Carrillo & Carrillo
[2023] FedCFamC1F 953
•10 November 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Carrillo & Carrillo [2023] FedCFamC1F 953
File number(s): BRC 2953 of 2022 Judgment of: BAUMANN J Date of judgment: 10 November 2023 Catchwords: FAMILY LAW – Application for Summary Dismissal of parts of Applicant’s claims against the second Respondent – Application successful – Application of spouse maintenance – Determination for interim spouse maintenance payable by the husband to the wife in the sum of $300 per week from 16 August 2022 – Further submissions required as to disbursement of $300,554 held in solicitors trust account as result of findings made – Further directions necessary to progress proceedings to mediation and/or final property alteration hearing Legislation: Family Law Act 1975 (Cth) ss 72, 75, 78, 79, 85A, 106B
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 46
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 10.09, 10.11
Cases cited: Atkins & Hunt & Ors (2020) 61 Fam LR 238
Boston Commercial Services Pty Ltd v GE Capital Finance Australia Pty Ltd (2006) 236 ALR 720
Jones & Dunkel (1959) 101 CLR 298
Lindon v The Commonwealth (No 2) (1996) 70 ALJR 541
Division: Division 1 First Instance Number of paragraphs: 80 Date of last submission/s: 31 March 2023 Date of hearing: 16 August 2022 and 16 March 2023 Place: Brisbane Counsel for the Applicant: Mr P Hackett Solicitor for the Applicant: Sambanis Family Law Counsel for the First Respondent: Mr P D Sweeney Solicitor for the First Respondent: Barry Nilsson Lawyers Counsel for the Second Respondent: Mr D Dura Solicitor for the Second Respondent: Hopgood Ganim Lawyers ORDERS
BRC 2953 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS CARRILLO
Applicant
AND: MR CARRILLO
First Respondent
MS B CARRILLO
Second Respondent
ORDER MADE BY:
BAUMANN J
DATE OF ORDER:
10 NOVEMBER 2023
THE COURT ORDERS:
1.That the orders sought by the wife at paragraphs 1B, 1C, 2, 2A and 3 of the further amended Initiating Application filed 9 August 2022, are summarily dismissed pursuant to section 46 of the Federal Circuit and Family Court of Australia Act 2021 (Cth).
2.That the husband pay to the wife, by way of interim spouse maintenance the sum of $300 weekly, with the payment of that sum (capitalised) from 16 August 2022 and the manner of payment from the date of this order to be as further ordered, after further submissions.
3.That these proceedings be listed for Case Management Hearing at 9.30am on 30 November 2023 in the Federal Circuit and Family Court of Australia (Division 1) at Brisbane to hear further submissions as to:
(a)The manner of payment of the spouse maintenance order;
(b)The orders as to the distribution of the funds held in trust by Barry Nilsson solicitors; and
(c)Any further necessary directions to progress the proceedings towards private mediation and/or final hearing.
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).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Carrillo & Carrillo has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BAUMANN J:
The Applicant wife, Ms Carrillo (“the wife”), and the Respondent husband, Mr Carrillo (“the husband”), have been engaged in litigation involving both parenting and financial matters since March 2022. They had separated in September 2020 after a relationship and marriage of over 20 years.
The parties have five children, three of whom are still under the age of 18 years – X (born 2006); Y (born 2009) and Z (born 2016).
The wife’s Initiating Application joined the husband’s mother Ms B Carrillo as a party, as a result of the some of the relief and orders sought that would affect Ms B Carrillo and her rights and interests in various corporate and trust entities.
For the purposes of these Reasons, it is not necessary to record the number of events since proceedings commenced and the various changes to the positions and applications, save to observe that the interlocutory proceedings were heard on 16 August 2022 and re-opened on a limited basis on 16 March 2023.
MATERIAL RELIED UPON BY THE PARTIES
The Applicant wife relies upon the following material as identified in her list of documents filed 9 August 2022:
(a)Initiating Application filed 15 March 2022 (amended 23 May and 9 August 2022);
(b)Affidavit of the Applicant filed 15 March 2022;
(c)Financial Statement filed 15 March 2022;
(d)Affidavit of the Applicant filed 23 March 2022;
(e)Application in a Proceeding filed 23 May 2022 (amended 9 August 2022);
(f)Affidavit of the Applicant filed 23 May 2022;
(g)Reply filed 30 June 2022; and
(h)Affidavit of the Applicant filed 30 June 2022.
The wife was represented by Mr Hackett of Counsel who made both oral and written submissions.
The Respondent husband relies upon the following material as identified in his case outline filed 12 August 2022:
(a)Response to Initiating Application filed 21 April 2022;
(b)Response to Application in a Proceeding filed 4 July 2022;
(c)Affidavit of the husband filed 21 April 2022;
(d)Affidavit of the husband filed 4 July 2022;
(e)Affidavit of the husband filed 9 August 2022;
(f)Affidavit of Mr D filed 30 June 2022; and
(g)Financial Statement filed 21 April 2022.
The husband was represented by Mr Sweeney of Counsel who made oral submissions.
Ms B Carrillo relies upon the following material as identified in her case outline filed 12 August 2022:
(a)Affidavit of Ms B Carrillo filed 23 May 2022;
(b)Amended Response to Initiating Application filed 21 July 2022;
(c)Response to Application in a Proceeding filed 21 July 2022;
(d)Affidavit of Ms B Carrillo filed 21 July 2022;
(e)Affidavit of Ms C filed 12 August 2022; and
(f)Costs Notice filed 15 August 2022.
Ms B Carrillo was represented by Mr Dura of Counsel who made oral submissions.
The complexity of the structure and the relationship between various entities, is demonstrated in a diagram produced and tendered as Exhibit 1 – and forms Appendix One to these Reasons. As I understand the submissions, the references to the various shareholders, beneficiaries of trusts and directors as set out in the diagram are accepted as accurate at this time.
APPLICATIONS AND RELIEF SOUGHT
The Applicant seeks the following orders (contained within the Initiating Application filed 15 March 2022 and further amended 9 August 2022), excluding reference to orders for disclosure for the current Reasons:
PROPERTY – FINAL
1. The Court declares, pursuant to s.78 or 85A of the Family Law Act that:
a.That the document entitled “Employment Agreement” dated 9 November 2021 purporting to ratify and backdate to July 1 2020, the First Respondent’s employment with [E Investment Group], is a sham document;
b.That the document entitled “Loan Agreement” dated 20 December 2021 purporting to ratify a pre-existing loan between the first respondent and the second respondent, in the amount of $2,095,101.04 and securing that alleged loan against the matrimonial home, [F Street, Town G], QLD […] (Lot […] on RP[…]) and providing as Guarantor for the loan the business known as [H Pty Ltd], of which the first respondent and applicant are joint shareholders, is a sham document;
c.That the document entitled “Loan Agreement” dated 20 December 2021 purporting to ratify a pre-existing loan between the first respondent and the second respondent, in the amount of $599,685.45 and securing that alleged loan against the matrimonial home, [F Street, Town G], QLD […] (Lot […] on RP[…]) and providing as Guarantor for the loan the business known as [H Pty Ltd], of which the first respondent and applicant are joint shareholders, is a sham document;
d.That the document entitled “Deed of Guarantee” dated 20 December 2021 between [H Pty Ltd] and the second respondent, guaranteeing the alleged $2,095,101.04 loan at paragraph 1(b) above and providing as security for the loan the property located at [J Street, Suburb K] QLD […] (Lot […] on SP[…]), is a sham document;
e.That the document titled “Deed of Guarantee” dated 20 December 2021 between [H Pty Ltd] and the second respondent, guaranteeing the alleged $599,685.45 loan at paragraph 1(c) above and providing as security for the loan the property located at [J Street, Suburb K] QLD […] (Lot […] on SP[…]), is a sham document; and
f.That the document entitled “Loan Agreement” dated 24 May 2021 purporting to ratify a pre-existing loan between the first respondent and the second respondent, in the amount of $648,000, is a sham document.
