Blythe and Blythe

[2018] FamCA 883

FAMILY COURT OF AUSTRALIA

BLYTHE & BLYTHE [2018] FamCA 883

FAMILY LAW – ENFORCEMENT OF ORDERS –Where the husband seeks orders for works to be done to a property that was previously meant to be sold pursuant to final consent Orders – Where the wife seeks orders to appoint an independent trustee for the sale of the property with power given to the trustee to organise and complete the required works – Where the Court finds that the only source of power to vary those final Orders, by the making of further Orders as sought by the parties, is found in s 79A(1) of the Family Law Act 1975 (Cth) – Where the Court is satisfied that circumstances have emerged since the making of the final Orders which have made it impracticable for the sale of the property to be effected within the requisite time frame – Where the Court is not satisfied that the wife has acted unreasonably – Where the Court is satisfied that it is just and equitable to resolve this immediate dispute by appointing an independent trustee for sale.

Family Law Act 1975 (Cth)

APPLICANT: Mr Blythe

RESPONDENT: Ms Blythe

FILE NUMBER: BRC 1545 of 2017

DATE DELIVERED: 31 October 2018

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Forrest J

HEARING DATE: 29 October 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Alexander

SOLICITOR FOR THE APPLICANT: MacPherson Family Law

COUNSEL FOR THE RESPONDENT: Ms Oakley

SOLICITOR FOR THE RESPONDENT: Lucy Wood Family Law

Orders

1. That pursuant to s 79A(1)(b) of the Family Law Act 1975 (Cth) paragraph 38 of the Orders made by this Court on 21 November 2017 be set aside and in its place the following Orders are made:

   (a)Mr B is hereby appointed as trustee for the sale of the property situated at C Street, D Town more particularly described as Lot … in RP … (“the D Town property”);

   (b)The husband and the wife shall in their capacities as Directors of E Pty Ltd, trustee of the Blythe Fund, and to the extent that it is necessary, in their capacities as Directors of Blythe Pty Ltd, trustee of the Blythe Trust, do all things necessary to transfer title of the D Town property to Mr B as trustee for sale;

   (c)Mr B is hereby empowered to cause the necessary repair and rectification of the D Town property to be carried out as quickly as is reasonably practicable and to sell the D Town property by auction or by such means reasonably required to affect the sale of the property as quickly as is reasonably practicable after such repair and rectification work is completed and on such terms and conditions as he determines appropriate in carrying out the duties of the trust he is hereby appointed to;

   (d)Mr B is hereby authorised in carrying out the terms of the trust he is hereby appointed to, to authorise all expenditure necessary in the discharge of his duties as trustee for sale and to cause any such expenditure to be paid for from cash assets held in the accounts of the Blythe Fund as and when such payment is required. To be clear, this authority extends to the authorisation and payment of expenditure reimbursing the Husband for any expenses he has already personally incurred on behalf of the Blythe Fund to the extent that Mr B is satisfied that such expenses are legitimately claimed as expenses incurred on behalf of the Blythe Fund and rightfully to be paid by the said Fund;

   (e)The Husband and the Wife shall assist Mr B as may be reasonably required by him from time to time, including by complying with any written directions he may issue to them or either of them in connection with matters relating to the discharge of his duties under the trust to which he is by these Orders appointed;

   (f)That following the sale of the D Town property, Mr B shall stand possessed of the net proceeds of sale, after payment of all costs and expenses of sale, and he shall stand possessed of the net income received on the D Town property until sale, after payment of all rates, taxes, costs of insurance and costs of all necessary repairs and rectification work and in discharging the duties of the trust he is hereby appointed to he shall have regard to the provisions of paragraph 37.7 of the Orders made by this Court on 21 November 2017;

