VARNHAM & VARNHAM
[2014] FamCA 765
•15 September 2014
FAMILY COURT OF AUSTRALIA
| VARNHAM & VARNHAM | [2014] FamCA 765 |
| FAMILY LAW – PROPERTY – Interim Orders – where parties required to withdraw monies from superannuation fund – where husband seeks distribution of pension funds in his favour – where wife opposes husband’s application and seeks to preserve the property of the parties – no evidence before the Court as to how the husband intends to use funds – orders made for the funds to be placed in joint account and used to meet costs of valuations. FAMILY LAW – PRACTICE AND PROCEDURE – Valuations – where husband and wife have undertaken separate valuations – significant disparity in valuation – whether parties bound by previous order appointing a single expert – where that order was conditional upon a timeframe – whether appropriate to now appoint a single expert – orders made for the respective experts to confer. FAMILY LAW – PRACTICE AND PROCEDURE – husband seeks the wife be removed as a director – wife opposes removal – where no evidence that the wife has attempted to frustrate the running of the business – implications for the business if wife is removed as a director – inappropriate to remove purely as a matter of convenience to the husband – where pathways available to the husband under the Corporations Act 2001 (Cth) – no orders made for the removal of the wife. |
Corporations Act 2001 (Cth) s 290
Family Law Act 1975 (Cth) ss 79, 80
Family Law Rules 2004 (Cth) rr 15.68, 15.69
Bell & Bell [2000] FamCA 1301
Cordelia Holdings Pty Ltd v Newkey Investments Pty Ltd [2004] FCAFC 48
Re Ronald Neville McGorm Ex Parte; the Co-operative Building Society of South Australia [1989] FCA 87
Strahan & Strahan (Interim Property Orders) (2009) 42 Fam LR 203
| APPLICANT: | Ms Varnham |
| RESPONDENT: | Mr Varnham |
| FILE NUMBER: | ADC | 1970 | of | 2013 |
| DATE DELIVERED: | 15 September 2014 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Berman J |
| HEARING DATE: | 9 September 2014 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Lewis |
| SOLICITOR FOR THE APPLICANT: | Scales and Partners |
| COUNSEL FOR THE RESPONDENT: | Mr McGinn |
| SOLICITOR FOR THE RESPONDENT: | Angela Ferdinandy |
ORDERS
upon noting:-
The wife’s assertion that she has provided the disclosure as requested in paragraph 6 of the Amended Response filed 15 August 2014
and upon further noting:-
That the wife will apply all rental payments received from the tenant in respect of the investment property at I Street, Town B to the Town B mortgage and in the event that there is a surplus of income over expenses for the said investment property the wife will quarantine such surplus pending agreement of the parties or order of the Court
by consent it is ordered:-
That the wife be at liberty to sell the Alfa Romeo and Ford motor vehicles PROVIDED THAT:-
(a)The value thereof for the purpose of these proceedings be fixed in the sum of $12,000 and $3,500 respectively, or such greater sum as shall represent the trade-in value thereof;
(b)The value and liability relating to any new vehicle be excluded from the asset pool.
That the wife do within 14 days provide disclosure of her Costs Advice.
That the parties do all things and sign all documents to cause C Accountants to undertake the management and operation of the D Superannuation Fund pending the making of final orders.
That the parties be restrained and an injunction is granted restraining each of them from:-
(a)Transferring, assigning or disposing of, dealing with or in any way interfering with the assets of the D Superannuation Fund;
(b)Making any sole decision in relation to the management or investment of the assets of the superannuation fund.
IT IS ORDERED:-
The parties do instruct Ms E and the wife do instruct Mr F to confer in relation to their valuations of the properties situate at G Street, Suburb H and J Street, Suburb K and that following their conference they shall prepare a joint memorandum setting out the areas of agreement and the basis and parameters of any disagreement as to value PROVIDED that the husband shall be responsible for the fees incurred by Ms E and the wife shall be solely responsible for the fees incurred by Mr F.
The husband shall permit the wife, her solicitor and/or such other person as the wife may nominate to inspect the husband’s type L goods collection and accessories as set out in Schedule B to the affidavit of the wife filed 5 June 2013, with such inspection to occur at such place as may be nominated by the husband or in the alternative, at the premises of the husband’s solicitors.
That the parties do instruct C Accountants to undertake an assessment and calculation of the rent due or owing or any adjustment in respect of same by D Pty Ltd in favour of D Superannuation Fund.
