FEDERAL CIRCUIT COURT OF AUSTRALIA
| BAINES & BAINES | [2016] FCCA 1017 |
| Catchwords: EVIDENCE – Fresh evidence – where Applicant’s lawyers submitted an amended balance sheet annexed to written submissions three weeks after the close of the proceedings – where no leave sought to reopen – whether amended balance sheet should be considered. PRACTICE AND PROCEDURE – Appointment of Registrar to sign documents under Family Law Act 1975 (Cth), s.106A – Registrar of the Federal Circuit Court of Australia should be appointed and not a Registrar of the Family Court of Australia. |
| Legislation: Family Law Act 1975 (Cth), ss.4, 79, 80, 90MT, 90MZD, 106A Income Tax Assessment Act 1997 (Cth), ss.126-140 |
| Cases cited: Black v Kellner (1992) 15 Fam LR 343; FLC 92-287 Hickey & Hickey (2003) 30 Fam LR 355; FLC 93-143; [2003] FamCA 395 Milankov & Milankov (2002) 28 Fam LR 514; FLC 93-095; [2002] FamCA 195 S & S [2004] FamCA 906 Stanford v Stanford (2012) 47 Fam LR 481; FLC 93-518; [2012] HCA 52 |
| Applicant: | MR BAINES |
| Respondent: | MS BAINES |
| File Number: | SYC 4275 of 2011 |
| Judgment of: | Judge Scarlett |
| Hearing dates: | 4-7 March 2014 |
| Date of Last Submission: | 2 May 2014 |
| Delivered at: | Sydney |
| Delivered on: | 11 May 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr Blackah |
| Solicitors for the Applicant: | Warren McKeon Dickson |
| Counsel for the Respondent: | Mr Campton SC |
| Solicitors for the Respondent: | Gordon & Barry |
THE COURT NOTES THE FOLLOWING DEFINITIONS FOR THE PURPOSE OF THESE ORDERS
A.“Property B property” means the property at Property B in the State of New South Wales and being the property described in title reference (omitted) and which is registered in the name of the Applicant Husband.
B. “Property O property” means the property at Property O, Sydney in the State of New South Wales and being the property described in title reference (omitted) and which is registered in the name of the Husband.
C. “Property C property” means the property at Property C in the State of New South Wales and being the property described in title reference (omitted) and which is registered in the name of (omitted) Pty Ltd.
D. “(business omitted) Pty Ltd” means (business omitted) Pty Ltd, ABN (omitted), being a company registered in the State of New South Wales and having its registered office at Property K in the State of New South Wales…
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- AGLC
- BAINES & BAINES [2016] FCCA 1017
- Case
- [2016] FCCA 1017
- Decision Date
CaseChat Overview and Summary
The court was required to determine the appropriate orders for the division of the parties' superannuation interests, which were held within a self-managed superannuation fund where both parties were members and directors of the trustee company. The parties had agreed to an equal division of these superannuation assets, but the specific mechanism for achieving this, including the form of the superannuation splitting orders, required the court's determination. Additionally, the court considered whether to admit fresh evidence presented by the applicant's lawyers after the close of proceedings and the appropriate appointment of a Registrar to sign documents if required.
Judge Scarlett reasoned that the parties' concession for an equal division of superannuation was to be implemented through a "Cross-Split Order," which involved a split in favour of the husband from the wife's superannuation interest and a further split in favour of the wife from the husband's superannuation interest. The court applied the provisions of the *Family Law Act 1975* (Cth) concerning superannuation splitting orders and noted that procedural fairness had been observed due to the parties' roles as directors of the trustee company. The court also determined that the fresh evidence, an amended balance sheet, would not be considered as no leave was sought to reopen the proceedings.
The court made detailed orders for the division of non-superannuation assets, including the transfer of shares in a company to the wife and the discharge of mortgages on various properties. It also ordered the husband to pay a sum of $303,973.50 to the wife. The court further made comprehensive orders for the splitting of the parties' superannuation interests, including provisions for the transfer of assets and the resignation of the wife as a director and member of the superannuation fund. Finally, the court appointed a Registrar of the Federal Circuit Court of Australia to sign documents in default of either party.
Orders
Orders of the court
PART A – NON SUPERANNUATION ORDERS
Company
1.
