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…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Cirillo & Cirillo (No 2)

Details

AGLC: Cirillo & Cirillo (No 2) [2022] FedCFamC1F 86
Case: [2022] FedCFamC1F 86
Decision Date

CaseChat Overview and Summary

In the case of Cirillo & Cirillo (No 2), the husband sought payment from a controlled monies account, which held the sale proceeds of a property, to cover the gaming tax liabilities of four commercial properties operated by the business. The court had to determine whether the sale proceeds could be used to pay these current business expenses instead of relying on the business's income. The primary legal issue was whether the general principle of using capital sums for current expenses should be applied in this situation, considering the risk to the business's operations if the gaming tax was not paid.

The court considered that while it is generally expected that business expenses should be covered by current income, the specific circumstances of the case warranted a different approach. The court recognised that the gaming facilities of the commercial properties were crucial to their operation and should not be put at risk by non-payment of gaming licence fees. Although the evidence of an inability to pay the debts from current earnings was not robust, the unpaid accounts indicated that the current and previous month's gaming tax remained outstanding. The court concluded that paying these sums would allow the businesses to meet other trade creditor obligations, thereby supporting the argument for using the controlled monies account for this purpose.

The court authorised the payment of the outstanding gaming tax liabilities from the controlled monies account, reasoning that there were sufficient assets available to make the necessary adjustment. The court also noted that there was no reason why ordinary trade creditors should not be paid, even if it reduced the amount available for distribution. The court's decision was based on the balance of the specific circumstances of the case against the general principle of using capital sums for current expenses. The court's reasoning led to the approval of the husband's application to use the controlled monies account to pay the gaming tax liabilities.

Orders