Aitken & Aitken (No 4)
[2022] FedCFamC1F 646
Federal Circuit and Family Court of Australia
(DIVISION 1)
Aitken & Aitken (No 4) [2022] FedCFamC1F 646
File number(s): SYC 5021 of 2019 Judgment of: WILSON J Date of judgment: 7 September 2022 Catchwords: FAMILY LAW – MAJOR COMPLEX FINANCIAL PROCEEDINGS LIST – parties unable to reach a joint position on minutes to reflect reasons for judgment – consideration of competing orders sought. Legislation: Corporations Act 2001 (Cth) ss 257A and 257Y Cases cited: Aitken & Aitken (No 3) [2022] FedCFamC1F 496
Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300
De L v Director-General, NSW Dept of Community Services (No 2) (1997) 190 CLR 207
Scott v Alvarez [1895] 1 Ch 596
Smith v New South Wales Bar Association (1992) 176 CLR 256
Division: Division 1 First Instance Number of paragraphs: 94 Date of last submissions: 23 August 2022 Place: Melbourne Counsel for the Applicant: Mr N. Ford Solicitor for the Applicant: Nolan Lawyers Counsel for the Respondent: Mr S. Lloyd SC Solicitor for the Respondent: Avondale Lawyers ORDERS
SYC 5021 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS AITKEN
Applicant
AND: MR AITKEN
Respondent
order made by:
WILSON J
DATE OF ORDER:
7 september 2022
THE COURT ORDERS THAT:
1.On or before 4:00pm on 21 September 2022 the parties have liberty, if they wish, to make further submissions on anything arising from these reasons.
2.On or before 4:00pm on 28 September 2022 I direct the parties to bring in a minute giving effect to these reasons.
3.The further hearing of this proceeding is adjourned to 10:00am on 12 October 2022 for mention in the Major Complex Financial Proceedings List.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b)) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Aitken & Aitken has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
WILSON J
Following the delivery of judgment after trial in this proceeding, I directed the parties to bring in a minute that gave effect to those reasons by 27 July 2022.[1]
[1] Aitken & Aitken (No 3) [2022] FedCFamC1F 496.
The parties were unable or unwilling to agree on orders that gave effect to my reasons. Each provided a separate minute. On 16 August 2022 I heard the parties on their respective contentions for each order a draft of which was formulated by counsel for the wife to which Senior Counsel for the husband responded with one and a half pages of submissions.
These reasons address the competing contentions of the parties. Paragraph numbering is from the husband’s proposals.
Definitions
No objection was taken to the introductory portion so the passages in alphabetical identification A to I remains.
Paragraph 1 – Joinder
The joinder of Aitken Pty Ltd as trustee for the Aitken Unit Trust was not in issue. An order in terms of paragraph 1 of the draft should be made.
Paragraph 2 – SUBURB C PROPERTY
The wife proposed an order for the transfer by the husband to the wife of his interest in the property known and described as B Street, Suburb C in the State of New South Wales, being the whole of the land more particularly described in Certificate of Title Folio Identifier…. The wife’s counsel submitted that paragraph 140(a) of my 15 July 2022 reasons addressed the matter.
The husband did not make any submissions on point. In those circumstances an order in the form recorded in paragraph 2 of the draft orders is appropriately made.
Paragraph 3 – SUBURB F PROPERTY
The proposal in paragraph 3 related to the wife transferring to the husband her interest in the real property known and described as E Street, Suburb F in the State of New South Wales, being the whole of the land described in Certificate of Title Folio Identifier…. The genesis of the proposal was paragraph 140(c) of my reasons dated 15 July 2022. The husband made no submissions to the contrary. In those circumstances it is appropriate for an order in terms of paragraph 3 to be made.
Paragraph 3A – superannuation
In this paragraph the parties proposed the wife to receive the base amount out of the interests of each in the Aitken Family Superannuation Fund. Her entitlement in that fund was to be correspondingly reduced. For the purpose of ascertaining the base amount, paragraph 3A proposed that it was the totality of funds held as at 15 March 2022 in a K Bank term deposit account ($1,142,332), Westpac account …94 ($2,200) and Westpac account …07 ($104,041).
As nothing was said in opposition to paragraph 3A, orders should be made in accordance with it.
Paragraph 4 – superannuation
No issues was taken in relation to paragraph 4. Orders should be made in accordance with paragraph 4.
Paragraph 5 – superannuation
No issue was taken in relation to paragraph 5. Orders should be made in accordance with paragraph 5.
Paragraph 6 – superannuation
This paragraph has already been addressed in relation to paragraph 3A.
Paragraph 7 – superannuation
No issue was taken in relation to paragraph 7. Orders should be made in accordance with paragraph 7.
