DELONG & ROUSE (No.2)

[2019] FCCA 2256

FEDERAL CIRCUIT COURT OF AUSTRALIA

DELONG & ROUSE (No.2) [2019] FCCA 2256

Catchwords:
FAMILY LAW – Whether the Court should adjourn the matter pursuant to section 90SM(5) – whether such an application was made – need to give certainty to the matter – matter not adjourned pursuant to s 90SM(5).

Legislation:

Family Law Act 1975 (Cth), s 90SM(5)

Cases cited:

Deputy Commissioner of Taxation v Malphus Pty Ltd (Admins Apptd) [2019] FCA 471

Applicant: MR DELONG

Respondent: MS ROUSE

File Number: MLC 4043 of 2017

Judgment of: Judge McNab

Hearing dates: 3 and 4 June 2019

Date of Last Submission: 4 June 2019

Delivered at: Melbourne

Delivered on: 4 June 2019

REPRESENTATION

Counsel for the Applicant: Ms Isaacson

Solicitors for the Applicant: Lander & Rogers

Respondent appearing in person

ORDERS

1. The Orders made in the Judgment delivered 3 June 2019 remain in full force and effect.

2. All extant applications otherwise be dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Delong & Rouse (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 4043 of 2017

MR DELONG

Applicant

AND

MS ROUSE

Respondent

REASONS FOR JUDGMENT

(DELIVERED EX-TEMPORE – REVISED FROM TRANSCRIPT)

Introduction

1. On 3 June 2019, the Court delivered a judgment that set out findings on the majority of the matters that the Court was required to determine. The Court ordered the parties to consider those reasons and draft orders for the division of property of the de facto relationship.

2. An outstanding issue involved whether orders would be made adjourning the proceedings pursuant to section 90SM(5) of the Family Law Act 1975 (Cth) (‘the Act’). An adjournment would allow the parties and the Court to see whether Malphus Pty Ltd (‘Malphus’) enters into a Deed of Company Arrangement (‘DOCA’), and if so, the effect this might have on the assets and liabilities of the parties.

3. Another question arose as to whether it was appropriate to make an order adjusting the payment made to the respondent should the liabilities of Malphus fall if, or when, Malphus enters into a DOCA.

4. The applicant urged that no order be made other than to calculate the assets and liabilities that have been found to exist at the date of trial.

5. The respondent was equivocal about the orders that she seeks. Her written submission of 3 June 2019 raised points that were seemingly in favour of an adjournment, or alternatively, for the Court to make orders so that a DOCA could be entered into by Malphus.

Consideration

1. A prerequisite to the Court making an order pursuant to section 90SM(5) of the Act is that a party must request that the Court makes such an order. The Court must then consider whether there is likely to be a significant change in the financial circumstances of the parties if a particular event was to occur.

2. It is not clear that either party has actually asked for the Court to make such an order. I make particular reference to [9] through [11] of the respondent’s submissions of 3 June 2019. The submissions that were made today by the respondent was that the best result for the parties would be for Malphus to enter into a DOCA as soon as possible.

3. The parties have run the case on the basis of particular assumptions and on particular bases. In particular, one significant assumption was that a planning approval could be obtained in relation to C Street, Suburb D on what was referred to as a best case scenario. That agreement was reached in order to try and get the matter on for hearing and so that the hearing was not further delayed. The parties entered into the litigation knowing that the Australian Tax Office (‘ATO’) were a pressing creditor of Malphus and that the ATO may make an application wind up Malphus for its unpaid tax debts.

4. I agree with the submissions of the applicant that the preferable course is to obtain some finality in this proceeding, otherwise the matter is likely to continue in an unfinished state for some considerable time.

5. The respondent has significant concerns resulting from a case in the Federal Court involving Malphus in which there was a recent judgment: Deputy Commissioner of Taxation v Malphus Pty Ltd (Admins Apptd) [2019] FCA 471. She is particularly concerned of what is noted at [17] of that judgement, where the Court recounts the applicant’s evidence that the respondent withdrew $500,000 from Malphus without authorisation in or around mid-October 2016. There is evidence that Mr TT, who is the administrator of Malphus, is continuing to investigate the withdrawal of the $500,000 from the company’s bank account and other voidable transactions.[1]

   [1] Deputy Commissioner of Taxation v Malphus Pty Ltd (Admins Apptd) [2019] FCA 471, [20].

6. These are matters outside the control of this Court. The Court is not in a position to simply defer a final decision indefinitely pending what might happen as a result of investigations by the administrator. Nor is the Court in the position to further defer making final orders in relation to what may happen in relation to Company H Pty Ltd (‘Company H Pty Ltd’), in the event Company H Pty Ltd is placed into liquidation.

7. The proposal that was put by the respondent’s proposed orders of 3 June 2019 was that the applicant place the amount of the ATO debt in the applicant’s solicitors’ trust account to be held on behalf of the parties. The respondent further proposed that:

   Upon a final determination of the amount due and payable by Malphus to the ATO by the Administrators (Mr TT and Mr UU as appointed by the Federal Court on 3 April 2019), that amount will be paid directly to the Australian Tax office (‘ATO’) by the Husband’s solicitors from the trust account monies or directly to the Administrations.[2]

   [2] Respondent’s proposed orders, page 2, order 2.

8. The respondent’s proposed order 3 stated:

   In the event that the payment by Malphus to the ATO on account of the GST debt is less than $739,205 (or an alternative amount set aside by this Honourable Court), the Husband’s solicitors will forthwith make further cash payments to the Applicant and Respondent equal to their respective percentage entitlements multiplied by the difference between the amount included in the pool for the ATO debt and the amount ultimately paid to the ATO.

9. The difficulty with the respondent’s proposal is that there is no apparent means for the applicant to fund the moneys owed to the ATO or to pay such an amount into a trust account prior to any agreement being reached. Furthermore, the mathematical calculation proposed by the respondent fails to take into account the costs of securing the DOCA, paying the amounts under the DOCA to Malphus’ creditors, and the legal, accounting and administrator fees associated with the DOCA. The proposal, therefore, appears to be markedly in favour of the respondent.

10. Furthermore, there is a lack of practicability about the proposed orders because it requires an ongoing relationship between the parties, albeit through solicitors. I do not believe the parties are capable of achieving that.

11. For those reasons, the Court is not minded to make the orders of the kind proposed by the respondent.

Conclusion

1. The Court will not adjourn the proceeding pursuant to section 90SM(5) of the Act due to the need to bring closure to this matter.

2. I have determined the asset pool based on the assets and liabilities of the entities and the parties as at the date of the trial. Certainty and finality are parts of the legislative regime and there is too much uncertainty attended with trying to predict what might happen in the future.

3. The Court has to do the best it can and the course it has adopted is the one which is most likely to lead to the resolution of the proceeding and avoid the need for ongoing litigation. The question of the just and equitable distribution of assets was determined by the judgment delivered 3 June 2019.

4. The Court will make orders along the lines of those proposed by the applicant, with the addition of an order requiring the applicant to do all things necessary to remove, at his expense, the caveat over the A Street, Suburb B property.

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Judge McNab

Date: 16 August 2019