1A.In the alternative to paragraph 1, an order pursuant to s.106B of the Family Law Act setting aside the documents in paragraphs a. to e. of paragraph 1.
1B.An order pursuant to s.106B of the Family Law Act setting aside the share transfers executed by the First Respondent in favour of the Second Respondent of his shares in the following corporations:
a. [L Pty Ltd];
b. [Carrillo Family Holdings Pty Ltd];
1C.An order pursuant to s.106B of the Family Law Act setting aside the share transfers executed by the First Respondent of shares in the following corporations to [Carrillo Family Holdings Pty Ltd]:
a. [M Pty Ltd];
b. [N Pty Ltd];
c. [P Pty Ltd];
d. [Q Pty Ltd];
e. [R Pty Ltd];
f. [S Pty Ltd].
2.Pursuant to s.78 or 85A of the Family law Act, it is hereby declared that the entire shareholding in the following corporate entities is held on a constructive trust and/or a resulting for the benefit of the Husband, or in the alternative that the following corporate entities are the alter ego of the Husband:
a. [L Pty Ltd] and [T Trust];
b. [Carrillo Family Holdings Pty Ltd] and [Carrillo Family Trust];
c. [U Pty Ltd] and [U Discretionary Trust];
d. [E Investment Group Pty Ltd] and [E Sales Group];
e. [V Pty Ltd] and [V Discretionary Trust];
f. [H Investments Pty Ltd] and [H Investment Trust];
g. [H Pty Ltd] and [H Trust];
h. [E Pty Ltd];
i. [W Pty Ltd] and [W Trust];
j. [R Pty Ltd] and [R Unit Trust];
k. [S Pty Ltd] and [S Unit Trust];
l. [Q Pty Ltd] and [Q Unit Trust];
m. [M Pty Ltd] and [M Unit Trust];
n. [N Pty Ltd] and [N Unit Trust];
o. [P Pty Ltd] and [P Unit Trust];
p. [AA1 Pty Ltd] and [AA1 Unit Trust];
q. [AA2 Pty Ltd] and [AA2 Unit Trust].
2A.In the alternative to paragraph 2, a declaration the Second Respondent’s interest in any of the corporate entities is a sham as she has and continues to hold her interest in the same at the direction of the Husband.
3.the alternative to Order 2 above, it is declared, pursuant to s.78 or 85A of the Family law Act, that the following parcels of land (or any proceeds of sale from their realisation) are held on a constructive trust and/or a resulting trust for the benefit of the Husband:
a. The property/ies situated at [BB Street, Suburb CC] (also known as lots […] on SP[…]);
b. The property/ies situated at [DD Street] and [EE Street], [Suburb FF] (also known as lots […] on SP[…]);
c. The property/ies situated at [GG Street, Suburb HH] (also known as lots […] on RP[…]);
d. The property/ies situated at [J Street, Suburb K] (also known as lot […] on SP[…]);
e. The property/ies situated at [JJ Street, Suburb KK] also known as lots […] on SP[…]);
f. The property/ies situated at [LL Street] and [MM Street], [Suburb NN] (also known as lots […] on SP[…]);
g. The property/ies situated at [PP Street], [Suburb QQ] (also known as lots […] on SP[…]);
h. The property/ies situated at [RR Street] and [SS Street], [Suburb TT] (also known as lots […] on SP[…]);
i. The property/ies situated at [UU Street, Suburb CC] (also known as lot […] on RP[…]);
j. The property/ies situated at [VV Street, Suburb WW] (also known as lot […] on RP[…]);
k. The property/ies situated at [XX Street, Suburb YY] (also known as lots […] on RP[…]);
l. The property/ies situated at [ZZ Street, Suburb AB] (also known as lot […] on RP[…]); and
m. The property/ies situated at [AC Street, Suburb TT] (also known as lot […] on RP[…]
(As per original)
And further seeks the following orders (contained within the Application in a Proceeding filed 23 March 2022 and amended 9 August 2022):
INJUNCTION ON REAL PROPERTY DEALINGS
7.An injunction be issued restraining the First Respondent and the Second Respondent in their personal capacities and in their capacities as directors of the entities listed at paragraph 2 from encumbering, further encumbering, selling or in any other way dealing with the following properties without first having given 14 days’ notice to the Applicant of the dealing and providing a written undertaking to pay any net sale proceeds into the Applicant’s solicitors trust account (after the discharge of any securities registered over those properties and for clarity, no payments are to be made to related entities):
a.The property/ies situated at [BB Street, Suburb CC] (also known as lots […] on SP[…]);
b.The property/ies situated at [DD Street] and [EE Street], [Suburb FF] (also known as lots […] on SP[…]);
c.The property/ies situated at [JJ Street, Suburb KK] also known as lots […] on SP[…]);
d.The property/ies situated at [LL Street] and [MM Street], [Suburb NN] (also known as lots […] on SP[…]);
e.The property/ies situated at [PP Street, Suburb QQ] (also known as lots […] on SP[…]);
f.The property/ies situated at [RR Street] and [SS Street], [Suburb TT] (also known as lots […] on SP[…]); and
g.The property/ies situated at [UU Street, Suburb CC] (also known as lot […] on RP[…]).
8.An injunction be issued restraining the First Respondent and the Second Respondent in their personal capacity and in their capacities as directors of the entities listed at paragraph 2 from encumbering, further encumbering, selling or in any other way dealing with, without the agreement and written consent of the Applicant or by order of the Court:
a.The property/ies situated at [GG Street, Suburb HH] (also known as lots […] on RP[…]);
b.The property/ies situated at [VV Street, Suburb WW] (also known as lot […] on RP[…]);
c.The property/ies situated at [XX Street, Suburb YY] (also known as lots […] on RP[…]);
d.The property/ies situated at [ZZ Street, Suburb AB] (also known as lot […] on RP[…]); and
e.The property/ies situated at [AC Street, Suburb TT] (also known as lot […] on RP[…]).
9.The First Respondent and the Second Respondent are further injuncted from resigning as director and/or appointing any other director to any of the entities listed at paragraph 2.
10.The First Respondent and the Second Respondent are further injuncted from transferring or issuing further shares in any of the entities listed at paragraph 2.
11.The injunctions referred to in 7, 8, 9 and 10 apply unless otherwise agreed by the parties in writing or by orders of the Court.
THE MATRIMONIAL HOME
12.The Applicant has sole occupancy of the property situated at [F Street, Town G] (the former matrimonial home) to the exclusion of the Respondents.
13.The First Respondent is to meet all of the mortgage payments and all other outgoings in relation to the former matrimonial home.
LITIGATION FUNDING
14.Within seven (7) days of these Orders, the net proceeds of sale from the property located at [J Street, Suburb K], being $300,554.16, currently being held in trust by the First Respondent’s solicitors on behalf of [H Investments Pty Ltd], are to be transferred to the Applicant’s trust account held with Sambanis Family Law for payment of her legal fees.
15.Should this Honourable Court choose not to make the Order in relation to paragraph 14, within seven (7) days of these Orders the First Respondent is to pay the sum of $300,000 to the Applicant’s solicitor’s Trust Account for the purposes of the Applicant meeting legal costs and outlays in relation to these proceedings.
16.Further to paragraphs 14 and 15 but upon the Applicant exhausting the amounts therein, the First Respondent is to:
a.Cause any solicitors retained by him in these proceedings to render to him invoices for all costs and outlays in relation to these proceedings no less frequently than once per month; and
b.Cause those solicitors to notify the Applicant’s solicitors of the amount of each invoice so rendered within 24 hours of it issuing; and
c.Pay into the trust account of the Applicant’s solicitors that amount of each invoice so issued within 48 hours of its issue (ie. dollar for dollar).
SPOUSAL MAINTENANCE
17.Should this Honourable Court choose not to make the Order in relation to either paragraphs 14 or 15, the First Respondent is to pay to the Applicant the amount of $1,500 on the Friday of each week by way of direct transfer to the Applicant’s bank account unless otherwise agreed, with the first such payment to be made on the Friday immediately following the making of these Orders.
