Connor and Cosgrove and Ors

[2018] FamCA 408

FAMILY COURT OF AUSTRALIA

CONNOR & COSGROVE AND ORS [2018] FamCA 408

FAMILY LAW – PROPERTY SETTLEMENT – Where the First Respondent and the Intervenors agree about the terms of the Order – where the Applicant and Second Respondent do not agree – Application by the First Respondent and the Intervenors for an order to be made pursuant to Rules 10.12(d) and 10.14(c) Family Law Rules 2004.

Family Law Act 1975 (Cth)

APPLICANT: Mr Connor

1st RESPONDENT: Ms Cosgrove

2nd RESPONDENT: B Pty Ltd

INTERVENORS: Mr C Connor and Ms D Connor atf E Trust

FILE NUMBER: BRC 3669 of 2014

DATE DELIVERED: 28 May 2018

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Hogan J

HEARING DATE: 28 May 2018

REPRESENTATION

THE APPLICANT: Mr Connor in person

COUNSEL FOR THE 1ST RESPONDENT: Mr Galloway

SOLICITOR FOR THE 1ST RESPONDENT: Hetherington Family Law

THE 2ND RESPONDENT: Mr Connor in person

COUNSEL FOR THE INTERVENORS: Mr Alexander

SOLICITOR FOR THE INTERVENORS: Damien Greer Lawyers

Orders

IT IS ORDERED ON A FINAL BASIS THAT

1. The Intervenors are to receive the entirety of the funds presently held in the trust account of F Lawyers, together with all interest accrued thereon.  The parties hereby irrevocably authorise and direct F Lawyers to pay to Damien Greer Lawyers trust account such funds.

2. The Intervenors release and indemnify the Applicant, the First Respondent and the Second Respondent in respect of all liability to them arising out of the loans subject of these proceedings.

3. The parties shall bear their own costs of and incidental to the proceedings as they concern the involvement of the Intervenors.

AND IT IS FURTHER ORDERED BY CONSENT ON A FINAL BASIS AS BETWEEN THE INTERVENORS AND THE FIRST RESPONDENT THAT

1. The First Respondent indemnifies the Intervenors in respect of any liabilities to G Pty Ltd, H Pty Ltd and QBE Insurance.

2. The Intervenors shall pay to the First Respondent the sum of $210,000.00 and hereby authorise and directs Damien Greer Lawyers to make such payment following receipt of the funds referred to in Order 1.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Connor & Cosgrove and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 3669 of 2014

Mr Connor

Applicant

And

Ms Cosgrove

First Respondent

And

B Pty Ltd

Second Respondent

And

Mr C Connor and Ms D Connor atf E Trust

Intervenors

EX TEMPORE REASONS FOR JUDGMENT

1. I have before me an Application pursuant to Rule 10.12(d) (seeking orders pursuant to Rule 10.14(c)) made by Counsel for the Intervenors, joined by Counsel on behalf of the wife.  The Application seeks that I make orders in terms of the document I have initialled “A” (and dated) so as to dispose of the issues in dispute as between the Applicant, First Respondent, Second Respondent and Intervenors insofar as Clauses 1 to 3 are concerned; and as between the Intervenors and the First Respondent insofar as Clauses 4 and 5 are concerned. 

2. Mr Connor, who appears on his own behalf, opposes the making of any orders and opposes the Application. 

3. I do not intend in these Reasons delivered orally this afternoon to repeat those comments I have expressed during the course of consideration of the Application which came after the lunch adjournment today.

4. To the extent that I fail in these Reasons to refer specifically to any of my earlier comments, I incorporate them into the Reasons I now deliver. 

5. It is sufficient to state, for the purpose of determining this Application, that the husband and wife separated in April 2013.  Litigation seems to have commenced in 2014.  During their period of cohabitation they bought and sold a number of real properties.  They obtained funds – at least as was asserted initially by the husband, and I think accepted more recently by the wife – from the Intervenors and utilised those funds in the property transactions.

