Skipper and Skipper

[2018] FamCA 146

FAMILY COURT OF AUSTRALIA

SKIPPER & SKIPPER [2018] FamCA 146

FAMILY LAW – SPOUSAL MAINTENANCE – Application to restrain parties from shared business – whether parties constitute risk to property

Family Law Act 1975 (Cth) s 72
Family Law Rules 2004 r 13.01

APPLICANT: Ms Skipper

RESPONDENT: Mr Skipper

FILE NUMBER: SYC 8343 of 2016

DATE DELIVERED: 7 March 2018

PLACE DELIVERED: Canberra

PLACE HEARD: Sydney

JUDGMENT OF: Gill J

HEARING DATE: 2 March 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Gould

SOLICITOR FOR THE APPLICANT: Southern Waters Legal

COUNSEL FOR THE RESPONDENT: Mr Lloyd

SOLICITOR FOR THE RESPONDENT: DC Chambers & Associates

Orders

1. The matter is relisted for interim hearing regarding spousal maintenance on 11 May 2018 at 9:00am for a period of one hour.

2. That until 11 May 2018 the husband shall pay to the wife amounts in accordance with Orders 5, 10, 19 and 21 of Justice Johnston made 1 February 2017, namely:

   5.The husband pay to the wife by way of periodic spousal maintenance the sum of $359 per week with payments to be made each week into the following bank account in the wife’s name:  B Bank BSB …, Number …, with the first such payment to occur on 6 February 2017.

   10.The husband shall pay as and when they fall due the council rates, water rates, contents and building insurance, pool cleaning and maintenance and utilities (including electricity, telephone, internet and Foxtel) for the Suburb C property and veterinary bills for the family pets as and when they fall due.

   19.The husband shall, whether in his personal capacity or his capacity as director of the Business, cause the wife to continue to receive her salary as an employee of the Business in accordance with its usual payroll processes together with the accrual of all employee entitlements and superannuation contributions.

   21.The wife shall continue to have the sole use of the prestige motor car (NSW Registration …) and the husband shall, in his capacity as a director of the Business, continue to ensure that all registration, compulsory and comprehensive insurance, lease or finance payments, eTag and fuel card payments relating to the vehicle are made as and when they fall due, the Court noting that the car is a fringe benefit of employment and such payments are made consistent with the intention of Order 19 above and not by way of spousal maintenance.

3. Without detracting from his obligation of disclosure pursuant to Division 13.1.2 of the Rules, the husband shall provide to the wife:

   (a)The Business profit and loss financials within 21 days from the last day of each calendar month; and

   (b)The Business Activity Statements for the Business within 21 days from the end of each quarter.

4. The wife’s applications are otherwise dismissed.

5. The husband’s applications are otherwise dismissed.

6. The wife is restrained from attending at the Business premises at the Suburb D and Suburb E properties from the making of these Orders. 

7. In the event that the wife seeks spousal maintenance beyond 11 May 2018:

   (a)The wife shall file and serve all material that she seeks to rely upon before 20 April 2018;

   (b)The husband shall file and serve all material he seeks to rely upon one week before 4 May 2018.

8. In the event that a party seeks costs the party seeking costs is to file and serve written submissions within 14 days of today’s date, with the other party to file and serve written submissions in response within a further 14 days from that date, with the costs issue to be resolved at the next occasion on the basis of those submissions.

IT IS NOTED THAT

1. Failure of a party to comply with Order 7 above may result in the exclusion of that party’s material. 

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

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 r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT CANBERRA

FILE NUMBER: SYC 8343  of 2016

Ms Skipper

Applicant

And

Mr Skipper

Respondent

REASONS FOR JUDGMENT

Background

1. The Applicant wife in this matter is Ms Skipper; the Respondent husband is Mr Skipper. The parties began a relationship in 1998, and married in 2009.  They separated in about December 2016.

2. These proceedings relate to the division of property between the parties. The parties operate a number of entities associated with an enterprise, collectively described as the “Businesses”, including F Pty Ltd, Skipper Pty Ltd, G Pty Ltd, H Pty Ltd and the Skipper Family Trust.

3. The structure of the business is somewhat unclear on the current evidence.  What appears not to be controversial is that the husband commenced the business as the sole shareholder and director of the entities during the marriage.  The parties both worked, to varying degrees, in the business.

