Salim and Hakim (No. 2)
[2021] FamCA 495
•12 July 2021
FAMILY COURT OF AUSTRALIA
Salim & Hakim (No. 2) [2021] FamCA 495
File number(s): PAC 5392 of 2020 Judgment of: FOSTER J Date of judgment: 12 July 2021 Catchwords: FAMILY LAW – INTERIM SPOUSAL MAINTENANCE – INTERIM PROPERTY/COSTS – sole use and occupation of the home – application for appointment of receiver to trust and company – application to set aside lease transaction under s 106B – where application for spouse maintenance dismissed – where husband with knowledge of wife’s application for sole use and occupation of the home leases the premises before interim hearing – where tenant joined as second respondent – where wife seeks to set aside the lease under s106B of the Act – where application for interim property order by wife – where consideration of applicable principle – where order made that husband pay the wife $100,000 to be categorised at final hearing – where order made setting aside lease to second respondent – where second respondent ordered to vacate – where liberty to apply for Writ of Possession – where order made that husband indemnify second respondent as to relocation and removal expenses – where application for appointment of Receiver stood over with liberty to relist. Legislation: Family Law Act 1975 (Cth) ss 4(1)(e), 72, 74, 106B, 114
NSW Residential Tenancies Act 2010 s 119
Cases cited: Salim & Hakim [2021] FamCA 245
Bevan & Bevan (1995) FLC 92-600
D Pty Ltd and Ors & Sadler and Ors [2016] FamCAFC 187
Davis & Davis (1976) FLC 90-062
Fewster & Drake [2016] FamCAFC 214
Hall v Hall [2016] HCA 23
Harris & Harris (1993) FLC 92-378
Haseloff & Korman and Ors [2013] FamCA 1019
R v Dovey: Ex Parte Ross (1979) 5 Fam LR 1
Redman and Redman [1987] FamCA 2; (1987) FLC 91-805
Riemann & Riemann and Ors (No. 3) [2017] FamCA 911
Sieling v Sieling (1979) FLC 90-627Strahan & Strahan [2009] FamCAFC 166; (2011) FLC 93-466
Number of paragraphs: 140 Date of hearing: 18 June 2021 Place: Parramatta Counsel for the Applicant: Mr Givney Solicitor for the Applicant: Maclarens Lawyers Solicitor for the First Respondent: Mr Wahhab of York Law Family Law Specialists Counsel for the Second Respondent: Mr Havenstein Solicitor for the Second Respondent: Zahr Partners ORDERS
PAC 5392 of 2020 BETWEEN: MS SALIM
Applicant
AND: MR HAKIM
First Respondent
MS NOOR
Second Respondent
ORDER MADE BY:
FOSTER J
DATE OF ORDER:
9 JULY 2021
THE COURT ORDERS THAT:
1.The wife’s application for periodic spouse maintenance be dismissed.
2.The husband pay to the wife within 21 days from this date the sum of $100,000 with the categorisation of such sum reserved to agreement between the parties or final hearing.
3.Pursuant to s 106B of the Family Law Act 1975 (Cth) the Memorandum of Lease dated 3 May 2021 between the husband as landlord and the second respondent as tenant in relation to the property at C Street, Suburb D be set aside.
4.The second respondent vacate the property at C Street, Suburb D by no later than 21 days from this date.
5.Liberty to the applicant wife to apply for a Writ of Possession on short notice.
6.The husband indemnify the second respondent in respect to her reasonably incurred relocation and removal expenses within seven days of receiving evidence of payment of such expenses by the second respondent.
7.Pending further order the wife shall have sole use and occupation of the former matrimonial home at C Street, Suburb D as and from 21 days from this date and that thereafter the husband be restrained from doing any act or action that may interfere with the wife’s peaceful use and enjoyment of the said property.
8.The husband shall, pending further order, cause the payment of property outgoings as they fall due and payable, being levied council and water rates and insurances and mortgage payments.
9.The husband shall, concurrently with the wife taking up occupation of the C Street property, cause to be returned to the property by arrangement with the wife through her solicitors all items of personalty, furnishings, furniture, white goods and clothing and personal effects of the wife and children removed by him from the C Street home.
Note: The form of the order is subject to the entry in the Court’s records.
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 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Salim & Hakim has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
FOSTER J:
In the primary property proceedings between the applicant wife and the respondent husband that commenced in October 2020 the wife in her Initiating Application sought a final order as to property that the husband by way of property adjustment pay to her within 60 days the sum of $1 million and in default the real estate property at C Street, Suburb D be sold and that she be paid that sum from the proceeds of sale.
In her Initiating Application the wife sought interim orders, in summary, as follows:
(a)that the husband pay to her by way of urgent maintenance the sum of $20,000;
(b)that the husband pay to her by way of periodic interim spouse maintenance the sum of $1,500 per week;
(c)that the husband pay within 30 days the sum of $200,000 to the wife by way of interim property settlement.
The wife’s application was listed before a registrar on 11 January 2021. It was noted on that date that the husband continued to reside in the former matrimonial home and that the wife and three children of the relationship were residing at an address shared with her parents. It was ordered that interim issues be listed in the registrar’s call over on 11 February 2021 for consideration of transfer to the judicial duty list. Otherwise, certain directions were made for financial disclosure.
On 11 February 2021 the registrar was informed that the wife’s interim application was not ready to proceed and proceedings were adjourned to 1 March 2021 for further directions in consideration of a further interim listing date.
Subsequently an issue arose as to a Notice of Objection to Subpoena. The objection, following a review application of a registrar’s determination was listed for judicial hearing on 12 April 2021 and on that date judgment was reserved. On 29 April 2021 reasons for judgment were delivered and the subject Notice of Objection to Subpoena was dismissed: Salim & Hakim [2021] FamCA 245.
