows:
a)Sale of business;
b)Control of business pending its sale;
c)The husband’s application for an audit;
d)Sale of J [property], or if not to be sold whether the husband should meet the holding costs from now on;
e)Whether the husband’s rental should be paid from jointly held capital;
f)The manner of sale of cars, boats and jet skis;
g)Source of funds to meet holding costs of K Property pending it’s agreed sale;
h)The execution of the financial returns and the husband’s application for the appointment of new accountants; and
i)An injunction restraining the husband from further drawings from E Trust.
Background
The husband and wife commenced cohabitation in 1999 and were married in late 2005. There are two children of their relationship. The parties separated under the one roof in September 2017 and the husband moved into separate accommodation in January 2018. The husband and his new partner have one child.
The proceedings were commenced by the wife in August 2018 and although they have only been on foot for a little over 12 months they have been hard fought and there have already been a number of contested interim hearings. The parties have no doubt already incurred significant legal fees.
The Business
To date the most significant area of dispute has been in relation to C Pty Ltd, the business which the parties established in 2004. This dispute also involves the second respondent in these proceedings, Mr Hellis, who through his self-managed superannuation fund owns 3.437% of the shares in C Pty Ltd. In particular there have been ongoing and complicated disputes with respect to the management of C Pty Ltd and the husband has not attended at C Pty Ltd’s business premises and has played no part in the day to day operations of C Pty Ltd since late 2018. Although that may be the case, the husband as part of his application in the interim proceedings before me sought inter alia mirror orders restraining the wife from attending at the business premises and excluding her from the day to day operations of C Pty Ltd.
Pursuant to the orders made 14 November 2018, Ms N was appointed by the parties to value C Pty Ltd. Ms N’s report was completed and released on 11 July 2019. Ms N valued C Pty Ltd as a going concern, based upon the 2016, 2017 and 2018 figures, at a mid-point of $4.72 million. Ms N’s report has not as yet been filed, however it appears to be agreed that although the figures as at April 2019 were available to Ms N, she chose not to rely upon them having regard to the significant downturn in C Pty Ltd’s profitability. Whilst the parties agree that there has been a downturn in C Pty Ltd’s profitability, the reason for that downturn is not agreed. On 23 July 2019, the wife having considered Ms N’s report, advised the husband that she did not wish to retain C Pty Ltd at that value and proposed that if the husband did not wish to retain C Pty Ltd, it be placed on the market for sale.
In his Amended Response to Initiating Application filed 26 June 2019, in anticipation of the final hearing the husband sought orders inter alia that the wife retain C Pty Ltd and its associated entities subject to the valuation prepared by Ms N being on a par with or greater than the valuation conducted by O Business on the husband’s instructions. If Ms N’s valuation was less than the O Business’ valuation, the husband sought orders that he be reimbursed by the wife for that difference. In the alternative, if the wife did not wish to retain C Pty Ltd, the husband would retain it subject to an adjustment in his favour for the difference between the two valuations, the assumption being that Ms N’s valuation would be less than that of O Business. All of this is in circumstances where to date there has been no application by the husband to rely upon or adduce the evidence of O Business as to valuation.
Notwithstanding that there had been a two day mediation in mid-August 2019, at the commencement of the hearing before me the husband had still not made clear his intentions with respect to C Pty Ltd. In his Response to an Application in a Case filed 22 August 2019, he sought orders inter alia that the wife’s application for a sale be dismissed, that he be given unrestricted access to C Pty Ltd and that the wife be restrained from exercising any decision making authority in relation to C Pty Ltd, that Ms N be appointed to conduct an audit of C Pty Ltd and he reserved his right to retain the business pending the outcome of that audit.
The husband changed his instructions during the hearing and his case was at times difficult to follow.