4. At about the time of the breakdown of the relationship the husband formed the Skipper Family Trust (the Trust), transferring the shares in the entities into the Trust.  The husband is the trustee.  He nominated others as the appointors.  The wife claims, not unreasonably, that this was an attempt by the husband to remove the business from the pool.  At the interim hearing counsel for the husband specifically disclaimed the idea that the business could be considered as not forming a part of the pool.  Orders made by Johnston J on 1 February 2017 caused the husband to change the schedule to the trust such that he would be the sole appointor and sole member of the appointed class of beneficiaries.  The wife remains a member of the class of excluded beneficiaries.

5. The wife is seeking by way of final orders:

   a)That she have sole occupation of the former matrimonial home and that the property be transferred to her;

   b)That the husband cause the Applicant to be appointed as Director/Trustee of each entity of the Businesses, to transfer any of his shareholding in these entities to the wife, to authorise the wife to operate the bank accounts associated with the Businesses to the exclusion of the husband, and to resign as Director/Secretary or Trustee from the corporate entities or trusts as applicable;

   c)For the husband to indemnify the wife as to any tax liability incurred by the Businesses;

   d)That the husband otherwise retain his interests in the Queensland property, the Suburb D property, solely owned property and solely named superannuation; and

   e)That the wife otherwise retains her interests in any solely owned property and solely named superannuation.

6. The wife is seeking by way of interim orders:

   a)That, expressed in the same manner as (b) above, the husband transfer control of the Businesses to the wife and relinquish his control over the entities; and

   b)That the wife undertakes to manage and preserve the assets of the Businesses pending final property determination;

   c)That the husband be restrained from attending upon the Office (being situated at J Street, Suburb D NSW) without the express written consent of the wife;

   d)That the wife be restrained from attending upon the Factory (being situated at 2 J Street, Suburb D NSW) without the written consent of the husband;

   e)That the parties each be restrained from employing any relatives or friends to work in the Businesses without the express consent of the other party;

   f)That the husband indemnify the wife for any liabilities incurred by the Businesses or by the husband as a result of the husband’s conduct either personally or in his capacity as Director of any entity associated with the Businesses;

   g)That the husband do all things necessary to preserve the assets of the Businesses;

   h)That the husband pay outstanding arrears arising from his obligations under Orders 10, 19 and 21 of 1 February 2017 to the wife, with interest for to be calculated from the date that the wife provided the husband with notice of the expense or otherwise as the payments fell due and payable; and

   i)That the husband pay the wife’s costs of and incidental to this application within seven days.

7. In the alternative to the interim orders (a)-(b) above, the wife seeks that the husband, in his capacity as Director, Shareholder, Trustee, Appointer or otherwise:

   a)Be restrained from distributing cash amounts over $3000 without the wife’s written consent; and

   b)Be restrained from permitting Ms K, Mr L Skipper, or any other unemployed family members or friends from attending upon the Office without the written consent of the wife.

   c)Be restrained from disposing of the Japanese car;

   d)Provide the wife with exclusive use of the Japanese car;

   e)Be restrained from terminating the employment of any current staff member of the Businesses without the written consent of the wife;

8. The husband seeks that the wife’s applications be dismissed.

9. The husband also seeks that Orders 6 and 7 made on 21 December 2016 be discharged, that Orders 5, 19 and 21 made on 1 February 2017 be discharged, and that Order 10 made on 1 February 2017 be discharged insofar as it requires the husband to pay for outgoings for the Suburb C property and veterinary bills for the family pets. Order 6 of 2016 restrains the husband from interfering with the wife’s employment with the business, whilst Order 7 provides the wife with sole use of a prestige car. Order 5 of 2017 requires the husband to pay spousal maintenance to the wife of $359 per week, Order 19 requires to husband to continue to provide the wife her salary through the business, and Order 21 provides the wife with sole use of the prestige car and requires the husband to pay outgoings in relation to the vehicle.

10. In relation to the Suburb C property, the husband also seeks that the wife be restrained from permitting any other person from occupying the property.

11. In relation to the Business, the husband seeks that the wife be restrained from attending the Business premises, and be restrained from communicating with or contacting any existing employee, contractor or customer of the Business. The husband provided that he would pay the wife the totality of her employment and superannuation entitlements up to and including 2 March 2018, and provide the wife with business profit and loss statements for the end of each calendar month, and Business Activity Statements for the business at the end of each quarter.   

12. The husband also accepted that orders should be made that cause a payment to be made to the wife for a short period of one to two months for her support.

