Stopford Malloy & Malloy and Ors
[2016] FamCA 748
•5 September 2016
FAMILY COURT OF AUSTRALIA
| STOPFORD MALLOY & MALLOY AND ORS | [2016] FamCA 748 |
| FAMILY LAW – SPOUSE MAINTENANCE – ENFORCEMENT – Where the wife sought the enforcement of interim spouse maintenance orders made by consent by way of the appointment of Receivers – Where the Court found arrears were owing pursuant to spouse maintenance orders – Where the Court exercised its discretion to enforce the spouse maintenance orders and appointed Receivers – Application allowed – Husband to pay the wife’s costs. . FAMILY LAW – SPOUSE MAINTENANCE – VARIATION – Where the husband sought to vary the interim spouse maintenance orders made by consent – Where the court did not accept that the husband demonstrated any change in circumstances relevant to the application – Application dismissed – Husband to pay the wife’s costs. |
| Family Law Act 1975 (Cth) Family Law Rules 2004 (Cth) |
| Hall v Hall [2016] HCA 23 Reynolds & Reynolds (1985) FLC 91-632 |
| APPLICANT: | Ms Stopford Malloy |
| FIRST RESPONDENT: | Mr Malloy |
| SECOND RESPONDENT: | Mr Q Malloy |
| THIRD RESPONDENT: | The Malloy Group |
| FILE NUMBER: | ADC | 2595 | of | 2015 |
| DATE DELIVERED: | 5 September 2016 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Bryant CJ |
| HEARING DATE: | 15 June 2016 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Wells QC with Mr McGinn |
| SOLICITOR FOR THE APPLICANT: | Piper Alderman |
| COUNSEL FOR THE RESPONDENT: | Mr Whitington QC with Mr Richards |
| SOLICITOR FOR THE RESPONDENT: | Howe Jenkin |
| COUNSEL FOR THE SECOND AND THIRD RESPONDENTS: | Mr Harris QC with Ms Kari |
| SOLICITOR FOR THE SECOND AND THIRD RESPONDENTS: | Barnes Brinsley Shaw |
Orders
That pursuant to r 20.46 of the Family Law Rules 2004 (Cth) (“the Rules”), Messers R and S of T Accountants are appointed as joint and several receivers (“the Receivers”) of the income and property of Mr Malloy (“the husband”) so as to give effect to Order 1 of the Orders of the Honourable Justice Dawe made on 19 October 2015 and as varied on 22 April 2016 (“the Orders”).
In particular, that the Receivers be appointed to receive the following:
(a) the husband’s jewellery;
(b) the husband’s household contents;
(c) the properties of which the husband is the registered proprietor at:
(i)U Street, Suburb E, South Australia (Suburb E) and
(ii)V Street, Suburb B, South Australia (Suburb B )
That pursuant to r 20.47(3) of the Rules, the Receivers are authorised to do (in the Receivers’ name or otherwise) anything the husband may do.
That pursuant to r 20.47(4) of the Rules the Receivers’ powers operate to the exclusion of the powers of the husband during the receivership in relation to compliance with the Orders.
That the Receivers’ remuneration be paid from the financial resources of the husband and such remuneration be calculated in accordance with the standard rates effective from time to time as set out in Annexure “OSM-7” to the wife’s affidavit sworn 7 June 2016.
That no security be given by the Receivers.
That the husband is to co-operate with the Receivers and shall:
(a) Provide all such documents, financial records, bank statements/books, tax records and any other financial documents as required by the Receivers within twenty-four (24) hours of the request by the Receivers;
(b) Provide full details to the Receivers within twenty-four (24) hours of request of the names and address of any employer or entity controlled by the husband which has received remuneration within the last seven (7) days;
(c) Provide any other information sought by the Receivers which relates to income or property of the husband.
That, in particular, the Receivers may sell any assets collected by them pursuant to Order 2 upon such terms and conditions as they shall see fit and after payment of the costs and expenses of sale and payment of registered encumbrances are to apply the net proceeds of such sale:
(a) in payment of the Receivers’ fees and the costs and expenses of such sales;
(b) in payment to the wife of such sum or sums as shall be outstanding from time to time pursuant to the Orders;
(c) in payment of any order for costs in favour of the wife made in these proceedings;
(d) the balance, if any, to be held as security for and applied to the payment of spousal maintenance pursuant to the Orders.
That the husband is directed and an injunction is granted directing the husband to deliver up to the Receivers and/or make available for collection by the Receivers in good order and repair the husband’s jewellery and household contents upon such date and at such time as the said Receivers shall advise him in writing delivered to U Street, Suburb E in the State of South Australia.
That the husband do, and an injunction is granted directing the husband to do, all things, provide all documents and authorities, and execute all documents necessary to cause any credit provider or any person providing financial accommodation to the husband to pay any monies or the money equivalent of any accommodation to the Receivers.
That the Receivers submit accounts to the following parties on a three (3) monthly basis for work done pursuant to these orders:
(a) The wife; and
(b) The husband.
In default (whether such default be by reason of any act or omission or neglect) of the husband executing any document necessary to give effect to these orders within twenty-four (24) hours of the same having been delivered to the husband’s solicitors whilst they maintain a notice of address for service on behalf of the husband in the state of South Australia then and in such event a Registrar of this Honourable Court upon proof by affidavit of such default is hereby authorised and directed to sign all such documents and if in the Registrar’s opinion it is necessary to do so to settle the same and to do all things to give effect to these orders.
The husband’s application for variation of the maintenance orders made 19 October 2015 as varied by order made 22 April 2016 (“the spouse maintenance orders”) contained in his response filed 9 June 2016 is dismissed.
The husband pay the wife’s’ costs of and incidental to the enforcement application filed by her on 13 May 2016 and his application to vary the spouse maintenance orders contained in his response filed 9 June 2016, as assessed in default of agreement.
The application for orders sought by the second and third respondents in their response dated 14 June 2016 is dismissed.
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 Stopford Malloy & Malloy and Ors 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: ADC 2595 of 2015
| Ms Stopford Malloy |
Applicant
And
| Mr Malloy |
First Respondent
And
| Mr Q Malloy |
Second Respondent
And
| The Malloy Group |
Third Respondent
REASONS FOR JUDGMENT
The interlocutory proceedings agitated on 15 June 2016 before me comprise two discrete applications. The first is an application for enforcement of spousal maintenance orders brought by the wife on 13 May 2016; the second is an application for orders sought in a response filed by the husband dated 9 June 2016 for variation of the maintenance orders.
In her application the wife seeks the enforcement of spousal maintenance orders. The husband seeks orders discharging the existing orders for spousal maintenance, discharging any arrears and substituting an order with a different and significantly diminished sum for spousal maintenance payable to the wife.
These interlocutory proceedings are a part, (albeit a not insignificant part), of wider proceedings concerning property settlement and parenting orders. Already there are a plethora of documents filed and all the issues appear to be contentious and hard fought. The potential for resolution which should form part of any litigation does not seem to be an immediate prospect in this case.
The relevant orders sought to be enforced
Dawe J made spouse maintenance orders by consent on 19 October 2015(“the orders”) (with a variation made on 22 April 2016) which the wife now seeks to enforce.
The consent orders of 19 October 2015 relevantly provide:
1. The husband do pay the wife by way of interim spousal maintenance:
1.1The sum of TWO THOUSAND DOLLARS [$2,000.00] per week with the first such payment to be made on Friday 23 October 2015;
1.2The sum of up to SIX HUNDRED AND FIFTY DOLLARS [$650.00] per week in such instalments or multiples as the lease of the property wife shall rent together with the amount of any bond payable by the wife, such payment to the wife’s landlord or to her agent as and when they fall due and payable under the lease or rental agreement.
2. The payments referred to in paragraph 1.1 shall be paid to an account nominated by the wife’s solicitors in writing.
3. The husband to indemnify and to keep indemnified the wife in relation to the payment of rental and other bond in respect of the premises that the wife rents with the monies provided pursuant to paragraph 1.2 and if so requested by the wife’s solicitors in writing do guarantee the rental payments of the wife.
4. The husband be restrained and an junction granted restraining the husband from doing anything or taking an steps to cause or facilitate the removal of the [German motor vehicle] Registration number … from possession or control of the wife.
…
The preamble to the orders of 19 October 2015 reads:
Upon Noting the husband’s written undertaking given to this Honourable Court this day in terms of paragraph 8 excluding the words “not exceeding paragraph [7.1] of these orders” of the wife’s Application for Interim Orders filed 17 July 2015 SAVE AND EXCEPT for the sale and settlement of [Suburb B] property which proceeds are to be applied to the first mortgagor and (without prejudice to any application the wife may make) the balance to the [Malloy Group].
The orders were made on the basis of a written undertaking given by the husband. The undertaking was that the husband would undertake until further order, not to either personally or by his servants or agents dispose of, encumber or further encumber, sell, transfer or deal with his interest or any interest of any company of which he is a shareholder and a Director and/or Secretary and of any Trustee or any Trust of which he is Appointor or Trustee or beneficiary or member of a class of beneficiary in any property save and except:
1.Pursuant to an order of the Family Court of Australia first having been obtained; or
2.To give effect to the orders of the Family Court of Australia; or
3.To meet his living expenses; or
4.In the ordinary course of business of any such company or trust; or
5.With the wife’s written consent first having been obtained upon the husband giving the solicitors for the wife not less than 42 days clear notice in writing setting out full details of any proposed transaction.
