Stipic and Chesterfield

[2019] FamCA 515

FAMILY COURT OF AUSTRALIA

STIPIC & CHESTERFIELD [2019] FamCA 515

FAMILY LAW – PROPERTY – Interim –  Where the wife seeks the husband make a lump sum payment to her of $85,000 – where the husband has paid $85,000 in legal fees – where the parties agreed at the hearing to sell motor vehicles and equipment – where the husband asserts the funds available to him cannot be drawn upon and are necessary for the operation of the business and payment of business debts – where the husband asserts the future of his business is uncertain – order made that the balance of the mortgage account drawdown be released to the wife and husband pay the balance to the wife.

Family Law Act 1975 (Cth)

FAMILY LAW – PROPERTY – Interim –  Where the wife seeks the husband make a lump sum payment to her of $85,000 – where the husband has paid $85,000 in legal fees – where the parties agreed at the hearing to sell motor vehicles and equipment – where the husband asserts the funds available to him cannot be drawn upon and are necessary for the operation of the business and payment of business debts – where the husband asserts the future of his business is uncertain – order made that the balance of the mortgage account drawdown be released to the wife and husband pay the balance to the wife.

APPLICANT: Mr Stipic

RESPONDENT: Ms Chesterfield

FILE NUMBER: MLC 14080 of 2018

DATE DELIVERED: 2 August 2019

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: 16 July 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Wraith

SOLICITOR FOR THE APPLICANT: Peter Szabo Family Law

COUNSEL FOR THE RESPONDENT: Mr Glezakos

SOLICITOR FOR THE RESPONDENT: Marshalls And Dent And Wilmoth

Orders

IT IS ORDERED BY CONSENT THAT

1. The applicant and the respondent do all acts and things and sign all documents necessary to forthwith sell the following vehicles and equipment:

   (a)       Vehicle 1;

   (b)       Work Tools;

   (c)       Vehicle 2; and

   (d)       Vehicle 3;

   and after payment of any sale and associated costs of sale and the discharge of any loan, lease or other finance agreement secured over or associated with the  said vehicles and/or equipment the net proceeds of sale be held on trust in an interest bearing account in the name of the applicant and the respondent until further order.

IT IS ORDERED THAT

1. By 4.00 pm on 16 August 2019 the applicant and the respondent do all things necessary and sign all documents to draw down and to pay the sum of $30,472 from the Home Loan account, account number …07 to the respondent’s solicitor Marshalls & Dent & Wilmoth.

2. By 4.00 pm on 16 August 2019 the respondent pay the sum of $54,528 to the Respondent’s solicitor Marshalls & Dent & Wilmoth.

IT IS ORDERED BY CONSENT THAT

1. The characterisation of the payments in paragraphs 2 and 3 hereof be reserved for the determination of the Trial Judge.

2. The husband’s Application in a Case filed 9 May 2019 and the wife’s Response to an Application in a Case filed 3 July 2019 be otherwise dismissed and removed from the list of cases awaiting hearing.

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 Stipic & Chesterfield 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 MELBOURNE

FILE NUMBER: MLC 14080  of 2018

Mr Stipic

Applicant

And

Ms Chesterfield

Respondent

REASONS FOR JUDGMENT

1. This matter was listed before me in the Judicial Duty List on 16 July 2019. When the hearing of the matter commenced there were still numerous issues in dispute however in circumstances where the parties were able to resolve some of the more pressing issues and there is some prospect that the matter will be listed for final hearing by the end of the year the parties agreed that some of the remaining issues that they were seeking to ventilate could be deferred until that final hearing. For convenience I propose to refer to the parties as husband and wife.

2. Ultimately the primary issue requiring the Court’s determination was the quantum of the lump sum the wife should receive. It was her case that the husband should pay her $85,000 which is equivalent to the amount he has paid his solicitors. It was the husband’s case that if the wife agreed to the sale of the vehicles and equipment that the wife be paid the approximately $32,000 which he said could be drawn down on the mortgage over the former matrimonial home. Although it is somewhat unorthodox in circumstances where the parties agreed that whatever amount is paid should be characterised by the trial judge it is left to the Court to determine what that figure should be.

3. The parties in this case commenced cohabitation in 2007 and separated finally in August 2018. They each have children of previous relationships however there are no children of their relationship. The husband is 47 years of age and was until recently in partnership with a personal friend in a business B Pty Ltd as trustee of the B Unit Trust. The husband is the sole director and shareholder in C Pty Ltd which as trustee of the C Trust owns half the units in the B Unit Trust.  It was his evidence that both his personal and business relationship with his business partner have broken down, his partner is now working for a major competitor and although he is continuing to operate the business that its future is uncertain. The wife is a self-employed contractor working on a vehicle which was purchased by an entity which she controls but which was financed by C Pty Ltd an entity the husband controls leaving him responsible for the payments which it appears the wife is unable to meet.

