Trendor and Trendor
[2018] FamCA 944
•20 November 2018
FAMILY COURT OF AUSTRALIA
| TRENDOR & TRENDOR | [2018] FamCA 944 |
| FAMILY LAW – PROPERTY – Interim – Where the husband’s application to for interim spousal maintenance is dismissed – Where various trialable issues were unable to be determined on an interim basis – Where the husband has failed to provide complete disclosure – Where a forensic accountant is to be engaged. |
| Family Law Act 1975 (Cth) ss 72, 75 | |||
| APPLICANT: | Mr Trendor | ||
| RESPONDENT: | Ms Trendor |
| FILE NUMBER: | BRC | 5389 | of | 2016 |
| DATE DELIVERED: | 20 November 2018 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Baumann J |
| HEARING DATE: | 6 August 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr M Alexander |
| SOLICITOR FOR THE APPLICANT: | Barry.Nilsson Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr J Linklater-Steele |
| SOLICITOR FOR THE RESPONDENT: | DA Family Lawyers |
Orders
That the husband’s application for spousal maintenance is dismissed.
That the husband’s application for a partial property adjustment and/or an order for litigation funding is dismissed.
That within fourteen (14) days of the date of this Order, the wife nominate one (1) of the following panel of experts to be appointed a Single Expert pursuant to Rule 15.45 of the Family Law Rules 2004 (“the Rules”) to report on the value of the property, including a forensic analysis of all bank and investment accounts held in the parties’ sole and/or joint names and/or in the name of related entities as and from 24 December 2007 to the current date:
(a) Mr B of C Accountants;
(b) Mr D of E Accountants ; or
(c) Mr F of G Accountants,
with such Expert to be retained on the following terms:
(d)Any Expert appointed in accordance with this Order will be provided with a joint letter of instruction by the parties but if the parties are unable to agree for any reason, the joint instructions will be separately provided to the Expert by each parties’ legal representative. The parties will advise any Expert of the date for which any report is required;
(e)The parties shall comply with any reasonable request of the Court Expert to provide information and documentation to complete the report; and
(f)The costs of the Court Expert appointed pursuant to this Order is to be paid equally from funds held in trust with DA Family Lawyers in the Westpac Bank Case Reserve Bonus Account number #92 to a limit of $50,000.
That the parties have liberty to apply for further directions in respect of the appointment of and instructions to the Expert.
That the costs of the husband’s amended Application in a Case filed 19 July 2018 be reserved to the trial.
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 Trendor & Trendor 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 BRISBANE |
FILE NUMBER: BRC 5389 of 2016
| Mr Trendor |
Applicant
And
| Ms Trendor |
Respondent
REASONS FOR JUDGMENT
Introduction
These parenting and property adjustment proceedings were commenced in the Federal Circuit Court of Australia by the Applicant husband on 7 June 2016. It was then transferred to this Court on 10 May 2018.
The husband and Respondent wife met in late 1996/early 1997 in the United Kingdom and permanently relocated to Australia on 11 June 2009. The parties have two children, Ms H aged 18 years old and the other, a young boy, X aged 13 years old. In the context of the interim parenting relief sought by the husband, it is of relevance that X suffers from diabetes and requires ongoing medical care. It is also of relevance that the parties’ professional background demonstrates that they have a high degree of financial and legal literacy.
The circumstances of the parties’ marriage breakdown are unclear, however it is accepted that the wife emailed the husband on 3 April 2015, whilst he was on a business trip, to tell him that “the marriage was over” and that she had already moved into rental accommodation. The husband is now remarried and living in City J. Given the high level of distrust and conflict between these parties it is unsurprising that the circumstances of this marriage and the husband’s living arrangement are disputed and also partly the subject of this interim hearing.