Paragraph 8 – the AITKEN UNIT TRUST LOAN
Aside from the date once suggested of 30 June 2022 being altered to 1 December 2022, no issue was taken about the details in paragraph 8. On the basis that the relevant date is 1 December 2022, orders should be made in accordance with paragraph 8.
Paragraph 9 – transferring properties or paying a specific sum
A substantive dispute emerged in respect of paragraph 9. It invited attention to paragraph 140(c) of my reasons. In that paragraph I recorded that the wife should have the sole legal and beneficial ownership in B Street, Suburb C and the husband should have the sole legal and beneficial interest in AA Street, Suburb BB. In addition the wife was to transfer to the husband her legal and beneficial interest in all other land owned by the parties.
To give effect to that intendment the wife identified several properties. They were –
(a)J Street, Suburb H valued at $4.6 million;
(b)2 G Street, Suburb H valued at $3.2 million;
(c)1 G Street, Suburb H valued at $1.52 million;
(d)UU Street, Suburb H valued at $8.9 million; and
(e)3 AA Street, Suburb BB valued at $4.5 million.
The total value of those properties was $22.72 million.
The husband proposed a different collection of properties contending that the wife was indifferent about which properties she would transfer.
In addresses on 16 August 2022 Mr Ford of counsel for the wife submitted that the list of properties identified by the wife was, in fact, significant because the tax expert in this case who gave evidence, Mr XX, identified the properties listed by the wife as having taxation implications whereas the list identified by the husband had not been considered by Mr XX in connection with taxation implications. Further, Mr Ford submitted that the value of the properties urged by the husband was $18,235,000 and no evidence existed on that point.
Mr Lloyd SC submitted that the Division 7A issue was not necessarily solved by identifying the properties nominated by the wife. Mr Lloyd further submitted that the wife was indifferent about the properties to be transferred in order to satisfy the Division 7A debt. Mr Lloyd submitted that the collective values of the properties suggested by the husband are close in value to the debt. Mr Lloyd submitted that Mr XX is not the arbiter of the properties that are to be used to meet the Division 7A debt.
Mr Ford replied submitting that the Division 7A debt stood at $17.8 million. Mr Ford argued that the husband earlier contended that if the $18 million was insufficient to satisfy the tax indebtedness then a dividend could be struck. However, Mr Ford argued that there no longer exists on the husband’s proposal a mechanism to be activated in case it hereafter transpires that the $18 million is insufficient.
By way of further reply, Mr Lloyd SC contended that consistent with the parties’ joint approach, I found that the entirety of the parties’ assets was to be dividend on a 50/50 basis. He said the proposal put forward by the husband so as to achieve that 50/50 split actually does so. Mr Lloyd also submitted that the wife’s position in relation to paragraph 9 is little more than her insistence that she gets what she wants.
It seemed to me that Mr Lloyd is correct in that $18 million is more than the $17.8 million Division 7A debt. One would imagine that property transfers totalling the $18 million suggested by the husband should be sufficient to meet the $17.8 million liability. As for the selection of specific properties to meet the debt, the wife was firm at trial that she was indifferent about the properties to go to the husband. To that extent, no science exists in the identification of the precise properties to be the subject of the transfers.
That said, Mr Ford makes a valid point about there being a contingency plan lest it comes to pass that $17.8 million is not sufficient to discharge the whole of the Division 7A liability. Some consideration should be embedded into the orders in case $17.8 million is insufficient. Otherwise it is true that the property transfer method was my preferred approach and it is also true that the wife was indifferent about the precise identity of the properties to be transferred. In those circumstances I am minded to make orders in accordance with the husband’s proposal subject to there being a failsafe proposal in case the Division 7A debt cannot be satisfied by $18 million. I will hear parties further on point once they consider these reasons and so I will defer pronouncing final orders until then.
Paragraph 10 – communicating with the ATO
The wife proposed that the parties retain Mr XX to communicate with the taxation authorities. The husband resisted the proposal on the basis that the Division 7A issue has been resolved to the satisfaction of the ATO and no need exists to incur the further expenses of Mr XX.
In the scheme of the expenses of this litigation, the further fees of Mr XX are likely to be modest. He has a wealth of accumulated knowledge. To my mind Mr XX’s involvement is required.
Paragraph 11 – D PTY LTD
The husband sought orders for the appointment of accountants to regularise the accounts of D Pty Ltd, satisfying Division 7A issues, determining the value of CGT and determining FBT.
Mr Ford on behalf of the wife opposed the introduction of paragraphs 11-13. He contended that appointing the accountants elevated them to the status of a single expert or an adversarial expert in circumstances where the trial is over and no evidence was called on the matters canvassed in the husband’s proposed paragraph 11.
