BULLEEN & BULLEEN
[2012] FamCA 101
•8 March 2012
FAMILY COURT OF AUSTRALIA
| BULLEEN & BULLEEN | [2012] FamCA 101 |
| FAMILY LAW – PROPERTY – value of property |
| Family Law Act 1975 (Cth) |
| Blair v Curran (1939) 62 CLR 464 Bulleen and Bulleen [2010] FamCA 187; (2010 43 Fam LR 489) Bulleen and Bulleen [2010] FamCA 859 Bulleen and Bulleen [2011] FamCA 253 Cunningham v Cunningham (2005) FLC 93-212 GBT and BJT [2005] FamCA 683 McFarlane (2004) FamCA 1309 |
| APPLICANT: | Mr Bulleen |
| RESPONDENT: | Ms Bulleen |
| FILE NUMBER: | MLC | 12431 | of | 2007 |
| DATE DELIVERED: | 8 March 2012 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Cronin J |
| HEARING DATE: | 24 February 2012 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Kirkham QC WITH Mr Strum |
| SOLICITOR FOR THE APPLICANT: | Gadens Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Murphy SC with Mr Clarke |
| SOLICITOR FOR THE RESPONDENT: | Lewis Allen Janover |
Orders
Arising out of all extant orders, artwork belonging to the person who has nominated it shall be collected by no later than 4.00pm on 31 March 2012 by arrangement and the party who currently holds such artwork shall make it available accordingly.
That by 4.00pm on 31 March 2012, the wife pay to the husband $69,995 by way of his entitlement pursuant to the orders of 12 March 2010.
IT IS CERTIFIED:
That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage senior counsel and two counsel to attend.
That should any party seek costs arising out of these orders, such application be made by written submission and filed and served by no later than 16 March 2012 with such submission being endorsed with the fact that it has been so served on the other party and any recipient of such submission have until 30 March 2012 to file and serve any response and such response be endorsed with the fact that it has been so served on the other party and upon receipt of any such application for costs, it or they be determined in chambers.
That the application of the husband filed 5 August 2011 and the response of the wife thereto filed 4 October 2011 are otherwise dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Bulleen & Bulleen 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 MELBOURNE |
FILE NUMBER: MLC 12431 of 2007
| Mr Bulleen |
Applicant
And
| Ms Bulleen |
Respondent
REASONS FOR JUDGMENT
By application filed 5 August 2011, the husband sought a number of orders which if made, would finalise all property proceedings between the parties. In simple terms, he sought that the wife pay him $69,995 being the sum said to finally adjust their property entitlements.
Although that sum may sound modest, its preciseness was determined by an accountant whose evidence about the quantum was unchallenged.
The pool of assets between the parties ran to many millions of dollars. Almost two years ago, the husband paid into the wife’s bank account from those many millions of dollars, a large sum of money. The husband’s case was that the $69,995 was effectively an overpayment once all of the calculations were completed.
In her response filed 4 October 2011, the wife sought a variety of orders asking the Court to “determine the principles to be applied in calculating each party’s entitlement”. The wife sought consequential orders including joint accounting exercises.
The husband had also sought orders requiring the wife to sign a number of corporate documents transferring interests in a number of entities which had been valued as part of the pool of assets contemplated at trial. Although the wife maintained she was not legally obliged to do so, she consented to orders to “move” the case forward.
This dispute stems from two orders I made on 12 March 2010. That was after the trial of the property proceedings. Paragraphs 3 and 4 of those orders read:
3.That notwithstanding paragraphs (1) and (2) hereof, all property of the parties be divided as to 53.3 per cent to the husband and 46.7 per cent to the wife.
4.That the ultimate determination of the distribution of assets in specie, sale of assets, the payment of taxes and the payment of cash by one party to the other (if any) be the subject of agreement between the parties adjusting for and taking into account:
(a)the partial distributions in paragraphs (1) and (2) above;
(b) the determination in paragraph (3) above,
and failing agreement, that determination be made by the Court.
