Fagan & Fagan (No 2)
[2024] FedCFamC1F 791
•21 November 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Fagan & Fagan (No 2) [2024] FedCFamC1F 791
File number(s): MLC 1377 of 2022 Judgment of: CARTER J Date of judgment: 21 November 2024 Catchwords: FAMILY LAW – PROPERTY – Application in a Proceeding – Where the wife is seeking a part property distribution – Where the wife has previously received part property distributions – Where the husband opposes the wife’s application – Where the delay in judgment for the final hearing is substantially caused by the husband’s change of proposals at the ‘door of the court’ and his failure to adduce evidence – Where the husband has control of the vast majority of the asset pool – Where the wife has the primary care of four children and limited income – Where it is appropriate to exercise the power to order a further partial property distribution to the wife – orders made for further payment. Legislation: Family Law Act 1975 (Cth) s 79 Cases cited: Gabel v Yardley (2008) FLC 93-386
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466
Division: Division 1 First Instance Number of paragraphs: 20 Date of hearing: 12 November 2024 Place: Melbourne Counsel for the Applicant: Mr Sweeney Solicitor for the Applicant Kenna Teasdale Lawyers Counsel for the Respondent: Ms Fisken Solicitor for the Respondent Sayer Jones ORDERS
MLC 1377 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS FAGAN
Applicant
AND: MR FAGAN
Respondent
ORDER MADE BY:
CARTER J
DATE OF ORDER:
21 NOVEMBER 2024
THE COURT ORDERS THAT:
1.Within 60 days the husband pay to the ANZ bank the sum of $113,260 to comply with the default notice issued by the ANZ bank on 12 September 2024 to discharge the arrears owed in relation to the mortgage secured against the properties at B Street, Suburb C, Victoria and D Street, Suburb E, Victoria, with such payment to be characterised as a part property settlement to the wife.
2.The wife’s Application in a Proceeding filed 21 October 2024 be otherwise dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUSTICE CARTER:
In this matter, the final hearing in relation to the parties’ competing property applications commenced on 23 April 2024. At the conclusion of the hearing it became evident to me that I was unable to determine what orders would be just and equitable and otherwise appropriate in the absence of expert evidence regarding the effect on the corporate entities and the taxation consequences of any orders I made for a cash payment to be made to the wife.
Very briefly, at trial it was the wife’s position that the husband could arrange his financial affairs to make a payment to her – which she contended would be $6,788,401 – without causing the collapse of the corporate structure. Conversely the husband claimed the payment to the wife – which on his case would be $4,776,615 – would require the winding up of the entire corporate group, and accordingly the taxation consequences of doing so had to be taken into account. It was only effectively at the ‘door of the court’ that the husband asserted he would have to wind up the entire corporate group to make the necessary payment.
On 4 July 2024 I made orders requiring the parties to adduce evidence from a single expert to prepare a supplementary report as to whether a realisation of the group was necessary to effect the payment to the wife as proposed by each party.
Unfortunately the parties were unable to agree as to the letter of instruction and the matter returned before me on 8 August 2024.
The letter of instruction ultimately directed the expert to provide a report as to the maximum quantum of payment that could be made from the corporate structure without causing the realisation of the group; whether the realisation of the group was necessary to ensure the wife obtains her payment; and if the group was realised, the costs and tax consequences of doing so.
An addendum report was prepared on 22 August 2024.
The matter returned to Court again on 12 November 2024 in relation to the following matters:
(a)the wife’s Application in a Proceeding filed on 17 October 2024; and
(b)whether the matter could proceed to judgment (as contended by the wife) or whether there were further matters that needed to be put to the single expert (as contended by the husband).
I propose to determine only the wife’s Application in a Proceeding at this stage, as there is some urgency to the order she pressed for a further part property distribution to her. I will make orders and deliver reasons dealing with the issue of whether further questions need to be put to the single expert as promptly as possible.
The husband did not file a Response to the Application in a Proceeding. He filed an affidavit, as did the wife, both of which I have read and taken into consideration.