18.Should this Honourable Court make the Order in relation to either paragraph 14 or 15, the First Respondent is to pay to the Applicant the amount of $1,500 on the Friday of each week by way of direct transfer to the Applicant’s bank account unless otherwise agreed, with the first such payment to be made on Friday 15 September 2022.
As well as seeking that the Applicant’s Application in a Proceeding filed 23 May 2022 be dismissed (contained in the husband’s Response filed 4 July 2022), the Respondent husband seeks the following orders in his Response filed 21 April 2022:
1.That the real property at [F Street, Town G] QLD […] more particularly described as Lot […] on Registered Plan […], Title Reference […] (“the [F Street] property”) be sold and, for this purpose:
(a)The [F Street] property shall be listed for sale by private treaty with an agent as agreed between the parties and if there is no agreement, the agent shall be nominated by the CEO of the Real Estate Institute of Queensland.
(b)The listing price shall be as agreed between the parties and if there is no agreement the listing price shall be as advised by the real estate agent.
(c)In the event that the [F Street] property has not been sold by or before a date three (3) months from the listing of the [F Street] property, then the husband and wife shall make all such arrangements and do all such acts and sign all such documents and pay all moneys equally necessary to procure a sale by public auction of the [F Street] property upon the following terms:
(d)The auctioneer shall be agreed to by the parties and if there is no agreement the auctioneer shall be nominated by the real estate agent.
(i)The auction shall take place within four (4) months after the deadline date for sale by private treaty.
(ii)The reserve price shall, unless agreed upon by the parties, be as proposed by the auctioneer.
(iii)The husband and wife shall each pay and be responsible for payment of one-half of auction expenses payable before the [F Street] property is auctioned (or from the proceeds of sale)
(e)In the event that [F Street] property is not so sold by auction or by private negotiation within fourteen (14) days after the said auction, then the husband and wife do all acts and sign all necessary documents and shall pay all moneys equally necessary to procure a second auction within a further five (5) weeks of that date otherwise upon the same terms and conditions as applied to the first auction save and except the reserve price shall be 90% of the reserve price utilised for the first auction.
(f)That the proceeds of sale shall be distributed as follows:
(i)To pay all costs of sale including the real estate agent’s commission, fees and marketing costs or to reimburse whichever party was required to pay those fees at first instance;
(ii)To discharge the mortgage (No […]) secured over the [F Street] property in favour of Westpac;
(iii)To pay to the Second Respondent, or such nominee as chosen by her, the sum of $648,000 in satisfaction of the Loan Agreement entered into on 24 May 2021 between the First and Second Respondent together with any interest calculated in accordance with paragraph 3 of that Loan Agreement;
(iv)To pay to the Second Respondent such sum as necessary to repay monies advanced by the Second Respondent (or her nominees) pursuant to the Loan Agreements entered into between the Second Respondent (or her nominees) and the First Respondent dated 20 December 2021 including any interest calculated in accordance with those Loan Agreements;
(v)To pay to the Children’s Accounts the Monies Withdrawn by the Applicant;
(vi)The balance, if any, divided equally between the parties.
[J Street, Suburb K]
2.That, the husband in his capacity as director of [H Pty Ltd] as Trustee for the [H Trust], do all such acts and sign all such documentation as necessary to cause the payment of the monies held in the Trust Account of Barry.Nilsson. Lawyers pursuant to orders made on 30 March 2022 to be distributed and, after all relevant tax is paid, the balance is to paid to the Second Respondent as part payment of the loan owed to the Second Respondent pursuant to the Loan Agreements entered into on 20 December 2021.
(As per original)
Ms B Carrillo seeks the following orders (contained in her case outline filed 12 August 2022):
1.That the amended application in a proceeding filed on 9 August 2022 insofar as it seeks orders relating to the second respondent be dismissed, namely paragraphs 1 to 2, 5 to 11 and 14 under the heading “Property – Interim”.
2.Pursuant to section 45A of the Family Law Act 1975 and rule 10.09 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021, paragraphs 1, 1A, 1B, 1C, 2a to 2e, 2j, 2m to 2t, 2A, 3b to 3e and 3f to 3n of the further amended initiating application filed on 9 August 2022 be summarily dismissed and the second respondent be removed as a party to the proceedings.
3.The applicant immediately destroy or return to the second respondent, all copies of any disclosure documents received by her from the first respondent, in relation to entities that the second respondent controls or any documents otherwise within the applicant’s possession relating to those entities, excluding information pertaining to the first respondent’s interest in the [Carrillo] Family SMSF, and the applicant and first respondent be restrained and an injunction issue restraining the applicant and first respondent from referring to any information contained in those documents without the second respondent’s written consent.
4.The applicant meet the second respondent’s costs on an indemnity basis.
5.That the applicant meet the second respondent’s costs associated with the subpoena to ANZ Bank on an indemnity basis at an amount of $20,504.50.
In the alternative:
6.In the alternative to paragraph 2, pursuant to section 45A of the Family Law Act 1975 and rule 10.09 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021, paragraphs 1A, 1B, 1C, 2a to 2e, 2j, 2m to 2t, 2A, 3b to 3e and 3f to 3n of the further amended initiating application filed on 9 August 2022 be summarily dismissed.
7.In respect of any parts of the initiating application that are not summarily dismissed:
a.within 14 days of the date of these orders, the applicant file and serve a points of claim particularising any contentions of law the applicant relies upon as grounds for the relief sought by her and all material facts they content will support that relief, and any further evidence upon which they rely to support her claim;
b.within 21 days of service of the points of claim and supporting affidavit/s, the first respondent and second respondent file and serve a points of defence; and
c.within 21 days of compliance with order 5b, any party be at liberty to bring an application for summary orders pursuant to section 45A of the Family Law Act 1975 and rule 10.09 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 in relation to the applicant’s initiating application.
(As per original)
BACKGROUND FOR THE INTERLOCUTORY APPLICATIONS
For the purpose of context the following matters are recorded. At the onset, it is recorded that the Applicant wife admits that her current applications are effectively based on documents, and her interpretation of documents – either publicly available or produced through discovery.
It is broadly the wife’s contention that the husband has control and ownership of interests in a range of entities that could have a substantial value – as much as $70 million.
The husband says the wife seeks to include interests in property and trusts which are owned or held legally by his mother, Ms B Carrillo, and that the “pool” of interests relating to just the husband and the wife results in an excess of debts over assets of nearly $1 million.
The position of Ms B Carrillo is simply that the wife’s attack on her assets and interests, created by her family and her late husband, is misconceived and repeatedly states that whilst her son (the husband), who has relevant work experience, assists her in the management of her business interest, and whilst she has over the years been generous financially to the husband and his family (including the wife and their children), the wife’s claims against her have no merit or foundation. This position, although simply stated, is at the core of the Application for Summary Dismissal bought by Ms B Carrillo.
Whilst I appreciate that in a Summary Dismissal Application, the evidence of the wife should be taken at its highest, I regard it as assisting the discussion that follows to set out some of the evidence of Ms B Carrillo, much of which is historical but, in my view, proper to detail. In doing so, like all the evidence earlier identified, none of the evidence has yet been tested and numerous factual contests exist.
Ms B Carrillo was born in 1957 and is now 66 years of age, she claims her business interests arose predominantly through an inheritance from her late father Mr AD who was a successful businessman. Through the establishment of testamentary trusts, benefits were vested to Ms B Carrillo, and her two brothers Mr AE and Mr AF.
Ms B Carrillo has two children, the husband and his brother Mr AG. Ms B Carrillo accepts that she has no interest in the following entities:
(a)H Investments Pty Ltd and the H Investment Trust;
(b)H Pty Ltd and the H Trust; and
(c)W Pty Ltd and the W Trust.
