Spicer and Spicer

[2018] FCCA 1013

FEDERAL CIRCUIT COURT OF AUSTRALIA

SPICER & SPICER [2018] FCCA 1013

Catchwords:
FAMILY LAW – Property dispute – husband’s formerly valuable family company group now of negative value – now almost no assets to divide – wife to retain car and superannuation to be equalised.

Legislation:

Family Law Act 1975

Cases cited:

Stanford v Stanford [2012] HCA 52

Applicant: MS SPICER

Respondent: MR SPICER

File Number: MLC 1099 of 2017

Judgment of: Judge Burchardt

Hearing date: 5 March 2018

Date of Last Submission: 5 March 2018

Delivered at: Dandenong

Delivered on: 7 May 2018

REPRESENTATION

The Applicant: In person

The Respondent: In person

ORDERS

1. Ms K on behalf of Business A Pty Ltd transfer the ownership of the Vehicle S to the Applicant Wife.

2. The Applicant pay any costs arising out of the transfer of the vehicle.

3. In relation to the First Respondent Husband’s interest in Super Fund Q superannuation fund member number (“the Fund”):

   (a)There be an allocation for the purpose of section 90MT(4) of the Family Law Act 1975 (Cth) of a base amount of $36,484 from the Husband’s Fund to the Wife Ms Spicer;

   (b)Pursuant to section 90MT(1)(a) of the Family Law Act 1975 (Cth), whenever a splittable payment becomes payable in respect of the Husband’s accumulation component in the Fund, Ms Spicer shall be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Supperannuation) Regulations 2001 (Cth) using the base amount of $36,484 pursuant to order 3(a) of these Orders and there shall be a corresponding reduction in the superannuation interest of the Husband to whom a splittable payment would have been made but for this Order;

   (c)Order 3(b) of these orders shall take effect from the operative time, being the fourth business day after the date on which a sealed copy of this order is served upon the Trustee of the Fund.

   (d)Having been afforded procedural fairness in relation to the making of this Order, this Order binds the Trustee of the Fund;

   (e)The Trustee of the Fund and the parties in accordance with the obligations set out under the Family Law Act 1975 (Cth), the Family Law (Supperannuation) Regulations 2001 (Cth) and the Superannuation Industry (Supervision) Act and Regulations 1994 (Cth), shall do all such acts and things and sign all such documents as may be necessary to calculate the entitlement of and make the payment to Ms Spicer in accordance with these Orders.

   (f)Each party and the Trustee has liberty to apply in respect of the implementation of the superannuation splitting orders.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT DANDENONG

MLC 1099 of 2017

MS SPICER

Applicant

And

MR SPICER

Respondent

REASONS FOR JUDGMENT

Introductory

1. This is a property dispute arising out of particularly unfortunate circumstances.  It should be noted that the parties, to their credit, resolved parenting matters by consent orders made on 30 May 2017.  That measure of cooperation, however, fails to mask the ongoing bitterness between the parties.  The applicant wife seeks that there be a property division of some 60 to 40 per cent in her favour in respect of what she says is the net financial worth of the respondent husband.  The husband says that there is simply nothing to divide.

2. Although I suspect that the husband’s financial affairs may, after the conclusion of these proceedings, rather rapidly reconstitute themselves, the fact is that I cannot be satisfied on the evidence that there is anything to adjust other than chattels and superannuation.  For the reasons that follow, I am going to equalise the party’s superannuation and order that the husband transfer to the wife the Vehicle S car in her possession.

Agreed or Uncontested Matters

1. The wife was born on 1982 and the husband was born on 1975.  They met in 2003 and commenced cohabitation in 2004.  Their children [X] and [Y] were born on 2008 and 2012, respectively.  The parents married on 2010.

2. The husband has had, historically at least, a one-third share in what is called the Business A.  This, as exhibit A1 shows, involves a complicated family business structure of the Spicer family.  The family business, if I may use that phrase, has operated historically in and around Town 1 for many years.