THE WIFE’S APPLICATION IN A PROCEEDING
The parties were able to resolve some of the issues in the wife’s application. Consent orders were made at court on 12 November 2024 regarding counselling for the parties’ oldest daughter. The consent orders made that day also provided for the father to attend upon the parenting co-ordinator on or before 19 November 2024, which he had previously resisted.
The only additional order sought in the Application in a Proceeding that was pressed by the wife was her further application for part property distribution. She sought that the husband pay $113,259.60 to the ANZ bank in response to a default notice that had been issued by the bank on 12 September 2024 regarding the mortgages secured against the property in which she resides at Suburb C and the husband’s property at Suburb E.
Pursuant to orders made on 24 April 2024 the husband was required to pay the wife a further $200,000 by way of part property payments in three separate tranches. The last payment of $100,000 was paid by him on 31 August 2024 in accordance with the orders. The monies were transferred from the wife’s solicitors’ trust account into the mortgage encumbering the Suburb C property. They were then withdrawn by the wife. The wife’s position was that she required the funds to meet the living expenses for herself and the children, and that if she was required to apply the whole of the monies towards the mortgage that would leave her and the children with insufficient funds to meet their needs pending a final resolution of the property dispute. The husband asserted he did not have the funds to meet the mortgage payments on the Suburb C property as well as his own, and that the wife should apply her earlier partial property distribution towards the mortgage.
Ordinarily, and preferably, the power under s 79 of the Family Law Act 1975 (Cth) should be exercised on a ‘once only’ basis. However, the power can also be exercised partially, or on an interim basis until it is exhausted (Gabel v Yardley (2008) FLC 93–386 at 82,958; Strahan & Strahan (Interim Property Orders) (2011) FLC 93–466 at [114] (“Strahan”). In determining a partial property application, I must consider first whether it is appropriate to exercise the power, and if so, how that power should be exercised (Strahan).
There have been a number of partial property distributions to the wife. As already set out, most recently on 24 April 2024 orders were made for the wife to receive a further $200,000 by way of part property settlement. The sum of $100,000 was paid to her on 31 August 2024.
It is the wife’s evidence that as of 26 August 2024, the ANZ bank advised her they would be unable to provide her with any further hardship support which she had previously enjoyed, and she would be required to recommence making payments to the mortgage encumbering the Suburb C property. She deposed that she has $95,319.50 remaining in her bank account, having spent the balance of the funds advanced by way of interim property distribution since April 2024 meeting living expenses for herself and the children, and meeting some costs of repairs and maintenance on her property.
The wife received the default notice on 12 September 2024. She says if she applies the funds left in her account to meet the required payment, she will be left without funds to support herself and the children other than her modest income and $200 per week per child paid by the husband by way of child support.
I am satisfied that it is in the interests of justice that a further part property distribution be made to the wife. On either party’s case, she will be entitled to a substantial cash payment. The delay in the matter being finalised and that substantial cash payment being made to the wife arises substantially out of the husband’s failure to properly prepare his case when the matter was listed for final hearing in April 2024. Had the husband adduced evidence at that time as to the effect, if any, on the corporate structure in order to make payment to the wife, and the taxation consequences of doing so, the matter would have proceeded to judgment and final orders made many months ago.
I also accept that in the event the wife is required to pay the balance of the funds she currently has to the ANZ bank, she would be left with very limited funds to meet her needs and those of the children pending final judgment.
I am satisfied that it is appropriate for an order to be made for the payment of monies by the husband to the wife in the amount as sought by the wife. There is no doubt in this matter that the wife will receive by way of overall property settlement a sum well and truly in excess of the partial property payments – including this further payment – advanced so far. Whilst the husband said he does not have the resources to make the payment, he remains in control of the vast majority of the parties’ assets.
The last part property distribution paid by the husband was funded by drawings from F Company. I will include the part payment to the wife as an asset in her “keep” when determining the property pool, and I will similarly include a further liability in the husband’s “keep” of $113,260. If the part property distribution is not funded by drawing from F Company it will no doubt be funded elsewhere from the pool and accordingly this needs to be reflected.
I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Carter Associate:
Dated: 21 November 2024
0