Dinunca and Rhodes and Ors

[2012] FamCA 502

FAMILY COURT OF AUSTRALIA

DINUNCA & RHODES AND ORS [2012] FamCA 502

FAMILY LAW – PROPERTY - Settlement where husband bankrupt and dispute as to entitlement to superannuation

Family Law Act 1975 (Cth)

APPLICANT: Ms Dinunca

FIRST RESPONDENT: Mr W Rhodes

SECOND RESPONDENT: Ms L Rhodes

THIRD RESPONDENT: Mr Johnson

FILE NUMBER: MLC 10015 of 2009

DATE DELIVERED: 15 May 2012

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 15 May 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Mort

SOLICITOR FOR THE APPLICANT: Ryan Carlisle Thomas

FIRST RESPONDENT: In person

COUNSEL FOR THE THIRD

RESPONDENT:

Mr Apelbaum

SOLICITOR FOR THE THIRD

RESPONDENT:

Stynes Dixon Lawyers

Orders

IT IS ORDERED BY CONSENT

1. That within 7 days of the date of this order, the proceeds of sale of the C Hotel held in trust on behalf of the parties by Ryan Carlisle Thomas be divided:

   (a)$55,000 to the third respondent; and

   (b)the balance then remaining, to the applicant.

2. That the third respondent forthwith transfer all of his interest in the hotel property No 1 (being the trust which owns the B Hotel) to the applicant.

3. That contemporaneously with paragraph 2 hereof, the third respondent transfer all of his interest in the following trust to the applicant:

   (a)The E Trust No 1;

   (b)The E Trust No 2;

   (c)The M Hotel Trust;

   (d)D Trust;

   (e)The B Hotel Trust.

4. That the third respondent do all acts and things necessary and sign all documents to effect a transfer at the expense of the applicant, any shareholdings which form part of the bankrupt estate (if any).

5. That the second respondent be solely entitled to the exclusion of all other parties, any property including choses in action in her possession as at the date of these orders.

6. That any joint tenancy involving the second respondent in any real or personal property is expressly severed.

7. That the second respondent retain the benefit of any life insurance policies of which she is the beneficiary.

8. That all extant applications involving the second respondent be dismissed.

9. That unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or subsequent orders:

   (a)    each party be solely entitled to the exclusion of the other to all other superannuation and other property (including choses in action) owned by or in the possession of such party as at the date of these orders (the furniture, personal possessions and like chattels in the property has already been divided in specie between the parties);

   (b)    insurances policies are to remain the sole property of the owner named therein;

   (c)    each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders;

   (d)    any joint tenancy of the parties in any real or personal estate is expressly severed.

10. That all applications as between all parties are otherwise dismissed.

IT IS CERTIFIED:

1. That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.

2. Nothing in these orders affects the first respondent’s obligations pursuant to the Bankruptcy Act 1966 (Cth).

3. That the minutes of proposed orders marked Exhibit “A” and “B” are to remain upon the Court file.

4. That the reasons for judgment this day be transcribed and be made available to the parties.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 10015 of 2009

Ms Dinunca

Applicant

And

Mr W Rhodes

First Respondent

Mr L Rhodes

Second Respondent

Mr Johnson

Third Respondent

REASONS FOR JUDGMENT

1. Today is the mention day in this matter.  It has a chequered history and, ultimately, was to have been heard as a trial but the matter was taken out of the list by virtue of the fact that discussions were going on, which have now culminated in what might be loosely described as a fragile agreement.  It is a case involving Ms Dinunca as the applicant and there are three respondents.  The first respondent is Mr W Rhodes, the second respondent is Ms L Rhodes.  The Rhodes were married.  The third respondent is Mr Johnson who is the trustee of Mr W Rhodes’ bankrupt estate.

2. As long ago as June 2011, the second respondent, Ms L Rhodes, settled her issues in the proceedings and all parties signed a minute, which has been sitting on the file for exactly a year.  It is clear under that minute that Ms L Rhodes is, effectively, keeping whatever assets she has and I recall looking at the file at the time and being satisfied that I was comfortable to say that that was a fair outcome, having regard to all of the circumstances that were then known.  It is appropriate that those now be made into final orders.