On 22 April 2016 Dawe J made the following orders, varying the orders of 19 October 2015:
4. Paragraph 1.1 of the orders of 19 October 2015 is continued.
5.Paragraph 1.2 of the orders made 19 October 2015 be varied by inserting the following in lieu of the present order:
“that the sum of SIX HUNDRED AND FIFTY DOLLARS [$650.00] per week, the first payment of which is to be paid and received as from Friday 22 April 2016, such amount to be paid to an account nominated by the wife’s solicitors in writing.”
…
Thus it can be seen that the amount required to be paid to by way of spousal maintenance directly to the wife was:
· $2,000 per week from 23 October 2015 to 22 April 2016
· $2,650 per week from 22 April 2016 and ongoing
Orders sought by the wife
The wife set out in her application in a case filed 13 May 2016 the orders that she sought. Those orders were updated and replaced by a Minute handed up to the court on 15 June 2016. The orders sought by the wife are as follows:
IT IS ORDERED:-
1.That pursuant to rule 20.46(1) of the Family Law Rules, Messrs [R] and [S] of [T Accountants] are appointed as joint and several receivers (“Receivers”) of the income and property of [Mr Malloy] (“Husband”) so as to give effect to Order 1 of the Orders of Justice Dawe made 19 October 2015 and as varied on 22 April 2016 (“Orders”).
2.In particular, that the Receivers be appointed to receive the following:
(a)the Husband’s jewellery;
(b)the Husband’s household contents;
(c)the Husband’s properties at Suburb E and Suburb B, South Australia;
(d)the Husband’s [German motor vehicle 2], registration number …; and
(e)any monies received by the Husband, or to be received by the Husband, or to be paid on behalf of the Husband.
3.That pursuant to Rule 20.47(3) of the Family Law Rules the Receivers are authorised to do (in the Receivers’ name or otherwise) anything the Husband may do.
4.That pursuant to Rule 20.47(4) of the Family Law Rules the Receivers’ powers operate to the exclusion of the powers of the Husband during the receivership in relation to compliance with the Orders.
5.That the Receivers’ remuneration be paid from the financial resources of the Husband and such remuneration be calculated in accordance with the standard rates effective from time to time as set out in Annexure “OSM-7” to the wife’s affidavit filed contemporaneously with this Application.
6.That no security be given by the Receivers.
7.That the Husband is to co-operate with the Receivers and shall:-
(a)Provide all such documents, financial records, bank statements / books, tax records and any other financial document as required by the Receivers within twenty-four (24) hours of request by the Receivers;
(b)Provide full details to the Receivers within twenty-four (24) hours of request of the names and address of any employer or entity controlled by the Husband which has received remuneration within the last seven (7) days;
(c)Provide any other information sought by the Receivers which relates to income or property of the Husband.
8.That, in particular, the Receivers may sell any and/or assets collected by them pursuant to Order 2 upon such terms and conditions as they shall see fit and are to apply the net proceeds of such sale: –
(a)in payment of the Receivers’ fees and the costs and expenses of such sales;
(b)in payment to the wife of such sum or sums as shall be outstanding from time to time pursuant to the Orders;
(c)in payment of any order for costs in favour of the wife made in these proceedings;
(d)the balance, if any, to be held as security for and applied to the payment of spousal maintenance pursuant to the Orders.
9.That the Husband is directed and an injunction is granted directing the Husband to deliver up to the Receivers and/or make available for collection by the Receivers in good order and repair the Husband’s jewellery and household contents upon such date and at such time as the said Receivers shall advise him in writing delivered to [U Street, Suburb E] in the State of South Australia.
10.That the Husband do, and an injunction is granted directing the Husband to do, all things, provide all documents and authorities, and execute all documents necessary to cause any credit provider or any person providing financial accommodation to the Husband to pay any monies or the money equivalent of any accommodation to the Receiver.
11.That until further order, the [Malloy Group] of Companies (identified in the Annexure B hereto) and each of them is restrained, and an injunction is granted restraining each of them, whether by their respective directors, employees, agents or otherwise, from paying to, or on behalf of, the Husband any sum of money on account of, or in any way discharging debts incurred, or to be incurred, by the Husband, for so long as, and whenever at any time, or from time to time, the payment of spousal maintenance pursuant to the orders herein dated 19 October 2015 (“the October Order”) and 22 April 2016 (“the April Order”) are or remain in arrears, to the intent that the Husband’s obligations pursuant to those orders, or either of them, to be complied with in priority to his other debts.
12.That until further order, the Husband’s father [Mr Q Malloy] is restrained, and an injunction is granted restraining him, whether by his employees, agents or otherwise, from paying to, on or behalf of, the husband any sum of money on account of, or in any way discharging debts incurred, or to be incurred, by the Husband, for so long as, and whenever at any time, or from time to time, the payment of spousal maintenance pursuant to the October Order and the April Order are or remain in arrears, to the intent that the Husband’s obligations pursuant to those orders, or either of them, to be complied with in priority to his other debts.
13.That for the purpose of giving effect to the orders in paragraphs 11 and 12 herein the question whether the Husband’s obligations pursuant to the spousal maintenance orders have been fully complied with shall, subject to any direction by this Court, be taken as conclusively determined by the Receivers’ weekly accounting to the parties in accordance with the next immediately following paragraph.
14.That the Receiver submit accounts to the following parties on a weekly basis, including but not limited to, an account as to the payment of spousal maintenance pursuant to the spousal maintenance Orders:-
(a)The wife;
(b)The husband;
(c)The [Malloy Group] of Companies at their registered address, being care of …, or by their solicitors …;
(d)[Mr Q Malloy], by his solicitors ...
15.That the spousal maintenance orders are varied as follows:-
(a)That the amounts ordered to be paid by way of spousal maintenance be paid to the Receivers
16.That until further order, or a payment of $20,547.00 is paid and received in the Husband’s solicitors trust account to be applied towards the payment of spousal maintenance pursuant to the Orders of 19 October 2015 as varied on 22 April 2016, the Husband is restrained and an injunction is granted restraining him from leaving the Commonwealth of Australia, and that any and each of the Husband’s passports be lodged with this Honourable Court forthwith.
17.That a sealed copy of this Order be forthwith served upon the Australian Federal Police.
18.In default (whether such default be by reason of any act or omission or neglect) of the Husband executing any document necessary to give effect to these orders within 24 hours of the same having been delivered to the Husband’s solicitors whilst they maintain a notice of address for service on behalf of the Husband in the State of South Australia then and in such event a Registrar of this Honourable Court upon proof by affidavit of such default is hereby authorised and directed to sign all such documents and if in the her opinion it is necessary to do so to settle the same and to do all things to give effect to these orders.
19.That the Husband do pay the wife’s costs of this application, such sum to be agreed or in default of agreement as assessed by this Honourable Court.
It can be said that the orders sought fall into two main parts, the first part comprising orders 1-10 inclusive relating to enforcement against the property of the husband. The second part seeks orders which include the husbands’ father and the Malloy Group of Companies (orders 11-16 inclusive) (“the third party claims”). Orders 17 and 18 seek to restrain the husband from travelling overseas whilst there are arrears of maintenance outstanding, order 19 relates to execution of documents if the husband defaults and order 20 seeks an order for costs.
The wife supported her application with an affidavit filed 13 May 2016. She asserted that at the date of her application, a total sum for arrears of maintenance was outstanding pursuant to the orders of $10,547.86. The basis of this calculation is set out in [8] of her affidavit involving a reconciliation of monies due and amounts received.
The husband opposes the application on grounds that will be discussed in due course. The third parties intervened to oppose the orders sought against them.
The wife relied upon material in the following affidavits.
· Her affidavit filed 14 July 2015
· The first financial statement filed 14 July 2015
· Her affidavit filed 28 September 2015
· Her affidavit filed 21 March 2016
· Her affidavit filed 19 April 2016
· Her second financial statement filed 19 April 2016
· Her affidavit filed 13 May 2016
· Her affidavit filed 7 June 2016
· Her affidavit filed 10 June 2016 re: current maintenance arrears.
Background and evidence relied upon
The wife was born in 1981 and is 34 years old and the husband was born in 1969 and is 45 years old. They commenced a relationship in June 2010 and commenced living together in March 2011 at a property owned by the husband at V Street, Suburb B (“Suburb B”).
In 2013 the husband and wife married in the USA.
In June 2014 the husband and wife commenced living in a property at U Street, Suburb E (“Suburb E”).
The husband has a daughter of previous relationship, S born in 2006. In 2014 a son, C, was born to the husband and wife.
In March 2015 the parties separated as they were experiencing difficulty in the marriage and the husband moved to the Suburb B property while the wife remained living at Suburb E.
In early May 2015 the wife went to stay with her parents. On 15 June 2015 the husband informed the wife that he considered the marriage was at an end.
Their son C is now 20 months old. The parties are engaged in litigation concerning parenting orders for him which is not directly relevant to these proceedings, save to the extent that he lives with the wife. The wife is his primary carer and her capacity to support herself is directly affected by her need to care for C. It is uncontroversial that the husband does not pay child support for C.
