Verhoeven and Verhoeven

FAMILY COURT OF AUSTRALIA

VERHOEVEN & VERHOEVEN

[2018] FamCA 118

FAMILY LAW – PROPERTY – Interim – Where wife seeks orders for husband to provide further disclosure and pay for cancelled mediation costs associated with husband’s failure and untimely compliance with disclosure requirements –Where wife seeks further orders for husband to pay and indemnify wife for her tax liability for the financial year ended 30 June 2016 – Where parties have a duty to disclose all relevant financial resources – Where husband has persistently failed to comply with fundamental disclosure duty and consent orders requiring such disclosure – Where wife was unable to effectively participate in mediation – Where husband is required to pay the wife’s half of the cancellation fee of the mediation and comply with disclosure obligations – Where accountant is to negotiate a payment plan with the Australian Tax Office in relation to the wife’s tax liability and for this amount to be paid out of the family’s trust account.

FAMILY LAW – COSTS – Where the wife seeks husband to pay costs due to husband’s failure and untimely compliance with disclosure requirements – Where husband submits that he should not have to pay costs due to the wife’s conduct disqualifying her from being awarded costs – Where failure and untimely compliance with disclosure requirements has principally led to this Application in a Case being brought by the wife – Where costs order requiring husband to pay a specific amount is justified.

Family Law Act 1975 (Cth)

Family Law Rules 2004 (Cth)

APPLICANT:

Ms Verhoeven

RESPONDENT:

Mr Verhoeven

FILE NUMBER:

BRC

9509

2016

DATE DELIVERED:

1 March 2018

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Brisbane

JUDGMENT OF:

Forrest J

HEARING DATE:

26 February 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Dr Sayers

SOLICITOR FOR THE APPLICANT:

Rice Naughton McCarthy

SOLICITOR FOR THE RESPONDENT:

Mr Waller
Waller Family Lawyers

Orders

IT IS ORDERED

That within fourteen (14) days of the date this Order, to the extent that he has not already done so, the Respondent Husband shall provide to the Applicant Wife’s solicitors, all relevant documents that are in his possession or control, including the Financial Statements and Taxation Returns for the financial year ended 30 June 2017, for the following entities:
(a)B Superannuation Fund;
(b)C Unit Trust;
(c)D Unit Trust;
(d)E Unit Trust;
(e)F Pty Ltd;
(f)G Pty Ltd;
(g)H Unit Trust;
(h)I Pty Ltd;
(i)J Pty Ltd; and
(j)K Pty Ltd.

IT IS FURTHER ORDERED BY CONSENT

That within fourteen (14) days of the date of this Order, the Respondent Husband shall provide to the Applicant Wife’s solicitor, the following documents:
(a)All documents evidencing the amount for which Lot 2, SP …95, Title Reference …63 was sold and details as to how the sale proceeds were applied.
That the Respondent Husband and the Applicant Wife shall jointly instruct Mr L to provide a short form report containing:
(a)The list of entities which, in his opinion, should be wound up; and
(b)Reasons for the conclusion the entity should be wound up.
That within fourteen (14) days of receipt of the short form report from Mr L, the Respondent Husband and the Applicant Wife will confer to agree on the value of the parties’ interests in the Verhoeven Group and/or the entities of the Verhoeven Group which are to be wound up.
That paragraph (8) of Orders made on 30 November 2016 that commences with the words:
That the Respondent Husband cause the following documents to be provided to the Applicant Wife each month
be varied with the obligation now being on the Respondent Husband to cause the listed documents to be provided to the Applicant Wife’s solicitors each month rather than the Applicant Wife herself.