Mr Lloyd submitted that all taxation issues must be dealt with prior to any distribution of assets being made in order to ensure that each party receives an equal distribution. The previous accountants, PP Group, was shown to be wanting in competence, according to Mr Lloyd. He contended that an order in terms of paragraph 11 was essential. Mr Ford argued that Mr XX already dealt with the issue and the parties did not need another expert.
In debate I exposed my thought process to the effect that there was merit in the husband’s contentions. The relevant exchange with Mr Ford was as follows –
HIS HONOUR: Okay. Well, thank you. Well, on that point, Mr Ford, obviously, the upshot needs to be just and equitable but, in circumstances where the parties are at daggers drawn on most points, it would be a potentially churlish approach to say that there’s a technical problem in going down a path that I’ve asked for, to solve what has been an impenetrable impasse between the parties. So I don’t want to fall into error, of course, but is anything that you’ve heard to temper your earlier submission?
MR FORD: No, your Honour, and I can only refer you to the evidence of [Mr XX], that deals with these issues. And I will leave it in your Honour’s hands. I’ve made my submission. [Mr XX] deals with it. We don’t need another expert.
This is not a matter of insinuating another expert (whether in the form of a single expert or adversarial expert) into the litigation after reasons were given. The financial affairs of D Pty Ltd are in a state of disarray. They need regularising. There is force in the contention of Mr Lloyd that an order in the form of paragraph 11 is required. That said, at very considerable expense Mr XX has already addressed Division 7A issues. He has offered his view on the amount needed to satisfy those issues. He has already provided advice on the method by which that liability will be met. Paragraph 11.2 as proposed by the husband is unnecessary. As to whether FBT or CGT is applicable, there is force in Mr Ford’s submission, namely that those matters have already been determined or if not, now that the trial is over, that a new accountant is being proposed to calculate issues that should have been calculated ahead of trial.
One of the matters telling in favour of Mr Ford’s submissions relates to the likely amount of FBT and CGT. Neither counsel addressed on the quantum that may be in issue.
The same observations apply in relation to proposed paragraph 11.5, although Mr XX did address stamp duty implications at a reasonably high level of abstraction.
The proposal in paragraph 11.6 for the new accountants to determine “any other taxation liability” seems to be very much at large and something that ought to have been the subject of evidence at trial.
Unless and until the real amounts with which paragraph 11 is concerned emerge, it is difficult to see why the activities proposed in paragraphs 11.2 to 11.6 are warranted. In those circumstances it is best to proceed on the basis that the parties should consider my above observations before final orders about the issues raised in paragraph 11 are made.
Paragraph 12 and 13
The issues canvassed in those paragraphs are consequential upon the matters in relation to paragraph 11.
Paragraph 14 – the AITKEN UNIT TRUST PROPERTIES
Paragraph 14 of the husband’s proposal corresponded to paragraph 11 of the wife’s proposal. It was said that the wording of that proposed order was not in issue having regard to the observations in paragraph 140(c) of my reasons dated 15 July 2022. The wording of each proposal was identical. In those circumstances an order should be made in terms of paragraph 11 of the wife’s proposal as mirrored in paragraph 14 of the husband’s proposal.
Paragraph 15
The version of paragraph 12 of the wife’s proposal found equivalence at paragraph 15 of the husband’s proposal except that paragraph 15 of the husband’s proposal revealed several phrases that were struck through reflecting proposed deletions to the wife’s version. Mr Ford supported the wife’s version on the basis that it was consistent with paragraph 140(c) of my reasons. Beyond that he submitted that he said no more.
Paragraph 140(c) of my reasons was very loosely concerned with paragraph 12 of the wife’s proposal or paragraph 15 of the husband’s proposal. It said nothing about the costs of transferring the properties or in relation to any indemnity arising therefrom. Mr Lloyd’s written submissions contained no material in relation to his version of paragraph 15. He told me on 16 August 2022 that everything he wanted to say on this issue was in his written submissions yet his written submissions were silent on point.
In circumstances where paragraph 140(c) said nothing about indemnities or about the cost of the transfers of properties and the husband said nothing meaningful to support his suggested deletions I am left very much in the dark in relation to the matters raised in paragraph 12 of the wife’s proposal and paragraph 15 of the husband’s. The words “proposed by the wife at the sole expense of the husband and/ or the [Aitken Unit Trust]” are meaningless because the so-called sole liability might be borne by one of two alternative entities. As a matter of drafting that wording is defective. As for the suggestion that the husband and Aitken Pty Ltd holds the wife harmless in the manner suggested, that did not appear in paragraph 140(c) of my reasons. No reason was offered by Mr Ford to support its inclusion. In my view Mr Lloyd’s suggested deletions were correct. It is wrong to say that the words the husband proposed deleted reflected “a process captured to effect an equal division of the parties’ net assets”. In my view the version of paragraph 15 of the husband’s proposal and paragraph 12 of the wife’s proposal but with the deleted words suggested by the husband correctly reflect the intendment of my reasons.