3. In January 2017, the parties separated.  There seems no real dispute that this was precipitated most particularly by the husband’s apparent discovery that the wife was continuing to have an affair with Mr J, a former senior employee of the husband’s business.  An Intervention Order rapidly followed.  It is not necessary to examine in any great detail this whole process, but it is obvious that it has given rise to considerable bitterness.

4. Much of that bitterness arose from the fact that upon separation, the husband promptly sacked the wife from her employment with the family business and left her without income forthwith.  He subsequently ceased all payments by way of rental and bills to support the wife.

5. The wife had worked for the family business during the currency of her relationship with the husband, and it is common cause that at one point she contributed in excess of $90,000 following the sale of the property that was in her sole name.  Whether this was a property to which, in truth, the wife alone made payments is disputed, but the fact is that that money was applied to various extant debts of the family business and is long gone.

6. Shortly after separation, the Business A primary creditor, the Company Pty Ltd locked out the company’s two primary sites on the basis of overdue rent.  The net result was that the Business A was placed into voluntary liquidation on 9 March 2017.

7. The only other matter I should record under this aspect of the judgment is that, as earlier indicated, the parties commendably resolved parenting matters in 2017.  The children live predominantly with the mother, but spend four nights per fortnight with the father and half school holidays.

The Parties’ Finances

1. The real dispute as the matter has finally come before the Court is concerned first and foremost with what the true position of the husband is.  This is not, in any way, easy to ascertain.

2. In her first affidavit, filed 8 February 2017, the wife deposed that at the commencement of the relationship, she had about $5,000 in cash and $10,000 worth of Business equipment.  She also deposed to being in possession of a Vehicle S worth $25,000, and jewellery (which is not now of any moment).  In her second affidavit, filed 9 March 2017, the wife deposed to the cessation of payments of rent and bills of the like.  She also deposed to a dispute referred to the Child Support Agency as to the extent of the husband’s obligations.  She further deposed to having substantial unpaid entitlements arising out of her dismissal (which appear now to be abandoned) and the retention of her (personal) equipment by the respondent.

3. The husband’s first affidavit, filed 16 March 2017, deposes to his one-third share in the family business known as the Business A.  He asserted that the business has suffered extensive losses and was on the brink of liquidation.  He deposed there was no property for division and distribution by the Court.  He annexed as exhibit S-8 an email from Mr N at Accountants, dated 25 January 2017, about the proposed voluntary administration of the Business A.  Mr N, who is clearly an accountant, opined that the company was insolvent.  It had net assets of minus $1,272,000 on an estimated realisable value basis.

4. The only other matter of any note is that the husband has calibrated his superannuation at $96,000 at the time of his Financial Statement filed 16 March 2017.

5. The next affidavit which touches in a material way upon financial matters is that of the mother, filed on 6 December 2017.  The mother deposed to having commenced work on 2017 as a (occupation omitted) with an income of $1,324 per week and expenses of $1,027.50 per week.  She asserted that her superannuation was now worth $40,270.63.  The wife appended a number of financial documents.  The explanations as to these documents are contained in a second affidavit, also filed on 6 December 2017.  Annexure S 1 is an Advice to Creditors from Accountants about the Business A, dated 8 November 2017.  Accountants were appointed as liquidators on 9 March 2017.  There were insufficient resources in the liquidation to provide for the payment of a dividend to unsecured creditors, and, indeed, (this was surely a matter of pain for them), there were insufficient funds to indemnify the liquidators for their fees and disbursements to undertake further investigations for the purpose of identifying any further assets and potential claims.

6. It is important to note, inter alia, that at page 8 of 33 of the affidavit, Accountants asserted:

   “Our review of the internally maintained financial accounts of the Company confirm that they do not provide an accurate representation of the Company’s current financial status.  The lack of accurate financial information has also limited the depth and scope of our investigations.