The husband’s case was that:
(a)the wife was endeavouring to reopen her case to bring a claim for a division of property never previously claimed; and
(b)the final orders were operative and concluded and consequently the wife owed the husband the money to which I have referred.
The wife’s case was that she was not seeking to change any order whether substantive or machinery, but rather to work out the way in which paragraphs 3 and 4 of the orders mentioned above were to operate.
The dispute can therefore be condensed even more succinctly. Does the wife have a right to have a proportion of the interest and dividends earned on investments retained by the husband after the orders were made on 12 March 2010? In my view, the husband’s view is correct.
Apart from the application and response referred to, the parties relied on affidavit material and the case was heard on submissions with each party represented by senior counsel and junior counsel.
The husband relied upon affidavits sworn by him and filed on 5 August 2011 and 24 February 2012 along with that of his accountant Mr P filed 24 February 2012. The wife relied upon affidavit material sworn by her forensic accountant which was filed on 4 October 2011 and 24 February 2012.
The issues not only raise questions of the interpretation of orders but also the Court’s jurisdiction and powers to make orders in these circumstances. Unfortunately, the application before me cannot be dealt with in isolation or a vacuum and it is necessary to look at the historical pathway which focuses on orders.
In making, inter alia, orders 3 and 4 to which I have referred, I gave reasons on 12 March 2010 (Bulleen and Bulleen [2010] FamCA 187; (2010 43 Fam LR 489). I said:
158.The agreed total net asset pool excluding taxation liabilities is $151,037,015. Taxation liabilities, marketing and sale costs should be jointly carried by the parties. Similarly, transfer costs should be borne by the party who wishes to retain any property. Taxation expenses are different from transfer expenses.
159.That pool includes artwork, [Q Street] and a significant portfolio of shares.
160.It was common ground between the parties that the wife was to retain the [holiday home] property but neither [party] wanted [the farm]. They will need to work out whether one or other of them retains that property because otherwise, it needs to be sold. Whilst I clearly have a value as agreed between the parties, the ultimate proceeds may be very different from the valuation.
161.The same problem arises in respect of the shareholdings. Those may fluctuate in value and number and accordingly, I propose to give the parties an opportunity to divide the assets in specie and to deal with the question of [the farm] based upon the percentage divisions to which I shall refer below. I will make specific orders having regard to the matters raised above about [Q Street] and the artwork.
In respect of those findings, I relied upon the concessions of the parties. One of the contentious issues had been about who was to retain a property known as the Q Street property. I said of the husband:
He has a definite plan and this has been a project of his for some years. In the circumstances, the husband may retain [Q Street].
I then made assessments of the parties’ contributions and said:
Thus, the initial contributions of the husband and his inheritance are the elements that justify him receiving more than the wife. In a pool of about $151 million, $10 million more to the husband than the wife reflects the impact of the disparate contributions. $10 million is 6.6% of $151 million.
I declined to make any adjustment for the purposes of s 75(2) of the Family Law Act 1975 (Cth) (“the Act”). Importantly in respect of the current dispute, in my March 2010 reasons, I remarked:
One factor that I am obliged to take into account is the terms of any order made in relation to the property of the parties. Where the capital disparity between the parties is significant, a court may make an adjustment if it is necessary to achieve a just and equitable outcome. In this case, having regard to the way the case was conducted by both parties, I see no reason for a further adjustment because in my view, the division based on percentages as set out above is just and equitable. Having regard to the size of the entitlements, there is no basis in my view for any further adjustment.
Finally, I said:
The fourth step in the process requires the Court to be satisfied that the outcome is just and equitable to both parties. To reflect that appropriately and as part of the fourth step which is referred to in Hickey (supra), the husband should receive 53.3% of the pool whatever it turns out to be in net terms and the wife 46.7%. In my view, that represents a just and equitable outcome for both parties. Because of the fact that there may be a requirement for the liquidation of assets including [the farm], I propose to give the parties an opportunity to initially divide the assets amongst themselves. Failing agreement, I will determine the precise orders for division.
