Birk & Farwell (No 2)
[2021] FedCFamC2F 393
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Birk & Farwell (No 2) [2021] FedCFamC2F 393
File number: MLC 14486 of 2019 Judgment of: JUDGE O'SHANNESSY Date of judgment: 17 November 2021 Catchwords: FAMILY LAW – final property – disputes to be determined consistent with the scheme of the reasons – form of orders determined on the papers in chambers. Legislation: Family Law Act 1975 (Cth). Division: Division 2 Family Law Number of paragraphs: 22 Date of last submissions: 15 November 2021 Date of hearing: On the papers in chambers Place: Melbourne Solicitor for the Applicant: Lopes Family Law Solicitor for the Respondent: Westminster Lawyers Pty Ltd ORDERS
MLC 14486 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR BIRK
Applicant
AND: MS FARWELL
Respondent
ORDER MADE BY:
JUDGE O'SHANNESSY
DATE OF ORDER:
17 NOVEMBER 2021
Amended pursuant to rule 10.13(1) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) on 26 November 2021
THE COURT ORDERS THAT:
1.That on or before 12 noon on Friday 17 December 2021 the respondent de facto wife (‘the Wife’) advise the applicant de facto husband (‘the Husband’), in writing or by email to his solicitors, whether or not she will pay out his interest in the former matrimonial home known as and situate at C Street, Suburb D ("the C Street, Suburb D Property").
2.In the event the Wife advises the Husband within the time and as provided at order 1 herein;
(a)that she will pay out his interest in the C Street, Suburb D Property; or
(b)that she has elected to sell the parcel of shares (described herein as “the Shares”); then
(c)the Wife forthwith sign and deliver to the Husband all documents necessary to transfer to the Husband all of her right title and interest in the following shares (“the Transfer of Shares”):
(i)4328 Company CC shares;
(ii)2708 Company KK Ordinary shares;
(iii)50 Company JJ shares;
(iv)121 Company FF shares;
(v)1735 Company GG shares; and
(vi)900 Company KK shares; and
the shares described at (i)-(vi)
(iv)are herein described as “the Shares”.
3.That within 14 days of the Transfer of Shares the Husband sell all of the Shares and the net proceeds of the sale of these shares be forthwith distributed 41% to the Husband and 59% to the Wife.
4.That unless the provisions of order 6 herein apply, on or before 4.00 pm on Friday 14 January 2022 ("the Due Date") the Wife pay:
(a)the Husband the sum of $579,703 (“the Payment”) being, $585,056 less agreed adjustments ($4,957 being one half of private school fees agreed to be paid, and $396.36 being amounts agreed to be owing to Wife pursuant to interim financial Orders not yet discharged);
(b)pay to Mr Z the sum of $2,166 by way of costs associated with the subpoena;
5.That contemporaneously with the Payment:
(a)The Husband do all such acts and things and sign all such documents as may be required to transfer to the Wife at the expense of the Wife all of his right, title and interest in the real property situate at and known as C Street, Suburb D being the whole of the land more particularly described in Certificate of Title Volume …Folio … (“the C Street, Suburb D Property”);
(b)The Wife indemnify the Husband against all payments and liability pursuant to the mortgage registered number … (“the C Street, Suburb D Mortgage”) and all apportionable rates, taxes and outgoings of or with respect to the C Street, Suburb D property of whatsoever nature and kind; and
(c)The Wife discharge the C Street, Suburb D Mortgage by refinancing the loan secured by the C Street, Suburb D property into a loan in her sole name so as to release the Husband from all liability in relation thereto.
6.That in the event that the Wife advises the Husband that she will not pay out his interest in the C Street, Suburb D property or the Payment has not been made and the C Street, Suburb D Mortgage discharged by the Due Date, then the real property be forthwith sold altogether out of Court (“the Sale”) and upon completion of the Sale, the sale proceeds be applied as follows:
(a)Firstly, to pay all conveyancing costs, commission and agreed expenses of the said sale;
(b)Secondly, to discharge the remaining C Street, Suburb D mortgage;
(c)Thirdly to divide the remaining proceeds of sale 41% to the Husband and 59% to the Wife; and
(d)Contemporaneously with the distribution in paragraph 6(c):
7(c):(i)the Husband pay to the Wife $41,999 (being an adjustment between the parties for all of the parties' assets, excluding superannuation, other than the C Street, Suburb D Property less the mortgage and without the Shares); and
(ii)In the event the Wife has not elected to sell the Shares as provided in these orders, then the Wife pay to the Husband the further sum of $53,300 (being 41% of $130,000, the value attributed to the Shares in the 22 October 2021 reasons).
