RUBY & RUBY

FAMILY COURT OF AUSTRALIA

RUBY & RUBY

[2013] FamCA 851

FAMILY LAW – PROPERTY – Interim distribution – husband restrained from dealing with the parties’ assets and resources other than in the ordinary course of business.

FAMILY LAW – SPOUSAL MAINTENANCE – Interim – determination of threshold issue – consideration as to applicant wife’s reasonable needs and the husband’s capacity – order made.

Family Law Act 1975 (Cth) ss. 72, 75(2), 79, 106B

Waugh (2000) FamCA 1183

APPLICANT:

Mr Ruby

RESPONDENT:

Ms Ruby

FILE NUMBER:

SYC

2655

2013

DATE DELIVERED:

11 October 2013

PLACE DELIVERED:

Parramatta

PLACE HEARD:

Sydney

JUDGMENT OF:

Foster J

HEARING DATE:

1 October 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Wheelhouse SC

SOLICITOR FOR THE APPLICANT:

KDB Holmes Solicitors

COUNSEL FOR THE RESPONDENT:

Mr Richardson SC

SOLICITOR FOR THE RESPONDENT:

McDonell Milne Toltz Family Lawyers

Orders

That pending further order the husband pay to the wife by way of spousal maintenance the sum of $2,749 per week with such payments to be paid monthly in advance first payment within seven days from the date of these orders payable to an account with a financial institution nominated by the wife within two days from the date of this order.
That Order 7 made on 14 June 2013 be discharged.
That pending further order the husband is hereby restrained from dealing with the assets and income derived by the Ruby Family Trust and the B Trust (hereinafter called “the trusts”) other than in the ordinary course of business or the prior agreement in writing of the wife and further he is restrained from doing and/or causing or permitting any act or thing to be done so as to cause or permit, any of the following:
(a)The exercise of any power that the husband may have directly or indirectly in respect of any trust, including but not limited to any power of appointment and any power to vary the terms of any trust;
(b)Alienating or further encumbering any of the assets, income or undertakings of any of the entities or any of the subsidiaries;
(c)Alienating or further encumbering any of the shares in any of the entities or the subsidiaries;
(d)Removing replacing or appointing any director or other officeholder of any of the entities or subsidiaries;
(e)The provision to or on behalf of either of the husband and/or the wife of any benefit including by way of loan, save for payment by C Pty Ltd to the husband of remuneration in the amount deposed to by the husband in the financial statement sworn by him on 15 May 2013 and filed on 16 May 2013;
(f)The provision to Mr D Ruby or any person or entity on his behalf of any moneys on account of or by reference to any monies alleged to be owing to Mr D Ruby by the husband, wife and/or the Ruby Family Trust;
(g)Any dealing with the shareholding of E Pty Ltd in C Ltd pursuant to the “E Shareholdings – Mr Ruby and Mr D Ruby Reciprocal Entitlement Agreement” dated 2 October 2007 or otherwise;
(h) Provided always that this order does not restrain the husband from:
(i)Expending money derived by the trusts for ordinary living expenses that he is otherwise unable to meet from his personal exertion income;
(ii)Causing the trust to distribute income in favour of the wife in a sum sufficient to satisfy any interim maintenance order made in these proceedings provided that should he elect to do so then he shall pay and indemnify the wife in respect of any tax that she may incur as a consequence of the receipt of such payment;
(iii)Expending money derived by the trusts to pay:
A.property insurance,
B.lease, registration payments maintenance and repairs for the car used by the wife,
C.life policies in the name of the husband and wife, and
D.interest due on the portfolio loan;
(iv)Selling assets of the trusts to cause $300,000 to be paid to the wife in accordance with these orders.
That within one month from the date of these orders the husband pay to the wife or as she may otherwise direct the husband in writing the sum of $300,000 and that the characterisation of such payment be reserved to agreement between the parties or the trial judge.
That the artworks specified in paragraph 177 of the affidavit of the husband filed on 27 August 2013 be returned to the matrimonial home by the husband or his nominee by arrangement between the parties’ solicitors within seven days from this date.
That the husband be and is hereby restrained from doing any act or thing and/or causing or permitting any act or thing to be done to transfer, sell, dispose of encumber or otherwise deal with any of the furniture, furnishings household effects and personal documents removed by him from the Suburb F property.
That the husband pay or cause to be paid the following as they fall due and payable:
(a)Lease payments to MB Finance in respect to the European motor vehicle used by the wife, registration, comprehensive motor vehicle insurance and compulsory third-party insurance in relation to the said vehicle and all scheduled servicing maintenance and necessary repairs;
(b)Payments including interest to the National Australia Bank in relation to the parties joint overdraft facility;
(c)Life and critical iLLess insurance payments to MLC in relation to the wife; and
(d) House and contents insurance premiums for the Suburb F property.
That the conciliation conference on 26 November 2013 be vacated.
That proceedings be adjourned to a date to be fixed before a Case Management Registrar for further directions.

