Wallis and George

[2011] FamCA 525

FAMILY COURT OF AUSTRALIA

WALLIS & GEORGE [2011] FamCA 525

FAMILY LAW - PROCEDURAL – Review of orders made by the Registrar – Costs of appointing single expert

Family Law Act 1975 (Cth)

APPLICANT: Mr Wallis

RESPONDENT: Ms George

FILE NUMBER: SYC 2871 of 2008

DATE DELIVERED: 23 June 2011

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Le Poer Trench J

HEARING DATE: 15 June 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Millar

COUNSEL FOR THE RESPONDENT: Mr Wahaab

Orders

1. Order 6 made by Registrar Campbell on 6 April 2011 is discharged.

2. Order 1 made by Registrar Campbell on 6 April 2011 is extended to include the accounts for the year ended 30 June 2011. Further the parties are to instruct Mr S to complete the work required by order 1 of 6 April 2011 and any orders made herein, by 1 August 2011 or such later date as the parties may agree upon with him.

3. The cost of the work to be carried out by Mr S pursuant to order 1 made by Registrar Campbell on 6 April 2011 and any orders made herein, be paid by each entity referred to in that order in the first place and to the extent that there be insufficient funds available from that source to meet the cost, then, the parties are to jointly pay the shortfall by drawing against the joint mortgage redraw facility number … which the parties hold with AMP Bank, such facility being secured against the property at B Street, Sydney Suburb 1.

4. Any apportionment between the parties of the cost paid to Mr S pursuant to these orders is to be a matter to be determined by the trial judge in the final hearing should the parties so desire.

5. The husband is to cause a duplicate copy of the registration papers for the Holden Commodore motor vehicle registered number “…” to be delivered to the wife’s solicitor within 7 days from the date hereof to enable the wife to renew the current registration for the vehicle when it falls due.

6. I make orders pursuant to paragraphs 3, 7, 8 and 9 of the wife’s response to an application in a case filed 1 June 2011 as set out hereunder:

   ...

   3. That forthwith the husband do all things and sign all documents necessary to re-registrar the company [P Pty Ltd] with the Australian Securities and Investment Commission (“ASIC”) BY NO LATER THAN 1 June 2011 and pay all monetary amounts required by ASIC to cause [P Pty Ltd] to be registered.

   …

   7. That in relation to the work that [Mr S] is to undertake, each of the parties are to forthwith instruct their solicitors to sign the letter of instruction prepared by York Family Law dated 16 May 2011 a copy of which is annexed hereto and marked with the letter “A”. In addition, that both parties forthwith instruct [Mr S]:

   a) To provide timesheets to the parties solicitors for all work he will undertake in accordance Order 1 of the Orders of 6 April 2011;

   b) To provide to the parties solicitors the tax portal for [P Pty Ltd] from 1 July 2000 to date; and

   c) To produce at the completion of this work all source documents that he used in the preparation of the Financial Statements by producing the same to the Exhibits Section, Family Court of Australia at Sydney.

   8. That to give effect to the 6 April 2011 orders:

   a) the husband is to provide in a timely manner all documents and information to [Mr S] to enable [Mr S] to prepare and complete work required of him in accordance with order 1 of the April 2011 orders;

   b) Each of the parties is to comply in a timely manner with requests for inspection of the real estate, jewellery and artwork and the number plate by the experts to be appointed.

   9. That the wife’s costs in relation to the Orders made by Registrar Campbell on 6 April 2011 be reserved to the final hearing.

7. Subject to a change in the particulars of the mortgage redraw facility so as to identify it by the number …, an order be made as sought by the wife in paragraph 4 (and its sub paragraphs) of the response to an application in a case filed by the wife on 1 June 2011 as set out hereunder:

   4. That the parties forthwith do all acts and things necessary to cause a draw down against the mortgage redraw facility currently in place in favour of the applicant husband  and the respondent wife in mortgage no. […] with AMP Bank Limited secured against the former matrimonial home situate at and known as [B Street, Sydney Suburb 1], NSW and being the whole of the land in Certificate of Title Folio Identifier […] such that the draw down take place in a timely manner and upon receiving tax invoices to pay for the following:

   a) all costs for work contemplated in Order 8 of the Orders made by Registrar Campbell on 6 April 2011.

   b) the monies owing by the wife to Citibank Limited for credit card account no. […] in the sum of $6,646.

   c) the monies owing by the wife on her Westpac Mastercard in the sum of $6,199.

   d) the monies owing by the wife to Westpac in the sum of $31,000.

