Saville and Saville - [2011] FMCAfam 269

FEDERAL MAGISTRATES COURT OF AUSTRALIA

SAVILLE & SAVILLE

[2011] FMCAfam 269

FAMILY LAW – Application for alteration of property interests – injunctions – assets in Australia and Canada.

Family Law Act 1975

Mullen & De Bry [2006] FMCAfam 561
Waugh & Waugh [2000] FamCA 1183

Applicant:

MS SAVILLE

Respondent:

MR SAVILLE

File Number:

SYC 1834 of 2009

Judgment of:

Altobelli FM

Hearing date:

4 March 2011

Date of Last Submission:

17 February 2011

Delivered at:

Sydney

Delivered on:

4 March 2011

REPRESENTATION

Counsel for the Applicant:

Mr Sansom

Solicitors for the Applicant:

Watts Mccray Lawyers

Counsel for the Respondent:

Mr Miller

Solicitors for the Respondent:

Robyn Sexton & Associates

ORDERS

THE COURT ORDERS PENDING FURTHER ORDER THAT:

The Husband and the Wife each be restrained from increasing the amount presently outstanding and secured by way of mortgage on the property at Property K.
The Husband be restrained from increasing the limit of any and all lines of credit secured on the assets of the companies known as [1], [2], [3] and/or The Saville Family Trust, and any line of credit in the name of the husband with [omitted].
The Husband be restrained from dissipating and/or transferring the assets of [1].
The Husband notify the Wife in writing upon his obtaining employment and provide relevant particulars thereof;
In relation to the proceedings instituted against the Husband in the Superior Court of Ontario:-
(a)It is noted that upon his return to Canada the Husband intends to take steps to obtain legal advice as to defending those proceedings; and
(b)The Husband will keep the Solicitors for the Wife informed, in a timely fashion, with details of such advice and of the progress of and the prospects in relation to such litigation and of any offers of compromise that may from time be made; and
(c)That in the event that funds are needed to meet the legal costs of such proceedings the Husband will in the first instance provide the Wife’s Solicitors with the details thereof and in the event of there not being agreement as to the provision or source of those funds the Husband be at liberty to re-list the matter as to that, or associated matters, upon short notice.

THE COURT ORDERS THAT:

The matter be adjourned to 31 March 2011 at 9:30am for Mention.
The parties’ costs of today are reserved.

IT IS NOTED that publication of this judgment under the pseudonym Saville & Saville is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