Within fourteen (14) days of the date of these Orders and prior to the implementation of Order (9) of the Superannuation Orders, the Husband and Wife shall do all acts and things and sign all documents necessary:
(a) For the Husband to resign all directorships, positions and offices in (omitted) Pty Ltd;
(b) To transfer to the Wife all of his Ordinary Shares in (omitted) Pty Ltd.
2.
Subject to the Husband complying with Order (1) above, the Wife shall from the date of implementation of Order (1) indemnify and keep indemnified the Husband against all liability of whatsoever nature:
(a) By reason of the Husband having been employed as a Director, Officer or Shareholder of (omitted) Pty Ltd; and
(b) By reason of the Husband having been involved in any business operated by (omitted) Pty Ltd.
Real Estate
3.
Within twenty-eight (28) days of the date of these Orders, the Husband shall do all acts and things and sign all documents necessary to:
(a) discharge the Property M mortgage;
(b) discharge the Property P mortgage;
(c) discharge the Property R mortgage; and
(d) cause those discharges to be registered on the title to the said properties.
4.
Pending compliance with Order (3) above, the Husband shall do all acts and things and sign all documents necessary to indemnify the Wife and keep her indemnified with respect to the Property M mortgage and shall pay all mortgage instalments relating to the said Property M mortgage until such time as the discharge of the said mortgage is registered.
5.
Contemporaneously with the Husband complying with Order (3) above the Wife shall do all acts and things and sign all documents necessary to withdraw any Caveat lodged by her on the:
(a) Property B property;
(b) Property O property;
(c) Property A property;
(d) Property K property; and
(e) Property E property.
Other
6.
Within twenty-eight (28) days of the date of these orders, the Husband shall pay to the Wife the cash sum of $303,973.50.
7.
In default of the Husband complying with either Order (3) or Order (6) above, the Husband shall do all acts and things and sign all documents necessary to sell the Property B property for the best price reasonably obtainable in the following manner:
(a) The Husband shall authorise the Wife to instruct such lawyer as is necessary to have the conduct of the sale on behalf of both parties.
(b) The Wife shall appoint such real estate agent (hereinafter referred to as “the agent”) as is necessary to have the conduct of the sale.
(c) The Property B property shall be listed for sale by public auction within six (6) weeks of the date of appointment of the agent.
(d) The reserve price for the purpose of such auction shall be such price as is nominated by Mr G of (omitted) Valuations.
(e) The agent shall, if requested by the Wife at a date three (3) months after the date upon which the Property B property is first listed in accordance with Order (7)(c) and thereafter at three (3) monthly intervals until the Property B property is sold, nominate a sale price other than the originally nominated sale price and being such price as is determined by the Wife.
(f) The Husband shall cooperate in every way with the agent, including but not limited to:
(i) Making the key available to the agent;
(ii) Allowing inspection of the Property B property at all reasonable times requested by the agent;
(iii) Not taking any step to hinder or prevent a sale being effected;
(iv) Ensuring the said Property B property including the grounds is in a neat and clean condition at the time of inspection by the agent and any prospective purchaser; and
(v) Signing all documents requested by the agent in relation to the listing of the said property, other than a Contract or Agreement for Sale, which has not been authorised by the lawyer referred to in Order (7)(a).
(g) In the event that bidding at the auction does not reach the reserve price, the Wife may negotiate with the highest bidder or any other interested person and effect the sale of the said property at a price which is not more than 10% below the reserve price or such other price as the Wife shall nominate.
(h) In the event that the Property B property is not sold by public auction within eight (8) weeks from the date of appointment of the agent, the Husband shall do all acts and things and sign all documents necessary and as requested by the Wife so as to list the said property for sale by private treaty with the agent appointed in accordance with Order (7)(b) above.
(i) The sale price at which the said property shall be listed is to be such price as the Wife shall nominate.
(j) If the said property remains unsold, the parties must do all acts and things and sign all documents necessary to re-list the said property immediately for sale by public auction again on a date nominated by the agent and at such auction there is to be no reserve price unless otherwise nominated by the wife in writing.
8.
