YARDSLEY & YARDSLEY

[2019] FamCA 92

FAMILY COURT OF AUSTRALIA

YARDSLEY & YARDSLEY [2019] FamCA 92

FAMILY LAW – PROPERTY – Interim

Family Law Act 1975 (Cth)

APPLICANT: Ms Yardsley

RESPONDENT: Mr Yardsley

FILE NUMBER: SYC 5348 of 2015

DATE DELIVERED: 22 February 2019

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 22 February 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Christie SC

SOLICITOR FOR THE APPLICANT: Barkus Doolan

COUNSEL FOR THE RESPONDENT: Mr Richards

SOLICITOR FOR THE RESPONDENT: Clinch Long Woodbridge Lawyers

Orders and notations

1. Within seven days of the husband’s receipt of his 2018 Annual Bonus Payment and Redundancy Payment, to be received upon the cessation of the husband’s employment with J Ltd in Country D, the husband shall pay or shall cause to be paid to the trust account of Barkus Doolan Family Lawyers on account of the wife’s legal fees the sum of $150,000 and Barkus Doolan Family Lawyers shall be at liberty to apply such monies to the payment of the wife’s unpaid and future costs and disbursements in these proceedings (including senior counsel fees).

2. Commencing from the date of receipt by the wife’s solicitors, Barkus Doolan Family Lawyers, of all funds due and payable to the wife by the husband in compliance with Order 1 above, the operation of the dollar for dollar cost order referred to at paragraph 26 of Order 1 of the interim orders of Loughnan J of 20 July 2016 shall be suspended and shall not be enlivened until the husband pays his legal representatives (including counsel and/or senior counsel) on account of his current unpaid and future legal costs and disbursements in these proceedings a further amount of $150,000.

3. Pending the husband’s compliance with Order 1, the husband is restrained from expending, transferring, encumbering, disposing of and/or otherwise dealing with all of the funds received by him from his employer entity which comprise his 2018 Annual Bonus Payment and Redundancy Payment as referred to in the letter from H Ltd dated 7 November 2018.

4. I note that in relation to the sale price of the Suburb B property, the parties have agreed to enliven Order 8.6 of the orders of 30 April 2018 and that Mr C will be appointed to prepare a valuation report to determine the list price of the Suburb B property.

5. Otherwise, the applications in the wife’s Application in a Case filed on 18 December 2018 and in the husband’s Response to an Application in a Case filed on 15 February 2019 are dismissed.

6. I reserve any question on costs of this application to be determined at the same time as the making of any cost application after final property settlement orders are made.

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 Yardsley & Yardsley 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 SYDNEY

FILE NUMBER: SYC 5348/2015

Ms Yardsley

Applicant

And

Mr Yardsley

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. The wife has filed an Application in a Case dated 18 December 2018 seeking an order that when the husband receives his 2018 Annual Bonus Payment and Redundancy Payment (“the retirement payments”) upon the cessation of his employment in Country D, he pay $238,859.45 to the wife’s lawyers from those monies.

2. Further, the wife seeks that upon that payment, the operation of the dollar for dollar costs order made by Loughnan J on 20 July 2016 (order referred to at paragraph 26 of Order 1 on 20 July 2016) be suspended and not be enlivened until the amount of the payment has been expended on legal costs and disbursements in this litigation.

3. The wife also seeks an order freezing the balance of the retirement payments and an order for discovery in relation to documents associated with the redundancy payments.

4. By way of a Response to the Application in a Case filed 15 February 2019, the husband seeks that from the retirement payments he pay his lawyers $150,000 on account of legal fees.

5. Although it is not strictly necessary because of the continuing operation of the dollar for dollar order, he seeks a further confirmatory order that half of that amount be paid to the wife’s lawyers from his lawyers.

6. The husband agrees to an interim restraining order on the use of the balance of the funds received from the retirement payments until that $150,000 has been paid but otherwise seeks to be free to use them.