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

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: SYC 2655 of 2013

Mr Ruby

Applicant

And

Ms Ruby

Respondent

REASONS FOR JUDGMENT

The Proceedings

These are interim proceedings in relation to property, injunctive relief and spousal maintenance.
Proceedings were commenced by an application filed by the husband on 16 May 2013. Leave was granted to shortlist the application and proceedings were first listed before the Court on 14 June 2013.
In his initiating application the husband sought final orders as to property as follows:
a)That the property of the parties comprising the family home at Suburb F and the assets within the Ruby Family Trust (“the Trust”) with the exception of the shareholding in E Pty Ltd (“E”) and the G Superfund be divided as to 60 per cent to the husband and 40 per cent to the wife;
b)That the parties do all things necessary to cause the Ruby Family Trust to transfer its shareholding in E to the husband and in consideration of such transfer that the husband pay to the wife the sum of $1 million upon sale by him of the shares or at the expiration of five years from the date of orders whichever is the earlier;
c)That there be a splitting order as to 40 per cent of the husband’s member entitlement in the G Superfund in favour of the wife.
In her response filed on 5 June 2013 the wife sought orders that in summary were as follows:
a)That the husband transfer to the wife the family home at Suburb F unencumbered;
b)That the husband pay to the wife the sum of $5 million within 30 days from the date of orders;
c)That upon the husband’s compliance with the previous orders the wife do all things necessary so as to resign as director and/or secretary and transfer to the husband all her shares and loan account interests in various entities being H Pty Ltd, I Pty Ltd, B Pty Ltd, J Pty Ltd, K Pty Ltd and E Pty Ltd and that the husband thereafter indemnify the wife from all or any liability arising from the said entities;
d)That the wife roll out from the G Superfund her existing member entitlement and thereafter resigned as a director of G Super Pty Ltd, the trustee of the fund, transfer her share in the trustee to the husband and resign her membership of the fund;
e)That otherwise the wife be declared the owner of the furniture furnishings and contents in the family home at Suburb F including items removed from the home by the husband at the time of separation;
f)That pursuant to section 106B of the Family Law Act 1975 (Cth) (“the Act”) the Reciprocal Share Entitlement Agreement dated 2 October 2007 between the husband and his brother Mr D Ruby be set aside.
In his initiating application filed on 16 May 2013 the husband sought various interim orders, in summary as follows:
a)That the wife do all things necessary so as to facilitate the husband operating solely on various named accounts with the National Australia Bank;
b)That the wife be restrained from selling, transferring, mortgaging, charging or otherwise alienating or disposing of her interest in the family home at Suburb F without first obtaining the husband’s written consent;
c)That the husband and wife do all things necessary to cause the Trust to deal with the property at L Street, Suburb M including but not limited to renting the property, raising finances against the property or disposing of the property;
d)That the wife retain the sum of $150,000 transferred by the wife from the parties’ joint account to her own account by way of partial property settlement pursuant to section 79 of the Act;
e)That the wife within 14 days produce to the husband copies of all accounts and statements operated by her with any financial institution at any time in the period of 12 months immediately preceding the date of his filing his application;
f)That pending further order, the husband pay to the wife by way of interim spouse maintenance the sum of $1,000 per week first payment within 14 days and thereafter by way of weekly instalments.
In her response filed on 5 June 2013 the wife sought various interim orders that in summary were as follows:
a)That within 14 days the husband return to the home at Suburb F all items of furniture and furnishings, artwork, household effects and personal documents of the wife and all the children of the marriage removed by him from the home;
b)That the husband be restrained from transferring, selling, disposing of or otherwise dealing with any items of furniture, furnishings, household effects and artwork removed by him from the home or otherwise as presently contained in the home;
c)That within 48 hours the husband cause various funds removed from bank accounts by him to be repatriated to those bank accounts with the National Australia Bank;
d)That the husband pending further order be restrained from doing anything to sell, transfer, or otherwise deal with assets of the trust or cause to be paid to Mr D Ruby any monies alleged to be owing to him by the husband, the wife or the Ruby Family Trust, cause the shareholding of E in C Ltd to be sold or dealt with in anyway pursuant to the Reciprocal Share Entitlement Agreement dated 2 October 2007 between the husband and his brother Mr D Ruby, or deal in any way with the assets of the G Superfund;
e)That pending further order the husband be restrained from doing any act or thing in relation to various named companies or trusts which would have the effect of altering any rights of existing shareholders, issuing any new shares in the entities, removing the wife from the office of Director of any of the entities, borrowing of any money by the entities, mortgaging or otherwise encumbering any of the assets of the entities without the consent of the wife, selling transferring or otherwise dealing with any of the assets of the entities without the consent of the wife;
f)That pending further order the wife be granted exclusive occupation of the Suburb F home;
g)That pending further order the husband be restrained from attending at or entering upon the home and from doing any actual thing to disturb the wife’s quiet enjoyment of the home;
h)That pending further order the husband be restrained from abusing, harassing, assaulting, threatening or otherwise intimidating the wife;
i)That pending further order the husband pay or cause to be paid to the wife by way of spousal maintenance the sum of $7,000 per week first payment within seven days to a bank account nominated by the wife.
The proceedings were before the Court on 14 June 2013. On that day upon hearing from counsel for the applicant and respondent the Court, in summary, made the following orders:
a)That the wife have exclusive occupation of the home at Suburb F and the husband be restrained from attending at or entering upon the Suburb F properly or from doing any act or thing to disturb the wife’s quiet enjoyment of the Suburb F property;
b)That the husband be restrained from abusing, harassing, assaulting, threatening or otherwise intimidating the wife;
c)That pending further order or agreement in writing between the parties, the parties be restrained from doing any act or thing to deal in any way with the interest in the Suburb F properly including but not limited to transferring or encumbering such interest;
d)That pending further order or agreement in writing between the parties, that the parties be restrained from doing any act or thing to deal in any way with the interests and that of the Trustee of the Trust in the Suburb M properly including but not limited to transferring or encumbering such interest;
e)That in the event that of the Suburb M properly being leased or sold in accordance with any agreement in writing between the parties the entirety of any income or sale proceeds are to be paid to interest-bearing account in the name of the Trustee of the Trust and the husband and wife are restrained from dealing in any way with the said account;
f)That pending further order or agreement in writing between the parties, the parties are restrained from doing or causing or permitting:
i)The exercise of any power that the husband may have in respect of any trust including but not limited to any power of appointment and any power to vary the terms of the trust;
ii)Alienating or further encumbering any of the assets, income or undertakings of any of the entities or any of the subsidiaries;
iii)Alienating or further encumbering any of the shares in any of the entities or subsidiaries;
iv)Issuing any new shares or otherwise altering the shareholding in any of the entities or subsidiaries;
v)Removing, replacing or appointing any director or other officeholder of any of the entities or subsidiaries;
vi)The provision to or on behalf of either the husband or the wife of any benefit including by way of loan, save for payment by C Ltd to the husband of remuneration in the amount deposed to by him in his financial statement filed on 16 May 2013;
vii)The provision to Mr D Ruby or any person or entity on his behalf of any monies on account of or by reference to any monies allegedly to be owing to Mr D Ruby by the husband, the wife or the Trust;
viii)Any dealing with the shareholding of E Pty Limited in C Ltd pursuant to the Reciprocal Share Entitlement Agreement dated 2 October 2007 between the husband and his brother Mr D Ruby;
g)That the husband forthwith notify the wife in writing upon receipt by him of any notice of or upon otherwise becoming aware of any intention by any other person or entity to take any action or cause any of the matters referred to above to occur;
h)That pending further order or agreement in writing between the parties, the parties be restrained from causing or permitting any dealing with their interests or those of any of the entities in each of the NAB facilities;
i)That the husband be restrained from doing any act or thing to transfer, sale, dispose of, encumber or otherwise deal with any of the items are removed by him from the Suburb F home;
j)That the husband be granted leave to apply on short notice for the purpose of varying or discharging any of the injunctive orders referred to above.
On 14 June 2013 proceedings were returned to the judicial duty list on 13 August 2013 for further consideration.
On 13 August 2013 the Court made further interim orders that in summary were:
a)That by consent the order restraining the husband from dealing with items of personalty removed by him from the Suburb F home continue up to and including 9 September 2013;
b)That by consent pending further order the husband had exclusive occupation of the Suburb M property;
c)That by consent pending further order the wife be restrained from attending at or entering upon the Suburb M property and from doing any act or thing to disturb the husband’s quiet enjoyment of the Suburb M properly;
d)That up to and including 9 September 2013 the husband cause to be paid all lease payments to MB Finance and in respect to the European motor vehicle used by the wife, registration, comprehensive motor vehicle insurance and compulsory third-party insurance in respect of the vehicle, and all scheduled servicing, maintenance and necessary repairs for the vehicle;
e)That the husband pay to the wife by way of spousal maintenance the sum of $4,000 per week commencing 16 August 2013 until 9 September 2013;
f)The Court noted by consent that payment of spousal maintenance and lease payments for the Mercedes vehicle will be made by the husband out of the joint accounts of the parties under his control.