Notwithstanding counsel for the husband’s submission that C Pty Ltd was not worth the $4.7 million attributed to it by Ms N, that he described C Pty Ltd as “tanking on a daily basis” and said that the husband wanted it sold, the husband nonetheless opposed the sale. Doing the best I can to understand the way in which the husband put his case, at the commencement of counsel’s submissions his case was that C Pty Ltd should not be sold prior to the final hearing as the wife proposed in circumstances where there has been a significant downturn in the business’s profitability and the sale would deprive the husband of the opportunity to have Ms N carry out an audit. In my view, in circumstances where the purpose of an audit is in general terms to ascertain the accuracy of the financial accounts and it is common ground that the husband has access to all of the relevant financial information, his application for an audit was misconceived.
In support of his application for an audit the husband deposed to needing to “…personally review the operating accounts of the Business to ascertain if there has been any misconduct of the parties involved in the Business following my forced exclusion”. I am satisfied that if that is what the husband requires as submitted by counsel for the wife there would appear to be no reason why he could not already have done so. The husband also deposed to the possibility of the wife and Mr Hellis having created new relationships with longstanding customers of the business. His case at its highest appears to be that there might have been some misconduct, rather than adducing evidence of any actual misconduct.
Significantly in my view given the way in which he puts his case, the husband has not asked for any additional documentation and has not addressed any questions to Ms N, either with respect to her valuation generally or more importantly the need for an audit and whether it would address his concerns. Nor could counsel for the husband tell me how much the proposed audit would be likely to cost the parties. In circumstances where the husband has previously engaged O Business to prepare a valuation, it would also have been open to him to seek leave to adduce evidence from O Business with respect to any irregularities or matters they considered needed further investigation, or at the very least with respect to why an audit might be required and what it would involve.
Although Counsel for the husband ultimately conceded that the issue in dispute was what is referred to as a wastage argument, not a claim for damages or compensation by the husband against the wife. In my view he was unable to satisfactorily explain why C Pty Ltd could not be sold pending an audit, if one were to be ordered, or pending the trial. Counsel for the husband did refer in passing to the possibility of Ms N speaking to C Pty Ltd’s clients, however he also acknowledged that the husband had access to the client database and, in those circumstances, either the husband or any person engaged by the husband to carry out an audit would arguably have access to C Pty Ltd’s clients subject to those client’s being willing to co-operate. Not only can the Court not make orders requiring C Pty Ltd’s clients to co-operate, it would seem somewhat counterproductive from the point of view of maximising the sale price. The difficulty with the husband’s case is that the sale should be delayed, even on his own case, C Pty Ltd “…is tanking on a daily basis” and in my view it follows that, even though the matter is going to be set down for hearing in late January 2020, there is a real possibility, as submitted by counsel for the wife, that the value of the business is likely to be further diminished if the sale if delayed.
Although the husband has not satisfactorily demonstrated the need for an audit or that C Pty Ltd should not be sold pending the completion of that audit, in so far as it is his case that an audit is required, there is nothing preventing the husband from engaging O Business to carry out that audit and seeking leave to rely on and adduce that evidence should he choose to do so.
In the written submissions made on behalf of the husband it was submitted that where circumstances may change radically during the course of proceedings there is a strong basis for the Court maintaining “... its traditional stance that there should ordinarily be only one hearing of dispute concerning alteration of property issues”. Those submissions also highlighted the two step process when the Court exercises the power to make orders for partial property settlement referred to in Strahan & Strahan (Interim Property Orders) (2011) FLC 93-446. However it is now the husband’s case that he wants C Pty Ltd to be sold, albeit he submitted that an audit was necessary and that the sale needed to be delayed to allow that audit to be completed. In these circumstances the purpose of the orders the wife’s seeks are intended to preserve the value of the asset pool in circumstances where the parties are agreed upon a sale, albeit there is a dispute as to the timing. In all of the circumstances I am satisfied that I should accede to the wife’s application for an immediate sale of C Pty Ltd. This will have the added benefit of fixing the value of C Pty Ltd and the value of Mr Hellis’s interest in C Pty Ltd and in these circumstances there would appear to be no need for Mr Hellis to remain a party to the proceedings.