7. The husband sought further orders in relation to the sale price of the former matrimonial home (“the Suburb B property”) but the parties have reached an agreement about that, which I will refer to below.

Background

1. Interim orders were made for spousal maintenance on 20 July 2016. The husband was ordered to pay the wife spousal maintenance in the sum of $2,000 per week, together with maintaining the mortgage on the Suburb B property and payment of other outgoings on that property. Also on that day, the court made a dollar for dollar costs order in favour of the wife.

2. On 11 April 2018, I made an order for the payment of arrears in relation to the mortgage on the Suburb B property. On 30 April 2018, I made orders in relation to the sale of the Suburb B property as sought by the wife and consented to by the husband. I made further orders in relation to the wife accessing funds for her legal costs and in relation to how the net proceeds of the sale of the Suburb B property would be distributed after sale including an order that the wife be entitled by interim property settlement order to an amount up to $1.3 million to be used by her in the acquisition of real property to be purchased in her sole name and for the payment of stamp duty. A further order was made that from the proceeds of sale the wife’s arrears, which at that time were in the sum of $92,000, be paid and that the balance of those proceeds of sale be placed in a controlled monies account pending the outcome of the proceedings. The wife was permitted to use the new property as security for a borrowing to assist her to secure the new property and the husband was at liberty to place a caveat on that property. The competing applications for a property settlement order were expedited.

3. In August 2018, directions were made that a single expert provide an updated report as to the current market value of the husband’s interest in share options in H Ltd and any associated taxation issues. The parties agreed to go to mediation.

4. On 17 December 2018, I made a series of directions to prepare the matter for final hearing including directions that the parties file their trial affidavits.

5. The Suburb B property has not sold. When the order was originally made for its sale, the wife estimated that the net assets of the parties were $3,214,722. At that time, the Suburb B property had an estimated valued of around $4 million.

6. After the orders for the sale of the Suburb B property were made on 30 April 2018, the wife did not immediately list the property for sale. In her affidavit filed 20 February 2019, she gives some explanation for the delay but that has not been tested. An agency agreement for the sale of the property was not signed until August 2018 with an estimated selling price between $3.85 and $4.2 million. The Suburb B property has been scheduled for auction on 29 September 2018 and 1 December 2018. Both auctions were cancelled on the advice of the selling agent because there were no registered bidders. The parties dropped the listing price to an advertised price of $3.5 million. On 8 February 2019, the parties agreed to change the listing price of the Suburb B property to $3.1 - $3.2 million with “room for negotiation to be $3.1 worst $3 [million]”.

7. The wife says that she has maintained the Suburb B property at a high level of cleanliness and presentation for the purposes of having open home inspections by potential buyers.

8. There is now no issue between the parties that Order 8.6 of the orders of 30 April 2018, that Mr C set the list price for the Suburb B property, be enlivened.

The wife’s application for $238,859 under s 79 of the Act

1. On 21 June 2018, the husband’s lawyers wrote to the wife’s lawyers informing them that the husband was being made redundant in April 2019.

2. On 7 November 2018, the husband received a redundancy notice which indicated that the husband will receive an annual cash bonus of about $265,000 and a redundancy payment of about $272,000, a total amount of $537,000. There will also be some cash the husband receives in lieu of his usual annual leave entitlement but there is no further detail about that.

3. The wife seeks that she be paid $238,859 on account of outstanding legal fees of $107,785 and projected legal fees of $131,074 (total $238,859). If that happened, that would leave the husband with about $298,000 out of his retirement payments.

4. The position that the husband leaves is as the CEO of J Ltd. He says in his most recent Financial Statement that he is receiving gross income and benefit in the sum of $12,030 per week or $625,500 a year (although the wife asserts it is higher based upon taxation documents which the husband has provided). In respect of the termination of his employment, the husband says that he hasn’t been advised either verbally or in writing as to any reasonable basis for his redundancy. He has not been made any new offer of employment by H Ltd. He has had communications with recruitment consultants and has been advised that it might be 12 months or likely 18 months to 24 months before he might secure a new position. Both children still live in Country D with the husband (Ms E is 23 and working). The husband still has responsibility for the expenses of F who is 17 including his attendance of a private school.