   It appears however that there was substantial source documentation maintained by the Company.  Creditors should note that it may be possible for us to reconstruct and prepare more accurate financial statements/accounts from available source documents.  Undertaking this task would however come at a considerable cost.  The liquidation is currently without funds and creditors should refer to the “Request for Funding” section below should they wish to fund us to review the matter further.”

7. The report also noted that:

   “Our preliminary review of the Company’s financial records indicates that the Company may have been insolvent from as early as 1 July 2014.”

8. Accountants noted that they were unable to determine whether there was a claim against the director (the husband) for insolvent trading, and they requested further funds.  It seems reasonably clear that nobody was prepared to come forward.

9. Annexure S 2 is a document from Mr D, who appears to be an accountant, to Mr J (the person with whom the wife had an affair), dated 10 November 2017.  There is no material before the Court to show what materials were before Mr D and, accordingly, Mr D’s estimate that the husband’s net asset position would be $194,560 can be given no weight.  I note that the email concludes relevantly:

   “The above are estimates only based on the information provided.  It is not legal advice”.

10. Annexure S 3 is described by the wife’s affidavit as a consolidated balance sheet, but its origins are in no way explained.

11. Annexure S 4 is a series of emails between the parties, showing that the wife was resiling from an agreement earlier entered into, and annexure S 5 are email exchanges between the husband and various possible purchasers of items owned within the family business more generally.

12. The husband’s responding affidavit, filed 8 December 2017, relevantly deposes to the demise of Business A.  He deposed that following the liquidation, Company Pty Ltd, described as “my mother’s company”, attempted to take over the business of the Business A, but deposed to such efforts being ceased in April 2017.  He annexed as annexure S 3 correspondence from the Bank F, dated 7 December 2017, to himself, showing loans to the family business (in its various corporate and other entities) in excess of $1,210,000.  He also annexed as S 4 an Internal Accounts Group Financial Position as of 7 December 2017, showing a net liability on the husband’s part of in excess of $114,285 to the family business.

13. He also annexed as annexure S 5 from Accounting, dated 7 December 2017, which relevantly asserts:

    “The comments below are based on financial accounts most recently completed to 30 June 2016, and in some cases earlier, as the last completed and reconciled records available.”

14. Having set out various corporations and trusts, which are said to have no value, the letter concludes:

    “Finally, there exists quite a web of inter-entity loans between the various Spicer entities within the family group.  My strong opinion is that none of these entities have assets available to be able to repay these loans.

    In summary – based on the most recent information I have available (and I have no reason to believe that situation has changed for the better) Mr Spicer’s various shareholdings and entitlements within the Spicer Group of entities have no value.”

15. It should be noted that the husband also appended, as annexure S 1, an agreement executed between the husband and wife on 29 November 2017, which allotted the wife her motor vehicle and an equalisation of superannuation.  It was this agreement from which the earlier emails to which I have referred were seeking to resile.

16. The husband did, however, in his affidavit assert that his current superannuation balance was $104,500. 

17. The husband appended as annexure S 6 correspondence from Mr R, a licenced real estate engaged by the Business A to endeavour to sell the property at Property A.  While the report noted a possible realisable value of between $999,000 - $1,100,000, this is substantially less than the Business A’s overall debts.  Furthermore, as at the date of the trial, the property has not been sold.

18. The other materials annexed to the affidavit, while to an extent self-serving, all point towards a parlous financial position on the husband’s part.