3. The second part of the case is a lot more complicated.  The first respondent, Mr W Rhodes, and the third respondent, Mr Johnson, have only just reached a fragile agreement today along with the applicant Ms Dinunca.  The problem is that Mr W Rhodes’ argument is that his superannuation fund, which is a self-managed fund, has as its major asset, loans owed to it by a company called N Proprietary Limited.  N Proprietary Limited is, effectively, the trustee of a unit trust and the units are being divided between the trustee in bankruptcy and Ms Dinunca.

4. Under the agreement between Ms Dinunca and the trustee in bankruptcy, 20 per cent of the value of those units will go across to the bankrupt’s estate and the balance will be retained by Ms Dinunca.  The cash in the superannuation fund comes from the sale of the property and working its way through the corporate entity and then the unit trust, the figures work out about 20 per cent to the trustee and 80 per cent to the applicant.  That is all predicated, however, on the basis that the trustee and Ms Dinunca dispute a claim by Mr W Rhodes that his superannuation fund is owed money.  Mr W Rhodes, through his accountant, filed tax returns last year for the year ended 30 June 2010.  Those returns show a balance sheet which reflects an intercompany loan but after the payment of creditors, including tax, there is a balance in the member’s account, which is Mr W Rhodes only, of about $160,000.

5. Under the proposed orders today, the only other issue relates to the superannuation entitlement of Mr W Rhodes.  The order that was proposed and is now to be made is that Mr W Rhodes, effectively, gets his superannuation.  It is at that point that the parties’ views diverge markedly. 

6. Mr W Rhodes acknowledges that the balance of his member account does not reflect the reality.  He acknowledges that if he purchased N Proprietary Limited, he would not get $160,000 in his member account.  From Ms Dinunca and the trustee in bankruptcy’s point of view, it is worse than that.  Mr W Rhodes will get nothing because the reality is, they say, that the loan between the self-managed superannuation fund and N Proprietary Limited is a sham. 

7. The compromise reached today is that the trustee in bankruptcy and Ms Dinunca acknowledge that if in the future, when Mr W Rhodes is no longer bankrupt, action is taken by the trustee of the superannuation fund to try and recover its money, the res judicata principle will not be raised.  That is reflected in the notation to the orders.  It is important to note that nothing can realistically be done about that problem at the moment because as Mr W Rhodes is a bankrupt, there is no current trustee of the fund and this case has been adjourned a number of times to try and rectify that problem.  Doing the best he can today, Mr W Rhodes says that he hopes that in 18 months time when he is out of bankruptcy, something might occur which would enable him to take the action he considers should be taken to recover the money for his superannuation fund.  How and what might then occur remains to be seen.  It may be, at that time, that N Proprietary Limited no longer exists or that it has no assets or alternatively, that it does exist and has assets but it defends any claim that Mr W Rhodes’ superannuation trustee brings.

8. I am left with the dilemma as to what it is that Mr W Rhodes is receiving under the orders.  Ms Dinunca and the bankruptcy trustee say Mr W Rhodes is getting nothing other than perhaps the right to sue.  That may or might not be worth anything but the reality is that there is little more that Mr W Rhodes can argue about because any money that he might otherwise receive would belong to the bankrupt’s estate, in any event.  Mr W Rhodes’ position is that he will not be getting $160,000 but, in effect, what he does have is a right to sue if he can establish that the fund is worth more.

9. The only conclusion I can come to and, it is the only logical way to resolve what is otherwise a problem, that the orders are just and equitable to all parties.  There is little dispute that an enormous amount of money has been spent on legal fees, which far outweigh the benefit that the parties would receive but my function is only to make orders which are just and equitable in the circumstances.  It seems to me this is the fairest way out for everybody, having regard to all of the circumstances.

I certify that the preceding nine (9) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 15 May 2012.

Associate: 

Date:  4 July 2012