Burt & Merrill (No 2)

Case [2024] FedCFamC1F 514

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Burt & Merrill (No 2) [2024] FedCFamC1F 514

File number: MLC 9912 of 2013
Judgment of: MCGUIRE J
Date of judgment: 13 August 2024
Catchwords: FAMILY LAW – PROPERTY – Consideration of s 90SN of the Family Law Act 1975 (Cth) – where applicant seeks to set aside final orders made 10 August 2018 on the basis of s 90SN(1)(a), (b) or (c) – orders made by Berman J on 10 August 2018 be set aside – trial directions made in relation to the substantive proceedings
Legislation: Family Law Act 1975 (Cth) ss 79, 90SM and 90SN(1)
Cases cited:

Barker & Barker [2007] FamCA 13; (2007) 36 Fam LR 650

In the marriage of Cawthorn v Cawthorn [1998] FamCA 37; (1998) FLC 92-805 at 85,061.

In the marriage ofHolland v Holland [1982] FamCA 31; (1982) FLC 91–243

In the marriage of Molier v Van Wyk [1980] FamCA 85; (1980) FLC 90–911 at 75,767

In the marriage of the Rohde v Rohde (1984) FLC 91–592 at 79,768

Trustee of the Bankrupt Estate of Hicks & Hicks and Anor [2018] FamCAFC 37; (2018) FLC 93-824
Division: Division 1 First Instance
Number of paragraphs: 49
Date of hearing: 15 July 2024
Place: Melbourne
Counsel for the Applicant: Mr Gronow
Solicitor for the Applicant: Vasilaras & Co
Solicitor for the First Respondent: Litigant in Person
Counsel for the Second Respondent: Mr Galvin KC
Solicitor for the Second Respondent: McKean Park Lawyers
Counsel for the Intervener: Mr Eley
Solicitor for the Intervener: Serong Legal

ORDERS

MLC 9912 of 2013

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MR BURT

Applicant
AND:

MS MERRILL

First Respondent

MR COUPE AS TRUSTEE OF THE BANKRUPT ESTATE OF MS MERRILL

Second Respondent

MR PQ IN HIS CAPACITY AS LIQUIDATOR OF C PTY LTD (IN LIQUIDATION)

Intervenor

ORDER MADE BY:

MCGUIRE JJ

DATE OF ORDER:

13 AUGUST 2024

THE COURT ORDERS THAT:

1.The final property Orders made by his Honour Berman J on 10 August 2018 be set aside pursuant to section 90SN(1)(a) and (c) of the Family Law Act 1975 (Cth).

2.The substantive proceedings be listed for final hearing in the Federal Circuit & Family Court of Australia at Melbourne before me commencing 10.00am on Monday 3 February 2025 (with a time estimate of two (2) days).

IT IS DIRECTED

3.The parties make, file and serve their trial affidavits no later than twenty eight (28) days prior to the commencement of the final hearing.

4.That no later than seven (7) days prior to the commencement of the hearing the parties make, file and serve a document setting out:

(a)the orders sought;

(b)a list of documents to be relied upon; and

(c)a brief summary of argument.

5.The applicant be responsible for the payment of any fee including a setting down or hearing fee pay or cause to be paid such of the fees as shall be payable by that party in accordance with,…

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AGLC
Burt & Merrill (No 2) [2024] FedCFamC1F 514
Case
[2024] FedCFamC1F 514
Decision Date

CaseChat Overview and Summary

The applicant, Mr Burt, sought to set aside final orders made by Justice Berman on 10 August 2018, under s 90SN of the Family Law Act 1975 (Cth). The orders provided for the payment of a settlement sum of $614,197 by the applicant to the first respondent, Ms Merrill, and the transfer of a property from Ms Merrill to the applicant. Additionally, the orders required Ms Merrill to sign a settlement agreement with the Australian Taxation Office (ATO) and gave the applicant a right of first refusal on the sale of certain properties held by Ms Merrill. The primary legal issue before the court was whether the orders should be set aside under s 90SN(1)(a), (b) or (c) of the Act. The applicant argued that Ms Merrill had failed to comply with an order to reach a settlement agreement with the ATO, which undermined the integrity of the orders. The court agreed, finding that Ms Merrill's failure to comply with this order went to the fundamental basis of the property orders, and therefore, the orders should be set aside under s 90SN(1)(c). The court also noted that it would be contrary to public policy to allow a party to apply to have property settlement orders set aside based on their own default.