Issues

The issues for determination by the Court are:
a)The question of spousal maintenance for the wife;
b)The provision of an interim capital sum to the wife of $300,000. The husband agreed to such an order being made;
c)Whether the present injunctions as to the husband dealing with matrimonial assets should remain as is, should be modified or should be discharged;
d)Whether the husband should be permitted to make further payments in relation to his asserted debt to his brother and if so how such payments should be made; and
e)The return of items removed by the husband from the Suburb F home.

Background

The husband is aged 56 and is a professional by occupation. He is presently employed by C Ltd.
The wife is 54 years of age and is a part-time artist.
The parties commenced cohabitation in late 1980 or early 1981. They married in 1983 and migrated to Australia in 1986.
There are two children of the parties’ marriage, the eldest aged 23 and independent and the youngest aged 18 and presently overseas.
The parties separated in late October 2012.

Early History

At the time of marriage the parties had no assets of significance. The wife was employed in design and the husband was employed in the computer industry.
Subsequent to migrating to Australia the husband worked in an employed capacity in the computer industry until about 1987. The wife was employed as a designer for a period of about four years.
The parties initially resided in rented accommodation in Australia until 1988.
The parties purchased their first home at Suburb N in about 1988 for the sum of approximately $250,000. The purchase price comprised monies gifted by the husband’s father and a mortgage advance from the Commonwealth Bank of Australia.
In 1993 the Suburb N property was sold for approximately $303,000 and the parties purchased a property at O Street, Suburb P for $530,000. The purchase price of the Suburb P property that comprised in the net proceeds of sale of Suburb N together with funds gifted by the husband’s father.
Subsequent to purchase of the Suburb P property the parties undertook significant renovations to that property over a period of years.

In 1993 the husband purchased a property at Q Street, Suburb R for $205,000. The husband’s evidence is that the purchase price comprised funds available as a consequence of the sale of 20 per cent of “T Pty Ltd” to U Pty Ltd.
In 2000 the parties purchased land at Suburb F for the sum of $1 million and commenced construction of a home on that property at significant cost.
The husband’s evidence is that the sum of $2 million was advanced to him through his father’s family trust known as the V Trust. The husband says that whilst waiting for the funds from his father he arranged bridging finance and on 4 May 2000 the sum of $1,995,985 was paid into the parties’ joint account. Of that sum the husband says $900,000 was applied to discharge the bridging finance and a balance of $1,250,000 was placed on term deposit to thereafter fund the construction of the home.
The wife disputes that the parties have any liability to the V Trust.
In June 2005 the property at Suburb R was sold for about $570,000 and after payment of expenses funds were applied to the Suburb F build.
The home at Suburb F was not completed until 2005 at which time the parties commenced to occupy that property.
In early 2004 the parties sold the Suburb P property and the proceeds of sale were advanced by the parties to the Ruby Family Trust through which they purchased a property at L Street, Suburb M for the sum of $2,200,000.

“T Pty Ltd”

Subsequent to the parties migrating to Australia the husband commenced a business known as “T Pty Ltd” with his brother Mr D Ruby and a Mr W. The parties’ interest was held by X Pty Ltd a company owned by the parties equally.
In 1993 20 per cent of “T Pty Ltd” was sold to U Pty Ltd.
In 1994 the husband’s brother sold his share in the business to a third party.
In 1996 “T Pty Ltd” was sold for $5 million to Y Holdings with 37.5 per cent of the sale proceeds being paid to X Pty Ltd, a company owned by the parties as to 62.5 per cent through the Ruby Family Trust, and 37.5 per cent by the husband alone. The husband’s evidence is that he was then granted 60,000 shares in the purchasing entity and was appointed CEO.
Following the sale of the business the parties and the children moved to the Country Z in order that the husband could fulfil his contractual obligations in relation to the purchase. The family returned to Australia in 2000.
In 2002 the husband and his original partners in “T Pty Ltd” purchased the business back for $600,000 from receivers appointed to the business. The purchasing entity was C Ltd. The husband’s evidence is that the purchase price was funded by a loan from the National Australia Bank to himself and Mr W.
The parties through the Ruby Family Trust hold a 50 per cent interest in E Pty Ltd with that company holding about 39 per cent of the issued share capital in C Ltd.
The husband is presently employed by C Ltd as CEO.

