Cirillo & Cirillo (No 2)

[2022] FedCFamC1F 86

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Cirillo & Cirillo (No 2) [2022] FedCFamC1F 86

File number(s):	SYC 4192 of 2020
Judgment of:	ALDRIDGE J
Date of judgment:	23 February 2022
Catchwords:	FAMILY LAW – PROPERTY – Interim application – Where the sale proceeds of a primary asset are held in a controlled monies account – Where the husband seeks payment out of the controlled monies account to pay current business expenses – Inability to pay debts from the current earnings of the business – Payment of business expenses authorised.
Division:	Division 1 First Instance
Number of paragraphs:	7
Date of hearing:	18 February 2022
Place:	Sydney (via video link)
Counsel for the Applicant:	Ms Vohra SC
Solicitor for the Applicant:	Lander & Rogers
Counsel for the First and Second Respondent:	Mr Richardson SC with Mr Todd
Solicitor for the First and Second Respondent:	Boyce Family Law & Mediation

ORDERS

SYC 4192 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS CIRILLO

Applicant

AND:

MR CIRILLO

First Respondent

B PTY LTD
Second Respondent

ORDER MADE BY:	ALDRIDGE J
DATE OF ORDER:	18 FEBRUARY 2022

THE COURT ORDERS BY CONSENT THAT:

1.That the parties shall forthwith do all things and sign all documents necessary to jointly instruct and cause TT Lawyers to distribute the sum of $969,908.65 from the funds held on behalf of the parties in the controlled monies account established pursuant to orders made in these proceedings on 8 October 2021 and operated by that firm (“CMA”) to the second respondent, following which the second respondent shall forthwith apply the funds in payment of the tax liability of Cirillo Pty Ltd to the Australia Taxation Office and for no other purpose.

2.That pending further hearing on 10 March 2022, the first respondent shall pay or cause to be paid all home loan repayments in relation to the Westpac Equity Access Loan Account (ending #…71), secured by mortgage against the title of the former matrimonial home at RR Street, Suburb P NSW, as and when they fall due.

3.That pursuant to s 114 of the Family Law Act 1975 (Cth) (“the Act”), the applicant and the first respondent be and are hereby restrained from:

(a)further encumbering the property situated at and known as RR Street, Suburb P, NSW (“the matrimonial home”);

(b)disposing of, or otherwise dealing with any interest they have in the matrimonial home; and

(c)otherwise disposing of or dealing with their assets other than to discharge all business and taxation liabilities properly incurred by them, including in payment of any legal fees referable to these proceedings.

AND IT IS ORDERED THAT:

4.That the parties shall forthwith do all things and sign all documents necessary to jointly instruct and cause TT Lawyers to distribute the sum of $984,778.19 from the CMA to the second respondent following which the second respondent shall forthwith apply the funds in payment of the gaming tax liabilities of the PP Property, the MM Property, the F Property and the QQ Property, as identified at pages 18–22 of the exhibits to the affidavit of Mr A sworn and filed in this proceeding on 17 February 2022, and for no other purpose.

5.That further hearing of the present applications be and is hereby adjourned to 10.00 am on 10 March 2022.

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 Cirillo & Cirillo has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

EX TEMPORE REASONS FOR JUDGMENT

ALDRIDGE J:

1. The first respondent seeks the payment out of the controlled monies account which holds the proceeds of sale of LL Property (which is more fully explained in my earlier reasons in Cirillo & Cirillo [2021] FedCFamC1F 118) for the purpose of paying Liquor & Gaming NSW gaming tax in respect of the four commercial properties that are still being operated by the group.

2. In those earlier reasons I expressed the general view, to which I still adhere, that ordinarily speaking one would expect that current expenses of a business be paid from current assets, principally income, and that capital sums should not be used for that purpose. The fund which represents the sale of LL Property is clearly such a capital sum.

3. However that is a general principle. It seems to me that one of the fundamental lynchpins of the commercial properties, as is apparent from the gaming turnover, are their gaming facilities which ought not be put at risk by non-payment of the appropriate gaming licence fees.

4. I have some misgivings in that the evidence that demonstrates an inability to pay those debts from current earnings is somewhat lacking but the aged payables accounts do show that both the current and the previous month remain unpaid.

5. The payment of these sums will of course free up the income of those businesses to pay other trade creditors. I note in that respect that the application of the respondents is that some $1.8 million be paid out from the controlled monies account for that purpose and may render that part of the application otiose.

6. I also think that there is force in the argument that there are sufficient assets available to make the appropriate adjustment and finally the general principle is that the net assets of the parties be divided. There is no reason why ordinary trade creditors ought not be paid and if that diminishes the amount for distribution then so be it.

7. Taking those matters into account, I propose to authorise the payment of the outstanding licence fees as sought.

I certify that the preceding seven (7) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of the Honourable Justice Aldridge.

Associate:

Dated:       23 February 2022