FAMILY COURT OF AUSTRALIA
| BAILEY & BAILEY | [2018] FamCA 318 |
| FAMILY LAW – PROPERTY – TRUSTS – where the husband, his brothers and their children are specified beneficiaries of a discretionary trust – whether the trust is a sham – whether the trust should be treated as an alter ego of the husband – where wife seeks that assets of the trust be included in the property pool – where wife seeks a Kennon adjustment – where wife makes an application for spousal maintenance - where trust is found to be not a sham or alter ego of the husband – where trust is found to be a financial resource of the husband – where court finds no basis for wife’s Kennon claim – where wife’s application for spousal maintenance is dismissed. |
| Family Law Act 1975 (Cth) s 72 |
| MacDowell and Williams [2012] Fam CA 479 Ascot Investments Pty Ltd v Harper and Harper [1981] FLC 91-000 Gillard & Gillard and Anor [2016] FamCA 841 Noogle &Noogle [2017] FamCA 140 Britt & Britt [2017] FamCAFC 27 Bevan & Bevan (1995) FLC 92-600 |
Grant T Riethmuller, “Discretionary trusts and family property disputes” (MPhi Thesis, University of Melbourne, 2016)
Geoff Y, “Fast Cars … Discretionary Trusts: Property of the Parties or a Financial Resource” – paper presentation to the Eleventh Annual Family Law Conference, Palazzo, Gold Coast 27 July 2017
| APPLICANT: | Mr Bailey |
| RESPONDENT: | Ms Bailey |
| FILE NUMBER: | HBC | 958 | of | 2016 |
| DATE DELIVERED: | 9 May 2018 |
| PLACE DELIVERED: | Hobart |
| PLACE HEARD: | Hobart |
| JUDGMENT OF: | Benjamin J |
| HEARING DATE: | 29, 30 & 31 January 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Ayliffe SC |
| SOLICITOR FOR THE APPLICANT: | Blissenden Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Trezise |
| SOLICITOR FOR THE RESPONDENT: | Dobson Mitchell & Allport |
ORDERS
The wife may elect to acquire the husband’s interest in M Street in Suburb T (‘the T Property’) and in the event that she does:-
(a)the wife pay to the husband the sum of $50,434 within 60 days from the date of these orders;
(b)upon such payment and the wife will secure the release of the husband from his personal guarantees and covenants in respect of the mortgage to Q Bank of about $414,131 over the T Property;
(c)the husband shall at the same time transfer his interest in the T Property to the wife;
(d)should the wife not make the election or pay the said sum to the husband and/or fail to secure the husband’s release from the mortgage, then order 3 shall apply instead of the provision for payment and vesting of property to the wife provided by this Order; and
(e)any such acquisition under this order is to be regarded as an acquisition pursuant to the Family Law Act 1975 (Cth).
The husband shall pay to the wife the sum of $30,943:-
(a)within 60 days from the date of this Order if the wife complies with order 1 above (and the sum of $30,943 may be deducted by the wife from the sum she…
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- BAILEY & BAILEY [2018] FamCA 318
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- [2018] FamCA 318
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CaseChat Overview and Summary
The legal issues before the court included whether the wife should have the option to acquire the husband's interest in the T Property, and if so, the terms of such acquisition, including the payment of a sum to the husband and the securing of the husband's release from mortgage guarantees. The court also had to determine the process for selling both the T Property and the P Property, including the appointment of selling agents and the setting of sale terms, in the event the wife did not acquire the T Property. Furthermore, the court needed to decide on the disbursement of the proceeds from any sale, the interim arrangements for the T Property and another property at O Street, and the final division of various other personal property and financial assets between the parties.
Benjamin J ordered that the wife could elect to acquire the husband's interest in the T Property, subject to specific payment and release conditions. If the wife did not elect to acquire the T Property or failed to meet the conditions, both the T Property and the P Property were to be sold. The court provided detailed provisions for the sale process, including mechanisms for agreeing on or appointing selling agents and determining sale terms, and stipulated how the proceeds of sale were to be disbursed, including the discharge of mortgages and repayment of debts. The wife was granted exclusive residence in the T Property pending sale, and interim arrangements for rental income and outgoings for the O Property were established. The orders also specified which assets each party would retain as their sole property, including vehicles, household contents, bank accounts, investments, and superannuation entitlements. Finally, the parties were to release each other from any further claims regarding property or debts, and all extant applications were dismissed.
Orders
Orders of the court
1.
The wife may elect to acquire the husband’s interest in M Street in Suburb T (‘the T Property’) and in the event that she does:-
(a) the wife pay to the husband the sum of $50,434 within 60 days from the date of these orders;
(b) upon such payment and the wife will secure the release of the husband from his personal guarantees and covenants in respect of the mortgage to Q Bank of about $414,131 over the T Property;
(c) the husband shall at the same time transfer his interest in the T Property to the wife;
(d) should the wife not make the election or pay the said sum to the husband and/or fail to secure the husband’s release from the mortgage, then order 3 shall apply instead of the provision for payment and vesting of property to the wife provided by this Order; and
(e) any such acquisition under this order is to be regarded as an acquisition pursuant to the Family Law Act 1975 (Cth).