It is an agreed position that these entities are the property of the husband and wife. At paragraph 12 of her affidavit filed 23 May 2022, Ms B Carrillo says:
“I agree that, for a number of years, [Mr Carrillo] has served as a director of many of my entities. This was a matter of convenience for me in the operation of my entities, particularly those in which developments are undertaken as [Mr Carrillo’s] role in the Group (for which he receives remuneration) is to handle those matters for me.”
The wife contests this evidence and through her Counsel Mr Hackett, contends that evidence from staff, business associates, accountants, and financial advisers etc when ultimately produced to the Court will prove her case that in fact the husband has entitlements beyond those of a mere employed manager.
Consistent with the wife’s position that she knows little about the business, devoted and consumed by the primary care role towards the parties’ five children throughout their relationship, her affidavits contain almost entirely an analysis of documents and transactions (totalling in three bundles over 2500 pages) from which, she says, it is able to be comfortably inferred that the husband has an interest in many of the entities in the Group. At this interlocutory stage, it is neither possible or necessary to analyse so many documents. Helpfully, the submissions of Counsel to which I will shortly refer, directed me to a number of documents before me of particular relevance, they say.
Whilst the husband’s affidavits seek to provide further background he asserts he is an employee of E Investment Group of which Ms B Carrillo is the sole shareholder since registration in 2007. The husband is a joint director. The husband says that the “E Group” business name is the collective banner under which “all developments and activities are marketed” because it was “decided early on that it would be simpler to brand all projects as being undertaken by ‘[E Group]’ rather than using the separate legal entity that owns each project”. At paragraph 33 of the husband’s affidavit filed 21 April 2022 he says:
33.[E Investment] was set up as the administration company to assist our family to begin property development projects. However, all projects were undertaken by discretionary family trusts, each with a separate corporate trustee. Initially, these projects were funded with money received from [Ms B Carrillo’s] father and would typically involve the purchase of land/dwellings, renovation of same and holding them for their rental income. Whilst undertaking this model, new entities were established as needed but each entity would be used to hold multiple properties before establishing a new entity.
Then at paragraph 35, the husband identifies what he claims to be “[Ms B Carrillo’s] entities” as follows:
35.The following are [Ms B Carrillo’s] entities (“[Ms B Carrillo] Entities”):
(a) [L Pty Ltd] ATF [T Trust];
(b) [Carrillo Family Holdings Pty Ltd] ATF [Carrillo Family Trust];
(c) [U Pty Ltd] ATF [U Discretionary Trust];
(d) [V Pty Ltd] ATF [V Discretionary Trust];
(e) [E Investment Group Pty Ltd];
(f) [E Pty Ltd];
(g) [AH Pty Ltd] ATF [AJ Trust];
(h) [Carrillo Family Group Pty Ltd] ATF [Ms B Carrillo Estate Trust];
(i) [E Sales Group Pty Ltd];
(j) [M Pty Ltd] ATF [M Unit Trust];
(k) [N Pty Ltd] ATF [N Unit Trust];
(l) [AK Pty Ltd] ATF [AK Discretionary Trust] (deregistered);
(m) [AL Pty Ltd] ATF [AL Discretionary Trust] (deregistered);
(n) [AM Pty Ltd] (deregistered); [and]
(o) [AN Pty Ltd] ATF [AN Trust] (deregistered)[.]
The husband further says that the model changed in 2015 when E Group began undertaking property developments and selling the developed property involving third party investors, utilising a special purpose vehicle (“SPV”) for each property development, comprising a unit trust with a corporate trustee. These “Syndicate Entities” were more particularly identified at paragraph 37 of the husband’s affidavit.
Finally, at paragraph 39 the husband identified a further eleven entities which he claims were controlled previously by the grandfather Mr AD (now deceased) but are now controlled by the husband’s uncles, cousins, or brother Mr AG.
The husband acknowledges that he set up the entities referred to at paragraph 21 of these Reasons “as a deliberate choice” to belong to the wife and “our family” and with a view to accumulating personal wealth. The “[Mr Carrillo] Family Entities” (as I shall collectively describe them), undertook projects at various addresses set out at paragraph 44, including relevantly the development at J Street, Suburb K (“the Suburb K property”).
Before the settlement of the sale of the Suburb K property, a dispute arose as to the distribution of the proceeds of sale, in that, Ms B Carrillo claimed an interest in the property (it seems as a result of an equitable change contained within a loan agreement) and had registered a caveat claiming that interest. The existence of the caveat was an impediment to the settlement taking place and after seeking Court intervention, on 30 March 2022, consent orders were made by a Senior Judicial Registrar, in these terms, including notations– which although not orders, reflected a position maintained during the interlocutory Applications relating to the availability, or disbursement of the funds still remaining in the trust account of the solicitors Barry Nilsson. The order was:
THE COURT ORDERS BY CONSENT UNTIL FURTHER ORDER THAT:
1.The net proceeds of sale of the property situated at [J Street, Suburb K] in the State of Queensland, more particularly described as Lot […] on SP […], be distributed as follows:
a.to discharge the mortgage owing to the Westpac Banking Corporation under Mortgage No. […];
b.to pay any real estate agent’s commission associated with the sale (including GST); and
c.the remainder of the sale proceeds to be held in the Barry.Nilsson. Lawyers Trust Account on behalf of [H Pty Ltd] as trustee for the [H Trust] pending an order of a Court or written agreement between the parties.
2.The first respondent sign all documents and do all acts in his capacity as sole director of [H Pty Ltd] to authorise Barry.Nilsson. Lawyers to invest the funds paid to their trust account in accordance with paragraph 1(c) of this order.
3.All parties’ costs are reserved.
IT IS ORDERED
4.The issue of disclosure related to the Second Respondent is adjourned for Judicial Registrar First Return to the Federal Circuit and Family Court of Australia sitting in Brisbane at 10.00am on 9 May 2022.
5.Each party shall, by no later than 4.00pm on 29 April 2022:
a.file and serve a Case Outline setting out the material on which they seek to rely and a Minute of Proposed Orders sought; and
b.by email to […]@[…]:
i. identify all subpoenaed material to be relied upon; and
ii.provide copies of all documents proposed to be tendered at the interim hearing; and
iii.identify any agreed orders.
6.All remaining applications are adjourned for Interim Defended Hearing to the Federal Circuit and Family Court of Australia sitting in Brisbane at 11.30am on 3 May 2022. The appearance of the Second Respondent is excused.
IT IS NOTED:
A.That the second respondent’s consent to this order is without admission as to the question of the appropriateness of her joinder to the substantive proceedings in this matter.
B.The applicant’s consent to this order is not to be seen as her resiling from her position that the applicant and first respondent are the beneficial owners of the net proceeds of sale of the [J Street] property as the primary beneficiaries of the [H Trust].
When the subject Applications were heard on 16 August 2022, the remaining funds in the trust account totalled $300,554.41 (see Exhibit 1). This trust account is the target of the wife’s claim for a litigation funding order.
Before first turning to the Application for Summary Dismissal, for completeness as the transcript reveals, interim parenting issues were also listed for determination on 16 August 2022, however ultimately final orders were agreed a few days later and, were made by consent by the Court on 31 August 2022 (“the said parenting Orders”). I will refer to those orders when dealing with the wife’s claim, opposed by the husband, for a spouse maintenance order.
I regret the delay in publishing these Reasons. The parties were entitled to expect their delivery much earlier than has occurred. Sadly, as will become apparent by the conclusion of these Reasons, there are still some interlocutory matters and directions that will need to be considered before the substantive property alteration dispute can be finally determined at a hearing. The Court is mindful of the costs estimates of costs to date exceeding, in total, well over $500,000. At one level it is hoped that the determinations now made, might lead the parties to consider negotiated resolutions rather than further Court events.
