Selen and Selen & Ors

[2010] FamCA 86

FAMILY COURT OF AUSTRALIA

SELEN & SELEN AND ORS [2010] FamCA 86

FAMILY LAW – PROPERTY – Interim application by the wife seeking to receive control of the parties' farming enterprise from the husband by reason of his asserted incapacity – Application granted

Family Law Act 1975 (Cth)

APPLICANT: Mr Selen

FIRST RESPONDENT: Ms Selen

SECOND RESPONDENT: C Selen

THIRD RESPONDENT: N Selen

FILE NUMBER: NCC 2454 of 2007

DATE DELIVERED: 27 January 2010

PLACE DELIVERED: Newcastle

PLACE HEARD: Newcastle

JUDGMENT OF: Justice Austin

HEARING DATE: 27 January 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT: Not Applicable

SOLICITOR FOR THE APPLICANT: Not Applicable

COUNSEL FOR THE RESPONDENT: Mr Charles

SOLICITOR FOR THE RESPONDENT: Ms McCabe

COUNSEL FOR THE SECOND RESPONDENT: Mr Knackstredt

SOLICITOR FOR THE SECOND RESPONDENT:	Ms Blissett
COUNSEL FOR THE THIRD RESPONDENT:	Not Applicable
SOLICITOR FOR THE THIRD RESPONDENT:	Mr Guyder

Orders

PENDING FURTHER ORDER, IT IS ORDERED THAT

1. Orders 4.9, 4.10 and 4.11 made on 30 October 2007 are discharged.

2. The wife is appointed attorney for the husband in his personal capacity, in his capacity as an officeholder of P Pty Ltd (“the company”), and in his capacity as a partner in the partnership with the wife styled as “Selen & Selen” (“the partnership”) for the purposes of:

   2.1Dealings with the Commonwealth Bank of Australia, ANZ Bank and L Ltd, in respect of personal, company and partnership accounts, overdrafts accounts and loans;

   2.2Conduct of the affairs of the company; and

   2.3Conduct of the affairs of the partnership.

3. For the purposes of implementation of Order 2 hereof the wife shall:

   3.1Conduct herself for the mutual benefit of herself, the husband, the company and the partnership;

   3.2Provide to the husband, within seven days of the conclusion of each calendar month, a written statement and account of the financial transactions conducted by her in the preceding calendar month;

   3.3Provide to the husband, upon his demand, copies of any documents pertinent to the wife’s conduct of affairs pursuant to Order 2 hereof; and

   3.4Draw from the resources of the partnership a payment of $600.00 per week for both herself and the husband, so long as there are sufficient funds available for that purpose.

4. For the purpose of implementation of these Orders the Registry Manager of the Family Court of Australia at Newcastle is empowered, pursuant to s 106A of the Family Law Act, to execute documents on behalf of the parties.

5. The wife’s costs of and incidental to her Application in a Case filed on 22 December 2009 are reserved.

6. Any and all other outstanding interim applications are dismissed.

7. Leave is granted to the wife to disclose these Orders to the Commonwealth Bank of Australia, ANZ Bank and L Ltd for the limited purposes of implementing these Orders.

IT IS FURTHER ORDERED

1. This matter is adjourned for further directions before Justice Austin at 11:30 am on Tuesday, 23 February 2010.

2. Leave is granted to the first respondent wife and the second respondent to appear on the next occasion by telephone if the first respondent wife and second respondent so desire.

NOTATIONS

A.On the next occasion the Court expects to hear and adjudicate any claims for legal professional privilege made in respect of documents produced on subpoenae by McCabe Partners Lawyers and Michel & White Solicitors issued by the second respondent.

B.On the next occasion the Court expects to fix a hearing date and make procedural orders in respect of the hearing of the equity suit.

C.The Court expects that by the next occasion the parties will have comprehensively complied with the procedural orders previously made on 7 September 2009 and 27 October 2009.

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

FAMILY COURT OF AUSTRALIA AT NEWCASTLE

FILE NUMBER: NCC 2454 of 2007

MR SELEN

Applicant

And

MS SELEN

1^st Respondent

And

C SELEN

2^nd Respondent

And

N SELEN

3^rd Respondent

EX TEMPORE

REASONS FOR JUDGMENT

Introduction

1. These proceedings concern the spouses and their two adult sons, all of whom are separately represented. 

2. A company of which the spouses are directors and shareholders is also a party to the proceedings, but it has not independently participated in the litigation.

3. The proceedings concern a dispute between the spouses about property adjustment orders that should be made between them pursuant to section 79 of the Family Law Act. 

4. Allied with that dispute is an equity suit brought by one son, the second respondent, against the spouses, the company, and his brother.  The equity suit was commenced in the Supreme Court of New South Wales but transferred to this Court some months ago for determination. That was because the resolution of the equitable claim will have a bearing upon the matrimonial pool of property, and hence the property adjustment orders ultimately made between the spouses.

