Sully & Sully (No 2)
[2016] FamCA 706
•25 August 2016
FAMILY COURT OF AUSTRALIA
| SULLY & SULLY (NO. 2) | [2016] FamCA 706 |
| FAMILY LAW – PROPERTY – INTERIM PROCEEDINGS – Where the outstanding issue for determination was whether or not the wife should receive an interim property settlement of $10 million dollars in order to purchase a new home –Where the Court is not satisfied as to the taxation and commercial consequences of the husband extracting $10 million dollars from his company – Where the only other matrimonial asset available to satisfy such a settlement is the former matrimonial home – Where the Court finds it not to be just and equitable for there to be a sale of the former matrimonial home at this stage in the proceedings – Where the future parenting arrangements for the parties’ four children are not clear – Application dismissed. |
| Family Law Act 1975 (Cth) s 79 Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 | |
| APPLICANT: | Ms Sully |
| RESPONDENT: | Mr Sully |
| FILE NUMBER: | MLC | 2232 | of | 2016 |
| DATE DELIVERED: | 25 August 2016 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Justice Stevenson |
| HEARING DATE: | 3 August 2016 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr North SC and Ms Vohra |
| SOLICITOR FOR THE APPLICANT: | Taussig Cherrie Fildes |
| COUNSEL FOR THE RESPONDENT: | Mr Strum QC and Mr Puckey |
| SOLICITOR FOR THE RESPONDENT: | Kennedy Partners |
Orders
Paragraph 3 of the wife’s Application in a Case filed on 20 May 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 Sully & Sully 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: MLC 2232 of 2016
| Ms Sully |
Applicant
And
| Mr Sully |
Respondent
REASONS FOR JUDGMENT
The proceedings
By an Application in a Case filed on 20 May 2016 the wife,
Mrs Sully, sought the following orders:
Spousal Maintenance
1.The husband pay to the wife, by way of spousal maintenance, the sum of four thousand five hundred and fifty dollars ($4,550) on the day of these Orders, and weekly thereafter, such sum not to be taxable in the wife’s hands.
Litigation Funding
2.On or before the expiration of seven (7) days, the husband pay into the Taussig Cherrie Fildes Lawyers Practice Trust Account on trust for the wife, by way of partial property settlement, the sum of
five-hundred thousand dollars ($500,000).Partial Property Settlement
3.On or before the expiration of seven (7) days, the husband pay to the wife, by way of partial property settlement, the sum of
ten million dollars ($10,000,000).Tax Payment
4.Upon the wife providing to the husband a copy of a Notice of Assessment issued to her by the Australian Taxation Office with respect to the financial year ended 30 June 2015 (“NOA”), on or before the later of:-
(a)the due date for payment specified on the NOA; and
(b)the expiration of seven (7) days from the date of provision by the wife to the husband of the NOA,
the husband pay to the Australian Taxation Office such sum as is required to be paid as specified on the NOA.
Discovery
5.On or before the expiration [of] fourteen (14) days, the husband provide to the wife, by way of discovery, the documents in Annexure A.
Valuations
6.Each party do all such things, and sign all such documents, as are required to engage, at the husband’s sole expense, suitably qualified persons as single experts to value each real property, company, trust, firm, unincorporated association, partnership, joint venture and/or other property of significance in which the parties, or either of them, have a direct or indirect legal and/or equitable interest.
7.In the event that the parties are unable to agree as to the persons to be engaged as single experts on or before the expiration of fourteen (14) days:-
(a)on or before the expiration of a further seven (7) days, the wife nominate three (3) persons as potential experts with respect to each property class;
(b)on or before the expiration of a further seven (7) days thereafter, the husband select one (1) of those persons to be engaged with respect to each property class;
(c)in the event that the husband fails to select the single experts pursuant to the previous sub-paragraph within the time provided therein, the wife nominate one (1) of those persons to be engaged with respect to each property class; and,
(d)upon the nomination under either 7(b) or 7(c), the person, or persons, nominated shall be the single expert for the purpose of rule 15.44(1) of the Family Law Rules 2004.
8.Each party comply with each single expert’s reasonable request for information and/or documentation including, where requested by a single expert, authorising accountants, property managers and like advisers to communicate with, and provide documentation and information to, the single expert.
9.The husband pay the wife’s costs of, and incidental to, this application.
10.Such further, other or consequential Order as this Honourable Court deems appropriate.