The husband and his father are involved in a group of companies the structure of which the wife describes as “complicated”[1]. The wife describes the group of companies as a family business involving hundreds of millions of dollars in multiple states. It was established by the husband’s father in the 1980s.[2]
[1] Wife’s affidavit 12 July 2015, paragraph 19
[2] Wife affidavit 12 July 2015, paragraph 20
The wife further deposes that the husband’s father, Mr Q Malloy, was recently listed as having a net worth of over $1 billion. The husband has personally been reported as having a net worth of $420 million.[3]
[3] Wife’s affidavit 12 July 2015, paragraph 21
The wife deposes to the husband as being a Director and a shareholder of a number of companies in the Malloy Group.[4]
[4] Wife’s affidavit 12 July 2015, annexures A, B and C
The wife asserts that the husband has told her he owns large property developments in South Australia.[5]
[5] Wife’s affidavit 12 July 2015, paragraph 29
The wife further deposes that:
30.In or about June 2014, the husband said to me that in or around 2012 there had been a restructure of the assets that he owned so as to limit the assets available for division with his previous de facto partner.
31.In or about September 2012, when the husband was engaged in family law property settlement negotiations with [S’s] mother, the husband’s father placed mortgages over Suburb B. [6]
[6] Wife’s affidavit 12 July 2015, paragraphs 30 and 31
The wife deposes to the husband being the registered proprietor of three properties.
1. Suburb B;
2. Suburb E; and
3. W Street, Suburb X (“the Suburb X property”).
She said that the parties have lived in Suburb B which she deposed to the husband having advised the value of the property was about $5 million.[7]
[7] Wife’s affidavit 12 July 2015, paragraph 35
The wife deposes to the fact that during the period of their cohabitation the husband purchased the property at Suburb E which was valued at approximately $3.2 million and that the husband had told her the mortgage repayments for Suburb B were approximately $18,000 per month and the repayments for Suburb E were approximately $12,000 per month.[8]
[8] Wife’s affidavit 12 July 2015, paragraphs 37 and 38
The wife also deposed to the fact that the husband owned the following motor vehicles:
· An Italian motor vehicle with an approximate value of $330,000;
· A German motor vehicle purchased in February 2015 which the wife estimated to have the value of between $220-320,000; and
· A German 4WD with a value the wife estimates as between $140-200,000 of which she currently has the use.
The wife indicates that she has a number of professional qualifications and experience[9] but that the last time she was in paid full time employment in the workforce was in June 2012.
[9] Wife’s affidavit 12 July 2015, paragraphs 48 and 49
It appears that when the husband and wife commenced cohabitation the husband offered to pay the mortgage payments for a property of which the wife was the registered proprietor at Z Street[10] and the husband began paying the weekly mortgage payments through a company in June 2012. The wife also says that in June 2012 the husband provided her with two credit cards and advised her that there was a “$40,000 limit on those cards and that I could use the cards as I saw fit. The credit cards are in the husband’s name”.[11]
[10] Wife’s affidavit 12 July 2015, paragraph 53
[11] Wife’s affidavit 12 July 2015, paragraph 55
The wife deposes to the fact that during the marriage she and the husband enjoyed a high standard of living which included the following:
· Living in a large house valued at about $3.2 million;
· Having the weekly services of a cleaner, a gardener and a nanny;
· Prior to C’s birth dining out 3-4 times per week;
· The wife being able to purchase items of clothing and entertainment without having to account for such expenditures to the husband;
· The husband making whatever expenditures he wished on clothes and other items without discussing it or accounting for it to the wife;
· Permitting the wife to renovate the Suburb E property and expending about $150,000;
· Travelling by business class to Europe for holidays and spending the holiday on the husband’s family yacht in the Mediterranean and to the United States;
· The husband providing the wife with gifts including jewellery, clothing and luxury hand bags and an expensive engagement ring;
· The use of expensive motor vehicles; and
· The husband paid for other living expenses such as the amenities, bills, mortgage payments, car insurance and renovation expenses[12]
[12] Wife’s affidavit 12 July 2015, paragraphs 71 and 72
The wife deposed the fact the husband informed her that “the company” pays the credit cards each month.[13]
[13] Wife’s affidavit 12 July 2015, paragraph 79
The wife estimated her current weekly expenditure to total $3,212 per week[14] and indicated that in the past she spent approximately $5-6,000 per month on credit cards using them to pay for:
[14] Wife’s affidavit 12 July 2015, paragraph 80
· Food
· Health insurance
· Medical expenses
· Contact lenses and vitamins
· Vehicle servicing and petrol
· House maintenance and repairs
· Entertaining
· Memberships and personal training
· Clothing for C and the wife
· Educational expenses for C
· Household items and toys
· The wife’s mobile phone[15]
[15] Wife’s affidavit 12 July 2015, paragraph 82
The affidavit sworn by the wife on 12 July 2015 was in support of an application (at that stage in the Federal Circuit Court but since transferred to the Family Court) filed 14 July 2015 for urgent spousal maintenance and interim spousal maintenance. For the purpose of this application the interim spousal maintenance sought by the wife was as follows:
1. That until further order the husband do pay or cause to be paid to the wife the sum of $2,500 net per week by direct debit into such account nominated by the wife in writing to the husband, the first such payment to be made on the Friday following the filing of an application and each Friday thereafter.
2. That the husband vacate the [Suburb E] property and the wife have the sole right to use and occupy the property.
The wife deposed to the fact that she had difficulty ensuring the husband continue to provide her with financial provision[16] and deposed to the fact that she wished to continue her role as full time parent and carer for C and that there was no child support assessment or formal arrangement in place for herself or C.[17]
[16] Wife’s affidavit 12 July 2015, paragraphs 84 and 85
[17] Wife’s affidavit 12 July 2015, paragraphs 97 and 98
In an application filed 4 August 2015 the husband sought parenting orders in relation to C but otherwise sought that the wife’s application be dismissed. In response to the wife’s application the husband set out his version of the financial arrangements between him and his father and generally in relation to his financial position.
The husband said that he left the Malloy Group in 1995 having been a Director of the Malloy Group from 1987-1995. He then formed the AA Group, selling a portion of that group which consisted primarily of two large properties in Adelaide in 2002. He retained various companies which owned substantial property. He later formed BB Pty Ltd for a major business operation.[18]
[18] Husband’s affidavit 14 August 2015, paragraphs 4-7
Between 2000-2008 the husband says that he purchased a number of residential properties funded by substantial borrowing from commercial lenders. He says that from 2010 onwards his financial position deteriorated caused mainly by inadequate cash flow and that the residential properties apart from Suburb B were sold to reduce his debt. He said that the Property CC was sold with all the proceeds applied to the reduction of bank debt.[19]
[19] Husband’s affidavit 14 August 2015, paragraphs 8-11
The husband then deposed that at the initiation of the banks his father agreed to take over responsibility for the liabilities of his group to the banks on the condition that he took control of parts of the business. The husband says he was required to guarantee payment of the debt with the funds advanced by the Malloy Group and to provide mortgage security over Suburb B.
He asserts that at the bank’s insistence his father became co-borrower with him of the first mortgage loan over Suburb B and that DD Pty Ltd as Trustee of the Mr Q Malloy Family Trust has met all payments in relation to the EE Bank loan secured by a mortgage and that those payments are then lent back (as book entries) to the husband. He asserts that he retained ownership of Suburb B but with a substantial mortgage liability to EE Bank and to the Malloy Group secured by mortgage. He asserts that the first mortgage liability to EE Bank has a balance of over $3 million and a second mortgage to FF Pty Ltd securing the guarantee liability of $3,263,133 and a third mortgage to DD Pty Ltd with a liability of $3,075,819.[20]
[20] Husband’s affidavit 14 August 2015, paragraphs 13-16
The husband asserts that in November 2014 he purchased Suburb E for $2.8 million funded by funds advanced by NAB and FF Pty Ltd, one of the companies in the Malloy Group. The amount currently outstanding secured by mortgage over Suburb E he asserts to be $2.95 million. NAB lent the money to another Malloy Group company, DD Pty Ltd as trustee of the Mr Q Malloy Family Trust as the borrower. The husband says that he has guaranteed the payments by DD Pty Ltd to the NAB and that DD Pty Ltd has made all the repayments under the mortgage loans.[21]
[21] Husband’s affidavit 14 August 2015, paragraph 17
The husband asserts that he has “no occupation” and that his personal income tax return shows that he has no income. He asserts that his father has funded his living expenses and as a result of the mortgage payments and his living expenses he owes DD Pty Ltd as Trustee for the Mr Q Malloy Family Trust over $3 million. He asserts a financial position with a shortfall of assets over liabilities and that since about 2010 he has “relied entirely on the largesse of my father for my financial support. I therefore owe the [Malloy Group] a substantial sum by way of loan for my living expenses”.[22] He did not deny however, the living expenses and lifestyle the wife described them as enjoying.