relief sought by the parties
By way of the husband’s amended Application in a Case filed 19 July 2018 (amending the Application in a Case filed 22 June 2018) the husband seeks interim financial and parenting orders. Specifically he seeks orders providing for him to receive $110,480 by way of interim spousal maintenance for a period of 12 months; $157,145.07 by way of interim partial property settlement and the appointment of a Court Expert to value the property pool. He seeks that the wife engage a night nurse; the appointment of a Court Expert to assess X’s current clinical presentation and the completion of a social investigation report from City J Social Welfare Department. The husband also sought a departure from the administrative assessment of the child support payable for the periods 22 September 2017 to 31 December 2019, such that an adjusted child support amount be set at $Nil per calendar year and a stay of certain child support assessment case numbers. The husband no longer seeks a departure from the administrative child support assessment, and did not press his application for a Social Investigation Report in City J.
By way of the wife’s Response to an Application in a Case, filed 13 July 2018, the wife sought that the husband’s Application in a Case filed 22 June 2018 be permanently stayed until the husband’s personal appearance before the Court and that leave be granted to the wife to cross examine the husband. The wife’s case outline makes it clear that the Court should not grant any of the relief sought by the husband and that instead, the matter should be set for trial. Initially, when the matter came before me on 20 July 2018, the husband was not present. For reasons given orally at the time I adjourned the application to 6 August 2018 so as to allow the husband the opportunity to attend, which he did.
Issues requiring determination
In relation to the financial part of this interim hearing there are a few key factual issues in dispute. The Court faced the usual dilemmas at an interim hearing where cross-examination does not usually occur. In this case, the wife sought to cross-examine the husband, which was opposed. For reasons given orally, I did not permit cross-examination at that stage.
Such disputed factual issues include:
a)what funds were transferred to the wife and available to her in 2008?
b)what funds were available to the parties at the time they relocated to Australia?
c)what funds have been spent by the wife since separation?
In addition to the above issues, it is also necessary to consider certain issues that were agitated during submissions. These include:
a)the husband’s alleged lack of disclosure; and
b)the husband’s immigration status in City J.
I will now deal with each of these important issues, sequentially noting that I had the benefit of oral submissions from Counsel for the husband (Mr Alexander) and Counsel for the wife (Mr Linklater-Steele), together with written case outlines from both parties (which identified the Affidavits and material relied upon by the parties).
What funds were transferred to the wife in 2008?
The husband’s case is that prior to relocating to Australia the parties entered into a Transfer Agreement where he divested the whole of his legal and beneficial interest in his assets to the wife. He asserts that together, this totalled not less than $5,174,992.26. Upon clarification by the husband’s counsel I note that the figure of £12,702,302.99 attached to a joint schedule of assets dated 16 November 2006 refers to the parties’ gross assets. The wife says that this summary was not agreed upon by the parties but rather was prepared by the parties’ private banker. She identifies errors in the calculations and instead asserts that the parties had a negative cash asset balance of - $1,577,565.69 (excluding the value of the K Street property).
In relation to the Transfer Agreement, the husband does acknowledge that there were various transfer agreements in circulation but asserts that they all had the same purpose. The wife deposes to signing a transfer agreement in October 2009 but back dating it to 24 December 2007 at the request of the husband. She concedes that the husband transferred her some assets between November 2008 and June 2009 but rejects his assertion that the transfer agreement was put into effect as the husband suggests. She says he “did not and has never transferred his interest in shares, options, real property or motor vehicles” to her.
Having regard to the evidence before me, I am satisfied that some money changed accounts around the time of this Transfer Agreement. However, for the purposes of this interim decision, I am unable to determine the precise figure that was transferred. This may be a trialable issue. Instead at this stage, I should have greater regard to the total amount of money controlled by the parties in and around the time of relocation to Australia. Issues surrounding the “transfer agreement” and its formation and operation are likely to be issues at a final hearing.
what funds were available to the parties at the time they relocated to Australia?
At the time when the parties relocated to Australia the husband says that the wife would have had roughly $5,174,000.00. From this amount, he concedes that $1,400,000 was spent on the acquisition of the Suburb L property, leaving roughly $3,700,000 in cash. The husband also pointed out that since the parties sold the Suburb L property on 19 January 2018 for $1,440,000 they have had the benefit of $100,000 each meaning that approximately $1,200,000 remains in trust.
