Porter and Porter (No 2)

[2017] FamCA 894

FAMILY COURT OF AUSTRALIA

PORTER & PORTER (NO. 2) [2017] FamCA 894

FAMILY LAW – PROPERTY – Interim – Where the husband has made an application under s 79A of the Family Law Act 1975 (Cth) – Where the wife had sought orders that the proceeds of sale of a property owned by the husband and his new partner be frozen – Where the Commonwealth Bank previously made an error and there is a loan amount owing to them – Where it is unclear whether or not the Commonwealth Bank had an entitlement to refuse to discharge the mortgage if the proceeds were not given to the bank to correct the bank’s earlier error – Where the wife did not join the bank as a party and ultimately does not press her application

FAMILY LAW – SOUSAL MAINTENANCE AND CHILD SUPPORT – Where the husband makes an application for a stay of a spousal maintenance order and of his obligations under a binding child support agreement on the basis of his asserted parlous financial circumstances – Where the husband is a professional who runs an operation that has a turnover over $4.5 million a year with alleged expenses of $4.5 million a year – Where the husband’s financial circumstances were presented in voluminous material which was confusing and contradictory in parts and the corporate and business structures in which he operates is unable to be discerned – Where, given those deficiencies in the material and in the context of the wife abandoning her application to freeze the proceeds of the property owned by the husband and his new partner, it is not appropriate to alter the current order for spousal maintenance or the husband’s obligations under the binding child support agreement.

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

APPLICANT: Ms Porter

RESPONDENT: Mr Porter

FILE NUMBER: SYC 4014 of 2012

DATE DELIVERED: 7 November 2017

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 11 October 2017

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Jennifer Weate & Associates

SOLICITOR FOR THE RESPONDENT: Antunes Lawyers

Orders

1. The wife’s application as contained in her Amended Minute of Proposed Orders (Exhibit 34) for orders 2, 3, 4, 5, 6 and 7 be dismissed.

2. The husband’s Amended Application in a Case filed 8 September 2017 be dismissed.

3. The listing before Justice Loughnan on 28 November 2017 be vacated.

4. This matter be listed for mention before Justice Watts on 30 November 2017 at 9am.

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 Porter & Porter (No. 2) 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 SYDNEY

FILE NUMBER: SYC 4014  of 2012

Ms Porter

Applicant

And

Mr Porter

Respondent

REASONS FOR JUDGMENT

1. This case is a matter of considerable complexity involving a professional who runs an operation that has a turnover of $4.5 million a year with alleged expenses of $4.5 million a year.

2. The husband has made an application under s 79A of the Family Law Act 1975 (Cth) for a variation of final property settlement orders. The husband alleges that in 2014 he agreed to transfer future property to the wife generated from his future income streams as a professional which property did not exist at the date the orders were made. The husband asserts the court had no jurisdiction to make the order.

3. The parties have three children aged 11, nine and seven. B who is the eldest child has Down Syndrome.

4. The immediate matter in contention is whether or not an order should be made to freeze what the wife thought were the proceeds of the sale of a property owned by the husband and his new partner at Suburb F. The husband’s share of those proceeds were firstly in the order of $639,000 and secondly a balance of the deposit of $67,000.

5. It emerged that there was a history of the husband’s dealings with the Commonwealth Bank whereby the Commonwealth Bank made an error when another property was sold in 2016. The Commonwealth Bank provided discharges of a mortgage or mortgages in respect of those sales at that time without requiring any payment in respect of the discharge of those mortgages. Consequently, the loan that was secured by those mortgages wasn’t paid out. That loan is in the amount of about $639,000.

6. Exhibit 30 is an email from Mr H from the Commonwealth Bank dated 11 October 2017 which sets out the arrangements the bank had hoped for in respect of the sale of the Suburb F property. The bank expected full repayment of loan ending 2443 (that is the loan associated with the mortgage on the Suburb F property). The bank also expected full repayment of loan ending 3901 (that is the loan in respect of the J Street, Suburb K property which was sold in 2016 and in respect of which the bank in error provided a discharge of mortgage without any payment to the bank in respect of that discharge).

7. The bank also sought on the sale of the Suburb F property discharge of the current outstanding arrears on the matrimonial home at Suburb E (loan ending 5206). That loan currently has arrears of $71,000. The bank have issued a 57(2)(b) notice in relation to that property.