That the parties do instruct C Accountants to appoint an expert licensed land valuer to undertake a valuation of a fair and commercial rent that should be paid by D Pty Ltd in favour of the D Superannuation Fund in respect of the premises at J Street, Suburb K and to provide a report both as to rent and the compliance status of the said fund.
That the parties will do all things necessary and sign all such documents as may be required to cause the sum of FORTY ONE THOUSAND NINE HUNDRED AND THIRTY NINE DOLLARS ($41,939) being the payment from D Superannuation Fund by way of a pension on behalf of the husband to be invested (or remain so invested) in a joint account with both parties to sign pending further order or agreement of the parties PROVIDED THAT the said money shall be used to pay the costs and disbursements due and owing to C Accountants as may be incurred and supported by invoice rendered from time to time, such invoice to be paid within 7 days of it having been received.
That the interim proceedings do stand dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Varnham & Varnham has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT ADELAIDE |
FILE NUMBER: ADC 1970 of 2013
| Ms Varnham |
Applicant
And
| Mr VArnham |
Respondent
REASONS FOR JUDGMENT
introduction
By Initiating Application filed 5 June 2013, Ms Varnham (“the wife”) commenced proceedings in the Federal Circuit Court of Australia seeking orders for settlement of property. Mr Varnham (“the husband”) filed a Response to the Initiating Application on 29 July 2013.
The parties appear to be possessed of significant and diverse property that is comprised of real property, personalty of the parties including various investments and their separate member entitlements in a self-managed superannuation fund.
The wife seeks that “the husband pay to the wife a sum to effect a 60/40 division”, whereas the husband seeks orders that “the assets of the parties be divided on a 65/35 basis in favour of the husband”.
By order dated 19 May 2014, the proceedings including an Application in a Case filed 17 April 2014 be transferred to this Court.
On 10 June 2014 Registrar Paxton referred the proceedings to the list of matters awaiting a trial allocation noting that the trial estimate is four to five days.
Relevant to the matters argued before me, a Consent Order was made on 27 June 2014 that provided the following:-
(1)That prior to 30 June 2014 the parties do all such things and sign such documents as shall be necessary to withdraw the sum of $41,939 from the [D] Superannuation Fund as a pension on behalf of the husband, provided that the sum be invested in a joint account with both to sign pending determination on 19 August 2014 as to whether the said sum should be released to the husband and any condition of such release.
The matter was listed before me on 19 August 2014 and after hearing submissions by way of an overview of the matters outstanding, the second Application in a Case filed 12 August 2014 and the Amended Response filed 15 August 2014 were listed for hearing before me on 9 September 2014.
CONSENT ORDERS
At the commencement of the hearing, counsel presented a Consent Order in the following terms:-
It being noted that the wife shall apply all rental payments received from the tenant in respect of the investment property at [I Street, Town B] to the [Town B] mortgage and in the event there is a surplus of income over expenses for the said investment property the wife will quarantine such surplus pending agreement of the parties or order of the Court.
BY CONSENT IT IS ORDERED:-
(1)The wife will be at liberty to sell the Alpha Romeo (sic) and Ford motor vehicles provided that:-
(a)The value thereof for the purposes of these proceedings be fixed in the sum of $12,000 and $3,500 respectively or such greater sum as shall represent the trade-in value thereof;
(b)The value and liability relating to any new vehicle will be excluded from the asset pool;
(c)That the wife within 14 days provide disclosure of her Cost Advice;
(2)The parties do all things and sign all documents to cause [C] Accountants to undertake the management and operation of the [D] Superannuation Fund pending the making of final orders.
I will make those orders with slight amendment (“shall” becomes “will”) as part of the further orders arising from these reasons.
SECOND AMENDED APPLICATION IN A CASE
Taking into account the orders proposed to be made by consent, the following orders are still agitated by the wife:-
(3A)Pursuant to 15.49 (2) of the Family Law Rules the applicant be given the Court’s permission to tender a report and adduce evidence from [Mr F] in relation to the value of [G Street, Suburb H] and [J Street, Suburb K];
(3)That the valuer [Ms E] and [Mr F] confer in relation to their valuations of [G Street, Suburb H] and [J Street, Suburb K];
(4)That the husband upon being given 48 hours’ notice to provide his [type L goods] and [type L goods] accessories set out in in Schedule A to the affidavit filed in support of this application to Mr [A];
(7)That [D] Pty Ltd pay the rent due to the [D] Superannuation Fund and the statutory super due.