In reply, the wife has carefully provided the Court with her analysis of the difference between both the husband and wife’s financial position as contended, by explaining the context of certain transactions. Together, the wife says they are demonstrative of the husband “double counting” certain transactions to reach $5,174,000.00. Even though it does not appear that a complete set of the financial documents relating to the relevant accounts was tendered in these interim proceedings, I am satisfied that the husband himself would have been provided with all the relevant documents having had reference to the list of financial documents disclosed by the wife (see TB293, 329 and 440). I am further satisfied that even (in the unlikely event that the husband was unaware of the parties’ true level of assets at the time) this disclosure would have allowed the husband to track the money and ascertain its true value.
The wife explains the change in the financial position of the parties from June 2009 to the approximate time of their relocation on 13 July 2009 when the parties’ total cash savings (including the balance of sale of the K Street property) of $3,689,332.45 increased to $3,702,915.97, after money was transferred from the wife’s United Kingdom bank account to an Australian Westpac account, and then reduced to $2,183,696.53 after the parties spent roughly $1,400,000[1] in purchasing their former matrimonial house (“the Suburb L property”) in July 2009. This is consistent with the wife’s evidence at paragraph 94 of her Affidavit sworn and filed 13 July 2018.
[1] Various figures have been given for the exact amount of monies expended in total on the purchase price, stamp duty, rates adjustment, release of fees rebate and well as fees payable to the Department of Environment and Resource Management and legal fees.
As at 13 July 2009 it seems that the majority of the assets were then held in the M Trust Westpac account ending #37 ($1,639,710.45) with the remainder of the cash being held in the wife’s Westpac E-saver Account ending #5704 ($533,349.73).
During submissions for the wife, it was pointed out what limited reply the husband makes in his reply Affidavit filed 19 July 2018. During submissions the wife asserted that the husband has embarked on a “leverage exercise” to force the wife to settle or spend monies on an accountant and that the husband has made an attempt to “muddy the waters” and is effectively saying “I can’t work it out”.
The husband asserted that the parties established a trust account when they moved to Australia (for which he is not a beneficiary) and that he does not know where the funds went. In reply, the wife says that the husband has been integrally involved in the couples’ money and effectively had control of it through the trust.[2]. Whilst this dispute will be determined at the hearing, the documents tendered in evidence to date supports the wife’s assertions on this point of the husband’s knowledge.
[2] See [22] of the wife’s Affidavit dated 13 July 2018.
What funds have been spent by the wife since separation?
The husband asserts that the wife has not adequately explained her use of the significant funds he claims are “missing” from the property pool. He says, the wife has had the use of those funds and believes the wife has spent excess funds leading up to, during and post separation whilst he has had the benefit of very little. Aside from the funds obtained through the sale of the Suburb L property (held in trust), the husband believes minimal funds have been preserved.
In contract, the wife says that she has provided very clear and detailed responses to the husband’s allegations concerning the significant use of funds by the wife. The wife says the husband has not put forward any particular transactions that demonstrate a misappropriation of any monies but rather he has generally said “I am not able to reconcile the various withdrawals and transfers made”. The wife’s Affidavit filed 13 July 2018 has provided a detailed exposition of how she says the parties’ money has been spent (a significant amount of which she says was spent on the husband (paragraph 110(x) of the wife’s Affidavit)) and that in doing so, the wife has clearly identified the husband’s “double counting” in relation to what monies have actually been spent by the wife. It is evident that the figures provided by the husband do not account for deposits made into the various accounts from which the wife admits to withdrawing those monies.
The wife’s recent Financial Statement filed 13 July 2018 does not include the value of the M Trust Account ending #4737. Instead it lists three Westpac accounts with funds totalling $5,500 (including $2.91 in her E-Saver Account ending #04 (which previously held $533,349.73)), her share of the proceeds of the Suburb L property held on trust by DA Family Lawyers Trust Account in the sum of $591,498.60, as well as her Audi car and her business interest in M Pty Ltd of $26,145.