The court found that the final property orders made by Justice Berman on 10 August 2018 should be set aside pursuant to s 90SN(1)(a) and (c) of the Family Law Act 1975 (Cth). The substantive proceedings were listed for final hearing in the Federal Circuit & Family Court of Australia at Melbourne. The court directed that the parties file their trial affidavits and a document setting out the orders sought, a list of documents to be relied upon, and a brief summary of argument. The court also noted that if any party failed to comply with the orders, directions, Rules or Regulations of the Court, the application may be struck out, the proceedings may be directed to proceed undefended, or the trial date may be vacated, and the party in default or their solicitor may be ordered to pay the costs of the other parties wasted as a result of the default.

Orders

Orders of the court

MLC 9912 of 2013

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MR BURT

Applicant

AND:

MS MERRILL

First Respondent

MR COUPE AS TRUSTEE OF THE BANKRUPT ESTATE OF MS MERRILL

Second Respondent

MR PQ IN HIS CAPACITY AS LIQUIDATOR OF C PTY LTD (IN LIQUIDATION)

Intervenor

ORDER MADE BY:

MCGUIRE JJ

DATE OF ORDER:

13 AUGUST 2024

THE COURT ORDERS THAT:

1. The final property Orders made by his Honour Berman J on 10 August 2018 be set aside pursuant to section 90SN(1)(a) and (c) of the Family Law Act 1975 (Cth).

2. The substantive proceedings be listed for final hearing in the Federal Circuit & Family Court of Australia at Melbourne before me commencing 10.00am on Monday 3 February 2025 (with a time estimate of two (2) days).

IT IS DIRECTED

3. The parties make, file and serve their trial affidavits no later than twenty eight (28) days prior to the commencement of the final hearing.

4. That no later than seven (7) days prior to the commencement of the hearing the parties make, file and serve a document setting out:

(a) the orders sought;

(b) a list of documents to be relied upon; and

(c) a brief summary of argument.

5. The applicant be responsible for the payment of any fee including a setting down or hearing fee pay or cause to be paid such of the fees as shall be payable by that party in accordance with, and within the time specified in, the Family Law (Fees) Regulation 2022 (Cth).

AND THE COURT NOTES THAT

6. In the event of non-compliance by any party with the orders, directions, Rules or Regulations of this Court relating to the filing of documents or any other procedural issues, the application may be struck out, the proceedings may be directed to proceed undefended or the trial date may be vacated and the party in default or their solicitor may be ordered to pay the costs of the other parties wasted as a result of the default.

7. To the extent that it is or may be practicable to do so, a compliance check is to be carried out by an associate or deputy associate of the trial judge, or by another appropriate court officer, shortly prior to the final hearing date.

8. Leave be given to the parties to apply for further procedural and/or interlocutory orders.

THE COURT NOTES THAT

9. If in any proceedings there are allegations of family violence and the provisions of section 102NA of the Family Law Act 1975 (Cth) (see Family Violence Information sheet attached to the Orders on the Court Portal) apply any unrepresented party will not be permitted to personally cross-examine the other party/parties.

10. Affected unrepresented parties may apply to the Commonwealth Family Violence and Cross-Examination of Parties Scheme (“the Scheme”) for representation but any such application must be made at least 12 weeks prior to the final hearing.

11. Further information about the legislation and the Scheme can be found at Part 4 of the Family Violence Information Sheet.

12. If section 102NA of the Family Law Act 1975 (Cth) applies and a party becomes unrepresented after trial directions have been made, that party is required to promptly advise the Court.

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).

Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

It was agreed that the application pursuant to s 90SN be heard as a preliminary application where the applicant has filed for relief pursuant to s 90SM of the Act.BACKGROUND After a trial of some eight days duration, Berman J made final orders on 10 August 2018 providing inter alia as follows:(1) …(a)That on or before forty five (45) days from the date of this order the husband pay the wife the sum of SIX HUNDRED AND FOURTEEN THOUSAND ONE HUNDRED AND NINETY SEVEN DOLLARS ($614,197) (“the settlement sum”); (b)That contemporaneously with the payment of the settlement sum the wife shall transfer her estate and interest in a property situate at [L Street], [Suburb E] … to the husband;(c)That within fourteen (14) days of this order wife do sign the settlement agreement with the Australian Taxation Office (“ATO”) with respect to the taxation liabilities in the total sum of TWO MILLION FIVE HUNDRED AND THIRTEEN THOUSAND SEVEN HUNDRED AND SEVENTY THREE DOLLARS ($2,513,773) for the following entities:-(i) [C] Pty Ltd;…(f)That if in the discharge of the wife’s liability to the ATO or in respect of her other liabilities she proposes to sell any or all of the real property held by [C Pty Ltd] THEN the wife shall give the husband thirty (30) days’ notice of any intention to sell and the husband will have the first right of refusal and a first option to purchase the nominated property or properties at the following value: –(i)[2 and 3 M Street], [Suburb D] $1.9 million;(ii)[1 M Street], [Suburb D] $630,000; (iii)[N Street], [Suburb D] $750,000;(iv)[…] [L]ots [5, 6 and 7] at [N Street], [Suburb D] $65,000;…(j)that in default of the payment of the settlement sum and should the default continue longer than fourteen (14) days, the parties will cause the property situated [L Street], [Suburb E] to be placed on the market for sale by public auction or private treaty with the net proceeds of sale to be applied in the following manner… In his Reasons for Judgment Berman J identified an issue in dispute being the wife’s contention that she had a taxation liability both personal and in respect of her associated entities that should be recognised and brought to account at $2,513,773. At [97] – [103] of the Reasons his Honour notes:97.The wife contends that in late 2013 she became aware that there may be a significant taxation liability.98.The wife’s evidence is that even with the assistance of her accountants she was not able to ascertain the extent of the potential liability.99.The wife specifically instructed Ms F to assist her in determining the potential liability and then if possible to negotiate a settlement with the ATO.100.Consequent upon the evidence of Ms F and her colleague Mr DD (“Mr DD”), the wife seeks that the collective taxation liability both personal and of her associated entities should be brought to account at $2,513,773.101.The parties disagreed as to the extent to which documents that may have been in the possession of the husband were withheld from the wife thereby hindering her from more easily assessing the extent of the taxation liability.102.The husband does not deny that a tax liability may exist.103.Paragraph 286 of the husband’s trial affidavit is relevant:-I note [the wife’s] complaints that tax returns were not filed for the entities that she now controls. I admit that due to my health problems, as detailed above, I was simply not capable of preparing and filing tax returns from approximately 2009 onwards.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Perversely, the applicant also argues “default” by himself and not meeting his Honour’s order for a payment of $614,197 to the first respondent. Put simply, it would be contrary to public policy should a person be permitted by the legislation to apply to have a property settlement order set aside on the basis of their own default. The default of the first respondent, however, in not entering into the settlement agreement with the ATO pursuant to a direct order of his Honour is a default that impacts on the justice and equity of the very integrity of the orders. The fundamental rationale of his Honour’s orders emanating from the “first step” in identifying the legal and equitable interests of the parties in property, comprises the very integrity of the orders, in that by not complying with his Honour’s assertive order to reach a settlement agreement with the ATO in a prescribed amount then the fundamental basis of his Honour’s orders stemming from the “first step” of identifying the legal and equitable interests in property is without sound and evidentiary basis. That is, the other substantive orders including the cash payment from the applicant to the first respondent and the transfer of real property from the first respondent to the applicant are based on the first respondent’s compliance with order 1(c). This is not an incidental matter but one going to the very fundamental core of the property orders. Justice and equity, therefore, demands, that the orders would be set aside under this subsection.CONCLUSION I would therefore set aside the orders of his Honour Justice Berman made 10 August 2018 on the applicant’s application under s 90SN(1) of the Act either through subparagraph (a) or subparagraph (c).

Ratio Decidendi

Legal Principle Established

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