5. Previously, this court made procedural orders severing the equity suit from the matrimonial suit, with the former to be heard before the latter. 

6. In December 2009 the hearing of the equity suit was vacated because of the husband apparently having lost cognitive capacity to participate in the litigation and instruct his lawyers.  All parties acquiesced to the hearing date being vacated.

7. At that time, the wife foreshadowed an interim application to wrest control of the parties' farming enterprise from the husband, by reason of his asserted incapacity. 

8. The wife filed an Application in a Case seeking orders of that ilk on 22 December 2009.  That is the Application requiring determination today.

Application for Adjournment

1. The second respondent, who is the plaintiff in the equity suit, sought an adjournment of the hearing of the wife's Application in a Case. The adjournment application was dismissed with reasons to follow.  These are those reasons.

2. The second respondent asserted two bases for the adjournment,  namely:

   (a)An inability of the second respondent to file and serve affidavit evidence in rebuttal of that prepared by the wife, and

   (b)A contention that the equity suit should be heard first, as if the second respondent was successful in that suit, it would make the wife's interim application otiose.

3. As to the first ground, the second respondent was granted leave to file in court and rely upon an affidavit sworn by his solicitor, Ms Blissett, two days ago on 25 January 2010.  In that affidavit, the second respondent's solicitor admits being served with the wife's Application in a Case and supporting affidavit on 22 December 2009.  She informed the second respondent of that development. 

4. The second respondent's solicitor asserts that, for various reasons of inconvenience, she was unable to take, file, and serve an affidavit of the second respondent between 22 December 2009 and today.

5. I am not satisfied that the second respondent has not had sufficient opportunity to prepare, file, and serve his affidavit evidence in response over the last five weeks. 

6. The paradox of the second respondent's position is that he has admittedly had sufficient time to prepare and swear, on 25 January 2010, an affidavit for his use and reliance in the substantive equity suit.

7. As to the second ground, I do not anticipate being in a position to now hear the equity suit for several months.  That begs the question of what is to happen to the spouses' business interests in the meantime.  I am not persuaded that that pressing issue ought await the outcome of the second respondent's equity suit.

8. The wife tendered correspondence between solicitors dated 19 and 20 January 2010.  That correspondence became exhibits W1, W2, and W3.  Those letters demand an inference that the ANZ Bank, as a creditor of the spouses' farming partnership, is seriously considering enforcement action against the spouses in respect of a delinquent liability, and that such enforcement action is imminent.

9. The wife also alleges that the second respondent is improperly drawing upon the assets of the spouses' farming partnership.  It is common ground that the second respondent withdrew $22,880 from partnership funds some months ago.  Although he later apparently repaid $5000, there remains a dispute about the balance.

10. Although there is no evidence about it yet from the second respondent, it is asserted on his behalf that he was lawfully entitled to those funds.  Curiously, the wife's solicitors sought the second respondent's explanation for that withdrawal in a letter to his solicitors on 4 December 2009.  It is common ground that, to date, the second respondent and his solicitors have not responded to that inquiry. The wife invites an inference that the second respondent has no reasonable explanation to offer.  At this stage, there is no need to draw such an inference.  Suffice it to observe that there is an unresolved allegation of conversion of partnership funds made against the second respondent, which itself militates in favour of a speedy resolution of the wife's interim application.

11. In the alternative to adjournment of the hearing of the Application in a Case until after the hearing of the equity suit, the second respondent sought an adjournment of the hearing until some time after 4 February 2010.  The significance of that date is that it is the scheduled date for the hearing before a Guardianship Tribunal of New South Wales about the incapacity of the husband and the need for the appointment of a financial guardian for him.

12. I am not persuaded of the merit of that alternate application for adjournment.  I am satisfied that the existing financial affairs of the spouses deserve more immediate attention.  There is no guarantee that the Guardianship Tribunal proceedings will be heard and/or determined on 4 February 2010, and even if it is, there remains the prospect of the financial guardian taking some time to accumulate and familiarise him or herself with the financial data of the farming partnership.

Evidence and Submissions

1. The wife moved on her Application in a Case filed on 22 December 2009 and read in evidence her affidavit filed on 22 December 2009.  The wife also relied upon exhibits W1, W2, and W3, tendered on the adjournment application. 

2. No evidence was adduced by the second or third respondent. 

3. Due to the lacuna in the instructions of the husband's solicitors, no evidence could be adduced on his behalf. 

4. The third respondent supported the position of the wife.

5. In the absence of a stated position by the husband, only the second respondent contested the orders sought by the wife. 