IT IS FURTHER ORDERED

That within fourteen (14) days of the date of this Order, the Respondent Husband provide to the Applicant Wife’s solicitor, the following documents that are in his possession or control:
(a)All documents evidencing the disposition of the Verhoeven Family Trust’s shareholding in K Pty Ltd in or about December 2017 and the application of any proceeds received;
(b)All documents relating to the payment to the Verhoeven Family Trust of the sum of $149,434.84 as deposited into the said trust’s M Bank Business Cheque account number …89.
That the Applicant Wife shall forthwith instruct Mr L of L Chartered Accountants to apply to the Australian Taxation Office for the Applicant’s Wife’s taxation debt for the year ended 30 June 2016 to be put on a payment plan.
That the Respondent Husband and the Applicant Wife shall cause:
(a)The repayment plan determined by the ATO for the Applicant Wife’s taxation debt to be paid from the Verhoeven Family Trust;
(b)The repayment plan determined by the ATO for the Respondent Husband’s taxation debt for the 2016 Financial Year, in so far as it has not already been paid by the Respondent Husband, to be paid from the Verhoeven Family trust.
That within twenty-one (21) days of the date of this Order, the Respondent Husband shall prepare, file and serve a balance sheet setting out what he contends is all of the property of the parties or either of them, the liabilities of the parties or either of them and the superannuation interests of the parties or either of them, such list to include all of the shares the parties hold directly or indirectly in companies whether those companies be currently trading or not, interests they hold directly or indirectly in trusts, whether they be unit trusts or discretionary trusts and whether those trusts are currently trading or not, and the husband shall on that balance sheet, to the best of his ability, ascribe his opinion as to the value of the interest of the parties or either of them in such property, however his opinion may be formed.
That should the parties not be able to agree on the current net value of all of their interests in property and superannuation within two (2) calendar months of the date hereof, then they shall do all things necessary to cause a jointly instructed single expert accountant (and any single expert real property valuers that are necessary to assist the single expert accountant) to provide a report as to the value of the parties’ interests in property and superannuation as soon as possible thereafter with the costs of such expert reports to be paid for out of funds held in the Verhoeven Family Trust’s accounts.
The Respondent Husband shall within fourteen (14) days of the date of these Orders, pay to the Applicant Wife, by way of contribution towards her legal costs and outlays in these proceedings, the following:
(a)The sum of $1,182.50 being her half of the mediation cancellation fee incurred in December 2017; and
(b)The further sum of $2,500.

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 Verhoeven & Verhoeven 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 9509 of 2016

Ms Verhoeven

Applicant

And

Mr Verhoeven

Respondent

REASONS FOR JUDGMENT

Before me in the Judicial Duty List for determination on Monday, 26 February 2018, were competing applications brought by the Applicant Wife (“wife”) and the Respondent Husband (“husband”) who are parties to substantive property settlement proceedings commenced in this Court by the wife in 2016.
The wife filed an Application in a Case in December 2017 seeking orders for the husband to provide further disclosure of documents, to pay her half share of the costs of a cancelled mediation and to pay the wife’s liability to the Australian Tax Office for the financial year ended 30 June 2016 assessed in the sum of $181,988.80 from a source other than funds held to the credit of the parties in their Self-Managed Superannuation Fund.
The wife filed an Amended Application in a Case on Thursday, 22 February 2018, in which she added the name of one more company in respect of which she was seeking disclosure from the husband.
On that same day, Thursday, 22 February 2018, the husband filed a Response to an Application in a Case. In that, he was seeking orders that the wife cause a named accountant (the accountant who has been acting for the parties and their entities in the past) to apply to the ATO for the wife’s 2016 tax debt to be put on a payment plan and for the debt to be paid from the parties’ family trust’s cash assets. He also seeks an order that $12,500 he has paid towards his own tax debt for the 2016 year, which was assessed at $47,136.18, from his own funds be reimbursed to him from that family trust.
At the hearing of the competing applications, the Court was told that the parties had reached agreement with respect to certain matters but that they remained locked in dispute on some matters. The Court was told that the husband opposed the wife’s application for an order that he pay the entirety of $2,365 being the mediator’s cancellation fee for the mediation that was cancelled by the wife late last year. The Court was also told that the wife was not opposed to orders for the parties to cause the accountant to negotiate with the ATO for the payment of her tax liability on a payment plan, but that she was opposed to the tax being paid from funds held by the parties’ family trust.