Upon settlement of the sale of the Property B property, the proceeds of sale are to be paid in the following manner and priority:
(a) all costs and expenses of sale, including legal costs and disbursements, agent’s commission, advertising expenses and auction expenses;
(b) the amount required to pay all municipal and water rates outstanding with respect to the said property;
(c) the amounts payable to the wife as prescribed by Orders (3) and (6) above; and
(d) the balance to the Husband.
9.
In the event that the proceeds of sale of the Property B property are insufficient to meet the amounts payable to the Wife under Order (3) or Order (6), the Husband must do all acts and things and sign all documents necessary to sell the Property A property for the best price reasonably obtainable in the following manner:
(a) The Husband shall authorise the Wife to instruct such lawyer as is necessary to have the conduct of the sale on behalf of both parties.
(b) The Wife shall appoint such real estate agent (hereinafter referred to as “the agent”) as is necessary to have the conduct of the sale.
(c) The Property A property shall be listed for sale by public auction within six (6) weeks of the date of appointment of the agent.
(d) The reserve price for the purpose of such auction shall be such price as is nominated by Mr G of (omitted) Valuations.
(e) The agent shall, if requested by the Wife at a date three (3) months after the date upon which the Property A property is first listed in accordance with Order (9)(c) and thereafter at three (3) monthly intervals until the said property is sold, nominate a sale price other than the originally nominated sale price and being such price as is determined by the Wife.
(f) The Husband shall cooperate in every way with the agent, including but not limited to:
(i) making the key available to the agent;
(ii) allowing inspection of the said property at all reasonable times requested by the agent;
(iii) not taking any step to hinder or prevent a sale being effected;
(iv) ensuring the said property including the grounds is in a neat and clean condition at the time of inspection by the agent and any prospective purchaser; and
(v) signing all documents requested by the agent in relation to the listing of the said property, other than a Contract or Agreement For Sale, which has not been authorised by the lawyer referred to in Order (9)(a).
(g) In the event that bidding at the auction does not reach the reserve price, the Wife may negotiate with the highest bidder or any other interested person and effect the sale of the said property at a price which is not more than 10% below the reserve price or such other price as the wife shall nominate.
(h) In the event that the said property is not sold by public auction within eight (8) weeks of the date of appointment of the agent, the Husband shall do all acts and things and sign all documents necessary and as requested by the Wife so as to list the said property for sale by private treaty with the agent appointed in accordance with Order (9)(b) above.
(i) The sale price at which the said property shall be listed is to be such price as the Wife shall nominate.
(j) If the said property remains unsold, the parties must do all acts and things and sign all documents necessary to re-list the said property immediately for sale by public auction again on a date nominated by the agent and at such auction there is to be no reserve price unless otherwise nominated by the wife in writing.
10.
Forty-eight (48) hours prior to settlement of the sale of the Property A property, the Husband must vacate the said property and leave it in good order and condition.
11.
Upon the settlement of the sale of the Property A property the proceeds of sale are to be paid in the following manner and priority:
(a) all costs and expenses of sale, including legal costs and disbursements, agent’s commission, advertising expenses and auction expenses;
(b) the amount required to pay all municipal and water rates outstanding with respect to the said property;
(c) the amounts payable to the Wife as prescribed by Order (3) and (6) above; and
(d) the balance to the Husband.
12.
In the event that any amount remains payable to the Wife in accordance with these Orders the Husband must pay interest on the amount from the date it is payable, being twenty-eight (28) days from the date of these Orders, at the rate prescribed by Part 22 of the Rules to the date of payment.
13.
Within fourteen (14) days of the date of these Orders or at such date as may be determined by the Wife the Husband must deliver to the Wife the piano currently in his possession.
14.
Unless otherwise specified in these Orders:
(a) Each party shall be solely entitled to the exclusion of the other to all property and chattels of whatsoever nature and kind in the possession or title of such party as at the date of these Orders;
(b) Each party shall be solely liable and indemnify the other against any liability encumbering any item of property to which that party is entitled in accordance with these Orders; and
(c) Each party shall be solely liable for and indemnify the other against any liability in their respective names including but not limited to credit cards and personal loans.
15.
The Husband and Wife must do all acts and things and sign all documents necessary to give effect to these Orders.
16.
In default of either party doing any act or thing or signing any document or executing any instrument necessary to give effect to these Orders, the Registrar of the Federal Circuit Court of Australia at Sydney is hereby appointed to sign all such documents and execute all such instruments in the name of the defaulting party and the defaulting party will be responsible for the whole costs of any such Application by the non-defaulting party to the Registrar of this Court.