6. The available evidence permits or demands the following findings: 

   (a)The husband and the company own parcels of rural real property; 

   (b)The spouses are directors and shareholders of the company; 

   (c)The second and third respondents both assert legal and/or beneficial entitlement in respect of some of the parcels of real property; 

   (d)The spouses are in partnership, which partnership conducts a farming enterprise upon the parcels of real property; 

   (e)The spouses and their sons all have experience in participating in the farming enterprise in one way or another; 

   (f)Following separation, the court made interim orders on 30 October 2007 vesting sole control of the company, partnership, and a Commonwealth Bank account in the husband; 

   (g)The wife now seeks mirror-image orders in favour of herself in substitution of those orders made on 30 October 2007, by reason of the husband's incapacity; 

   (h)Further interim orders were made on 21 October 2008, 17 March 2009, and 10 July 2009, the wife does not seek to disturb those orders; 

   (i)The husband is currently suffering from cognitive incapacity, which is demonstrated by medical evidence annexed to the wife's affidavit.

7. In a report dated 4 December 2009 Dr J says:

   “I feel that he (a reference to the husband) currently does not have capacity to make decisions about his medical care, financial affairs, accommodation, and care needs and services.  My opinion is that currently Mr [Selen] (a reference to the husband) is unable to manage his financial and property affairs due to his cognitive deficits.”

8. In a report dated 11 December 2009 Dr W says:

   “If his (a reference to the husband) cognitive performance can not be explained by reversible medical factors, then he would meet criteria for a dementing condition with prominent memory, visuo-spatial and executive components, but given the timeframe of recent worsening of symptoms may represent a condition with a rapid course of decline … it would seem appropriate to strongly consider the appointment of an independent (State) guardian and financial manager.”

9. I reject the second respondent's submission that there remains a "question mark" over the husband's cognitive capacity, by reference to available evidence.

10. Given the husband's incapacity, control of the spouses' financial affairs pursuant to the orders made on 30 October 2007 is now in a vacuum. 

11. Deleterious consequences may flow if that vacuum remains.  The ANZ Bank will probably shortly commence enforcement action against the spouses, which may entail foreclosure of mortgages secured over some parcels of real property.  That enforcement action may be staved off if the wife can assume control of the spouses' financial affairs and satisfy the demands of the ANZ Bank.

12. I am not persuaded that the second respondent can take control of the financial affairs as an alternative.  There remains the prospect of the second respondent's unlawful use of the spouses' partnership funds.  The court has also previously ordered restraints upon the second respondent's involvement in the partnership business, as exemplified by Order 1.1 made on 21 October 2008, and Orders 2.1, 2.2, and 2.7 made on 10 July 2009.

13. The second respondent submits that if the court makes orders in line with those proposed by the wife in her Application in a Case, then the court should either:

    a)Impose an injunction precluding the wife from terminating the partnerships' employment of the second respondent, and additionally precluding the reduction of his wage, or

    b)Impose an injunction requiring the wife to provide financial data pertinent to the partnership to the second respondent.

14. I decline to do either of those things. 

15. There is no evidence before the court that the second respondent is an employee of the partnership.  There is only evidence that the husband has paid to the second respondent the sum of $2,500 per month from partnership funds.  The wife has not been afforded by the husband any explanation for that payment.  It may or may not be in the form of wages.  Even if so, it may or may not be a wage commensurate with his services to the partnership. 

16. That factual situation remains vexed given that: 

    a)The withdrawal of $22,880 from an account by the second respondent in recent months was said by the husband's solicitors to have occurred without the husband's knowledge or authority; 

    b)The second respondent apparently alleges that the withdrawal was for "backpay"; 

    c)The husband's solicitors assert that the husband moved to change the bank account password so as to preclude the second respondent's resort to accounts; and 

    d)The husband's solicitor's assertion that the second respondent may have withdrawn the funds held in an account in the name of the husband, rather than from an account held in the name of a partnership.

17. The court cannot, or should not, oblige the wife to maintain an employment relationship with a third party, even though it be her son, in the absence of evidence proving the employment relationship and the probity of the alleged remuneration. 

18. The wife has undertaken not to disturb the second respondent's residential status upon one of the parcels of real property.  In her affidavit the wife says:

    “I am happy for [C] and his family to remain living on the property in cottage two as long as he does not interfere with my quiet enjoyment of the property.”

19. What the wife does with the engagement and payment of the second respondent in her control of the partnership will be a matter for her, which might be the subject of evidence, if relevant, at the final hearing. 

20. I am not persuaded that the second respondent, as a third party to the business affairs of the spouses' partnership, has an entitlement to periodically receive and inspect financial data pertinent to the partnership.  If, as he alleges, he is an employee of the partnership, I am not convinced that he has the right to inspect the financial affairs of his employer.

21. For those reasons I make the following orders.

I certify that the preceding forty-one (41) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Austin

Associate: 

Date:  27 January 2010