S and S - [2000] FMCAfam 27

FEDERAL MAGISTRATES COURT OF AUSTRALIA

S & S

[2000] FMCA fam 27

INTERIM PROPERTY AND ANCILLARY MATTERS

Applicant:

A L S

Respondent:

S S

File No:

ZM3113 of 2000

Delivered on:

5 September 2000

Delivered at:

Melbourne

Hearing Date:

24 August & 1 September 2000

Judgment of:

Hartnett FM

REPRESENTATION

Counsel for the Applicant:

Mr Sweeney

Solicitors for the Applicant:

Marshalls and Dent,
Solicitors, DX 213 Melbourne

Counsel for the Respondent:

Mr Brown

Solicitors for the Respondent:

Wisewoulds, DX 470 Melbourne

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

ZM 3113 of 2000

A L S

Applicant

And

S S

Respondent

REASONS FOR JUDGMENT

Applications

The wife by amended application filed 15 August 2000 sought a number of orders relating to the parties’ three children; sole occupation of the former matrimonial home; spousal maintenance and security for costs; various restraining orders; procedural orders; and orders relating to the sale of property. In support of the wife’s application were filed: (a) her affidavits filed 12 May 2000 and 11 August 2000; (b) a statement of financial circumstances filed 12 May 2000; (c) an affidavit filed 26 June 2000 sworn by Mr Szabo.
The husband in response filed a Form 8A response on 23 August 2000 wherein he sought various orders which included orders pertaining to the parties’ three children; the discharge of earlier orders; various restraining orders; the provision of some property items to him; and that the husband continue to be entitled to operate the business P Insurance and Investment Consultants from the premises known as and situate at 106 B Street, H H. He sought that his Australian passport surrendered to the Court be released to him and the wife return to him his Italian passport.
In support of his application the husband filed affidavits of 21 August 2000 and 23 August 2000.
The husband was cross-examined by Counsel for the wife.
The parties consented to the Federal Magistrates Court hearing and determining those matters contained in their competing applications. The hearing was an interim one.
On the first hearing date, namely 24 August 2000, an application was filed by two companies, G W Management Advisers Service Ltd (hereinafter referred to as GWMAS Ltd) and A Financial Planning Ltd, seeking various interim orders including orders which related to a third company, namely A C Pty Ltd. In support of that application was an affidavit filed 24 August 2000 and sworn by Ms M.
On 1 September 2000 orders were made by consent between the Third Party Applicant companies and the husband and wife which effectively dealt with that application.

Background

The husband is aged 49 years, his date of birth being 20 April 1951. The wife is aged 39 years, her date of birth being 9 September 1960.
The parties married on 26 January 1980 and separated on 18 February 2000 after a marriage of nearly twenty years.
There are three children of the marriage, namely A S, born 25 August 1983 who is now aged 16 years; R S, born 11 July 1986 who is now aged 14 years; and J S, born 26 January 1989 who is now aged