The wife continues to seek these orders, although for the reasons that follow I consider that a determination of paragraph 3A is premature.
AMENDED RESPONSE
The husband seeks the following orders:-
(1)That the wife be restrained and an injunction granted restraining the wife from:-
(a)Transferring, assigning, disposing of, dealing with, or in any way interfering with the assets of the [D] Superannuation Fund:
(b)Making any decision in relation to the management or investment of the assets of the superannuation fund;
(c)Instructing any accountant or professional to give any advice in relation to, or take any steps in relation to the superannuation fund;
(3) The wife be forthwith removed as a director of [D] Pty Ltd…
(5 )That the wife do authorise a payment to the husband from the [D] Superannuation Fund in the sum of $41,939 by 30 June 2014;
(10) (c) The wife do give full disclosure of her financial circumstances relating to the purchase of another vehicle and the source of funds for payment.
Following discussion, agreement was reached that if both parties are obligated by similar restraint in respect of any dealings with the D Superannuation Fund, then the husband would not press paragraph (1). Agreement was reached and accordingly that order can be made by consent with minor amendment.
The husband also sought discovery and disclosure pursuant to paragraph 6 of the said response. The issue of discovery between the parties has been an ongoing dispute. The general impression is that despite the appearance of substantial disclosure having been made by the parties, such is the mistrust between them that more documents are sought.
It is perhaps timely to remind the parties of the deliberations of the Full Court in Bell & Bell [2000] FamCA 1301:-
[44]The obligation of parties in financial proceedings to make a full and frank disclosure of their financial circumstances, and all matters relevant thereto, has been considered in a number of authorities; St John v St John (NSW Court of Appeal 19 June 1974, unreported per Hutley JA); Penfold v Penfold (1980) FLC 90-800 at 75,055; Livesey v Jenkins (1985) 1All ER 106; Oriolo v Oriolo (1985) FLC 91-653; Guinti v Guinti (1986) FLC 91-759; Mezzacappa v Mezzacappa (1987) FLC 91-853; Milligan v Milligan (Full Court, 4 February 1991, unreported); Black & Kellner (1992) FLC 92-287; Weir v Weir (1993) FLC 92-338;…
[45]In our opinion, some of the principles emerge from authorities are as follows:-
·In proceedings in the Family Court, in relation to financial matters, there is an obligation on each party to make a full and frank disclosure of his/her financial circumstances and all matters relevant thereto;
·The obligation arises because of the necessity for the Court in such proceedings to consider all aspects of the financial circumstances of each party (step 1, 2 and 3);
·If there is a non-disclosure, in the relevant sense, then the failure to disclosure undermines the who process of adjudication of the proceedings in relation to financial matters;
·The obligation is not created by the rules or practice of the Court and the rules simply set out the procedure by which that obligation may be fulfilled;
·If there is a deficiency in the rules or practice adapted for the purpose of making such a disclosure mere compliance with the requirements of the relevant rule or practice, if deficient, is not enough;
·A finding of non-disclosure may, in appropriate cases, result in the other party being granted, without more, the relief sought. However it does not follow that the outcome sought is appropriate in all such cases. It depends on the circumstances of each case. It may be, in the circumstances of certain cases that it is appropriate to simply award to the innocent party all that he/she seeks. However, we do not accept that such an outcome is required or necessary in all cases where there is a finding of non-disclosure. That said, it also does not follow that non-disclosure should be ignored; Penfold & Penfold (supra). However, if there is finding of non-disclosure there should always be reasons given supporting the finding and for the consequences of such a finding.
[46]It may be appropriate, depending upon the circumstances, to make notional adjustments to the pool of assets to reflect identified items of property that have been bona fide disposed of or one party only has had the benefit of to the exclusion of the other party; Townsend & Townsend (supra); Farnell & Farnell (1996) FLC 92-681.
[47]It may also be appropriate, depending upon the circumstances, to notionally include in the pool of assets items of property in respect of which no or no reasonable explanation has been given for the assertion that they no longer exist or never existed; Mezzacappa & Mezzacappa (supra). In other words, it is also possible, in appropriate cases, to have regard to, and notionally include in the list of assets, what is called unascertained property the value of which is capable of some identification and quantification.
The assertion by each of the parties is that the other is uncooperative and recalcitrant in respect of their separate obligation to make full and frank disclosure.
