Allan and Allan

[2008] FamCA 174

FAMILY COURT OF AUSTRALIA

ALLAN & ALLAN [2008] FamCA 174

FAMILY LAW – PROPERTY – Consent orders rejected by Court – Not just and equitable

Family Law Act 1975 (Cth)

APPLICANT: Mr ALLAN

RESPONDENT: Mrs ALLAN

FILE NUMBER: MLC 1190 of 2008

DATE DELIVERED: 7 MARCH 2008

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: YOUNG J

HEARING DATE: 7 MARCH 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: IN PERSON

SOLICITOR FOR THE APPLICANT:

COUNSEL FOR THE RESPONDENT: MR McLEOD

SOLICITOR FOR THE RESPONDENT: PHILLIPS & WILKINS

ORDERS

IT IS ORDERED:

1. THAT the application for the making of consent orders is dismissed.

2. THAT the extempore reasons for judgment be transcribed, be placed upon the Court file and be made available to the parties.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 1190 of 2008

MR ALLAN

Applicant

And

MRS ALLAN

Respondent

REASONS FOR JUDGMENT

1. In the matter of Allan & Allan I have before me an application to approve consent orders agreed to between the husband and wife.  By way of background a solicitor was engaged by the husband to draw minutes of consent orders, that being Mr Steven Canals.  That document was lodged with the court and came before Registrar Moser on or about 11 February 2008.  The Registrar declined to make orders and advised the parties in writing by letter dated 22 February 2008 that she could not be satisfied in all the circumstances that the proposed orders are just and equitable.  The matter was referred to the Judicial Duty List and came before me as the list Judge this day.

2. On 11 February 2008 an application for consent orders was filed with the court.  Initially the wife was shown as residing at …, but by handwriting that address was changed to Phillips and Wilkins, solicitors.  In the matter before me today the husband appears in person, the wife is represented by Mr McLeod of counsel and the wife is present in court with her solicitor.  The background that I have is contained within the minutes of consent orders.  From that document it is apparent that the parties met in or about 1999 and commenced living together in February of 2001 when they married.  There may or may not have been an earlier period of cohabitation.

3. Separation occurred in mid-January of this year.  There are two children of the marriage, though their particulars are not properly provided for in that consent document.  I am told they are approximately five and a half and three and a half years of age.  The wife is 38, she is in receipt of a sole parent's pension of approximately $200 per week.  I understand that there has yet to be a child support assessment though counsel for the wife indicated that when and if it is sought by his client it will be in the maximum sum.

4. I do not understand there is any regular spousal maintenance being paid.  Though again the wife indicated to the court through counsel that various sums of money have been paid from time to time approximating $500 a week.  The wife's current asset is the property in the northern suburbs.  It has an agreed value of $300,000.  Its current mortgage is $154,000 therefore its equity is approximately $146,000.  Significantly, at date of marriage the wife owned this property but its mortgage was then $44,000 or thereabouts.   

5. As to the husband his assets are identified in the prepared schedule of assets accompanying the proposed minutes of consent orders.  At marriage he owned in his sole name a portfolio of properties in the desirable bayside areas of Melbourne.  Those properties were said to have as at February 2001 a market valuation of $3,455,000 or thereabouts.  The other then assets of the husband were incorporated within his asset and liability statement of that date including a liability of $910,000.  It was said by the husband therefore that his net worth at that time was $2,578,000 and that is to be contrasted with the then net worth which the wife brought to the marriage of $126,000 or thereabouts.

6. Significantly from the document now before the court, and as one would expect, the value of the bayside properties have increased in value.  Though as a mere observation that increase is far less than I would realistically have expected having a general understanding of property values in Melbourne particularly on the waterfront and in some of the better bayside streets of our city.  Nevertheless the husband's properties are now said to total $7 million in property, and that is after allowing for the sale of the properties at T Street.  The husband's other assets are now held in cash or in managed investment schemes.  The cash is approximately $870,000 or thereabouts including distributions from various tax effective trusts that were made in February of 2007.

7. The various managed investment schemes are said to have a gross value of $7,486,000 but are otherwise encumbered by significant borrowings or tax liabilities.  The bottom line of what the husband has proposed to the wife and to the court, is that his total net worth excluding superannuation is now $3.233 million and that there has been only an increase in his net worth of $654,000 over the years of the marriage between 2001 and 2008 inclusive.