(iii)the Husband pay to the Wife the sum of $4,957 (being reimbursement for half of the agreed first term school fees paid by the Wife);
(iv)the Husband pay to the Wife the sum of $396.60 (being the agreed outstanding amounts payable by the Husband to the Wife pursuant to Interim Orders);
(v)the Wife pay to Mr Z the sum of $2,166 by way of costs associated with the subpoena;
7.That the parties pay any capital gains tax payable by either of them at their respective effective tax rates actually applied to their total taxable income ie what they are each actually required to pay by way of tax, associated with
(a) the sale of the G Road, Suburb D and E Street, Suburb F properties;
(b) the sale of the shares required to pay the Husband the ordered partial property settlement payment of $40,000; and
(c) the sale of the shares that are sold pursuant to order 2 and 3 of these orders;
when the same becomes due and payable following either party lodging the applicable tax return (and only the amount that each party is required to actually pay associated with these sales) as to 41% to be paid by the Husband and 59% by the Wife, with the parties to make such payment within seven days of receiving the applicable Notice of assessment and a copy of the full lodged tax return from the other party, and in the event either party lodges an amended return thereafter for the applicable year/s, that there be any further adjustment in accordance with this order based on any such return.
8.That not-withstanding any previous Orders, (noting that all other previous orders are discharged upon the making of these orders as a matter of course pursuant to Rule 5.01 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021) pending the payments or settlement of the sale of the C Street, Suburb D property:
(a)The Wife have the sole right to occupy the C Street, Suburb D property and that during such right of occupation, the Wife pay all instalments pursuant to the mortgage and all rates, taxes and like apportionable outgoings of the C Street, Suburb D property of whatsoever nature and kind as they fall due;
(b)The parties hold their respective interests in the C Street, Suburb D property upon trust pursuant to these orders; and
(c)Neither party encumber the C Street, Suburb D property (or increase the level of indebtedness secured thereon) without the consent in writing of the other party, save as is required to comply with these orders; and
(d)Any arrears properly due as a consequence of interim orders of more than the agreed sum of $396.36 paid pursuant to these orders are not discharged by these orders and/or Rule 5.01 and in the event of any application is respect of any alleged arrears, such application be accompanied by details of the legal costs of such application to the point of issue and to conclusion.
9.That within 30 days:
(a)the Wife do all things and sign all documents to transfer and so transfer all of her right, title and interest in her shares in H Pty Ltd to the Husband at the Husband’s expense, subject to any advice obtained in order (b) of this order and/or taking any steps that may be required pursuant to order (b) of this order;
(b)the Husband obtain advice on what (if anything) needs to be done to deal with the fact that some of the shares held by the parties in H Pty Ltd are recorded as not being held beneficially and if it is necessary to do anything in that regard, then both parties do all things and sign all documents to change that, if advised the same is necessary; and
(c)the Husband indemnify the Wife with respect to any and all liability associated with H Pty Ltd.
10.That orders 11 to 14 (inclusive) of these orders are binding on the Trustee of the Super J Superannuation Trust (Super Fund J).
11.That a base amount of $30,301 pursuant to section 90XT(4) of the Family Law Act 1975 (Cth) ("the Act") be allocated to the Husband out of the interest of the Wife, Ms Farwell born in 1972 in the Super J Fund Scheme account member number ….
12.That pursuant to Section 90XT(1)(a) of the Family Law Act 1975, whenever a splittable payment becomes payable in respect of the interest of the Wife in the Super J Fund Scheme, the Trustee of the said superannuation fund shall:
(a)Pay to the Husband or his legal representative the amount which is calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using a base amount of $30,301; and
(b)Make a corresponding reduction in the entitlement that the Wife would have had but for these Orders.
13.That order 12 has effect from the operative time.
14.That the operative time for the purpose of Orders 11 and 12 is the fourth business day after the day on which a certified copy of the sealed Orders is served on the Trustee of the Super J Fund.
15.All extant applications and responses are otherwise dismissed.