It appears that interim proceedings were thereafter listed before Hannam J on 3 June 2021. The application was not able to proceed to hearing on that date and proceedings were adjourned for judicial case management to 15 June 2021. On 15 June 2021 the interim application was listed for hearing on 18 June 2021. Directions were made that the husband file and serve an outline of case and summary of argument by 17 June 2021, that the wife file any further amended Initiating Application to be relied upon by 16 June 2021 and any further respondent to be joined by such application and be informed of the listing for hearing on 18 June 2021.
The directions of 15 June 2021 were necessitated by the disclosure that the husband had, he asserts, rented out the former matrimonial home that was the subject of the wife’s application for sole use and occupation.
On 18 June 2021 the interim hearing proceeded in relation to the financial relief sought by the wife with the issue of sole use and occupation adjourned until 30 June 2020 as the tenant of the matrimonial home had been joined as the second respondent and sought time to seek legal advice. Judgment was reserved as to the financial issues. The second respondent (tenant) in the event that there was no agreement as to occupation of the home by the wife, was directed to file and serve any affidavit evidence to be relied upon by her by close of business 29 June 2021.
It is to be noted that the tenancy agreement entered into by the second respondent is a tenancy agreement with the husband’s named as landlord, notwithstanding that he is not the owner or registered proprietor of property that is owned by Hakim Pty Ltd in its trustee capacity.
The Wife’s Application
The wife filed her Further Amended Initiating Application on 15 June 2021. In that Further Amended Initiating Application she sought amended interim orders, relevantly in substance as follows:
(a)that the second respondent (tenant) deliver up vacant possession of the property at C Street, Suburb D to the wife;
(b)that the wife be granted sole use and occupation of the property at C Street, Suburb D;
(c)that the husband be restrained from approaching or otherwise entering the property at C Street, Suburb D;
(d)that the husband within seven days pay to the wife the sum of $100,000;
(e)that the husband forthwith advise the Court as to the address and/or whereabouts of the contents of the property at C Street, Suburb D and provide all necessary authorities to enable the wife to collect same and have same delivered to the property at C Street, Suburb D;
(f)that pursuant to Rule 6.03 J Pty Ltd, Hakim Pty Ltd as trustee of the Hakim Family Trust and N Pty Ltd be joined as parties to the proceedings;
(g)that in the event that the husband fails to comply with orders as to sole use and payment of the sum of $100,000 to the wife then Mr O and his delegates be appointed as receiver of the property and income of J Pty Ltd, Hakim Pty Ltd as trustee of the Hakim Family Trust and N Pty Ltd.
It is noted that Mr O has provided his consent to his appointment as receiver: Exh “I” and that the husband’s counsel had no issue as to his qualifications and experience.
The wife relied upon the following documents:
(a)her amended financial statement sworn 10 February 2021;
(b)her affidavit sworn 1 June 2021;
(c)her further affidavit sworn 10 June 2021;
(d)with leave her further affidavit sworn 29 June 2021.
The Husband’s Response
The husband filed his Response to the wife’s Initiating Application on 8 January 2021. In that Response he sought a primary property order that he pay to the wife by way of property settlement the sum of $100,000.
Otherwise, the husband sought an order that the wife’s interim application be dismissed and that she pay his costs on an indemnity basis.
The husband relied upon the following documents:
(a)his financial statement sworn 7 January 2021;
(b)his affidavit sworn 5 May 2021;
(c)his affidavit sworn 2 June 2021;
(d)the affidavit of Mr U sworn 2 February 2021;
(e)with leave, his further affidavit sworn 28 June 2021.
(f)with leave, his further affidavit sworn 7 July 2021.
Context
The parties married in 2004.
The wife is presently aged 41 and the husband aged 45.
There are three children of the marriage presently aged 16, 13 and seven. The wife asserts that she was the primary carer for the children and provided substantially for all of their day-to-day needs and activities.
The husband has three children from a previous marriage who at the commencement of the parties’ relationship were aged eight, seven and three. These children remained part of the parties’ household for about three years, with the wife providing care for those children until the children were eventually retained by their mother in Country E.
The wife asserts that the parties separated under the one roof in 2013, with final separation occurring when she and the children vacated the former matrimonial home at C Street, Suburb D on 16 February 2020. The wife asserts that in 2013 the husband said to her “since we separated you can go fucking get a pension, I pay enough taxes, and I’m not giving you any money.” The wife thereupon informed Centrelink of their separation under one roof and the wife commenced to receive a single parent’s benefit. The husband, asserts the wife, demanded that the wife conduct herself in public as if still married and insisted that the wife not obtain any employment at all. He was, she asserts, well aware of the receipt of Centrelink benefits.
The wife’s Centrelink benefits were paid to her own account to which she had access. Otherwise, the wife had access to an Eftpos card in the husband’s name and was required to account to the husband for any purchases made. Otherwise, he would give her from time to time $50 or $100 from a wad of cash money that he carried.
In late 2019 the wife informed the husband that she proposed to finally separate and leave the matrimonial home. The husband then acquired through his business a motor vehicle 1 that he made available to the wife. In June 2021 the wife became aware that the husband was using payments for the car to offset against his child support liability. The husband, she says, also drives a motor vehicle 1 purchased in 2017 for about $214,000.
Subsequent to final separation the wife and children moved to her parents rented unit at Suburb D that was in a poor state of repair and unsuitable for the children. The wife and one of the children slept on a mattress on the floor. Subsequently they obtained a four bedroom rented home unit premises at Suburb BB. Both of the wife’s parents have health issues.
The children at present have no relationship with the father. The wife asserts that the husband has provided little financial assistance to her and the children.
The wife’s evidence
The wife asserts that separation occurred in February 2020 when there was an incident involving family violence perpetrated upon her by the husband in the presence of the children. Subsequent to the incident, the wife and children moved out of the home and commenced to occupy residential premises with her parents. Presently the wife, children and her parents occupy a four bedroom townhouse that she asserts is not big enough for the six of them.