Paragraph 16 – the AITKEN GROUP ENTITIES
The point of difference between the husband and wife in relation to paragraph 16 of the husband’s proposal and paragraph 13 of the wife’s proposal was whether the dividend to be paid of $7,658,144 should or should not be fully franked. The wife said it should. The husband said it should not.
But Mr Ford went further by stating, essentially as evidence from the Bar table, that the figure he postulated was wrong and that instead of the figure being $7,658,144 as the dividend sum, it was in fact half of $16,868,391 (an extra $1.5 million or thereabouts on the sum of $15,316,288) that was the relevant amount at trial. The relevant balance sheet item was 3(a). Mr Lloyd submitted that he had no basis to verify the amounts to which Mr Ford referred. There was merit in Mr Lloyd’s submissions. The parties must confer and fasten upon a dollar perfect amount for balance sheet item 3(a) and agree that such an amount will be incorporated into the amount by which the dividend payable is derived. I accept that the amounts in term deposits and trading accounts have changed from the date when the balance sheet was agreed. But it requires updating. That should be a tolerably straightforward exercise, and hopefully, one that is uncontroversial. That said, little in this case is agreed.
But the payment of the dividend proposed by the wife is to be fully franked. Paragraph 148(b) of my reasons addressed the need for submissions from the parties on the amount of tax that will be separately paid on that payment. That paragraph was silent on whether the payee of the dividend would pay tax or whether the dividend would be fully franked.
Paragraph 148(c) invited submissions on who was to pay the tax on the dividend. Mr Ford offered no reason for his contention that the dividend was to be fully franked rather the dividend being taxable in the hands of the wife. Mr Lloyd submitted that the intendment of my reasons was to divide the assets equally as near as possible. That was true. That said, a payment in the nature of a dividend paid to the wife in excess of $8 million is likely to have major tax ramifications. Without knowing how much tax will be payable on that amount I am unable to conclude that the payment of an $8 million dividend is just and equitable. It strikes me that good arguments can be advanced to the effect that the dividend should be fully franked whereas equally good arguments can be advanced in favour of the wife paying tax on the dividend.
Despite my hope for sophisticated submissions on point (including pinpointing the existing evidence from any witness who may have addressed this issue) as contemplated by paragraph 148(c) of my 15 July 2022 reasons, no such assistance was provided. The parties should have an opportunity to put before me all they wish to say, but within 14 days. The amount is too large to do otherwise.
Paragraph 17 – share buy back
In paragraph 159 of my reasons I held that once the proper value of D Pty Ltd was ascertained in accordance with my reasons, the husband must pay the wife for her shareholding in D Pty Ltd.
Paragraph 14 of the wife’s proposal contained orders largely reflective of observations in my reasons. The husband proposed that D Pty Ltd engage in a share buy back.
Aside from the fact that I did not make provision for D Pty Ltd buying back its own shares, s 257A of the Corporations Act makes provision about share buy backs that Mr Lloyd had not considered. I offered him seven days from 16 August 2022 within which to make submissions about his client’s proposal for a share buy back. He subsequently provided written submissions.
I do not favour the share buy back proposal. Paragraph 159 of my reasons did not make provision for D Pty Ltd engaging in a share buy back. Mr Lloyd recognised as much during his address on 16 August 2022.
In written submissions, for which leave was granted, Mr Lloyd SC developed his contentions about the share buy back proposal. Relevantly paraphrased, he argued –
(a)D Pty Ltd would undertake the buy back the legislative source of the power for which is found in s 257A of the Corporations Act;
(b)pursuant to s 257Y of the Corporations Act, the proposal does not take effect with D Pty Ltd acquiring the wife’s shares but rather the proposal nullifies the wife’s shares for value;
(c)the wife currently holds one share in D Pty Ltd and the husband holds one share in D Pty Ltd;
(d)upon the cancellation of the wife’s share the husband becomes the sole shareholder in D Pty Ltd by reason of the issued shares in the capital of D Pty Ltd having been reduced from two to one;
(e)the husband proposes to pay the wife for her share in D Pty Ltd and then her share will be cancelled;
(f)the Federal Circuit and Family Court of Australia is a court empowered to make an order for share buy back as s 259A provides;
(g)tax implications of the proposed buy back are dealt with in Private Ruling Authorisation Number …;
(h)the buy back does not prejudice the ability of D Pty Ltd to pay its creditors as the funds to be used to acquire the wife’s share are not funds derived from D Pty Ltd;
(i)the husband will follow the procedures set out in the Corporations Regulations;
(j)so far as the husband is concerned, D Pty Ltd’s constitution does not prohibit or restrict D Pty Ltd pursuing the share buy back; and
(k)no material difference is caused to the wife because she intends to resign as a director and to sell her shares.