The issues to be dealt with are:
(a)The Application by Ms B Carrillo for summary dismissal of most of the claims against her by the wife. In that regard, although Ms B Carrillo does seek that the wife’s claims pursuant to paragraph 1(a) to (f) be dismissed, on a final basis, Mr Dura submitted he could not properly argue that those claims be summarily dismissed;
(b)The competing Application for the use or preservation of funds in trust of $300,554.41;
(c)Spouse Maintenance Application, in respect of that Application, on 1 March 2023 the Applicant husband filed an Application in a Proceeding seeking effectively permitted a limited reopening of the evidence and orders in on the nature of further discovery and on 16 March 2023, the Court gave the husband and wife leave to file further submissions which were duly filed – the husband on 31 March 2023 and the wife also on 31 March 2023; and
(d)The further conduct of these proceedings towards a final hearing.
Whilst the husband had sought orders for the sale of the former family home at F Street, Town G (“the Town G home”) he did not press for any such orders. The wife, who occupies the home with some of the parties’ infant children, contended for her security that an order for sole use and occupancy was necessary. Where the husband does not seek to now remove the wife from the home, I am not satisfied that an order for the sole use and occupancy is required. Nothing has been bought to the attention of the Court over the last twelve months, to persuade the Court to take a different view on this issue, at this time.
SUMMARY DISMISSAL
Mr Dura for Ms B Carrillo, in his oral submissions, adopted as accurate the appropriate principles to be applied in a Summary Dismissal Application set out in the written submissions of Mr Hackett at paragraphs 17 to 32. I accept they are an accurate distillation of the principles to be applied and, by way of summary:
(a)s 46 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) prescribes that the Court to may dismiss an application where it is satisfied that the other party “has no reasonable prospect of successfully prosecuting the proceeding”. However, for the purposes of the section, a proceeding need not be “hopeless” or “bound to fail” for it to have no reasonable prospects.
(b)Under Rules 10.09 and 10.11 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021, a party may apply and the Court may summarily dismiss a proceeding or a party of the proceeding. The power to do so, is discretionary and “sparingly exercised”.
(c)Seeking to rely on the comments made by Kirby J in the well-known case Lindon v The Commonwealth (No 2) (1996) 70 ALJR 541 at [256], Mr Hackett at paragraph 27 of his submissions contends and acknowledges that the Application by Ms B Carrillo has been brought before “disclosure is complete” and the Court must be “very cautious not to do a party injustice by summarily dismissing the proceedings where… contested evidence might reasonably be believed one way or the other so as to succeed” (per Rares J in Boston Commercial Services Pty Ltd v GE Capital Finance Australia Pty Ltd (2006) 236 ALR 720 at [45]).
(d)Ms B Carrillo bears the onus of establishing the wife has no reasonable prospects of success.
MS B CARRILLO’S CONTENTIONS
By reference to the wife’s further Amended Initiating Application filed 9 August 2022 it is submitted that:
(a)The wife seeks, pursuant to paragraph 1B, an order to set aside pursuant to s 106B of the Act, share transfers executed by the husband in favour of Ms B Carrillo in 2008 in L Pty Ltd. That transaction occurred 12 years before separation. The shares related to a trustee company with no value – other than it is accepted the shareholders can by resolution change the Directors. The husband and Ms B Carrillo are Directors. This company is trustee of the T Trust. The wife has produced no evidence (admissible or inadmissible) that touches on prospects of successful prosecuting paragraph 1B, in respect of L Pty Ltd.
(b)The wife under paragraph 1B seeks to set aside a share transfer in Carrillo Family Holdings Pty Ltd however, there is no evidence of any share transfer taking place. This entity was incorporated in 2007, with Ms B Carrillo as sole director and shareholder. The husband was subsequently appointed as a Director in 2008 and remains a Director. Carrillo Family Holdings Pty Ltd is trustee of Carrillo Family Trust. The overarching submission is that these transactions occurring many years ago, and with no evidence other than the wife’s retrospective suspicions, that the transactions (if they occurred) were not actions designed to defeat an anticipated order under the Act.
(c)The relief under s 106B of the Act seeks to set aside transfer of shares in six entities referred to in paragraph 1C made, the wife asserts, in 2020 by the husband to Carrillo Family Holdings Pty Ltd. As the diagram attached to these Reasons (and the evidence establishes), each of those entities is a mere trustee – and as such the shares have no intrinsic value. Again, the husband remains either a joint Director (with Ms B Carrillo) or a sole Director of the entity. It is submitted that the husband’s legal position might allow him some powers, depending on the entities’ constitution – but does not confer ownership of the underlying assets.
(d)Although the wife seeks to set aside these transactions, with no obvious utility, she does not seek to disturb, in any way, the current beneficial interest that the husband might ultimately have as a beneficiary in a discretionary trust or unit trust.
(e)That, as is conceded, Ms B Carrillo granted the husband the right to act on her behalf, through a Power of Attorney, does not confer ownership – but merely authority to act. There is no evidence the husband has, in breach of his fiduciary duties and the laws of Queensland, used the rights under the Power of Attorney to create benefits for himself personally – and Ms B Carrillo, the grantor of the power, does not say otherwise.
(f)When considering the relief sought at paragraph 2 (declarations under s 78 or s 85A of the Act) in respect of 17 entities asserting that the “entire shareholding … is held on a constructive trust and/or a resulting [trust] for the benefit of the Husband” or the alternate relief (that all the entities are the husband’s alter ego), the wife offers no evidence that founds such assertion – seemingly relying on the contention, that it is more likely than not with further discovery and with evidence from currently unnamed persons in the group who might provide evidence to support the wife’s contention, she will be able to make out her claim. This is contrary to the yet untested assertions of Ms B Carrillo as to the basis upon which she has allowed her son to manage her business interests. As an alternate to claim 2, the wife at clause 3 seeks to include a range of real properties which are legally vested in the entities (or if sold any proceeds of sale from their realisation) on the basis that those properties are held on a constructive trust or resulting trust for the benefit of the husband. Mr Dura attacks that relief sought on the same basis as he attacks the claim against the “entire shareholding” in the entities (under paragraph 2).
(g)At paragraph 2A, the wife weeks orders and declarations that Ms B Carrillo’s interest in any corporate entities is a sham as she has and continues to hold her interests in the same at the direction of the husband. For this allegation to be established the conduct at the time of the creation of those entities would need to be carefully examined, however the evidence from the documents (relied upon by the wife) not in any way challenged by Ms B Carrillo is that the entities referred to at paragraph 2, were established as follows (and with current existing shareholdings as set out in the diagram):
(i)L Pty Ltd – incorporated in 2005 with the T Trust created in 2006;
(ii)Carrillo Family Holdings Pty Ltd – incorporated with the Carrillo Family Trust created in 2006;
(iii)U Pty Ltd - incorporated in 2007 with the U Discretionary Trust created in 2007;
(iv)E Investment Group Pty Ltd - incorporated in 2007;
(v)V Pty Ltd incorporated in 2008 with the V Discretionary Trust created in 2008;
(vi)E Pty Ltd incorporated in 2011;
(vii)R Pty Ltd incorporated in 2018 with the R Unit Trust created in 2018;
(viii)S Pty Ltd incorporated in 2018 with the S Unit Trust created in 2018;
(ix)Q Pty Ltd incorporated in 2019 with the Q Unit Trust created in 2019;
(x)M Pty Ltd incorporated in 2019 with the M Unit Trust created in 2019;
(xi)N Pty Ltd incorporated in 2019 with the N Unit Trust created in 2019;
(xii)P Pty Ltd incorporated in 2020 with the P Unit Trust created in 2020;
(xiii)AA1 Pty Ltd incorporated in 2020 with the AA1 Unit Trust created 2020; and
(xiv)AA2 Pty Ltd incorporated in 2020 with the AA2 Unit Trust created in 2020.
The contentions of Ms B Carrillo, supported by the husband, is that many of these entities were established as part of intermingled corporate entities managed by the husband, but not owned by him for sensible commercial purposes.
(h)The wife’s approach, rather than revealing a “shotgun” approach which casts a net wide and indiscriminately is better described, Mr Dura contends, as using a “grenade” – which I took to be a colourful assertion that with no evidence; but plenty of suspicions the wife is attempting to create significant damage to the structures created by Ms B Carrillo over many years - in an effort to increase the divisible pool beyond the interests acknowledged by the husband to exist.