In his affidavit of 22 July 2016 the husband, Mr Sully, deposed that he had recently caused a sum of $1,167,000 to be paid to the wife. These funds consisted of rental from a block of home units at R Street, Suburb S and sale proceeds from one of those properties. The home units were transferred to the wife on 1 July 2015 and these sale proceeds and rental were generated after that date. Having received this sum of $1,167,000 the wife abandoned her applications for interim spouse maintenance and litigation costs.
Counsel for the wife noted in their written submissions that the husband deposed that he is willing to pay her tax. Proposed order 4 in the wife’s Application in a Case thus can be made by consent.
In their outline of submissions dated 3 August 2016 counsel for the husband indicated that he sought the following relief:
a. the dismissal of the Wife’s Application in a Case; and
b.the removal of caveats lodged by the Wife over real properties registered in the name of the Husband or entities in which he has an interest.
Neither party addressed the orders proposed in paragraphs 5, 6, 7, 8, 9 and 10 of the wife’s Application in a Case.
The only issue which remained for determination at the interim hearing on 3 August 2016 was therefore:
1.Should the wife receive an interim or partial property settlement in an amount of $10 million?
Background
The husband and the wife, who are aged 46 and 41 respectively, began to live together in 1996 and married in 1998. The wife contended that a separation under one roof took place in mid-2015. It was common ground that the parties physically separated on 26 December 2015, when the wife left the former matrimonial home.
The parties have four children:
·J born in 2001 (15);
·Q born in 2003 (12);
·N born in 2005 (10); and
·O born in 2007 (eight).
Since the separation the children have lived with the husband in the former matrimonial home at G Street, Suburb H. Pursuant to interim orders made on 18 March 2016, the three youngest children spend three nights per week with the wife. A nanny employed by the husband is in attendance during the children’s time with the wife. The parties’ son J has elected to spend no time with the wife since 26 December 2015.
At the commencement of cohabitation the husband operated a construction and property development business known as X Pty Ltd. He had obtained qualifications as a skilled tradesman at the age of about 19 years and immediately began to purchase, renovate and sell real properties. At the commencement of cohabitation the husband owned a property T Street, Suburb U, which he had purchased for $160,450 in August 1994. This property was subject to a mortgage to the National Australia Bank.
At the commencement of cohabitation the wife held no significant assets and was employed as a marketing consultant. Shortly after the parties began to live together the wife became solely entitled to the property W Street, Suburb V upon the death of her mother.
The business X Pty Ltd (“X” or “the X Group”) has grown substantially and undertakes large development projects. As yet, there is no valuation of the entities within the X Group. The husband, who is its managing director, deposed as follows:
16.Based on the draft interim financial statements of the [X] Group for the period ending 31 December 2015, [X] has net assets of $120,944,062. This value is indicative only and is derived only from the figures used in the financial statements. A copy of the consolidated draft balance sheet summary of the [X] Group as at 31 December 2015 is annexed and marked MAS3.
The draft balance sheet of the X Group as at 31 December 2015 read as follows:
[X] GROUP
CONSOLIDATED DRAFT NET ASSETS SUMMARY
AS AT 31 DECEMBER 2015
Description Net Assets [X] Group Business Entities [X] No. 14 Trust 45,951,818 [Y1] Trust (145,756) [Y2] Trust (106,236) [X] No. 9 Trust (45,524) [X1] Developments (1,960,495) [X] Administration 165,515 [X] Australia Trust 69,229,248 X Pty Ltd Trust (1,880,277) Sub Total 111,208,293 Investment Entities [X] Capital Trust (4,071,541) [XX] Trust 34,861 [X] No. 2 Trust 917 [X] No. 4 Trust 95,148 [X] No. 6 Trust 149,334 [X] No. 7 Trust 10 [X] No. 8 Trust 34,850 [X] No. 11 Trust (48,104) [X] No. 15 Trust 22,411 [X] Building Trust 22,048 [Z] Trust 6,692 [ZA] Holdings Trust 10 Sub Total (3,753,364) Holding & Dormant Entities [X1] Pty Ltd 13,436,553 [X1] Trust 10 [ZZ] Trust 49,999 [Sully] Family Trust 3,261 [X] No. 12 Trust (236) [X] Group Pty Ltd 2 [X1] Investments Trust (2) [X1] Holdings Pty Ltd 12 [X2] Nominees Pty Ltd 12 [X] Nominees Pty Ltd 2 [Sully] Investment Holdings Pty Ltd 12 [X] No. 1 Trust (299) [X] No. 5 Trust 10 [X] Construction Trust (203) Sub Total 13,489,133 120,944,062
The husband deposed further that he has obtained an assessment of the tax liability of the X Group from a firm of chartered accountants (Annexure MAS4). This assessment read in part as follows:
Based on our analysis of information provided by the [X] group we have estimated the taxation implications to be $65,398,732 as provided in the table below:
$ Current year to date tax liability 33,444,079 Top-up tax on access to cash from current year retained profits
21,181,250Top-up tax on accessing prior year retained profits 3,686,038 Taxation liability on realisation of trading stock (current projects)
4,109,307Top-up tax on access to cash on realisation of trading stock
2,602,561Taxation liability on realisation of capital assets 375,497 Total Taxation Payable 65,398,732 Background
It is our understanding that due to the ongoing nature and scale of the development activity within the [X] Group, it has been able to manage current tax liabilities at a reasonable level due to expenditure from larger projects exceeding revenue derived from the completion of older projects.