On behalf of the wife, counsel filed written submissions in opposition to the husband’s share buy back proposal. The following is a précise of those submissions –
(a)the husband’s buy back proposal is made after a trial, after reasons and no application to amend the relief sought is made;
(b)properly understood, the husband’s application is an application to amend the relief he seeks after the delivery of reasons for judgment;
(c)the husband is not applying to reopen prior to the delivery of reasons for judgment which, had such an application been made, would have enlivened a consideration of principles in Scott v Alvarez[2] and Smith v New South Wales Bar Association;[3]
(d)so long as a judgment has not been passed and entered, the court possesses power to alter or correct a judgment[4] provided the existing judgment is affected by some relevant irregularity or misapprehension of fact or law;
(e)ordinarily the power will not be exercised in favour of an applicant who failed to raise the matter at an earlier stage;[5]
(f)the public interest in maintaining the finality of litigation circumscribes the exercise of the power;[6]
(g)on the facts of this case, the husband has not applied to move for an amendment to the relief sought nor has he explained why the proposed buy back is raised for the first time after the conclusion of the trial nor has he advanced any evidence to support the proposed buy back plan so no proper basis has been laid pursuant to which I could or should entertain, still less grant, the proposal;
(h)no irregularity or misapprehension of fact or law has been identified by the husband to engage the application of the rule;
(i)evidence is not before the court to meet the elements of s 257A of the Corporations Act, especially evidence of D Pty Ltd’s constitution;
(j)no evidence relevant to Division K of Part III of the Income Tax Assessment Act has been adduced and the single expert who gave extensive evidence about taxation said nothing about share buy back taxation implications;
(k)no notice was given of an intention to raise the buy back; and
(l)in those circumstances, the share buy back proposal should be rejected.
[2] [1895] 1 Ch 596.
[3] (1992) 176 CLR 256.
[4] De L v Director-General, NSW Dept of Community Services (No 2) (1997) 190 CLR 207.
[5] Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300
[6] Ibid.
To my mind, the wife’s contentions have considerable merit. I say that for several reasons. First, the buy back proposal was first raised in the formulation of orders. It was not raised at or prior to trial. No evidence was led about it. No evidence about taxation ramifications was adduced. The proposal does not feature in the husband’s orders he sought at trial. No submissions were addressed to the point. Nowhere does the husband say that the reasons I previously handed down are affected by irregularity or misapprehension of fact or law. If anything, this proposal reflects a last minute idea considered by the husband after judgment was handed down. In fact it was me who alerted Mr Lloyd to s 257A of the Corporations Act. No explanation has been offered as to why this proposal has emerged for the first time at this stage.
The share buy back proposal is rejected.
Paragraph 18 – General indemnity
Paragraph 15 of the wife’s proposal was incorporated as paragraph 18 of the husband’s proposal then deleted by all of its provisions being struck out. The wife asserted that its genesis arose from paragraph 159 of my 15 July 2022 reasons. That is not so. I said no such thing in that paragraph of my reasons. Mr Lloyd resisted the proposal in paragraph 15 contending that his client has no idea in what conduct the wife may have engaged so as to attract the giving of an indemnity.
Mr Ford argued, ambitiously in my view, that the wife would be given a full indemnity at law (his words) if she sold her shares. That is not a legal concept arising out of company law of which I am aware. If the wife sold her shares on the open market a purchaser may be willing to indemnify her but that would be a matter of negotiation and agreement. Indemnity does not follow axiomatically upon a share sale, so far as I am aware.
In my view there is force in Mr Lloyd’s submissions. If Mr Ford is able to find and bring to my attention authority for his contention that the wife as the vendor of her shares would obtain an indemnity, then I will entertain his proposal in respect of paragraph 15 of the wife’s proposal. In the absence of authority, I do not propose to make the order he seeks.
Paragraph 19 – MR X
Paragraph 16 of the wife’s proposal corresponded with paragraph 19 of the husband’s proposal. The husband’s proposal incorporated several deletions to the wife’s proposal. This paragraph related to a proposal for the husband to keep the wife indemnified against claims by Mr X. It was said that paragraphs 140(c) and 149 of my reasons dated 15 July 2022 were relevant. Paragraph 140(c) was not relevant. Paragraph 149 was, however. In it I did in fact address the need for the husband to indemnify the wife against any claim Mr X may hereafter make.