Some relevant background

The husband and wife were married for forty-two years. They have three independent, adult children. They separated in or around November 2015.
The husband managed their financial affairs throughout their marriage and has principally done so since they separated. He is and has been a businessman and his businesses and investment activities generated income to support him and the family during the parties’ marriage and to support him and the wife since their children grew up and gained independence. Those activities have also generated wealth for him and the wife. He has continued to be involved in business projects since separation.
The parties hold few assets in their own names, save for cash held in bank accounts. They are beneficiaries of a discretionary family trust which has a corporate trustee of which the husband and the wife are the directors and the shareholders. The wife asserts the husband has not disclosed to her a copy of the trust deed of that family trust so she is unaware of the identity of any person who may, in the trust deed, be given the power to dismiss and appoint the trustee of the trust. At this point in time though, I would be very surprised if the husband is not named as the Appointor or Principal, the person who holds that power and, thus, ultimate control over the trust. That would be easily resolved by disclosure of the trust deed.
The evidence is that the family trust holds interests in many corporate and other trust entities through which the business activities are pursued or invested in.
The parties also have a self-managed superannuation fund which has a corporate trustee of which the husband and the wife are both directors and shareholders. Both parties are over the age at which they can take their superannuation benefits. I understand that they are receiving income from the superannuation fund in the form of pension payments.
It seems as if the parties, or the husband at least, also have interests in many other corporate entities through which the business activities have been carried on, and in some through which several current business projects are being undertaken.
In Orders that were made by the Court on 30 November 2016, with the consent of the parties, the parties agreed that after the sale of the former marital home which was also owned by the family trust, they would both do all acts and things reasonably required to cause the family trust to pay each of them an income distribution of $10,000 (with each party being responsible for paying their own health insurance premiums from that income). According to the wife, she has been receiving that payment each month since that Order was made, but through the parties’ self-managed superannuation fund after payment to the SMSF from the family trust. Presumably, the husband is responsible for ensuring that happens.
The November 2016 consent orders also relevantly placed a number of other obligations upon the husband. Those orders require him to:
(i)cause his Income Protection policy payments (net of tax) to be deposited to the bank account of the family trust;
(ii)pay the costs of fuel, registration, insurance and servicing in relation to a prestige motor car being driven by the wife; and
(iii)pay the costs of the wife’s mobile telephone and internet access to the wife’s residence.
I know nothing more of the basis for the receipt by the husband of income protection insurance policy payments. I do know that it is undisputed that the husband has Parkinson’s disease. The income protection payments may be related to his illness. I can say little more than that about that subject.
The husband did not appear at Court at the hearing on Monday this week. His solicitor tendered into evidence a document from a Brisbane private hospital informing that the husband was currently an inpatient. His solicitor told the Court that he “had a fall” last week. He was, on the basis of that evidence and the representations of his solicitor, excused for not being present at the hearing. His solicitor assured the Court that he had no concerns about the husband’s current mental capacity for providing him with instructions.
There was no evidence from the wife, though she had filed two affidavits in support of her Application in a Case, the husband had failed to comply with the obligations he consented to being ordered to take on in November 2016, referred to above. Most particularly, the wife conceded that she has continued to receive the payment of $10,000 each and every month. There was no evidence that he had been anything other than diligent in meeting his obligation in that respect and none that he had not made any of the payments he is otherwise obliged to make pursuant to those Orders.
The major area of dispute between the parties arises out of their positions with respect to the appropriate finalisation of their property settlement. The wife and her legal representatives assert that she is entitled to 60 per cent of the total net value of their assets and superannuation interests, whatever that might be, having regard to the likely future income stream of the husband from the ongoing projects as they are finalised. The husband and his legal representatives assert that the husband and the wife should share their existing assets equally and divide profit that is received from the current projects as they are finalised, also on an equal basis. In support of this, the Court was told that the husband asserts that their interests in the current business projects cannot be valued.