11 years. The three children reside with their mother pursuant to an interim order made in the Family Court on 14 July 2000 by consent. They continue to live in the former matrimonial home with their mother at 27 B Avenue B, in the State of Victoria, and pursuant to the orders of 14 July 2000 questions of contact are reserved.
The husband in the proceedings is an insurance and financial consultant by occupation. The wife is engaged in home duties. The husband is a director and/or shareholder of a number of companies. Included in these companies is one known as A C Pty Ltd. The husband is a director of this company, the wife is not, and it is this company which entered into an agency agreement on 27 May 1998 with A Ltd as broker (A Ltd being formerly known as L Financial Planning Ltd) and A C Pty Ltd as an adviser company. Tendered in evidence by the wife was an agreement wherein the date had been whited out between A C Pty Ltd as licensor and, the husband said in evidence, the company known as P Insurance and Investment Consultants Pty Ltd as licensee, although that company’s name and seal had also been whited out. That agreement was for the licensee to operate under the trade name A Financial Services (“the name”) the business of authorised life assurance adviser to the broker A in Victoria. The document had, it appeared, affixed to it the seals of A C Pty Ltd and P Insurance and Investment Consultants Pty Ltd but both seals and any signatures had been whited out. The original agreement entered into between A Limited as broker and A C Pty Ltd as an adviser company was signed by the three directors of A C Pty Ltd on 29 June 1998. In that agreement, A C Pty Ltd traded as A Financial Services (M P) and A Financial Services (H H).
Considerable monies appear to have been at the husband’s disposal in company accounts of A C Pty Ltd and/or P Insurance and Investment Consultants Pty Ltd. Certainly the husband was able to access funds in excess of thirty thousand dollars, either by the removal of such funds from one or other of these accounts or by direct cash cheque payments to him by creditors on or about 21 and 22 August 2000. The “cash” payments to him were unusual and payments made for monies owing to one or other of the above companies.
Since the parties separated on 18 February 2000 the husband has engaged in significant financial restructuring, including the forwarding of large sums of money overseas. His activities have rendered the wife’s current financial position extremely precarious. Both the husband and wife depose to the husband having control of the parties’ finances throughout their marriage. Indeed in 1991 the wife granted to the husband a general power of attorney and pursuant to that power of attorney and subsequent to separation the husband signed a document on behalf of the wife to sell a taxi licence for approximately $246,000.00 net (which funds he then sent overseas); and to resign as a director of P Insurance and Investment Consultants Pty Ltd in June 2000.