The property is being rented for $1,520 per week to which the wife contributes $260 per week from her present Centrelink jobseeker benefits that are in the sum of $900 per week. The wife has some uncertainty as to future entitlement to Centrelink benefits. The wife further asserts that she has little prospect of being able to obtain rental premises as she is on Centrelink benefits and an appropriate property for her and the children would cost between $950 and $1,000 per week.
The wife and her parents have now received a Notice to Terminate the tenancy dated 17 May 2021 as a consequence of the property being sold. Under the notice they are required to vacate the property within 30 days.
The wife asserts that she has sought employment utilising the service of an employment agency and submitting various job applications in the areas in which she has some experience, being in customer service or as a receptionist. To date she has been unsuccessful in obtaining employment
Otherwise, the wife asserts that since February 2020 the husband has failed to make arrangements for payment of the children’s school fees, necessitating the withdrawal of the eldest child from school and her enrolment in a public high school. The wife asserts there is some risk in relation to the continuing attendance of the younger two children at the school they attended throughout cohabitation.
Subsequent to separation, the husband remained in occupation of the matrimonial home at C Street, Suburb D. Notwithstanding the husband being on notice that the wife seeks an order for sole use and occupation of their former home, the husband in his affidavit sworn 5 May 2020 asserts that his financial circumstances necessitated him renting out the matrimonial home which he did as and from 3 May 2021 for a period of 18 months through a real estate agent. The property has been rented to the second respondent who the wife asserts is otherwise known to the husband.
The wife asserts that at the commencement of the relationship the husband owned the property at C Street, Suburb D, a motor vehicle and some items of personalty and a business trading as J Pty Ltd that engages in supply and installation. The wife says that she had some jewellery and had a motor vehicle at the commencement of the relationship.
The wife asserts that the company owned commercial real estate at H Street, Suburb D and subsequently acquired the adjoining property at H Street, Suburb D.
In 2017 the husband acquired an interest in a development site at Suburb R with the intention of construction of luxury apartments.
The husband also acquired a shareholding in CC Pty Ltd, a company that manufactured construction material. The husband subsequently sold shares in that company receiving the sum of $1 million and telling her “I’m going to get another 3 million”.
It is the wife’s understanding that J Pty Ltd owns the business conducted on premises at H Street, Suburb D and also the former matrimonial home at C Street, Suburb D. The wife asserts that the financial statements for J Pty Ltd for the year ended June 2019 disclose a gross turnover of just over $5.6 million.
The husband, she says, in the period September to November 2019 made payments to third parties, she says, are unrelated to his business, totalling about $138,000 and, otherwise, paid funds to his brother overseas in 2019 totalling about $80,000. Otherwise, she asserts, that the husband has paid funds to an entity associated with his children of his former marriage in the total sum of about $235,000 between December 2019 and December 2020.
The wife asserts she has no funds to be able to contribute to legal fees. She seeks funds to be able to pay the legal fees. The wife says that subsequent to separation she has received funds totalling about $60,000 from a friend by way of loan to facilitate her ongoing living expenses, legal fees and support for herself and the children. The husband, she says, cancelled private health cover for herself and the children resulting in significant dental expenses for the middle child and doctors’ fees and hospital expenses for herself of about $2,000. She asserts that she will not seek to borrow more funds.
As to the “tenant” of the former matrimonial home, the second respondent and her husband sold their property at DD Street, Suburb EE in February 2021. The tenant, the second respondent, was put on notice by way of a letter from the wife’s solicitor dated 8 June 2021 that the wife had since April 2021 sought an order for sole use and occupation of the home and that such an order would be sought as against the second respondent.
More recently the wife has obtained a training position with FF Company for prospective employment in the call centre. She provides no evidence as to her likely salary if accepted after training.
The husband’s evidence
The husband denies the wife’s assertion that separation occurred in 2013. He further denies that he was aware that the wife was in receipt of Centrelink benefits as asserted by her. The husband further asserts that the wife received family tax benefit payments in relation to the children of his first marriage that remained as part of their household for some time, even when those children were no longer in their care.
He asserts that the wife had refused to return to work after the marriage and had refused his requests to help him in the business.
These will be issues for determination at final hearing.
As at the commencement of the parties’ relationship, the husband asserts that he had the following assets:
(a)his company Hakim Pty Ltd which as trustee of the Hakim Family Trust held the following assets:
(i)the commercial property at H Street, Suburb D;
(ii)the matrimonial home at C Street, Suburb D;
(iii)the J Pty Ltd business, at that time trading as that business name;
(iv)a motor vehicle 2;
(v)a motor vehicle 3;
(vi)cash of about $100,000;
(b)a property in Country E, value not known, the husband asserts that this property was sold in about 2018 to his brother for the sum of $100,000 with funds used to meet family expenses;
(c)furniture and personal effects value not known;
(d)superannuation value not known.
He asserts that the wife had a motor vehicle and no other assets of significance.
As to Hakim Pty Ltd the husband holds the vast majority of the shares with his brother holding shareholding of about one per cent. The company is the trustee of the Hakim Family Trust that was established in 2003. Hakim is the registered proprietor of the former matrimonial home at Suburb D and at about the time of the marriage purchased the commercial property at H Street, Suburb D for $654,000. The purchase price was partly funded by way of mortgage from the Westpac bank. Subsequent to purchase a showroom was constructed on the property. The husband had the use of the adjoining properties H Street, Suburb D that are owned by his brother for the purposes of the business of J Pty Ltd.
The business of J Pty Ltd Australia was incorporated in January 2010 as J Pty Ltd, the husband is the sole director and shareholder of the company. The husband asserts that from early 2020 the company has borrowed at exorbitant interest rates, funds totalling about $893,000 to allow the business to continue to trade and meet liabilities and buy stock. Repayments on these loans are in excess of $100,000 per month. By reason of the company’s ongoing liabilities the husband asserts that he had decided to reduce expenditure by selling the two motor vehicles used by himself and the wife and a car driven by his general manager, at a saving of about $6,173 per month. Since December 2020 none of these vehicles have been disposed of, the inference being that finance payments continue to be made.