8. The payments made to the wife as required by order 7 hereof be taken into consideration in the final hearing of the parties’ property proceeding and a determination as to whether the payments be designated as spouse maintenance or partial/interim property distribution be made at that time.

9. Paragraph 6 of the wife’s response to an application in a case filed on 1 June 2011 is dismissed.

10. The proceedings are listed for further mention at 9.00 a.m. on 19 August 2011. By that date the parties anticipate that Mr S’s work will be completed. On that day the requirement for valuation of the entities for which Mr S has prepared financial statements may be raised by either party.

11. The Court notes the parties may choose to request Mr S to carry out the work necessary to calculate any tax liability which may repose with any of the entities referred to in order 1 made by Registrar Campbell on 6 April 2011 or in the parties associated with loan accounts in any of those entities.

12. On the application of the wife made orally to the Court on 15 June 2011, orders 4, 5, 6 and 7 made by Registrar Campbell on 6 April 2011 are discharged.

13. In relation to a subpoena issued by the wife against the husband the Court notes that the husband has provided to the Court a photocopy of his 2011 diary. The only omissions from that photocopy are completely blank pages and pages with notes of communications between the husband and his solicitor in relation to these proceedings. On the husband’s application the Court restricts access to the photocopy of the husband’s 2011 diary to the wife’s solicitor, at this time, and reserves to the wife leave to apply for further access to the document.

IT IS NOTED that publication of this judgment under the pseudonym Wallis & George  is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 2871 of 2008

Mr Wallis

Applicant

And

Ms George

Respondent

REASONS FOR JUDGMENT

1. Before the Court is an application in a case filed by Mr Wallis (“the husband”) on 19 April 2011 and a response to that application in a case filed by Ms George (“the wife”) on 1 June 2011.

2. By his application the husband seeks to review orders made by Registrar Campbell on 6 April 2011. The orders of 6 April 2011 appear in a document titled “Order 6 April 2011 AMENDED PURSUANT TO THE SLIP RULE 21 APRIL 2011.”

3. The orders, in broad terms, provide for the parties to appoint Mr S, accountant, to prepare financial statements and other relevant financial documents for three entities namely, the Wallis Family Trust, Wallis Partners Pty Limited and P Pty Ltd for the financial years ended 30 June 2007 to 30 June 2010 inclusive. Other procedural orders are made relative to valuation of other assets and in particular an order was made requiring the husband to fund the expenses of the single expert appointed for the valuation of several of the parties’ assets.

4. The principal ground upon which the husband seeks to review the orders is that the Registrar required that he be solely responsible, in the first place, for the payment of the costs which may be incurred by experts appointed pursuant to those orders. It is the husband’s case that he does not have the resources to be able to meet such costs.  He seeks that the cost be paid by the parties jointly extending their liability to AMP Bank Limited by operating a redraw facility they hold with that bank. The facility is secured over the former matrimonial home at B Street, Sydney Suburb 1 (“the former matrimonial home”).

5. In addition to the orders sought by the wife in her response to an application in a case, the wife seeks that orders 4 to 7 inclusive made on 6 April 2011 be discharged. Those orders required the parties to jointly appoint a single valuer for the purpose of valuing the parties’ interest in P Pty Ltd, Wallis Partners Pty Limited and the Wallis Family Trust. Other specific tasks were assigned to the single expert relative to tax liabilities of the parties and/or the entities. The quantum of loan accounts relating to the parties was also to be ascertained. The husband was to be responsible, in the first instance, for meeting the cost of the valuation work.

6. Included in the orders, sought by the respondent wife, are orders which, subject to the burden of payment associated with the orders being removed from the husband, the husband does not oppose. Those orders are contained in paragraph 3, 4 (a), 7, 8 and 9.

7. The husband says that in relation to order 4(e) made on 6 April 2011 it will be necessary for the parties to have Mr S ascertain that information (in respect of tax liabilities) before the matter could be concluded.

8. In the determination of this application the husband relied on the following documents:

   a)Application in a case filed 19 April 2011 by the husband;

   b)Affidavit sworn 18 April 2011 by the husband;

   c)Financial statement sworn 18 April 2011 by the husband; and

   d)Financial questionnaire filed by the husband.

