Carri and Carri

[2008] FamCA 21

FAMILY COURT OF AUSTRALIA

CARRI & CARRI [2008] FamCA 21

FAMILY LAW – PROPERTY SETTLEMENT –Orders made by consent in a property case involving an imprecise assessment of the business assets but stated to be “many millions” of dollars.  Second marriage for the husband who is elderly and mentally incompetent.  The wife too is elderly and accepts a settlement to her benefit of $2M.  The parties’ practitioners endorse the proposed orders.  Commentary on obligation of judges in such cases.

Family Law Act 1975 (Cth) (as amended)

APPLICANT: Mrs Carri

RESPONDENT: Mr Carri

FILE NUMBER: MLC 8726 of 2007

DATE DELIVERED: 3 January 2008

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Guest J

HEARING DATE: 3 January 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Graham

SOLICITOR FOR THE APPLICANT: Graham Legal

COUNSEL FOR THE RESPONDENT: Mr Caldwell

SOLICITOR FOR THE RESPONDENT: Mark Caldwell

Orders

1. That within 30 days of the making of these Orders, the husband pay to the wife the sum of $750,000.00 (the “First Payment Sum”) and payment of a further sum of $1,250,000.00 (the “Final Payment”) no later than 31 October 2008.

2. That within 30 days of the date of these Orders the husband transfer motor vehicle registration number … to the wife free of all charges and expenses associated with the transfer including a roadworthy certificate.

3. That to secure payment of the Final Payment referred to in paragraph 1 hereof, Ms E, on behalf of the Husband  hereby grants a charge sufficient to support a Caveat to be lodged by the wife over the following properties:

   (a)Lots 14, 15 and 16 in …, P, being the properties described in Certificates of Title …; and

   (b)the property at M, Queensland, being the land described in Certificate of Title ….

   collectively called (the “said properties”).

4. That the parties hereby agree that Ms E, as case guardian and attorney under power, may sell all or any of the said properties described in paragraph 3 and may use the proceeds or part thereof in satisfaction of the payments referred to in paragraph 1 above and the wife will provide a withdrawal of Caveat at settlement to facilitate such sale.

5. That the wife will continue to reside with and care for the husband in her residential home or other premises provided by her during her lifetime and in consideration of which Ms E as attorney under power of the husband as and from the date of these Orders will pay into the joint account of the husband and wife, the sum of $1,000 per week, which sum is to be applied for the maintenance and benefit of the husband.  For the avoidance of doubt, the payments provided for in this paragraph shall cease and be suspended during any period when the husband does not reside with the wife as provided for in this paragraph.

6. That if it becomes necessary for the husband to enter a nursing home within 3 years of the date of these Minutes being made Orders of the Court, the wife and the husband’s case guardian and attorney under power will:

   (a)agree on a suitable institution for the accommodation of the husband;

   (b)contribute equally to the cost of any bond or other necessary payment to allow the husband to enter the institution and the payment for the maintenance benefit of the husband provided for in paragraph 5 hereof shall cease and paragraph 5 of these Orders will be discharged.

7. That the husband will pay to the wife’s solicitors the sum of $4,290.00 in respect of the agents commission and costs thrown away by reason of the aborted sale of the property at P. The wife acknowledges having already received that amount.

8. That subject to and upon full compliance with the terms of settlement dated 18 October 2007 in relation to the proceedings issued in the Guardianship List at the Victorian Civil and Administrative Tribunal being proceedings numbered … (the VCAT proceedings) the wife hereby releases and forever discharges the husband and his case guardian and attorney under power, Ms E, and all companies, trusts and other entitles associated with the husband or Ms E from all actions and suits or proceedings and all claims of whatsoever nature that the wife has or might have in respect of the husband other than the enforcement of these Orders.

9. That subject to and upon full compliance with the terms of settlement dated 18 October 2007 in relation to the VCAT proceedings the wife hereby agrees not to institute any proceedings against or in respect of the husband his assets and estates and in particular proceedings under Part IV of the Administration & Probate Act 1958.

10. That subject to and upon full compliance with the terms of settlement dated 18 October 2007 in relation to the VCAT proceedings the husband releases and forever discharges the wife from all actions suits or proceedings and all claims of whatever nature that he has or might have in respect of the wife other than the enforcement of these Orders.

11. That this is an Order to which Section 77A of the Family Law Act applies.

12. That the sum of $50,000 payable to the wife pursuant to these Orders is on account of spousal maintenance for the wife.

13. That the parties agree to do all things and execute all documents that are or may be required to implement or facilitate compliance with these Orders.

14. That unless otherwise specified in these Orders and except for the purposes of enforcing the payment of any moneys due under these or any subsequent Orders:

    (a)each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these Orders;

    (b)any money standing to the credit of the parties in any bank account are to be retained by the party in whose name the account appears;

    (c)each party hereby foregoes any claim they may have to any superannuation benefit that is belonging to or earned by the other save as provided for in these Orders;

    (d)all insurance policies are to become the sole property of the owner named hereon;

    (e)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders; and

    (f)any joint tenancy of the husband and wife in any real or personal estate is hereby expressly severed.