But the wife’s proposal in relation to paragraph 16 went substantially beyond observations in paragraph 149 of my reasons. It was erroneous to say, as counsel for the wife said, that the proposal in paragraph 16 of the wife’s proposal was grounded in paragraph 149 of my reasons. In debate on 16 August 2022 Mr Ford took me to paragraph 39 of my reasons. Those reasons did not provide a foundation for the orders proposed by the wife. In my view Mr Lloyd’s proposal as recorded in the deletions he made to paragraph 19 as it related to the wife’s paragraph 16 were correctly made.
Paragraph 20 – assignment
The same paragraph of my 15 July 2022 reasons were said to underpin paragraph 20 of the husband’s proposal being paragraph 17 of the wife’s proposal. That paragraph related to the wife doing all that was required to assign to the husband any amount owing to the wife by Mr X in respect of the property at 1 YY Street, Suburb BB. The husband proposed the deletion of the additional words “that is owned by [Aitken Family Holdings] and beneficially held by [Mr X]”.
It seems plain enough that both the husband and the wife were largely in agreement that if Mr X owed money to the wife she would assign that amount to the husband. It is utile to record paragraph 149 of my reasons –
As has already been recorded above, [Mr X] has not participated in this case yet, for reasons also recorded above, he is to be taken as having an equitable interest in […] acres of the [1 YY Street, Suburb BB] property. The husband acknowledged a moral obligation to preserve the equitable interest possessed by [Mr X] in those […] acres of the land comprising [1 YY Street, Suburb BB]. The wife sought orders from the husband protecting her by way of indemnity in the event that thereafter, [Mr X] made a claim against the wife in relation to the […] acres. The husband was willing to accommodate that request. The wife apprehended that the husband has now adopted a different position. She wishes to hold the husband to his previously adopted position, namely, to indemnify the wife as to any liability of the parties to [Mr X]. Proceeding on the basis that all parcels of real property are transferred to the husband, except for the [Suburb C] property which is to be transferred to the wife, the husband will need to somehow accommodate [Mr X]’s equitable interest in […] acres of the [Suburb BB] property. If [Mr X] pursues such a claim and he included the wife in any such claim once the husband is the sole registered proprietor of the legal estate in the [YY Street] land, the wife will have no interest other than an in personam interest against which [Mr X] might bring a claim. In those circumstances, it seems to me to be just and equitable for the husband to indemnify the wife against any claim [Mr X] may hereafter make. An indemnity in those terms is largely consistent with the husband’s concession that he owes [Mr X] a moral obligation in relation to the […] acres.
It will be immediately apparent that the provision of an assignment was not canvassed in paragraph 149. Paragraph 149 contemplates the transfer of properties to the husband. So far as the acres of the Suburb BB property were concerned, it was acknowledged that Mr X has an equitable interest in over 30 acres of that land. Paragraph 20 of the husband’s proposed order (paragraph 17 of the wife’s) contemplates the wife assigning to the husband payment of any amount owing by Mr X to the wife relating to the acres. Paragraph 149 relates to a set of circumstances where the husband becomes the registered proprietor of the land in which Mr X holds an equitable interest. The words “beneficially held by [Mr X]” therefore should be part of paragraph 20 and should not be deleted in the manner contended for by the husband. But the words “that is owned by [Aitken Family Holdings]” may be incorrect for two reasons. First, the words “registered proprietor” is a more accurate phrase. But second, the husband will probably be the registered proprietor.
The parties should consider that wording.
Paragraph 21 – other property
Paragraph 18 of the wife’s proposal corresponded precisely with paragraph 21 of the husband’s proposal. An order in those terms should be made.
Paragraph 22
Only one word (“amount”) was altered in paragraph 22.1 of the husband’s proposal to reflect consistency with paragraph 21.1. There is merit in that proposition.
Paragraph 23
In paragraph 20 of the wife’s proposal, corresponding to paragraph 23 of the husband’s proposal, the wife proposed that the husband pays to the wife a dollar sum. Originally it was $34,409,167. That was amended to $26,751,023. The date for such payment was 60 days of the date of the order.
The husband proposed a more ephemeral style of wording, incorporating language such as “they jointly cause to be distributed to each other 50% of the net assets” once various steps were completed.
The precise dollar figure sought by the wife was fluid. Paragraph 159 of my reasons recognised that. The precise amount must be ascertained. True, I intend to give effect to orders dividing property equally. But I entertain no expectation (or hope) that in the absence of very tight orders will the parties do as they are required to do. Further, in terms of appointing other accountants to deal with FBT and CGT issues, that has been addressed above. Orders in terms proposed by the husband in paragraph 23 of his draft orders document simply invites non-compliance. I declined to make an order expressed with such imprecision.