9. The wife relied on the following documents:

   e)Response filed 1 June 2011 by the wife;

   f)Affidavit sworn 1 June 2011 by the wife;

   g)Financial statement sworn 10 June 2011 by the wife;

   h)Order of the Court made 6 April 2011 as amended under the slip rule on 21 April 2011;

   i)Joint balance sheet dated 1 March 2011;

   j)Application for final orders filed 16 May 2008 by the wife;

   k)Response to application for final orders filed 12 June 2008 by the husband; and

   l)Financial questionnaire filed by the wife.

Short Background Facts

10. The parties commenced cohabitation in about April 2001 and were married in July 2001. They separated finally in about February 2008. The husband is 51 years of age and the wife is 48 years of age. Both are engaged in the property sector. The husband also has employment as a hospitality worker.

11. The parties have two children, Z who is 9 years of age and Y who is 7 years of age. The wife is the mother of a child from a former relationship J who is now 15 years of age and who resided with the parties during the cohabitation.

12. The financial questionnaires filed by each of the parties disclose that they each had assets of some value at the commencement of their cohabitation. The difference in the net value of their respective assets at the time of commencement of cohabitation, as reported by each, is not significant.

13. The parties cohabitated for 7 years and throughout the marriage both parties worked and the wife was the principal home maker and parent.

14. During the cohabitation the parties were engaged in the property sector. At the time of separation the parties jointly owned a property at B Street, Sydney Suburb 1 which, pursuant to the joint balance sheet, has a value of somewhere between $1,050,000 and $1,350,000. The husband otherwise owns two properties the value of which are not great.

15. The wife has identified that during the parties’ cohabitation the husband drew approximately $800,000 from the family trust. She claims the husband has not accounted for that expenditure. The wife’s case is that if the total amount of those drawings are added back to the balance sheet there would be insufficient funds in the remainder of the parties’ assets to service the amount of division of the parties’ assets which the wife is seeking.

16. The entities referred to earlier in these reasons have not had relevant accounting records completed for the years ended 30 June 2007 to current date. The parties seek Mr S, accountant, be appointed to complete the relevant statutory and accounting records for the corporations and the trust up to and including 30 June 2011. They further seek that Mr S complete that work by the end of July 2011.

17. Both parties express concern about the cost of the valuation work which was required by the orders made 6 April 2011. Whereas both agree that the real estate and other chattels need to be valued they are reticent to incur the cost associated with valuation of the corporate and trust entities unless and until they have had the opportunity to look at the updated accounts for those entities.  There is no quote which has been provided to either party illustrating an estimation of the cost that may be incurred in carrying out the valuation work of those entities. The cost of updating the financial records and completing the statutory accounts for the corporations and the trust is estimated to be somewhere between $5,000 and $12,000.

18. It is the husband’s case that he does not have the capacity to meet the cost of Mr S completing the accounts for the various entities up to and including 30 June 2011. It is implicit in his case that those entities are not capable of meeting the cost from their own resources.

19. The wife is not able to point to a particular fund of money which might be available to meet the costs of Mr S, as estimated by him. As stated earlier, the wife says the husband has withdrawn money from those entities during the course of the cohabitation and since and has not accounted for that expenditure. The wife says that the Court should assume, in those circumstances, the husband still has funds available to him to meet the relevant expense.

20. The joint balance sheet illustrates that the parties have each expended considerable sums on legal costs. The husband, in his affidavit, recites information that the wife’s legal fees may now be in the order of $150,000.

21. It is common ground between the parties that they have redraw facilities on their mortgages registered against the former matrimonial home at Sydney Suburb 1 That property has a value as referred to earlier in these reasons and has total registered liabilities of about $270,000. There is no issue between the parties that the amount permitted on the redraw would not be sufficient to meet the anticipated costs of Mr S in completing the accounting works for the entities. In his submissions in relation to the issue of whether the husband should meet the costs of the work to be carried out by Mr S, the wife drew my attention to the disparity in the evidence provided by the husband and that set out by her in her affidavit. In particular in relation to the husband’s earnings from his hospitality work. Further the wife annexes the husband’s tax return as annexure “W” to her affidavit. That tax return is for the year ended 30 June 2010. That document illustrates that the husband had three sources of income for that year. They are Property Business 1, hospitality and Property Business 2. He had a gross income of $144,099 of which $30,990 had been withheld as tax. His total taxable income was $120,894. That translates to $2,324 per week. The wife says the husband’s financial statement shows his current income at $1,731 per week. She says there is no explanation for the apparent drop in income between the two tax years.