The Reciprocal Entitlement Agreement

On 2 October 2007 the parties together with the husband’s brother Mr D Ruby, H Pty Ltd as trustee of the Ruby Family Trust, H Pty Ltd as trustee of the D Ruby Trust and E Pty Ltd entered into an agreement described as a “reciprocal entitlement agreement”. The agreement created reciprocal entitlements that granted to each of the respective family trusts an entitlement to purchase for $1 million the shares held by the other of those trusts in E Pty Ltd in the event that either the husband or his brother Mr D Ruby ceased to be employed by C Ltd.
In the context of these proceedings the wife will seek on final hearing an order that the agreement be set aside. The wife complains that she was not consulted by the husband or his brother as to preparation of the agreement and was simply presented with the document by the husband to sign at the home. She further complains that she received no legal advice in relation to the document and that at the time of signing there was no witness to her signature.
Notwithstanding the consideration provided for in the reciprocal entitlement agreement the husband in his evidence asserts that the parties’ shareholding in E Pty Ltd has a value of $1,581,979, significantly in excess of the consideration proposed in the agreement.
The wife in the context of these interim proceedings seeks an order restraining the husband from implementing the terms of the reciprocal entitlement agreement pending further order.

The Ruby Family Trust

The parties’ significant investment vehicle is the Ruby Family Trust, with the trustee of the trust being H Pty Ltd, the parties being directors and shareholders of this trustee. The trust, a discretionary trust, was established by deed dated 28 December 1994. The husband is the appointer for the purposes of the trust.
In summary the assets of the trust are as follows:
a)Cash at bank, managed funds and equities as at 30 June 2012 of about $1 million;
b)AA Hotel Sydney investment as at 30 June 2012 of $45,000;
c)The property at Suburb M as at 30 June 2012 having a book value of $2,582,111;
d)62.5 per cent shareholding in X Pty Ltd that has cash at bank and publicly listed shares. The husband asserts the trusts shareholding to have a value of about $300,000;
e)50 per cent shareholding in E Pty Ltd that holds 57,500,000 shares in C Ltd. The husband asserts the trust’s shareholding to have a value of about $1,600,000.
f)50 per cent shareholding in BB Pty Ltd that owns a block of units at Suburb N. The husband asserts the trust’s shareholding to have a value of about $921,000.
g)50 per cent shareholding in CC Pty Ltd that owns a boarding house at Suburb N. The husband asserts the trust’s shareholding to have a value of about $350,000.
h)A one third interest in the DD Unit Trust that owns a commercial property at EE Street Suburb N. The husband asserts the value of the trust’s interest to be about $160,000. The property itself is rented to C Ltd.
i)15 per cent shareholding in FF Pty Ltd that holds public company shares to the value of about $635,000. The husband asserts the value of the trust’s shareholding to be about $95,000.
j)15 per cent shareholding in GG Pty Ltd that owns public company shares. The husband asserts the value of the trust’s shareholding to be about $1,600,000.
k)50 per cent interest in the HH Unit Trust as at 30 June 2012 having a book value of $1.
As at 30 June 2012, ignoring inter-related entity loans, the primary liabilities of the trust were as follows:
a)Debt to the parties $2,255,748
b)Debt to Mr D Ruby $1,520,755
The amount allegedly owing by the trust to Mr D Ruby is a matter of significant dispute between the parties.
Subsequent to separation and on 14 May 2013 the wife was informed that the husband had exercised his power as appointer of the Ruby Family Trust to remove H Pty Ltd as trustee of the trust and appoint II Pty Ltd as trustee. The husband is the sole director and shareholder of the new trustee company.

Other Assets

Otherwise the other assets of the parties comprise:
a)The Suburb F property having an estimated value of about $5 million;
b)Significant furniture and furnishings and artwork in the possession of the parties;
c)The husband’s Country Z bank account $77,000;
d)The husband’s joint Country Z bank account with his brother Mr D Ruby $20,000;
e)The husband’s FNB joint bank account with his brother Mr JJ Ruby $954;
f)The husband’s CBA account $65,000;
g)The husband’s 2,250,000 shares in C Ltd;
h)European motor vehicle presently driven by the wife;
i)Member entitlements in the G Super Fund that the wife asserts to be about $1.04 million in relation to the husband and about $480,000 for herself;
j)The parties’ interest in the B Trust that holds 100 per cent of the shares in J Pty Ltd. The trustee of the trust is B Pty Ltd with the husband and wife as directors and equal shareholders. J Pty Ltd is a beneficiary of the Ruby Family Trust and has advanced funds to GG Pty Ltd.
As at 5 June 2013 the wife asserts that the primary liabilities of the parties comprised a debt to the National Australia Bank (account …) of $285,992 and a debt to the National Australia Bank (account …) of $253,916 being a total of $539,908 secured over the Suburb F property.
It is contended on behalf of the wife that there has been significant nondisclosure by the husband, particularly as to his overseas assets and other interests. The wife asserts that the husband has interests in overseas trusts associated with his family with those trusts or the husband having interests in the following properties:
a)A beachfront apartment in City KK, Country LL;
b)Two beach houses in MM Town Country LL, evidenced says the wife by correspondence from the husband’s architect as to proposed renovations to the property;
c)A house in MM Town Country LL;
d)Beachfront land in MM Town Country LL;
e)A timeshare apartment in NN Street, City OO, Country PP;
f)A beachfront apartment in City QQ Country Z evidenced says the wife by the husband’s listing in the Owner’s Association telephone directory;
g)Vacant land in Country RR in respect to which the wife gave her consent to a proposed drawing by the husband from his member account in the G Super Fund to pay the balance of purchase price and later consented to the sum of $126,858 being drawn by the husband against the National Australia Bank joint overdraft facility to fund the balance of purchase price.