5. The husband has failed to comply with the order for the continuing payment of the mortgage on the former matrimonial home (see paragraph 7.1 of wife’s affidavit).

6. The husband ceased to pay fees to his own lawyers rendering the dollar for dollar order ineffective.

7. The husband has sold shares in the approximate sum of $350,000.

8. The husband has increased his credit card debts by $363,000 ($441,000 - $78,000).

9. The husband’s own accountant Mr L has done a calculation where he has attempted to reconcile the husband’s income and expenses. That reconciliation gives a surplus of about $89,000 which does not take into account the $363,000 that has been expended using credit cards.

10. The husband says that he has debts totalling $899,000, excluding a shortfall if he should sell his motor vehicle. Those debts in summary are:

    a)Outstanding legal fees - $162,000;

    b)Estimated legal fees - $75,000;

    c)School fees - $40,000;

    d)Tax - $200,000;

    e)M Bank overdraft - $192,000;

    f)M Bank credit card - $197,000;

    g)Westpac credit card - $33,000;

    Total - $899,000.

11. As at the date of her first affidavit of 18 December 2018, the wife asserts that the arrears of the interim spousal maintenance order were approximately $117,142, but there was another amount of $17,457 that the wife says the husband might also owe her for some reason that I wasn’t able to discern.

12. The wife also submits that the husband’s tax debt, which he asserts is in the sum of $200,000, is incorrect and has calculated a figure of $58,000 based on information contained in taxation records provided by the husband. The husband promised, but did not deliver, a tax calculation. In those circumstances, I can place little weight on the husband’s estimate of tax in the sum of $200,000.

13. Counsel for the husband makes the point that looking forward from April 2019, when the husband becomes unemployed, if his expenses continue at a rate of $13,412 a week, he will be in serious trouble. That $13,000, of course, includes the $2,000 he is liable to pay the wife by way of spousal maintenance which he is not doing and tax of $2,462 per week for which he will no longer be liable.

14. The wife’s lawyers have been carrying her costs to date. She currently owes them $107,000. They have told her that they are not prepared to continue to act for her if the order that is being sought is not made. The submission is made that the wife is entitled to continue to engage lawyers who know the matter and with whom she is comfortable. I don’t place a large amount of weight on that submission.

15. Looking at the matter on an overall basis, the final property hearing does not throw up issues of huge complexity. I have been told there is no issue of any serious nature in relation to contributions up until the date of separation. Issues have been identified in relation to what the husband has done with funds since separation; his future earning capacity; and the value of any options he might continue to have in the company that he is leaving.

16. The assets, apart from the retirement payments, include the equity that is coming out of the sale of the Suburb B property (hopefully something in excess of $ 2 million) which would go into a new property for the wife to the value of $1.3 million. After the wife is paid for spousal maintenance arrears, the balance of approximately $500,000 will be placed in a frozen account. There is also $700,000 in the husband’s superannuation and an unknown amount that the husband might have in the H share entitlements (but nobody has asserted that that is a large asset).

17. Taking all those matters into account, I find that it is appropriate, just and equitable to make an interim property order in favour of the wife, payable to her lawyers, to be earmarked for her legal costs and disbursements in the sum of $150,000.

18. The wife made no submissions in respect of application number 5 in her Application in a Case filed 8 December 2018 (an application for an order for specific discovery) and that application will be dismissed.

I certify that the preceding thirty-three (33) paragraphs are a true copy of the ex tempore reasons for judgment of the Honourable Justice Watts delivered on 22 February 2019.

Associate: 

Date:  25 February 2019