AND THE COURT NOTES

A.That pursuant to section 81 of the Family Law Act 1975 the parties intend that these Orders shall fully and completely finalise the financial relationships between them and avoid the necessity for further proceedings in relation to property and spousal maintenance matters.

B.Subject to paragraph 4 hereof, Ms E, the case guardian and attorney under power warrants that:

(i)the husband is the sole beneficial owner of each of the said properties referred to in paragraph 3(a) and (b) hereof;

(ii)each of the said properties is free of all encumbrances and not subject to any mortgage or charge and will remain so until the payments referred to in paragraph 1 hereof have been made.

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Honourable Justice Guest delivered this day will for all publication and reporting purposes be known as Carri & Carri.

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 8726  of 2007

Mrs Carri

Applicant

And

Mr Carri

Respondent

REASONS FOR JUDGMENT

1. This matter comes before me in the Judicial Duty List, having been referred by Registrar Field on 11 December 2007.  Subsequently, proposed consent property orders were filed on 13 December 2007.  The Application for Consent Orders itself sets out in detail the background to the matter and the resolution between the parties. 

2. By way of short background, the wife was born in October 1931 in Germany and is 78 years of age.  The husband was born in April 1922 in Poland and is 85 years of age.  It is a second marriage for the husband.  The parties married in April 1978.  They still reside together, in the circumstances set out in an affidavit deposed to by Ms E, who is the daughter of the husband in the proceedings, she being one of three siblings, the eldest child of whom was deceased in April 1977. 

3. I have had the advantage of reading the Form 1 Application for Final Orders filed on 3 August 2007 together with a Form 13 Financial Statement of the wife filed on 25 October 2007.  I have also been helpfully assisted with affidavits of Ms E, to whom I have earlier referred, and MARK GERARD CALDWELL, the solicitor for the husband.  He has been the solicitor for in excess of 20 years. 

4. I will deal firstly with the affidavit of Ms E who deposed that on 18 December 1997 her father made a Power of Attorney appointing her as his power a copy of which is annexed to her affidavit.  Tragically, in August 1998 the husband was involved in a motor car accident in which he sustained severe head injuries. 

5. Ms E deposed that her father’s mental condition deteriorated after that time and annexed to her affidavit, and properly so, a copy of the medical report prepared in March 1999 by Dr S, detailing his cognitive function impairment.  She deposed that she has been informed by her father's medical practitioner that there was “no prospect of any meaningful improvement” in his condition.

6. It was in view of that medical condition and that he is a person with a disability by reason of mental health that the husband was not capable of understanding the nature and consequences of the proceedings and thus not capable of giving instructions to conduct them himself.  Accordingly, on 11 December 2007, and with the consent of Mr Graham, the solicitor for the wife, Ms E was appointed Case Guardian on behalf of her father. 

7. Ms E then set out, in a helpful way, the background to her father's successful business enterprise.  Apparently, as I understand it, in the late 1950s, a considerable time prior to his marriage to the wife, the husband commenced a business in residential fittings.  She deposed that since that time the business had grown to be one of the “largest domestic and commercial […] businesses” in the country.

8. The structure of the business is that it is conducted by Carri Pty Ltd as trustee of the Carri Business Trust.  The directors of Carri Pty Ltd are the deponent and her husband.  The Guardian, by reason of the Power of Attorney to which I have earlier referred, is Ms E.  The business, as I said, manufactures and installs building fittings for commercial and domestic use.  It has an annual turnover of $18 million to $20 million and is described by Mr Caldwell “as very profitable”. 

9. The value of the business remains unstated, but is said to be "worth many millions of dollars".  Also involved within the financial structure is a company known as M Pty Ltd, acting as trustee of F Property Trust.  That too is a discretionary trust, the beneficiaries of which are the husband and the husband's children.  It holds real property to a value in excess of $1 million.  The directors of the trustee company are again Ms E and her husband.

10. Ms E deposed that, on behalf of her father, she entered into Terms of Settlement with the wife in proceedings issued by her in the Victorian Civil and Administrative Tribunal.  The Terms of Settlement are annexed to her affidavit.  In accordance with the Terms of Settlement, it provides, in effect that the wife will no longer be a beneficiary of the Carri Business Trust or the F Property Trust.  The husband, however, will remain as a beneficiary of those trusts.

11. Ms E said that the financial needs of her father “nowadays” are not significant and that arrangements had been put in place before his accident that he is paid an amount of $695 per week, which is paid into a joint account of the husband and the wife so that the wife can draw upon that account to pay for her husband's needs.  She deposed that, if there were any other financial needs for them both that cannot be met from those moneys, additional funds would be made available out of the Carri Business Trust.  Those needs include nursing care, accommodation and medical supplies. 