6. As I understand the evidence before me (as read by the parties for the purposes of the trial which commenced this morning), the last property transaction seems to have occurred – by way of sale of a piece of real property – on or around 7 November 2016.  Prior to that, a number of pieces of real property had been sold in late 2014 such that the sales of the same seem, at least on a prima facie basis, to have fallen within the 2014/2015 financial year.  This information is relevant because one of the reasons advanced by the husband in opposing the making of orders by way of final order on any issue pursuant to Rule 10.14 of the Rules is that there are, or may well be, issues associated with the Australian Taxation Office and contingent tax liabilities. 

7. It seems uncontroversial that no tax returns have been filed since, I think, the 2008 financial year.  So, nearly a decade has passed during which such documents could have been prepared and lodged with the Australia Taxation Office.

8. The Intervenors made their position clear, I think, by no later than about November 2014 – they caused correspondence to be sent to the husband seeking the repayment of funds that they have always asserted were loaned to the parties for use in the property transactions.  The husband’s position in relation to that assertion has always been to support it.  The orders sought in his Initiating Application certainly provided for a payment to the Intervenors of the funds held currently in the trust account of F Lawyers.  That position was outlined in the Initiating Application filed 17 March 2016: Clause 2 of the final orders sought is that all monies held in the F Lawyers trust account be paid to the Intervenors by way of bank cheque within seven days in part repayment of the monies owing to the Intervenors by the Applicant, the defending First Respondent and the Second Respondent.  The defending First Respondent is the wife. 

9. The husband’s position was reiterated in a document entitled “Affidavit – Financial Statement” filed by him on 17 April 2018.  In that document he refers to a what he describes as a “Financial Statement Table” which is exhibited to that affidavit.  That table (headed “GWC-B298”) contains an assertion that the Intervenors are owed the sum of $1,248,000.00 as a consequence of the asserted use of the money described in that table by the husband.  In addition, paragraph 47 of that affidavit contains the husband’s assertions about, and acceptance of, the position advanced by the Intervenors to the effect that they should receive all of the funds held in the F Lawyers trust account – at least in part payment of what is asserted to be a larger amount as I have said, a little over $1,200,000.00.

10. Reference to the terms of Exhibit “A” make it clear that, as between the wife and the Intervenors, there is agreement that, in fact, the Intervenors receive the entirety of the funds presently held in the F Lawyers trust account.  The terms proposed and agreed as between the wife and the Intervenors are as set out in paragraphs 2 and 3 also of the Order. 

11. As reference to the transcript of my earlier comments would make clear, what has in fact happened it seems since lunch is that the wife and Intervenors have reached an agreement which would give effect to the very proposition advanced by the husband during the course of the litigation:  namely, that the funds held in the F Lawyers trust account should be paid to and, therefore, are rightly the property of the Intervenors. 

12. As between the Intervenors and the wife, reference to Clauses 4 and 5 of the document marked “A” reveal agreement about an indemnity and an agreement that the Intervenors pay to the First Respondent the sum of $210,000.00 from the funds they receive in discharge of their asserted debt to the parties: that is, it appears that the Intervenors are prepared to compromise what they assert is a much larger claim and/or entitlement quantified by the husband to be a little over $1,200.000.00 by receipt of the funds held in the trust account of F Lawyers and that they have reached agreement with the wife for the payment by them to her from those funds of the amount specified in Clause 5 of the document.

13. It is apparent from reference to earlier discussions, as I have said, that there is no issue as between the husband and the Intervenors about their entitlement to the funds.  He specifically disavows any suggestion that any funds that they might receive as a consequence of a payment to them of the funds held in the F Lawyers trust account would be, or are to be considered as being, held by them on trust for him.

14. His opposition to the orders being made seems to rest primarily upon two features:  that there is a concern that the indebtedness of the parties (and the Second Respondent, in respect of which he is the sole director since, I think, about 2008) or any potential indebtedness, to the Australian Taxation Office may not be met if funds, which he acknowledges, and has always acknowledged, in his case, are funds owing to the Intervenors are paid now to the Intervenors;  and, the same also, in relation to two other creditors who remain as a consequence of property transactions entered into by the husband and the wife during their relationship. 

