FEDERAL CIRCUIT COURT OF AUSTRALIA
| DELONG & ROUSE | [2019] FCCA 1498 |
| Catchwords: LIABILITIES – Tax liabilities – Proposed Deed of Company Arrangement – Australian Tax Office – United States of America Internal Revenue Service – difficulty of ascertaining asset pool – adjournment to properly determine debts – section 90SM(5). PENALTIES – Where parties cause penalties to be imposed – whether the debt should be joint or individual. DEBT – Whether parental support was a gift – whether parental support was a loan. |
| Legislation: Family Law Act 1975 (Cth), ss.79, 90SF and 90SM Corporations Act 2001 (Cth), s.588G |
| Cases cited: Haslam & Haslam [2018] FCCA 734 |
| Applicant: | MR DELONG |
| Respondent: | MS ROUSE |
| File Number: | MLC 4043 of 2017 |
| Judgment of: | Judge McNab |
| Hearing dates: | 14, 15, 16 November 2018, 4 December 2018 and 2 May 2019. |
| Date of Last Submission: | 2 May 2019 |
| Delivered at: | Melbourne |
| Delivered on: | 3 June 2019 |
REPRESENTATION
| Counsel for the Applicant: | Ms M Smallwood |
| Solicitors for the Applicant: | Lander & Rogers |
| Counsel for the Respondent: | Mr M Wilson |
| Solicitors for the Respondent: | Westminster Lawyers |
ORDERS
All previous Orders be discharged.
Within 120 days of the date of these Orders- or earlier at the Applicant's election (provided that the Applicant gives the Respondent at least 42 days' advance notice of the revised settlement date) and contemporaneously:
(a)the Applicant pay to the Respondent the sum of $419,460.
(b)the Respondent do all such acts and things and sign all such documents as may be required to transfer to the Applicant at the Applicant's expense, all of her right, title and interest in the property situated at and known as C Street, Suburb D, in the State of Victoria, more particularly described in Certificate of Title Volume … Folio … (‘C Street, Suburb D property’);
(c)the Applicant do all things necessary and sign all documents necessary to refinance into his sole name the amount owing to Westpac Banking Corporation for loan number … in the parties' joint names and to cause the discharge of mortgage registration number … (‘C Street, Suburb D mortgage’);
(d)the Respondent do all such acts and things and sign all such documents as required to refinance the amount to Westpac Banking Corporation for loan number … in the parties' joint names and to cause the discharge of mortgage registration number … (‘A Street, Suburb B mortgage’);
(e)The Applicant at his expense do all things necessary and sign all documents necessary to cause the discharge…
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- AGLC
- DELONG & ROUSE [2019] FCCA 1498
- Case
- [2019] FCCA 1498
- Decision Date
CaseChat Overview and Summary
The court was required to determine several key legal issues. These included whether certain tax liabilities and penalties should be considered joint or individual debts, the nature of parental financial support (whether it constituted a gift or a loan), and the appropriate division of assets and liabilities arising from their joint business ventures and properties. The court also had to consider the implications of a proposed Deed of Company Arrangement and the difficulties in ascertaining the total asset pool for the purposes of settlement.
In its reasoning, the court applied principles of family law concerning the division of property and liabilities in de facto relationships, particularly under section 90SM(5) of the Family Law Act 1975 (Cth). The court's orders reflect a comprehensive settlement of the parties' financial affairs, discharging previous orders and establishing a clear framework for the transfer of property, refinancing of loans, and allocation of significant business and tax debts. The orders detail specific payment obligations, property transfers, and indemnities to ensure a final resolution of the financial disputes between the parties.
Orders
Orders of the court
1.
All previous Orders be discharged.
2.
Within 120 days of the date of these Orders- or earlier at the Applicant's election (provided that the Applicant gives the Respondent at least 42 days' advance notice of the revised settlement date) and contemporaneously:
(a) the Applicant pay to the Respondent the sum of $419,460.