Mr Sweeney, on the husband’s behalf supported the submissions made by Mr Dura for Ms B Carrillo and the orders for Summary Dismissal of the relief sought at paragraphs 1B, IC, 2, 2A and 3 of the further Amended Initiating Application. In succinct submission, Counsel for the husband directed the Court to the Full Court decision of Atkins & Hunt & Ors (2020) 61 Fam LR 238 at [42], which referred to a “so called” Ferrcomm inference that may be drawn adverse to a party who fails to lead evidence-in-chief from a witness who it would ordinarily be expected to lead such evidence – an extension of the principle established in Jones & Dunkel (1959) 101 CLR 298.
Mr Sweeney for the husband, asserts the inference, although usually asserted in the context of a final hearing, can equally apply during an interlocutory hearing. He points to the orders made by the Court on 24 May 2022 directing the wife to file and serve an affidavit in Reply to the affidavit of Ms B Carrillo in support of Ms B Carrillo’s Summary Dismissal Application. I refer earlier in these Reasons to the material and extreme bundles of documents relied upon by the wife. Mr Sweeney says the evidence is simply deficient.
THE WIFE’S CASE OPPOSING SUMMARY DISMISSAL
Without repeating the principles already identified, the broad submission of Mr Hackett for the wife is that although, though lack of full discovery, the wife’s case is not yet fully developed -this is not a trial and the intended evidence from other persons (quite likely after subpoenae are served) shall enable the wife to demonstrate the foundation for the relief she seeks on a final basis. A combination of written submissions and oral submissions identifies the following more specific contentions on the available evidence, or reasonable inferences from the available evidence:
(a)In circumstances where Ms B Carrillo does not seek to Summarily Dismiss the Applications relating to the Employment Agreement (paragraph 1(a)); the Loan Agreement dated 20 December 2021(paragraph 1(b) and 1(c)); the Deed of Guarantee dated 20 December 2021 (paragraph 1(d) and 1(e)) and the Loan Agreement dated 24 May 2021 (paragraph 1(f)), the legitimacy of which transactions the wife challenges, at this time the Court does not need to consider the wife’s submissions at 33 to 29 specifically, other than to note that the wife contends that, to enable the wife to determine that the husband controls the E Group, and in particular “those entities that have the appearance of control by the husband’s mother”, the persons identified at paragraph 34 of the submissions are likely to be the subject of cross-examination.
(b)Although it is accepted the husband and his brother transferred shares in L Pty Ltd in 2008, the transactions could have been because of an expectation of future marital separation or breakdown, and as part of asset protection to remove the appearance of the husband’s control.
(c)In 2006, the Carrillo Family Trust was settled - with the original trustee being L Pty Ltd. The husband executed, on behalf of himself and his mother; the Trust Deed for the trustee. At paragraph 9(c) of the written submissions, the wife contends that from as early as 2006, the husband’s actions demonstrate Ms B Carrillo being “the puppet and the husband being the puppeteer” as the husband was able to control distributions from the Carrillo Family Trust at either a directors or shareholders level. The documents establish however, that although L Pty Ltd was the original trustee, Carrillo Family Holdings Pty Ltd (incorporated in 2007) became the trustee, and Ms B Carrillo has at all times been the sole shareholder (although the husband was appointed a director in 2008). Mr Hackett said in oral submissions the wife seeks to challenge the allocation of shares in the company or incorporation – conceding there has been no “transfer of shares” by the husband or Ms B Carrillo in this entity, despite the Application being made by the wife.
(d)The premise purported by the wife is that from 2006 the husband was the actual controller of the trust and the transactions entered following the incorporation of Carrillo Family Holdings Pty Ltd were all part of the “charade created by the puppeteer”, as was the incorporation of E Investment Group Pty Ltd in 2007.
(e)After the husband resigned his position as a professional in 2007, thereafter more than 30 companies and trusts were established (for some discrete developments as the husband deposes), which the wife concedes “have the appearance of control” by Ms B Carrillo because of her shareholding but where, as a director of each company and on behalf of Ms B Carrillo, the husband could control distributions. Furthermore, there is evidence it is submitted that the husband was at all material times:
(i)the public face of E Group;
(ii)a director of each trustee company;
(iii)on behalf of Ms B Carrillo; and
(iv)a beneficiary of the trusts, with the husband and his entities being the major beneficiaries of distributions by the Carrillo Family Trust for the 2019 and 2020 financial years (receiving some $1.3 million).
(f)The wife contends that the Employment Agreement dated 9 November 2021 (being after separation is a “sham” created to perpetuate the charade. Rather than being a mere employee the wife submits, the husband controls the E Group; personally is the owner of the domain name and after separation wrote to staff see MSC-15) by email dated 10 March 2021 essentially claiming he was preparing to wind down the E Group business. The wife asserts that, as the husband is not a shareholder, the tenor of this email to staff, demonstrates he is in control and the entities are his “alter ego”.
DISCUSSION
Essential to an understanding of this discrete issue is the wife’s assertion that the husband’s control and management of the entities referred to amounts to an interest which would be amenable to the relief she seeks.
Although the Court must take the wife’s case at its highest and should be cautious in summarily dismissing some of the applications she seeks to pursue, I have reached the conclusion that, on the current evidence offered by the wife, the claims, have no reasonable prospects of being successfully prosecuted.
The husband does not deny he manages the interests of his mother. His skills as a professional, with a clear interest in property development, made him a trusted advisor, and one Ms B Carrillo says holds her confidence.
The family transactions with L Pty Ltd, Carrillo Family Holdings Pty Ltd and their underlying trusts were established many years ago. It is a very long bow to suggest, as the wife does, that managing Ms B Carrillo’s interests in the way she chose (with her granting the husband the power to operate with her authority) was in contemplation of a possible breakdown of the husband’s marriage nearly 15 years later.
The husband and wife did operate entities in which they had an interest – effectively differentiating their interests from those of Ms B Carrillo’s. Whilst I accept it is likely – evincing Ms B Carrillo’s generosity – that inter entity loans and the like may well have taken place (whether documented properly or not), the relevance of those transactions lies when ultimately seeking to establish the possible interests which the husband holds as a beneficiary in the various trusts. How any interests are to be brought into account either as property or as a financial resource is a matter relevant to determining, as between the husband and the wife, what orders achieve just and equity.
I accept that in a trust, the decisions of the trustee, exercised within the constraints of the terms of the Trust Deed and the law generally, can affect the entitlements of the beneficiaries. Even if the husband does control (with his mother’s approval) various entities, that simply does not represent ownership or a legal interest in the assets of the trust. In a case like this, it is likely that the history of payments made, or benefits received through the various trust entities, by the husband on the personal trusts he created will be relevant. It might persuade the Court that such a pattern of benefit will continue into the future.
The various special purpose vehicles represent a fairly standard approach when involving third party investors.
In summarily dismissing the relief sought by the wife at paragraphs 1A, 1B, 1C, 2, 2A and 3 of the further amended initiating Application filed 9 August 2022, I accept the submissions of Ms B Carrillo that the wife has not demonstrated that claims for a constructive or resulting trust over various entities has a reasonable prospect of success.
In reaching this decision, I acknowledge that the wife says that; if she is given an opportunity to gather other evidence, she is confident her claim will succeed. I am certain, as directed by the orders made, that she has accumulated as many papers and documents as have been able to at this time. She has retained highly competent counsel to articulate the strongest case she can advance at this time. The Applicant, Ms B Carrillo, bears the onus and although the bar is low for the wife, the Applicant for Summary Dismissal has discharged the onus in my view.
As Ms B Carrillo (or her entity) is a party to the relief sought at paragraph 1(a) to (f) of the Further Amended Application, I will hear further submissions as to whether she still seeks to be released as a party. Although that is her application, that may have been before the concession was made by her Counsel, Mr Dura, that he did not seek summary dismissal of those claims by the wife against her of her entities.