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 a pseudonym Birk & Farwell (No 2) has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE O’SHANNESSY
This is the third judgement delivered in the matter of Birk & Farwell. The first was an interim decision following a contested interim hearing (Birk & Farwell [2020] FCCA 2732). The second was a decision as to the division of property hearing over 3-4 May 2021 (Birk & Farwell [2021] FedCFamC2F 234). In that judgment delivered on 22 October 2021 I ordered that the parties bring in minutes to give effect to that judgement within 14 days and that was Friday 5 November 2021. I determined that the non-superannuation assets of the parties should be divided in proportions of 41% to the husband and 59% to the wife.
The parties requested a further seven days to bring in the minutes to give effect to the reasons delivered, that is to have until Friday, 12 November 2021.
Neither party made any application to adduce further evidence between the last day of hearing and the reasons and decision handed down on 22 October 2021.
The parties were unable to agree upon the form of the minutes. On Friday 12 November 2021 at 3.37 pm, the applicant de facto husband (‘the Husband’) provided a form of the orders said by him to give effect to the reasons of 22 October 2021 (H3 16.11.21 orders proposed by the Husband), a written submission dated 12 November 2021 as to the form of the orders (H6 16.11.2021 orders proposed by Husband) and a letter to, and a reply from, the trustee of a superannuation fund as to the form of the superannuation split (H4 16.11.2021 & H5 16.11.2021) showing procedural fairness has been provided to the trustee. Implicit in those documents was a request to determine the remaining dispute as to the form of the orders in chambers and on the papers.
On Monday, 15 November 2021 at 5:10 pm, the respondent de facto wife (‘the Wife’) provided a form of the orders said by her to give effect to the reasons of 22 October 2021 (W3 16.11.2021 Wife's orders sought) and a written submission dated 15 November 2021 as to the form of the orders (W4 16.11.2021). Like the documents provided by the Husband, implicit in those documents was a request to determine the remaining dispute as to the form of the orders in chambers and on the papers.
By comparing the orders sought by the Husband and those sought by the Wife is clear that considerable work and effort has gone into attempting to reach agreement on the form of the orders.
These are reasons as to the form of those orders. It is necessary to recite paragraph 165 of the reasons of 22 October 2021.
[165]The parties agreed the Wife should have the opportunity to attempt to pay out the Husband and if she could not then the property should be sold. Now that the parties know the decision, if that opportunity to buy out the Husband is still sought the Wife should have 60 days from the date of the orders to do so and in default there be a sale and division of the proceeds.
I am endeavouring to determine the remaining dispute as to the form of the orders consistent with that scheme determined at [165].
The first dispute was whether the bundle of shares, included in the asset pool at a value of $130,000 at final hearing, should be sold and the proceeds divided promptly (as the Husband sought) or only sold after the Wife had ascertained what finance she could and could not raise over a further 45 days, and then if the Wife was able to raise sufficient finance to buy out the Husband's interest in the former matrimonial home ("the C Street, Suburb D Property') shares would be sold. Otherwise the value of the shares, as agreed at the time of the final hearing back in early May, would be divided between the parties 41/59 by the Wife paying to the Husband a sum equivalent to 41% of the value of those shares as agreed back in early May.
The Husband contended that the Wife had had ample time to contemplate whether she would need to sell the shares or not and the Wife contended that she had always made it clear that she wished to purchase the Husband's interest in the matrimonial home if possible and I infer, from the manner of her lawyers drafting of the proposed orders, that she would prefer, if she cannot raise the finance to buy the Husband's interest in the C Street, Suburb D Property and the property has to be sold, to keep the shares.
Whether or not the now remaining bundle of shares include precisely the same bundle of shares as the Wife brought into the relationship, her initial contribution of those shares is the foundation of the existing bundle of shares (referred to as “the Shares” in the orders). In that circumstance and 15.5 years later it is not unreasonable for the Wife to endeavour to keep those shares if she can and still comply with her obligations under the orders. The scheme of the orders the Wife proposes means she must elect whether or not she can sell the shares well within the 60 days scheme of the orders. It is just and equitable because of those circumstances that she have that opportunity. Otherwise the sale of the shares will ascertain the market value at the time of sale but also likely trigger a capital gains tax liability. The orders will provide that if the Shares are transferred and sold as provided in these orders that liability is born in the 41/59 proportions of the property division. I take into account that it is the preferred option of the Wife to buy out the Husband if you can and in that case to sell the shares and the parties pay the tax.
