Chester and Chester
[2009] FMCAfam 1102
•16 October 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CHESTER & CHESTER | [2009] FMCAfam 1102 |
| FAMILY LAW – Property settlement – adjustments made on final order of 30 April 2008. |
| Applicant: | MR CHESTER |
| Respondent: | MS CHESTER |
| File Number: | BRC 2696 of 2007 |
| Judgment of: | Baumann FM |
| Hearing date: | 14 August 2009 |
| Date of Last Submission: | 14 August 2009 |
| Delivered at: | Sydney |
| Delivered on: | 16 October 2009 |
REPRESENTATION
| Applicant: | In person |
| Respondent: | In person |
ORDERS
The further hearing and determination of the applications before the Court for Enforcement of the Property Order and claims for relief by the Intervenors be listed for 9.30am on 28 October 2009 in Brisbane.
That the husband file and serve any Affidavit he seeks to rely upon in respect of the debt owed by the [A] TRUST for the business premises be filed and served upon the Wife by 4pm on 26 October 2009.
The Registrar cause a copy of the Reasons published today in respect of disputes between the Husband and Wife, by 4pm Wednesday 21 October 2009.
The costs of each party of this day are reserved.
Notice be given to Messrs Hunters Solicitors that their dispute with the Husband in this Court is also listed for further hearing at 9.30am on
28 October 2009 in Brisbane.
IT IS NOTED that publication of this judgment under the pseudonym Chester & Chester is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
BRC 2696 of 2007
| MR CHESTER |
Applicant
And
| MS CHESTER |
Respondent
REASONS FOR JUDGMENT
Background
On 15 February 2008 the court delivered Reasons in respect of disputed property proceedings between MS CHESTER (“the Wife”) and MR CHESTER (“the Husband”). After the reasons were delivered the parties, who had been legally represented for the hearing, began to represent themselves.
A final Order was made on 30 April 2008 (“the said Order”). Although complex disputes have arisen since the making of those Orders as to the rights of some creditors of the Wife – in particular her litigation funder [I] LIMITED and an expert witness in the substantive proceedings [MR T ACCOUNTANTS] – those issues are not the focus of these Reasons. Regrettably for the parties the resolution of those disputes will ultimately shape the entitlements of both the Husband and the Wife to the balance of the proceeds of sale of the former matrimonial home of approximately $510,182.85.
The Court has indicated to all persons concerned with or claiming an entitlement in those proceeds that it will not make further machinery Orders for the distribution of funds until all parties have been given an opportunity to be heard on the matter. These reasons relate specifically to some disputed issues between the Husband and the Wife as to adjustments between themselves. In that regard on 14 August 2009 the parties appeared before me and argued, and were cross examined and questioned at the Bar table, about the disputed issues set out below. I regret my delay in providing these Reasons, but it is the Court’s intention to now expedite the further determination of the remaining issues as to priority of payment so that the funds held from the property can be distributed.
It is not necessary in these Reasons to recite the terms of the said Order, although a reference to specific paragraphs of the Order will be appropriately recorded. Essentially, however, the said Order provided that the Wife was to receive 35% of the net proceeds and the Husband was to receive 65% of the net proceeds and pending sale of the home the Wife was to pay 35% of the mortgage payments and outgoings as defined, with the Husband’s contribution being 65%.
The Wife occupied the home for some time with the child of the marriage. The home took nearly 12 months to find a buyer who completed the sale in July 2009.
The following disputes arose for my determination:
Bendigo Back Visa Card Debt (Order 7)
(a)The Wife claimed the Husband had not satisfied his indemnity in respect of this debt. In his Affidavit filed 13 August 2009 evidence was produced that the Husband has made satisfactory arrangements with the bank and the Wife has no further liability. The Wife, despite her claims in her Affidavit filed 5 August 2009, now accepts that to be the case.
House Maintenance Expenses (Order 6)
a)The Husband, I am satisfied on all the evidence, caused to pay maintenance expenses pursuant so the Order, of $6,046.40. The Husband claims an adjustment of $2,116.24 (35% of this sum) from the Wife. The Husband’s Affidavit filed on 13 July 2009 establishes the expenses were paid and they are consistent with the obligations under the said Order. Nothing the Wife has said in her material disputes this liability. As a result the adjustment claimed by the Husband of $2,116.24 should be made.
Mortgage Payments (Order 6)
b)Simply the Wife claims she did not have the funds to meet mortgage instalments whilst occupying the home. The Husband claims he could only meet the expenses of the mortgage by borrowing from his brother – a resident of the United Kingdom (or an entity controlled by the brother names [K]). There is no dispute that the payment for the relevant period made by the Husband totalled $27,159.13. The Husband seeks an adjustment of $9,505.70. I am satisfied the Wife was aware these payments were being made. I am satisfied the Wife accepted that the funds would attract interest at the rate of 15%. The Wife, in her Affidavit filed 5 August 2009 at paragraph 16 says: -
“I ask that no adjustment be made in regard to personalty by the Husband for mortgagee shortfall. An agreement was reached by the parties that I would not make maintenance Order requests in the Family Court based on Mr Chester’s overseas earnings, back in August 2008. For that reason, there exists no paperwork signed by me for any liability ON BORROWINGS FROM [K] since that date. This agreement is mentioned in a letter attached, marked 3A dated 25 December 2008, handed to me when the Husband collected our daughter from my home on Christmas Day. I have underlined the appropriate line in the letter that clarified that in return for my patience and compliance with
Mr Chester’s requests, I would not be held liable at settlement of the property Property H for any further costs. Mr Chester has since reneged.”