The most recent development project undertaken was by [X] No. 14 Trust (landowner) and [X] Australia Trust (builder/developer), which was completed in November 2015 (…). This project comprised [a substantial number of] residential apartments and has derived substantial profits.
Forthcoming projects are not mature, due primarily to the required focus on completing the [most recent] project, the deterioration of apartment sales and a general market slow down.
As a consequence the group now has substantial current year earnings. This together with retained profits generated over the course of the various developments and unrealised profits embedded in property which remains on hand, has seen the accumulation of a significant latent tax liability...
The husband has assets and superannuation to a value of approximately $9,529,000 in his name. The wife holds assets and superannuation to a total value of about $7,872,000 in her name. She is also the registered proprietor of the former matrimonial home G Street, Suburb H, which has an estimated value of $10,000,000 to $11,000,000 dollars. The husband asserts that the wife holds the former matrimonial home upon trust for the parties jointly.
The R Street home units and the property W Street, Suburb V generate income in the form of rental for the wife. In her Financial Statement of 18 May 2016 the wife deposed that she receives net rental income from these properties of approximately $3,700 per week.
Consideration
In Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 the Full Court said at 85,633:
86.Once the relevant source of jurisdiction for making an order is resolved then it could be assumed that what Brereton J in Paris King Investments described as “the necessary preconditions and relevant considerations” or as the Full Court in Zschokke described as the “matters” to be taken into account should be easy to identify. If the source of jurisdiction is s 117(2) of the Act then the court may make such order as it considers just provided there are justifying circumstances. If the order is sought under s 79 of the Act then the court may make such an order as it considers appropriate provided it is satisfied that it is just and equitable to make the order. If the order is sought under s 74 of the Act then the court may make such order as is proper.
87.If the source of jurisdiction is s 79 of the Act, in Zschokke at 83,216 the Full Court said:
If the order is to be made under s.80(1)(h), it would seem that regard should be had to the requirement in s.79 that the orders be just and equitable and this would require the Court to undertake at least some brief consideration of the matters in s79(4) including those referred to in s.75(2). If on a brief consideration of those matters, it seems likely to the Court that the party who is the applicant for the interim order for an advance of funds from the other party will be likely to receive by way of property settlement a sum sufficient to cover the advance, that would seem to be sufficient to enable the order sought to be made (cf Wilson and Poletti).
88.In Paris King Investments Brereton J at [33], referring to an interim property order under s 79 and s 80(1)(h) of the Act and also Zschokke, said that “while the requirements of s 79(2) and (4) must be observed in the same manner as for any interim property order, if it appeared that the applicant would likely receive by way of property settlement a sum sufficient to cover the advance, then an interim order may be made” (citations omitted).
The Full Court continued at 85,641:
115.It was submitted by senior counsel for the Wife that it is important to recognise that in relation to an application under s 79 and s 80(1)(h) of the Act there are two distinct aspects of an application. The first consideration is the adjectival or procedural step and the second consideration is the substantive step. The first step requires consideration as to whether the jurisdiction is entertained and requires consideration of the factors which are relevant to the exercise of power under s 79 to make an order.
...
118.We agree with the submissions of senior counsel for the Wife in relation to the approach to be taken to the hearing of an application for an interim property settlement order. There are two stages to the hearing of such an application where the power is to be exercised pursuant to s 80(1)(h) of the Act. This is recognised by the fact that although the power under s 79 should ordinarily be exercised on a once only basis, “circumstances may arise before there can be a final hearing” where the power is exercised. Thus the first step is to resolve whether to exercise the power before a final hearing and if it is resolved to do so then the second step involves the exercise of that power.