[22] Husband’s affidavit 14 August 2015, paragraphs 14, 19-22
The husband denied any knowledge of the Suburb X property and in relation to the motor vehicles he asserted that German motor vehicle was owned by him and under finance to Esanda and the Malloy Group has met all the finance and other expenses and that German 4WD motor vehicle was purchased by DD Pty Ltd as Trustee of the Mr Q Malloy Family Trust. The husband then asserted “[m]y father allowed us to use it but has recently insisted it be returned to [DD Pty Ltd].”[23]
[23] Husband’s affidavit 14 August 2015, paragraphs 23.38
The husband asserted the Italian motor vehicle had recently been sold for $330,000 and a net sum of $320,000 was applied “toward repayment of the loan to the Malloy Group”.[24]
[24] Husband’s affidavit 14 August 2015, paragraphs 23.36
The husband’s affidavit sworn immediately before the consent order on 19 October was sworn on 15 October and relevantly contained the following information:
12.The payments made by the [Mr Q Malloy Family Trust] … are not paid to me in cash, they are paid to the credit card accounts at the discretion of my father after review by CEO of the [Malloy Group] [Mr GG] and CFO of the [Malloy Group] [Mr HH].
13.The purchase of [Suburb E] was always on the condition imposed by my father that [Suburb B] had to be sold. As a result of having been groomed for sale, in April this year, the [Suburb B] property was listed with [II Group]. Stylists were engaged to replace previous furniture to enhance the appeal of the property for sale.
14.There have been numerous inspections by prospective purchasers but to date no offers have been made.
Relevantly to the orders to which he consented, the husband said that:
17.Despite my request that my father continue to maintain a nanny for the wife and continue to make the payments for the mortgage on the wife’s [Z Street] property he refused to do so after becoming aware the wife had instituted proceedings.
The husband said that his father had until 22 September 2015 at his request:
[c]ontinued to allow the wife the use of the [German 4WD] motor vehicle however by letter from his lawyers … to the wife’s lawyers made it clear that he now wants that vehicle returned to him.”[25]
[25] Husband’s affidavit 15 October 2015, paragraph 18
The husband went on to depose to the fact that he understood from discussions with the Malloy Group CEO, the wife continued to have the benefit of the use of the Bank SA credit card for her expenses and his father had to date made payments to that credit card regularly “so that her reasonable expenses have been met”.[26]
[26] Husband’s affidavit 15 October 2015, paragraph 19
The husband indicated that he understood that since 1 July 2015 the wife had access to $23,000 from the Malloy Group. The husband also indicated that upon sale of the Italian motor vehicle for $330,000 the proceeds were applied towards the repayment of his loan account, the balance of his loan account in the Mr Q Malloy Family Trust then being $2,755,819.[27]
[27] Husband’s affidavit 15 October 2015, paragraph 16
As previously described, on the 19 October 2015 when the wife’s application for maintenance orders came on before Dawe J the matter was resolved by agreement and a number of parenting and interim maintenance orders were made. In particular the husband consented to pay the wife interim spousal maintenance of $2,000 per week and a sum of up to $650 per week for the lease of any property that she would rent together with a bond if one was required. In addition the husband consented to being restrained from doing anything or taking any steps to cause or facilitate the removal of German 4WD vehicle from the wife.
Events since 19 October 2015
The present application was supported by an affidavit by the wife dated 21 March 2016 and a further affidavit of 13 May 2016. The wife deposed to a number of things that had occurred since the order of 19 October 2015. Particularly relevant is the fact that the husband and Wife attempted a reconciliation on 2 November 2015 at which time the wife returned with C to the Suburb E property. The reconciliation failed and on 22 January 2016 the wife moved out with C to resume staying at her parents’ home. During the reconciliation she had relet the unit in Z Street with the result that it was not available to her when the reconciliation with the husband broke down.[28]
[28] Wife’s affidavit 21 March 2016, paragraphs 4
The wife deposed that following the failed reconciliation, the husband blocked and deactivated her use of credit cards depriving her of access to funds for living expenses for herself and C, that the husband failed to pay interim spousal maintenance in accordance with the orders in place and has not paid bond and weekly rental payments.
The wife deposed to the fact that during their attempted reconciliation the husband went to work at the Malloy Group and she is aware that he attended the office, attended meetings, took regular work telephone calls and performed duties relating to his work with the Malloy Group. She made reference to her previous affidavit, not denied by the husband, in which he stated that his business card for the Malloy Group showed his title as “Chairman”, his direct telephone line at the Malloy Group office and the Malloy Group email address.[29]
[29] Wife’s affidavit 21 March 2016, paragraph 56.7
The wife deposed to the fact that a letter had been received from the husband’s lawyer indicating that the husband’s father proposed to pay half the amount of interim spousal maintenance.[30]
[30] Wife’s affidavit 21 March 2016, paragraph 88
The wife made various assertions regarding the husband’s lifestyle since the orders of 19 October 2015 which she asserts were recounted to her during the period of attempted reconciliation. She asserted that the husband:
·Promised that the lifestyle that he enjoyed would be hers to enjoy as well, as long as stayed with him
·Said that once she returned to the Suburb E property she would now have “limitless” funds available on credit cards but only if she did not use them to pay a lawyer
·Said that lawyers would never have found anything as he draws income from the Malloy entities as a loan
·Told her he was not required to repay the $330,000 received from the sale of his Italian motor vehicle but asserted that it was required in order to stop the wife’s “lawyers from getting their hands on the money”
·Took the wife to drive various motor vehicles and informed her he was considering trading his German motor vehicle for another Italian car and paid a deposit on a new Italian car
·Offered to trade in the wife’s German 4WD for whatever car she wanted
·Informed the wife that he could pay her lawyer’s bill but although he could pay it all at once would not do so
·Bought her expensive gifts including a diamond watch and diamond earrings and a diamond necklace
·Purchased $9,000 of outdoor furniture for the Suburb E home
·Dined out regularly with the wife at good restaurants
·Took the wife to Sydney for a week flying business class and hiring a luxury 4WD for the week and dining at top restaurants
·Offered to take the wife overseas to any destination she wanted to go for three months flying first class
·Informed the wife business was going well for him.[31]
[31] Wife’s affidavit 21 March 2016, paragraph 137-161
The wife attached, as Annexure A, to her affidavit of 21 March 2016 a handwritten document purportedly signed by the husband dated 19 December 2015 indicating, inter alia, that he would meet various financial obligations including:
1.Pay my [wife’s] legal fees of $61,000 as my wife has returned to live at Suburb E.
2.I will arrange and sign a payment plan contract/agreement with [the wife’s former lawyer] and make direct monthly payments to [the wife’s former lawyer] each month from January 2016, of $10,000 until the legal fees are completely paid and no debt owing.
3.I will continue to provide my wife with CBA and Bank SA credit cards, I will ensure there are funds on the cards and authorise her to spend as much as required each month – this excludes making any payments to [the wife’s former lawyer] unless I permit her.
4.…
5.I will ensure my wife is not in any way sued, nor legal action taken against her by my father, [Mr Q Malloy], for continued possession and use of the [German 4WD] – I have told her this is “her car to use” and understand it is needed by her drive our son [C].
6.…
7.…
8.In the event we are unable to reconcile/continue our relationship as husband and wife and living together in the same house, I will not threaten or intimidate my wife – I will not cut her off from required and reasonable financial support to continue caring for our son [C].
The wife filed another affidavit on 19 April 2016 noting relevantly in relation to the application for spousal maintenance that the husband had noted his occupation as “Chairman” in his affidavits sworn 15 October 2015 and 18 March 2016. The wife confirmed that she had applied for work but apart from one off sessional work does not have full time employment. She set out that the husband reinstated her access to the credit cards during the period of attempted reconciliation.[32]
[32] Wife’s affidavit 19 April 2016, paragraph 7-16
On 18 March 2016 the husband filed an application in case seeking to vary the orders made by consent with respect to interim maintenance to:
1.Reduce the monthly payment from approximately $8,660 per month to $4,000 per month
2.To meet the monthly finance payments made in relation to the [German 4WD] in the wife’s possession
3.To pay the monthly mortgage instalments over the wife’s [Z Street] property for which the wife would otherwise have been responsible
The effect of the husband’s application was to see a reduction in the monthly repayment from up to $11,482 per month to $5,688 per month.
The wife then filed an application in a case dated 19 April 2016 seeking to vary the existing orders by redirecting the payments which would have been applied to rental expenses directly to her but otherwise maintaining the amount of the payments.
The matter came before Dawe J on 22 April 2016. Her Honour gave ex tempore reasons for judgment, continued paragraph 1.1 of the orders of 19 October for spousal maintenance and varied order 1.2 by requiring the husband to pay the sum of $650 per week directly to the wife. Otherwise the husband’s application in a case was dismissed.
In her ex tempore reasons for judgment Dawe J dealt specifically with the husband’s application to reduce the spouse maintenance. After noting the history of the events since October 2015 was set out in the numerous affidavits filed by the parties, her Honour noted that the wife had ceased to reside with the family and moved to a property which she owns but is subject to ongoing mortgage payments previously covered by the rental of that property.[33]
[33] Ex tempore reasons for judgment of Dawe J dated 22 April 2016, paragraph 7
Her Honour noted that the circumstances in relation to the husband’s financial arrangements are in dispute; he claims he works for his father and his father then provides him with living money but that he is technically unemployed. She observed that his financial statement indicates expenses on a weekly basis in excess of $17,000 but no income.[34]
[34] Ex tempore reasons for judgment of Dawe J dated 22 April 2016, paragraph 8
Her Honour was satisfied the wife had established the need for the payment of spouse maintenance, took into account the previous standard of living enjoyed by the parties and observed that there was no evidence directly from the husband’s father as to his willingness to continue to make payments in accordance with the consent order. Her Honour emphasised that the October 2015 orders were made by consent.