8. Settlement of the Suburb F property is due in the middle of this month although so far as I could be told, there was no time of the essence clause in the contract for sale but the purchasers would have the ability to issue a notice to complete and then sue for specific damages and or performance if the husband and his new partner did not complete the contract.

9. What was uncertain before me is to whether or not the Commonwealth Bank had any right to refuse to give a discharge of mortgage if this additional loan wasn’t paid out. It was unable to be clarified before me as to whether or not the Commonwealth Bank had an all monies mortgage or some other basis that would have entitled them to take that action.

10. In addition, the Child Support Agency has served a notice on the solicitors who will receive the balance of the deposit monies in a sum of about $67,000. Under that notice, those monies are to be paid to the Child Support Agency in respect of the husband’s arrears in relation to spousal maintenance (under an order) and child support (under a binding child support agreement). The bank want that $67,000 and it seemed agreed in the presentation of the case before me that in all likelihood the lawyers who were receiving this money would conclude the Child Support Agency had priority over the Commonwealth Bank. It is uncertain (although it didn’t look like it from the Commonwealth Bank’s documentation) that the Commonwealth Bank would withhold a discharge of mortgage on the Suburb F sale if they weren’t paid that $67,000.

11. The lawyer for the wife ultimately conceded that without having made an application to join the Commonwealth Bank as a party to the proceedings and to clarify the Commonwealth Bank’s rights in relation to what they were now asserting in relation their requirements for providing a discharge, then the risks involved in not completing the contract with the third party purchaser could not be covered by any undertaking for damages that the wife could give and could lead to significant financial ramifications for the parties.

12. The husband and his new partner have given the authority to the bank to provide a discharge of mortgage on the conditions the bank has requested. In the circumstances it appeared to me that the wife did not ultimately press her application for a freezing of the proceeds of the sale of the Suburb F property and ultimately conceded that those monies would be paid to the Commonwealth Bank in repatriation of debts by the husband to the bank. On the basis that the wife at the end of the interim hearing did not press applications for orders 2, 3, 4, 5, 6 and 7 of her Amended Minute of Proposed Orders (which I will mark Exhibit 34), those applications shall be dismissed.

13. The husband for his part made an application to the court for a stay of a spousal maintenance order that was made by consent in 2014 and a stay of his obligations under a binding child support agreement that he also entered into at the same time in 2014.

14. The husband’s responsibility under the spousal maintenance order is currently $1,000 per week and under the binding child support agreement an amount of $2,100 per week. The husband also has the responsibility of paying lease payments in respect of the wife’s motor vehicle and in respect of the mortgage on the matrimonial home.

15. The overall basis of his application was what he now asserted was his parlous financial circumstances.

16. The husband’s financial circumstances were presented to the court in voluminous material which was ultimately confusing and contradictory in parts.

17. Notwithstanding the Family Law Rules 2004 (Cth), the husband sought in this interim application to rely upon no less than seven affidavits that had been sworn by him between January and October 2017.

18. The husband provided his most recent tax return for the 2016 year (Exhibit 32). That document indicates that the husband’s total business income was $4,539,739 with total business expenses of $4,514,906 and that the husband’s taxable income was $266,381.

19. To highlight the confusion in the presentation of the husband’s case, I pointed out during submissions that his updated Financial Statement filed 22 June 2017 asserted that he had an average weekly income of $8,810 a week and total personal expenditure of $10,231 per week. Then on 18 August 2017 he filed another document entitled Updated Financial Statement which asserted that his total average weekly income was $5,133 per week and that his total personal expenditure was $5,103 per week.

20. It appears that the husband operates under a complex corporate structure and has multiple interests in various trading activities all associated with professional practice.  I was unable to discern from the material provided nor was I assisted in any way during submissions by the lawyer for the husband as to what was the husband’s corporate and business structure. I was told that at some point in the future it was intended to engage a forensic accountant to provide a report that might better assist the court in understanding the husband’s financial position.

21. The husband asserts that documents that would indicate that income comes to him under a provider number with a government agency are not all as a result of his personal exertion but are as a result of other professionals using his provider number.

22. I pointed out during submissions that one item claimed on the husband’s tax return was a claim for an annual amount for depreciation in excess of $300,000.