   (g)That before finally disbursing the net proceeds of sale to the Blythe Fund and completing the duties of the trust he is hereby appointed to by these Orders, Mr B shall be entitled to pay himself reasonable fees for the professional work he undertakes in discharge of the duties of the trust he is hereby appointed to, such expenses to be charged at the rates set out in the Queensland Offices column of the Schedule of Hourly Rates that is attached as Exhibit “PN-2” to the affidavit of Mr B filed in these proceedings on 26 October 2018 and he shall fully account to the Husband and the Wife in their capacities as Directors of the said trustee companies for such fees he causes himself to be paid.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Blythe & Blythe has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 1545 of 2017

Mr Blythe

Applicant

And

Ms Blythe

Respondent

REASONS FOR JUDGMENT

1. In November last year, the parties in this matter asked me to make orders pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) finalising their property settlement. They provided a draft of Orders they consented to which was approximately twenty pages long. It was comprehensive and clearly well thought out and carefully drafted. The Court was told the parties had reached agreement just prior to a private arbitration of their dispute about their property said to have been valued at around $20,000,000. I made the Orders they asked me to make, satisfied that they were just and equitable.

2. Now, a year later, they are back, again in dispute, this time each asking the Court to resolve their fresh dispute as they are unable to.

3. The parties, like so many Australians, have a self-managed superannuation fund (“SMSF”). The trustee of their fund is a company. They are, of course, both directors and shareholders of that company. Their superannuation fund owns a valuable commercial property in a south-west Queensland town. It is leased to a third party unrelated company. The SMSF also has significant cash assets, taking its assets to a value of roughly $5,000,000.

4. The Orders made last November provided for the parties to do all things necessary to cause the trustee company to sell the property and for the net proceeds of sale to be held by the SMSF with the parties to do all things necessary for the wife’s member benefit entitlement to be rolled into another superannuation fund of her choice and for her to resign as a director of the trustee company and transfer her share in that company to the husband.

5. The Orders were very specific in respect of the timetable and processes to be applied in getting the trustee company to sell the property. By that timetable, the property was to be sold by now, if not by private treaty, then by auction. The evidence supports a finding that the parties have fallen into dispute about the sale and about readying the property for sale.

6. Paragraph 59 of the Orders provided:

   That either party have liberty to apply as to implementation or enforcement of these orders upon the giving of 7 days written notice to the other.

7. By Application in a Case filed on 29 August, 2018, the husband applied to the Court for orders that he and the wife be ordered to engage a firm of engineers to effect certain works to be done at the property. The husband’s application seeks orders that he be appointed “as the point of contact and conduct all communications and provide all authorities on behalf of the parties in relation to the work”. In simple terms, he seeks sole control of the process. He does, though, seek a further Order that obliges him to keep the wife informed of the decisions and directions he makes in this regard. Finally, he seeks an Order obliging the wife to authorise the SMSF’s bankers to pay all invoices in respect of the work to be done, other expenses said to have already been paid for by the husband on behalf the SMSF, as well as any further costs of a named bookkeeper for work she may do on behalf of the fund (presumably as unilaterally directed by the husband) and any further expenses incurred by the husband on behalf of the fund “in supervising the work”.

8. The wife opposes the husband’s application and instead seeks to have an independent third person appointed as trustee for the sale of the commercial property with power given to him to be responsible for causing the work to be done, paid for by the SMSF and then to appoint agents to sell the property by auction. She proposes Mr B, who is an accountant, official liquidator and registered trustee in bankruptcy, to be appointed as the trustee for this purpose.

9. Mr B gives evidence that he is experienced, over 19 years, in causing repairs to properties and preparing properties for sale and selling them in his professional capacity. He deposes to a willingness to accept the appointment and sets out the hourly charge out rates he would expect to be paid for any such work done.