Paragraph 24 – injuctions
In the wife’s proposed paragraph 21, she proposed restraints on the husband and the trustee of the Aitken Unit Trust in respect of eight parcels of real property. The husband complained that those restraints were not included in any form in the reasons. That is true. No suggestion was made that evidence exists justifying the restraints. I do not propose to order the restraints.
Mr Ford took me to that aspect of paragraph 21 of the wife’s proposal in which she sought orders for her appointment as a trustee for sale. Mr Ford conceded that the reasons said nothing about such an appointment. However, he submitted –
(a)s 81 permitted such a course;
(b)numerous applications have been brought in this case; and
(c)the husband’s opposition will only produce further litigation.
Mr Lloyd said there will not be further applications to enforce the judgment.
Paragraph 21 of the wife’s order was not the subject of my reasons. If complications emerge hereafter, she may wish to renew her application.
Paragraph 25 – advanced property
Paragraph 22 of the wife’s orders corresponded with paragraph 25 of the husband’s. Orders should be made in those terms.
Paragraph 26
The husband’s proposal recorded in paragraph 26 of his orders had certain parallels with paragraph 23 of the wife’s proposal, although differences emerged. Those paragraphs related to the disposal of the Suburb KK properties. No dispute emerged in relation to –
(a)the parties’ execution of selling authorities (26.1/23.1);
(b)the parties’ appointment of a solicitor or conveyancer (26.2/23.2);
(c)the parties’ selling at market price (26.3/ 23.3);
(d)cooperating in the sale process (26.4/ 23.4);
(e)maintaining the Suburb KK properties in reasonable condition (26.5/ 23.5);
(f)the steps to be adopted if contracts have not been exchanged in two months (26.6/23.6);
(g)fixing a reserve price (26.7/ 23.7); and
(h)where a sale by public auctions becomes necessary (26.8/ 23.8).
The husband opposed the wife’s proposal for the husband and the wife to attend any such public auction and what was to occur if the sale price failed to reach reserve. That was proposed paragraph 26.9. Mr Lloyd’s written submissions supported his client’s resistance to the proposal put forward by the wife on the ground that his client’s deletion of paragraph 26.9 was procedural only. Neither party advanced verbal addresses on this issue.
It seemed to me that the wife’s proposal was properly described as procedural yet no good reason had been advanced for its deletion. While the husband and wife may not get along sufficiently well to attend a public auction jointly, they may need to do so and if they do need to do so, they may also need to negotiate with a prospective purchaser so as to achieve the best price available. It seemed to me that paragraph 26.9 of the husband’s proposal was wrongly deleted. That paragraph should remain.
In paragraph 26.10 of the husband’s proposal (corresponding to paragraph 23.10 of the wife’s) the husband made certain deletions and he introduced certain substitutions if contracts for the sale of the Suburb KK properties were not exchanged. The husband preferred wording to reflect one or both of the Suburb KK properties not being sold at public auction and if that occurred then he suggested the parties could relist any unsold property for successive public auctions.
It was curious that the wife chose the method of successive public auctions only if contracts were not exchanged. As a matter of conveyancing law and practice, a contract for the sale of land can come to an end for reasons going beyond a failure to exchange contracts for sale. The husband’s proposed amendment to paragraph 26.10 (or the wife’s paragraph 23.10) was expressed in broader terms to include either of the Suburb KK properties being not sold at auction. That seemed to be more enabling in its breadth. That form of wording should be adopted.
Paragraph 27 – Proceeds of Sale
Paragraph 27 of the husband’s proposal corresponded with paragraph 24 of the wife’s proposal. Subparagraph 27.4 (24.4) was the only contentious point between the parties. It concerned depositing the balance of the proceeds of sale into the wife’s solicitors’ trust account to be applied solely to the costs of the winding up of U Pty Ltd. Neither party offered submissions in relation to keeping or deleting paragraph 27.4 or 24.4.
If a balance of proceeds of sale emerges those funds need to be placed in a controlled account. The wife’s solicitors’ trust account is an eminently suitable vehicle for that but it was not said precisely why any disbursement of funds that may be so deposited was limited to meeting winding up costs. It may transpire that those funds are better deployed in some other way. It seems to me to be unduly prescriptive to limit the application of those funds. In those circumstances the better wording for paragraph 27.4 (24.4) is to include the balance of funds being deposited into the trust account as already appears. The reference to the application of funds thereafter should be deleted.