22. In support of her case the wife tendered a number of documents which I understand her to say would support a conclusion that the husband’s available income and resources is greater than that stated by him in his financial statement. In the absence of cross examination and adequate submissions in respect of those documents it is difficult to see how they might establish that fact.

23. The reality is that in the absence of a final hearing the wife, if she ever has the ability to do so, has very little prospect of being able to illustrate any failure to disclose by the husband or any inappropriate expenditure by him which might be brought to account at a time of division of the parties’ assets between them.

24. These proceedings were commenced in 2008 and need to be progressed to a final hearing as soon as possible. Given the projected cost of having Mr S carry out the accounting work for the named entities, the history recited by me herein and the current extent of the parties’ assets it is hard to see how either party could be substantially prejudiced by requiring that the costs of any work carried out by Mr S first be met from the resources of the subject entities and otherwise met by the parties jointly drawing against the redraw facility on the mortgage over the former matrimonial home. In those circumstances I propose to so order.

25. The question of further valuation of the corporate entities is a matter which needs to be carefully considered. As I understand the husband’s case, it suggests that the corporate and trustee assets are an empty shell. Neither party should expend any further funds on having those entities valued if, on their face, having seen the updated financial information provided by Mr S, it appears unlikely that a valuation will provide a benefit to either of the parties which exceeds its cost. I propose therefore at this stage to discharge the order requiring the valuation of those entities and it will of course be open to either party to renew an application for same once the material is provided by Mr S.

26.  The wife seeks an order that the husband transfer to her his interest in a Holden motor vehicle with registration plates “[…] .” That vehicle is currently used by the wife and she is concerned that the husband will dispose of the registration plates which she says are a valuable asset. The husband opposes the transfer on the basis that he is concerned the wife would dispose of the plates and they are of particular value to him given that he works in the property sector. There is an issue between them as to whether or not the husband delivered the current registration papers for the subject vehicle to the wife in the last 14 days so that she could renew the registration of the vehicle. The wife acknowledges that she did receive an updated green slip which the husband provided to her.

27. The husband says he is able to produce a duplicate copy of the registration papers to enable renewal and that he can provide those to the wife’s solicitors forthwith. In my opinion, the transfer of the registration of the subject vehicle is not something which needs to be dealt with on an interlocutory basis and can abide the final determination. Clearly, in the interim, neither party should dispose of the registered number plates or the vehicle without the consent of the other. I propose to order that the husband within 7 days provide the registration papers for the subject vehicle to the wife’s solicitor sufficient to enable her to renew the registration of that vehicle.

28.  The wife seeks that part of the redraw against the mortgage be used to meet outstanding debt of hers accrued since the separation. She owes $6,646 to Citibank Limited, $6,199 to Westpac MasterCard and $31,000 to Westpac Bank. The husband opposes that application.

29. Given the history of the parties’ contributions to the marriage and the extent of the current assets they hold, I consider it is unlikely that prejudice would flow to the husband in the final determination of the division of the parties assets should the order now sought by the wife be made. The distribution of the asset to the wife as she now seeks can be taken into consideration in the making of final property orders. I propose therefore to make the order sought by the wife together with a direction that the payment be taken into account at the final property hearing.

30. The husband produced to the Court, in answer to a subpoena issued by the wife, a photocopy of his 2011 diary. He had not copied pages which were blank or pages which had entries noting the content of communication with his solicitor relative to the current proceedings. The husband says the diary contains sensitive information of a commercial nature. He says both the parties work in the property sector and in the same general area. He is concerned that some of the proposals he is working on with potential clients and which are noted in his diary may be used by the wife for her own commercial gain. Such behaviour, if engaged in by the wife, would be likely to give rise to other proceedings in the Court.

31. I propose in the first place to restrict the inspection of the husband’s diary to the wife’s solicitor. Should it be necessary to extend the inspection leave to include the wife then I anticipate the wife’s solicitor will make such application. It is hard to see, at this time, why the Court would ultimately refuse access to the wife. However, I have not yet heard that application and it may be that the husband can direct the Court to fact or authority which is compelling.

32. The orders of the Court will be as set out earlier in this judgment. 

I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Le Poer Trench  

Associate: 

Date:  23 June 2011