PART B – SUPERANNUATION ORDERS
IN MAKING THESE ORDERS THE COURT NOTES;
A. The Mr Baines Superannuation Fund ABN (omitted) (“the Super Fund”) is a self-managed superannuation fund listed by the Australian Taxation Office on the Super Fund Lookup Website (omitted) as a complying superannuation fund.
B. The Super Fund was established under a Deed of Trust dated 1 August 2007. The rules governing the operation of the Super Fund are contained in the Deed of Trust (“the Rules”).
C. The Husband and the Wife are the only members of the Super Fund.
D. The trustee of the Super fund is a corporation, (business omitted) Pty Ltd (ACN (omitted)) (“the trustee corporation” “the trustee”) and the Husband and wife are the Directors of that corporation.
E. The Husband has the following member accounts in the Super Fund and in accordance with s.90MT(2) of the Family Law Act 1975 as at 30 June 2013 the respective balance was:
a. Accumulation $2,087,950
b. Accumulation (Tax free) $1,360,495
Total $3,448,444
F. The Wife has the following member account in the Super Fund and in accordance with s.90MT(2) of the Family Law Act 1975 as at 30 June 2013 the respective balance was:
a. Accumulation $874,320
b. Accumulation (Tax Free) $1,234,588
Total $2,108,908
G. That the requirements of procedural fairness in accordance with s.90MZD of the Family Law Act 1975 have been observed on the basis that the parties are the directors of the trustee corporation of the Super Fund.
H. “Baines Superannuation Fund” means Baines Superannuation Fund, ABN (omitted), created by Deed dated 18 July 2012 and in respect of which (omitted) Investments is the trustee.
Superannuation Orders
IT IS ORDERED:
Wife to transfer her entire interest in the Super fund to the Husband for an Instant (Splitting Order 1)
17.
That in accordance with paragraph 90MT(1)(b) of the Family Law Act 1975:
(a) the Husband is entitled to be paid the specified percentage, being 100% out of the Wife’s Super Fund interest; and
(b) the Wife’s entitlement to the amount in her member account (and the entitlement of any other person to payments out of the Wife’s interest) in the Super Fund, is correspondingly reduced.
18.
That the Husband and Wife in their capacity as directors of the trustee corporation of the Super Fund, shall do all such acts and things and have signed all such documents as may be necessary to:
(a) calculate, in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001 the entitlement awarded to the Husband in clause 1 of this Order; and
(b) pay the entitlement whenever the trustees make a splittable payment out of the Wife’s interest in the Super Fund.
19.
Splitting Order 1 operates from Operative Time 1.
Substantive Superannuation Split in favour of wife (Splitting Order 2)
20.
That in accordance with paragraph 90MT(1)(b) of the Family Law Act 1975:
(a) the Wife is entitled to be paid the specified percentage being 50% out of the Husband’s Super Fund interest; and
(b) the Husband’s entitlement to the amount in his member account (and the entitlement of any other person to payments out of the Husband’s interest) in the Super Fund is correspondingly reduced.
21.
That the Husband and Wife in their capacity as directors of the trustee corporation of the Super Fund shall do all such acts and things and have signed all such documents as may be necessary to:
(a) calculate, in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001 the entitlement awarded to the Husband in clause 4 of this Order; and
(b) pay the entitlement whenever the trustees make a splittable payment out of the Husband’s interest in the Super Fund.
Operative time of the Order
22.
The operative times for Splitting Order 1 and Splitting Order 2 operate as follows:
(a) Firstly, Operative Time 1 operates from the beginning of the day of the transfer of the transferable benefit; and
(b) Secondly, Operative Time 2 operates immediately following the operation of Operative Time 1.
Transfer of Investment Property to Trustee of Wife’s New Super Fund
23.
The service of this Order shall be deemed to have occurred on the date of the Order by reason of the parties in their capacity as directors of the trustee corporation and the Court notes that this will enliven the operating standards under Part 7A of the Superannuation Industry (Supervision) Regulations 1994.
24.