A party does not have the option of avoiding their proper obligation to make disclosure. In particular, it is no answer to suggest that discovery was not able to be made because the relevant documents were in the hands of others. See Re Ronald Neville McGorm ex parte; the Co-operative Building Society of South Australia [1989] FCA 87:-
[5]The obligation resting on a party obliged to give discovery requires that he make proper enquiries and efforts to identify and disclose all relevant documents that are not in his possession. The obligation extends to making enquiries from the person whose possession the documents now are; see Mertens v Haigh [1863] Eng R 633. It was said in the 19th Century case of Taylor v Rundle 41 ER 429 at 433 by Lindhurst LC:-
If it is in your power to give the discovery, you must give it; if not, you must show you have done your best to procure the means of giving it…
[6]The scope of the enquiries that should be made will depend upon the circumstance of the case having regard to the need for discovery in order to dispose fairly of the matters in questions, or to save costs in the proceedings. The enquiries must be reasonable, but do not demand of the party giving discovery that he goes to lengths that are oppressive.
There is however no obligation on a party to provide discovery of documents that are not relevant to the case notwithstanding that there may have been a request for same. The unbridled pursuit of documents without cause or connection to the issues to be genuinely determined may well be adverse to the timely and efficient disposal of the litigation.
Whilst the documents have not yet been inspected, the wife’s counsel submits that disclosure has now been made (of recent date) in respect of the documents sought in paragraph 6 (a) to (n) of the Amended Response. I do not propose to make an order in terms of paragraph 6 but simply to note that the discovery is purported to have been made and that the husband reserves his right to bring further proceedings if he would contend that the disclosure is inadequate.
BACKGROUND
The husband was born in 1950 and is a consultant professional. The wife was born in 1958 and is employed in the education field. The parties commenced cohabitation in 1984 and were married in November 1984. The parties separated on 26 March 2010.
There are no children of the marriage.
Other than some modest personal property and monies inherited from the families of the parties, neither entered the relationship with assets of significant value.
The husband operates as a consultant professional via a corporate entity known as D Pty Ltd which company was incorporated in or about 1986. The husband and wife are directors of D Pty Ltd. The husband holds the majority shareholding of two shares as against the single share held by the wife.
It would seem common ground that the only purpose for D Pty Ltd is the vehicle by which the husband operates his consulting business. There is a concession that over and above plant and equipment, there is unlikely to be any goodwill in the business and whilst it has not come to pass, the husband suggests that he may give retirement serious consideration in 2015.
At some point in the 1980’s the parties purchased the property at G Street, Suburb H which was the former matrimonial home. The property was purchased for the modest sum of $79,000 which was paid for by an inheritance the wife received from her grandmother and a residual mortgage.
In 2005, the parties invested in a vineyard in Argentina. That investment has been retained. In 2007 the husband purchased a one half interest in a duplex in City Z, Argentina. The husband still retains his interest in that property.
In or about 2005, the D Superannuation Fund purchased a property at J Street, Suburb K as an investment in their self-managed fund but also, being commercial premises from which the husband’s consulting business could operate.
Taking into account the value of the J Street property and other inclusions in the fund, each of the parties has a substantial member balance entitlement. The wife also has an accumulation fund entitlement with M Super Fund.
Whilst there was agreement between the parties and taking into account the financial advice of the accountants, D Pty Ltd paid rent to the super fund on a properly determined commercial basis.
Of recent date the husband has ceased the payment of rent. The wife seeks that the payments be reinstated and at a level based upon her assertion of the value of the J Street property, whereas the husband acknowledges that rent should be paid but submits that the property has a significantly lower value than asserted by the wife and in any event, there has been an overpayment by D Pty Ltd to the super fund and therefore there should be an adjustment in his favour which results in there being no obligation for D Pty Ltd to pay rent at the present.
Following separation, the parties purchased a property at X Street, Suburb Y in which the husband resides. At best, the equity in that property would be modest. The wife has purchased a property at I Street, Town B in October 2012 with the intention that it will be an investment property and generate rental income. Again, the equity in the I Street property is modest.
The husband has an extensive type L goods collection, the value of which is in dispute.