Her Honour concluded that orders were made on 19 October 2015 which provided for the husband to pay the wife the sum of $2,000 per week and there was not sufficient material put to indicate why the orders should be altered. However, as indicated, she varied the order to provide for the sum of $650 per week to be paid directly to the wife. She added “if the husband does not comply with orders of the Court then appropriate adjustments will, no doubt, be made and enforcement proceedings can be commenced.”
On 13 May the wife brought the present proceedings by filing an application in a case seeking orders by way of enforcement of spousal maintenance.
That application was supported by the wife’s affidavit of 13 May 2016.
The husband sought that the wife’s application be dismissed and as indicated sought to vary the orders for spousal maintenance made on 19 October and varied on 22 April 2016 by reducing spousal maintenance to the sum of $650 per week. I will deal with that application separately.
On 7 June 2016 the wife filed a further application in a case seeking a variation of the spouse maintenance orders of 19 October 2015 and 22 April 2016 and supported that application with an affidavit sworn on the same date. The wife’s affidavit sworn 7 June 2016 set out the reasons for the application. That application is not before me for determination at this time.
The wife asserted that on Friday 22 April 2016 the proceedings before Dawe J concluded at approximately 11 am. At 3.25 pm on the same day a letter from solicitors representing the husband’s father and the Malloy Group was forwarded by email to her. The letter sought delivery up of German 4WD motor vehicle of which the wife has had the sole use since September 2014. The letter required the delivery up of the vehicle by 28 April 2016 at 5 pm otherwise court proceedings would issue. [35]
[35] Wife’s affidavit of 7 June 2016, paragraphs 4-9
The wife deposes to the fact that she returned the German 4WD because she did not want to be sued and that it was collected by the agents for the husband’s father from her parents’ house in Suburb JJ.[36]
[36] Wife’s affidavit of 7 June 2016, paragraphs 13 and 14
The wife through her solicitors then wrote to the husband’s solicitors providing them with a copy of the letter from his father’s solicitors seeking delivery of German 4WD. The wife’s letter sought that the husband provide the wife with the use of German motor vehicle in his possession and indicated that if he was not to do so, an application would be made to the court for a variation of the spousal maintenance orders and, in the alternative, the delivery up of German motor vehicle would be sought.
The wife asserts that without her knowledge the husband’s solicitors wrote to the Malloy Group’s solicitors enquiring as to whether their clients (the husband’s father and the Malloy Group) would amongst other things:
1.Continue to meet lease expenses of the husband’s German motor vehicle if the wife were to have its use;
2.If it was acceptable for the husband to use an Italian motor vehicle; and
3.Whether this “accommodation” made to the husband to enable him to meet payments in favour of the wife pursuant to the spousal maintenance orders would be increased.
The solicitors for the husband’s father and the Malloy Group responded advising that they would not pay lease payments on German motor vehicle if it left the husband’s possession and would not find “additional payments or amounts” for the husband for payment to the wife.
The husband’s solicitors then wrote to the wife’s solicitors claiming amongst other things:
· The husband had continued to request his father to allow the wife to use German 4WD
· The husband was in no position to make a decision about the use of German 4WD
· The husband does not own an Italian motor vehicle
· The German motor vehicle is leased from Esanda Finance Limited[37]
[37] Wife’s affidavit of 7 June 2016, paragraphs 18-22
The wife deposed to the fact that the husband travelled overseas on 15 May 2016 for a period of eight weeks.
In support of her application she said that she has the use of the German prestige car which had been purchased in 2010 for her but it was of an inadequate size to transport C and his pram and to fit other items in the car. It is a two door hatch back style of car making it difficult to put C into the back seat in his child restraint seat.[38]
[38] Wife’s affidavit of 7 June 2016, paragraphs 24-36
She asserted that the payments for German 4WD were approximately $525 per week and any costs had been paid by or on behalf of the husband for that vehicle including fuel, registration, insurance and services in the sum of approximately $210 per week. She further deposed that the decision to buy a German 4WD was because it had features which the parties considered necessary for use for the baby and a pram and had a child car seat professionally fitted. German 4WD was driven regularly by the wife or by the husband. [39]
[39] Wife’s affidavit of 7 June 2016, paragraphs 37-60
The wife then set out the details of the purchase of German motor vehicle and pointed out that the husband had sworn a financial statement on 4 August 2015 which at paragraph 40 confirmed himself as the owner of the German motor vehicle.
The wife further deposed (at paragraph 80) to the fact that the consent orders made on 19 October 2015 included in paragraph 4 the following “the husband be restrained and an injunction granted restraining the husband from doing anything or taking any steps to cause or facilitate the removal of German 4WD registration … from the possession or control of the wife. [40]
[40] Wife’s affidavit of 7 June 2016, paragraph 80
The wife also asserted that on 19 September 2015 the husband signed a statement that German 4WD was hers to use and he understood that German 4WD was needed to drive C around. The document signed by the husband was annexed to the wife’s affidavit of 21 March 2016.
The wife asserts that on 10 January 2016 the husband told her that he, rather than his father, had arranged for legal letters to be sent to her regarding the German 4WD and that he had employed an agent to attempt to remove the German 4WD from her parent’s home.
The husband by his affidavit of 18 March 2016 at paragraph 18 says that as a result of the reconciliation, he withdrew his instructions to his lawyers to seek the return of German 4WD. Upon separation on 22 January 2016 the wife returned German 4WD. The wife says that on 30 January 2016 the husband said to her amongst other things that he would sign the German 4WD over to her and on 18 March 2016 the husband by application, sought an order that he pay spousal maintenance by, amongst other things, “monthly finance payments in respect of the [German 4WD] in the sum of $2,100”.[41]
[41] Wife’s affidavit of 7 June 2016, paragraphs 76-92
Finally the wife filed a further affidavit on the 10 June 2016 setting out matters in compliance with Family Law Rule 20.06. She deposed to the fact that the arrears outstanding as at 10 June 2016 were $21,197.86 and set out the basis of that calculation.[42]
[42] Wife’s affidavit of 10 June 2016, paragraphs 9 and 10
The wife also set out the amount she sought by way of costs from the husband in the sum of $4,794.24 and explained how those costs arose.[43]
[43] Wife’s affidavit of 10 June 2016, paragraphs 13 and 14
The wife deposed to the fact that she is now in receipt of $485 per week from Centrelink, the first payment having been received on 25 May 2016.[44]
[44] Wife’s affidavit of 10 June 2016, paragraphs 15, 16 and 17
Submissions by the wife for enforcement of the arrears of spouse maintenance
Senior counsel for the wife submitted that the wife’s enforcement application does not include the period of attempted reconciliation and the calculations exclude payments made during the period of reconciliation.
It was further submitted the husband went overseas from 15 May 2016 for eight weeks during which period the wife received nothing other than $650 per week and has no access to the credit cards upon which she had previously drawn.
It is also submitted that no child support is paid by the father to the mother in respect of the ongoing care of C.
It was not disputed the husband travelled overseas, that the wife had only received $650 per week and that she received no child support. Senior Counsel for the wife submitted that the husband consented to the order of the
19 October 2015 in the full knowledge and understanding that he had always received the benefit of financial resources from Malloy Group and would continue to do so.
The husband’s response
The husband filed a response together with an affidavit on 9 June 2016 seeking dismissal of the wife’s application and variation of the spouse maintenance order to $650 per week.
In his affidavit he denied there were any arrears of spousal maintenance accrued pursuant to the orders. He attached to his affidavit various documents including annexure A which purported to be a “reconciliation of payments made to the benefit of [Ms Stopford Malloy] from [DD Pty Ltd] ATF the [Mr Q Malloy Family Trust]” for the period 19 October 2015 to 2 June 2016 which document summarises all payments and reimbursements and payments made to the wife by DD Pty Ltd in the period 19 October 2015 to 2 June 2016.
The husband annexed a bundle of statements for the CBA credit card accounts for the period 16 October 2015 to 28 April 2016 and a bundle of statements for Bank SA credit card account for the period 5 October 2015 to 4 April 2016.
He asserted that since the making of the orders the Mr Q Malloy Family Trust had paid on his behalf a total of $86,863.24 as summarised.
The husband asserted the wife’s legal fees in the sum of $15,000 were paid at her request via an EE Bank credit card in his name with approval of his father and the liability was then discharged by DD Pty Ltd.
He asserted that it was his “understanding that [DD Pty Ltd] has and will continue to make payment of the sum of $650 per week direct to the wife’s nominated bank account.”
He confirmed that the wife had use of credit cards but that the Bank SA card was closed on or about 22 April 2016 and the CBA card account was closed on 29 April 2016. The CBA card and Bank SA card were each in the name of the husband with the wife as a secondary card holder.
The husband deposed to the fact that two other credit cards in his name, an EE Bank card and a NAB card were used exclusively for his expenses.
He asserted that the payments made to the CBA, the Bank SA card, the NAB card the and the EE Bank card and the finance obligation relating to German 4WD motor vehicle were all paid by DD Pty Ltd and debited to his loan account in the company which now stands at $3,797,902.[45]
[45] Husband’s affidavit filed 9 June 2016, paragraphs 3-7
The husband asserted that his father is the sole director and shareholder DD Pty Ltd and the sole appointor of the Mr Q Malloy Family Trust. He asserted he has no beneficiary entitlements nor role as appointor or trustee nor any directorship or shareholding in the trustee company or otherwise in any of the companies or trusts comprising the Malloy Group. He asserted that he did not receive payments directly from DD Pty Ltd but payment of his expenses were made either direct to the supplier/creditor or to the respective credit card accounts in his name at the discretion of his father.