The Full Court further said at 85,646:
137.Once a court proceeds to exercise the power in s 79 of the Act, being in the substantive phase, a court is required to undertake consideration of the matters in s 79(4) including by reference to s 79(4)(e) the matters in s 75(2) so far as they are relevant. However, consideration of such matters may be brief and if it is established that “it seems likely to the Court that ... the applicant ... will be likely receive by way of property settlement a sum sufficient to cover the advance, that would seem to be sufficient to enable the order sought to be made”: Zschokke; Polletti and Polletti per Nygh J and Wenz v Archer. As senior counsel for the Wife submitted, “provided scope can be found within the assets of the parties for an order of the size sought ... then that should be the end of the matter”. In other words, in such circumstances the applicant would only be receiving what he or she was entitled to receive when the power was exhausted.
However, the Full Court then proceeded to “emphasise that in order to establish an appropriate case for an interim property settlement order more is required than the mere fact that upon a final hearing the applicant would receive the property being sought (or an amount in excess of the funds being sought) from the other party”.
As counsel for the husband noted in their outline of submissions:
23.The statements of the Full Court in Strahan and Strahan ... in relation to sec. 79 of the FLA must now be read in the light of the decision of the High Court in Stanford v Stanford [2012] HCA 52.
24.In Stanford v Stanford, the plurality (French CJ, Hayne, Kiefel and Bell JJ) said:
35. It will be recalled that s 79(2) provides that “[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”. Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.
36. The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds. And while the power given by s 79 is not “to be exercised in accordance with fixed rules”, nevertheless, three fundamental propositions must not be obscured.
37. First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. So much follows from the text of s 79(1)(a) itself, which refers to “altering the interests of the parties to the marriage in the property” (emphasis added). The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.
38. Second, although s 79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion. In Wirth v Wirth, Dixon CJ observed that a power to make such order with respect to property and costs “as [the judge] thinks fit”, in any question between husband and wife as to the title to or possession of property, is a power which “rests upon the law and not upon judicial discretion”. And as four members of this Court observed about proceedings for maintenance and property settlement orders in R v Watson; Ex parte Armstrong:
“The judge called upon to decide proceedings of that kind is not entitled to do what has been described as ‘palm tree justice’. No doubt he is given a wide discretion, but he must exercise it in accordance with legal principles, including the principles which the Act itself lays down”.
39. Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is “just and equitable” to make the order is not to be answered by assuming that the parties’ rights to or interests in marital property are or should be different from those that then exist. All the more is that so when it is recognised that s 79 of the Act must be applied keeping in mind that “[c]ommunity of ownership arising from marriage has no place in the common law”. Questions between husband wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be “decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses”. The question presented by s 79 is whether those rights and interests should be altered.
40. Third, whether making a property settlement order is “just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised “in accordance with legal principles, including the principles which the Act itself lays down”. To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.
In her affidavit of 18 May 2016 the wife deposed as follows:
77.I wish to purchase a real property in which to live, and in which the four children could ultimately live with me. I have begun searching for sufficiently large and appropriately appointed properties in [Suburb H], comparable to [G] Street. The following properties, all of which are presently on the market for sale, are examples of the type of property I would like to purchase for the children and me:-
77.1 [Property example 1] (four bedrooms);
77.2 [Property example 2] (five bedrooms);
77.3 [Property example 3] (five bedrooms);
77.4 [Property example 4] (six bedrooms); and
77.5 [Property example 5] (five bedrooms).
78.Each of the above properties has a swimming pool, to which the children are accustomed, and are within five kilometres of the children’s school. The advertisements for the properties do not provide an indication of price.
79.I have asked [Mr JJ] of [AA Real Estate], to provide to me a list of recent sales of properties comparable to those listed above. Mr [JJ] provided such a list to me on 17 May 2016. The list shows selling prices in the range of $5,800,000 to “in excess of $10,000,000”. Shown to me now, annexed and marked LCS14 is a true copy of the list provided to me by Mr [JJ].
Mr JJ’s list contained six properties, with the following indications of purchase price:
· in excess of $6,300,000;
· in excess of $10,000,000;
· $6,500,000;
· $5,800,000;
· $6,300,000; and
· in excess of $8,000,000.