Those last few sentences have a significant bearing here because they explain paragraph 3 and 4 of the March orders.
Section 79 of the Act is a provision which is exhausted once the orders dividing property of the parties are made. Thus said the husband, the exercise had been fulfilled but the wife maintained the calculations adding up to the percentage, were still to be done.
In September 2010, the parties’ dispute raged on and I made further orders. Those proceedings were largely about the distribution of artwork and taxation issues which flowed from the distribution of money. However, I made the following orders:
9.That to give effect to paragraph 3 of the orders made 12 March 2010, [B Holdings Pty Ltd (B Holdings)]:
(a)pay to the wife a cash payment equivalent to 46.7% of the net asset value of [B Holdings] and the remaining entitlement of the wife thereafter pursuant to the orders of 12 March 2010 be satisfied by transfer of property and cash by the husband and/or entities associated with the husband; or
(b)a cash payment equivalent to 100% of the net asset value of [B Holdings] and the remaining entitlement of the wife thereafter pursuant to the orders of 12 March 2010 be satisfied by transfer of property and cash by the husband and/or entities associated with the husband
10.That to give effect to paragraph 3 of the orders made 12 March 2010, each of the husband and the wife forthwith do all things necessary and sign any required document to distribute such funds of [B Holdings] as may be necessary to satisfy the order or as much of it as can be so satisfied.
11.That the husband forthwith transfer to the wife at her expense, all of his interest in [the holiday home property].
12.That the wife forthwith retain and the husband relinquish any interest in [the M Street property].
13.That the husband forthwith retain and the wife relinquish any interest in [the L Street property].
14.That the wife forthwith transfer to the husband at his expense, all of her interest in [the suite in O Street].
15.That the husband forthwith retain and the wife relinquish any interest in, the farm property [name omitted].
16.That save as otherwise provided in these orders, the husband retain and the wife relinquish any interest in:
(a)[K Nominees Pty Ltd];
(b)[B Holdings Pty Ltd];
(c)[The Bulleen Investment Trust].
In my reasons for those orders (Bulleen and Bulleen [2010] FamCA 859), I said:
The wife also sought orders for an updating of the real property valuations and thereafter for the matters to be relisted for further determination of the division based on the percentages mentioned earlier.
Significant also to the present proceedings, I then said (with my grammatical errors uncorrected):
13.Other orders that the husband sought orders included a return of his personal belongings and that [B Holdings] sell its shares and the proceeds then be used to satisfy the wife’s cash entitlement. This latter point arose because he did not want to involve or wait for the Taxation Commissioner to give a ruling.
14.The return of the husband’s personal belongings had not only not been an issue in the trial and I do not think it appropriate to consider that further having regard to what I shall shortly say about other assets. Having said that, after so many years of marriage, I comment that it is sad if the parties cannot work out the delivery of those personal items.
15.In terms of the property orders I had anticipated the parties would draw, the husband sought that the wife retain the [holiday home] and he retain the [L Street] residence, the farm and [the A Building]. None of those was controversial as the positions of the parties were clear. In the trial, neither party had wanted the farm.
…
53.The crux of the wife’s argument to have the various real properties revalued arises largely because of the evidence of the wife’s new valuer, [Mr W].
…
61.Whilst the argument revolves around the issue of the valuation, the principle is essentially the question of whether this is an application by the wife to reopen her case. She denies that it is.
…
70.The wife wishes to call new evidence. It is evidence different to that upon which the parties conducted the trial. It is not just evidence of an increasing value. This was evidence available at the trial. It is evidence in relation to the question of a different methodology for valuation. It has many qualifications. The husband is entitled to expect the Court to conclude his trial after the hearing. The admission of new evidence will not only protract the hearing but may require a rearguing of the fundamental concepts of contribution. In the exercise of my discretion, I refuse to admit the evidence.