With respect, I do not accept that the parties’ direct or indirect interests in existing business projects cannot be valued. At the same time though, if it is that those interests are in any way valued by having regard to their future income or profit generating potential, it is, at first blush, difficult to see how the wife could sustain an argument for a 60/40 division of their net assets (including their interests in those current projects) on the basis of the future profit/income stream generated from those projects, particularly given the ages of the parties (the wife is 70 this year and the husband is 69 this year) and the fact that the net asset pool is said to be likely to be valued at several million dollars.
In any event, the wife has maintained a position for some time now, that she is simply not able to formulate, with the assistance of her legal advisers, a sound and reliable position in respect of what constitutes the property interests of the parties or either of them and as to what those interests are worth because the husband has repeatedly failed to provide full disclosure to her. Indeed, she asserts that she has been pressing him on this issue since the interim Orders were made in November, 2016. Her affidavit evidence refers to and exhibits many pages of correspondence between her solicitors and the husband’s solicitors in which the assertions of lack of full disclosure are repeatedly made and responded to.
Ultimately, the wife applied for Orders that included one as follows:
That within seven (7) days of the date of this Order, the Respondent Husband provide to the Applicant Wife’s solicitor, the Financial Statements and Taxations Returns for the financial year ended 30 June 2017 for the following entities:-
a)[B] Fund; (their SMSF)
b)        [C] Unit Trust;
c)         [D] Unit Trust;
d)        [E] Unit Trust;
e)         [F] Pty Ltd;
f)         [G] Pty Ltd;
g)         [H] Unit Trust;
h)        [I] Pty Ltd;
i)         [J] Pty Ltd; and
j)         [K] Pty Ltd.
These are the entities in respect of which she said (when she filed the Application in a Case (and the Amended Application in a Case in respect of K Pty Ltd)) she still had not received disclosure of the Financial Statements and Taxation Returns. Clearly, it must be safely assumed, she had received disclosure that satisfied her in respect of the many other entities in which the parties hold direct or indirect interests, numbering in excess of forty, the evidence reveals.
The wife also sought the following Orders for disclosure:
3.That within fourteen (14) days of the date of this Order, the Husband provide to the Wife’s solicitor, the following documents:-
(a)a list identifying the “dormant” or “non-trading” and the “active” or “trading” entities in which the parties or either of them have an interest;
(b)the Husband’s asserted schedule of net assets and superannuation available for division between the parties; and
(c)all documents evidencing the amount for which Lot 2, SP …95, Title Reference …63 was sold and details as to how the sale proceeds were applied.
At the commencement of the hearing, I was told that some of the documents sought to be made the subject of orders, such as the Financial Statements and Taxation Returns of the B Superannuation Fund had very recently been provided by the husband. Unfortunately, I was not given a list of all of those entities in that list of ten entities set out in order (1) sought by the wife for which the disclosure sought had now been provided, though it was made clear to me on the evidence and in submissions that full disclosure still had not been made in respect of all of those named entities.
I was also informed that the order sought in (3)(a) was no longer sought because that list has now been provided to the wife’s satisfaction. I was informed that the order sought in (3)(c) could be made by consent and that a further order could be made by consent and included as (3)(d). I was told that further could be made in the following terms:
(d)All documents evidencing the disposition of the husband’s shareholding in [K] Pty Ltd in or about December 2017 and the application of any proceeds received.
I was told that the order sought in (3)(b) was opposed.
I was also informed that the following Orders could be made by consent:
(1)That the Respondent Husband and the Applicant Wife jointly instruct Mr L to provide a short form report containing:
(a)The list of entities which, in his opinion, should be wound up; and
(b)Reasons for the conclusion the entity should be wound up.
(2)That within fourteen (14) days of receipt of the short term report from Mr L the Respondent Husband and the Applicant Wife will confer to agree on the value of the parties’ interests in the Verhoeven Group and/or the entities of the Verhoeven Group which are to be wound up.
(3)That paragraph (8) of Orders made on 30 November 2016 that commences with the words:
That the Respondent Husband cause the following documents to be provided to the Applicant Wife each month
be varied so that the obligation is on the Respondent Husband to cause the listed documents to be provided to the Applicant Wife’s solicitors each month.