He asserted that he consented to the order on 19 October 2015 “at that time I assumed my father would accommodate those payments to the wife”.[46]
[46] Husband’s affidavit filed 9 June 2016, paragraphs 8-12
The husband asserts that “on promptly informing my father of the order I became aware that he would not agree to provide the wife with any more than $1,000 per week.[47]
[47] Husband’s affidavit filed 9 June 2016, paragraph 13
The husband asserts that during the period of reconciliation his father:
·Withdrew instructions to his lawyers to seek return of German 4WD motor vehicle owned by DD Pty Ltd which the wife used
·Authorised payments to the wife’s solicitor on account of the wife’s costs
·Allowed and authorised the wife to use and reinstate use her credit cards in the husband’s name being the Visa credit card and the Bank SA Visa card.
The husband asserts “in short, my father agreed to reinstate all the previous accommodation that he had provided to the wife for her living expenses and to meet the wife’s outstanding legal fees”.[48]
[48] Husband’s affidavit filed 9 June 2016, paragraphs 16 and 17
The husband then says that “on 22 April 2016 my application to vary the order for spousal maintenance made on 19 October 2015 was refused. As a consequence, my father withdrew his offer, indicating he would only accommodate further payments to the wife for $650 per week and that any payment of the wife’s use of the credit cards would no longer be met.”[49]
[49] Husband’s affidavit filed 9 June 2016, paragraph 25
The husband asserts that he has no funds of his own to enable him to pay any sums to the wife whether by order for spousal maintenance or otherwise and “relies entirely on my father’s largesse to meet my expenses”.[50]
[50] Husband’s affidavit filed 9 June 2016, paragraphs 28 and 29
The husband then made reference to paragraphs 12-22 of his affidavit filed 4 August 2015 and in relation to his present circumstances says:
30.1In 2012, at the initiation of the Banks my father agreed to take over responsibility for the liabilities of my Group to the Banks on the condition that he took control of the … development[s]. I was required to guarantee payment of the debt for the funds advanced by the [Malloy Group] and to provide mortgage security over the [Suburb B property].
30.2At [EE Bank’s] insistence his father is co borrower with me of the first mortgage loan from [EE Bank]. [DD Pty Ltd] has met all payments in relation to the [EE Bank] loan secured by mortgage, with those payments, along with my living expenses debited to my loan account in [DD Pty Ltd] which now stands at $3,797,902 (as at 30 April 2016).
30.3I have retained ownership of [Suburb B] but with a substantial mortgage liability to both [EE Bank] and the [Malloy Group]
The husband asserts that Suburb B is secured by way a first mortgage to EE Bank with a current outstanding balance of $3,085,257 and a second mortgage to FF Pty Ltd securing the guarantee liability of $3,263,133 and a third mortgage to DD Pty Ltd securing his debit loan account of $3,797.902.[51]
[51] Husband’s affidavit filed 9 June 2016, paragraph 30.4
The husband deposes the fact that in November 2014 he purchased Suburb E for $2.8 million funded by borrowing from FF Pty Ltd which in turn borrowed from NAB. The FF Pty Ltd debt to NAB is currently $2.9 million and is supported by his personal guarantee and all payments to NAB are made by FF Pty Ltd and debited to his loan account (see also [43]).[52]
[52] Husband’s affidavit filed 9 June 2016, paragraph 30.5
The husband asserts he has no occupation and receives no taxable income and since 2010 has relied on “entirely on the largesse of my father for financial support” and that his personal expenses are determined at the discretion of his father and the Malloy Group. He asserts he has no personal capacity to meet any order for payment of spousal maintenance to the wife “other than by way of sale of my personal assets being the [Suburb B] and [Suburb E] property (in each of which there is no equity), my household contents, my jewellery” and the German motor vehicle. He asserts the vehicle is security for a loan from Esanda with all payments having been made by the Malloy Group and debited to his loan account (see also [44]).[53]
[53] Husband’s affidavit filed 9 June 2016, paragraphs 30.5, 30.6, 30.7, 31 and 32
Discussion
Chapter 20 of the Family Law Rules 2004 (Cth) (“the Rules”) provides for enforcement of financial orders and obligations. Rule 20.01(1)(a) enables an obligation to pay money to be enforced under this chapter and r 20.01(2) provides that, for the purpose of paragraph 1(a), an obligation to pay money includes:
(a) provision requiring a payer to pay money under
(i) an order made under the Act, the Assessment Act or the Registration Act;
Pursuant to r 20.04(a) a party to an obligation arising under an order may enforce an obligation. If the obligation arises under an order to pay money for the benefit of a party or a child, a party or the child may enforce an obligation (r 20.04(b)).
Rule 20.05(d) provides that an obligation to pay money may be enforced by an order appointing a receiver or a receiver and manager.
Subject to being satisfied that there is an amount outstanding pursuant to the order, I am satisfied that the wife has an order which she is entitled to enforce. I am also satisfied that in the circumstances of this case, with the husband’s assertions that his own property involves his father and associated companies, it is appropriate to appoint receivers and managers to effect the enforcement.
At the time of making the application the wife deposed to the outstanding maintenance pursuant to the order being $10,547.86.[54] As at 10 June 2016 it was $21,197.86.
[54] Wife’s affidavit of 13 May 2016, paragraph 8
Insofar as the husband seeks in his affidavit to assert that there are no arrears, his calculations include payments the wife has received both directly and by payment of credit cards and incorporates the period of the parties’ reconciliation. Senior Counsel for the wife submitted that it would not be appropriate to take into account payments made during the period of reconciliation as maintenance per se was not being paid to the wife, but rather the payments were being made for the benefit of the wife and C and the husband during the period of their reconciliation. The arrangement was, it was asserted, a different arrangement which was not that put in place by the order. Accordingly the wife’s calculations do not take account of those payments.
I accept that argument. In view of the husband’s own concessions (see [105] and [106]) as to what he put in place when the parties resumed cohabitation, it would in my view be unconscionable were he able to rely upon those payments as meeting his obligations for maintenance during a different period, and not only meeting them, but on his case putting him substantially into credit when the parties thereafter separated. I regard the husband’s admissions as to what he was prepared to arrange during the reconciliation as being admissions of a different arrangement, confirmatory of the submissions of the wife that payments during the period of their attempted reconciliation should not be taken into account in calculation of what is owing pursuant to the orders of 19 October 2015 and 22 April 2016. Nor should the period of reconciliation be part of any calculation of arrears adverse to the husband.
In oral argument before me the Senior Counsel for the husband asserted that even if regard were not had to the period of the reconciliation, payments by the husband nevertheless exceeded the amount the wife had claimed in her initial application for enforcement, and accordingly there was nothing owing and the application should be struck out.
In particular he referred to the assertion in paragraph 5.12 of the husband’s affidavit sworn 9 June 2016 to a figure of $10,979.49 paid from the CBA credit card account on 27 January 2016 to Company KK which he asserts related exclusively to the design of the wife’s website and should be included as a payment by him against his maintenance obligations.
The first thing that can be said about this payment is that it is proximate to the conclusion of the reconciliation of the parties which occurred on 22 January. It is a large sum and it clearly was paid with the consent of the husband. In her affidavit sworn 21 March 2016[55] the wife refers to a telephone conversation with the husband on 29 January 2016 during which he said “[a]ll the things I do for you, you ungrateful woman”. She said:
he listed things he had been paying at that time, $60,000.00 my former lawyer’s bill, and $10,000.00 for a website I had been working on for 1.5 years to promote my … work.
[55] Paragraph 108.2
In my view this should be treated as part of the payments the husband voluntarily made to the wife at or about the time of their reconciliation and was not part of, nor should it form calculations of, maintenance that was due and payable to the wife at the 13 May 2016.
In the husband’s affidavit of 9 June 2016 he provides at Annexure A a reconciliation of payments made to the wife which clearly includes indirect credit card payments during the period of their reconciliation. In particular CBA credit card expenditure of:
· $2,149.89
· $15,084.76
· $7,150.82
Bank SA credit card expenditure of:
·$2,237.65
·$3,000
The husband also takes in account $5,000 being legal fees paid to the wife’s solicitor in respect of which I am satisfied was a separate agreement to pay legal fees and this should not be regarded as any part of payment of the wife’s maintenance.
I am thus satisfied that when one looks at the overpayment the husband alleges of $18,963.24 and takes off those amounts there is a shortfall of maintenance. I also observe that a credit card payment of $14,588.98 to CBA was paid on 23 January 2016; the day after the reconciliation concluded and might reasonably be regarded as having arisen during the course of their reconciliation. I am satisfied therefore that none of these payments should be taken into account as relevant to the husband’s obligation pursuant to the orders for spouse maintenance for a period outside the period of reconciliation, even if those specifically noted in the schedule were for the benefit of the wife. The matters asserted by the wife detailed at [57] and [58] of these reasons, and the payments the husband concedes were made during reconciliation, at [106], are indicative of a substantially new financial arrangement between the parties, not the continuation of, nor payments for, the previous or subsequent period in which maintenance payments accrued.