In contrast, the husband’s most recent Financial Statement does not include a figure as to the current value of his interest in the amount held on trust by DA Family Lawyers although I accept it is the same as that claimed by the wife. Although he acknowledges the presence of other bank and trading accounts, the only listed property items of value include $10,000 in his Westpac account ending #14 and his car being valued at $12,000.
Assuming the parties had available a nett $2,183,696.53 when they relocated to Australia (and after purchasing the Suburb L property), as the wife estimates at paragraph 94 at 13 July 2009, then is it possible on an interim basis to be satisfied as to the use of the monies? At this stage it is not.
The wife’s analysis (at paragraph 110) which the husband disputes is broadly that:
a)she agrees $1,537,290.01 was withdrawn from her Westpac Cheque Account ending #28 during the period 8 October 2011 to 6 January 2017 of which sum $1,533,507 was deposited into that account, primarily being $1,099,230 of loan repayments by M Trust and $352,197 transferred from her savings accounts as well as some smaller sums (see paragraph 110(a));
b)of the sum $1,537,290, the sum of $870,448 was transferred to other accounts, including credit card accounts and $666,841 was paid, she says, to accounts as detailed in paragraph 110(x), including to the husband ($351,208.65) and sums for the wife’s legal expenses ($162,600.99) and other sundry expenses. I accept the husband may well wish to challenge that the payment of some of the expenses for the children and the wife were made or are reasonable;
c)in a very detailed manner, the wife explains the use of the Westpac Altitude Black Credit Card where she says $185,711.39 of charges were incurred over 10 months to 8 September 2015. The wife says that the husband had a subsidiary card to May 2015 and used the card (e.g. $10,712.42 for his United Kingdom flights, hotel etc); and
d)the wife says that from May 2017 her father has financially supported her, and used a partial release of funds from the sale of the Suburb L property of $100,000, for legal fees, living costs and rental.
The wife says, at paragraph 113, in response to paragraph 33 and 34 of the husband’s Affidavit, that she has provided substantial disclosure and that a forensic accountant expert is not required to trace dealings with these funds. Counsel for the wife contends this is merely a tactic of the husband to use up the available funds on investment and reduce her property entitlement being obtainable. I return to this issue later in these Reasons.
It is a trialable issue as to whether firstly, the analysis is correct, and secondly, whether the expenditure is reasonable. I accept that as currently indicated, the husband contends for significant “add backs” in determining the notionally divisible pool of assets.
Lack of disclosure by the husband
Although it is the husband’s position that there has been non-disclosure by both parties, it is apparent, in my view, that the husband has not attended to disclosure in a timely way and gaps in his disclosure have been properly identified in the submissions on behalf of the wife.
Examples of this arise, at least, from the husband’s Financial Statement dated 7 June 2016, in that:
a)the wife has identified that the husband has failed to provide the wife with disclosure of his N Bank account ending #18 (paragraph 102 of the wife’s Affidavit filed 13 July 2018) despite her making requests for such disclosure. The wife says she became aware of the account through N Bank accounts in subpoenaed material. The wife says that the husband had access to this account with funds in the sum of $138,672.86 at 21 June 2016, however this did not appear in his Financial Statement dated 7 June 2016. The wife asserts that this demonstrates significant non-disclosure given that the parties were trying to negotiate a partial property settlement at the time and there was an application for monies to be paid to the parties for various expenses and the like;
b)The wife asserts that the husband failed to disclose his Q Superannuation interest which was valued at $124,924.68 at 1 April 2015 and then $Nil at 1 March 2018 in his financial statement 7 June 2016. Since then the husband has also failed to disclose the full circumstances of his failed investment by his self-managed super fund in the sum of $124,924.68 as included in his 22 June 2018 tax return; and
c)The wife has also identified that despite the husband having shares in a ComSec account, he has failed to disclose these interests (paragraph 108 of the wife’s Affidavit filed 13 July 2018). Rather than providing further disclosure, the husband admits to having an account but says he uses the account to check stock prices rather than trade. Despite the husband indicating that he has made certain disclosures regarding this Comsec account (at paragraph 64 and TB464) I find the undated document to be unhelpful without further explanation. I also find that the husband has provided little relevant disclosure or response in a reply Affidavit to support his proposition (of that which the wife disputes) that the wife made “cash transfers from the Westpac bank accounts to my sole names N Bank account [ending #23] from time to time when I travelled overseas for business” (see TB459-460 and paragraphs 61 to 63 of the husband’s Affidavit file 22 June 2018).