2.
The husband shall pay to the wife the sum of $30,943:-
(a) within 60 days from the date of this Order if the wife complies with order 1 above (and the sum of $30,943 may be deducted by the wife from the sum she would otherwise pay to the husband under Order 1); or
(b) if the wife does not comply with Order 1 then the husband shall pay the said sum out of his share of the proceeds of sale of the T property, if it is sold pursuant to Order 3.
3.
Within 65 days from the date of these Orders the parties do all acts to sell the properties at U Street in Town P (‘the P Property’) and the T Property (unless the wife has complied with Order 1 above in which case this Order will only apply to the P property ) and:-
(a) The selling agent for the property/properties shall be such selling agent or agents as the husband and wife may from time to time agree or in default of such agreement:-
(i) Either the husband or the wife may request the President for the time being of the Real Estate Institute of Tasmania or his nominee (hereinafter referred to as ‘the arbitrator’) to determine the matter in dispute; and
(ii) The costs of the arbitrator’s determination shall be borne equally between the husband and wife.
(b) The listed sale price or reserved price and method of sale and manner of advertising for sale of the property/properties shall be as agreed between the husband and wife and in default of such agreement:-
(i) Either the husband or the wife may request the President for the time being of the Real Estate Institute of Tasmania or his nominee (hereinafter referred to as ‘the arbitrator’) to determine the matter in dispute; and
(ii) The costs of the arbitrator’s determination shall be borne equally between the husband and wife.
(c) In the event that the property/properties are offered for sale by way of auction the husband and wife shall each pay and be responsible for the payment of one-half of the auctions expenses.
(d) Both the husband and wife shall co-operate in every way with the selling agent in relation to the sale of the property/properties, including allowing inspection of the property/properties at times reasonably requested by the selling agent and will ensure that the property/properties are in a neat and clean condition at the time of inspection by the prospective purchasers.
4.
That the proceeds of sale of the properties referred to in Order 3 shall be disbursed as follows:-
(a) First, to pay all costs, commissions and expenses of sale and to pay any Council and water rates outstanding in respect of the property/ies;
(b) Second, in respect of the sale of the T property to discharge the mortgage registered against the title to that property of about $414,131 together with any discharge costs and the like;
(c) Third, in respect of the sale of the P property to pay $139,999.77 in repayment to the S Bank line of credit (secured over one or both of the properties R and N);
(d) Fourth, to pay or adjust the net proceeds of sale of those properties equally to the parties subject to any deductions referred to in these Orders: and
(e) Fifth, the wife shall reimburse the husband out of her share of the proceeds of sale the sum of $4,466 being the wife’s share of valuation fees charged by Valuer 1 and Valuer 2 and the cost of production of documents by Firm 3.
5.
Pending completion of sale of the T property and the O property:-
(a) The wife shall be entitled to reside in the T property to the exclusion of the husband;
(b) The wife and husband shall be each entitled to receipt of one half of the rental payments paid in relation to the O property and each shall be equally responsible for and shall pay as they fall due one half of all outgoings referable to that property;
(c) Neither party shall encumber the title to either the T property or the O Property without the consent of the other party;
(d) The parties shall each pay one half of instalments due under the Q Bank Mortgage registered against the titles to both properties when they fall due for payment; and
(e) The wife shall be solely responsible for the payment of all other outgoings referrable to the T property.
6.
The wife shall retain as her sole property:-
(a) Motor vehicle 1 registration number … in her possession;
(b) The furniture and household contents presently situate at the T property;
(c) All furniture and household contents belonging to the wife at the date of this Order situate at the P property;
(d) All monies standing to the credit of bank accounts in the sole name of the wife;
(e) Motor vehicle 2 registration number … in her possession;
(f) Jewellery in the wife’s possession given to her by the husband;
(g) The horse; and
(h) The caravan in the wife’s possession.
7.
The husband shall retain as his sole property:-
(a) The shares in his name in Mr Bailey Pty Ltd ACN … ATF R Trust;
(b) All monies standing to the credit of bank accounts in the sole name of the husband or under his control;
(c) The proceeds of the offset account in the joint name of the husband and wife with Q Bank, account number ending in …7
(d) The Z Bank investment in the sole name of the husband;
(e) The boat and trailer in his possession;
(f) A camper trailer in his possession; and
(g) The husband’s superannuation entitlements with Superannuation 1 and Superannuation 2.
8.
That save as is otherwise provided for herein, the husband and wife each releases in favour of the other party any claim they may otherwise have to an interest in, ownership or possession of any real or personal property presently registered in the name of or in the possession of the other party and to any debt, damages or other sum due or alleged to be due by the other party to that party.
9.
All extant applications in a case are dismissed.
10. All subpoenaed documents be returned to the persons or institutions from which they emanated and all exhibits are returned to the person or persons who tendered the same.
IT IS CERTIFIED
11. Pursuant to Rule 19.50 of the Family Law Rules 2004 (Cth) it was reasonable to engage senior counsel and counsel to attend.
Note: The form of the order is subject to the entry of the order in the Court’s records.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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