I am satisfied therefore that there were arrears of maintenance owing at the time the application for enforcement was made and the application should not be struck out. I further accept the evidence of the wife as it is, subject to the arguments to which I have already referred, otherwise unchallenged, that the arrears of maintenance as at 10 June 2016 were $21,197.86.
Two other matters raised by the husband need to be referenced. The first is an assertion by the husband that car payments should be brought to account as part of the interim spousal maintenance orders. Both spousal maintenance orders were made on the basis that the family car being a German 4WD, which was the subject of periodic finance payments, would remain available for the wife’s use. It is recognised by order 4 of the orders of 19 October 2015 that as the car was at all times understood to be owned by the Malloy Group, no liability attached to the wife in respect of payment for the vehicle. Further, the handwritten document which the wife asserts was signed by the husband, described in [58] of these reasons, acknowledges (at point [5]) the provision of German 4WD as “her car to use”.
At paragraph 28 of his filed 18 March 2016 the husband says:
My father has authorised and agreed to payments being made to the wife as follows:
28.1The sum of $4,000 per month to be applied to the CBA Visa card for the wife’s use;
28.2The monthly finance payments in respect of the [German 4WD] which the wife uses in the sum of $2,100; and
28.3the monthly mortgage to the National Australia Bank for the wife’s [Z Street] apartment (approximately $1,300 per month).
The application in a case filed 18 March 2016 by the husband sought at 3.2 that the monthly finance payments in respect of the family car be brought to account as part of the interim spousal maintenance and that application was dismissed by paragraph 6 of the orders 22 April 2016.
Accordingly I am satisfied, as submitted by Senior Counsel for the wife, that the wife’s benefit and use of the family car comprised part of the factual matrix upon which the spouse maintenance order of 19 October 2015 and 22 April 2016 were made. The cost of the vehicle was never intended to be part of the maintenance order of 2,000 per week.
The final matter referred to by the husband’s solicitors as matters that should be taken into account in assessing arrears, included payment of legal fees to the wife’s solicitors. Legal fees were paid by the husband in December 2015 and January 2016 during the period of the parties’ attempted reconciliation and is part of the arrangements the parties entered into during that period. The husband acknowledged that payments in respect of the wife’s legal fees and the use of credit cards by the wife were “a consequence of the reconciliation”.[56] Paragraph 19 of the same affidavit says:
in short, my father agreed to reinstate all of the previous accommodation that he had provided to the wife for her living expenses and to meet the wife’s outstanding legal fees.
[56] Husband’s affidavit 18 March 2016, paragraph 18
It is thus clear in my view that these concessions demonstrate that the agreement to meet legal fees to the wife’s solicitor was a consequence of the reconciliation and was not intended either formally or informally to form part of payments of maintenance for that, or a different period.
Accordingly I am satisfied that there were at the time of the wife’s application being made, arrears of maintenance as she indicated, and at the date of hearing (see paragraph [127] of these reasons).
Discretion to enforce
Having established that there are arrears outstanding the Court has discretion as to whether or not to enforce those arrears. Put shortly, the husband through Senior Counsel asserts that the discretion should not be exercised on the basis that:
·The husband has few assets of his own and depends entirely for his support on the “largesse” of his father
·He has limited personal property
·His real estate is encumbered both to commercial lenders and to his father’s companies in excess of any value in the property
Although I intend to deal with the claims against the third parties separately, it is useful to refer to the submissions of Senior Counsel for the third parties at this point. In the course of written submissions Senior Counsel indicated that the husband never had a personal ability to meet maintenance payments without funds from third parties; that neither the husband’s father nor the Malloy Group have any legal liability to make payments and that the father is entitled to refuse to make any payments to or for the wife’s benefit. The only way the husband could meet any payments would be as a result of him continuing to benefit from the largesse of Mr Q Malloy and the Malloy Group.
I accept that on the evidence to date that is before the court those submissions are legally correct. However the question is whether I should enforce the obligation of the husband pursuant to an order to which he consented, and the basis of that consent, in my view, can both be taken as an admission that the husband wished to make payments to the wife, and that he had the capacity to arrange to do so, albeit from funds made available from his father. By consenting to the orders, he became personally liable to the wife. If there was any doubt it would have been simple for him to check with his father before consenting to the orders. It is inconceivable in view of their close financial dealings that he did not do so.
His application for variation of that order has been dismissed. The court may not be able to force the husband to make payments to which he consented on a weekly basis, but the husband has property which can be the subject of an order for sale to meet his outstanding obligations.
In general terms, (I will refer specifically to the orders sought in due course), it is my view that it is appropriate to exercise the court’s discretion to enforce the arrears of maintenance from the assets of the husband. In my view it would be unconscionable in all the circumstances not to do so.
The matters that I particularly take into account in relation to the exercise of this discretion are as follows:
(a)The husband’s financial affairs are enmeshed with his father and have been for many years.[57]There is evidence of support for the husband during financial difficulties and supporting his lifestyle.
(b)None of the dealings so described by the husband suggest anything but a close financial relationship in business dealings and in personal/living arrangements.
(c)It is clear that the husband was of the view that he should and could make payments to the wife in accordance with his consent given on 19 December 2015. I draw the inference from all of the facts that he was well and truly in a relationship with his father which enabled him to confidently make that commitment, confident that if required his father would meet the payments.
(d)The fact that the car was to be removed from the wife and a letter sent from the father’s solicitors to this effect was countermanded when the parties reconciled is evidence that this was so.
(e)Whilst as a matter of law, control by the husband’s father of the money gives him the capacity to make or stop making payments as he chooses, the evidence comfortably allows me to find that the impetus for making and stopping payments, flows from the circumstances of the husband and wife, vis a vis each other, rather than from any relationship between the wife and the husband’s father. Thus, pre-separation, payments are made; following separation, payments are reduced and benefits rescinded; the husband consents to orders effectively reinstating payments; during reconciliation payments and benefits are resumed; following separation, payments and benefits are again removed or reduced. Following dismissal of the husband’s application to vary orders, payments are reduced. All this occurred in the context of the relationship of the husband and wife and the ebb and flow of payments follows the fortunes of the husband and wife’s relationship and course of their litigation.
[57] See paragraphs 39-46 of the Judgment
If the court is asked to find that these stops and starts were solely at the husband’s father’s whim, with the husband a hapless observer, that position must be rejected on the evidence. The inference that I draw from all the unchallenged evidence is that payments that have been made and then stopped have been done so as a consequence of the husband’s attitude to the wife and the fortunes of their relationship and not for any independent economic reason connected with the husband’s father. So is, in my view, the payment of monies both directly and indirectly during the course of the reconciliation evidence of the wish of the husband to have the payments made and the willingness of his father to make them.
As the Full Court said in Reynolds & Reynolds (1985) FLC 91-632 at 80,113, when discussing benefits conferred without legal control:
There is no formula for quantifying future generosity on the part of a group of people whether bound by ties of blood or not. One can only look at the past history and weigh the probabilities.
In Hall v Hall [2016] HCA 23 the plurality of the High Court said:
55.Whether a potential source of financial support amounts to a financial resource of a party turns in most cases on a factual enquiry as to whether or not support from that source could reasonably be expected to be forthcoming were the party to call on it.
But, if applicable, neither of those statements in Reyonlds and Hall necessarily permit enforcement against the assets of the third party.
The genesis of the business relationship between the husband and his father in which his father assisted him when his companies were in financial difficulty attests to the close personal and financial relationship that has attended their relationship and the manner in which distributions are made to the husband from the family trust and the Malloy Group of companies. I am satisfied that the husband’s consent to payment of maintenance for the wife and child was done reasonably and that adjustments to it both during the period of reconciliation and subsequently have been made at the behest of the husband and accommodated by his father. Accordingly, in my view, it is appropriate and proper to enforce the Husband’s commitment.
Whether or not the amount outstanding can be entirely satisfied will remain to be seen after sale of the assets as proposed by the wife.
Senior Counsel for the third parties opposed an order for sale of the real property on the basis that there was no equity in the property and the husband’s father was a mortgagee. They complained that the properties have borrowings in excess of their value and that sale would “crystallise that shortfall”.[58]
[58] Outline of Submissions for the Second and Third Respondents dated 13 June 2016, paragraphs 18 and 19
It remains to be seen what value the properties have and whether there is any equity. The wife has contended that the husband’s father has encumbered the properties so as to quarantine the property from claims by the husband’s former wife. I do not make any finding in that respect. However, on the submissions of the husband and his father the taking of security over the properties was never a commercial decision as according to the husband, there was insufficient equity to meet the security after the interests of the commercial lenders was taken into account. Hence, on its face these were never commercial arrangements and I see no reason why they should be an impediment to an order for sale. In addition the husband asserts that Suburb B was on the market[59] in 2015.
[59] See [47] of these reasons
In any event, if the equity in the properties are so insufficient then the continued payment of the mortgages by the Malloy Group of companies is itself an uncommercial arrangement and in the normal course one would have thought that the sale of the properties would be to their benefit. Of course if it were the case the father and the Malloy Group of Companies security was never to be enforced then of course that would give some reason for continuing to make mortgage payments in what otherwise looks like an uneconomic arrangement and wishing to retain the properties.