Circumstances Following Separation

It is common ground that the circumstances of the parties’ separation were acrimonious.
On 13 November 2012 the husband withdrew $50,000 from the parties’ joint account with the National Australia Bank and transferred those funds to his own account. The wife did not become aware of this withdrawal for some time.
In November 2012 the husband departed to work overseas.
In the period from separation until early March 2013 the parties engaged in various negotiations in relation to settlement.
On 4 March 2013 the husband informed the wife that he proposed to stop her access to their joint credit card facilities and to the parties’ bank accounts with the National Australia Bank.
Shortly thereafter the wife was informed by the parties’ accountant that the husband proposed to sell his shares in E Pty Ltd to his brother pursuant to the Reciprocal Entitlement Agreement.
On 4 March 2013 or shortly thereafter the husband cancelled the wife’s authority to operate on the family credit card accounts that she had routinely used during cohabitation to meet household and living expenses.
As a consequence and on 5 March 2013 the wife withdrew from the parties National Australia Bank joint account $150,000 and deposited those funds to an account in her own name with that bank.
Thereafter the wife continued to draw funds as against the joint account to pay household bills and her living expenses and provided to the husband’s solicitors a list of those drawings by letter dated 19 March 2013.
The wife gives evidence that from the sum of $150,000 withdrawn on 5 March 2013 she has expended about $20,000 on cost of repairs and improvements to the Suburb M property. Otherwise she says that she has expended the balance of those funds to meet living expenses as required. As at 19 July 2013 the balance of her account was $73,818 and the wife had outstanding debts totalling $62,392.
On 7 March 2013 the husband withdrew the sum of $150,000 from the parties’ joint National Australia Bank and then withdrew a further sum from that account of $11,000 on 11 March 2013.
In April and May 2013 the husband sold a significant portion of the public company shares and managed investment units owned by the Ruby Family Trust.
On 3 May 2013 the wife drew a cheque for $130,000 against the joint account and deposited that cheque to her own account. Payment of that cheque was subsequently stopped.
On 5 May 2013 the wife departed overseas to spend time with her son. Upon arriving in Country Z the wife received a communication from the National Australia Bank informing the wife that the husband had transferred about $600,000 out of the parties various accounts. The officer from the bank informed the wife that the husband had been requested to return funds to the various accounts.
The husband says that after the wife left for overseas he withdrew funds totalling $853,000 from the parties’ various accounts including the parties’ superannuation fund.
The wife gives evidence that the husband has repatriated funds to the joint overdraft facility but has failed to account for withdrawals from other sources totalling $720,535.
By letter dated 7 May 2013 the wife was notified by the National Australia Bank that operation of all joint accounts would be frozen pending provision of a written authority from both parties as to the future conduct of those accounts.
The wife returned to Australia on 14 May 2013.

Funds Advanced by Mr D Ruby

The husband asserts that between 11 November 2005 and 1 November 2007 in a series of tranches his brother Mr D Ruby loaned to the Ruby Family Trust $1,520,755. The money the husband says was used to acquire assets in the trust, particularly the trust’s interest in GG Pty Ltd.
Historically the alleged loan has been recorded in the financial statements of the trust from year to year and in the financial statements for the year ended 30 June 2012 the then balance of the loan was $1,520,755. The wife on her part denies the existence of the loan.
The husband’s evidence is that otherwise in about 2009 his brother Mr D Ruby sold his home in City KK, Country LL and transferred the proceeds of sale in the sum of $757,483 to a bank account in the joint names of the husband and wife being their National Australia Bank joint account (…). The husband asserts that it was his understanding that this was a loan to him and the wife.
The wife for her part denies that these monies were a loan from Mr D Ruby and asserts that they are the husband’s funds remitted from overseas.
The husband’s evidence is that in February 2013 his brother made a request for repayment of the alleged loan to complete a purchase by him of a property in Country Z.
Without the wife’s knowledge or consent the husband made arrangements with the National Australia Bank to pay some monies to his brother. Between 5 March 2013 and 13 May 2013 the husband remitted to his brother the total sum of $757,483.70 allegedly in repayment of the City KK funds.
The husband between 24 May 2013 and 8 June 2013 made various payments to his brother allegedly in repayment of the monies advanced to the Ruby Family Trust. Those payments totalled $778,255.
The husband asserts that by reason of the various payments the Ruby Family Trust remains indebted to his brother in the sum of $778,255 together with a further sum of $175,000 outstanding in relation to the City KK loan.

The husband’s “offshore voluntary disclosure”