15. It seems clear to me that, if orders are made as sought by the wife and the Intervenors, the wife would have available to her the sum of $210,000.00, which, of course, forms part of the “property of the parties of the marriage”, the subject of further consideration in the proceedings which remain on foot as between the husband and wife.  Those funds also, obviously, provide a source from which any established debts could be ordered to be paid. 

16. It is relevant, also, in my view, to note that, at no time has the husband sought specific orders that any funds be held aside from the funds currently in the F Lawyers trust account to meet these potential repayments.  His case has always been that all funds held in that trust account go to the Intervenors.

17. I am not remotely persuaded, nor has anyone suggested, nor has there been any Application, that it is necessary to join as parties the Australian Taxation Office or the other creditors.  Their presence as parties is not necessitated by application of the terms of Rule 6.02(1) of the Rules. 

18. It is clear on the evidence before me that the indebtedness of the husband and wife to the Intervenors appears to have commenced in 2006 – as I have said, they sought repayment by correspondence in about November 2014.

19. There is nothing in the evidence before the Court to establish the existence at present of any debt to the Australian Taxation Office.  There is in evidence before the Court evidence of the wife’s attempts, in or around December of last year, to seek to utilise some of the funds held in the F Lawyers trust account to reach a commercial compromise with the two other creditors of the parties in a way that would advantage both of them:  because those creditors were, at least at that time, prepared to reach commercial compromises which would have seen the indebtedness of the parties to them decrease significantly.

20. As I have said, the payment by the Intervenors of a lump sum to the wife makes that possibility one that remains open.  And as I have said to the husband, it is certainly open to him to make submissions during the course of the trial, at the appropriate time, as to what orders should be made to bind the wife in relation to any potential indebtedness and the existing indebtedness to the creditors identified in her affidavit material.

21. There is nothing in the submissions made by the husband which persuades me that there is a reasonable likelihood of success insofar as any defence to the claim by the Intervenors to the funds in the trust account.  As I have said, in that sense, the parties are as one – the Intervenors should receive the benefit of those funds. 

22. The terms of Clauses 1 to 3 of the document marked “A” also provide to the husband additional benefit, because by Clause 2, he is provided an indemnity by the Intervenors in relation to any further claim upon him about any funds said to be owing to them as a consequence of their provision of funds to the parties during the course of the marriage (and following the separation) of the parties.

23. I am persuaded that it is appropriate, there being an Application under Part 10.3 of the Act, that I exercise the power to make a final order on the issue of the payment to the Intervenors of the funds held in the F Lawyers trust account.  I consider that an order requiring the payment to them of those funds to be an order which is just and equitable in the circumstances of the case;  noting, as I do, again, that the husband has always advanced that those funds are payable to the Intervenors.

24. For those reasons, supplemented by the discourse that occurred after the lunch adjournment and before I adjourned to consider the submissions made by each of the parties and taking into account the submissions made in support of the orders by Counsel who appears for the Intervenors and the wife, I am persuaded that it is appropriate, proper and just and equitable that I make orders in terms of the document that is Exhibit “A” and I do so.  I initial those orders and place them with the papers.

25. The reality, then, for the Intervenors, is that that brings to an end their involvement in the litigation.  I have taken into account and have been particularly concerned to sit after 5.00 pm this afternoon to deliver these reasons orally because I note the ages of the Intervenors and the submissions by their Counsel on their behalf as to the importance of bringing to an end their involvement in the litigation. 

26. As I have already said to the parties, that was certainly a feature which factored in to the decision to accord to this matter priority when I listed it before me when the parties appeared in December of last year.

27. That will mean that, as between the husband and wife, the proceedings will continue tomorrow.  At that time it is, of course, open to the husband to make whatever submissions (at the appropriate time) he considers are appropriate as to how I should deal with the $210,000.00 that is to be received by the wife; and what provision, if any, ought properly be made from it to deal with the issues he has raised vis-à-vis the Australian Taxation Office and the two other creditors.

28. Those are the reasons that I intend to deliver in relation to and in support of the orders I have made – supplemented, as I have said, by the discourse today but, particularly, between lunch time and when I stood down earlier. 

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hogan delivered on 28 May 2018.

Associate:                 

Date:    28 May 2018