I have no difficulty in making the Orders by consent as proposed in the form set out in the previous paragraph and in paragraph (3)(c) of the Amended Application in a Case and I will. I do have difficulty making the Order that I was told could be made by consent that I refer to above as proposed paragraph (3)(d).
Evidence tendered by the wife tended to establish that the family trust’s shareholding of 30 shares in K Pty Ltd was disposed of in December, 2017 to a company called N Pty Ltd for a payment of $195,565.16. That same evidence tended to establish that the husband had once owned 100 shares in K Pty Ltd but that he had disposed of those in 2007, many years before the parties separated. That same evidence tended to establish that the family trust had received payment of $149,434.84 from K Pty Ltd at the same time as the family trust received $195,565.16 from N Pty Ltd.
The husband’s solicitor did not attempt to argue that the family trust had not sold its shareholding of 30 shares (one-fourteenth of the share capital in K Pty Ltd, the Court was told) to N Pty Ltd. Indeed, he effectively conceded that was the case from the bar table, though the husband had said nothing of it in his affidavit of 22 February 2018. The solicitor also mentioned from the bar table that balance sheets that were disclosed to the wife revealed a debt owing to the family trust by K Pty Ltd as at 30 June 2017 of around $135,000 and that the second payment evidenced in the family trust’s December 2017 bank statement that the wife put into evidence could represent repayment of that debt. Furthermore, the husband’s solicitor conceded that the husband had not made disclosure in respect of those matters just referred to up to this point in time and that he would rectify that immediately.
Accordingly, I consider the appropriate order to be made in this respect is for the Respondent Husband to disclose all documents evidencing the disposition of the Verhoeven Family Trust’s shareholding in K Pty Ltd in or about December 2017 and the application of any proceeds received. I also consider it appropriate to order that the husband disclose all documents relating to the payment to the Verhoeven Family Trust of the sum of $149,434.84 as deposited into the said trust’s M Bank Business Cheque account number …89. I will so order.
As for the disclosure of the documents of the entities listed in paragraph (1) of the Orders sought in the Amended Application in a Case, I am satisfied that an order should be made.
The husband’s evidence in his affidavit of 22 February 2018, responding to the wife’s assertions that the husband had not provided her with the Financial Statements and Taxation Returns for the 2017 Financial year for the entities all listed in paragraph (1) of the Amended Application in a Case (listed above), was as follows, simply quoting a letter his solicitors had sent the wife’s solicitors early last year:
(i)       [C] Unit Trust;
(A)“The entity no longer owns any property. No further profits to be distributed.”
(ii)     [F] Pty Ltd;
(A)        “Only acts as Trustee – does not trade.”
(iii)     [G] Pty Ltd;
(A)        “Only acts as Trustee – does not trade.”
(iv)     [I] Pty Ltd;
(A)        “Entity never traded. Documents not available.”
(v)      [J] Pty Ltd
(A)        “Entity never traded. Documents not available.”
In relation to those remaining entities:
(i)       The [B] Superannuation Fund;
(A)The 2017 Financial Year, Financial Statements, were with the auditors.
(ii)The [D] Unit Trust;
(A)Is not trading.
(iii)[E] Unit Trust;
(A)I no longer have any control over the entity as I am a minority shareholder. It is [Mr O’s] accountant who prepares the financial statements for this entity.
(iv)[H] Unit Trust;
(A)I am a minority shareholder. I am a (sic) not responsible for preparing the financial statements for this entity. [Mr O’s] accountant prepares these statements.
I do not accept that an assertion that the requested financial statements of the superannuation fund were “with the auditors” was sufficient reason for not disclosing them. In any event, as I have observed, I was told that they have since been provided.
Further, I do not accept that an assertion that a particular unit trust is not trading somehow excuses the obligation to disclose relevant documents. If no “2017 Financial Statements and Taxation Returns” have been prepared or are required to be prepared then the husband should have sworn to that fact. If they have been prepared he must disclose them, whether the particular trust is “trading” or not.
Further, I do not accept that an assertion that he is only a “minority shareholder” in a particular unit trust and that the trust is controlled by a third party who has his own accountant prepare the financial statements for the entity somehow excuses the obligation to disclose relevant documents. If the relevant financial statements have not yet been prepared and provided to the husband then he should have sworn to that fact. If they have been prepared and they are in, or come into his possession, or control, then he must disclose them. If he is not able to require the trustee of the particular unit trust to provide him with the relevant documents he should have sworn to that fact.
I also do not accept that an assertion that an entity “no longer owns property” and that there are “no further profits to be distributed” excuses disclosure of relevant documents if they are in his possession or within his control, and I do not accept that an assertion that a particular company “only acts as Trustee – does not trade” excuses the obligation to disclose any relevant documents pertaining to that company if they are in, or come into the husband’s possession or control.
Accordingly, I will make an order for the husband to disclose, to the extent that he has not yet done so, any relevant documents, including the 2017 Financial Statements and Taxation Returns of the entities listed by the wife, which are in, or subsequently come into the husband’s possession or control.