Paragraph 28.3 – disbursing funds
A minor amendment to paragraph 28.3 of the husband’s proposal was made, corresponding to the wife’s paragraph 25.3. In view of retaining the provision for depositing funds in the trust account of the wife’s solicitors, that much of paragraph 28.3/ 25.3 which speaks of Nolan Lawyers Trust Account should remain. The proposed inclusion of the words “equally to the husband and to the wife”, while seemingly surplusage, should similarly appear in the order.
Paragraph 29 – RENTAL
The wife’s corresponding paragraph was 26. The husband sought the deletion of the whole paragraph contending it was unnecessary and that no case was advanced at trial to enliven the making of such an order. The proposed order concerned a requirement for the continuation of rental payments to U Pty Ltd pending sale of the Suburb KK properties. The submissions of Mr Ford to the effect that without paragraph 29/26 no other mechanism was prescribed that deals with the application of rental payments was true. Mr Lloyd’s submission was equally true that no case for the need for the proposed order in paragraph 29/26 was run at trial.
It must not be overlooked that this litigation carries with it profound hostility between the parties. Distrust underscores the perception held by one of the other’s every move. To the extent that the inclusion of this paragraph removes the source of dispute in relation to yet one further issue between the parties, I take the view that its inclusion is warranted. Paragraph 29 of the husband’s order and its counterpart at paragraph 26 of the wife’s proposal should be included.
Paragraph 30 – APPOINTING AO ACCOUNTING GROUP
The proposal in the husband’s paragraph 30 which found correspondence in the wife’s paragraph 27 included the husband’s substitution of AO Accounting Group instead of PP Group. In the earlier passages of these reasons I have already addressed how the husband no longer favoured PP Group and the wife opposed AO Accounting Group. Whoever the parties select to address FBT and CGT issues in relation to other aspects of this case should be selected to address the matter with which paragraphs 30 and 27 are concerned. The parties should confer on the issue. They should have a short time to do so.
Paragraph 31 – CGT
Aside from amending the correct paragraph number in 31.2 the proposal for orders in paragraph 31 of the husband’s draft as mirrored in paragraph 28 of the wife’s draft should be made.
Paragraph 32 – $2,200
No dispute emerged about this payment as reflected in the husband’s proposal in paragraph 32 of his draft orders corresponding to paragraph 29 of the wife’s proposed orders. It seemed uncontroversial for orders to be made in those terms.
Paragraph 33 – $13,320.96
Again, no dispute emerged about the proposed order in paragraph 33 of the husband’s draft and its counterpart paragraph 30 of the wife’s draft. It related to paying the wife the sum of $13,320.96 for the fees of SS Company. An order should be made in those terms.
Paragraph 34 – discharging interlocutory orders
The proposal in paragraph 34 of the husband’s draft order and its counterpart in paragraph 31 of the wife’s proposed orders related to maintaining the operation of all interlocutory orders pending compliance with “these orders”. The husband opposed the proposal in this paragraph contending that some interlocutory orders have caused real injury to his business operations, especially the orders that limited his business expenditure to $10,000.
Without knowing which interlocutory orders the wife wished maintained, the ambit of the proposal in her version of paragraph 31 was far reaching. Plus, the chronology for compliance with the orders under consideration may involve many months as several parcels of land are to be sold and in the case of Suburb KK properties, successive public auctions are also contemplated. It may very well work a hardship for all interlocutory orders to remain operative until the last step has been performed to comply with final orders contemplated by these orders. Unless and until the wife identifies the precise orders she says must remain operative, I am reluctant to make orders in terms of the wife’s proposed paragraph 31.
Paragraphs 35 & 36 – Further orders
Provisions relating to the husband and wife executing all necessary documents as proposed by the wife in her paragraph 32 and by the husband in his proposed paragraph 35 can be made as they were not the subject of dispute. Similarly the proposal in the wife’s paragraph 33 corresponding to the husband’s paragraph 36 can also be made as no dispute existed about them.
Costs
I do not propose to make orders about costs without knowing what application is made.
Liberty to apply
The husband sough an order granting the parties liberty to apply if a dispute hereafter emerges with compliance. Such an order is probably unnecessary for cases in the Major Complex Financial Proceedings List. However, I shall make the order sought by the wife in her paragraph 35 and by the husband in paragraph 38.
Paragraphs 39 to 45 – trustee for sale
This has already been canvassed. It was not the subject of debate in the trial. My earlier observations apply.
What next?
The parties should have 14 days to address these reasons then bring in a further minute to reflect these reasons. If debate is required, I will allocate one hour over lunchtime. Any written submissions should be filed and served ahead of any such debate so as to better use the court time.
I certify that the preceding ninety-four (94) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wilson. Associate:
Dated: 7 September 2022
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