Material relied upon

1. The wife relied upon her Affidavit filed 9 February 2018; the Respondent relied upon his Affidavit filed 9 November 2017, his Affidavit filed 23 February 2018 and his Financial Statement filed 28 February 2018.  The wife relied upon her further Affidavit and Financial Statement filed 1 March 2018.

Procedural History

1. Aside from the orders referred to above of Johnstone J, orders were made, in general terms, to preserve the wife’s employment in the business, to provide her with the sole occupancy of the home and use of prestige vehicle, along with other obligations on the husband to make payments in respect of the wife.

2. Further interim proceedings were conducted on 10 March 2017 where the husband sought to exclude the wife from the business premises in Suburb D.  Those orders were refused.  At the same time the wife sought orders to exclude the husband from the business premises.  The wife’s late filing of that application meant that it was not heard at that stage, as to do so would have deprived the husband of procedural fairness.  He had not been given any adequate opportunity to deal with the new matters raised.

Current Circumstances

1. Since the wife filed her current application the husband has relocated part of the business to Suburb E. The Suburb D office, where the wife works, predominately controls the interstate operations, whilst the Suburb E office, where the husband works, runs the Sydney metro operation. According to the wife this has been a functioning arrangement.

2. The husband still attends on the Suburb D premises to open the office, and according to the wife is aggressive towards her at these times. He works predominantly from the Suburb E premises, but attends the Suburb D premises daily in order to unlock and lock the premises and to use part of the premises.  The husband states that he is still required to attend at the site, as the factory is located there, as is the dispatch site for drivers. The husband states that he is required to meet with drivers there often. The factory and the office in which the wife works are in different units at the same site.

3. The husband will not provide the wife with the keys to open the Suburb D office herself. According to her 9 February 2018 affidavit, the wife is seeking an arrangement where she works exclusively from the Suburb D office, whilst the husband works from Suburb E.

4. Each of the parties accuses the other of engaging in hostile and difficult behaviour directed at the other.  The husband has caused the termination of the employment of a number of persons who worked closely with the wife, including her relatives.  The husband terminated the employment of Mr M (wife’s son-in-law) Ms N (wife’s daughter) and Ms O (wife’s daughter) in March and October 2017 respectively. The wife alleges that these terminations were unfounded and improper.

5. The husband is said to have been verbally abusive to the wife.  He has not denied this. The wife alleges that the husband caused his sister-in-law and his children to attend on the Suburb D premises for the purpose of provoking the wife. This was particularised as having occurred on five occasions, 23 and 28 February, 2 March, 10 May and 12 December.

6. The wife seeks to justify the orders she seeks as protective of the property of the marriage.  She voices a concern that the husband may run the business down. The wife’s affidavit expresses a series of concerns that all revolve around the husband’s actions in “running the business into the ground”. These concerns include the unnecessary purchase of a second prestige car, unilateral hiring and firing of family members, interfering with business operations at Suburb D and changing of the locks on the business premises.

7. However, the wife’s material asserts that the sales of the business have steadily increased over the last few years.  In particular, in the year of their break up, the 2017 financial year, the sales increased by over 16 per cent.  The profit for that year increased by more than 100 per cent.  On her material the sales have increased further since that time.  

8. The husband raised four major concerns regarding the wife’s ongoing involvement in the business. The first related to an alleged gambling problem on the part of the wife spanning a number of years. The second related to fraudulent behaviour undertaken by the wife to secure the early release of funds from her superannuation. The third and fourth concerns related to the allegations that the wife had been defrauding the business of funds by redirecting invoice payments and covering the trail of those payments, and that the wife’s justifications for her actions were themselves duplicitous. 

9. The husband provided evidence by way of Exhibit TST-1, annexed to his affidavit of 10 November 2017, of the wife’s spending habits. These were a series of ATM transactions, typically of $160 - $260, spanning 28 March to 27 April 2013, 28 February to 27 May 2014 and 28 May to 27 November 2014. For 28 March – 27 April 2013 the transactions totalled $4,320, for 28 February – 27 May 2014 they totalled $9,170 and from 28 May – 27 November 2014 they totalled $20,780. In the aggregate, these transactions total $34,270.  These ATM withdrawals occurred at the “P Club” although evidence was not led as to the nature of this place. 