4. Pursuant to orders made by consent on 22 January 2019 the wife has continued to occupy the former matrimonial home at D Street, Town E (“D Street”) with each party being required to pay half of the mortgage. The husband deposes that despite those orders the parties agreed that the mortgage payments would be drawn down from monies in the parties redraw facility. The wife for her part disputes that there was such an agreement and deposes that she has been paying her half of the mortgage and in her Response to an Application in a Case filed 3 July 2019 (“her Response”) she sought a payment from the husband to account for the monies he has drawn down to meet his share of the mortgage payments. At the hearing, the wife having agreed to sell some of the vehicles and equipment, the husband agreed to pay his half of the D Street mortgage in accordance with the previous orders and the parties agreed that the question of whether the husband should reimburse the wife for the mortgage payments she had made pursuant to those orders could be left for determination at the final hearing. The husband also deposed that he has continued to pay the rates and insurance and at least some of the utilities. 

5. On 9 May 2019 the husband filed an Application in a Case in which he sought inter alia orders for the sale of D Street and that the wife pay the monthly instalments to the various lenders and meet the cost of insuring the vehicles and equipment in her possession. The husband’s case was that he no longer had the capacity to meet those payments.  

6. In her Response the wife sought a raft of orders, the tenor of that response being that the husband should continue to meet half of the mortgage and discharge any arrears and make all future payments with respect to the vehicles and equipment in her possession, the wife’s case being that she wished to retain D Street and the vehicles and equipment. Whilst the husband’s evidence with respect to the state of his business and hence his capacity to meet the payments is yet to be tested my preliminary view having regard to the wife’s Financial Statement filed 17 January 2019 and the assets available for distribution including the business, which will need to be revalued, was that it is unlikely that the wife would be able to retain both D Street and the various vehicles and the equipment she has in her possession.

7. After giving the parties some time for further negotiations they were able to reach agreement on the sale of vehicles and equipment relieving some of the financial pressure and in these circumstances the husband did not pursue his interim application for the sale of D Street. This leaves the wife with the opportunity to retain the former matrimonial home if she is able to do so.

8. In her Response the wife sought an order for either a partial property settlement or in the alternative litigation funding and that she be permitted to offer her interest in D Street as security for the purposes of that litigation funding. The husband said he would consent to this order and would similarly need to secure litigation funding. However in the intervening period, and I note both parties criticise the other for failing to comply with their obligations for full and frank disclosure, counsel for the wife having inspected documents produced pursuant to subpoena submitted that in circumstances where the husband had approximately $200,000 in business accounts and where he had paid legal costs of $85,000 that he should pay the wife an equivalent amount. It is common ground that the husband does not have personal accounts in his name but draws from the business accounts to meet his personal expenditure.

9. The husband conceded that there was approximately $200,000 in the B Pty Ltd account but that in circumstances where he and his partner are in the process of ending their business relationship, that only half of the $200,000 in the B Pty Ltd accounts would be available to him. He did however also acknowledge that there was also approximately $100,000 in the C Pty Ltd accounts. Although it is common ground that these are the accounts which the husband uses to meet his personal expenditure, it was his case that the funds in these accounts are required to meet operating expenses of the business. Counsel for the husband also referred me to an amount of approximately $40,000 the husband says is owing to the Australian Taxation Office and F Pty Ltd’s potential claim against B Pty Ltd of in excess of $300,000. I note that although the husband deposed to F Pty Ltd’s claim against B Pty Ltd he did not depose as to the likely amount of that debt. It was on this basis that the husband proposed a payment of $32,000 to the wife from the D Street mortgage draw down. Counsel for the husband was not in a position to provide me with an up-to-date figure for the mortgage draw down however by agreement he subsequently provided me with statements from both the mortgage account and the offset account which show that there is $30,472 available by way of draw down and a further sum of $32,814 in the mortgage offset account.  

10. I was advised by Counsel that the husband’s legal costs to date are approximately $100,000 of which he has paid $85,000. Although it was submitted that these costs were paid out of post separation income in circumstances where he now asserts that he needs the funds in the business accounts to meet cash flow and a tax debt it is not possible to determine if this is the case or whether the husband, who has control of the business and it is agreed meets his personal expenditure from those business accounts, has prioritised the payment of his legal costs and other personal expenditure at the expense of business expenses.

11. Counsel for the husband could not point me to any evidence to support the husband’s assertion and I am not satisfied in these circumstances on the balance of probabilities that all of the approximately $200,000 in the business accounts is required for the continued operation of the business. These are matters that can be tested when the matter comes on for final hearing and orders can be made if necessary to adjust for any funds that are paid to the wife. The wife for her part opposed the husband using what are in effect joint funds to pay her the $85,000 she seeks in circumstances where he has had access to the business accounts and paid his legal fees from those accounts.

12. Doing the best I can on the evidence before me I propose to make the order the husband proposes with respect to the D Street draw down however I also propose to require the husband to pay the balance of the $85,000 the wife seeks, in the sum of $54,528, from the funds held in the business accounts which he controls.   Whilst this will reduce the funds in the business account the husband will be left with approximately $145,000  to operate the business pending the final hearing.

13. I will also make orders by consent for the sale of vehicles and equipment and I have referred the matter to the list of cases awaiting allocation to a judicial docket as soon as practicable. The funds the parties have each had access to since separation and the source of those funds can be looked at in more detail at the hearing and adjustments made if necessary at that time.

I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 2 August 2019.

Associate: 

Date:  2 August 2019