The Initial Dispute as to whether this is an application pursuant to s 79A of the Act

1. Counsel for the wife submits that the Orders sought by the husband actually seek to vary the s 79 Orders originally made on a final basis and that, as such, they are sought pursuant to s 79A(1) of the Act. Counsel for the husband submits that the Orders sought are merely sought as Orders to effect the implementation or enforcement of the final Orders and as such are “machinery orders” rather than substantive orders varying the previous orders. It matters, submits counsel for the wife, as it is only s 79A(1) that provides a source of power to make orders varying final orders made pursuant to s 79.

2. The Orders provided for the property to be sold by private treaty on or before the expiration of three months from 21 November 2017 by an agent chosen by agreement between the parties. The evidence shows that they chose F Real Estate. The Orders provided that if not sold by private treaty within that three months then it was to sell by auction within a further three months (by 21 May 2018) unless the parties otherwise agreed in writing. The evidence suggests the parties agreed in or around March to extend F Real Estate’s authority to sell by private treaty for a few more months until sometime in May but then, when the property had not been sold, the parties agreed to sell the property by auction. The evidence shows that they could not then agree as to who would be the agent to auction the property. By the terms of the Orders, on default, the auctioneer was to be appointed by the President of the Real Estate Institute of Queensland at the request of the parties or either of them. That has not happened to this point in time. It appears, on the evidence, that neither party turned their mind to that issue.

3. In the meantime, the parties have fallen into substantial dispute about work that is to be done to make the property safe for the tenants and those who access it through the tenants. I apprehend from the evidence and what fell from counsel during the hearing that the likely cost of this work could be substantial. The figure of around $250,000 was mentioned without demurrer at one point. The parties are not in dispute about the fact that this work needs to be done urgently for safety and risk management reasons, as well as the practical fact that the work really must be done now before they act to sell the property. The parties just remain in dispute about who to engage to do the work and to ensure it is done properly.

4. As such, I do not consider this to be simply an application for enforcement by one party of an obligation cast upon the other party in the final orders. I accept the submission that to make further Orders in the terms sought by the husband or in the terms sought by the wife is actually to be varying the final Orders as made last year. I accept that the only source of power to vary those Orders in contested proceedings is found in s 79A(1). I do not consider them just to be “machinery orders”.

5. Counsel for the wife submitted that the source of power correctly can be found in s 79A(1)(c). She submitted that the husband defaulted in his obligation to appoint a selling agent and that in the circumstances that have arisen “as a result of that default” it is just and equitable to vary the Order as the wife seeks.

6. It is correct that the husband did not immediately accept the wife’s nominated Auctioneer, but the circumstances that have arisen since then, in my judgment, have not arisen “as a result of that default”. The Orders provided a default response in respect of such default and that was for the President of the Real Estate Institute of Queensland to nominate an Auctioneer at the request of the parties or either of them. Neither the parties nor either of them made that request. The Orders provided their own remedy for such default so that they could continue to be implemented. The circumstances the parties now find themselves in are not, in my judgment, causally related to the failure of the property to be auctioned by an agreed or nominated Auctioneer within three months of the time at which the parties agreed that the property should go to auction, which would have been around the end of August. The problems with the property that the parties now agree need to be fixed before the property is sold emerged prior to the expiration of that three month period. It is their emergence and the parties’ agreement that they needed to be rectified before sale that really prevented the property being sold when it should have been rather than the failure to have an Auctioneer in place. Even had an Auctioneer been in place, absent agreement between the parties as to the scope of work that needed to be done and the taking of action to have that work done, the property would be most unlikely to have sold at an auction.

7. There is no provision in the Orders made last year that provides an appropriate mechanism for dealing with the impasse that they have reached that is effectively interfering with the implementation of the Orders and the finalisation of the property settlement the Orders provide for. That is why each party seeks Orders that effectively vary the existing final Orders by adding new requirements. Accordingly, I am satisfied that the source of power for the Court to make Orders varying the existing Orders so that the property settlement can be finalised as quickly as possible is found in s 79A(1)(b) rather than (1)(c). I am satisfied that these circumstances that have emerged since the Orders were made last year are what has made it impracticable for that part of the Orders providing for sale to be effected by auction within the requisite time frame to be carried out.