10. The husband tendered Exhibit H1, being a series of “Payment instruction forms” from Q superannuation, one from R Bank and one from S Bank. The Q superannuation forms were dated:

    a)13 October 2014

    b)6 July 2013

    c)19 November 2015

    d)25 June 2012

    e)7 May 2012

    f)23 April 2014

11. The R Bank form was dated 13 January 2012, whilst the S Bank form was dated 1 February 2003. The forms all provided for the early release of monies from the wife’s superannuation.  The justifications for these early releases varied. On the Q forms the wife declared that she had “reached preservation age and intended never to become gainfully employed for more than 10 hours per week.” On the R Bank form that she was “Over 55 years old and… permanently retired from the workforce”. The S Bank release form was justified on different grounds; the wife claimed early release of funds on the basis that she had mortgage debts overdue and major vehicle repairs owing. Counsel for the wife accepted that these withdrawals totalled approximately $44,000.

12. Exhibit H1 also included [50], [52], [61], [63], [67] and [79] of the wife’s affidavit dated 14 December 2016. These paragraphs outlined the wife’s work history, and demonstrated that the wife was in fact engaged in full time employment at the time of swearing to the contrary on the superannuation forms. Paragraph 52 stated that in June 2014 the wife obtained full time employment with B Bank; this would mean that the wife’s statements on the 7 May and 25 June 2012, 6 July 2013 and 23 April 2014 Q superannuation forms that she “intend[s] never again to become gainfully employed for more than 10 hours per week” were false. Similarly, at [79] the wife indicated that she “currently derive[s] a nominal income… from [her] employment with the Business”. This statement was part of an affidavit filed 14 December 2016 and so would indicate employment occurring after the declarations made on all the exhibited superannuation forms.

13. In relation to the alleged misappropriation of money by the wife, the husband pointed to [17] – [42] of his Affidavit, along with annexures C, D, E, F and G of the same document. These paragraphs alleged that the wife had caused payments to be made to entities called “T” or “U” for services rendered on behalf of the business by its interstate contractors. Annexure C was a copy of a Mr V’s bank statement showing a payment of $138.60 to T on 24 October 2017, whilst annexure D was a copy of an invoice issued by the business to Mr V for the same amount.  Annexure E similarly showed that the amount of $369.60 had been paid to U by Company W on 16 November 2017, with the corresponding invoice issued by the business for the same amount at annexure F.

14. The wife accepted that she had been diverting payments,[1] in excess of those identified by the husband and approximating $16,000.  She justified her actions on the basis that she was in a financially precarious position, as the husband had begun refusing to pay her expenses as required by the Orders of 21 December 2016 and 1 February 2017, and that she was advised of the need to pay $12,000 for necessary dental work (but not that she used the money for that). The wife claimed that an amount of $1,583.21 is owed to her by the husband by way of the previous Orders.[2]  The wife has spent almost all of the $16,000.

    [1] wife’s affidavit filed 1 March 2018 at [5].

    [2] wife’s affidavit filed 9 February 2018 at [247].

15. Further, the evidence suggests that the wife amended the business accounts to cover this activity.

Discussion regarding the business

1. The allegation in relation to the wife’s gambling may be a matter to be resolved at trial.  It cannot be resolved in these proceedings at present.  The issue was raised by the husband, with supportive material (notably well before the current interim hearing).  The material is not definitive.  Neither is it adequately answered by the wife, when the answer is in her hands to give. On the interim proceedings these circumstances raises the question of a risk that the wife has a gambling issue.

2. This, however, is a secondary issue.  The concrete issue is that the wife, by her concession, has taken and diverted the money properly to be received by the business into her own account.  She did this as an employee of the company who had access to the company accounts to assist her in that exercise.  While the wife points to the husband having taken benefits from the company, she has not identified an impropriety in him doing so.

3. The significant hostility between the parties was advanced as the reason to exclude the husband from the business.  In the face of that the business appeared to be taking greater and greater profit, meaning that the hostility, insofar as it impacted upon the worth of the business, did not provide a sufficient reason to exclude a party from the business.

4. However, the conduct of the wife, as an employee in a trusted position, does.  The diversion of significant funds by her is a strong reason to now exclude her from the operation of the business.  This exclusion from the business will necessarily dispose of the majority of the orders that she seeks in relation to the business.

Maintenance

1. The Orders of 1 February 2017 provide that:

   5.The husband pay to the wife by way of periodic spousal maintenance the sum of $359 per week with payments to be made each week into the following bank account in the wife’s name:  B Bank BSB …, Number …65, with the first such payment to occur on 6 February 2017.