On 5 April 2011 the husband was assessed for additional personal income tax in the sum of $1,001,198. The assessment arose as a consequence of the husband taking advantage of the Australian Taxation Office Offshore Voluntary Disclosure Initiative (OVDI).
The OVDI was an initiative of the Australian Taxation Office that permitted Australian taxpayers to make a voluntary disclosure of previously undeclared offshore income with a view to the Australian Taxation Office taking a more lenient view as to the assessment of additional tax and penalties.
As a consequence of the husband’s voluntary disclosure his income tax returns for the financial years 2006 through to 2009 were amended by including previously undisclosed foreign income as follows :
a)2006  $510,913
b)2007  $530,863
c)2008  $257,836
d)2009  $293,400
It is noted that the disclosed income by the husband coincides with the period in respect of which he asserts his brother advanced monies to the Ruby Family Trust.
In the finalisation of the additional tax liability of the Australian Taxation Office required payment of the sum of $1,040,248 by 24 August 2011. It is unclear on the evidence how that sum was paid.
Documents before the Court comprising Exhibit R relating to the husband’s OVDI disclosure were produced by the husband’s accountant’s SS Accountants.
On 9 February 2010 a conference was held between representatives of the Australian Taxation Office (ATO) and the husband. It was represented to the ATO that the husband’s father had set up offshore trusts in the 1970s and 1980s and that these trusts were not disclosed to the Country LL revenue authorities due to the family’s concerns about government interference in their financial affairs. The Ruby family were very concerned that any disclosure made to the ATO may under the exchange of information clause between Australia and Country LL become known to the Country LL revenue authorities.
It was represented to the ATO that the husband’s father was in his 80s and that the husband’s mother had passed away. It was further represented that the Ruby family wished to wind up the offshore structures and repatriate the funds to Australia.
It was further represented that one of the trusts was created by the husband’s father for the benefit of his four children. It was further represented to the ATO that whilst the nature of the husband’s interest in this trust was unclear he was willing to treat his interest as a beneficial interest in the income of the trust if the ATO would agree to amending only the past four years of income tax returns, charging shortfall interest only at the base rate and imposing a penalty of no more than 5 per cent for failure to take reasonable care.
It was further represented to the ATO that it had been discussed with the husband the possibility of bringing the trust funds onshore to Australia and holding the remaining 75 per cent on trust for the husband’s three siblings in order that the trusts would be the subject to Australian income tax laws on an ongoing basis.
On 24 February 2010 the husband met with his taxation advisers. At that meeting the husband provided to his advisers financial statements for trusts identified as Ruby Trust 1, Ruby Trust 2 and Ruby Trust 3. The documents comprised what were described as income and expenditure statements for each of the trusts. In addition to income producing investments there were properties that did not derive income. The husband was asked to obtain information to reveal the capital value of each of the trusts. The husband confirmed to his advisers that he had used two credit cards linked to the trusts. The husband further informed his advisers that in addition to the three trusts referred to his father had some Country TT trusts and that he was likely to get 25 per cent of the value, expressing concern that they were not being disclosed in the context of the present OVDI.
The husband through his taxation advisers made a formal disclosure under the OVDI dated 30 April 2010. The formal disclosure informed the ATO inter-alia:
a)That the offshore funds were referred to by the husband’s father as “the nest egg”;
b)That assets were held in separate offshore entities to ameliorate any risk by not having the nest egg in one basket;
c)That from time to time the husband’s father moved assets out of one offshore entity, which was then terminated, to a new offshore entity or entities;
d)The nest egg had been used to assist the children with their education and the acquisition of homes both in Country LL and outside Country LL;
e)In 2003 the Country LL government offered an amnesty for offshore entities such as those held in the nest egg and the husband’s father was urged by the husband and his brother to take advantage of the amnesty. The husband’s father did not do so;
f)During 2009 the husband became aware of the ATO OVDI and after protracted family discussions it was agreed that the husband would make a voluntary disclosure to the ATO, provided that no information would or could be given to the Country LL authorities;
g)The ATO was informed of the husband’s proposed OVDI disclosure on 22 December 2009;
h)The nature of the three offshore entities is unknown and have been treated as if they would be trusts for Australian taxation purposes;
i)The legal nature of the interest of the husband in the three entities is unknown and each such interest is being treated as if the husband is beneficially entitled to the income and capital;
j)That until finalisation the husband’s father has requested that the three offshore entities be identified as Ruby Trust 1, 2 and 3 respectively;
k)That the estimated value of each trust as at 31 December 2009 was as follows:
Ruby Trust 1            $14,268,585
Ruby Trust 2            $ 2,332,440
Ruby Trust 3            $     971,381
l)That advice had been obtained from Mr UU of VV Securities Ltd in City OO, Country PP;
m)That if amended assessments are raised on the basis of the disclosure it is anticipated that the total liability will exceed $1 million. The family have agreed that this liability should be met out of the Ruby Trusts and would seek time to realise and remit to Australia the funds required.

By email dated 10 March 2011 the ATO requested further information regarding the husband’s OVDI. The information requested was:
a)The types (e.g. company, trust, foundation, foreign investment fund) of entities described in the disclosure as the three Ruby Trusts;
b)The jurisdiction in which these entities are located; and
c)The husband’s legal interest in the entities.
The information was requested by the ATO to be provided by 25 March 2011 and in the event that the information was not provided by that date then the disclosure will be considered to be outside of the OVDI process.
On 10 March the husband’s adviser spoke to a representative of the ATO advising that the husband had been unable to obtain more information in relation to the trusts from his father by reason of the father’s concern that information might be communicated by the ATO to the Country LL revenue authorities.
On 11 March 2011 the husband’s tax adviser met with the husband and wife. The husband agreed that the information to be provided to the ATO would be as follows:
a)That it was understood that the three Ruby trusts were discretionary trusts but that the trustees would not supply the husband with copies of the deeds;
b)That it is believed that the three trusts may be located in the Country WW;
c)That in family discussions the husband’s father had said that the husband could be treated as if he was beneficially entitled to the income of the three trusts but it was not known what if anything the trustees had done to make the husband beneficially entitled.
By letter dated 23 March 2011 the ATO accepted the husband’s OVDI disclosure.

Contents from Suburb F

Following the wife’s departure for overseas on 5 May 2013 the husband returned to Australia and on 10 May 2013 attended at the family home at Suburb F and removed from the home a quantity of household furniture and furnishings and art. The wife asserts that the items removed have a significant value.
The husband has placed the items removed by him in storage pending, he says, his occupation of the Suburb M property from time to time when he is in Australia. The husband contends that he will install a security system at Suburb M and keep the items insured.