Orders sought

In the proceedings the husband through his Counsel consented to an order that until further order the wife have sole use and occupation of the former matrimonial home known as and situate at 27 B Avenue B, in the State of Victoria. He also elected not to proceed with his application for the return of his passports.
In the proceedings the wife conceded that the husband had transferred ownership of 106 B Street, H H, to the C Group Pty Ltd Superannuation Fund and accordingly the wife no longer sought a sale of that property.
The husband in his Form 8 Response seeks orders for residence/residence and I do not propose to make such an order in this Court. The matter of residence is before the Family Court as is the question of contact. The residence order in favour of the wife was made recently, being 14 July 2000. The competing proposals currently put forward by the parties as to the question of the husband’s contact are not too dissimilar. Each proposes alternate weekend contact and the wife in addition proposes one night each week commencing at 5:00 pm until 9:00 am the following day. In his submissions, Counsel on behalf of the wife said that the wife’s proposals as to contact may change in the event that a psychiatric report indicated that such a regime was not in the best interests of the children – due to the current state of functioning of the husband. I shall hear any issues as to contact on the adjourned date. Given the request to obtain a psychiatric report as to the husband’s functioning by Counsel for the husband, the ordering of a Welfare Report may be premature.
The main thrust of these interim proceedings has been as to property and ancillary matters. In the proceedings, Counsel for the husband sought an order that the husband attend upon a psychiatrist nominated by the wife and/or her solicitors in an adjourned period and that a report be prepared by the said psychiatrist arising out of that attendance which should be made available to the parties, their legal representatives and the Court. Counsel for the husband proposed that the costs of such attendance and report be paid for by the monies currently held in trust at the husband’s solicitors offices. Counsel for the husband then proposed an adjournment of the matter to 15 September 2000 for further hearing with no further orders to be made.
Counsel for the husband however was careful to point out that he was not foreshadowing an application to the court for the appointment of a next friend for the husband on the next occasion. Nevertheless what is raised are questions as to the husband’s capacity to operate his business; questions as to the appropriateness of unsupervised contact and other like matters.
This application arose out of the husband’s sustained inability, in the latter part of the proceedings only, and after the wife had subpoenaed Mr M following the husband’s earlier sworn evidence, to recall how it was he had disposed of $35,000.00 – and then subsequently $500,000.00. The husband repeatedly responded that he could not recall, could not remember or did not know.
Counsel for the wife in the proceedings sought that an order be made for the husband to hand to the wife the keys to his motor vehicle and the wife be at liberty to sell the motor vehicle and thereby reduce and/or pay out the debt secured over her motor vehicle.
The most immediate and pressing difficulty for the wife is that the husband, in particular, performed the following actions subsequent to separation:
a)He withdrew the sum of $500,000.00 from the Commonwealth Bank and disposed of such funds overseas and/or elsewhere. The security for the provision of such funds is the former matrimonial home at 27 B Avenue, B and the adjoining property at number 29. The husband concedes that he has made no payments of principle or interest with respect to these borrowings and Counsel for the wife, in submissions, said to the Court that $9,773.00 of interest has accrued on these borrowings to date. The husband in evidence says that he has no capacity to repay these borrowings. The wife seeks to sell one of the properties provided as security to alleviate the growing interest debt and to have the opportunity of sale prior to the bank forcing the parties to sell. The husband opposes this. The husband, in evidence, said that he objected to the sale because there would be a loss of his “integrity”. This was an extraordinary answer to the question from the husband who admitted in his evidence that he had lied in his sworn testimony of 24 August 2000, and further that he had knowingly breached a Family Court restraining order.
b)He refinanced – to the sum of $25,300.000 - the Mitsubishi Magna motor vehicle which is registered in his name, but driven by the wife. The husband was unable to say as to whether payments were being made with respect to those borrowings. Likewise the husband had taken a further loan on his motor vehicle, a BMW 7-35 I Executive, in the sum of $20,300.00. Again the husband was not able to say as to whether payments were being made with respect to those borrowings. Such refinancing was done without consultation with the wife. The car, which is in the wife’s possession, is used by her to transport the parties’ children. The husband said in evidence that the sum of approximately $45,000.00 (being monies paid to him as a result of the provision as security of these two motor vehicles), was deposited by him with his solicitors, Wisewoulds. Approximately $30,000.00 of those funds remain in that account. This action of the husband had no real basis, save that, as he said in evidence, to “hurt” his wife. It certainly has made her position very financially precarious. It is hard to imagine a more destructive mode of behaviour wherein one party sets out to eradicate, in large part, the parties’ asset pool.
The wife needs the security of having a motor vehicle to transport herself and her children. This matter needs to be rectified as soon as possible to prevent further loss to the wife. The parties’ two motor vehicles are currently registered in the husband’s name. The husband’s evidence is that he is unsure as to the current status of repayments made with respect to his wife’s and his own motor vehicles and he makes no proposal as to how it is that those repayments are to be met in the future. The wife may thus face the prospect of her car being repossessed, as indeed might the husband unless he is able to access some of the considerable funds’ which he has had at his disposal since early this year. Given the husband’s admitted breach of a restraining order made in the Family Court, I am very concerned that the husband may either further encumber or dispose of one or other of the parties’ motor vehicles. This would be catastrophic for the wife and I propose that the husband should not be given that opportunity by a transfer of ownership of those two vehicles to the wife. It may become necessary for the wife to sell the husband’s motor vehicle in order to release her motor vehicle from its present encumbrance. That is a matter which I shall adjourn to the further hearing date so that the husband can put proper material before the Court as to that matter including his ability to pay the instalments due on the motor vehicle of the wife. Alternatively, the husband may regain his memory as to the whereabouts of the $35,000.00 cash previously held by him and pay out the wife’s motor vehicle.
The wife seeks the sale of 29 B Avenue, B, not to make any funds immediately available to her, but rather to reduce the parties’ losses. Although the wife is currently in receipt of rental in the sum of $770.00 per month with respect to that property, the interest that has accrued is in the sum of $9,773.00 to date and the husband in evidence does not propose that he commence to make any repayments. Indeed, the husband was engaged in his business at the time he drew down the Commonwealth Bank funds of $500,000.00, but he neglected to make any payments with respect to the monies advanced, both at the time of his being engaged in the operations of his businesses and subsequently. The husband has admitted that he is not servicing the mortgage. The wife has no capacity to service the loan and it would seem in both parties’ interests that the parties have the opportunity to sell the property before the Commonwealth Bank sells it for them. There shall remain a significant loan secured by the former matrimonial home which the wife and/or husband must find the means to service.
The husband received approximately $45,000.00 from the re-financing of the two motor vehicles. His evidence was that these monies, in their totality, went into a trust account, in his name, at Wisewoulds. The evidence is that there is only approximately $30,000.00 of those funds remaining. The husband has thus had the benefit of approximately $15,000.00 of those monies to date. In addition the husband has had the benefit of the sum of $35,000.00 which he can now not recall as to its whereabouts or disposition. The husband had the use of these funds in blatant breach of a restraining order then existing at the time of his withdrawal of such funds as admitted by him. The husband’s further evidence is that he has gambled and wasted a lot of money. The wife is supporting the parties’ three children and has currently outstanding in Visa card debts, household bills and school fees the sum of $14,431.00, and this is before one takes into account her weekly living expenses and legal fees. The wife’s Statement of Financial Circumstance indicates that she has no income and considerable expenses in relation to which, save for her current receipt of $770.00 per month, she receives no assistance from the husband in meeting. In my view it is entirely appropriate that the wife receive the funds presently in the trust account at Wisewoulds.