The husband asserts that the circumstances of J Pty Ltd had been substantially affected by COVID-19, in particular, facing a significant drop in retail sales, an increase in the cost of stock purchases and significant increases in shipping costs.
The husband as a consequence cancelled a warehouse lease at Suburb EE, a saving of about $66,000 per year in rent, with all stock now held in a Suburb GG rented warehouse at a cost of about $72,000 per annum. The husband asserts that gross turnover in the period from 1 July 2020 to 31 March 2021 is reduced to about $2.742 million. The husband asserts that rent paid by J Pty Ltd in the sum of about $300,000 in that period is paid to the Family Trust, with the trust using funds to meet mortgage repayments and the mezzanine finance loans. In the financial year ended June 2020 financial statements for J Pty Ltd reveal funds advanced to Hakim Pty Ltd of about $620,000 in that financial year. These funds may well be advanced from the mezzanine loan funding referred to by the husband.
The husband’s company J2 Pty Ltd acquired a shareholding in a company T Pty Ltd in July 2019. The other shareholder is the wife’s brother Mr V. The husband asserts that T Pty Ltd never traded and he sold his shareholding in J2 Pty Ltd. There is no detail as to this transaction.
In April 2018 the company N Pty Ltd was established. The husband calls a 25 per cent interest in the company that acquired a development site at Suburb R referred to by the wife. The husband provides no details as to the acquisition of the property or how it was funded. Financial statements for N Pty Ltd reveal as at 30 June 2019 cash on hand of $300,000, the only other substantial asset of the company is a loan advanced to N2 Pty Ltd of about $3.1 million. It appears that those funds were advanced to the company by the various parties engaged in the joint venture development proposal with the husband’s 25 per cent representing about $750,000. It is unclear where he may have sourced those funds. N Pty Ltd holds 100 shares in N2 Pty Ltd. No financial statements for N2 Pty Ltd have been provided by the husband. The development site is presently on the market with a development approval having been obtained for 72 home units.
It appears that in about 2017 the husband incorporated J3 Pty Ltd to engage in a joint venture mineral project in the S Town area of New South Wales. The husband asserts that over a period of some three years he invested more than $4.1 million in the project funded by way of loan secured by the Family Trust and the J Pty Ltd business. Funds were borrowed from the Westpac bank, private lenders at higher interest rates and from cash flow from the business. Subsequent to a further call for further capital injections into the venture, the husband secured private finance for $200,000 at a punitive interest rate of 16 per cent to assist cash flow.
Following a further call for funding in late 2019, the husband asserts that as a consequence of no capacity to make a further contribution due to his level of debt he sold out of the joint venture for the sum of $1 million. He asserts that he applied the funds to “pay down the company and business liabilities”. He provides not one jot of detail as to the expenditure of these funds or how the resulting loss of about $3 million is secured or funded.
The husband provides, he asserts, details as to the liabilities of the Family Trust as follows:
Westpac bank – H Street $ 1,124,000
Westpac bank – C Street, Suburb D $ 1,124,000
Westpac bank – Suburb R development property $ 325,000
Westpac bank – motor vehicle leases $ 215,170
HH Finance – husband’s motor vehicle 1 $ 58,007
JJ Finance $ 303,901
Westpac bank – other loan $ 626,535
KK Company – finance $ 283,000
LL Company – finance $ 243,000
Unpaid superannuation contributions $ 70,722
Unpaid tax/GST $ 252,843
Westpac bank – other loan $ 274,346
Westpac Wintrade – loan $ 249,647
Westpac credit card $ 5,964
The husband asserts that his brother has permitted him to use the properties at H Street as collateral for his further borrowings.
The husband, otherwise, deposes to trade payables presumably in the business of J Pty Ltd of $832,482 and deposits held, presumably for work to be performed, of $159,022.
The husband asserts that his real estate interests being H Street Suburb D, C Street Suburb D and his interest in the Suburb R property have a total value of approximately $3.825 million. He, otherwise, asserts that motor vehicles comprising four motor vehicles and utility vehicle have a total value of about $338,000. Otherwise, the husband asserts stock in the business of about $882,000 and trade receivables of about $233,500.
The husband says that in early 2019 he advanced to the wife’s brothers’ funds totalling $162,159 that were transferred from his personal funds and from the Family Trust Funds. He also contributed $20,000 to the establishment of a business by the wife’s brothers. He gives no evidence that such advances are not repayable or not recoverable.
The husband, otherwise, asserts that he has borrowed in 2020 $100,000 from Mr P to meet cash flow and in late 2020 borrowed by way of personal loan sums totalling about $105,000. Of this $30,000 was paid to his lawyers on account of costs and disbursements of these proceedings and the balance into J Pty Ltd.
The husband relies upon the affidavit of his accountant. The accountant said he has been doing the financial accounts for the husband and his various entities for the last seven years. The accountant’s report is blunt and to the point. In the event that J Pty Ltd does not trade well then the trust cannot pay debts. The trust pays all debts for the various properties and hire purchase payments for three motor vehicles. As at late January 2021 the husband paid himself a wage from J Pty Ltd of $1,000 per week after tax.
The accountant asserts that as at January 2021 J Pty Ltd had overall ATO liabilities of $261,451. Outstanding superannuation payments to the ATO of about $9,500 are being paid on a payment plan of $1,000 per month. Otherwise, superannuation instalment payments for superannuation contributions as at late January 2021 total $117,201. No superannuation contribution payments have been made since 30 June 2018. In the event of an audit, penalties and charges will accrue in the sum of $138,000.
Otherwise, ATO are seeking an instalment plan from J Pty Ltd of $20,000 per month so as to avoid a director’s notice being issued to the husband rendering him personally liable for the company’s debts. Since the commencement of COVID-19, assumed to be about March 2020, the husband has paid no GST that prior thereto was averaging between $35,000 and $50,000 per quarter.