However, I make no finding in that regard at this stage. The fact that the father and the Malloy Group of companies are secured creditors together with third party commercial lenders is not a reason in my view to refrain from enforcing the maintenance order by way of a sale of these properties. Whether and to what extent there is funds to meet the wife’s liability at the end will remain to be seen depending upon the value of the properties and the liabilities that have to be repaid. .
Accordingly I propose to make orders in accordance with paragraphs 1, 2(a), 2(b), 2(c), 3, 4, 5, 6, 7, 8, 9 and 10 of the minute of proposed orders filed by the wife.
The wife’s application for orders affecting the third parties
Senior Counsel for the wife submitted that as the husband has identified his father and the Malloy Group as the persons responsible for funding the payment of his expenses, and from time to time those expenses which the wife had had the benefit of since the separation, that there should be an injunction directed to the Third Parties to ensure that the husband gives priority to his obligations under the court orders.
The effect of the proposed orders by the wife would be that the husband’s obligation to make payments of spousal maintenance in compliance with the orders would take priority over his other debts, all of which are regularly discharged by the direction of the husband’s father exercising powers as director of one or more of the Malloy Group of companies including but not limited to DD Pty Ltd as Trustee for the Malloy Family Trust.
Senior Counsel argued that Section 106B of the Family Law Act 1975 (Cth) (“the Act”) could be called in to aide to prevent the defeating of an existing order and that the court could set aside or restrain the making of a disposition on behalf of or in the interest of a party proposed to be made to defeat an existing order.
Senior Counsel submitted that insofar as the discharge of the husband’s liabilities by the transfer of funds from the husband’s father or the Malloy Group to a credit provider constitutes a “disposition whether it be a loan or a gift to the husband”. Accordingly he argued that discretionary payments made by the husband’s father or the trust discharging the husband’s credit card liabilities could fall within an injunction made under Section 106B.
Even if that submission is correct, and I make no finding, I am not prepared to make such an order. It is clear from the relationship between the parties that the husband’s father’s willingness to make payments varies from time to time and there is no certainty of payments to the husband. In any event, this application in my view was overtaken by events. The Chief Executive Officer of the Malloy Group, Mr GG, swore an affidavit in which he deposed to the fact, inter alia[60] that the father intends to reduce payments for the husband’s benefit and to make payments of $650 per week for the benefit of the wife and $650 per week for the benefit of the husband. For that reason alone it would not be appropriate in my view to make any orders under s 106B of the Act and I proposed to dismiss the wife’s application in respect of the Third Parties.
[60] Affidavit of Mr GG 14 June 2016. paragraphs 21.2-21.7 and 31
Husband’s application to vary the orders for spouse maintenance
In his response to the wife’s application in a case filed 9 June 2016 the husband sought, in addition to the dismissal of the wife’s application, that:
2.That the orders for spousal maintenance made in paragraph 1 of the Order of this Honourable Court on 19 October 2015 and made in paragraphs 4 and 5 of the Order of this Honourable Court on 22 April 2016 be discharged and all arrears (if any) of payments pursuant to the said Orders be remitted.
3.By way of spousal maintenance the husband do pay to the wife the sum of $650 per week.
In support of that application the husband filed a financial statement, also on 9 June 2016. The financial statement is of no forensic benefit whatsoever. In broad terms it shows the husband having no income of any kind, either by salary and wages, business income, government benefits or any other income at all. The husband’s personal expenditure is said to include mortgage payments to EE Bank, some insurance premiums, some hire purchase/lease payments in respect of a German motor vehicle and his Mastercard. He deposes to the fact that he is receiving $15,657 per week from DD Pty Ltd as trustee for the Mr Q Malloy Family Trust. He asserts that a breakdown of his expenses on an annualised basis, using the 2015 financial year figures, indicate total expenditure of $344,523 or $6,625 per week, including car repayments and school fees for his daughter, S.
The husband filed an affidavit on the same date in support of his application, much of which was directed to opposing the wife’s application for enforcement of the maintenance orders.
In support of his own application for the variation of the spouse maintenance orders, the husband deposes to the fact that when his father became aware of the consent order, he would not agree to provide the wife with the amount in the order. He further deposes to the reconciliation and the reinstatement of “all the previous accommodation that he [the husband’s father] had provided to the wife for her living expenses and to meet the wife’s outstanding legal fees”.[61]
[61] Husband’s affidavit filed 9 June 2016, paragraph 17
The husband says that his father agreed to make certain payments, including $4000 per month for monthly payments in respect of the wife’s Visa card, monthly payments in respect of German 4WD used by the wife in the sum of $2,100 and the mortgage liability for Z Street in the amount of $1,300 per month. The husband further deposed that when is previous application to vary the spouse maintenance orders was dismissed on 22 April 2016, his father indicated “he would only accommodate further payments to the wife of $650 per week and that any payment of the wife’s use of the credit cards would no longer be met.”[62]
[62] Husband’s affidavit filed 9 June 2016, paragraph 25
The husband’s affidavit continues:
28.I have no funds of my own to enable me to pay any sums to the wife, whether by Order for spousal maintenance or otherwise.
29.I rely entirely on my father’s largesse to meet my expenses.
The husband’s financial affairs are comprehensively set out in these reasons for judgment and the financial arrangements between the husband and his father are well described.
I have indicated in my findings that on the evidence, the husband and his father have cooperatively and collaboratively arranged payments for the benefit of the husband (and at times for the wife) to meet his needs including his forensic needs, in the course of these proceedings. I am not satisfied that the husband has demonstrated any change in circumstances since the making of the order on 19 October 2015 as amended by the Orders of 22 April 2016. All of the matters to which the husband deposes were in place as at the date of the order of 19 October 2015, including his father switching on and off financial largesse as the fortunes of the parties’ relationship ebbed and flowed.
Section 83 of the Act provides for modification of spousal maintenance orders. Section 83(1) provides that where there is in force an order with respect to the maintenance of a party to the marriage, the court may:
…
(c) discharge the order if there is any just cause for so doing;
(d) suspend its operation wholly or in part and either until further order or until a fixed time or until happening of some future event;
(e) revive wholly or in part an order suspended under paragraph (d); or
(f) subject to subsection (2), vary the order so as to increase or decrease any amount ordered to be paid or in any other manner
In determining whether to make an order increasing or decreasing an amount to be paid by an order s 83(2) provides that the court shall not make an order unless it is satisfied:
(a)that, since the order was made or last varied:
(i)the circumstances of a person for whose benefit the order was made have so changed (including the person entering into a stable and continuing de facto relationship);
(ii)the circumstances of the person liable to make payments under the order have so changed; or
(iii)in the case of an order that operates in favour of, or is binding on, a legal personal representative-the circumstances of the estate are such;
as to justify its so doing
(b)that, since the order was made or last varied:
(i)the cost of living has changed to such an extent as to justify it so doing;
(ba)in a case where the order was made by consent-that the amount ordered to be paid is not proper or adequate;
(c)that material facts were withheld from the court that made the order or from a court that varied the order or material evidence previously given before such a court was false.
I am not satisfied that the husband has established any of the matters under s 83(2). In particular, I have already indicated that in my view s 83(2)(a)(ii) is not available to the husband as his circumstances have not changed since the making of the original order .In any event, change per se does not require a variation of a maintenance order. The inclusion in the section of the words “as to justify its so doing” indicate a residuary discretion not to vary an order even if circumstances have changed.
Further, s 83(2)(ba) requires that where the order was made by consent, the court must be satisfied that the amount paid is not proper or adequate. Given the maintenance is for the wife and C, and given the standard of living of the parties, the husband has not met the evidentiary threshold to establish that the order should be varied.
Accordingly, the husband’s application filed by way of his response filed 9 June 2016 will be dismissed.
Costs
By their response dated 14 June 2016 the second and third respondents sought dismissal of the wife’s application seeking orders against them and also opposed the appointment of Receivers and sale of the Suburb E and Suburb B properties owned by the husband. They sought indemnity costs against the wife. They have been partially, but not wholly successful because I have made orders for the appointment of Receivers to sell the husband’s real estate.
Each of the parties seeks costs. Costs are governed by s117(1), (2) and s 117(2A) of the Act. I do not propose to make an order in favour of the second and third respondents. They have not been wholly successful in their opposition, and thus the wife has not been wholly unsuccessful (s117(2A)(e)) and I take into account the financial circumstances of the wife as compared to the third parties (s117(2A)(a)). In any event I have found them to have acted effectively in concert with the husband (s117(2A)(g)).
Although the wife did not obtain the orders she sought against the third parties, she was wholly successful in her enforcement application against the husband (s117(2A)(e)). The application was necessitated by his failure to comply with previous orders (s117(2A)(d)) and the wife is in a significantly worse financial position than the husband, and requires the maintenance for herself and the child C (s117(2A)(a) and (g)).
Accordingly I propose to order the husband to pay the wife’s costs of and incidental to the enforcement application filed 13 May 2016, to be assessed in default of agreement.
As the husband was unsuccessful in his application to vary the maintenance orders, there will be an order for costs associated with that application and I propose to order that the husband pay the wife’s costs of and incidental to his application to vary the orders.
I certify that the preceding one hundred and seventy-four(174) paragraphs are a true copy of the reasons for judgment of the Honourable Chief Justice Bryant delivered on 5 September 2016
Associate:
Date: 5 September 2016
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