8. This satisfaction gives rise to the discretion to vary the Orders as sought by the parties. However, it must be recognised that it is still a s 79 order that is being made in the exercise of this discretion and that the s 79(2) mandate of not making an order under s 79 unless the Court is satisfied in all the circumstances that it is just and equitable to make the order still applies.

What Order should now be made that is just and equitable?

1. The evidence satisfies me that there is a great deal of mistrust between these two parties. It satisfies me that they find it impossible to reach agreement on decisions that have to be made, especially ones that involve authorisation of expenditure from their SMSF. For the husband, the submission is made that he should be the one who is given sole responsibility for making the decisions and authorising the expenditure and that the wife should simply be ordered to accept and authorise his decisions whether she likes them or not. The husband’s evidence is that he is the one best placed to make the correct decisions. It is true that it is also the case that he has as much financial interest in maximising the price that can be obtained for the SMSF’s property as does the wife.

2. The husband’s position is one where he seeks this sole control for the purposes of getting on with finalising the necessary rectification work and then simply reverting to the terms of the final Orders in respect of the sale of the property. That is, as I have already said, leaving it for the parties or one of them to have the President of the Real Estate Institute of Queensland to nominate an Auctioneer to sell the property.

3. The wife’s position is based on the fact that the evidence demonstrates mistrust resulting in stalemate that is holding up finalisation of the property settlement in accordance with last year’s consent Orders. For her, it is submitted that the fairest solution is for an independent professional to be appointed as trustee for sale with authority to arrange for the finalisation of the rectification works, the appointment of the Auctioneer and the carrying out of the sale of the property. That way, the wife, particularly, can be satisfied that decisions are being made in both parties’ interests and not in the interests of the husband alone.

4. For the husband, it was submitted that the wife’s proposal for an independent trustee to be appointed for the sale of the property would delay the repair work that is urgently required and cost the parties a lot more money than the other course of action would cost.

5. Ultimately, I am satisfied that the just and equitable resolution of this immediate dispute is to appoint the independent trustee for sale as sought by the wife. As I pointed out to counsel for the husband during the hearing of this application, there is nothing in the evidence, particularly where the decision is being made on the papers alone without any cross-examination of the parties, which persuades me that the wife is the party who is acting unreasonably in all of these circumstances. If I was so persuaded, that might be reason to give unilateral control and authority to the husband, but I am just simply not so persuaded.

6. An independent trustee experienced in this sort of work will ensure that disagreement between the parties will not hold up the carrying out of the rectification work, will not hold up the authorisation of expenditure from the SMSF’s bank account, will not hold up the sale of the property and will not hold up the finalisation of their property settlement that they agreed upon last year. The appointment of an independent trustee will also provide both parties with confidence that each of their interests in obtaining the best outcome is being respected and considered.

7. There is no evidence before me that persuades me that the trustee proposed by the wife will not be able to get on with authorising the rectification work as urgently as it is said to be needed. As to the issue of cost, I do not consider that to be prohibitive of the appointment of the proposed trustee in this case. The parties have agreed to the division of approximately $20,000,000 worth of property and superannuation. Their SMSF is said to have assets with a value of around $5,000,000, including around $1,000,000 in cash assets and the net assets of the fund after sale of the property are to be effectively divided equally between them with the wife to roll her interest into a new fund. I am satisfied that with prudent management the amount of property and superannuation the parties will be retaining as they move on with their lives apart, will be well and truly sufficient to provide them with a lifestyle far more comfortable than most Australians enjoy. Accordingly, I am satisfied the parties can bear the likely costs of the independent trustee through their SMSF. I will make the Orders that the wife seeks varying the final Orders made last year.

1. I make the Orders set out at the commencement of these written reasons.

I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Forrest delivered on 31 October 2018.

Associate: 

Date:  31 October 2018