THE FUNDS HELD IN TRUST
In her Amended Application in a Proceeding filed 9 August 2022, the wife sought a number of orders under the rubric of litigation funding as follows:
LITIGATION FUNDING
14.Within seven (7) days of these Orders, the net proceeds of sale from the property located at [J Street, Suburb K], being $300,554.16, currently being held in trust by the First Respondent’s solicitors on behalf of [H Investments Pty Ltd], are to be transferred to the Applicant’s trust account held with Sambanis Family Law for payment of her legal fees.
15.Should this Honourable Court choose not to make the Order in relation to paragraph 14, within seven (7) days of these Orders the First Respondent is to pay the sum of $300,000 to the Applicant’s solicitor’s Trust Account for the purposes of the Applicant meeting legal costs and outlays in relation to these proceedings.
16.Further to paragraphs 14 and 15 but upon the Applicant exhausting the amounts therein, the First Respondent is to:
a.Cause any solicitors retained by him in these proceedings to render to him invoices for all costs and outlays in relation to these proceedings no less frequently than once per month; and
b.Cause those solicitors to notify the Applicant’s solicitors of the amount of each invoice so rendered within 24 hours of it issuing; and
c.Pay into the trust account of the Applicant’s solicitors that amount of each invoice so issued within 48 hours of its issue (ie. dollar for dollar).
(As per original)
During submissions, it becomes clear that both the husband and Ms B Carrillo contend that the funds held in trust of $300,554.16 are not available to the husband and wife for litigation funding or any other purpose – other than to repay in part loans said to have been made by Ms B Carrillo to and/or for the benefit of the husband and wife.
As a result, it is appropriate to first consider the evidence (intended as it is) about the origin of the funds in trust and the claim by Ms B Carrillo, supported unsurprisingly by the husband.
Broadly, Ms B Carrillo says (see paragraph 6 to 9 of her affidavit filed 23 May 2022) that during the relationship between the husband and wife she:
(a)Provided financial assistance and support to them, some in the nature of gifts some as loans;
(b)She maintained a ledger to be kept in relation to loans made however these “loans” were not formalised until after separation, and comprise loan agreements and guarantees dated 24 May 2021 and 20 December 2021. None were executed by the wife.
(c)Ms B Carrillo says she had spoken to the wife on a number of occasions in respect of certain advances and claims and “on each occasion, [Ms Carrillo] stated to me words to the effect that she understood that the amounts were loans that needed to be repaid”. The wife currently makes no such concession.
Ms B Carrillo does not depose as to why, where some alleged loans were made many years earlier, that she and her son did not elect to document the arrangements until after separation. Is it not disputed that the wife did not sign any of the documents and, she says she was unaware of them until copies of the documents were received by her solicitors during pre-action discovery.
The husband, in his affidavit filed 21 April 2022 at paragraphs 48 to 65 deposes to some aspects of the loans, but at no time does he say he discussed the transactions with his wife. Broadly, the husband says that:
(a)On 20 December 2021 Ms B Carrillo’s lawyers made a request he enter into loan agreements.
(b)Curiously, the first loan agreement is dated 24 May 2021 – some 7 months before the request. In any event, it was for a loan of $648,000 used to part pay the parties home loan over the F Street property.
(c)The second and third loan agreements dated 20 December 2021 (being the date of request from Ms B Carrillo’s lawyers), were to formalise loans previously made, being:
(i)$2,095,101.04 from Ms B Carrillo to the husband personally; and
(ii)$599,685.45 from Ms B Carrillo’s “entities to my entities”.
(d)At paragraphs 52 to 57 the husband deposes as to loans made to various entities between 2015 to 2021 at MRC-3 and MRC-4 of his affidavit, which purport to be a summary of advances.
(e)At paragraphs 58 to 62, the husband deposes as to loans made personally totalling $2,095,101.04 by Ms B Carrillo over many years.
The impact of these “loans” is starkly identified by the husband in annexure MRC-1 referred to at paragraph 47 of the husband’s affidavit where he claims the marital “property pool to have a value of ($916,219)”.
The pool attributes no value at all to the range of interests the husband or the parties entities, have in a number of discretionary or unit trusts. If the husband, as a director, has signed any personal guarantees to secured creditors for with the many commercial projects he has engaged in (inferring of course that monies could have been borrowed rather than every project being “self-funded”) no residual personal liability is yet identified – other than the loans from his mother Ms B Carrillo documented post separation.
Annexure MRC-1 assets the following pool exists:
Assets
Joint
Home – F Street, Town G
$1,800,000
Husband
Furniture
$50,000
Joint
Cash in trust (H Trust)
$300,554
Wife
Motor Vehicle 1
$60,000
Husband
Motor Vehicle 2
$5,000
Husband and Wife
Parties combined superannuation
$1,034,708
$3,250,262
Liabilities
Joint
Home loan
$660,026
Husband
Loan from mother to pay mortgage
$648,000
Husband
Personal loan – Ms B Carrillo
$2,245,101
Husband
Personal loan – Ms B Carrillo loans to husband’s entities by Ms B Carrillo
$599,868
Joint
Credit card
$5,000
$4,157,959
Negative pool
-$907,733
This “pool” does not include any presently entitled funds from entities which Mr Hackett says are available in the region of $1.3 million.
Mr Sweeney and Mr Dura conceded that the loans to the husband personally are unsecured, save for the guarantee. It seems clear that in documenting the loans post separation, the husband would have been unlikely to secure the wife’s signature.
To that extent it was arguable at all that Ms B Carrillo had an equitable interest in the Suburb K property (and I do not find at this stage she had a caveatable interest at law in the entities property necessarily), it could only arise from the agreements and the “equitable change” clause. Again, it is necessary to point out, that the wife maintains her action to set aside the two loan agreements and guarantees dated 20 December 2021 which Ms B Carrillo did not seek to “summarily dismiss”. I am not satisfied that the claims of Ms B Carrillo as an unsecured creditor of the husband, on purportedly some of his “[Mr Carrillo’s] Family Entities” should have priority over the capacity for the H Family Trust to distribute the funds held in trust from the sale of Suburb K.
If Ms B Carrillo, having made loans since 2015 to her son, chose never before 2021/2022 to seek to document them, then, like many parents who are generous financial supporters to their children, they can seek to engage in their child’s property dispute with their former partner or simply leave it to their child to agitate that financial advances were in fact loans and not gifts. If found, in part or otherwise, to be gifts then the usual approach in the s 79 (of the Act) property alteration proceedings is to attribute some extra weight to the contributions made by that child during the relationship from that source.
For these reasons, subject to the further observations to be made later in these Reasons, and subject to any further submissions as to any advice or tax consequences that could flow to the H Trust (or the parties) by a distribution to them personally, I regard the funds held on trust to be amenable to an order of the Court for distribution in some way.
In that regard, in oral submissions by Mr Sweeney, and I sensed in a last ditched contention to receive some payment for his client the husband from the funds in trust, Mr Sweeney suggested it may be appropriate to consider an equal distribution of the funds by way of partial property orders. I take up this suggestion later in these Reasons, but before doing so, I am obliged to consider the wife’s claim for spousal maintenance.
Before leaving this topic, I have considered the oral submissions of Mr Sweeney, that if any distribution is made to the wife, then the existence (on the husband’s case) of a negative pool means that when the Court comes to consider on a final basis what orders do justice and equity any such payment to the wife could not be recovered or set off her ultimate entitlement. I have formed the view that the unsecured loans by Ms B Carrillo to her son, distort the actual minimum pool available (even before more detail as to the other interests in unit trusts etc. is known fully), and even allowing for funds to satisfy bank demands ($648,000). In a marriage of this length the equity in the home together with the funds in trust and the superannuation interests, would comfortably allow for just and equitable adjustments to be made – if the monies in trust of $300,554 are revealed.
SPOUSE MAITENANCE
The wife seeks an order for spouse maintenance payable by the husband in the sum of $1500 on the Friday of each week whether or not a litigation funding order is made.