The husband took issue with suggested purchase prices and availability of these properties. For reasons which appear below, however, I do not consider that this dispute is relevant for present purposes.
The wife has entered into a lease of a property at I Street, Suburb H for which she pays rent of $2,000 per week. This lease expires on 25 February 2017 and is thus current for the next six months. In her affidavit of 1 August 2016 the wife deposed:
22.2I have set up a loving and comfortable home for the children, aiming for a standard similar to that to which the children are accustomed at [G] Street.
The wife deposed that she sold one of the R Street home units for a net amount of approximately $458,000 in July 2016. She also sold a motor vehicle for $81,900 in July 2016. The wife thus came into possession of some $540,000 in liquid funds during July 2016, the fate of which money was largely unexplained in her evidence. These funds were in addition to the sum of $1,167,000 which the husband recently caused to be paid to the wife in relation to the R Street properties. The wife also owns the R Street home units and the Suburb V property, which are valued at $4,600,000 and $1,100,000 respectively.
The husband’s uncontradicted evidence was that “[he] does not have access to funds outside [X]”. He deposed further that “[f]unds presently held by [X] are reserved as working capital for the continued operation of the business”. The husband also gave evidence that X is about to commence a large development project and is involved in the tender process, both of which will require capital.
The husband deposed that substantial tax liabilities would be generated if funds are extracted from the X Group. As noted, the accountants for X have estimated that it already has approximate tax liabilities of $65,000,000. There was no evidence as to the likely additional tax liability which would be generated if $10,000,000 is extracted from X. There was no evidence of the potential impact on its ability to continue with current commercial enterprises or to honour commitments to third parties in such circumstances.
The written submissions on behalf of the wife (at paragraph 9) stated that the assets of parties which are outside the X Group are valued at approximately $27,000,000. This figure is the total of $9,529,344 and $7,872,577 in assets and superannuation which are held by the husband and the wife respectively, together with the former matrimonial home at a value of $10,000,000. The submission on behalf of the wife stated: “Of these assets, $7,872,577 are in the Wife’s. The rest, around $20,000,000 are in control of the Husband.”
With respect, that assertion appears to be incorrect. The husband holds assets and superannuation to a total value of $9,529,344. The wife is the legal owner of the remaining assets and superannuation in this category.
A sum of $10,000,000 could not be extracted from the assets within the ownership of the husband and the wife without a sale of the former matrimonial home. The written submissions on behalf of the wife stated “[s]he does not seek to interfere with the Husband’s residence at that property”. Obviously, a sale of the former matrimonial home would mean that the four children of the marriage would need to be re-accommodated as well as the husband.
Counsel for the husband submitted that “it is not just and equitable at the present time to make an order under sec 79 of the FLA” (emphasis in original). The written submissions on behalf of the husband advanced the following matters in support of that proposition:
·The wife owns assets with a total value in excess of $13,000,000 with the exception of motor vehicles and other chattels.
·“A review of documents discovered by the Wife on 1 August 2016, indicates that she has dissipated funds in excess of $728,000 in her possession and control in the five months since February 2016, the application of the majority of which remains unexplained”.
·The wife offers as a reason why she should receive a partial property settlement of $10,000,000 that she wishes to purchase a home suitable for herself and the children of the parties.
·The wife has entered into a lease which expires on 25 February 2017 in respect of a property which constitutes a “comfortable home for the children, aiming for a standard similar to that which the children are accustomed at [G] Street".
·It is premature for the wife now to purchase a property on the basis that the children will ultimately live with her.
·The husband has no access to funds outside the X Group and extraction of $10,000,000 from X will generate a substantial tax liability.
·Funds presently held in X are required as working capital to service specified current projects, the ongoing operation of the business and tax liabilities.
·It cannot be assumed that a significant diversion of funds to the wife would not prejudice the ability of the group to meet its obligations to third party creditors.
·The evidence proffered by the wife does not enable a sufficient consideration of section 79(4) matters.
The written submissions on behalf of the wife drew attention to a passage from the judgment of Boland and O’Ryan JJ in Strahan (supra). Counsel wrote:
7. ...The decision of the trial judge in Strahan’s case, to refuse the amount sought by the Wife by way of a part property settlement was overturned on appeal because:
154.In this case it was uncontested that the Wife will be likely to receive by way of property settlement a sum sufficient to cover the amount sought by her. The only opposition put forward by the Husband was an objection as to “the need for the Wife to have further funds”. It was submitted on behalf of the Wife and we accept that there was no basis to refuse the order sought.