The Issue of Payment of the Mediator’s Cancellation Fee

By Orders made by consent on 17 August 2017, the parties were to attend mediation prior to 15 December 2017.
The parties agreed to attend mediation with a particular mediator on 7 December 2017 and that was confirmed on 25 October 2017. The wife’s solicitors wrote to the husband’s solicitors on 2 November 2017, informing that some time would be required by the wife to consider the documents that the husband was still to disclose prior to the mediation.
The wife deposed to the receipt by her solicitors of further disclosure from the husband on 9 November 2017, which she said was incomplete. The wife’s solicitors wrote to the husband’s solicitors on 14 November 2017 and told them that the wife was not in a position to meaningfully engage in mediation on 7 December 2017 whilst the husband remained in breach of his disclosure obligations. The wife’s solicitors proposed postponing the mediation until a date in January 2018 and sought the husband’s agreement to approach the mediator in that respect.
The wife said in evidence that the husband’s solicitors had told her solicitors on 16 November 2017 that the remaining disclosure could be provided by the husband in the week commencing Monday, 20 November 2017. The husband did not deny or dispute that evidence of the wife in his affidavit evidence.
Further, the wife said in evidence that she instructed her solicitors to inform the husband’s solicitors that she “would remain prepared” to attend mediation on 7 December 2017, provided her solicitors were provided with certain documents by Tuesday, 21 November 2017. The list of documents she said she required relevantly included the 2017 Financial Statements and Taxation Returns for the B Superannuation Fund, C Unit Trust and the H Unit Trust. The husband accepted that the wife’s solicitors did inform his solicitors of her instructions on 16 November 2017.
As at the date of swearing her affidavit that was filed on 20 December 2017, the wife asserted her solicitors had not received a response to that communication, nor the documents requested. That has not been disputed either.
The wife said that her solicitors informed the mediator on 22 November 2017 that she was not in a position to be able to participate meaningfully in the mediation on 7 December 2017 and asked the mediator to send any cancellation fee to the husband’s solicitors.
The wife said that on the same day, the husband’s solicitors communicated the husband’s refusal to pay all of any cancellation fee as he considered the matter still capable of mediation. Indeed, the husband, in his affidavit evidence, concedes that it was his position that they could still participate in the mediation.
The wife’s solicitors received an invoice from the mediator on 5 December 2017 for the sum of $1,182.50 being half of the total cancellation fee.
Though, I do not know whether the wife has paid the amount invoiced to her solicitors by the mediator for her share of the cancellation fee, the wife maintains that an order should be made that the husband pay that amount.
I consider the amount an outlay incurred by the wife as part of her legal costs and outlays in these proceedings and, as such, that the Court’s power to order the husband to pay it is found in the provisions of s 117 of the Family Law Act (“the Act”).
Of course, that section provides that generally each party to proceedings under the Act shall bear his or her own costs. That is, however, subject to the Court ordering otherwise where it is satisfied the circumstances justify it in doing so. If it the Court is so satisfied, it may make a costs order in terms considered just. Satisfaction in respect of those matters is to be informed by the matters set out in s 117(2A) of the Act. Included in the list of matters in s 117(2A) of the Act, the Court shall have regard to is “the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to … discovery … production of documents and similar matters.”
As I have already observed earlier in these reasons, I do not consider the husband excused from his obligation to disclose relevant documents, or the particular documents requested to be disclosed by the wife prior to mediation taking place, of the three named entities for the reasons advanced to the wife’s solicitors in correspondence sent to them by his solicitors and repeated by him in his affidavit evidence filed in this application. Furthermore, the wife’s evidence that the husband’s solicitors informed her solicitors that the documents could be provided in the week commencing 20 November 2017 was not disputed, as I have already observed. Neither was the wife’s evidence that they were not provided in that week despite that assurance.
I do not consider it unreasonable for the wife to have determined that she would not attend mediation in those circumstances. Mediation of a property settlement dispute in circumstances where one of the parties is unaware of significant facts that would put her or him in a position of being able to be properly advised of her rights, potential entitlements and obligations could only seriously disadvantage that party and make it far less likely for a resolution of the dispute to be achieved, let alone a resolution that would be adjudged to be just and equitable.
I consider that the circumstances justify a costs order being made and that a just costs order would be one that obliges the husband to pay the wife within fourteen days the amount of $1,182.50 being her half of the cancellation fee charged by the mediator. I will so order.

Should the Wife’s tax debt be paid out of the Family Trust’s cash assets?