As to cash flow the accountant expresses the opinion that the company J Pty Ltd is bleeding dry, that it has no capacity to pay ATO or anyone and further asserts that the husband had previously deferred payments of short-term loans and his Hakim Pty Ltd mortgage to Westpac Bank.
The major commitment of the husband is finance repayments of $36,499 per month, including motor vehicle hire purchase payments. Overall, the irresistible conclusion is that J Pty Ltd and the Trust will be unable to pay their debts as they fall due and payable as evidenced by the financial statements for J Pty Ltd as at June 2020, revealing a trading loss of $1.503 million, a turnaround of almost $2 million from the trading circumstances of the previous financial year. Yet, as contended by counsel for the wife, there is no evidence adduced as to any loan or other default.
It may be inferred that the loss has been funded by undisclosed income and the further short-term borrowings.
Overall, the husband had paid $108,000 to his lawyers on account of legal fees including $16,500 on account of senior counsel’s fees for this interim hearing. He asserts that he has borrowed monies paid from associates including members of the wife’s extended family.
The husband’s personal Westpac Choice account (…50) for the period February to August 2020 revealed deposits totalling about $689,000 and withdrawals in a similar sum. In the period September 2020 to January 2021 there were deposits to his account of about $270,000. Why in his personal account is not clear. The J Pty Ltd account (…13) revealed deposits of $328,000 in December 2020.
Discussion
Curiously, during the hearing the husband had admitted into evidence as Exhibit “L” his “Open Offer of Settlement” to the wife that provided that he would forthwith do all things necessary to assign the debt owing to him by the wife’s brothers in the sum of $162,159 that is referred to above and that such assignment be by way of partial property settlement. It may be inferred from that offer that the funds advanced to the wife’s brothers are repayable on demand and available for repayment. There is no suggestion that the husband cannot demand repayment of the sum advanced to the wife’s brothers.
Counsel for the wife contended that in default of a lump sum order there should be a dollar for dollar costs order and/or a periodic order for payment to the wife. Should the wife return to the home she and the children will be accommodated, the wife will receive some Centrelink assistance. The appointment of a receiver would see the receiver take control of the business, the home and the property at H Street. The wife’s primary position was to get back in the home with the children, have its contents returned and receive a lump sum payment of $100,000 “to promote her case”, then in default of the payment as ordered a receiver then be appointed.
It became apparent during the hearing and during submissions that the lease of the matrimonial home at Suburb D is not in the name of Hakim Pty Ltd as landlord but the husband has purported to enter into a lease in relation to the property in his own name. In that regard the lease itself may be defective.
Counsel for the husband makes much of funds borrowed by the wife from a third party. Yet the wife asserts that she will seek no further advances. The issue of the date of separation was the subject of submission. The resolution of the issue will await final hearing, it does not impact on the interim issues for determination.
The husband resists the appointment of a receiver to the Trust and to the J Pty Ltd business.
It is clearly a remedy well within the jurisdiction of the Court. As the Full Court observed in D Pty Ltd and Ors & Sadler and Ors [2016] FamCAFC 187:
22.The appellants submit that Order 3 was an impermissible exercise of the Court’s jurisdiction under the Corporations Act 2001 (Cth) (“the Corporations Act”) because the receivers were not appointed to corporations but rather the property and income of trusts.
23.The power to appoint receivers clearly arises from s 80(1)(k) of the Act (Jones v Jones (1968)10 FLR 493 and Dimov v Dimov (1971) 17 FLR 462). The power is to make “any other order” necessary to do justice. This enables the court to make “whatever orders it regards as appropriate” (R v Ross-Jones & Anor, Ex Parte Beaumont [1979] HCA 5; (1979) 141 CLR 504 at 509 per Gibbs J).
24.As is common with many statutes that permit courts to appoint receivers, s 80(1)(k) of the Act does not make provision for the powers that may be exercised by the receivers. The Rules are similarly silent. Thus, orders which appoint the receivers must also clothe the receivers with the powers to be exercised by them. A common and shorthand way of providing for this is by giving the receivers some or all of the powers referred to in s 420 of the Corporations Act, as if they had been appointed under that section. In doing so, the Court is exercising power conferred pursuant to s 80(1)(k) of the Act and not the Corporations Act.
25.Order 3 is not ideally worded, in that the receivers would not ordinarily have the powers under s 420 of the Corporations Act. They would only have those powers if the order appointing the receivers specifically conferred them. However, this is clearly what the order intended. Preferably, and more correctly, the order should have been made omitting the words “ordinarily available to them” and the words “as if they had been appointed under that Act” inserted after the words “Corporations Act 2001”.
Notwithstanding this contention as to the parlous state of his financial affairs, it is likely that the appointment of a receiver will constitute a breach of the presently secured mortgages and may result in at least Westpac taking enforcement action under its security or any collateral guarantee proffered by the husband. Such may have a devastating effect on the husband’s prospect of trading out of his present circumstances. However, such appointment may be revisited at a later date.
The wife variously frames her relief as interim spousal maintenance, s 106B of the Family Law Act 1975 (Cth) (“the Act”) relief as to the lease, interim property, interim costs and relief by way of injunction.
Spouse maintenance
Section 72 of the Act sets out the relevant provisions in relation to the right to spouse maintenance. The Court can make such order as it considers proper (s 74 of the Act).
Section 72 of the Act provides that a party to a marriage is 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 age or a 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) of the Act.
In Redman and Redman [1987] FamCA 2; (1987) FLC 91-805 at 76,081 the Full Court (Evatt CJ, Lindenmayer and Nygh JJ) said:
As Nygh J. said in Ashton, the most common purpose of an interim order is to make provision for the spouse and children pending the determination of the property settlement. If a so-called permanent order is made on that occasion, that is not a variation under sec. 83 and does not have to be justified as such, but it is a fresh order made upon the termination of the interim order. Another consequence is that on an application for interim maintenance the court conducts “not as final or exhaustive a hearing as would be the case if one were hearing the matter finally”: Williamson and Williamson [1978] FamCA 57; (1978) FLC 90-505; (1978) 4 Fam. L.R. 355 at FLC p. 77,650; Fam. L.R. p. 359 per Fogarty J. The evidence need not be so extensive and the findings not so precise. Having regard to those factors, and the general injunction of sec. 97(3), the court should in such matters have a greater degree of flexibility than it possesses in applications for maintenance which are intended to last for an indefinite period and can only be varied under sec. 83.