SYC 1834 of 2009

MS SAVILLE

Applicant

And

MR SAVILLE

Respondent

REASONS FOR JUDGMENT

I deliver the following oral reasons in the matter of Saville. On 16 February 2011, I adjourned by consent the substantive proceedings between the parties and on 17 February, heard submissions in relation to interim issues arising out of that adjournment. Substantive proceedings relate to property settlement, maintenance and possibly child support.
The emerging issues seem to be not just assessment of contribution, and 75(2) considerations, but valuation, non-disclosure, and whether certain assets should be included in the pool. The substantive proceedings originally involved a third party intervenor, but that aspect of the case appears now to have been settled.
The wife is the applicant for interim orders; she is seeking injunctions in terms of a minute of order, the terms of which I will incorporate into these oral reasons. The husband’s response is contained in another minute of order, that I will also incorporate into these oral reasons. He opposes the wife’s application, but in the alternative seeks to modify the effect of any injunctions. Orders 3 and 4 sought by the father are largely consented to and this will be reflected in the orders I make.
The evidence before me consisted of the affidavits of the parties and a number of documents tendered without objection. The applicable law is of course, found in section 114 of the Family Law Act, and the Full Courts decisions in Waugh & Waugh [2000] FamCA 1183 and Mullen & De Bry [2006] FMCAfam 561 are useful authorities containing the relevant principles.
Before considering the submissions, and the evidence, I think it is important to record a number of features of this case that make it somewhat different from other cases where injunctions are sought. Firstly, a significant part of the parties’ assets are located in Canada, where the husband lives. The wife lives here. There is no issue about Australia being the appropriate forum, but there are obvious challenges in cases such as this.
Secondly, it seems common ground between the husband and the wife, and seems otherwise clear from the evidence that is available before me, that the current living expenses of the wife and children and possibly, even of the husband as well, are sourced primarily, if not exclusively from borrowings, rather than income. This is a case therefore where, by virtue of the factor I have just referred to as well as the dynamics of overseas property, there is a real risk of natural depletion of capital assets, let alone what I will call “the unnatural depletion or dissipation of assets” that is clearly part of the wife’s case.
Thirdly, the litigation commenced against the husband in Ontario, shortly before the hearing of this case, and initiated by a company controlled by the husband’s brother, casts a long shadow over these proceedings and an adjournment was necessary, and was granted, no one knows for how long. Only the husband can defend these proceedings, and the wife relies on him to tell her what is going on. She clearly has some concerns about the bona fides of this litigation, but is not in a position to explore the matter further.
And lastly, whilst it is not uncommon for one party to litigation to allege non-disclosure in the context of seeking orders the effect of which are preservation orders, the cumulative effect of the first three factors to which I have referred, together with the fourth leads to certain distinguishing features about this case.
Thus, the cumulative effect of these factors, and even allowing for the fact that some of these matters are no more than assertions, nonetheless points to, firstly, the comparative vulnerability of the wife’s financial position, as opposed to that of the husband, and secondly the need for the court to closely manage and tightly control these proceedings. Consistent with the Federal Magistrates Court docket system, this may well mean that any orders I make today may need to be varied to reflect the changing circumstances of the parties, as time goes by.
Mr Miller, counsel for the wife, says that the orders sought are reasonably necessary and proportionate because, firstly, the wife’s lack of control over Canadian assets and liabilities, in a context where the husband asserts that certain assets are not owned or controlled by him. Secondly, the husband’s evidence about certain aspects of his finances has been shown, even at an interim level, to either be inconsistent, mistaken or plainly misleading, notwithstanding his clear duty to disclose to the court. And thirdly the husband’s previous demonstrated earning capacity seems to have greatly reduced, if not disappeared in comparatively recent times.
Mr Sansom, counsel for the husband, submits that the orders sought by the wife are unnecessary, and there is no risk to her which is greater than it has been for several years in fact. Whilst these are not the words used by Mr Sansom, I think that the effect of this argument is that the wife is no more vulnerable today than she has been for several years, eg they were living off capital then and they are living off capital now.
Mr Sansom also submits that the orders sought ignore the current reality, ie that they are living off credit, that there is not much credit left, and once it goes, it has gone.
I think it is not necessary for me to go into the detail about the corporate structure of the husband and wife and the various other entities in Canada. Ms W’s report deals with this extensively. The husband certainly does not agree with Ms W’s evidence as to ownership, or the control of entities or value.
I think the real significance of the report is that it crystallises some of the major issues between the husband and the wife, in a way that had not at all been apparent before. Thus, for example, the balance sheet that the wife and the expert contend for, are dramatically different to that contended for by the husband. And bear in mind, of course, that Ms W’s report was released one day before the start of the hearing. I fully recognise that there are probably several obstacles to be overcome before Ms W’s report can not only be admitted, but receive significant weight.
The report itself undermines the husband’s argument that the wife is no more vulnerable now than she was in the past, and that there is therefore no need for an injunction. In short, I think the report itself is enough to create a prima facie case for an injunction. In the specific context of this case, to me, it seems as if the risk of assets being disposed of is a real one. In any event, I accept Mr Miller’s submission that there are sufficient prima facie irregularities in the husband’s evidence as to warrant a fairly robust approach to the preservation of assets, especially as liabilities have increased significantly.
The wife says it was by no means clear to her that her maintenance and support for the children was being funded out of capital, rather than income. At least such was not apparent until the report was available.
I turn now to consider the appropriateness of the orders sought by the wife, and whether I should make the alternative orders sought by the husband, that is order (2). Order (1) seeks to prevent an increase in the mortgage over the former matrimonial home. That this is opposed is noteworthy. Having regard to the context of this case, I believe that it is an appropriate order to make and that the order is no wider than is appropriate in the circumstances.
Order (2) is about preventing any further increases in limits on lines of credit, secured over the stated assts. From the wife’s perspective, I would have thought that the problem with the order she is seeking is not, that it is not appropriate, but rather that, in time, it will or may potentially cut off her own finances. It interests me that there appears to have been no order in place at all regulating the current arrangement for the payment of the family’s living expenses. No one has sought that at the hearing, presumably because it has always been paid to date but if the line of credit limit can’t be increased, what happens when the limit is reached?
The wife says the husband has an unrealised working capacity, and she clearly contemplates agreeing to the sale of, for example, motor vehicles owned by the husband, and in this way recognises the very difficulty of which I now speak. In any event, whilst I am left wondering whether the wife has really thought this through, the question I have to decide is whether it is appropriate to make the orders in terms of the orders sought.
Order (3) is specifically directed to what both parties agree is the most significant Canadian asset. I note that the wife contends that there are other assets, but the husband does not agree. Again, in the context of this case, I think it is nonetheless an appropriate order to grant.
Now, where does this all lead the husband? Specifically, should I make order (2) sought by him. The husband’s financial statement of 31 January 2011 shows nil income, but almost $4000 per week in expenditure. But when one looks at some of his larger expenses, for example, items 23 and 31, these are funded out of the line of credit. He has liabilities, apart from the line of credit as well as a Visa card. He describes himself as an unemployed [occupation omitted]. His income in recent years has been about $70,000 per annum Canadian. He worked right up until 7 November 2010, when his employed was terminated, an event which is apparently linked to the current litigation against him in Ontario.
At paragraphs 142 to 145 of his affidavit, he sets out evidence relating to his employability and his entitlement to benefits in relation to his employment. Despite all of this evidence, he does not make out a case of needing $5000 per calendar month. It is left to guess work and submissions. I must say that whilst $5000 doesn’t sound unreasonable, I cannot act on that and whilst I am not prepared to make the orders sought by the husband, I urge Mr Saville and Mrs Saville to adopt a pragmatic approach to avoid further litigation. Nonetheless the fact remains that I am not satisfied that I have the evidence to make the orders sought by the husband.

I certify that the preceding twenty-two (22) paragraphs are a true copy of the reasons for judgment of Altobelli FM

Date: 24 March 2011