8. I have otherwise had the benefit of the husband providing to the court an estimate of tax payable on sale of assets.  On the face of the document it shows that the husband could have a total tax liability of $4,454,000.  That document is however, highly questionable because it calculates proper - perhaps maximum tax paid on the sale of all assets, including what currently is the matrimonial home of the husband.  There is of course no indication to the court that the husband would have to sell one or all of those assets and tax will only be realised upon sale or otherwise upon some form of assessment from the Deputy Commissioner for Taxation and currently I do not understand there is any ongoing investigation of the husband or his business activities and I accept that to be the case.

9. I also have a clear understanding that the husband has acquired properties with his brother, there is a Westpac facility of some $11 million shared equally by them and the husband's share is secured on his property and assets.  That much is apparent from the face of the document.  I turn to the minutes of consent orders whereby I am asked to give the imprimatur of the court under section 79(2) of the Act to a settlement that provides to the wife a cash sum of $438,000 and the transfer to her of a Honda motor vehicle.  In addition I understand the wife retains her equity in the P property of $146,000. 

10. I propose to have marked as exhibit “H1” the document identifying the estimated tax payable on assets as that otherwise is not before the court, and it should be retained on the court file.  I propose to have the document headed Minutes of Consent Orders and the various annexures thereto, being the schedule of assets and liabilities marked as exhibit “H2” and that also must remain on the court file hereafter.  What the court is required to do when an application for consent orders is before the court and lodged by the parties, is to make a determination under section 79(2) that it is just and equitable. 

11. Indeed the specific section of the Act says:

    “The court shall not make an order under this section unless it is satisfied that, in all of the circumstances, it is just and equitable to make the orders”.

12. How the court would determine and no doubt how these parties have considered a just and equitable settlement of property, is to have regard to the contributions both directly and indirectly made by each of them, to the acquisition conservation or improvement of assets as are contained within section 79(4) of the Act, and in particular there of course having an understanding of the homemaker and parent contributions provided for in subparagraph (c) thereof.  There is a reality to this case.  The husband has significant pre-marriage assets which he has largely quarantined and no doubt skilfully held and retained throughout the marriage.  Inflation has seen their value increase considerably.  They are all matters of real significance.

13. Otherwise and of equal consideration the court has to have full and proper regard to the various section 75(2) factors.  These include the age and state of health of the parties, their income, property and financial resources, their capacity to earn money in future years, and whether any parent and if so which parent has the care and responsibility for any children under the age of 18 years.  There are other specific matters and factors and aside from subparagraphs (a), (b) and (c) other significant matters would involve a consideration of subparagraphs (g), (j), (k), (l) and (o) thereof.  I emphasise in these extempore reasons that I have given due and considered reflection upon all of the matters that would have to have been considered and implemented within consent orders.

14. In the overview, my understanding is that the wife would take by these consent orders approximately 13 per cent or thereabouts based upon the valuations before the court, and allowing for all of the liabilities save tax liabilities as are claimed.  That would not represent a just and equitable settlement.  As a basis for what is a proper settlement there must be full and complete agreement on valuation, on assets and properly understood liabilities including relevant and applicable tax.  This matter has not had that level of investigation and it is very clear to me that there has been an acceptance, and it may well be fully correct, of what the husband has said to be the net asset circumstances.

15. I will not be making these consent orders as I do not declare that they are just and equitable under the Act.  Both parties are at court.  The husband has very properly indicated that he would like some time to discuss with the wife and her advisers any other settlement that might be just and equitable and if so I will treat any subsequent proposed and increased settlement on its merits.  It is understood that there cannot be finality with the imprimatur of the court unless it is just and equitable.  I also highlight the obvious that is there will be no declaration made under section 81 of the Act declaring the settlement to be appropriate and final unless and until it meets the test of what is a just and equitable settlement. 

16. I therefore indicate that I will not make consent orders.  I otherwise leave ongoing discussions to the parties, but I would currently propose to dismiss the application for consent orders.  I will have these reasons for judgment transcribed, placed upon the court file and sent to the parties. 

I certify that the preceding paragraphs are
a true copy of the reasons for judgment herein
of The Honourable Justice Young

………………………………………………………..
Associate:          
Date: 18 March 2008