(b) the Respondent do all such acts and things and sign all such documents as may be required to transfer to the Applicant at the Applicant's expense, all of her right, title and interest in the property situated at and known as C Street, Suburb D, in the State of Victoria, more particularly described in Certificate of Title Volume … Folio … (‘C Street, Suburb D property’);
(c) the Applicant do all things necessary and sign all documents necessary to refinance into his sole name the amount owing to Westpac Banking Corporation for loan number … in the parties' joint names and to cause the discharge of mortgage registration number … (‘C Street, Suburb D mortgage’);
(d) the Respondent do all such acts and things and sign all such documents as required to refinance the amount to Westpac Banking Corporation for loan number … in the parties' joint names and to cause the discharge of mortgage registration number … (‘A Street, Suburb B mortgage’);
(e) The Applicant at his expense do all things necessary and sign all documents necessary to cause the discharge of the caveat registered on his behalf over the property at A Street, Suburb B, in the State of Victoria.
3.
Forthwith the Respondent do all things and sign all documents necessary to authorise the Applicant to have sole control over the application to Council to amend the plans for the C Street, Suburb D property, planning permit … submitted 26 September 2018 (‘Council application’).
4.
From the date of the Orders, the Applicant retain (and the Respondent relinquish) his interest in the Company E Business Investment Trust and the company K Pty Ltd trading as Company K (‘Company K’) and indemnify the Respondent in relation to the third party debts owed by Company K, being:
(a) $713,432.26 to the Australian Taxation Office (‘ATO’);
(b) $3,019.50 to Company H Pty Ltd;
(c) $4,300 to Mr M;
(d) $6,427.81 to Company F Pty Ltd;
(e) $9,025.42 to Department of Agriculture and Water Resources;
Total: $736,205.19 (‘Third Party Debts’)
and, in the event that Company K goes into liquidation as a result of the Applicant's inability to meet the Third Party Debts or otherwise, the Applicant indemnify the Respondent for the Third Party Debts, on the basis that the Respondent, her agents or any party acting on her behalf is restrained from entering any proof of debt in any administration/liquidation for the benefit of the Respondent (directly or via any entity in which she has an interest), Company G, or for the benefit of any third party at her direction.
5.
By 8 June 2019 the Applicant pay and indemnify the Respondent with respect to the amount of $29,530.39 owed by Company G to the ATO with respect to penalties in relation to unpaid superannuation.
6.
Within 7 days of the date of the Orders, the Applicant and Respondent do all such things and sign all such documents necessary to cause Company G to pay, from the funds held in the Westminster Lawyers' trust account, the amount of $28,192 to the Applicant for the purposes of the Applicant applying his HSBC and Westpac Credit cards, and thereafter the Applicant do all such things and sign all documents necessary to transfer his shares in Company G to the Respondent, at the Respondent's expense.
7.
Company G pay and indemnify the Respondent with respect to any monies which are owed by Company G with respect to outstanding superannuation.
8.
In the event that Company G is liquidated and the liquidator seeks to recover the debt the Respondent alleges is owed to it by Company K, then the Respondent shall pay that amount on behalf of Company K and indemnify and keep indemnified Company K for any amount so sought by the liquidator.
9.
The Respondent whether by herself, her servants or agents, be restrained from causing Company G to seek to recover any debt said to be owed by Company K to Company G save that the Respondent shall be entitled to respond to:
(a) any request for information or enquiry made by the administrator or liquidator in relation to withdrawals of money from Company K’s bank accounts, or
(b) any claim made or proceeding issued by the administrator or liquidator of Company K in relation to withdrawals from Company K’s bank account, by raising:
(i) that either she or Company G were entitled to withdraw funds as creditors of Company K; and
(ii) the full circumstances of the withdrawals including that the Applicant and Respondent received $140,000 as part settlement in these proceedings from the funds withdrawn.
10.
The parties do all things necessary to deposit into the Company G account number … (‘Company G account’) all monies to which Company G is entitled, including but not limited to monies received by way of any legal settlements and proceeds of sale of stock and monies which are being held by the Respondent's solicitors from Company G and/or in the joint names of the Applicant and Respondent.