That after service by the trustee, on behalf of the Super Fund, of the payment split notice in accordance with regulation 7.03 of the Superannuation Industry (Supervision) Regulations 1994 in accordance with the operating standards under the Superannuation Industry (Supervision) Regulations 1994, the Wife shall do all such acts and things and sign all such documents as may be necessary, including but not limited to exercising her request in accordance with regulation 7A.06 of the Superannuation Industry (Supervision) Regulations 1994 (“the Wife’s regulation 7A.06 request”) for the transfer of the transferable benefits (defined in regulation 1.03 of the Superannuation Industry (Supervision) Regulations 1994) from the Super Fund to the Wife’s interest in a complying superannuation fund nominated by the Wife, being the Baines Superannuation Fund (ABN (omitted)) (“the Wife’s New Super Fund”).
25.
That the Husband and Wife as directors of the trustee corporation shall convene a meeting by exchange of minutes within fourteen (14) days after receipt of the Wife’s regulation 7A.06 request and in that meeting do all such acts and things, and sign all such documents as may be necessary to authorise the transfer of the transferable benefit in accordance with regulation 7A.12 of the Superannuation Industry (Supervision) Regulations 1994 to the trustee of the Wife’s New Super Fund by way of the following:
(a) The transfer of all right title and interest in the shares of (omitted) Pty Ltd from the trustee of the Super Fund to the trustee of the Wife’s New Super Fund; and
(b) The transfer of sufficient cash from the trustee of the Super Fund to the trustee of the Wife’s New Super Fund to meet the balance of the trustee’s liability in accordance with Splitting Order No 2 and the directors shall do all such things as may be necessary to sell or otherwise liquidate other investment property of the Super Fund to obtain the necessary cash referred to hereon
And it is noted that the trustee of the Super Fund will be eligible for Capital Gains Tax Rollover relief in accordance with s. 126-140 of the Income Tax Assessment Act 1997 for any in specie transfers.
26.
That immediately following the transfer of the transferable benefits from the Husband’s interest in the Super Fund to an interest in the name of the Wife in the Wife’s New Super fund, the Wife shall do all such things and sign all documents necessary to resign:
(a) as a director of the trustee corporation; and
(b) as a member of the Super Fund;
in accordance with the Rules of the Super Fund.
27.
That contemporaneously with the wife’s compliance with the provisions of Order (26) of this Order, the Husband will indemnify and keep the wife effectively indemnified against all liability of and in relation to the Super Fund including any debt personally guaranteed by the wife, and including any unpaid income tax assessed or hereinafter assessed against the Wife in respect of income derived or deemed to have been derived by the Super Fund inclusive of interest, penalties, costs and fines and from all proceedings, costs, claims or demands in respect thereof.
28.
That in the event of any dispute arising between the parties in the exercise of their powers as trustees of the Super Fund, the parties shall appoint an arbitrator nominated by the President of the Institute of Chartered Accountants.
29.
Pending the transfer of the transferable benefits from the Husband to the Wife and from the Wife to the Husband:
(a) Each party is restrained from dealing with, charging, encumbering or disposing of any investment property of the Super Fund other than in accordance with the terms of this Order; and
(b) Each party shall immediately revoke any binding death benefit nomination already made and each party be, and is hereby, restrained from:
(i) making any binding death benefit nomination in favour of a child described in regulation 13 of the Family Law (Superannuation) Regulations 2001;
(ii) making any other nomination where the effect of such nomination would be to render any splittable payment not splittable; and
(iii) doing any such act or thing which would defeat, extinguish or reduce the entitlement of either party under this order.
AND THE COURT NOTES
A. The value of the transferable benefits to be transferred:
a) from the Wife’s interest in the Super Fund to the Husband’s interest in the Super Fund; and
b) from the Husband’s interest in the Super Fund to the Wife’s interest in the Wife’s New Super Fund;
are calculated in accordance with regulation 7A.12 and regulation 7A.11 respectively of the Superannuation Industry (Supervision) Regulations 1994;
B. In accordance with regulation 14F of the Family Law (Superannuation) Regulations 2001, any payments from:
a) The Wife’s interest in the Super Fund made after the trustees have transferred the transferable benefits from the Wife to the Husband’s interest in the Super Fund; and
b) The Husband’s interest in the Super Fund made after the trustees have transferred the transferable benefits to the Wife’s New Super Fund;
are not splittable payments.
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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