I have already observed that the wife made it clear in her Amended Application and supporting affidavit filed 22 February 2018 that she opposed her tax liability being paid out of the parties’ self-managed superannuation fund. In fact, in support of this position she deposed as follows:
As I have previously deposed, funds I receive each month from the B Superannuation Fund in accordance with the Orders of 30 November 2016 is currently my only source of income.
In her affidavits, she said nothing in opposition to the tax liability being paid out of the cash assets of the family trust despite the fact that she deposed in her affidavit to having received a copy of bank statement for an account in the name of the family trust for the month of December 2017 that showed a balance of $372,304.10 in that account as at 31 December 2017.
Notably though, the wife deposed to having received that statement, and another in respect of an account of the self-managed superannuation fund, directly by post from the bank and not from the husband and she also deposed to not having received any such statements from the bank prior to receiving these. It seems the statement of the account held by the family trust alerted her to the disposal of the family trust’s shares in K Pty Ltd that the husband now concedes he must provide disclosure for.
In any event, at the hearing on Monday this week, counsel who appeared for the wife informed the Court that the wife now also opposed the husband’s proposal that the wife’s tax liability be paid out of the cash funds of the family trust. When I asked for the explanation as to why she was adopting that position now and had not taken that position in her recently filed affidavits, I was told that it was only now that the wife realised that, in fact, the $10,000 per month she is paid actually comes from cash held by the family trust transferred for superannuation pension related reasons to her through the superannuation fund and that she was now very concerned not to dissipate the funds that are held in the family trust as they are apparently the funds from which the regular monthly payments made to each of the parties are paid.
For the husband’s part, he deposed to the following:
15.The only property I own in my sole name is my interest in the [B] Superannuation Fund and the funds in my bank accounts.
16.I have provided [the wife] with bank account statements for all bank accounts in my sole name and the financial statements for the 2016 and 2017 financial year for the [B] Superannuation Fund which holds my only interest in superannuation.
17.The schedule of assets and liabilities only contains the entities, my bank accounts and my interest in superannuation.
The husband did not depose to the amount of funds he holds in any of his bank accounts, nor did he read a Financial Statement filed in the case. However, it was not asserted by the wife in affidavit material or by her counsel at the hearing that the husband had not provided the bank statements that he said he had. Neither was there an assertion as to the balance of any account other than the cheque account held by the family trust.
The husband did say, however, in his affidavit filed 22 February 2018, that there was $340,000 held in the family trust as at that date. Presumably, that is what remains of the $372,304.10 that was the balance of the cheque account on 31 December 2017, after at least $20,000 (if not $40,000) had been paid out to the parties by way of the $10,000 payments in the meantime.
The husband also said in his affidavit that he was assessed as having a tax liability for the 2016 financial year, but that it was only $47,136.18 compared to the $181,988.80 of the wife. He explained that those tax debts arose from the capital gain recorded on the sale of investments that were held in the parties’ respective names, although all of the proceeds of sale were used to pay off liabilities and the party retained none of the proceeds.
The husband said that he has entered into a payment plan with the ATO to pay his debt off and has been paying it off at $2,500 every two months since May, last year, although a document from the ATO which he attached to his affidavit suggests he has actually been required to pay that amount each month and some marks on that document suggest that he has made those monthly payments. However, he said in his affidavit that he has paid a total of $12,500 of his tax debt to this point in time (even though it appears that may be a mistake and that he could have actually paid more than that) and deposed to having paid that each time out of the $10,000 payment that he has been receiving each month pursuant to the 2016 Orders.
The husband proposes that the parties’ accountant negotiate with the ATO for the wife’s tax debt to be paid by a repayment plan and asserts that the accountant is confident of being able to achieve success in those negotiations. The husband proposes that the repayments for that tax debt and for his much smaller tax debt be paid out of the cash funds held in the family trust’s account, currently said to be around $340,000. He also proposes that he personally be reimbursed for the $12,500 that he has already paid from the funds he has been paid on a monthly basis from the family trust, apparently just to even things up between him and the wife. His proposal is seemingly premised on acceptance of the tolerably clear fact that the two tax debts are debts of the parties arising out of the relationship that should be paid by the capital and income of both parties at this stage of the proceedings.
I asked counsel for the wife for his submissions as to why the husband’s proposal for the tax debts to be paid from family trust funds should not be accepted, particularly when there is absolutely no evidence of there being any other source from which the debts could be paid and no evidence that the husband was paying his debt from any other source. Counsel’s submission in response was twofold. He submitted that the family trust’s funds appear to be the source of funds from which the payments of $10,000 per month are paid and that such payments would exhaust the balance of the family trust’s account (there being no other payments out of that account) within seventeen months. His submission in this respect was essentially that the proceedings could not necessarily expect to be concluded in that time frame and, without more, the wife had a right to be concerned about the maintenance of her $10,000 per month income in the meantime.
The second part of his submissions, if I have understood it correctly, was based around the apparent inability of the husband to meet his disclosure obligations and a suspicion that there might be funds held elsewhere in other entities not yet disclosed to the wife or discovered by her, and that preservation of the family trust’s assets now known to the wife was necessary so as to preserve capital that she could currently see.
Counsel pointed out the husband’s failure to disclose anything about the family trust’s sale of its shares in K Pty Ltd in January, from which some of the approximate sum of $345,000 banked into the account was apparently sourced. He also pointed out the evidence that supports a finding that the husband has purchased an interest in a retirement living complex in Brisbane, about which the wife said in her affidavit she had heard “a rumour” and about which the husband had not yet disclosed any documents according to the wife. Finally, counsel pointed out that there were still around four entities in which the parties had interests for which the husband had made no disclosure whatsoever, a factor, he submitted, that raises concerns about whether or not there may be unknown assets.
Ultimately, counsel for the wife submitted that these matters should cause the Court to take a “robust” approach and simply order the husband to cause the wife’s tax debt to be paid, but from funds other than those held in the family trust.
The husband’s solicitor submitted that there is just no evidence of there being any other “funds” from which the tax debt could be paid. He pointed out that there is no evidence that the husband has not complied with the obligations cast upon by the November 2016 Orders to cause monthly payments of $10,000 to the wife and for some of her expenses to continue to be paid and submitted that there is no reason to conclude that he will not continue to make those payments in the future.