In 2011, further disputes concerning the question of artwork and documents occurred. There can be no doubt that the present issue was under consideration. I made orders for the husband to provide the wife documents. In my reasons (Bulleen and Bulleen [2011] FamCA 253) , insofar as matters are now relevant, I said:
5.…The wife’s application sought orders for information to enable her accountant to determine her entitlement and further that the division of the artwork be deemed to have concluded…
…
21.The second question concerns access by the wife to [B Holding’s] documents to determine if the capital sum deposited into the wife’s account was a correct distribution to the wife? The husband argued res judicata applied and that the Court had exhausted its power under s 79.
22.On 17 November 2010, $43,496,041 was paid into the wife’s bank account. The calculation was made by the husband’s accountant, [Mr P]. He asserted that this sum reflected the wife’s interest in [B Holdings].
…
24.After receiving the deposit in her account, the wife sought documents to enable [Mr F] to verify the distribution reflected her 46.7% interest in [B Holdings]. It is to be remembered that in March 2010, I ordered that the wife was entitled to 46.7% of the assets of the parties.
I referred again to paragraphs 3 and 4 of the March 2010 orders and said:
28.The construction of paragraph 3 of the orders clearly indicates that it is a substantive provision as it vests a right in each party as to the division of property. Paragraph 4 is a consequential provision as it gives effect to paragraph 3. In the event that the parties fail to agree to “the ultimate determination of the distribution of assets in specie, sale of assets, the payment of taxes and the payment of cash by one part to the other” in accordance with paragraph 3, then paragraph 4 provides that the determination can be made by the Court.
…
30.Paragraph 15 [of the orders of 28 September 2010] is a substantive provision as it vests a right in the husband to retain [B Holdings]. Paragraph 9 is a consequential provision as it gives effect to paragraph 3 of 12 March 2010 and gives effect to paragraph 15 of 28 September 2010.
31.On the limited evidence available to me, I accept that the wife was endeavouring to verify whether the amount distributed to her by [Mr P’s] calculations reflected the distribution under the orders. That did not require fresh evidence to be adduced nor did it give rise to a matter that was res judicata. The wife is seeking to vary machinery or consequential orders in order to give effect to paragraph 3 of the original orders and to achieve a just and equitable outcome. It is appropriate therefore for me to make those orders.
Counsel for the husband made a number of submissions which followed a written outline which was extensive. I do not propose to set out the argument in full but the transcript of the hearing will note that it was extensively referred to.
Counsel for the wife also provided an outline of her case highlighting the fact that the central issue was whether the amount to be paid to the wife should take into account 46.7 per cent (being her entitlement from the 2010 orders) of the income earned subsequent to 1 July 2009 until she ultimately received the monies. It was argued that the property of the parties comprised real estate, shares in listed companies, artwork and cash but also the earnings on the various passive assets.
The wife’s submission was that it was implicit in the orders entitling the wife to 46.7 per cent of the pool that it covered the earnings on those passive assets until she received her money. She submitted that the reference to the split of the assets related to the property of the parties and if the earnings subsequent to 1 July 2009 were ignored, then the husband was receiving much more than his entitlement of 53.3 per cent. It was submitted that there was always uncertainty as to what the value and nature of the property of the parties would be. It was said that the uncertainty was accepted by the husband and his accountant because at one stage, suggestions were made by the husband as to how the calculations were to be done but he ultimately resiled from that position. Finally, it was submitted that the distribution had to be just and equitable and it could not be so if the post-1 July 2009 earnings were ignored. Thus, it was said if that argument was accepted, the wife was entitled to all of the information to enable the calculations to be done.