The wife contends in the brief written submissions made in respect of spouse maintenance (paragraphs 62 to 64), that “the inability of the wife to support herself is established”. This is a reference to the “threshold test”, created by s 72 of the Act whereby a party is liable to maintain the other party “to the extent that the first mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself…adequately”.
The wife’s financial statement filed 15 March 2022 reveals:
(a)No disclosed income; and
(b)Estimated weekly personal expenses set out in Part N, at $1203.11.
The wife does not indicate she receives child support from the husband. The wife’s financial statement revealed, at that time, she had approximately $58,800 in bank accounts.
The basis of the orders made on 16 March 2023, was the husband’s application to adduce further evidence and seek further submissions. As a result, in addition to the written and oral submissions made on 16 August 2022 by Counsel for the parties, the husband sought, impermissibly in my view, to rely upon submissions made before a Senior Judicial Registrar by his Counsel at the time – perhaps now preferring those to the ones delivered on his behalf by Mr Sweeney before me. I ignore the husband’s attempts to do so.
The subsequent material relating to the spouse maintenance application which I have considered are:
(a)The husband’s updated financial statement and affidavit filed 1 March 2023 and his self-prepared written submissions filed 31 March 2023; and
(b)The wife’s updated financial statement filed 15 March 2023 and the further written submissions filed by her solicitor on 31 March 2023.
The husband’s further affidavit deposed to:
(a)A belief that the wife “has been working” at AO Institution for “at least three months”.
(b)That between late 2022 and early 2022, the husband had sought disclosure about the wife’s work and efforts to find work and receipt of Centrelink payments.
(c)After making various “ad hoc” repayments to the wife, the husband says he commenced paying child support voluntarily of $1000 per week before reducing the payment to $616.08 per month (approximately $142 per week after an administrative assessment).
(d)Asserts a failure by the mother to make proper and timely disclosure.
(e)A change in his financial circumstances since his last financial statement on 21 April 2022, in that in late 2022, his employment agreement (with his mother’s entity) was varied and his renumeration was reduced. Again at this stage no opportunity to examine the full context for this change is known – for example there is no evidence from his “employer” – his mother Ms B Carrillo.
(f)He now relies on his updated financial statement filed 1 March 2023.
The wife’s updated financial statement filed 15 March 2022 now reveals a total income of $703 per week comprising:
(a)Government benefits of $561 per week; and
(b)Child support of $142 per week.
The wife’s bank accounts have reduced to a total of $956.00 (from $58,500) and she claims unpaid legal fees owing of $391,000. At Part N of the updated financial statement the wife claims:
(c)$1,055 as her weekly personal expenses; and
(d)$1,570 as the children’s weekly expenses.
As to the threshold test previously identified, I find that the wife is “unable to adequately support herself” because:
(a)Any benefits she receives for income tested government benefits, must be disregarded (s 75(3)).
(b)The children’s expenses, without analysing them precisely are to some extent covered by the child support the husband is required by administrative assessment to pay, and does pay.
(c)The wife and the husband share equally the care of their two younger children, aged 14 and 7 years as a reflection of the final parenting orders. With the mother having been (during the relationship) the primary carer of the five children and, not employed outside of the relationship for many years, the wife claims an “inability to work” even if she had skills for employment relying paragraph 171 to 186 of her affidavit filed 15 March 2022 and some, yet untested, medical advice. It is not in dispute that, by comparison, the husband is a trained professional who chose to move from this employment with a large Brisbane business, to a role in a different industry both in his own right and as, he claims, the employed manager of his mother’s extensive property interests.
I accept the husband’s submission that the wife does not have “an exemption” from seeking employment – at the very least a poor word selection by her solicitor in her letter of 15 March 2023. I am prepared to accept the wife has engaged in some voluntary work at AO Institution, but having a capacity to do some work does not mean, at the age of 41 years she can find remunerative employment – and certainly the husband reveals no evidence for such employment availability or how any work impacts upon the wife’s clear long-standing role as primary carer.
Both at the hearing on 16 August 2022 and again in his submissions of 31 March 2023, the husband says that even if the wife is unable to adequately support herself (which he denies) he has no capacity to pay spouse maintenance, now relying on his updated financial statement (see submissions at paragraph 43). I analyse this recent financial statement broadly as follows:
(a)The husband now claims his income has dropped to a gross sum of $2638 (including superannuation of $230 paid to his self-managed superannuation fund) which I take to be his employer’s occupational superannuation obligation.
(b)His fixed weekly expenses are now:
Income tax $613 Superannuation $230 Rent $525 Life insurance $153 Child support $142 $1663 which leaves a nett average sum of $975 per week. He claims at Part N, his living expenses are $896, but I would find his non-discretional living expenses to be:
Food
$100
Gas
$5
Electricity
$36
Internet
$20
Telephone
$15
Clothing
$50
Medical and dental
$25
Chemist
$15
Sundries (gifts etc.)
$50
$316
Entertainment and holidays are discretionary expenditure. Where he claims rent and has a car allowance, the basis for:
House supplies
$50
House repairs
$100
Car maintenance
$50
Fares
$30
$230
is not explained adequately.
From his available nett of $975, I would allow $350 for his personal living expenses. However, it is fair to accept that when the children are with him he also has a duty to meet their needs – even though he contributes to the wife by way of child support, $142 per week. His claim of $2678 a week for the children when in his care, is unreasonable – although I accept; as an intact couple, the parties and the children probably maintained a higher lifestyle with entertainment and holidays. Sadly, the husband’s current claim for private school expenses of $600 per week, on his income, cannot be maintained – although I accept that it is likely the parents hope for the schooling to continue.
I have come to the conclusion that an order for spouse maintenance, is available on the evidence, before the Court, on an interim basis in the sum of at least $300 per week. I am prepared to hear further submissions as to whether this spouse maintenance obligation should be capitalised for the period since 16 August 2022 and paid from the funds in trust.
I am however concerned that it appears no one is paying the home mortgage to Westpac.
When the matter gets to a trial, and the evidence properly tested and examined, it may well be that s 75(2) factors favour an adjustment to contribution based entitlements when the full extent of the husband and wife’s interests in various entities is established than what constitutes as a just and equitable division can be determined.
WHAT HAPPENS NEXT
The husband says, he no longer has legal representation (that representation having ceased in November 2022 as a result of nonpayment of legal expenses). As he has professional experience, the “playing field” is not necessarily even if the wife as well does not have a lawyer, as she seeks.
Clearly, I will order, the:
(a)Summary dismissal of parts of the wife’s Application; and
(b)The wife’s Application for interim maintenance being granted at a level of $300 per week.
the issues to be further considered include:
(a)Whether the funds in trust should be applied in these changed circumstances to litigation funding, lump sum spouse maintenance or partial property payments;
(b)Although not formally before me, whether the funds should be distributed to the husband and wife equally or in some other proposition by way of partial property relief;
(c)Whether the wife continues to press for injunctive relief;
(d)Apart from Ms B Carrillo, is it necessary to consider the joinder of any other parties (a matter raised at least by Mr Dura in his submissions); and
(e)Are there other steps necessary to move this mater towards either a private mediation or a final hearing, including further and updated discovery.
In regard of the assessment of the pool of interests, the evidence reveals, at least that the husband and wife have interests and/or or possible interests in a number of unit trusts and discretionary trusts and other syndicates (other than the acknowledged “[Mr Carrillo’s] Family Entities”) and with so much attention having been given to “control” issues, little information about contingent or actual value of various interests under these trusts is currently available to the Court.
The Court, as a result will list the matter and seek further submissions on these issues with a Case Management Hearing set for 9.30am on 30 November 2023.
I certify that the preceding eighty (80) numbered paragraph is a true copy of the Reasons for Judgment of the Honourable Justice Baumann. Associate:
Dated: 10 November 2023
APPENDIX ONE
Image omitted to comply with s 121 of the Family Law Act 1975 (Cth).
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