The husband, whilst opposing the wife’s application for a sale, did not take issue with the form of the orders with respect to that sale, save and except that he opposed the order sought by the wife that neither he nor the wife be required to enter into a non-compete clause as part of the contract of sale. To the contrary it was initially the husband’s case that if there were to be a sale, in order to achieve the best price, the parties should be bound by a restraint of trade.
In general, a contract or a term of a contract that seeks to unreasonably restrain trade is prima facie void for being contrary to public policy, however it is well settled that a contract may include a restraint that recognises the interests of the purchaser of a business in protecting its goodwill from competition by the seller. In order for such a restraint to be lawful it must be reasonable in relation to each party and in relation to the public interest: see for example AG v Adelaide Steamship Co (1913) 18 CLR 30 at 35.
Counsel for the wife referred me to the decision of Cronin J in Ledarn & Ledarn [2013] FamCA 858 (“Ledarn”) in which he addressed the question of orders with respect to a restraint of trade as between the husband and the wife. Whilst the case before me does not involve one of the parties to the marriage retaining the business, the general principles espoused by his Honour in Ledarn are pertinent to the matters at hand. Pursuant to s 114 of the Act, the Court may make such order as it considers proper with respect to the matter to which the proceedings relates. As Cronin J said at [162] the purpose of this power “...is to prevent the abuse or frustration of the processes or indeed the remedies of the Court. The power exists not to create additional rights but to protect the process from abuse in relation to the enforcement of orders (see Jackson and Sterling Industries Limited (1987) 162 CLR 612)”.
Counsel for the husband submitted that the parties would not achieve the best price absent a restraint of trade clause, however other than his assertion that it was possible that the wife and Mr Hellis have partnered with competitors within the business field to move longstanding clients to a new business, there is no other evidence in relation to this issue. There is also some force in counsel for the wife’s submission that it would not be proper to restrain the wife from exercising her income earning capacity in the human resources field in which she has always worked. This is particularly so in circumstances where it is the husband’s evidence that “...in practical terms the value of the Business is contained in its database”. It was in these circumstances and in order to allay the husband’s concerns that the wife amended her proposal on the basis that not only would the contract of sale include the intellectual property and database of the business but that both she and Mr Hellis would consent to an order that neither the husband, the wife or Mr Hellis be permitted to retain a copy of the database of C Pty Ltd or utilise such database in any subsequent business.
In response the husband proposed that “the contract for the sale of the business include the sale of the intellectual property and client database of C Pty Ltd together with such other clauses as are recommended by the independent solicitor that operate so as to prohibit the parties to this proceeding from using the intellectual property and client database in any way that would undermine the business that is to be acquired by and operated by the purchaser”. Counsel for the husband submitted in support of his client’s proposal that the wife’s potential use of the intellectual property and the client database, although that would be in the face of the order proposed by the wife, would leave open the possibility of further litigation between the husband and the wife.
Whilst if the wife were to use that information contrary to the orders proposed, arguably the purchaser might have a cause of action, it is difficult to see what cause of action the husband might have against the wife. It would certainly be open to the husband to seek orders that he be indemnified by the wife in relation to any claim made by the purchaser of the business because of the wife’s misuse of the intellectual property and/or the client database. Moreover, as submitted by counsel for the wife, the husband’s proposal leaves open the possibility of the solicitor appointed for sale recommending a restraint of trade clause which would in effect delegate the Court’s decision with respect to the terms of the contract to that solicitor. In my view given that there is a dispute, this is a decision that the Court should make.
It is obliviously not possible to expunge the information that the wife, Mr Hellis and, for that matter, the husband may have in relation to the intellectual property and the client database from their minds. In circumstances where the wife in particular and Mr Hellis have established relationships with the client’s by, the possibility that some of those clients might chose to follow the wife and/or Mr Hellis subsequent to a sale also cannot be ruled out. However, in my view the order proposed by the wife will restrain the parties, and in particular the wife, from using the intellectual property and the information they may have in relation to that client database thereby protecting any prospective purchaser and facilitating a sale.