Paragraph 1 of the orders of March 2010 was a final and substantive order. The value of the parties’ assets (whether on a capitalised basis or otherwise) was agreed in the trial itself. At trial, all counsel addressed the issue of how the assets were to be divided but each approached it on the basis of a percentage of an agreed sum. Paragraph 3 of the orders therefore, was a determination of how the parties were to divide the defined pool. At the request of the parties, the formal orders for the division were to be worked out by the parties and the precise dollar amounts that each would receive would have had to vary to take into account the net outcome of any consequential sale. The contemplated negotiations I had understood to be only those matters to which I had referred in my reasons. Save as to a small number of assets however, there was a clear understanding between the parties about which assets they were receiving. To the extent that subsequent to the determination, the value of the assets changed, in my view, there is no basis to recalculate the pool. The parties litigated about a defined amount of equity in a specific set of assets. If a matter was overlooked, it is not appropriate for the Court to simply revisit the determination. That is particularly so because of the need to conclude litigation (see Blair v Curran (1939) 62 CLR 464 at 531 per Dixon J).
Section 79(2) requires the Court only to make an order which is just and equitable. It follows that the underlying value of what each party received from the orders must be just and equitable. However there must be a cut-off point for the determination of that value and it is usually, and for good reason, the date of the trial. The wife argued that to allow the husband to retain the income from the passive assets he was to receive prejudiced her because he was getting more than his percentage entitlement. However, that could only be so if there was some justification for saying that interest, rent or dividends had accrued to the passive assets and were intrinsic to them. In my view, unless that issue was raised at trial, that is that the assets were pregnant with something that would increase the value, the point could not be raised after the determination because the percentage division was made on a defined monetary value in the pool not on the nature of that pool. To do otherwise would mean that any such passive asset would have to be re-examined for not only increases but also decreases at the time of the ultimate transfer of the property.
The husband also argued that to add in the post-1 July 2009 earnings amounted to double-dipping because the parties had agreed upon the value of the assets and for that purpose, the valuations had been done on the capitalisation of the yield of the asset. The wife’s submission was that it was not double-dipping but rather, these were simply passive assets and the income would accrue to the assets in any event. A number of authorities were put to me to indicate that in a case where the asset was put into the pool on a value determined by a capitalisation method, to contemplate the income later was double-dipping. I am not convinced that that is the law in Australia. In McFarlane (2004) FamCA 1309, the Full Court dealt with an appeal in which the wife retained a business which had been valued on a future maintainable earnings basis. The business had earnings of about $38,500 and when the capitalisation rate was applied, the capital value for the purposes of the pool went up to $128,650. Kay J with whom Bryant CJ and Holden J agreed said that the profit-making capacity of the business had already been factored into the valuation and that there was a perception of an element of double-dipping by focussing attention on the income. The focus in that case however was for the purposes of s 75(2). The husband was arguing that an adjustment in the wife’s favour was unfair because she had the capitalised value. That is not the situation here.
In Cunningham v Cunningham (2005) FLC 93-212 a different Full Court distinguished McFarlane because the pool and the income involved was seen to have been very small. The Full Court said there was no general principle that where one person bought out assets of the other, the Court had to ignore the income disparity. It is clear that the highest it could be said that a principle is involved is that one has to be conscious of the double-dipping point.
In GBT and BJT [2005] FamCA 683, the Full Court looked at an overlap of contributions but laid down no principle relating to double-dipping. Ultimately, the question of the capitalisation of the asset comes about because of the fact that the Court is entitled to assume in most cases that should the asset be disposed of, a purchaser might pay that value or, in the case of an asset that is not to be sold, it is worth that amount to that particular person.
In this case, the argument of the wife is that at trial, albeit the capitalisation method was used, the husband continued to receive all of the income after that relevant date and did not account for it in the pool of assets for division. He therefore had an advantage to which the wife was excluded.