The Evidence Given At Court

1. The parties were both self-represented, and this presented understandable forensic difficulties.

2. In her opening, the wife indicated that she wanted the Vehicle S in her possession to be transferred to her.  She said that Business A paid out the loan.  She said that the property at Property A was worth $1,300,000, and the Spicer Partnership, $118,850.  There was an equipment boat owned by the Spicer Trust.  She referred to the Partnership, the Spicer Corporation, as Trustee for the Family Trust and thought that the Partnership had a one-third interest in the Trust.  There were shares in Company Pty Ltd, sold by the husband to his mother.  There is a block of land in her name which had been sold and the money was put into the business in 2013, worth $94,989.  The wife indicated that she sought an equalisation of superannuation and that the car be transferred to her.  She sought to split the $121,000, attributed as value to the husband’s interests.  She referred to shares held on trust for her daughters.  It must be said that some of the wife’s references to the admittedly convoluted affairs of the Spicer Group were somewhat difficult to follow.

3. The wife adopted her affidavit as true and correct.  She was cross-examined, relatively briefly, by the husband.  The wife said that she was fired from her employment and had no work for six months.  She had accessed $7,000 by way of superannuation on a hardship basis.  Her current balance of her superannuation is about $43,000.

4. She was cross-examined about the block of land to which reference has been made, but, in my view, this takes the matter no further as the land is long gone.  The wife said that she and the husband kept their money separate.  The property was bought in her name to get the first home owners grant, not because the husband might be sued in negligence.  Following the sale of the land, the money went back into the business in the sum of $94,000.  She did not know which business the money went into.  She confirmed that she was employed full-time at the start of her relationship with her husband and had $5,000 in the bank and $15,000 worth of Business equipment.  She said that she was not provided a residence, but the parties always rented.  Cars and telephones were provided by the company.  She said she was paid under the award rate.

5. In opening address, the husband said he wanted the application dismissed.  He said an equalisation of assets had already occurred.  The firm had met its demise.  The contents of the house were distributed.  The wife had retained the motor vehicle.  This was replaced by another loan from Business A Pty Ltd as Trustee of the Spicer Trust.  His mother and sister are beneficiaries under the trust.  Loans are intra-family loans.  The loan to pay out the car was from his father, and the father has registered security over Business A.

6. Once again, the opening address assumed a familiarity on the Court’s part with details of the Spicer Trust, and the submissions were by no means easy to follow.

7. The husband adopted his affidavits as true and correct.  He is unemployed.

8. Under cross-examination by the wife, the husband confirmed that he did not have any shares in Company Pty Ltd.  He owned 40 per cent of the shares, but sold them two months ago.  Company Pty Ltd has not traded for six years.  There are restrictions on him because he is the director of a liquidated company.  (omitted) would not give him a licence.  He has not been trading for two months.  There is a negative debt position for Company Pty Ltd.  He was $134,000 in debt when he last heard.  There is a business loan in respect of Business A Victoria, but he had to give a guarantee, as, indeed, did his mother.  There is debt across all the companies and it would cost a lot more than $128,000 to pay out the debts.  When challenged as to the shares held in trust for his daughter, the husband agreed that it would be appropriate that there be a declaration that the shares are held on trust for their daughter.  He said these were for originally $5,000, but were worth now $2,300.

9. The husband was challenged as to an asserted value of $530,000 for one of the vessels owned by the Business, but he said this was simply for the bank.  The boat has been sold and paid towards debt owed to the Bank F.  Bank F has a fixed and floating charge over the assets of the Group.  Bank E were paid out first, and then Bank E took the rest.  When cross-examined about property at Property A (if I have recorded this correctly from my notes), he said he had a one-third interest in the Partnership he was trying to sell, but the offer was only $900,000.  He is trying to sell the Boat for $220,000, but has had no luck, but may be able to sell it for $190,000.  He no longer has 50,000 shares in Business A.  When challenged about two moorings, he said one was irreparable.  Company Pty Ltd started just before Christmas.  Business D is his father’s company.

10. The husband did not agree that the wife was paid under the award rate.  All her expenses were covered.  She was paid $14.18 an hour at her election.  When it was put that this was $17 an hour in 2016, the husband said there were no payslips.  The husband was adamant that if all the assets of the Group were sold, there would still be debts.