See also Hall v Hall [2016] HCA 23.
There is no fettering principle that the pre-separation standard of living must automatically be awarded and reasonableness in the circumstances is the guiding principle (see Bevan & Bevan (1995) FLC 92-600).
It is well settled that a party is not required to exhaust capital before a spouse maintenance order can be sought. As the Full Court said in Fewster & Drake [2016] FamCAFC 214:
103.… it is well established that a person’s capital resources need not be exhausted before they can seek an order for spousal maintenance.
104. In Bevan and Bevan (1995) FLC 92-600 (“Bevan”) the Court said at 81,980:
… we do not think that the law requires that a wife should deplete an already comparatively meagre capital sum, to enable a much higher earning husband to avoid his obligation to maintain a former spouse who is in financial circumstances such as those in which she finds herself. She may well wish to apply all or part of that sum to the purchase of new premises and we do not think that she should be prevented from doing so should she desire it.
105.In Mitchell and Mitchell (1995) FLC 92-601 (“Mitchell”) the Court said at 81,995 - 81,996:
… her age and her limited earning capacity would make it legitimate for her to set aside a reasonable capital sum by way of a nest egg against future contingencies and uncertainties such as illness or holidays or other significant changes in her life which may call for expenditure which would go beyond the parameters of a small income.
It is also necessary in determining this issue to have regard to the standard of living of the parties and the financial circumstances of the other person: s. 75(2)(b) and (g). The days are long gone when it is necessary for an applicant for maintenance to use up all of her assets and capital in order to satisfy the requirement that she is unable to support herself “adequately'”. Where the line is to be drawn will depend upon the circumstances of individual cases.
106.However, these two authorities do not establish that the capital of a person seeking spousal maintenance is always to be entirely disregarded. Rather, the point is that the possible need to retain that capital and not use it for day to day support is a relevant consideration to take into account.
The wife’s need for spousal maintenance to an extent has been obviated by her prospective employment. Her need to pay rent will be obviated with the Trust providing her and the children’s accommodation needs. In the asserted limited financial capacity of the husband to meet a periodic order, provision of the home will meet her primary expense of accommodating herself and the children. Otherwise, as there is no evidence from the wife as to her income the Court cannot be satisfied that she cannot support herself adequately.
The husband adduces further evidence with leave that the wife’s new employment will pay her a salary of about $62,000 per annum plus superannuation.
Her application for periodic spouse maintenance is to be dismissed.
Interim property
The husband asserts no capacity to meet such an order from what he asserts are the matrimonial assets, subject to liabilities discussed above.
The principles as to applications for interim property provision are well settled, (Strahan & Strahan [2009] FamCAFC 166; (2011) FLC 93-466) and require a two-step process.
In Strahan, the Full Court said:
132.In relation to the first stage, in our view, when considering whether to exercise the power under s 79 and s 80(1)(h) of the Act to make an interim property order the “overarching consideration” is the interests of justice. It is not necessary to establish compelling circumstances. All that is required is that in the circumstances it is appropriate to exercise the power. In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.
Firstly, there must be circumstances enlivening the power to make an interim order. The test is not limited to “compelling circumstances” but whether it would be “appropriate” to make an interim order, with the “overarching consideration” being the interests of justice.
Secondly, the Court is to have regard to relevant matters in s 79 of the Act. It needs to be kept in mind that the final outcome of property settlement should not be compromised by an interim property order. Either the remaining property needs to be adequate to meet the legitimate expectations of both parties at the final hearing or the order that is contemplated needs to be capable of being reversed or adjusted if it is subsequently considered necessary to do so.
A detailed inquiry is not required, but there must be some assessment of s 79 factors.
In Strahan the Full Court went on to say:
137.Once a court proceeds to exercise the power in s 79 of the Act, being in the substantive phase, a court is required to undertake consideration of the matters in s 79(4) including by reference to s 79(4)(e) the matters in s 75(2) so far as they are relevant. However consideration of such matters may be brief and if it is established that “it seems likely to the Court that ... the applicant ... will be likely receive by way of property settlement a sum sufficient to cover the advance, that would seem to be sufficient to enable the order sought to be made”: Zschokke; Polletti and Polletti per Nygh J and Wenz v Archer. As senior counsel for the Wife submitted, “provided scope can be found within the assets of the parties for an order of the size sought ... then that should be the end of the matter”. In other words, in such circumstances the applicant would only be receiving what he or she was entitled to receive when the power was exhausted.
138.The legislation does not prescribe what the Full Court in Zschokke at 83,218 described as “preconditions” and nor would we seek to exhaustively prescribe matters that may be relevant to take into account in the exercise of the discretion under s 80(1)(h) of the Act. As to the three “criteria” identified by the Full Court in Zschokke, we accept that an inability on the part of an applicant for an interim property order to defray the costs of litigation to meet his or her litigation costs would be a relevant matter to take into account at the procedural or first stage. Senior counsel for the Wife submitted that it may be relevant at the substantive or second phase in reviewing the “necessarily limited and impressionistic budget for costs” to ensure that the application is bona fide. We are of the view that it may be that any issue about the bona fides of an application is relevant at the procedural phase in the context of considering if in the interests of justice it is appropriate to make an order before the final hearing.
139.We also emphasise that in order to establish an appropriate case for an interim property settlement order more is required than the mere fact that upon a final hearing the applicant would receive the property being sought (or an amount in excess of the funds being sought) from the other party.