VALUATION EVIDENCE FOR G STREET, SUBURB H AND J STREET, SUBURB K
Judge Mead made orders on 29 July 2013 clearly designed to prepare the matter in anticipation of a Conciliation Conference to be convened on 11 November 2013. The following order was made by her Honour:-
(4)That any relevant asset the value of which is not agreed in writing by the parties’ solicitors by 13 September 2013 shall be valued by a jointly appointed licensed valuer or valuers at the joint and equal expense of the parties by 25 October 2013, with the valuation or valuations to be filed by 6 November 2013.
It is reasonable to assume that when her Honour made the order, she had reference to the provisions as set out in Division 15.2 – Expert Evidence of the Rules of the Federal Magistrate Court (as it then was), in particular Rule 15.08 (2).
A valuation had been previously commissioned by the accountants for the super fund which placed a value on the J Street property at $491,000 in 2012. As a result of her Honour’s order, the parties jointly instructed N Valuers to undertake a further valuation of the property. Ultimately, the valuation was conducted by Ms E who placed a value on the property of $350,000. The wife was not content with that valuation and instructed Mr F of O Valuers to conduct a valuation. The result was a value of $500,00.
Not surprisingly, the parties are in heated dispute as to the value. To some extent the issue of the value of the J Street property has been further complicated, not simply by the appropriate value that is to be brought to account for the purposes of assessing the total value of the corpus of D Superannuation Fund, but the valuations have also been used to determine the appropriate rental that should be paid by D Pty Ltd in respect of its occupation of the J Street property.
It is argued on behalf of the husband that her Honour’s order of 29 July 2013 is effectively an order made under Rule 15.45 of the Family Law Rules 2004 (Cth) namely, an order for the appointment of a single expert witness. It is argued that if that is the case that subject to further order (possibly pursuant to Rule 15.49) the parties in this Court are bound by her Honour’s order and that it should be treated as if it were an order for a single expert.
I do not agree with that assessment. Whilst it is true that her Honour made an order providing for the valuation of property either by agreement or in the absence of agreement, by the appointment of a “jointly appointed licensed valuer or valuers at the joint and equal expense of the parties”. The order was conditional upon the exercise being undertaken by a particular date namely, 25 October 2013 and the valuation or valuations to be filed by 6 November 2013 in anticipation of a Conciliation Conference on 11 November 2013.
The proceedings have undergone a significant metamorphosis. They are no longer in the Federal Circuit Court and the Conciliation Conference failed to resolve the matter.
By Registrar’s order, the proceedings have now been placed in the trial list and I consider that the parties are not bound by her Honour’s order but rather are free to undertake whatever activity they would wish in order to properly prepare for the litigation.
It may well be a sensible course for the parties to do all things that they can to attempt to reach agreement as to the valuation of the real estate in circumstances where it would not at first instance appear to be controversial or complex.
A further difficulty arises in that there may be a substantial time delay in this matter reaching a hearing. Given the extensive valuation efforts already undertaken by the parties, it would seem to be counter-productive at this stage to require the parties either to consider the appointment of a single expert (being now a fourth valuer) or alternatively to hear an argument as to whether leave should be given pursuant to Rule 15.49 for the parties tender a report or rely upon separate adversarial evidence.
At this stage I am not asked to determine whether there should be a single expert appointed or to hear an argument that the parties should be able to call separate adversarial evidence.
I am however asked to consider whether an order should be made that would require Ms E (from the office of N Valuers) and Mr F (from the office of O Valuers) to confer in relation to their separate valuations of G Street, Suburb H and J Street, Suburb K.
Frankly, I do not understand why this issue remains contentious. I would have thought that it would be prudent for the parties to undertake all reasonable activities to ascertain whether agreement can be reached as to the value of these properties rather than incur the further cost of yet again another valuer being involved and/or incurring the further costs of interim proceedings with the purpose of the Court having to decide the issue.
Rule 15.68 provides:-
This division applies to a case in which two or more parties intend to tender an expert’s report or adduce evidence from different expert witnesses about the same, or a similar, question.
Rule 15.69 (1):-
In a case to which this division applies:-
(a)The parties must arrange for the expert witnesses to confer at least 28 days before the relevant date; and
(b)Each party must give to the expert witness the party has instructed a copy of the document entitled Expert’s Conferences – Guidelines for expert witnesses and those instructing them in cases in the Family Court of Australia, the text of which is set out in Schedule 5.
If required, the Court is able to be prescriptive in terms of the method and manner by which the conference is to take place.