The husband also proposed that the words “market C Pty Ltd for sale and the terms of any such sale, so as to maximise the price payable on sale” be added to paragraph 10(b) of the wife’s minute of orders, which currently requires the wife to obtain the written recommendation of the business broker as to the way in which to market C Pty Ltd for sale. Although counsel for the husband’s submission with respect to the wife running down the value of the business might make sense if she was proposing to retain it, that is unlikely to be the case in circumstances where both parties agree that it should be sold. Even if, as asserted by the husband, the wife is intending to start her own business taking longstanding clients with her, arguably it would still be to her benefit to maximise the sale price of C Pty Ltd. In all of the circumstances, I do not consider it necessary to add the words the husband seeks to the order. To the contrary I am concerned given the history of this matter that doing so would create fertile ground for further dispute. I propose in all of the circumstances to make the orders in the terms sought by the wife with respect to the sale of C Pty Ltd.
Other Issues
Although by the end of the hearing the husband was not pressing the orders he had been seeking or his opposition to the wife’s application, as previously referred to, he did not consent to the court making orders in the terms proposed by the wife.
One area of dispute was in relation to the sale of the Motor Vehicle 2 and Motor Vehicle 1, the boat, and the Jet Ski. In his response, the husband sought orders that he have the conduct of the sale of both of the vehicles, the boat, and the Jet Ski. He also sought reimbursement of the expenses he said he had incurred with respect to the upkeep of the two vehicles. It is difficult to see how the husband can claim these expenses, particularly with respect to the Motor Vehicle 2, in circumstances where on 20 March 2019 an order was made by consent that he have the sole use of both vehicles on the basis that he be responsible for the costs of those vehicles and on 30 April 2019 an order was made that he be at liberty to sell the Motor Vehicle 2. As submitted by counsel for the wife, the husband’s affidavit is silent as to any steps he may have taken to sell the vehicle and in those circumstances it is reasonable to infer that the husband chose not to sell the Motor Vehicle 2 and has in any event had the use of all of these assets.
It is difficult to understand in these circumstances how the husband could mount an argument that he be reimbursed for what he has spent on the two motor vehicles and that he does so tends to highlight the nature and level of disputation in this case. I am satisfied that the best way to have these assets sold, if possible avoiding further dispute and litigation, is for their sale to be placed in the hands of an independent third party. There was no objection to P Business being appointed and accordingly I propose to make the orders the wife proposes with respect to the sales.
The husband also wanted to have the opportunity to purchase the two vehicles. The wife in her minute of orders proposed an order that the Motor Vehicle 2, the Motor Vehicle 1, the boat, and the Jet Ski be listed for sale at the prices at which they had been valued but that any offer of at least 80 per cent of the listing price should be accepted. The purpose of that order being to avoid any dispute with respect to the purchase price. In these circumstances the husband sought orders which would allow him to purchase the Motor Vehicle 2 and the Motor Vehicle 1 for 80 per cent of their listed value. Although I am satisfied that the husband should be given the opportunity to purchase the vehicles, in my view at least initially that should be at full value. If after a period, and I will hear submissions from the parties as to that time frame, the vehicles have not sold, then I propose to permit the husband to purchase them at a reduced price. In my view, the wife’s proposal was not a concession that the vehicles are worth less than the value ascribed to them and I am of the view that some time should be allowed for them to be sold at full value.