140.As to the other matters being a position of relative financial strength on the part of the respondent to an application and the capacity of the respondent to meet his or her own litigation costs, there is no doubt that the financial circumstances of both parties are relevant at the substantive stage and may also be relevant at the procedural stage. Senior counsel for the Wife submitted that all of the matters discussed by the Full Court in Zschokke are self-evident and we accept that this is so in relation to at least two of the matters being the need for funds and the financial circumstances of both parties.
141.As to the various matters discussed by Brereton J in Paris King Investments which we have discussed above, we do not propose to deal with all of what his Honour said, however we make the following observations about some of the matters. Obviously the applicant should have “at least an arguable case for substantive relief which deserves to be heard”. Further, in determining at the procedural stage whether to exercise the jurisdiction there may need to be evidence of the applicant’s “likely costs of the litigation” given that the need for funds to defray litigation costs and expenses is the circumstance propounded as to why it is appropriate that an order be made. We also accept that “it is not an essential precondition” that the applicant’s legal representatives will not continue to act unless the costs are paid or secured on an ongoing basis.
It is important to have regard to an overall caution. In Harris & Harris (1993) FLC 92-378, the Full Court said:
As a generality, the interests of the parties and the Court are better served by there being one final hearing of s 79 proceedings.
In Strahan, the Full Court said at [132]:
… regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.
It is readily apparent that there are significant factual issues as between the wife and the husband. They will be resolved at final hearing.
The nature of the parties’ contributions are discussed above. The wife has been out of the workforce for many years and has the care of the parties’ three children, with little or no support from the husband.
The wife seeks a final order in the sum of $1,000,000. The husband seeks that he be ordered to pay her $100,000. Notwithstanding that the asset pool that stands in the sole control of the husband is to an extent indeterminate, it is significant in terms of value but encumbered in circumstances that will be the subject of enquiry at final hearing.
An order for payment to the wife of $100,000 is but what the husband asserts she is entitled to. In circumstances where he proffers to assign to her a debt of about $162,000 to meet her needs with the inference in the absence of any evidence from him that the debt is not recoverable, there appears no reason why he should not call in the debt to provide a capital payment to the wife. Any contention that the debt is not recoverable would simply reveal that his offer to settle the interim financial issues on that basis was but sharp practice and ingenuous.
It is proper that the husband pay to the wife the sum of $100,000 within one month from the date of order.
It is also proper that the application for appointment of receiver be stood over with liberty to relist.
Occupation of the home
The wife gives evidence that proceedings have now been commenced in the NSW Civil and Administrative Tribunal by the landlord seeking that the premises be vacated. The hearing is listed for 20 July 2021. Having regard to the property being sold it appears most likely that an eviction order will be made. The wife asserts that her being the subject of tenancy proceedings will hinder any application by her for another rental property.
The wife asserts that the agent managing the rental of the matrimonial home is the same as the agent that sold the home of the second respondent.
The husband asserts that the property previously tenanted by the wife’s parents and later occupied as well by the wife and children at MM Street, Suburb D remains available for rent. He does not assert that it is suitable accommodation for the wife and children.
Notwithstanding the present application before the Court, the husband, who professes impecuniosity, has paid a holding deposit and bond on the property totalling $2,880 and offers to pay the rent for the next 12 months. He represented to the agent that the occupants will be the wife and children. He asserts that the property will be available for occupation on 6 July 2021. He makes no comment as to the circumstances of the wife’s parents who dislocated their own accommodation arrangements to assist the wife and children after separation.
The husband exhibits the management agreement with the letting agent of the matrimonial home that was entered into by Hakim Pty Ltd. The property was to be tenanted for six to 12 months with rental payments to the company account.
The Second Respondent
The second respondent relies on her affidavit sworn 29 June 2021.
Her matrimonial home in the name of her husband was sold on 1 April 2021 with final settlement on 31 May 2021.
The family comprises herself, her husband and four children, twins at university aged 19 and aged 15 and 12.
The second respondent inspected the home at Suburb D in April 2021. The husband was present. She observed that the home was full of furniture. She spoke to the agent and a lease was signed on 3 May 2021. On occupying the property it was unfurnished.
The second respondent’s husband, she asserts, has a modest business relationship with the husband. The wife says that the husband is well known to the second respondent and was well aware that the husband and wife had separated. She asserts that she was not aware that the wife had left the home and that there were current proceedings before the Court.
The second respondent contends that s 119 of the NSW Residential Tenancies Act 2010 precludes this Court from ordering recovery of possession. The section precludes certain named state courts and not otherwise and has no relevance to the present application.
Discussion
The wife’s affidavit sworn 8 March 2021 clearly indicated her wish to occupy the home and sought an order accordingly.
In his affidavit sworn 9 April 2021 the husband refers to the wife’s affidavit of 8 March 2021.
Section 114 of the Act provides:
(1)In proceedings of the kind referred to in paragraph (e) of the definition of matrimonial cause in subsection 4(1), the court may make such order or grant such injunction as it considers proper with respect to the matter to which the proceedings relate, including:
(a) an injunction for the personal protection of a party to the marriage;
(b)an injunction restraining a party to the marriage from entering or remaining in the matrimonial home or the premises in which the other party to the marriage resides, or restraining a party to the marriage from entering or remaining in a specified area, being an area in which the matrimonial home is, or the premises in which the other party to the marriage resides are, situated;
(c)an injunction restraining a party to the marriage from entering the place of work of the other party to the marriage;
(d) an injunction for the protection of the marital relationship;
(e) an injunction in relation to the property of a party to the marriage; or
(f)an injunction relating to the use or occupancy of the matrimonial home.
Under s 114 of the Act the Court is required to make an order that “it considers proper”.
The definition of “matrimonial cause” in Section 4(1)(e) of the Act relates to:
proceedings between the parties to a marriage for an order or injunction in circumstances arising out of the marital relationship (other than proceedings under a law of a State or Territory prescribed for the purposes of section 114AB);
It must be tolerably clear that the issue of occupation of the former matrimonial home to the exclusion of the other party to the marriage in the context of ongoing proceedings must “arise out of the marital relationship”: e.g. see R v Dovey: Ex Parte Ross (1979) 5 FamLR 1.