23. Schedule C to the wife’s tender bundle filed 16 May 2017 would indicate that in addition to the Suburb F property and the matrimonial home in which the wife and the three children live, there is the company in which the husband has an interest which owns five other pieces of real estate.

24. The lawyer for the wife referred to the following parts of a transcript of answers given by the husband in cross examination on 25 August 2017 in an interim enforcement hearing before Senior Registrar Campbell:

    And when you say, “I am paying the rent on an apartment”, could you please give us the address?---I just did. [L Street] - - -

    [L]…? --- - - - [Street], [Suburb M].

    …

    [Mr Porter], is this an answer to the question how is the lease a business expense?---The business expense allows me to work so that my mother can help me with the children when I was having them more frequently. So, yes, it is a business expense.

    Your evidence to the court is that providing rent payments to your mother is something that can be regarded as a legitimate business expense?---Well, if it’s not a legitimate business expense it’s repayment of the moneys that I’ve borrowed from her.

    …

    And how much is the rent on a weekly basis?---I believe it’s about $800.

    …

    It’s the case, isn’t it, that in the 2016 tax year you received distributions from the [N Trust]?---Yes, there was a distribution from the [N Trust] in around Christmas time.

    December 2015?---No, ’16.

    Well, I asked you about the tax year ended 30 June 2016, so - - - ?---Sorry, then I misunderstood. What exact time period – because the first ever dividend was 2016.

    Well, sir, at – this is your most recent financial statement, the one that you adopted on oath on 17 August, and you say this. The question is, “Do you receive any income from business, partnership, company or trust?” Now, you’ve written, “The [N Trust]”?---Mmm.

    And so I take it that what you received was a trust distribution; am I right or wrong?---If you’re referring to the distribution in Christmas time of two thousand and - - -

    No, no, I’m not referring to anything. What are you referring to, because you used the word “dividend”?---Yes.

    Well, did you mean to use the word “dividend” or - - -? ---Distribution or dividend. Sorry, I’m - - -

    Well, further, on page 15 of your financial statement, you refer to moneys received by you from the [N Trust] in the 2016 tax year as a salary/wage. Are you employed by the [N Trust]?---No, I’m not.

    Right, Well, why did you describe what you received as a salary or wage?---From the N Trust?

    Yes?---I’ve only ever received loan repayments or a one-off distribution that occurred around Christmas time of 2016.

    Well, I want to stop you there. Firstly - - -?---I had previously - - -

    No, no, stop. In this financial statement you say this:

    I received a total of gross 79,628 from the [N Trust] in the 2016 tax year as a salary and wage.

    …

25. In both of the Financial Statements referred to above the husband indicates that he does not know the average weekly gross income of his partner, Ms O, who I was told is a health professional and is co-owner with him of the Suburb F property.

26. The husband has a responsibility under the orders to bring the mortgage on the Suburb E property (loan ending …06) up to date. He should negotiate with the bank in order to do that. The husband told Loughnan J through his lawyers on 10 August 2017 that the husband was hopeful if the bank took the proceeds of sale of the Suburb F property then they would hold off on taking action on the Suburb E property.

27. Given that the wife will receive the $67,000 through the Child Support Agency in relation to the deposit monies, she also has some flexibility in reaching some arrangement to postpone any action the bank might take by way of sale of the Suburb E property she is living in with the children.

28. Given that the wife did not join the bank as a party to the proceedings, I have no ability to further regulate what might happen as a result of actions brought by the bank in respect of interests held by the husband or the wife. The wife has not sought any orders against the bank (arising out of the mistakes they made in 2016) to stay any proceedings the bank might take against the Suburb E property pending the court being able to reach this case on a final basis.

29. Given the deficiencies that I have pointed to and having regard to the context in which this application has been brought and also having regard to the fact that the wife’s application to attempt to quarantine $639,000 has been abandoned and the husband has the ability to use those funds to repatriate debt, I am not able to find that it is appropriate to alter the current order for spousal maintenance or the husband’s obligation under the binding child support agreement for the payment of child support. His application for a stay in respect of those obligations is dismissed.

30. The Case Management Judge has assigned this matter to myself for judicial management. Accordingly I will arrange for a listing of the matter before me for mention at a date as close to the original date as possible.

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 7 November 2017.

Associate: 

Date:  7.11.2017