The wife’s financial circumstances

The wife has not been in employment for about 19 years and her only income apart from income from the matrimonial investments is the occasional sale of artwork created by her.
Her income for the 2012 financial year are comprised a distribution from the B Trust in the sum of $88,632. By reason of the underlying assets in the trust that distribution carried a franking credit of $26,589. From the wife’s income the sum of $50,000 was paid as a personal superannuation contribution to the wife’s member account in the G Super Fund. This resulted in the wife’s taxable income for the 2012 year being $38 920 with an estimated taxation refund of $21,957.
The circumstances of the wife in terms of income at least from the Ruby Family Trust are now subject to the whim of the husband who controls the new trustee of that trust. Otherwise the Court accepts that the wife is devoid of income from other sources.
It is common ground that the husband will continue to pay or cause to be paid payments to the National Australia Bank in relation to the parties’ joint overdraft facility, lease payments and motor vehicle registration and insurance payments in relation to the European motor vehicle being used by the wife, life and critical illness insurance payments to MLC in relation to the wife and house and contents insurance premiums as they fall due and payable.
Otherwise the wife asserts that her reasonable expenses are as follows:
a)Rates – Suburb F property  $    98
b)Food  $ 375
c)House repairs  $ 173
d)Gas and electricity  $ 142
e)Telephone  $ 150
f)Motor vehicle petrol and maintenance     $ 198
g)Clothing and shoes  $ 850
h)Medical dental and optical  $ 300
i)Entertainment/hobbies  $ 250
j)Holidays  $ 769
k)Education expenses  $    58
l)Gardening/lawn mowing  $ 115
m)Cleaning – house/pool  $ 415
n)Dry cleaning  $    58
o)Gifts  $    10
p)Hairdressing and toiletries  $ 150
q)Foxtel  $    45
Total:             $4,156
The wife adduced no evidence as to how the various periodic weekly amounts are calculated.
By reference to Part N of the husband’s financial statement it is clear that he enjoys a comfortable lifestyle spending, he says, $500 per week on entertainment and hobbies, $350 a week on holidays, $200 a week on cleaning, $250 a week on dry cleaning, $100 a week on books and magazines, $150 a week on hairdressing and toiletries and $400 a week on a gym and a trainer.
Doing the best the Court can on the evidence available, the Court is satisfied that it is appropriate to consider the wife’s reasonable expenses in the context of this marriage and the available financial resources of the parties to be as follows:
a)Rates – Suburb F property  $    98
b)Food  $ 375
c)Gas and electricity  $ 142
d)Telephone  $ 150
e)Motor vehicle petrol and maintenance     $ 198
f)Clothing and shoes  $ 250
g)Medical dental and optical  $ 300
h)Entertainment and hobbies  $ 250
i)Holidays  $ 350
j)Education expenses  $    58
k)Gardening and lawnmowing  $ 115
l)Cleaning – house/pool  $ 200
m)Dry cleaning  $    58
n)Gifts  $    10
o)Hairdressing and toiletries  $ 150
p)Foxtel  $    45
Total:             $2,749

The husband’s financial circumstances

As referred to above the husband now controls the income and assets of the Ruby Family Trust.
The husband is employed by C Ltd. He receives a salary of $2,835 per week in addition reportable fringe benefits provided by the company but unspecified totalling $3,116 per week.
He had previously been provided with a motor vehicle by the company as his employment package includes a motor vehicle with the cost of no more than $5,000 per month to the company. The motor vehicle was sold on 11 July 2013 and the husband will now be provided with a luxury motor vehicle at a price to the company of US$213,630. The rental payments for the vehicle will be approximately $2,300 a month paid by the company.
It is conceded by the husband’s counsel that by way of distributions from the Ruby Family Trust the husband had the capacity to pay to the wife the sum of $2,500 per week. Otherwise it is conceded by counsel for the husband that a secondary source of funds available to the husband for the purposes of providing a periodic sum to the wife is by way of distribution from the B Trust that in the 2012 financial year was able to pay a dividend by way of distribution of about $77,000 or about $1,500 per week. Thus leaving aside the husband’s salaried income and benefits it is conceded by counsel for the husband that there is an availability of about $4,000 a week from the two trusts to meet the wife’s claim provided that she demonstrates an entitlement to an order for spousal maintenance.
In such circumstances the Court is not required to consider the husband’s personal capacity to meet any obligation to pay maintenance.
Otherwise the husband has recourse to his salary, his fringe benefits received and other sources including it appears the husbands offshore trust interests.

The issues for determination

Spousal maintenance

Section 72 of the Family Law Act 1975 (Cth) sets out the relevant provision in relation to the right to maintenance.
Section 72 provides that:
A party to a marriage is a liable to maintain the other party, to the extent that the first mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a) by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b) by reason of a age or physical or mental incapacity for appropriate gainful employment; or
(c) for any other adequate reason
having regard to any relevant matter referred to in subsection 75(2).
As to the relevant section 75(2) considerations:
a)The wife is aged 54 years and makes no significant complaint in relation to health save for her need to consult with a psychologist on a weekly basis as a consequence of the breakdown of the marriage. The husband is aged 56 years of age and there is no evidence as to any adverse health circumstances relating to him;
b)The income, property and financial resources of the parties are referred to in detail above. The wife has no real capacity to earn income that in any way would meet her reasonable needs as assessed by the Court. The husband initially appeared to concede this issue in his initiating application where he sought an interim order that he pay spouse maintenance for the wife in the sum of $1,000 per week. As the husband has now in effect become the trustee of the Ruby Family Trust the wife remains at his mercy as to whether he distributes to her trust income. The Court was invited to fashion an order or accept an undertaking from the husband that the wife would receive the benefit of appropriate distributions. Having regard to the husband’s control of the trust it will be a matter for him how he makes the payment to the wife and that should be in a way that accrues to her no income tax liability;
c)The commitments of the wife necessary for her self-support are set out above in the sum of $2,749 per week. It is contended on behalf of the husband that an appropriate sum would be $2,500 per week paid from the trust. The husband has a sufficient income and other financial resources as referred to above to meet his reasonable needs;
d)Both parties have superannuation interests in their self-managed super fund. Their respective entitlements will be the subject of consideration in the context of the property proceedings;
e)The parties have enjoyed during cohabitation a lifestyle of significant comfort. The family home presently occupied by the wife has a value of $5 million or more and the Suburb M property occupied by the husband has a value of about $2 million or more. There is no reason having regard to the assets and financial resources available to the parties that they should be required to significantly diminish their standard of living post separation;
f)The wife has to some extent contributed to the income capacity, property and financial resources of the husband by reason of her role within the marriage as the primary homemaker and carer for the two children;
g)The wife has for many years remained out of the paid workforce and is engaged only part-time as an artist. At present she is continuing further studies. Her absence from the workforce in any real sense during the relationship has significantly diminished her present earning capacity.
The Court is satisfied in all the circumstances that it is appropriate there be an order for spousal maintenance in that the wife is unable to support herself adequately for the reasons referred to above.
The wife’s reasonable needs are referred to above and they are in the sum of $2,749 per week and an order will accordingly be made in that sum. It will be a matter for the husband how he provides that periodic sum and in the event that he elects to pay that sum by way of distribution to the wife from the parties’ trust resources the husband should be required to indemnify the wife from any additional taxation liability incurred by her as a consequence of such distribution.