11. In final submissions filed, the wife asserted that related party documents were not accurate.  The records were contradictory.  Shares had been moved in breach of Court orders.

12. In final submissions, the husband said the Group of businesses was intended to guarantee a lifestyle, but has not occurred.  It was a downward spiral.  They were trying to ensure that his mother keep her home and his sister also.  He was trying to salvage something for himself, but nothing is left.  He said that an equalisation of superannuation was not fair.

Findings about the Credit of the Parties

1. The wife presented as honest and, more noticeably, extremely angry with the husband.  She still feels that he has manipulated matters to his advantage and her ongoing dissatisfaction with what she perceives as her treatment was palpable.

2. The husband struck me, likewise, as being honest.  He seemed to me to be ground down by the whole experience.  He said he was depressed, and although, of course, I have no medical qualifications, his demeanour and affect was certainly consistent with such an assertion.

Stanford v Stanford

1. In my view, the parties’ circumstances are such that there are only chattels and superannuation to divide.  It is, however, appropriate that there be a property adjustment.  The parties no longer conduct their financial affairs as they did during their marriage (the wife’s assertion that they kept their finances separate does not alter the overall conclusion that they were a united family unit), and it is just and equitable that there be a division.

The Pool

1. The Spicer Group is all its emanations is presently worthless.  Not only does such documentation as there is available support this conclusion, but I accept the husband’s evidence to this effect.  It was given with conviction and I accept it.  This leaves the car which should be transferred to the wife, and superannuation.

The Parties’ Contributions

1. When the net result is so wholly disastrous, the question of contributions necessarily assumes lesser significance.  There is no doubt that both parties worked hard during the relationship, and the wife had the primary care of the children.  I would assess their contributions as equal.

Future Needs – the Section 75(2) Factors

1. Here, the position is stark.  I suspect that the husband’s affairs will reconstitute themselves in time.  Although he says that his reputation has taken a battering, and there is evidence to support this annexed to his most recent affidavit, the fact is that he comes from a family that is not devoid of resources.  No real evidence has been given about the husband’s father, who stands in the background as a part creditor of the family businesses, but when all this is over, I think that the husband will gradually reconstitute his affairs.

2. The wife, on the other hand, has regular and gainful employment, albeit at a modest wage.  She will have the primary care of the children on an ongoing basis.  Ordinarily, there would be an adjustment of some 20 per cent in her favour.

What Orders Should the Court Actually Make to Achieve a Just and Equitable Outcome

1. As indicated at the commencement of this case, there is really nothing now left to divide.  I do not know what has happened to the wife’s Business equipment, which was clearly of some value.  I am unable to make any positive findings as to where it is or how it got to wherever it is.  Realistically, all the Court can order is that each party retain chattels in their possession.  I think that it is entirely appropriate that the wife receive the car.  She needs to transport herself for work and the children also.

2. As to the question of superannuation, I think it is just and equitable that there be an equalisation.  The parties were together from 2004 to 2017, and, given the quantum of their superannuation, it is probable (as in so many other areas of this case, there is something of an evidentiary wasteland about this) that most of the superannuation, or at the very least a substantial proportion of it, accrued during the relationship.  Furthermore, given the long-term likelihood, in my opinion, that the husband will ultimately emerge far better off than the wife, it is, in my view, just and equitable that there be an equalisation.

3. I note that the father agreed to a declaration in respect of the shares and an order that they be held on behalf of his daughter, and there will be such an outcome.

Conclusion

1. This is a very discrete case turning on a very singular and unfortunate set of facts.  In my view, the orders proposed are a just and equitable resolution of a dispute that arises out of circumstances that could scarcely be more unfortunate.  The Court will need details of the Vehicle S, the child’s shares and to confirm the current figures in each parties superannuation fund (see annexure S 1 to the husband’s trial affidavit) are true and current before orders and a declaration can be made.

I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of Judge Burchardt.

Date: 7 May 2018