TEALL & NEILSON
[2020] FamCA 671
•14 August 2020
FAMILY COURT OF AUSTRALIA
| TEALL & NEILSON | [2020] FamCA 671 |
| FAMILY LAW – PROPERTY – Where application for discrete interim financial orders – Where consideration of applicable principles – Where order made for the husband to be paid a salary from the parties’ business. FAMILY LAW – INJUNCTIONS – Order made restraining the wife from attending upon business premises operated by the husband without first giving the husband 24 hours’ notice in writing of her intention to do so. |
| Family Law Act 1975 (Cth) s 114 |
| Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 Tsiang & Wu and Ors [2019] FamCAFC 128; (2019) FLC 93-911 |
| APPLICANT: | Mr Teall |
| RESPONDENT: | Ms Neilson |
| FILE NUMBER: | PAC | 870 | of | 2020 |
| DATE DELIVERED: | 14 August 2020 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 13 July 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Druitt |
| SOLICITOR FOR THE APPLICANT: | Herbert Waller |
| COUNSEL FOR THE RESPONDENT: | Ms Spain |
| SOLICITOR FOR THE RESPONDENT: | Armstrong Legal |
Orders Pending Further Order
That the husband and wife do all things necessary to cause F Pty Ltd trading as Q Business at Suburb N to pay to the husband a salary of $60,000 per annum after tax in consideration of him managing the ongoing conduct of the said business in a proper manner.
That the wife be and is hereby retrained from attending at or entering upon the premises of the business conducted by F Pty Ltd trading as Q Business at Suburb N save and except on her giving to the husband not less than 24 hours’ notice in writing, such writing may include SMS or email communication, of her intention to do so.
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 Teall & Neilson 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 PARRAMATTA |
FILE NUMBER: PAC 870 of 2020
| Mr Teall |
Applicant
And
| Ms Neilson |
Respondent
REASONS FOR JUDGMENT
The applications for determination are discrete interim financial issues as between the primary applicant husband and the primary respondent wife.
The husband commenced proceedings by way of Initiating Application filed on 11 May 2020. The husband sought final orders as to property that, in summary, provided:
a)that the husband pay to the wife 40 per cent of the net value of F Pty Ltd trading as Q Business at Suburb N and 40 per cent of the value of H Pty Ltd and G Pty Ltd;
b)that simultaneously with the said payments by the husband to the wife the wife transfer to the husband her shares, rights and entitlements in the said companies and resign as a director of each of the said companies;
c)that the parties do all things necessary to ensure that G Pty Ltd can sell motor vehicle registration number … for the best price reasonably obtainable.
In the husband’s Initiating Application he sought certain interim orders, some of which have been resolved as referred to below, leaving several discrete issues for determination.
The respondent wife filed a Response on 9 June 2020 to the husband’s Initiating Application. In that Response the wife, in summary, sought final property orders as follows:
a)that there be an overall division of assets of the parties as to 70 per cent to the wife and 30 per cent to the husband;
b)that the parties do all things necessary to transfer the wife’s shareholding in the companies referred to above to the husband, that the wife resign as a director of the said companies and that the husband indemnify and save harmless the wife from all or any liability associated with the trading affairs of the said companies; and
c)that simultaneously with the parties complying with the previous order, the husband pay to the wife such sum as is necessary to effect an overall division of assets as sought by her.
The wife for her part sought certain interim relief in her Response.
The proceedings were first listed before a registrar on 11 June 2020 and on that date interim issues for determination were listed in the judicial duty call over list on 9 July 2020. At call over the proceedings were listed for hearing in the judicial duty list on 13 July 2020.
On 13 July 2020 certain of the interim orders sought by the parties were resolved by agreement and orders pending further order were made by consent as follows:
(1)That within 14 days from the date of the orders, the Husband transfer to the Wife’s nominated bank account, the sum of $7,675.40 being one half of the deposit paid by the parties in respect to the Suburb B business, the entirety of which was returned to the Husband on 25 March 2020.
(2)That otherwise than as set out herein, the parties are restrained from drawing any funds from the bank accounts of :
(a)F Pty Ltd trading as Q Business at Suburb N
(b)G Pty Ltd
(c)H Pty Ltd
without the prior written consent of the other party, except for payments of legitimate business expenses.