All of the evidence of the accountants in this particular case and to that extent, also the husband, really addressed the issue of how one would calculate the earnings to get a value which would ultimately have to be added to the pool for division. Senior counsel for the wife said that the wife was not endeavouring to increase the pool but rather to obtain her 46.7 per cent of the accrued income. That is, her entitlement had been fixed in the pool and that accrued interest thereafter until she was paid or given the capital asset. In my view, she does not have the right to do that because the value in respect of each of the assets in the pool in 2009 and 2010 was that which the parties had agreed upon whether it included a capitalisation of the income or not.
Counsel for the husband argued that for the wife to pursue the additional income post-1 July 2009, was effectively an attempt to reopen her case and that was an issue that was litigated before me previously and, as I have set out above, I refused to allow it to happen. Senior counsel for the wife said that that was not her intention and maintained that she was simply pursuing what was in existence and still accruing. In my view, that argument also has to be seen in the context of a determination that I made on the agreed pool of assets.
Accordingly I find that the power in s 79 has been exhausted largely because of the fact that the parties agreed upon how the individual assets within the pool were to be divided and that the consequences were that each knew what was being received and the values were then calculable having regard to the amounts set out in the trial. The only obvious variation would have arisen in circumstances which I had contemplated. That is, where a valuation altered because of the sale of a particular asset. That must be so in circumstances where the parties knew that that was the likely occurrence.
I had determined that a division of the known assets on the percentages that I declared was just and equitable and the parties themselves had decided who was keeping what assets within that just and equitable determination. Accordingly, there is no basis for any further contemplation of the pool.
It is important to also recognise that this was not an oversight or an error. The parties knew what they were litigating about and made clear how the Court was to do it. That situation cannot be revisited now.
As I earlier mentioned, a quantum was not a matter about which there was an argument with evidence and accordingly the only evidence I have is that the wife owes the husband $69,995.
Senior counsel for the wife raised as an alternative that she was at least entitled to interest on her money but that is a complicated situation by virtue of the fact that she has had the husband’s money from the moment that he put it into her bank account. Section 117B provides that where a court makes an order for the payment of money, interest is payable at a rate prescribed by the applicable rules of court. No such order was made here. Accordingly, there is no basis for me to make an order for interest in favour of the wife that would have an offsetting effect.
Finally, the submission (although not the application) of the wife sought that there be further orders to conclude the artwork dispute. That dispute must be determined within the framework of the orders that I have previously made. I ordered that after the pick-about method was used, the person who had the other’s artwork had to make it available for collection. As yet, that has not occurred and I was asked to make an order that all of it be undertaken by 8 March 2012. That seems to me to be somewhat restrictive and there was no argument put by the husband about his position but I would propose to resolve the matter on the basis that it be concluded by 31 March 2012.
The dispute about the artwork did not end there. One of the pieces that the husband has chosen is a painting entitled “[…]”. The unusual feature of this artwork is that it is connected to the wall of the wife’s house and its removal may require repairs to the wall. Senior counsel for the wife said that his client was most concerned about not being responsible for damaging this painting when it is removed.
Although the orders I made relating to the artwork were of a machinery nature, I see no reason to alter the situation here. It was clear that the parties were to sort out who was to get which pieces and the collection was also made clear. The obligation is upon the wife to make it available in circumstances where she had had the choice to keep the artwork and chose not to do so. Thus, if there is any damage to the wall of the house, it must be the responsibility of the wife to fix that situation herself. To the extent that the painting might be damaged, that cannot be the responsibility of the wife other than in circumstances where she deliberately damages it, because the husband knew that the painting was part of the wall (he having lived in the house previously) at the time he made the choice. The whole argument did little credit to the parties after their many years of marriage and accrued significant wealth. I propose to do nothing further about the matter other than to make clear that the artwork is to be made available by the end of March.
There was no opportunity for the parties to argue issues of costs but each asked me that I give them an opportunity to make written submissions and I propose to make that order accordingly.
I certify that the preceding Forty Four (44) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 8 March 2012.
Associate:
Date: 8 March 2012
0
6
1