I consider that Rule 15.68 has application notwithstanding no order has been made for the appointment of separate adversarial evidence. It seems clear that at least on present indications, the parties would intend to tender reports or adduce evidence from different witnesses as to the value of the properties.
There would seem to be a substantial difference in the valuation outcome by two valuers who appear who to have appropriate levels of qualifications.
Accordingly, I consider that it is an entirely benign but prudent exercise to require Ms E and Mr F to confer in respect of their separate valuations. That is no way predetermining any application that I may hear on behalf of the parties for leave to adduce separate adversarial evidence. The outcome of such a conference may assist the Court in determining any such application or indeed, whether single experts should be appointed and if so, the issues that might form the instructions to such a person.
PAYMENT OF RENT BY D PTY LTD
This has been a matter of high contention in the more recent part of the proceedings. It seems however that the parties have at least reached a partial resolution to the problem by their general agreement to appoint C Accountants to undertake the management of the D Superannuation Fund pending a final determination of the proceedings. As part of that management, it is reasonable to anticipate that the necessity and if so determined, the extent of rent that should be paid by D Pty Ltd to the super fund for the company’s occupation of the J Street premises.
The parties have agreed that for the limited purpose only of determining the appropriate rental to be paid, thereby enabling the new accountants to provide a report as to what monies either should be paid if there has been an under-payment by D Pty Ltd of rent, or to the extent to which there should be a refund in the case of an over-payment and in any event the consequences that flow has now been agreed. It is proposed that a single expert valuer will be appointed for the express purpose of providing an advice to the new accountants.
I propose to accede to the request of the parties, but given the ongoing mistrust that each has for the other and the resultant inability for them to reach sensible and uncontroversial agreement, I propose to provide for the new accountants to have the ability to seek such valuation information as they consider necessary to discharge their professional and legal obligations in respect of the fund, that they are entitled to use the rental assessment as part of the proper accounting requirements and then to provide a report as to the manner in which the issue of rental does or does not impact on the superannuation fund. The husband has indicated a preparedness to abide the decision of the new accountants in that regard.
THE HUSBAND’S TYPE L GOODS COLLECTION
The husband has an extensive type L goods collection. His type L goods and accessories have been the subject of joint valuation by an employee of the P Type L Goods Store. The value attributed to the type L goods is $14,730. At the commencement of these proceedings, the wife considered that the type L goods collection was worth $80,000. In his financial statement, the assessment of the husband is that the type L goods collection is valued at $20,700.
The wife has not been happy to accept the valuation of the P Type L Goods Store. She has made contact with a type L goods dealer in New South Wales, Mr A, and without the type L goods being seen, he offers to purchase the collection for $25,000.
The wife seeks that Mr A inspect the type L goods collection and accessories and presumably provide her with his view as to their value. The husband objects. His position is that the issue of the value of the type L goods has effectively been determined by the parties reaching agreement as to the appointment of a single expert namely, the P Type L Goods Store. That process has come to an end with no other reason why the valuation of the type L goods collection should be revisited.
Moreover, it is submitted that Mr A could not be an expert for the purposes of the proceedings if he has an alternate interest namely, to purchase the collection. It would appear that there is some uncertainty as to whether Mr A genuinely would wish to buy the type L goods collection, or whether it was merely a cavalier and throw-away remark in order to emphasise that he considers the collection more valuable than does the P Type L Goods Store.
In Cordelia Holdings Pty Ltd v Newkey Investments Pty Ltd [2004] FCAFC 48 the Full Court of the Federal Court of Australia said:-
[128]It seems clear to us the decision of the High Court in McDonald, as applied by single justices of the High Court in James Patrick and Co Pty Ltd v Minister of State for the Navy…and Gregory v Commissioner of Taxation …is determinative as to whether it is an error to take into account evidence of offers. Whatever weight may be properly given to evidence of offers for limited or general purposes, it is clear that such evidence is not permissible as direct evidence of value.
[129] In so far as the trial judge used the evidence in that way he was we consider in error in doing so… Moreover, even if such evidence is used in a general way, it would only be used if it were accompanied of an assessment of the relevant factors such as the genuineness of the offer and whether it was made at an arms-length…
There was nothing in the nature of a “concluded contract” in terms of the remarks made by Mr A.