In Sieling v Sieling (1979) FLC 90-627 the Full Court said:
The power to grant injunctions is, of course, a discretionary power, not to be exercised lightly. The Court must balance the hardship to each party of granting or refusing an order, and frame its order in such a way as to impose no further restriction than is necessary to achieve the protection of the applicant’s interest. It will not lightly interfere with the rights of an owner of property on the basis of a vague or uncertain claim. There must be circumstances arising out of the marital relationship which make it necessary to restrain, temporarily, a spouse from using his or her property rights to the detriment of the other party.
In Davis & Davis (1976) FLC 90-062 (at 75309) the Full Court said that considerations include:
...the means and needs of the parties, the needs of the children, hardship to either party or to the children and, where relevant, conduct of one party which may justify the other party in leaving the home or in asking for the expulsion from the home of the first party.
The issue of occupation was clearly before a registrar on 22 April 2021 who determined that it was an issue for judicial determination.
Yet the second respondent asserts that she became aware of the matrimonial home being available for rent by late April 2021.
The husband, notwithstanding the live issue as to the occupation of the home awaiting judicial determination, swore an affidavit on 5 May 2021 evidencing that he had tenanted the property as a consequence of his asserted poor financial position. There is an inference that he, in fact, did so to frustrate the wife’s application for occupation.
Curiously, the Agency Management Agreement was only signed by the husband on 2 May 2021 with full knowledge of the wife’s application for occupation of the home.
The husband has now, it appears, rented other accommodation as referred to above.
The wife seeks relief as against the lease transaction under the provisions of s 106B of the Act. Section 106B relevantly provides:
Transactions to defeat claims
(1)In proceedings under this Act, the court may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or in the interest of, a party, which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.
(1A) …
(3)The court must have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser or other person interested.
(4)A party or a person acting in collusion with a party may be ordered to pay the costs of any other party or of a bona fide purchaser or other person interested of and incidental to any such instrument or disposition and the setting aside or restraining of the instrument or disposition.
In Haseloff & Korman and Ors [2013] FamCA 1019 at [58] Dawe J referred to relevant authorities[7] in concluding that:
The wording of s 106B is such that the following questions must be answered affirmatively for the wife’s claim to succeed:
a) are there “proceedings under this Act”?
b) is there an “instrument or disposition”?
c)was the “instrument or disposition” made “by or on behalf of, or by direction or in the interests of, a party”?
d)is the interests or disposition “made or proposed to be made to defeat an existing or anticipated order in those proceedings” or “irrespective of intention, is likely to defeat any such order”?
In reviewing the authorities McClelland DCJ said in Riemann & Riemann and Ors (No. 3) [2017] FamCA 911:
Accordingly, in order to satisfy the requirements of the second leg of section 106B (1) it is necessary for the applicant to establish:
•the transaction must be foreseeably likely to defeat the order or anticipated order, where ‘anticipated’ means ‘expected’ or ‘reasonably probable’ according to an objective test; and
•That there is a causal connection between the transaction and the defeat of the order or likely defeat of the order as opposed to the order being defeated by a supervening event.
It is readily apparent that the husband was on notice that the wife sought occupation of the home (the anticipated order). Notwithstanding, he entered into a lease agreement with the second respondent thus assigning occupancy to the property (the transaction) and thus defeating the anticipated order.
The effect of the transaction, irrespective of his intention, was to defeat the wife’s claim to occupation.
The second respondent asserts her lack of knowledge of the circumstances surrounding the lease of the premises. There is some doubt as to her innocence. However, her situation can be protected and remedied by the husband providing an indemnity for her reasonable relocation expenses. In the short term he has property just leased by him that he can make available to the second respondent.
In this circumstance it is appropriate that the lease agreement as between the husband and/or Hakim Pty Ltd and the second respondent be set aside. An order will be made accordingly. The effect of such order is that the second respondent is in occupation of the property determinable at will.
In considering occupation orders the Court must consider various factors.
The wife asserts that she and the children have had to vacate the home by reason of the husband’s conduct. He at present has no relationship with the children.
The wife asserts that she does not have the capacity to obtain adequate housing elsewhere. She has no financial capacity to meet rental payments and asserts that she does not qualify for rental properties, being primarily dependent of government benefits. She is in need of urgent accommodation by reason of current possession proceedings in the Tribunal. She, otherwise, asserts that her parent’s rental premises previously occupied by her and the children (and now prospectively re-leased by the husband) are unfit and inadequate.
The wife has no funds to promptly obtain housing accommodation. The husband is able to make the Suburb D home available to the wife and return the removed contents and personal possessions. He has himself vacated the property.
It is more convenient for the wife and children to live in the home pending final hearing. His proposal leaves the wife and children at his whim in relation to accommodation he proposes and requires the wife to establish another home for herself and the children when the children’s primary home is available for their return.
It is clearly in the best interests of the children to be able to return to their home.
The husband concedes that the Hakim Family Trust is his alter ego and that he controls the trust through the trustee company and thus the Suburb D property.
By reason of the above considerations, there will be an order that the second respondent vacate the home within 21 days and that thereafter pending further order the wife has sole use and occupation of the Suburb D property. The husband will be required to do all things necessary to ensure the wife’s peaceful use and enjoyment and that he pay as they fall due and payable council and water rates and mortgage payments in respect to any mortgage secured over the property.
Section 106B(4) relevantly provides:
A party or a person acting in collusion with a party may be ordered to pay the costs of any other party or of a bona fide purchaser or other person interested of and incidental to any such instrument or disposition and the setting aside or restraining of the instrument or disposition.
Otherwise, it is thus proper to order that the husband indemnify the second respondent from the costs likely to be incurred by the second respondent by reason of the lease agreement being set aside, such costs including but not limited to reasonable removal and relocation expenses.
Orders will be made accordingly.
I certify that the preceding one hundred and forty (140) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Foster. Associate:
Dated: 12 July 2021
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