At paragraph 109 the wife also says that the husband has failed to disclose what the loan agreements are in relation to P Pty Ltd International Investments (“P Pty Ltd”). The husband’s current affidavit evidence shows that he has resisted subpoena concerning information about him being removed as a director and resisted a subpoena relating to stockbrokers O Brokers. The wife says his evidence is so poor and it is so contrived. This is not a finding I can make on an interim basis. The husband has provided two letters to the Court dated 22 and 27 June. The wife says the husband was the controller/driving force of P Pty Ltd. When he has ultimately admitted his interest, he says he has been removed as the director and he produces letters and says that there has been a call in of loans to him from P Pty Ltd. The wife’s Affidavit outlines what she has done to determine that this notion is a possible sham and that he has resigned as the director. The wife’s position is that the husband should not be believed when he says that he is not in receipt of an income because he is still connected to this company and has even resisted disclosure in relation to this company by saying it puts his “ability to earn income in jeopardy”. Furthermore, the wife says that the husband was listed as a director on the O Brokers form dated May 2016 and the husband signed a loan form in May 2016 and then did not disclose this in June 2016.
The wife also points out that despite the husband trying to suggest that the wife used alternative monies “direct from the UK” to fund the purchase of the Suburb L property, the wife has disclosed her Australian Westpac Bank account ending #04 from which the deposit; balance of the Suburb L property purchase price and stamp duty payable was withdrawn from (see paragraph 21 of the wife’s Affidavit filed 24 July2018 in response to the allegation made by the husband at paragraphs 29 and 30 of his Affidavit filed 19 July 2018).
The wife makes further allegations that the husband has not provided anything to show how he has been living post separation; his needs or income and has not confirmed when he left to live in City J. Despite the husband providing certain amounts of disclosure, he has failed to provide complete disclosure at this stage.
The husband, on an interim basis, has failed to discharge the evidentiary onus that he has about his financial position or that the wife, as he alleges, has unreasonably used joint funds. Whether with further disclosure, and at a trial, the husband’s position is established, is yet to be determined.
The apparent inconsistencies in the material offered to the Court at this time, is not sufficient to comfortably make a finding about the husband’s immigration and/or residency status in City J. Whether or not this becomes an issue at trial, other than as to credit, is difficult to know.
The husband’s immigration status in City J
In relation to the husband’s assertions that he received a notice from the Immigration Department of the Government of City J saying that his Visa has been terminated and that he must depart City J, the wife asks this Court to not accept the husband’s evidence. Instead, the wife asks the Court to take a letter she obtained from the Immigration Department to say that they do not give these letters out and thus it must have been fabricated. The wife argues that no weight can be given to it given its unexecuted form. Furthermore, the wife makes note of the fact that the husband in his third Affidavit, filed by leave on 6 August 2018, fails to respond to the wife’s questions regarding husband’s visa, income and residency status even though he could have had the opportunity to respond. The wife asks the Court to give weight to the fact that the husband has seemingly evaded providing a response under oath.
The husband’s position as a company director
The wife asserts that she has provided various letters and documents which demonstrate that the husband is involved in the company (see letter dated 22 June 2016). As at 9 August 2016, the husband was paying ongoing costs (TB596).
In contrast, the husband says he was never saying he was never a director but that he never got any money from that position in the past or now. Again, I believe this is a matter best left to trial.