It may be the case that there is merit in the argument put by counsel for the husband that the wife may struggle to persuade a Court that Mr A has demonstrated an appropriate level of impartiality. That might be a matter relevant to an application for separate adversarial evidence, but the manner in which paragraph 4 of the Amended Application in a Case has been drafted does not seek that relief. What is sought is that a person nominated by the wife should inspect the type L goods. It may be that the purpose is to assist the wife in the litigation, or even to craft questions that could be put to the author of the current valuation. It may be that the purpose is to satisfy the wife that there is a genuine issue that needs further consideration.
At that level, it is difficult to see why the wife should be unduly restricted in the proper preparation of her case unless in doing so her requests become onerous for the husband. That is not the contention at present and indeed the husband’s position is that he would provide a set of photographs of the type L goods if that would avoid a physical inspection.
There is no suggestion that the wife is seeking financial contribution from the husband to the attendance by Mr A and on that basis I propose to order that appropriate arrangements be made for a person nominated by the wife to attend upon either the husband or his solicitor to inspect the type L goods. In doing so, the wife should not have any expectation that a subsequent application to adduce separate adversarial evidence as to value will necessarily be successful.
SHOULD THE WIFE BE REMOVED AS A DIRECTOR OF D PTY LTD
The husband seeks that the wife be removed as a director of D Pty Ltd.
A summary of the husband’s position is that once the parties separated there remained no good reason why the wife should retain her directorship of the company. D Pty Ltd has value only in respect of the plant and equipment held by it, otherwise it is a corporate vehicle for the husband to operate his consulting business.
The wife has never generated income for the business and should the husband cease his consulting work, there is no separate income being generated. The business holds no employees.
In happier times, the wife did assist in some of the administration including bookkeeping duties. Those activities ceased in February 2013 and following the breakdown of the relationship between the parties and the demonstrable mistrust, the husband considers it inappropriate for the parties to remain as co-directors in circumstances where to discharge the obligations of directors under the Corporations Act 2001 (Cth) (“the Corporations Act”) there should be a cooperative approach to the proper management of the company. It is his case that difficulties have arisen in terms of the wife retaining various books and records of the company with a view to frustrating his operation of the business.
There is some confusion in terms of the management of the superannuation fund by the parties in their capacity as trustees of the fund and D Pty Ltd. The only connection between the husband’s business entity and the super fund is that the business operates from the J Street premises which is owned by the fund.
For her part, the wife seeks to retain her directorship and says that she has not done anything that would see the operation of the company in any way adversely affected. She denies the specific allegations that she has embarked upon a course of conduct designed to frustrate the operation of the business, but in any event both in terms of affidavit material but also the submissions of her counsel, she undertakes that she has not and will not interfere with its proper operation. An example of the wife’s position is demonstrated by the lack of any opposition from her when it was revealed that the husband had placed the income of the company into a new account to which the wife has no access.
It might be argued that even if the parties had a more civil relationship to each other, that there is little point in the wife retaining her directorship in respect of an entity that has little or no value and is in reality only a vehicle to generate the income earned exclusively by the husband via his personal exertion.
I suspect that the wife’s opposition to removal as a director is largely based upon a perceived need to ensure that there is a proper financial relationship between the company and the super fund with the further advantage that as a director she has ready access to the financial statements and other relevant corporate documents pertaining to the business pursuant to Section 290 of the Corporations Act.
On balance, I do not consider it is appropriate for the Court to require the wife to resign as a director simply because the husband seeks it as a matter of convenience.
The husband of course has an alternate pathway. He holds the majority of shares and there is nothing that would stop the husband from taking action to remove the wife in circumstances that would comply with the provisions of the Corporations Act. It is therefore a matter for the husband to take the action that he is entitled to take rather than to seek the Court’s intervention in respect of allegations made by him which are the subject of dispute by the wife.
The husband also does not explain the consequences of the removal of the wife as a director in circumstances where either the Memorandum of Articles of Association would need to be changed to enable the company to operate as a single director company or alternatively, an alternate director would need to be found. That may have certain implication in terms of the inter-relationship of the parties, the company and the super fund.
They are all matters that the husband can consider but at this stage I do not propose to make orders as sought by the husband for the forced resignation of the wife.
PENSION SUM OF $41,939
By letter dated 21 October 2013 being Annexure A to the affidavit of the husband filed 6 May 2014, Q Accountants for the D Superannuation Fund advised the husband that he was entitled to draw down a pension payment for the financial year ending 30 June 2014, an amount that would fall within the minimum sum of $16,120 and the maximum of $41,939.
It is now history that the husband elected to take the maximum amount.