I accept that there is some merit in those submissions. There is apparently no restraint on the husband, prohibiting him from accessing funds in the family trust’s account. Prima facie, he has not acted in a way that has stopped the wife being supported from the parties’ capital and income to date. It just appears that the burden of compliance with disclosure obligations has been hard for him to bear. He complains that he has had to disclose over sixteen hundred documents, but as I said at the hearing, if a person has an obligation to disclose documents that number in the thousands, that person simply cannot throw their hands up after having disclosed sixteen hundred and say “surely, I have disclosed enough”.
I do not consider that there is enough evidence in this case, or even such a lack of evidence, for me to act “robustly” and just order the husband to pay the wife’s tax bill from anywhere other than the family trust’s account. I will not do that. Instead, I will make Orders that permit the accountant to negotiate a payment plan with the ATO and for any payments in respect of that tax debt to be paid out of the family trust’s account. I will also order that any further repayments in respect of the husband’s tax debt also be paid out of the family trust’s account. I will not order that the husband be reimbursed the $12,500 that he says he has already paid towards his own tax debt from his own $10,000 per month payments out of the funds in the family trust. I am satisfied that he was clearly prepared to make his own payments from his own funds before the wife’s application for her tax debt to be paid from their joint assets. If he wishes to revisit that determination, he can raise it again with the Trial Judge who can make the determination against a backdrop of a full understanding of their actual financial position.
I also consider it appropriate, in the circumstances of this case as it has been presented to me, that an order be made requiring the husband to prepare, file and serve on the wife a balance sheet of what he contends is all of the property of the parties or either of them, the liabilities of the parties or either of them and the superannuation interests of the parties or either of them, such list to include all of the shares the parties hold directly or indirectly in companies whether those companies be currently trading or not, interests they hold directly or indirectly in trusts, whether they be unit trusts or discretionary trusts and whether those trusts are currently trading or not, and the husband shall on that balance sheet, to the best of his ability, ascribe his opinion as to the value of the interest of the parties or either of them in such property, however his opinion may be formed.
I am also satisfied that an order should be made that obliges the parties then to attempt to agree on the extent of their interests in property and superannuation and the value of those interests and, failing agreement, to then instruct a single expert accountant (and real property valuers as required) to provide them with a valuation of their interests. In this way, this dispute that has now languished in this Court’s list for over 12 months without even making it into the pool of matters awaiting listing for trial may be able to be advanced towards finalisation. The costs of any single experts are to be paid out of the funds of the family trust as well.

Costs

At the end of the hearing, I called for submissions from the parties in respect of the costs of the Application in a Case and the hearing before me.
Counsel for the wife, submitted that if the wife is successful in her application the husband should be ordered to pay her costs. He referred to the fact that the husband’s failure to fully disclose and to disclose in a timely fashion was what forced the wife to bring the Application in a Case.
The husband’s solicitor submitted that if the husband is not wholly unsuccessful in respect of all of the matters being determined that he should not have to pay the wife’s costs. He also submitted that the wife’s conduct in respect of the litigation should disqualify her from being awarded costs. He argued that the wife keeps asking for disclosure every year and has never asked for the appointment of a single expert valuer to assist in determining the value of the parties’ interests in the numerous entities.
It is the case that the husband has not been wholly unsuccessful in respect of the matters the Court has had to determine in these interim proceedings. Indeed, he has succeeded on some points that were opposed by the wife. However, I am satisfied that the husband’s failure to disclose and/or the untimely way in which he has dealt with disclosure have led, principally, to this Application in a Case being brought by the wife. His refusal to pay the mediator’s cancellation fee is something I have determined to have been unreasonable in the circumstances.
I am satisfied that the circumstances justify making a costs order that obliges the husband to pay something towards the wife’s legal costs having regard to the work her legal representatives have been put to due to the husband’s reluctance or recalcitrance in respect of disclosure. I consider that making an order pursuant to Rule 19.18(1)(a) of the Family Law Rules for the husband to pay a specific amount to the wife by way of a contribution towards her costs of and incidental to the Application in a Case that I have heard and determined is appropriate. I consider that a figure of $2,500 is sufficient contribution in the circumstances. I am satisfied that ordering him to pay this amount, plus the wife’s share of the cancellation fee for the mediation is a just order and hopefully will encourage the husband to meet his disclosure obligations as and when he is expected to, so that this dispute might be able to be finalised as soon as possible.
I make the orders set out at the commencement of these written reasons.

I certify that the preceding seventy-seven (77) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Forrest delivered on 1 March 2018.

Associate:

Date: 1 March 2018

[2018] FamCA 118

1 March 2018

Key Legal Topics

Areas of Law

Family Law

Civil Procedure

Legal Concepts

Discovery

Costs

Remedies

Procedural Fairness

Standing