The Husband's submissions concede that there is due to the Wife as a consequence of interim orders made the sum of $396.36. The Wife contends that the sum due is not $396.36 but $2440.15. Hence it is agreed that part of the alleged $2,440.15, that is $396.36 is due, but the remaining $2,043.79 is not agreed. The Wife's written submissions particularise what is alleged to be due, including amounts down to $11.80. Such an issue was not agitated at final hearing and I do not have evidence as to when the said arrears were said to have arisen.
If the arrears were said to have arisen prior to final hearing it could be argued that the parties or one of them had determined that it was not cost-effective to prolong the trial by agitating that issue and that it should not be permitted at this time. On the other hand if one party had been complying with the interim orders up to the time of final hearing and after that had ceased to comply with the interim orders the delay in the delivery of judgement would not ordinarily excuse a party from compliance with those still extant interim orders. It maybe there were arrears but that the issue had not been agitated on the basis that such detail would, like the capital gains tax, be worked out later.
Hence I am unable to determine whether the remaining disputed $2,043.79 is due or not. Nor do I intend to give a party license to ignore the consequences of the interim orders if the further sum or some part of it is properly due by inadvertently discharging arrears. I must also apply a sense of proportionality to the funds in dispute. Whilst not quite de minimis I cannot determine whether the pursuit of the further arrears is an appropriate proportionate response at this time.
I accept the submission of the Husband that further evidence of a change in circumstances cannot be simply referred to in written submissions as to the form of the orders and hence be evidence and be taken into account.
Hence balancing these competing considerations I have determined that the orders will not by implication or otherwise discharge any arrears due under the interim orders. Notwithstanding the relatively modest sum involved, I am not permitted by law, to make a guess without evidence or to treat the amount as de minimis by ignoring the dispute.
The Wife sought 45 days from the making of these orders to advise the Husband as to whether she is able to purchase his interest. That is a sensible and courteous provision and I will make the order that she have 6 weeks or 42 days from when the orders were originally to be provided in my reasons. However to avoid notifications, transfers of shares and the house and/or refinances falling due during the Christmas break when it is likely that solicitors offices, including those of finance companies, are likely to be closed I have varied slightly the various dates to attempt to insure that no event will fall between the day before Christmas Eve and the likely reopening of some solicitor's offices on Monday 10 January 2021. The scheme of the orders remains consistent with the reasons delivered in that the Wife will have more than 60 days from the date of orders contemplated by the reasons to organise funds but slightly less than 45 days to determine whether she will be able to buy out the Husband or not. I have determined to use the term “buy out” rather than “purchase” as this is not a purchase in the usual sense but a payment pursuant to court orders contemporaneously with a transfer of an interest in property.
The form of the order as to payment of the capital gains tax consequent upon the Wife's sale of $40,000 worth of shares to fund an interim payment to the husband is in dispute. The orders that the Husband seeks are consistent with the arguments of both sides at final hearing. I am asked to infer that the Wife or her advisers has calculated that the sum of 41% of the tax for that event is likely to be $2,388.12 but that further documents are not to hand necessary to prove that sum as certain. I am not persuaded that sum should be treated differently from other taxation sums due. Certainly the Husband’s 41% share of that tax should be paid immediately when the greater sum is due or if paid already paid as soon as practical. The orders as to taxation are in the agreed form.
The draft orders as sought by the wife provide for the capital gains tax payable relating to the G Road, Suburb D and E Street, Suburb F properties to be paid by the parties in the appropriate proportions and without any security for such payment. I do not have any evidence that necessitates the sum of $2,388.12, said to be due to the wife in regard to one transaction, to be treated differently to the other likely taxation liabilities.
Hence I will make orders in regard to taxation as drafted by the Husband.
My associate alerted the parties that I intended to rejig dates slightly and regarded their letters as a request to determine the remaining disputes in chambers on the papers. Following that communication the Husband sought further time to respond to the Wife’s submissions about the sale of the shares and the “new” evidence. I did not take into account “new” evidence not otherwise before the court but merely recited in submission. No submission was made against the remaining dispute being heard in chambers and on the papers. The Husband’s submissions had accurately anticipated the Wife’s submission as to the shares and responded to them. The parties have provided each other with abundant procedural fairness. It is in the interests of justice that the decision as to the form of the orders be made at this point and I dismiss the application to make yet further submissions in writing as to the form of the orders.
They are my reasons.
I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment of Judge O'Shannessy. Associate:
Dated: 17 November 2021
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