Conclusion

I refer to the evidence of the husband given 24 August 2000 as to his payment of monies to Mr L M and Mr H H in the total sum of

$30 – $35,000.00.
I refer to the further evidence of the husband given 1 September 2000 as to his admission that on 24 August 2000 he gave sworn evidence as described above which was a lie. On the husband’s own admission he has misled the Court.
I am referring the papers in this matter to the Commonwealth Director of Public Prosecutions for consideration of prosecution.
The husband, part way through the hearing of 1 September 2000 suffered from an inability to recall matters. For example, he was unable to recall what it was he had done with $35,000.00 in cash which he had obtained less than 10 days earlier. His evidence was that:
a)He had lied about his disposal of these funds on 24 August 2000;
b)He knew that in accessing the funds he was in breach of a Family Court order; and
c)That despite his very specific recall on 24 August 2000 including:
i)Persons whom he had paid;
ii)Times at which he had made payments;
iii)Locations at which he had made payments;
iv)Description of payments (being $50.00 bills).
on 1 September 2000 he could not assist the Court as to the whereabouts of the $35,000.00. The husband was repeatedly cross-examined as to the location of the monies and thereafter, to in fact, almost every question asked of him, his response was that he could not recall.
I am satisfied that the financial circumstances of the parties are compelling and require urgency of response by this Court. The financial position of the parties is rapidly deteriorating as:
a)Ever increasing interest bills are eroding the parties equity in the three pieces of real property remaining in their possession, namely:
i)27 B Avenue B;
ii)29 B Avenue B; and
iii)16 S Avenue P I (in relation to which the husband’s evidence was that no repayments have been made with respect to the $80,000.00 loan advanced to the husband and the wife with this property as security). and
b)The husband’s evidence indicates a lack of certainty as to repayments being made with respect to the loans secured by the wife’s motor vehicle and his own.
The need to preserve the car in the wife’s possession for the welfare of the children is imperative.
The need to place the wife in a position wherein she may be able to retain ownership and/or occupation in the short term of the former matrimonial home is also imperative for the welfare of the children.
I am satisfied that no purpose is served, but great harm may result, by delaying any further the sale of 29 B Avenue B.
I am satisfied that the husband has obtained funds in the sum of approximately $1.217 million (on his own affidavit evidence) and note his allegation that some $700 - $740,000.00 has been transferred by him overseas (that being also the instruction provided to his Counsel Mr Brown before Judicial Registrar Nikakis).
In addition he has obtained funds from the sale of shares, and the withdrawal of a further $35,000.00 in late August 2000.
I am satisfied that great hardship will be caused to the wife and children of the marriage to not grant the relief the wife seeks in the manner I have indicated above. The husband’s position in terms of an ultimate distribution of property as between the parties is not prejudiced in any way by the orders which I shall now make.

I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Hartnett FM

Associate:

Date: