Brisbois and Brisbois and Ors

[2014] FamCA 807

FAMILY COURT OF AUSTRALIA

BRISBOIS & BRISBOIS AND ORS [2014] FamCA 807

FAMILY LAW – PROPERTY – Undefended final property proceedings – where primary asset of the parties is held in a family trust – where the trust is the alter ego of the husband – where the husband has control as to the appointment or removal of trustees – where the husband has control as to distribution of income and capital in his absolute discretion – where order made removing the trustee appointed by the husband and appointing the wife as trustee of the trust – where orders made facilitating the wife selling the trust property and paying to herself her entitlement.

Family Law Act 1975 (Cth) ss 75(2), 79, 80

Stanford v Stanford (2012) 247 CLR 108
Bevan & Bevan [2013] FamCAFC 116

APPLICANT: Ms Brisbois

1st RESPONDENT: Mr Brisbois

2nd RESPONDENT: Brisbois Family Trust

3rd RESPONDENT: C Pty Ltd

4th RESPONDENT: Mr Z Chastain

FILE NUMBER: PAC 3304 of 2011

DATE DELIVERED: 24 September 2014

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Foster J

HEARING DATE: 5 August 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Maddox

SOLICITOR FOR THE APPLICANT: Turner Freeman Lawyers

Orders

1. That C Pty Ltd be forthwith removed as trustee of the Brisbois Family Trust.

2. That the wife Ms Brisbois be appointed forthwith as trustee of the Brisbois Family Trust and for this purpose the real property situate at I Street, Suburb K being the whole of the land comprised in Certificate of Title folio identifier … vest in the said Ms Brisbois as trustee of the said trust.

3. That the wife Ms Brisbois be at liberty to appoint herself as a beneficiary of the Brisbois Family Trust.

4. That the husband be restrained from appointing any trustee or trustees or removing any trustee or trustees during the continuance of the wife’s appointment as trustee of the Brisbois Family Trust as provided for in these orders.

5. That within 14 days from the date of these orders the husband vacate the property at I Street, Suburb K and do all things necessary to provide vacant possession of the whole of the said property.

6. That pending sale of the said property the husband pay as they fall due and payable all mortgage instalments payable to Permanent Custodians Ltd (Nationalcorp Home Loans).

7. That as and from 14 days from the date of these orders the wife Ms Brisbois have sole use and occupation of the said property pending sale as provided for herein.

8. That the wife as trustee of the Brisbois Family Trust do all things necessary so as to sell the property at I Street, Suburb K for the best price reasonably obtainable by either private treaty or auction at her election and that upon sale the wife as trustee of the Brisbois Family Trust apply the proceeds of sale in the following manner and priority:

   (a)In payment of agents commission, advertising, auction expenses if any, and legal expenses on sale;

   (b)In discharge of the mortgage encumbrances secured over the said property in favour of Permanent Custodians Ltd (Nationalcorp Home Loans) being loan accounts …54 and …65 excluding any mortgage arrears from the date of these orders;

   (c)In  distribution to the wife as a beneficiary of the Brisbois Family Trust 82.5 per cent of the balance then remaining;

   (d)In payment of any mortgage arrears accrued as and from the date of these orders until date of settlement of the sale;

   (e)In payment of the balance then remaining to the Brisbois Family Trust bank account.

9. That upon completion of the sale as provided for in the previous orders the wife resign as trustee of the Brisbois Family Trust.

10. That the husband and/or the Brisbois Family Trust indemnify the wife from all or any liability to the Australian Taxation Office in relation to the trust distribution to her pursuant to these orders.

11. That Mr Z Chastain do all necessary things and sign all necessary documents so as to forthwith withdraw any Caveat registered by him as against the title to the property at I Street, Suburb K being the whole of the land comprised in Certificate of Title folio identifier … and further that the said Mr Z Chastain be restrained from seeking to register any deed charge or mortgage as against the title of the said property.

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

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAC 3304 of 2011

Ms Brisbois

Applicant

And

Mr Brisbois

First Respondent

And

Brisbois Family Trust
Second Respondent

And

C Pty Ltd
Third Respondent

And

Mr Z Chastain
Fourth Respondent

REASONS FOR JUDGMENT

1. The present proceedings relate to property settlement between the applicant wife and the responded husband.

2. The wife commenced proceedings by application filed on 19 November 2012 in the Federal Circuit Court of Australia. In that application she sought orders that in summary provided as follows:

   a)That the property at I Street, Suburb K be sold and that the net proceeds of sale after discharge of the secured mortgage be paid to the wife; and

   b)That the husband return to the wife certain items of jewellery.

3. The wife’s application for property settlement orders was served on the respondent husband on 2 December 2012.

4. There have been issues during the course of the proceedings in relation to the husband’s non-disclosure such that on 3 June 2013 the court ordered that the husband and wife give discovery on oath within 28 days and that each party be permitted to administer requests for answers to specific questions.

5. On 29 November 2013 it was noted by the court that the husband had failed to attend mediation, that the husband’s then solicitors were in the process of filing a notice of ceasing to act and that the husband had made an application for bankruptcy.

6. On 6 March 2014 proceedings were once again before the court.  On that day the court in summary made the following orders:

   a)That by consent Mr Z Chastain be joined as fourth respondent and hereinafter referred to as the fourth respondent;

   b)That for the sake of clarity the present parties to the proceedings are:

   i)The wife, who is the applicant;

   ii)The husband and his trustee in bankruptcy, who is the first respondent;

   iii)The Brisbois Family Trust, who is the second respondent;

   iv)C Pty Ltd, who is the third respondent;

   v)Mr Z Chastain, who is the fourth respondent;

   c)That the third respondent in its capacity as trustee of the family trust be restrained from dealing with encumbering, using a security or otherwise disposing of or diminishing any interest in the assets of the family trust pending further order;

   d)The court noted that the legal representatives for the second respondent advise the court that:

   i)The significant asset of the family trust, the property at I Street, Suburb K is occupied by the husband and a relative of the husband; and

   ii)That all payments in respect to the property including mortgage payments are being serviced and payments made as and when they fall due;

   e)The court further noted that the husband’s trustee in bankruptcy having appeared before the court that day will consider his position as to what role if any the trustee in bankruptcy wishes to play in these proceedings;

   f)That proceedings be transferred to the Family Court of Australia.

7. Proceedings were listed before a Registrar of this court on 17 March 2014. Proceedings were adjourned for possible interim hearing to 9:30am on 30 June 2014 and directions were made for the wife and husband to file documents by 1 June 2014.

8. On 30 June 2014 proceedings were listed before Hannam J. On that day there was no appearance of the husband. The solicitor for the second and third respondents sought and was granted leave to withdraw from the proceedings. There was no appearance on behalf of the fourth respondent.

9. The court ordered that proceedings be adjourned to 21 July 2014 and noted that the wife’s application for property settlement was likely to proceed on an undefended basis.

10. On 21 July 2014 the proceedings were again before the court. There was no appearance by or on behalf of the husband, the second respondent, the third respondent and the fourth respondent. The court noted that the various respondents were notified by letter on 3 July 2014 of the listing and provided with a copy of the orders made by the court on 30 June 2014.

11. The court ordered:

    a)That the wife’s application for property settlement be listed for undefended hearing at 10:00am on 5 August 2014;

    b)That the wife file and serve any amended application and updated financial statement and affidavits to be relied upon by her by 1 August 2014;

    c)That a sealed copy of orders be forwarded to the respondent husband by ordinary prepaid post at [I Street, Suburb K], the third respondent at its registered office and the fourth respondent at [B Street, Suburb D] and the husband’s trustee in bankruptcy care of [E Accountants] at [Suburb G] by no later than Wednesday, 30 July 2014;

    d)That in the event of there being no appearance by or on behalf of the respondent husband, the third respondent and the fourth respondent on the adjourned date the wife’s application for property settlement orders be heard and determined on an undefended basis;

    e)The court further noted that the wife’s solicitor had received no further communication from the husband’s trustee in bankruptcy subsequent to 6 March 2014.

12. On 5 August 2014 proceedings were before the court for undefended hearing. There was no appearance by or on behalf of the husband or the other respondents.

13. The court was satisfied that the husband and the other respondents had been notified in accordance with orders previously made (Exh A).

14. Judgment was reserved to a date to be advised.

The wife’s evidence

1. The wife relied on:

   a)Her affidavit filed 1 August 2014;

   b)Her Financial Statement filed 1 August 2014;

   c)Affidavit of Mr S filed 1 August 2014;

   d)Affidavit of Mr F (Valuer) filed 7 July 2014.

Background

1. The wife at the time of trial was 30 years of age. The husband 40 years of age.

2. The parties commenced cohabitation in 2002 when the wife was 17 years of age. The parties married in September 2003.

3. The parties separated on 10 May 2008.

4. There are two children of the relationship who at the time of trial were aged 10 and 8. Both children live with the wife. During the period of the parties’ relationship the wife was the primary carer for the children of the marriage.

5. The wife has limited earning capacity as the children are in her full-time care. The wife is presently studying a Master’s degree at university on a full time basis. The wife receives no direct financial support from the husband in relation to the children other than him meeting expenses for the children when they are in his care or occasionally purchasing items of clothing or minor school suppliers.

6. The wife and children presently reside in partially furnished rented duplex accommodation that is provided to them by a charitable organisation.

Cohabitation

1. At the commencement of cohabitation the wife had a motor vehicle that had been purchased shortly before by her for about $10,000.  The husband had no significant assets.

2. The parties at first resided in rented accommodation at Suburb G with the wife working in a beauty industry role and the husband as a salesman.

3. In 2002 the husband purchased the home at H Street, Suburb J for $268,000.  Some monies were paid as a deposit and the balance of purchase price was funded by way of a mortgage. Subsequent to purchase the property was renovated with the work being undertaken by contractors paid by the parties.

4. In late 2003 the parties vacated the Suburb J property and rented it out. The parties moved in with the wife’s father for about six months, paying no rent. The parties then rented premises at Suburb L.

5. In late 2003 the wife ceased work in the beauty industry role as she was expecting the birth of the parties’ first child. Thereafter she did not return to work until after separation.

6. In February 2004 the parties purchased a property at Town N, Queensland for $650,000. The parties made joint application for a mortgage facility. The parties borrowed by way of two interest only loans sums of $570,000 and $265,000. The security for the two loans was the Suburb J property ($265,000) and the new property purchased at M Street, Town N, Queensland ($570,000).

7. The Town N property was purchased in the name of the wife with the purchase price comprising the mortgage facility and $70,000 contributed by the wife’s mother and stepfather.

8. The mortgage over the Suburb J property refinanced the then loan secured over the property.

9. Subsequent to purchase of the Town N property the parties occupied that property and undertook renovations to the property.  Whilst living in the Town N property the husband continued to work in Sydney.

10. In October 2004 the Suburb J property was sold for $425,000. The mortgage was paid out in the sum of $265,000. The net proceeds were about $140,000.

11. At the time of the sale of the Suburb J property from the net proceeds of sale $46,740 was required to be paid in reduction of the Town N collateral mortgage. Net funds of about $113,000 were available to the parties. Further deposits of $80,000 were paid into the Town N mortgage shortly thereafter.

12. In December 2005 the parties refinanced the CBA mortgage over the Town N property. At the time the mortgage was discharged the balance owing was about $520,000. The parties refinanced the property with NAB borrowing two loans – a principal and interest loan of $400,000 and a Line of Credit facility of $200,000. The $400,000 was fully drawn and the Line of Credit drawn to $110,000 after discharge of the CBA loan.

13. Thereafter the Line of Credit account statements (Exh G) evidence substantial deposits and redraws with many of the redraws being deposited to the husband’s NAB account (…41).

14. At about this time the husband purchased in his name an investment property at O Street, Suburb A. The purchase price was primarily funded by a mortgage advance and it appears from the line of credit facility. This property was renovated over a period and sold in 2009.

15. In 2005 the parties return to reside in Sydney in rented premises at Suburb P with the Town N property being rented out.

16. In about early 2007 the parties and the then two children of the marriage returned to reside in the Town N property for about 12 months while the husband worked in Brisbane. They returned to Sydney to reside in rented premises at Q Street, Suburb K. The Town N property was tenanted.

17. In February 2008 the Town N property was refinanced with the Westpac Bank. At the time of refinance the two NAB loans were paid in the sums of $396,060 and $100,095 totalling $496,155. On sale of this property in 2010 the mortgage payout was $640,000.

18. The application of the additional borrowing of about $145,000 is unexplained. Although it appears that at about this time the husband also purchased two properties in Suburb R, Queensland. It is to be inferred that Town N was used as collateral security to fund the purchase price.

Separation

1. In May 2008 following an incident where the wife was assaulted by the father the parties separated with the wife and children moving to reside in rented premises at Suburb T and the father residing with members of his family.

2. Subsequent to separation the husband demanded from the wife all her jewellery and items of personal adornment. These items have been retained by the husband.

3. The wife returned to work after separation, providing for herself and the children.

Wife’s Credit Cards

1. At the time of separation the husband and wife had accrued significant debt on credit cards which were in the name of the wife. The credit cards were used to purchase groceries, fuel and to meet living expenses.

2. At the time of separation the wife had significant credit card liabilities in her name. Orders were made on 5 March 2013 that the husband was to pay outstanding credit card instalments and continue to pay such instalments as and when they fall due and discharge the outstanding credit card liabilities in the name of the wife. He has not done so.

I Street, Suburb K

1. In 2009 the husband as Trustee of the Brisbois Family Trust purchased a property at I Street, Suburb K for $520,000. The purchase price comprised:

   a)A mortgage advance of $250,000 and an equity line of credit advance of $166,000 from the National Australia Bank;

   b)The net proceeds of about $240,000 from the net proceeds of sale of the two investment properties sold by the husband in early 2009 being properties at U Street, Suburb R, Queensland and V Street, Suburb R, Queensland.

2. The purchase of I Street, Suburb K was settled in early November 2009.

3. At the time of the purchase of the Suburb K property the husband represented to the incoming mortgagee that he had the following assets:

   a)MLC superannuation of $56,000;

   b)BMW motor vehicle having a value of $70,000;

   c)Two dirt bikes having a value of $12,000;

   d)A jet ski having a value of $12,000;

   e)Jewellery having a value of $50,000;

   f)Savings of $265,000.

4. As to his savings the husband represented to the bank that they were his “divorce settlement”. They in fact came from the sale of property acquired during the marriage.

5. The husband represented to the bank that his income was $91,411 gross per annum plus rent of $20,800, presumably from the Town N property.

6. In early January 2010 the property at Town N was sold for $680,000 and the net proceeds of sale of about $640,000 were applied to repayment of the Westpac mortgage secured over the property. It appears that the funds used to purchase the two investment properties at Suburb R by the husband were borrowed against the Town N property with the additional borrowing being discharged on sale of the Town N property.

7. This facilitated the net proceeds of the two investment properties being paid by the husband to the credit of the Brisbois Family Trust bank account.  As at 17 August 2009 the family trust bank account had a credit balance of $266,484 representing it appears substantially the proceeds of sale of the two investment properties.

More recent events

1. In 2010 the wife and children commenced to reside with the maternal grandmother and maternal step grandfather at W Street, Suburb K until the wife and children moved to the property then owned by the family trust at I Street, Suburb K that was occupied by the husband.  He moved to a self-contained granny flat on the property to facilitate the wife and children living in the home. Inexplicably the husband demanded that the wife pay rent to him.

2. In August 2012 the wife and children ceased residing at the I Street, Suburb K property after a domestic incident and the husband demanding that they leave the home.

The husband’s bankruptcy

1. On 28 November 2013 the husband was declared bankrupt. The initial report of the husband’s bankruptcy trustee, Mr X, (Exh D) reveals that the husband was made bankrupt on his own petition.

2. In the husband’s statement of affairs provided to his bankruptcy trustee he disclosed as his only asset an expected income tax refund of about $7000 and otherwise unsecured creditors, mainly credit cards, of about $170,000.

3. The husband disclosed to his trustee in bankruptcy the property at I Street, Suburb K asserting that the property was held in his name as trustee of the family trust. The trust paid to the husband’s bankruptcy trustee $7500 as an upfront payment in relation to the bankruptcy trustees fees.

4. At the time of his bankruptcy the husband asserted that he was self-employed as an unskilled worker on a casual basis and attributed his bankruptcy to his unemployment, loss of income and relationship breakdowns.

1. The husband disclosed to his bankruptcy trustees that he was a shareholder and director of Y Pty Ltd and DD Pty Ltd.   The circumstances of those companies are not known.

The Brisbois Family Trust

1. On 31 December 2005 the husband established the trust, being a discretionary trust. The settlor of the trust was a Mr BB, a cousin of the husband. The husband was the trustee of the trust by reason of him being the “parent” as defined in the trust deed.

2. The present asset of the trust is the Suburb K property having a value of $740,000.

3. The beneficiaries include inter alia the “parent”.

4. The husband as trustee in his absolute discretion may distribute income to any of the beneficiaries in his absolute discretion and as at the vesting date distribute capital to any of the beneficiaries in his absolute discretion.

5. The husband as trustee may at any time determine the vesting or distribution date of the trust. The husband as “parent” and thus trustee has the power at any time to add to or vary the provisions of the trust deed.

6. The husband as “parent” as defined in the trust deed or any person nominated by him during his lifetime has the power to remove trustees or appoint any new or additional trustees.

7. As can be seen above the cash purchase funds for the property at I Street, Suburb K can be traced back to the original property acquired in the marriage at Suburb J and the Town N property and it’s equity in respect of which the wife’s family contributed some $70,000 to the purchase price.

8. Funds paid by the husband into the trust bank account and subsequently used for the purchase of the property at I Street, Suburb K were it appears in fact an advance by way of loan by the husband into the trust. No financial statements for the trust are in evidence.

9. On or about 12 November 2013, at the time of the husband’s bankruptcy,  the husband exercising his power of appointment as “parent” appointed a new trustee to the trust. That new trustee was C Pty Ltd. The director of C Pty Ltd is a Mr CC Chastain, the son of Mr Z Chastain, a respondent in these proceedings. Mr Z Chastain, a previous tenant of the property at Suburb K, who has failed to participate in these proceedings, has previously asserted that he is owed monies by the husband yet he failed to prove in the husband’s bankruptcy.

10. The husband presently occupies the property at Suburb K and pays to the trust ‘rent’ of $588 per week that in turn is paid by the trust to meet mortgage payments.  The property at Suburb K also has an attached granny flat that is occupied by the husband’s brother at a rental of $300 per week that is also paid to the trust.

11. There is no doubt that the property at Suburb K is a resource available to the husband over which he has absolute control and to which matrimonial funds can be traced.

The Husband’s Income

1. From various bank records admitted into evidence the husband’s tax return and assessment (Tax File Number …1) for 2009 reveal gross taxable income of $90,600. The husband’s primary income was derived from “wholesale trade nec” with his return revealing gross business income of $403,112. His return was prepared by Mr EE.

2. Yet Exh I being documents produced on Subpoena by FF Accountants reveal another 2009 Tax Return for the husband under a different Tax File Number (…2), disclosing a different residential address and disclosing a PAYE income from GG Pty Ltd of $41,853 plus directors fees of $10,265. The return was prepared by Mr EE of FF Accountants. The return is unsigned and no assessment was produced.

3. Again from his tax documents in bank documents in evidence the husband’s estimated taxable income for 2010 was $103,109. The primary income disclosed was from the husband’s self-employment. The tax return was prepared by HH Accountants.

4. Exh I being documents produced on Subpoena by FF Accountants reveals another 2010 Tax Return for the husband under Tax File Number (…2) disclosing a PAYE income from GG Pty Ltd of $31,513 plus directors fees of $7,432. The return was prepared by Mr EE of FF Accountants. The return is unsigned and no assessment was produced.

5. From his tax return in bank documents in evidence the husband’s estimated taxable income for 2011 was a PAYE salary $115,899. The income disclosed was from the husband’s employment as a “manager”. The tax return was prepared by JJ Accountants.

6. Exh I being documents produced on Subpoena by FF Accountants reveals another 2011 Tax Return for the husband under Tax File Number (…2) disclosing a different residential address, disclosing a PAYE income from KK Pty Ltd of $72,800. The return was prepared by Mr EE of FF Accountants. The return is unsigned and no assessment was produced.

7. From his tax return and assessment in bank documents in evidence the husband’s taxable PAYE income for 2012 was $120,689. The primary income disclosed was from the husband’s employment as a “manager”. The tax return was prepared by JJ Accountants.

8. Exh I being documents produced on Subpoena by FF Accountants provided no 2012 Tax Return for the husband.

9. The husband’s present income circumstances are not known. It is to be inferred that he has an income earning capacity commensurate with previous years.

Child Support

1. As at 11 March 2013 the husband had an outstanding child-support liability of $9519. Subsequently the Child Support Agency paid to the wife a lump sum that it had garnisheed from the husband’s tax refund, presumably the one referred to in his statement of affairs to his bankruptcy trustee. The husband’s liability was reduced at that time to about $1200.

2. On 16 April 2013 the wife was informed by the agency that as from 5 April 2013 the husband was liable for child support of $1315 per month.

3. Previously for the period 1 October 2012 to 4 April 2013 the husband’s liability was $1799 per month based on his 2012 taxable income of $120,689.

The Other Respondents

1. The second and third respondents in these proceedings were previously described as the Brisbois Family Trust as second respondent and C Pty Ltd as third respondent.

2. C Pty Ltd as the trustee of the family trust filed a response in these proceedings on 6 March 2014 that sought the following orders:

   a)That [C] Pty Ltd remain trustee of the [Brisbois] Family Trust;

   b)The applicant has failed to file an amended application seeking to replace the current trustee with the applicant herself;

   c)The applicant has failed to establish that the trustee has failed in their (sic) duties as trustee for the [Brisbois] Family Trust.

3. C Pty Ltd has otherwise failed to engage in the proceedings and filed no documents in support of the orders sought by it as trustee and on behalf of the trust.

4. The fourth respondent Mr Z Chastain has filed no formal response seeking orders in relation to allegedly monies advanced to the husband. On 29 November 2013 the court noted the proposed application for joinder by Mr Z Chastain in the proceedings. On 6 March 2014 Mr Z Chastain appeared in person before the court and by consent was joined in the proceedings as fourth respondent. He has filed no response seeking orders. He has been notified of these proceedings.

The Husband’s Response

1. On 3 April 2014 the husband through his then solicitors filed a response to the wife’s initiating application. In that response the husband in summary sought the following orders:

   a)That the parties do all things necessary to sell the property at I Street, Suburb K by private treaty;

   b)That until sale the husband pay all outgoings in respect to the property including insurance premiums and mortgage payments;

   c)That on completion of the sale the proceeds of sale be paid in the following order of priority:

   i)In discharge of the home loan secured by way of registered first mortgage over the property;

   ii)In discharge of the loan from Mr Z Chastain secured over the property by deed of loan and unregistered second mortgage;

   iii)Payment of agents commission selling costs and legal costs on sale;

   iv)In discharge of the parties’ credit card debts and in the event that the net proceeds of sale are insufficient to discharge the whole of such debts then the net proceeds to be applied in reduction of such debts in equal proportions;

   v)In payment of the remaining proceeds of sale, if any, as to 60 per cent to the wife and 40 per cent to the husband;

   d)That otherwise the parties retain such other property as may be in their respective possession or entitlement.

2. The husband’s response seems to ignore the reality of the trust as it has been propounded by him to his trustee in bankruptcy. However in all of the circumstances that can be inferred that notwithstanding the nature of the trust property it is the husband’s position that the trust property should be available to meet the property entitlements of the wife.

Orders Sought

1. On hearing the wife sought in summary the following orders:

   a)That the husband and or C Pty Ltd as the trustee of the Brisbois Family Trust or the trustee for the time cause the property at I Street, Suburb K to be transferred to the wife within 60 days of the date of orders and authorise a discharge of the mortgage to Permanent Custodians Limited secured thereon and concurrently with the said transfer the wife shall discharge the current mortgage secured against the property;

   b)That in the event that the wife is unable to discharge the mortgage secured on the Suburb K property within 60 days of the date of orders the wife is to notify the trustee of the family trust and thereafter the trustee shall cause the Suburb K property to be sold by public auction within 60 days at a price to be determined by the wife and the proceeds of sale shall be paid in the following order and priority:

   i)Payment of agents commission, advertising expenses and legal expenses;

   ii)Discharge of the mortgage to Permanent Custodians Limited;

   iii)In payment of the balance remaining to the wife;

   c)That the wife have carriage of the sale of the Suburb K property and that the husband shall vacate the said property within 14 days from the date of these orders and procure that his brother or any other occupant of the premises vacate the premises within 14 days from the date of these orders and that the wife thereafter have exclusive possession and occupation of the property;

   d)That the husband within 14 days return to the wife in good order and condition the wife’s jewellery and items of personal adornment including the engagement ring, the wedding band, the eternity band, one large diamond ring, one white gold necklace with the Diamond “[First letter of the wife’s given name]” and a diamond white gold bangle;

   e)That the husband and wife do all acts and things necessary to give effect to the orders made herein and in the event that either party refuses or neglects to execute any deed or instrument the registrar of the Family Court at Parramatta be appointed pursuant to section 106A to execute such a deed instrument in the name of such party and do all acts and things necessary to give validity to the operation to the deed or instrument;

   f)That Mr Z Chastain be restrained from enforcing or attempting to enforce any interest pursuant to a purported deed of loan, or mortgage between him as mortgagee and the Brisbois Family Trust and the husband dated 9 December 2011 or the unregistered mortgage or caveat executed as collateral security in relation to the said deed of loan and that the said deed of loan or any unregistered mortgage be set aside;

   g)That the appointment of C Pty Ltd as trustee of the family trust to be set aside;

   h)That the husband be removed as trustee of the family trust; and

   i)That the wife be appointed as trustee of the family trust.

Discussion

1. The approach to the determination of an application under s 79 of the Family Law Act 1975 (Cth) (“the Act”) is set out in Stanford v Stanford (2012) 247 CLR 108 and that decision was the subject of detailed consideration by the Full Court in Bevan & Bevan [2013] FamCAFC 116.

2. The court should firstly identify the present assets, financial resources and liabilities of the parties.

3. The court should then consider whether, having regard to the circumstances before it, it would be unjust and unfair not to make orders for alteration of the property interests of the parties having regard to the provisions of s 79(2) of the Act.

4. Both parties seek disparate orders in relation to property in the circumstances referred to above. It is appropriate that orders be made to resolve the wife’s application.

5. The court can then proceed to consider the contributions by each of the parties as contemplated by s 79(4)(a) – (c) of the Act.

6. Having determined the contribution-based entitlements of the parties, the court can then consider the various factors set out in s 75(2) of the Act and whether any further adjustment to the parties’ contribution-based entitlements is appropriate.

7. The court is then required to consider the justice and equity of the proposed orders and whether in all the circumstances the orders to be made are appropriate.

The Asset Pool

1. As best can be determined the present asset pool is:

   a)The Trust property at Suburb K having a value of $740,000 and subject to a mortgage as at June 2014 of about $417,000 (Exh K)

   b)Husband: contents in Suburb K value not known

   c)Wife: contents with the wife $500

   d)Wife: car $1,500

   e)Wife: Money at Bank $869

   f)Wife: Superannuation $14,386

2. The wife has liabilities of:

   a)Outstanding school fees $5,300

   b)Credit Cards $51,071

3. The husband’s liabilities were subsumed in his bankruptcy.

4. Overall the pool has a net value of about $283,884

Contributions

1. The history of the relationship is set out above. It is conceded by the wife that the husband at least during cohabitation was the primary income earner. The wife on the other hand was the homemaker and primary carer for the children, the first being born only shortly into the relationship.

2. The wife has been the primary carer for the children post separation now for over 6 years. The husband provided her with little assistance.

3. The husband has had the sole use and occupation of the Suburb K property post separation save for the wife’s period of occupation with the children when the husband required her to pay rent.

4. There is no evidence to quantify any disparity between the parties in terms of initial contribution.

5. Overall contribution should favour the wife to reflect her contributions post separation. This is assessed at 60 per cent to the wife and 40 per cent to the husband.

Section 75(2) factors

1. Regard has been had to all of the factors set out. The relevant factors are as follows.

2. The wife at the time of trial was 30 years of age. The husband 40 years of age. There is no evidence of any health issue for either party.

3. The wife has a modest income of about $28,000 per annum and otherwise receives government benefits. She receives no regular child support, save for what can be enforced by the Child Support Agency. The husband’s tax returns are problematic but at least reveal historically a reasonable earning capacity.

4. The wife asserts no issue in continuing her present employment. The husband’s prospects are not known. The property of the parties as best it can be ascertained is set out above. The wife has been left with considerable credit card debt and a debt for school fees.

5. The wife has the full time care of the children aged 10 and 8 at trial. The husband spends some time with them.

6. Neither party has the responsibility to support any other person other than the children.

7. The wife receives government benefits and has modest accumulated superannuation. The husband’s superannuation is not known, if any.

8. The primary asset of the parties is in the Brisbois Family Trust and as such not available to creditors of the husband.

9. The wife had been out of the work force for much of the cohabitation. At separation she had young children then aged 4 and 2. Her income earning capacity has been diminished and will be so until the children are of an age where she can return to the work force full time.

10. The husband’s Child Support liability if any into the future is problematic. His income circumstances are not known. Historically he had accumulated significant Child Support debt that was only paid on the garnishee of his taxation return. The prospects of regular Child Support are poor.

11. The asset pool net is modest with 5 per cent equalling about $15,000. In considering the above factors a further adjustment of 20 per cent in favour of the wife is called for.

12. Orders proposed will have no effect on the earning capacity of the parties.

Overall

1. Overall the asset pool should be adjusted as to 80 per cent to the wife and 20 per cent to the husband. The wife should then receive $227,107 net.

2. The wife will retain assets to the value of $17,255 but with debts of $56,371, leaving her in the negative as to $39,116. To receive her entitlement she should receive a further $266,223 or about 82.5 per cent of the equity in Suburb K.

Appropriate Orders

1. For the wife to receive her entitlement it will be necessary for there to be a sale of the Suburb K property.

2. The husband for all intents and purposes controls the trust.

3. Section 80 of the Act sets out the powers of the court in property proceedings including the power to appoint or remove trustees.

4. It is thus appropriate to remove C Pty Limited as trustee of the Brisbois Family Trust and appoint the wife as trustee of the trust for purposes of an orderly sale of the subject property.

5. The trustee of the trust can appoint beneficiaries in his or her discretion (Cl. 1(a)(x) of the Trust Deed) and may determine as to a distribution of capital at any time prior to the vesting date (Cl.3.2) and as to any beneficiary to the exclusion of others (Cl 3.)

6. The wife after her appointment as trustee may appoint herself as one of the beneficiaries of the trust and thereafter resolve to distribute to herself 82.5 per cent of the net proceeds of sale.

7. The wife may then resign as trustee with the remainder of the funds from sale remaining in the trust to be dealt with by the husband as he sees fit.

8. To facilitate a sale the husband should give to the wife vacant possession of the property and procure otherwise vacant possession of the entire property. 

9. The husband shall be restrained from appointing or removing trustees of the trust until completion of the sale and distribution to the wife.

10. As the husband has sought either willingly or otherwise to put assets out of the reach of the wife he should indemnify the wife from any liability for tax on funds distributed to her.

11. Otherwise Mr Z Chastain should be restrained from asserting any interest in the trust property.

12. Orders will be made accordingly.

I certify that the preceding one hundred and thirty (130) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 23 September 2014.

Associate: 

Date:  24 September 2014