The husband also sought an order that his rent be paid out of the joint account, it being his evidence that the only reason he had moved out of the former matrimonial home was on condition that his rent would be covered until a final settlement. I note that orders were made by consent on 20 March 2019 which provided inter alia for the payment of the husband’s rent for the months of April, May and June 2019. Counsel for the husband submitted that the characterisation of the rental payments sought by his client could be left for determination at trial. Whilst that is not an uncommon order, if the order is opposed the Court needs to identify the power pursuant to which the order is to be made. Although not totally clear it appears that the husband was seeking the order for the payment of his rent by way of spousal maintenance. On that basis he would need to demonstrate that he was unable to adequately support himself and that the wife had the capacity to pay. The husband did not adduce any evidence with respect to his capacity to support himself and in particular, as submitted by counsel for the wife, no evidence as to his capacity for gainful employment. In circumstances where the husband receives income of $43,000 per annum from C Pty Ltd and has withdrawn $385,000 from D Pty Ltd as Trustee of the Banbury Trust, or as he says taken dividends which of course are income, it seems unlikely that the husband could demonstrate a need for spousal maintenance. In these circumstances, I am not satisfied that I should make the order the husband seeks by way of spousal maintenance. Arguably the other basis for an order would be by way of partial property settlement which might similarly be difficult to sustain given the funds it seems that the husband has had available to him.
There was also a dispute as to the source of the funds to meet the holding costs of the K Property pending its sale. The husband proposed that the funds should be transferred from the offset account against the former matrimonial home in which the wife is living. The wife on the other hand proposed that it should be the offset account against the investment property, her submission being that it would make “the now un-offset part of the mortgage tax-deductible”. It is hard to see any basis for the husband’s proposal.
Finally there was a dispute in relation to the husband’s application to appoint new accountants to prepare the financial returns for the year ending 30 June 2019. The husband deposed to having lost confidence in R Company, who were appointed pursuant an order made by consent on 20 March 2019 to prepare the financial returns for the year ending 30 June 2018; however, although he said that R Company had been advising the wife to his exclusion, that is in my view not sufficient to support the order he seeks. In these circumstances, I propose to accede to the wife’s application. Although the husband did not consent to the order proposed by the wife with respect to the Division 7A loan accounts he did not make any submissions in opposition to the order and in these circumstances I propose to make the order the wife proposed. Given the level of disputation in this case I also propose to make the order sought by the wife pursuant to s106A of the Act.
Before reserving judgement I made orders restraining the husband from withdrawing any further funds from D Pty Ltd as trustee for the E Trust. Counsel for the wife relied upon evidence with respect to the $245,000 withdrawn by the husband on 29 April 2019 and the further $140,000 which he withdrew on 29 July 2019. Although counsel for the husband made some reference to the husband having provided some documentation with respect to the withdrawal of $245,000 and did not have instructions to consent to the order, he did not otherwise make submissions in opposition to the order sought by the wife. I am satisfied that at the very least the husband did not disclose the recent withdrawal of $140,000, which one would have expected him to do when the matter was before the Court. In all of the circumstances, I am satisfied that it was proper to make the order sought by the wife.
On the second day of the hearing counsel for the husband foreshadowed the possibility of a further application in a case seeking orders for O Business to have access to C Pty Ltd for the purposes of preparing an updated valuation. I have some difficulty understanding the way in which the husband put his case and why it was not until the end of the hearing before me that he raised the spectre of further interim proceedings if he wants to have the matter determined on a final basis. It is difficult to see why, given that O Business have already valued C Pty Ltd, that the husband would not have already turned his mind to the possibility of O Business updating their valuation or considered what they might require to do so. As discussed with counsel, I propose to set the matter down for a final hearing commencing on 28 January 2020 and, although further interlocutory proceedings could delay the final hearing, I am comforted by the indication from counsel for the wife that they will co-operate with any reasonable requests made by the husband or O Business. I note in that regard that the husband has access to C Pty Ltd’s financial records and can provide them to O Business.
The parties agreed that I should make directions for the filing of affidavits to enable the parties to update their evidence in chief in anticipation of the final hearing. I also propose to make the usual orders with respect to any submissions with respect to costs.
I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 7 October 2019.
Associate:
Date: 7 October 2019
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