Other issues raised by the wife
The wife also raised the following allegations for which I do not find that a determination needs to be made at this stage as it will not affect the interim orders I find to be appropriate in this case. However, for the record I will acknowledge them below being:
a)the husband mislead the Court about his new wife and her financial circumstances which are relevant under s 75(2) of the Family Law Act 1975; and
b)the husband failed to disclose certain shares and the fact that he was “enquiring” about purchasing a property in City J. The wife says this was all seen on an email that was seen in the background of a screenshot taken by the husband. The wife says that the husband has since changed his story and now alleges it was a sham.
Legal costs
It is the husband’s evidence that he has incurred legal costs in the sum of $302,229.62 with anticipated future legal fees of $118,100 and unpaid legal fees in the sum of $39, 045.42 (taking into account the monies the husband has in his solicitor’s account and also those funds that he has already transferred to his solicitors). The wife disputes this but has indicated that if I found it appropriate to allocate some funds to the husband to pay his legal fees then the wife would also want a similar amount. In saying that, she indicated however that she does not want it to be taken as a concession in the husband’s favour.
In regards to her own legal fees, the wife deposes to having already spent $253,490.05 (including some of which she owes to her father) with total estimated future legal costs of $102,545; some of this amount including the preparation and attendance relating to this interim application.
Applying these findings to the relief sought
As the father did not press for further interim orders in respect of the child X, I do not order for the appointment of a nurse to assist the mother or for a Social Investigation Report in City J to be prepared. It is a little ironic that the father presses for those orders, yet he has not spent time with X in Australia since November 2017 (as the Court was informed at the hearing on 6 August 2018). It is to be hoped that visits have occurred since the hearing.
Although most of the submissions related to the financial dispute, I am concerned that if the father expects the Court to order that X spend time with his father in City J, that he understand that not only is his management of X’s serious diabetic condition an issue, but more basically, the lack of time with his son may be damaging his relationship with X, and could shape any wishes the child might express about future parenting arrangements.
On the evidence available at this time, I am not satisfied the husband is unable to adequately support himself, which is the threshold test under s.72(1) of the Family Law Act 1975 (Cth). I am of the view that the husband has failed to make full and complete disclosure, which has persuaded me that he may have sources of funds or income available to him. At trial he will be subject to cross-examination, and the full extent of his financial support in City J is likely to be clarified.
I accept the submission of Mr Linklater-Steele, that further substantial payments from the funds held in trust from the sale of the Suburb L property, should be cautiously considered as it may in fact be the only available property interest for division. Whilst I do not accept that the Court would be unable to do just and equity by allowing funds to be withdrawn, I am sufficiently wary to treat requests to pay funds cautiously. Considering the sums already expended by each party in legal expenses, I am not prepared to make orders for further legal costs to be paid from the fund. In this regard, it is noted that the wife opposed any payment to the husband but that if paid, she sought a like amount.
I am not persuaded that the benefits of a forensic accountant engaged to trace the funds as set out, is a wasted exercise. If the Court was required to undertake the analysis (a form of audit really) to ascertain the correctness of the wife’s assertions, considering the amount of documents I would estimate not less than two days of trial time could be incurred. On this basis, a forensic accountant, properly briefed, would be likely to reduce the trialable issues and the amount of documentation the Court needs to receive.
Accordingly, I propose an Australian based forensic accountant be retained as agreed between the parties, and failing agreement as appointed by the Court. I would allow a payment of up to $50,000 for the fees incurred. The terms of the retainer are to be agreed, and if not agreed, the Court will settle the terms within 21 days.
The orders which appear at the commencement of these Reasons, are pronounced.
The uncertainties as to the true financial position are such that coupled with the fact that neither party was “wholly successful” make it appropriate to reserve the parties’ costs of the husband’s Application in a Case to the trial. I so order.
I certify that the preceding forty-seven (47) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Baumann delivered on 20 November 2018.
Associate:
Date: 20 November 2018
2
0
3