(3)That the parties do all things so as to cause the following:
(a)For the period to the end of December 2020 that the company F Pty Ltd make a profit distribution to the parties on the 7th day of each new month commencing from 7 August 2020 calculated as follows:
That the profit of the month, as per Quicken books of account less payment for 1/3rd of debts accrued due to the COVID-19 lockdown, until paid in full less provision for the company’s GST and PAYG taxes plus 27.5 per cent of the trading profit for a franking credit, thereafter the 72.5 per cent of the profit is distributed equally between the parties.
(b)That the parties authorize the company accountant Ms C to effect the calculations and advise the parties accordingly each month.
(c)The payment of $250 per fortnight for the Noise Offence fines until paid in full.
(4)That the wife is restrained from attending upon the business premises at U Street Suburb R the premises of J Pty Ltd trading as “Q Business at Suburb R”.
(5)Notation:
(a)That the husband has provided to the wife access to the QuickBooks accounts and the Xero accounts for the said F Pty Ltd.
(6)That within 21 days both parties shall provide disclosure in accordance with Rule 13.04 of the Family Law Rules.
(7)That order 3 is suspended in the event that there is a further COVID-19 lockdown in the Sydney Metropolitan area. Such suspension to operate for the duration of the lockdown and 60 days thereafter.
The remaining issues for determination were comprised in the joint Minute of Proposed Orders provided by the parties and marked into evidence as Exhibit “B”. The orders the subject of dispute are as follows:
a)that the company F Pty Ltd employ the husband as manager of the Suburb N business on an annual salary of $65,000;
b)that the wife is restrained from attending upon the business premises at M Street, Suburb N without the prior written consent (which does include email) of the husband, which shall not be unreasonably withheld except the wife may attend at the said premises on any Sunday between 9.00 am and 10.00 am.
Context
The husband is presently aged 34 and the wife aged nearly 33. The parties married in 2018 and separated in February 2019.
In June 2015 the parties incorporated G Pty Ltd. The parties are the shareholders and directors of that entity. In early 2016 the company obtained a franchise for a Q business at Suburb D with the purchase of the franchise being funded by a mortgage advance of $74,000 secured by the husband over his property at Suburb L and $107,000 secured by the wife over her property at Suburb K.
The franchise business commenced operating in May 2016 with the wife resigning her then employment and working as manager at an agreed net monthly salary of $7,500. The husband remained in his, otherwise, salaried employment.
In April 2017 the parties, in their personal names, signed a franchise agreement for a Q business at Suburb T.
Subsequently, in November 2017 the parties, using H Pty Ltd, entered into a lease for premises and a franchise agreement for a business at Suburb B. Subsequently, in March 2020 this project was not proceeded with and the husband received a refund of deposit in the sum of $15,350.
In November/December 2018 using F Pty Ltd sourced a site for a business at Suburb N and made a development application for a Q Business at Suburb N. The development application was approved in August 2019. The business at Suburb N commenced operating on 9 October 2019 with the husband moving from the Suburb D business to manage this business at Suburb N. At this time the wife had other full-time salaried employment.
In February 2019 the wife resigned from her management of the business at Suburb D. Thereafter the husband commenced working as a manager at Suburb D.
In August 2019 the wife commenced taking drawings from F Pty Ltd even though she was no longer working for any of the parties’ entities.
In October 2019 the Suburb D business ceased trading and after rectification works, the parties received a refund of $7,000 from the landlord that they divided equally.
In April 2020 the wife informed the husband that she would be returning to work two and a half days per week at the Suburb N business after the present community restrictions cease.
In August 2020 the husband’s new company J Pty Ltd opened a Q Business at Suburb R.
The husband’s evidence
As to the discrete issues for determination, the husband relies upon identified parts of his affidavit sworn 2 July 2020 and his Financial Statement sworn 6 May 2020.
He says that the Suburb D business commenced operating in May 2016. At that time the wife resigned her full-time employment and commenced working as manager of the business on a net take-home pay of $7,500 per month.
The husband commenced working in the business in February 2019 after the parties separated and she left her employment at the business.
The business at Suburb N commenced operating on 9 October 2019. The wife played no part in the management or running of the business. At that time the wife had full-time employment. The husband then worked between the business at Suburb N and the business at Suburb B after the closure of the Suburb D business.
The husband asserts that he has been significantly involved in the operations of firstly the Suburb D business and then the Suburb N business. He asserts he was working an average of 40 to 50 hours per week. The husband operates computer accounting software for the businesses that he manages. The wife, he asserts, does not have access to those accounts.
Through his new entity J Pty Ltd the husband has committed significant independently sourced funds to set up the Suburb R business.