11.
Subject to the Respondent's compliance with her obligations pursuant to Order 6, the Respondent retain the assets of Company G to the exclusion of the Applicant, and the Respondent be at liberty to wind up Company G.
12.
In the event that the Respondent fails to comply with her obligations pursuant to Order 2 then:
(a) the parties forthwith do all such things necessary and sign all such documents necessary to cause the sale of the property at A Street, Suburb B, in the State of Victoria, more particularly described in Certificate of Title Volume … Folio … (‘the A Street, Suburb B property’), and to cause the proceeds of sale to be distributed as follows:
(i) first, to pay the usual costs, commissions and expenses of sale;
(ii) second, to pay the usual rates adjustments;
(iii) third, to pay the amount outstanding for loan number … in the parties' names and to cause the discharge of mortgage registration number …;
(iv) fourth, to pay the balance to the Respondent.
13.
For the purposes of the above Order, the Respondent is to forthwith do all things necessary and sign all documents necessary to appoint the Applicant as trustee in sale of the A Street, Suburb B property and the parties have liberty to apply to the Court with respect to the terms and conditions of sale of the A Street, Suburb B property.
14.
In the event that the Applicant fails to comply with his obligations pursuant to Order 2 then:
(a) the parties forthwith do all such things necessary and sign all such documents necessary to cause the sale of the C Street, Suburb D property and to cause the proceeds of sale to be distributed as follows:
(i) first, to pay the usual costs, commissions and expenses of sale;
(ii) second, to pay the usual rates adjustments;
(iii) third, to pay the amount outstanding in order to discharge the C Street, Suburb D Mortgage;
(iv) fourth, to pay the Respondent such amount as is required in order to reflect a 35% adjustment of the asset pool (as set out in Annexure 'A') amended to reflect the actual proceeds of sale of the C Street, Suburb D property; and
(v) fifth, to pay the balance to the Applicant.
15.
From the date of the Orders:
(a) the Applicant have the sole use and enjoyment of the C Street, Suburb D property including with respect to all rental income received from the C Street, Suburb D property;
(b) the Applicant pay and indemnify the Respondent with respect to all liabilities in relation to the C Street, Suburb D property including: loan repayments, land tax (if any), rates and utilities;
(c) the Respondent have the sole use and enjoyment of the A Street, Suburb B property including with respect to all rental income received from the A Street, Suburb B property;
(d) the Respondent pay and indemnify the Applicant with respect to all liabilities in relation to the A Street, Suburb B property including: loan repayments, land tax (if any), rates and utilities.
16.
Subject to these Orders, the Applicant retain, and the Respondent relinquish, all assets in his ownership, possession or control including but not limited to:
(a) his interest in the Company E Investment Trust;
(b) his interest in Company K including but not limited to any monies which may be payable to Company K by Company N (in liquidation);
(c) monies standing in any bank account in his name;
(d) his Super Fund NN superannuation entitlement;
(e) the dog ‘P’.
17.
Subject to these Orders, the Respondent retain (and the Applicant relinquish) assets in her ownership, possession or control including but not limited to:
(a) monies standing in any bank account in her name, including monies standing in her overseas bank accounts with Overseas Bank;
(b) her O Pension retirement entitlement;
(c) her Australian superannuation entitlements.
18.
The Respondent pay and indemnify the Applicant with respect to any monies owing to her parents, including the amount of $294,414 and any liabilities owing in relation to taxation liabilities in the United States of America.
19.
Subject to these Orders, the parties each indemnify the other with respect to any liability attaching to any asset they are to retain pursuant to these Orders and in relation to any liability in their respective names.
20.
The Respondent be and is hereby restrained from, either directly or indirectly through any third party, taking steps to negatively impact upon the Council application including but not limited to filing a complaint in relation to the Council application, including any complaints by way of application/s to the Victorian Civil and Administrative Tribunal.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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