Injunctions

Counsel for the husband submits that injunctive relief should be granted in the following terms:
That the husband be restrained from dealing with the assets and income of and derived by the [Ruby] Family Trust and the [B Trust] (hereafter called the trusts) other than in the ordinary course of the husband’s business and the business of the trusts provided that this order does not restrain the husband from:
i)Expending money derived by the trusts for ordinary living expenses;
ii)Causing the trusts to distribute income in favour of the wife in a sum of not less than $2,500 per week such sum to be paid monthly in advance;
iii)Expending money derived by the trusts to pay legal and accounting costs reasonably incurred;
iv)Expending money derived by the trusts to pay:
a)Property insurance,
b)Lease and registration payments for the car used by the wife,
c)Life policies in the name of the husband and wife,
d)Any interest due on the portfolio loan;
v)Selling assets of the trusts to cause $300,000 to be paid to the wife in accordance with these orders.
Section 114 of the Act permits the Court to grant injunctive relief in various circumstances including an injunction in relation to the property of a party to the marriage.
Generally the Court will have regard to an existing or potential claim to an order altering property under section 79 of the Act and a danger or risk that any such claim may be defeated or prejudiced unless an injunction is granted. Once the need for an injunction is demonstrated it should go no further than is necessary to prevent the abuse or frustration of the Court’s process. (Waugh (2000) FamCA 1183)
It is contended by counsel for the wife that there are serious issues to be tried in relation to the husband’s alleged indebtedness to his brother and the alleged debt owed by the Ruby Family Trust to the V Trust.
It is further contended by counsel for the wife that there has been significant nondisclosure by the husband as to the nature and extent of overseas assets and resources as referred to above particularly with reference to the issues arising from the husband’s disclosure to the Australian Taxation Office detailed above.
In the event that there are significant assets and financial resources of the husband overseas the wife would have a significant claim as against the assets of the parties in Australia. The wife seeks by way of injunction to protect the assets and financial resources of the parties at least as they are known to her in Australia from further dissipation by the husband.
Counsel for the wife contends for injunctive relief in the following terms:
That pending further order the husband is hereby restrained from dealing with the assets and income derived by the [Ruby] Family Trust and the [B Trust] (hereinafter called “the trusts”) other than in the ordinary course of business or the prior agreement in writing of the wife and further he is restrained from doing and/or causing or permitting any act or thing to be done so as to cause or permit, any of the following:
i)The exercise of any power that the husband may have directly or indirectly in respect of any trust, including but not limited to any power of appointment and any power to vary the terms of any trust;
ii)Alienating or further encumbering any of the assets, income or undertakings of any of the entities or any of the subsidiaries;
iii)Alienating or further encumbering any of the shares in any of the entities or the subsidiaries;
iv)Removing replacing or appointing any director or other officeholder of any of the entities or subsidiaries;
v)The provision to or on behalf of either of the husband and/or the wife of any benefit including by way of loan, save for payment by [C Pty Ltd] to the husband of remuneration in the amount supposed to buy the husband in the financial statements sworn by him on 15 May 2013 and filed on the 16 May 2013;
vi)The provision to [Mr D Ruby] or any person or entity on his behalf of any moneys on account of or by reference to any monies alleged to be owing to [Mr D Ruby] by the husband, wife and/or the [Ruby] Family Trust;
vii)Any dealing with the shareholding of [E Pty Ltd] in [C Ltd] pursuant to the “[E] Shareholdings – [Mr Ruby] and [D Ruby] Reciprocal Entitlement Agreement” dated second of October 2007 or otherwise;
viii)Provided that this order does not restrain the husband from:
a)Expending money derived by the trusts for ordinary living expenses that he is otherwise unable to meet from his personal exertion income;
b)Causing the trust to distribute income in favour of the wife in a sum sufficient to satisfy any interim maintenance order made in these proceedings provided that should he elected to do so then he shall pay and indemnify the wife in respect of any tax that she may incur as a consequence of the receipt of such payment;
c)Expending money derived by the trusts to pay:
i)Property insurance,
ii)Lease and registration payments for the car used by the wife life policies in the name of the husband and wife;
iii)Interest due on the portfolio loan;
ix) Selling assets of the trusts to cause $300,000 to be paid to the wife in accordance with orders made by the Family Court of Australia.
In circumstances where there is a clear inference that the husband has financial resources that he failed to disclose in his evidence filed in these proceedings and that those financial resources are of significant substance it is inappropriate for the husband to have recourse to the matrimonial asset pool in Australia for the purpose of paying his legal fees or otherwise than in the ordinary course of business.
The injunctive relief proposed by counsel for the wife permits the husband to continue to act in the ordinary course of business or otherwise seek the wife’s prior written agreement to any transaction or circumstances that falls outside of the ordinary course of business.
Accordingly injunctive relief will be granted in terms as sought by counsel for the wife.

Interim Property

The parties are in agreement that the sum of $300, 000 should be provided to the wife by way of interim payment so as to meet her legal and other expenses in relation to these proceedings.
It is not a matter for this Court to seek to fetter the discretion of the ultimate trial judge in the characterisation of that sum and no characterisation will be attributed to the payment. It will be a matter for determination by the trial judge.

Contents of Suburb F

The husband has given evidence of the particular items removed by him from the home at Suburb F. Items of furniture and furnishings have been moved by him to the Suburb M property which he is to occupy when in Australia. He gives evidence that valuable items including artwork remain in storage until such time as he has installed an appropriate alarm system in the Suburb M property.
An issue will arise as to the valuation of these items, particularly the artworks removed from the matrimonial home by the husband.
The husband gives evidence that he will spend extensive periods outside Australia, leaving the Suburb M property vacant.
In that circumstance it would be appropriate that items of value being the artworks removed by the husband from the Suburb F property be returned to that home in order that they might be more securely contained. Otherwise should the wife require the other items removed by the husband to be valued she will be afforded access to the Suburb M property.
An order will be made that the artworks specified in paragraph 177 of the affidavit of the husband filed on 27 August 2013 be returned to the matrimonial home by arrangement between the parties’ solicitors within seven days.

I certify that the preceding one hundred and twenty-nine (129) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 11 October 2013.

Associate:

Date: 11 October 2013

[2013] FamCA 851

11 October 2013

Key Legal Topics

Areas of Law

Family Law

Equity & Trusts

Legal Concepts

Injunction

Remedies

Fiduciary Duty