12. Ms E deposed, and I accept, that, if required, she is happy to have her father live with her and her family.  The husband's first wife, that is, the mother of Ms E, has lived with the family for many years but suffers dementia. 

13. Ms E also deposed that she has no interest in the proceedings adverse to those of her father, has nothing personally to gain from litigation and that she bears no malice or ill‑will towards her father.  She has made the affidavit fairly and competently, believing that the Terms of Settlement were fair and just and for the benefit of her father. 

14. The affidavit of Mr Caldwell is a clear one too, helpfully setting out the financial structures to which I have earlier referred.  The affidavits clearly have been drawn by Mr Caldwell.  As I said, he has been the solicitor for the husband for in excess of 20 years. 

15. Mr Caldwell deposed, in addition to setting out the background and the general business matters, that Ms E is committed to provide for the husband in whatever way is required out of the assets of the family business.  He said that, due to the medical condition suffered by the husband, it is anticipated that the husband's needs will not be significant throughout the remainder of his life. 

16. Mr Caldwell also deposed that the wife had agreed to remain the husband's primary carer, but that if that position were to change then Ms E would take over that role and accommodate her father in her own home, unless he required full‑time nursing care, in which case she would arrange to pay for the cost of such care and accommodation as may be necessary out of the assets of the family business.  Importantly for the purpose of the hearing before me is the deposition of Mr Caldwell as follows:

    “10.I am of the opinion that the Terms of Settlement signed by the husband and the wife are fair and reasonable, particularly taking into account that the assets of the family business will be made available to ensure that the husband is adequately provided for during the remainder of his life.” 

17. I thought the affidavits were impressive and I congratulate the parties on coming to this sensible family arrangement.  In considering matters such as this, a judge in my position has a broad discretion to make such orders as may be considered appropriate, tempered however by the requirement of such orders being just and equitable in the whole of the circumstances of the case.  When I say "the whole of the circumstances of the case”, I emphasise that it is the discrete circumstances of each case before a judge when considering such Terms of Settlement and having regard to the provisions of section 79(2) of the Family Law Act 1975 (as amended) as to their justness and equitability.

18. In undertaking that task, a judge is required to take into account those matters set out in section 79(4) of the Act and those other matters by way of prospective adjustments, if any, pursuant to the provisions of section 75(2).  The legislation in effect provides to the court a discretionary power to adjust property interests of the parties in a manner that will do justice and equity between them.  I emphasise that the discretion reposed in a judge in my position is an extensive one. 

19. I am not obliged, for example, to adopt an excessively mathematical approach when considering the mandates required under section 79(4) of the Act, but, rather, a broad estimate of contributions.  My task is a matter of authoritative and informed judgment, not of exact computation. 

20. I appreciate that an established line of authority has made it clear that there are three steps I must undertake in the determination of the property entitlements of each of a husband and a wife in a particular case before me.  I appreciate too that I am required to identify the property of the parties.  Secondly, I am required to make an evaluation of what contributions have been made by each of them, direct or indirect, of a financial and non-financial nature.  Thirdly, I appreciate that I am obliged to consider those matters, insofar as they are relevant, pursuant to section 75(2) of the Act.  I might stress that the provisions of section 75(2) do not apply automatically, but only to the extent to which they are relevant.

21. Having regard to the whole of the circumstances of this case and particularly the age of the applicant wife, the fact that the parties are represented by experienced practitioners, and, insofar as the husband is concerned, a practitioner who has known him and been his solicitor for some 20 years, I am satisfied that the orders proposed are just and equitable.

22. It has been my experience that in cases of this nature a practical approach must be taken to the discrete cases that come before a judge from time to time.  It is an economic rationalisation by the parties, represented by highly regarded members of the profession, in adjusting a family situation to fall comfortably within the broad zone of that which is “just and equitable”, pursuant to the provisions of section 79(2) of the Act.

23. I am quite satisfied that the orders sought to be made are just and equitable.  The wife, at 75 years of age will be seized with assets to the value of some $2 million.  The husband has his affairs well and truly handled by his solicitor, Mr Caldwell.  His daughter, Ms E has explained the situation in a very helpful affidavit.  She is his power of attorney.  I have no doubt that he is going to be well cared for by his wife, and, in the event that circumstances come to bear that make that difficult for her, then he will continue to be well cared for financially and well and truly housed. 

24. I do not think it is necessary for the parties to embark upon a full valuation of the business interests of the husband.  It is deposed to be a business “worth many millions of dollars”.  In some regards the percentage adjustments between the parties set out in the Application for Consent Orders is only a modest gauge by which some sort of indicator can be given to the court.  However, what is appropriate to me and persuades me to make the orders is the quality of the representation and the apparent fairness of the orders having regard to the whole of the circumstances in which the parties have found themselves. 

25. I propose to make the orders.  I mark the Minute of Consent Orders Exhibit "A". 

I certify that the preceding twenty five (25) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Guest.

Associate: 

Date:  24 January 2008