Stutchbury and Stutchbury

[2017] FamCA 220

FAMILY COURT OF AUSTRALIA

STUTCHBURY & STUTCHBURY [2017] FamCA 220

FAMILY LAW – PROPERTY – Application for the husband to meet the costs of the single expert valuation report – Where there is no evidence that the husband can meet the costs – Application dismissed.

Family Law Act 1975 (Cth)

Family Law Rules 2004 (Cth)

APPLICANT: Ms Stutchbury

RESPONDENT: Mr Stutchbury

FILE NUMBER: SYC 1862 of 2015

DATE DELIVERED: 11 April 2017

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 6 April 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Bell

SOLICITOR FOR THE APPLICANT: Clinch Long Woodbridge

THE RESPONDENT: In person

Orders

IT IS ORDERED

1. That the Application in a Case filed by the wife on 8 November 2016 be 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 Stutchbury & Stutchbury 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 SYDNEY

FILE NUMBER: SYC 1862  of 2015

Ms Stutchbury

Applicant

And

Mr Stutchbury

Respondent

REASONS FOR JUDGMENT

1. Ms Stutchbury (“the wife”) and Mr Stutchbury (“the husband”) are engaged in protracted proceedings for property settlement which were instituted on 25 March 2015 by the wife. The proceedings have not yet been placed in the pool of matters ready for hearing and no conciliation conference has been conducted.

2. The wife has the primary care of the children. They live in the former matrimonial home. She has a very small income, some $250 per week.

3. The husband is a partner in a business (“the business”).

4. The parties’ relevant corporate interests are:

   ·    A Pty Ltd as trustee for the Stutchbury Family Trust (“the Trust”). The husband is the sole director. The husband and the wife are shareholders. The husband and the wife are the appointors of the Trust.

   ·    The Trust owns seven per cent of the group of companies which own the business and 45 per cent of B Unit Trust (“BUT”).

   ·    BUT owns 23.5 per cent of C Pty Ltd (“CPL”) which is a cosmetics brand and 15 per cent of the D Group which owns four freehold and one leasehold hotels. 

5. The wife has no part in the day to day affairs of any of the corporate interests which are controlled by the husband.

6. The husband owns shares in E Pty Ltd (“EPL”). The husband deposed that his shares have no voting rights. He is not a director and EPL is controlled by the husband’s father. The husband asserts that the shares have no value. The husband received distributions from EPL until 2014 when his father retired.

7. The husband estimates the net value of the parties’ assets, excluding superannuation,  to be $473,852.

8. On 17 July 2015, Watts J made orders requiring the husband to pay spousal maintenance of $870 per week; pay mortgage payments and outgoings on the property occupied by the wife and the children; pay the instalments on the wife’s car loan and maintain the private health insurance. Watts J also made a “dollar for dollar” order requiring the husband to pay to the wife’s solicitor an amount equivalent to any amount he paid his own solicitor by way of costs. The husband subsequently discharged his solicitors and acts for himself.

9. On 3 August 2015, an order was made by consent for the appointment of a single expert accountant, Mr F. In order to fund the cost of the single expert, a property at Suburb G was to be sold and a portion of the proceeds paid to Mr F. The Suburb G property was sold but Westpac, who held an “all monies” mortgage over the property, required all of the proceeds on settlement.

10. Mr F has provided an estimate of fees in the range of $60,000 to $90,000.

11. The matter was listed before me to hear the wife’s application for an order that the husband, at first instance, pay the costs of the single expert in the preparation of the report.

12. It is the wife’s case that the husband has the ability, if he chooses, to re-arrange his finances so as to be able to pay the amount.

13. The husband submits that he is unable to afford the costs and cannot raise the funds.

14. The husband seeks to rely upon a valuation prepared by his partner in the business, Mr H.

15. In the course of submissions, I explained to the husband that it was not likely that Mr H’s evidence would be accepted over objection by the wife.

16. Mr H is not a single expert as envisaged by the Family Law Rules 2004 (Cth). He is in partnership with the husband and, I assume, has a common interest with the husband in the group of companies which own the business. His evidence is neither independent nor impartial.

17. The husband has provided valuations of the real estate underlying the corporate entities. Those valuations were commissioned for commercial purposes in relatively recent times. Counsel for the wife indicated that she would accept those valuations for the purpose of the preparation of the single expert’s report.

18. If the matter were to come to trial, as it must eventually, without evidence of the value of the corporate assets, then it is likely that the trial judge would order that a receiver be appointed for the corporate assets, including the husband’s interest in the business, for the purpose of liquidating those assets and dividing the proceeds of sale in the percentage division determined.

19. The husband, in the course of discussion, indicated that he understood that, if that were the ultimate outcome of the proceedings, he would no longer be able to continue to practise as a member of the business.

20. Notwithstanding that understanding, the husband maintained that he was unable to afford to pay for a single expert valuation.

21. The husband swore a financial statement on 22 December 2016.  He deposed to receiving an income of $7,150 per week. From that salary he pays $1,144 in tax; $992 in mortgage payments for the former matrimonial home; $77 in rates; $66 for health insurance; and $1,229 for the maintenance of the wife and the children, a total of $3,508.

22. The discretionary expenses that the husband claims are $593 per week for his car; $600 per week loan repayments to Westpac and EPL and $356 per week for credit card payments.

23. In relation to the car, I note that the lease ended on 14 February 2017. There was no evidence before me as to whether he has disposed of the vehicle or the lease has been extended but presumably he needs a motor vehicle, albeit it could be one of lesser value.

24. The husband estimates his Part N expenses, including fixed expenses for the children and expenses when they are in his care, to be $1,965.

25. I cannot find that the husband can pay the sum required from his income.

26. Counsel for the wife submitted that the husband has a capacity to borrow the funds required. I accept that the husband has some, limited, capacity to meet repayments on a loan but I was not directed to any asset he could use as security for a loan. The wife estimates the value of the home to be $1,100,000. The mortgage is either $1,000,000 as asserted by the wife or $1,020,000 as asserted by the husband. In either event, it is unlikely that any lending institution would extend a further facility. The husband deposed to having been refused a loan by Westpac in February 2016. The loan application is not in evidence and it is not possible to say what information Westpac was given.

27. I was not directed to any asset of the parties or of the husband that could be used to pay the fees of the single expert.

28. The husband has remarried. His present wife, Ms I, earns a substantial salary, in excess of $7,000 per week. He deposed that he and his wife have separate finances. There is no evidence that Ms I is prepared to lend money to the husband for the purpose of these proceedings.

29. The wife bears the onus of demonstrating that the husband can pay the amount required. She has not done so.

30. The wife’s application will be dismissed.

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 11 April 2017.

Associate:

Date:  11/04/2017