c)The Wife attached in support of her claim, a copy of an email dated 25 December 2008 (annexure 3A) which the Wife says demonstrates an agreement reached by the parties. The Husband disputed the authenticity of the said letter initially and further, at paragraph 8(a) of this Affidavit filed 13 August 2009, the Husband gives evidence of why he says the emails is not one sent by him.
d)In any event, to resolve this issue, I am not required to determine the authenticity of the said disputed email. If the Wife held a legitimate claim for either spousal maintenance or departure of child support, she could have exercised those rights. The Husband’s actions in borrowing funds from overseas to preserve the major asset of the marriage so as to allow an orderly commercial sale was proper and to not allow an adjustment in the circumstances against the Wife would be inequitable. Simply the capacity for the parties to sell their home rather than have the home sold by a mortgagee in possession, I infer, is likely to have accrued a joint benefit and maximised the available funds for distribution.
Wife’s claim for Reimbursement for Improvements
e)The Wife seeks an adjustment in her favour of $11,121.50 which the Wife claims is the Husband’s “65% share of costs for permanent fixtures on joint property since final Orders”. The Wife’s claim must fail for a number of reasons being:
i)I am not satisfied n the evidence the Wife has paid the amount she claims;
ii)I am not satisfied that all claimed payments occurred “after final Orders”. To that extent, as the Husband asserts, some expenses may have been made whilst the matter was reserved for judgment and/or between the time from the publication of reasons and the pronouncement of the final Order – then any such contributions are consumed by the overall division. I note that the Court’s order was not the subject of appeal;
iii)The Husband does not concede, and on the evidence, I am satisfied any such payment made by the Wife were made with his express consent or approval;
iv)The Wife was not legally obliged to make any such payments;
The Wife’s claim under this head cannot be allowed as a result.
[S]
f)The evidence at the property hearing was that the Wife had been in control of a [omitted] business at least since 5 July 2006 when the Family Court of Australia made an Order that the Husband (on certain conditions) transfer the business to her. The difficulty at the hearing was that whilst the Wife had use of the income and responsibility for the outgoings of the business (found to have no market value at the hearing save for equipment which the Wife retained under Order 4(a)), the business was operated through an entity known as THE [A] TRUST.
g)Relevantly, Orders 8, 9 and 10 of the said final Orders required the parties to sign all such documents to – transfer the business to a company controlled by the Wife; cause the lease to be assigned to that new company; cause the new company to assume the liabilities.
h)Pending the perfecting of “these transactions” the Wife was “to be responsible for and indemnify the Husband against any claims, actions, or demands against the business entity known as [S].”
i)For reasons, in dispute, these transactions have not occurred. I am satisfied that taxation liabilities associated with the business have accrued to a level of $19,301.03. The debt has crystallised. Because the [A] Trust is still, so far as the Australian Taxation Office is concerned, the primary debtor, the Husband may ultimately be called upon to pay that debt. It is clear the Wife has, in the past, accepted the debt and made arrangements to the Australian Taxation Office to make regular part payments; she has ceased to do so for some months now.
j)The debt is clearly covered by the indemnity (and unlike the lease obligation which I deal with next) has crystallised. There should be an adjustment in the Husband’s favour for this liability of $19,301.03, accordingly.
Lease of Business Premises
k)In August 2004 [A] PTY LTD as trustee for the [A] TRUST executed a lease for the [S] Business premises. The Husband deposes that Annexure “A” to his Affidavit filed 13 August 2009 is a true copy of the said lease. The document reveals it was a tenancy for a terms commencing 1 September 2004 and expiring 31 August 2009. The commencing annual rental was $49,500.
l)Importantly, and relevantly, the Husband personally guaranteed the Obligations of the Lessee. The Wife provided no personal guarantee.
m)As earlier noted, the lessee’s interest has not be assigned to any other entity as contemplated by the Orders of this Court. The Husband says that the Lessee has vacated and/or abandoned the lease; that arrears are owing and that he says he will be called upon, as guarantor, to satisfy the claim of the Lessor.
n)Although the Lessor’s representative (a Mr S) has been present in Court, the evidence does not yet satisfy me that a claim against the Husband has yet been properly quantified or crystallised. No Affidavit evidence by the Lessor has been filed.
o)I am satisfied that any ultimate obligation owed by the Husband under the lease is likely to fall within the indemnity which the Wife has to the Husband under Order 9.
p)On the current evidence, I cannot confidently qualify the debt. The Wife says she is willing and/or intends to engage in negotiations with the Lessor – similar, I suspect, to those engaged in by the Husband relating to the Bendigo bank Credit Card debt.
q)It may be that since this matter was last before me the Husband’s obligation as personal guarantor under the lease has crystallised but the evidence at the time of hearing is not to that level, I will allow the Husband some time to put some further evidence before the Court from the Lessor on this issue.
Conclusion
The Court will Order that a copy of these Reasons be provided to the other interested parties before a Order distributing the funds is made. Depending on how quickly that matter can come back to the Court a direction will be made for the Husband to file further material if he wishes to do so from the Lessor of the business premises.
I certify that the preceding seven (7) paragraphs are a true copy of the reasons for judgment of Baumann FM
Associate: April Grenquist
Date: 16 October 2009
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