   10.The husband shall pay as and when they fall due the council rates, water rates, contents and building insurance, pool cleaning and maintenance and utilities (including electricity, telephone, internet and Foxtel) for the Suburb C property and veterinary bills for the family pets as and when they fall due.

   19.The husband shall, whether in his personal capacity or his capacity as director of the Business, cause the wife to continue to receive her salary as an employee of the Business in accordance with its usual payroll processes together with the accrual of all employee entitlements and superannuation contributions.

   21.The wife shall continue to have the sole use of the prestige motor car (NSW Registration …) and the husband shall, in his capacity as a director of the Business, continue to ensure that all registration, compulsory and comprehensive insurance, lease or finance payments, eTag and fuel card payments relating to the vehicle are made as and when they fall due, the Court noting that the car is a fringe benefit of employment and such payments are made consistent with the intention of Order 19 above and not by way of spousal maintenance.

2. In addition the wife has the exclusive occupation of the former matrimonial home.

3. The wife states that the husband failed to pay costs associated with the parties’ dog, plumbing for the former matrimonial home and that he cancelled the wife’s credit card. The wife alleges that the husband owes her the amount of $1,583.21.

4. The husband sought to discharge the orders requiring him to pay spousal maintenance to and for the support of the wife. 

5. The husband does not say that he lacks the capacity to support the wife, but says that the wife’s own assertions about her previous work and her work in the business should lead to the conclusion that she is able to support herself and so should no longer be in receipt of spousal maintenance.

6. He further complains that he is currently assisting to support the wife’s adult children as they are residing in the former matrimonial home with the wife.

7. A consequence of the determination about the business is that the wife will no longer be conducting the work of an employee of the business.  She will be without employment and without the income from employment. The wife states that she currently receives an income of $1,237 from the business. The husband says that the wife’s experience means that she will be able to find appropriate work.

8. The husband accepts that there should be a period of time, of one to two months while he continues to support the wife to allow her to transition.

Discussion regarding the support of the wife

1. Pursuant to s 72 of the Family Law Act 1975, the requirement to pay maintenance is predicated upon the two conditions.  The first is that a party is unable to support him or herself adequately.  The second is that the other party is reasonably able to support the first party.

2. The husband has conceded capacity to meet the current support of the wife.  In the short-term the wife is faced with the immediate loss of her employment.  At present she lacks the capacity to support herself, because of this fact.

3. Whether the wife has, in the longer term, the capacity to support herself is at present unclear.  The position is that I can be satisfied that the wife at present has a temporary incapacity to support herself.  I cannot, at this stage, be satisfied that the incapacity will extend beyond the period of a small number of months.

4. A spousal maintenance order will be made that mimics what the wife is currently receiving by way of spousal maintenance, employment entitlements and the payment of expenses, for a period of approximately two months.  She will, during the same period continue to have the exclusive occupation of the home.

5. Given the uncertainty of the position, directions will be made to allow the question of further spousal maintenance to be dealt with before the end of the relevant period.

Ancillary orders

1. The wife seeks restrictions regarding the husband’s expenditure in relation to the business.  One of the matters she points to in justifying such an order is the husband’s acquisition of a prestige motor vehicle.  On separation the parties had the use of another prestige motor vehicle, which the wife has access to as a result of previous orders.  Each now has one.  Perhaps the first was wasteful.  Perhaps it was not and it is entirely reasonable for the wife to have one and unreasonable for the husband to have one.  I am unable to determine that matter at this stage, nor determine whether the acquisition of the second prestige motor vehicle, as opposed to the first, is in some manner indicative of an undermining of a business that the wife says is increasing in its profitability.

2. The wife also sought restrictions in transactions for the business without her approval.  The evidence does not support why the particular amounts are significant, now how such orders may impinge upon the operation of the business.  The evidence does support the conclusion that there is significant risk if the parties are to continue to interact in the daily operation of the business there will be conflict.  The risk to the business demonstrated by the wife’s taking of the payments undermines the notion that she should be entrusted further with decisions relating to the day to day operation of the business and the restraint should not be made.

3. The husband should, however, fulfil the previous unmet obligations and should provide the wife with timely and comprehensive disclosure. The husband has a duty to provide this full and frank disclosure of all information relevant to the case in a timely manner under r 13.01 of the Family Law Rules 2004 and in accordance with the Rules under Division 13.1.2. He has offered particular disclosure in support of this.

I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Gill delivered on 7 March 2018.

Associate: 

Date:  7 March 2018