The husband expresses concerns as to the wife attending at the Suburb N business managed by him. He asserts conflict between them in the past and that she has demonstrated an unsatisfactory manner in dealing with staff. He asserts that there have been difficulties in the past between the wife and one of the staff members, Ms V at the Suburb N business.
He says in circumstances where the financial viability of the business is very much in question by reason of the present community circumstances, he is concerned about any disruption to the business or staff that may be occasioned by the wife’s attendance at the premises.
The wife’s evidence
The wife relies upon identified parts of her affidavit sworn 9 August 2020 and her Financial Statement sworn 9 June 2020.
She says that she was initially paid $45,000 per annum in relation to the position taken up by her at the Suburb D business. Subsequently, over the next three years, her salary increased to about $7,500 per month. She was not paid superannuation entitlements with monies paid to her being used during the parties’ relationship for joint expenses.
Both parties, she asserts, made further capital contributions to the relationship from the proceeds of the sale of the wife’s property at Suburb K and the husband’s property at Suburb L.
The wife complains that she has been almost entirely shut out of the Suburb N business by the husband despite being an equal shareholder in the business. She asserts that her offers of assistance to the husband have been rejected.
She says that she contributed $32,000 from her own funds to the relocation expenses of moving the business from Suburb D that closed down to the Suburb N business.
The Suburb N business ceased operating in about mid-March 2020 due to the current pandemic circumstances but has been able to reopen on a limited basis since mid-June.
The wife opposes the husband’s application to restrain her from attending at the business, asserting that there is no disharmony between her and any of the staff. She, otherwise, complains that the husband has changed passwords on the computerised accounting system so that she is unable to access financial information relating to the business.
She seeks to be able to attend at the premises for the purposes of informing herself as to its operating and financial circumstances.
Discussion
The Court has wide powers under s 114 of the Family Law Act 1975 (Cth) (“the Act”) that provides that in proceedings of the kind referred to in paragraph (e) of the definition of matrimonial cause in subsection 4(1), the Court may make such order or grant such injunction as it considers proper with respect to the matter to which the proceedings relate.
Section 114 relevantly provides:
(1)In proceedings of the kind referred to in paragraph (e) of the definition of matrimonial cause in subsection 4(1), the court may make such order or grant such injunction as it considers proper with respect to the matter to which the proceedings relate, including:
(a)an injunction for the personal protection of a party to the marriage;
(b)an injunction restraining a party to the marriage from entering or remaining in the matrimonial home or the premises in which the other party to the marriage resides, or restraining a party to the marriage from entering or remaining in a specified area, being an area in which the matrimonial home is, or the premises in which the other party to the marriage resides are, situated;
(c)an injunction restraining a party to the marriage from entering the place of work of the other party to the marriage;
(d)an injunction for the protection of the marital relationship;
(e)an injunction in relation to the property of a party to the marriage; or
(f)an injunction relating to the use or occupancy of the matrimonial home.
The grant of an injunction or order is discretionary and the basis on which such an orders may be made is made is well established, see for example: Tsiang & Wu and Ors [2019] FamCAFC 128; (2019) FLC 93-911. One purpose, as in this case, is to preserve the status quo pending resolution of the controversy. An applicant must demonstrate first that there is a serious issue to be tried. In Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [65], the court said the applicant must “show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo”.
The applicant must demonstrate that the balance of convenience favours making the order sought.
However, the dispute between the parties seeks to have the Court determine appropriate remuneration for the husband in relation to his ongoing role in the Suburb N business operated by F Pty Ltd.
Yet there is no evidence before the Court as to appropriate salary rates in the industry for the role asserted by the husband. There is, otherwise, no evidence as to the company’s capacity to pay the salaries sought by the husband of $65,000 per annum or the salaries sought by the wife of $60,000 per annum. Doing the best that can be done on the state of the evidence and in an endeavour to quell this discrete dispute it is appropriate to make the order as sought by the wife as her assertion is one against her interest. There will be an order made accordingly.
As to the remaining issue as to restraining the wife from attending the Suburb N premises, it appears the relief sought is as much about the personal conflict between the parties than any real or perceived risk. However, in circumstances where the wife has not attended the premises on any regular basis if at all recently, and being mindful that she has a proprietary interest in the business and has concern for its proper conduct, it is appropriate that she be able to attend the premises on giving to the husband not less than 24 hours’ notice of her intention to do so. There will be an order made accordingly.
I certify that the preceding forty two (42) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 14 August 2020.
Associate:
Date: 14 August 2020
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