155.Once it is determined there are appropriate circumstances then the substantive stage should ordinarily be readily capable of resolution for the reasons we have explained. As the jurisdiction is being exercised pursuant to s 79 of the Act it is wrong to take an approach that a part of a legitimate entitlement of an applicant should be deferred until the final hearing. Senior counsel for the Wife summarised what the trial Judge did as follows:
“These are matrimonial assets the husband has got them; the husband can do what he likes with them; the husband can run his case as he likes and expend whatever he likes out of the matrimonial pool on costs, but I’m going to inhibit in some way the wife in what she can do with the matrimonial assets, notwithstanding that there is scope in the pool to pay her now and [this is an approach which his Honour took] notwithstanding he also said “what the wife does with the money, once she receives it it is her business, not the business of the court.”
The written submissions on behalf of the wife contended that it is just and equitable that there be an interim or partial property settlement of $10,000,000 in favour of the wife for the following reasons:
·The marriage subsisted for 17 years, during which the parties had four children and built up their present asset base.
·The wife’s application for an equal division of the net assets is an “achievable” result.
·Of assets of a total value of $27,401,921 which are outside the X Group, “around $20,000,000 are in the control of the husband”.
·The husband has exclusive control of the X Group, which the husband claimed to have a value on winding up of $120,944,062 with tax liabilities of $65,398,732.
·“On his own material, in the Husband’s control, is over $75,000,000 of the assets of the marriage. The Wife he says should be content to wait until the conclusion of these proceedings for any share of this”.
·“The breakdown in the relationship that has occurred establishes a principled reason for this Court to make an adjustment of the property interests of the parties under s 79 (Stanford v Stanford [2012] HCA 52 at [41])”.
·The substantial wealth of the parties means that “this is not a usual case”.
·The husband seeks to prevent the wife from rehousing herself to a standard comparable to that which is enjoyed by him.
·It is “no defence” to the wife’s application that tax liabilities may be triggered by the payment of $10,000,000 to the wife, as this result will follow inevitably upon a property settlement.
·The wife will receive at least $10,000,000 by way of a final property settlement order.
·The husband has assets outside X which he could sell or use as security to raise $10,000,000.
·“The Husband’s case in resisting the part property payment sought by the Wife is exactly that which Strachan’s[sic] case disallows. It is the assumption that because he controls them, the assets of the marriage are his assets to do with what he wants. His case is the Wife can wait until any final order to receive even a portion of her ultimate entitlement. She can wait whilst renting at significant expense to own her home and to be settled as he is in the former matrimonial home. She ought make do with what she has whilst he controls and retains the benefit of all the rest of the assets she has contributed to over the marriage.”
Conclusion
In my view, it is a matter of concern that there is no evidence as to the net value of the assets held by the X Group, other than the husband’s “indicative” assessment. It is also a matter of concern that the taxation and commercial operations consequences for X of an extraction of $10,000,000 are unknown at this stage of the proceedings.
The wife made clear that she does not wish to deprive the husband of occupation of the former matrimonial home and, in my opinion, it would be a most undesirable outcome for the children of the parties to be forced to relocate at this time. As noted above, a sale of the former matrimonial home is the only means by which a sum of $10,000,000 could be extracted from the matrimonial assets outside the X Group. I am not satisfied that a sale of the former matrimonial home would be just and equitable at this stage of the proceedings.
The wife gave evidence that she requires a sum of $10,000,000 so as to establish accommodation suitable for herself and the parties’ four children. Simultaneously, however, she deposed that her rented accommodation is “a loving and comfortable home for the children, aiming for a standard similar to that which the children are accustomed at [G] Street”. The wife has entered into a lease which expires only in February 2017. The children’s future living arrangements are far from clear, with the parties’ son J having refused to spend time with the wife since the separation and the husband seeking final orders for primary residence. In my view, these matters militate against the wife’s contention that it is now just and equitable that she receive $10,000,000 to purchase a home for herself and the children.
For these reasons I am not satisfied that it is just and equitable, at this stage of the proceedings, that there be an order that the husband cause payment to the wife of a sum of $10,000,000 by way of interim or partial property settlement. I will thus dismiss paragraph 3 of the wife’s Application in a Case filed on 20 May 2016.
I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 25 August 2016.
Associate:
Date: 25 August 2016
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