There is an argument between the parties as to whether the husband needed to access the maximum pension payment allowable, but I consider that in these proceedings there is no advantage in canvassing the position adopted by each of the parties in that regard.
The wife was required to co-sign the necessary documents to enable the sum to be withdrawn following the husband’s election. At first she refused to do so and then ultimately the parties reached a consent order made 27 June 2014 which required each of them to sign all necessary documents to enable the sum of $41,939 to be withdrawn from D Superannuation Fund as a pension on behalf of the husband provided that the sum was invested in a joint account. How the money was thereafter to be dealt with is the subject of the husband’s application. Simply put, he seeks that the money be paid to him.
He refers to his financial statement recently filed and draws my attention to the modest pension component that forms the husband’s income on an ongoing basis.
Of course, the amount under consideration is significantly more than has been the subject of prior consent.
Moreover, the parties agree that the pension amount will not be subject to taxation.
Notwithstanding that it has its genesis as a pension payment to the husband, I do not consider that its current status is anything other than property available to the husband.
The husband seeks the money, but proffers no evidence as to how it is to be used. The assumption is that he will use it for his own personal living expenses. The wife seeks to restrain the husband’s access to the money, presumably to preserve the property of the parties.
The husband in effect seeks an order by way of interim or partial property settlement pursuant to Section 79 and 80 (1) (h) of the Act.
In Strahan & Strahan(Interim Property Orders) (2009) 42 FamLR 203, at paragraph 101 Boland and O’Ryan JJ said:-
Section 79 of the Act confers a power to make an order for property settlement. The approach to the determination of an application pursuant to Section 79 is well established by the Authorities. Section 79 (2) provides that an order shall not be made, under the section, unless the Court is satisfied in all the circumstances, that it is just and equitable to make the order. The Court is required in considering what order, if any, it should make, to take into account the respective contributions of the parties referred to in paragraphs (a), (b) and (c) of Section 79 (4); the effect of any proposed order upon the earning capacity of the parties; and matters referred to in Section 75 (2), so far as they are relevant; any other order made under the Act affecting a party or a child; and any child support under the Child Support (Assessment) Act 1989 (Cth). There is a preferred approach to the determination of such an application which involves four inter-related steps which we need not repeat.
The preferable approach without the requirement that the basis for the order sought is “compelling” may be exercised by a succession of orders until it is exhausted.
Their Honours further opined:-
The overarching consideration is the interests of justice. It is not necessary to establish compelling circumstances. All that is required is that in the circumstances it is appropriate to exercise the power. In exercising the wide and unfetted discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to Section 79 is an once and for all order made after a final hearing.
There is no explanation as to how the money is to be used and whether its use may benefit the husband alone or the parties. I suspect the former is the husband’s position.
The husband receives an income not dissimilar to that of the wife. Impecuniosity is therefore not a consideration.
I am uncertain where the interests of justice will ultimately lie. The asset pool is a matter of significant contention and a difficulty arises in the sense that the husband has already indicated his intention to retain the corpus of the superannuation fund simply because it holds the J Street business premises.
At this stage there has been no clear assessment between the parties as to the parameters of the dispute, although I note that the husband seeks that the property of the parties be adjusted as to 65/35 in his favour, whereas the wife seeks almost the reverse namely 60/40 in her favour.
It may be the case that to allow the husband to retain the sum that he seeks will not ultimately result in any prejudice to the wife. That issue however is entirely dependent upon the use to which the husband puts the funds if he is allowed to access them. That has not been established and in circumstances where no explanation has been provided by the husband other than his simple desire to have access to the money, even if I were to take a “narrow view” of the matter, I do not consider that at present the husband has satisfied even the most minimal obligation namely, to satisfy me that I should embark upon an application pursuant to Section 80 (1) (h) on an interim basis as opposed to a final hearing when all of the necessary considerations can be properly considered.
It may be that there are accounting and other issues that impact upon the manner in which these monies should be brought to account. At this stage there is nothing to suggest that there is any adverse taxation implications for the husband, but it seems to me that until the matter can be given some further consideration and the newly nominated accountants become appraised of the relevant issues and provide the report as to the management of the superannuation fund as is now requested, the monies should be held and represent a source from which C Accountants can be paid.
Accordingly, I make orders as appear at the commencement of these reasons.
I certify that the preceding ninety five (95) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 15 September 2014.
Associate:
Date: 15 September 2014
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