Faigle & Wadell

[2021] FCCA 2177

FEDERAL CIRCUIT COURT OF AUSTRALIA

Faigle & Wadell [2021] FCCA 2177

File number(s):	BRC 1628 of 2020
Judgment of:	JUDGE JARRETT
Date of judgment:	24 August 2021
Catchwords:	FAMILY LAW– The Family Law Act and related legislation – property adjustment – interim orders – partial property settlement.
Cases cited:	Strahan & Strahan (Interim property orders) [2009] FamCAFC 166
Number of paragraphs:	19
Date of last submission/s:	18 June 2021
Date of hearing:	18 June 2021
Place:	Brisbane
Counsel for the Applicant:	Mr Coulsen
Solicitor for the Applicant:	DA Family Lawyers
Counsel for the Respondent:	Mr Barbayannis
Solicitor for the Respondent:	Simonidis Steel Lawyers

ORDERS

BRC 1628 of 2020

BETWEEN:

MS FAIGLE

Applicant

AND:

MR WADELL

Respondent

ORDER MADE BY:	JUDGE JARRETT
DATE OF ORDER:	24 AUGUST 2021 AMENDED 13 SEPTEMBER, 2021

THE COURT ORDERS THAT:

1.As and by way of partial property settlement, within seven (7) days of the date of these orders, the wife applicant shall prepare, and execute in favour of the husband respondent, a transfer of the whole of her right, title and interest in her shares in the company B Pty Ltd.

2.Contemporaneously with order 1 herein, the wife applicant shall prepare, and execute, all documents necessary to:

(a)Appoint the husband respondent as director and secretary of the company B Pty Ltd; and

(b)Resign as director and secretary of the company B Pty Ltd.

3.Contemporaneously with orders 1 and 2 herein, the wife applicant shall prepare, and execure execute, all documents necessary to:

(a)Appoint the husband respondent as the appointer of the C Family Trust; and

(b)Resign as appointer of the C Family Trust;

4.In the event the wife applicant fails to sign any documents necessary to give effect to orders 1, 2 and/or 3 herein, then pursuant to section 106A of the Family Law Act 1975, a Registrar of the Federal Circuit Court of Australia is appointed to sign any such required documents on behalf of the wife applicant.

5.That unless otherwise agreed between the parties in writing, the respondent, in his capacity of director of B Pty Ltd as Trustee for the D Trust, is restrained, and an injunction hereby issues restraining the husband respondent, by himself, his servants or agents from:

(a)Selling, transferring, assigning, encumbering, alienating or otherwise dealing with his shares;

(b)Issuing any further shares;

(c)Appointing and/or removing any director or directors;

(d)Making any loan or advance to any other person or other company or entity, or guaranteeing any loan or contractual advance to any other person or entity, other than in the usual course of business;

(e)Entering into any contract, agreement, instrument or other document in connection with the assets of the trust, other than in the usual course of business;

(f)Selling, transferring, encumbering, further encumbering, disposing of, gifting, or otherwise dealing in any way with the assets of the trust, other than in the usual course of the administration of the trust;

(g)Altering the appointer of the trust;

(h)Replacing the trustee of the trust;

(i)Amending the beneficiaries of the trust; and

(j)Altering the trust deed.

6.The parties do all acts and things necessary to cause the net sale proceeds from the sale of various firearms held by the Region E Gun Shop to be paid to the trust account of DA Family Lawyers on trust for both the husband and the wife applicant.

7.The parties do all acts and things and sign all documents necessary to sell the real property located at F Street, Suburb G (‘F Street, Suburb G’) with real estate agent H Agent with a list price as agreed and failing agreement as recommended by H Agent.

8.The respondent and applicant are to sign any contract for sale of the real property located at F Street, Suburb G (‘F Street, Suburb G’) for a purchase price of $1,500,000.00 or more presented by any real estate agent contracted to sell the property.

9.In the event that either the applicant or the respondent fail to sign a presented contract in accordance with order 8 above within twenty-four (24) hours of it being presented by the real estate agent contracted to sell the property F Street, Suburb G, then pursuant to section 106A of the Act, a Registrar of the Federal Circuit Court of Australia is appointed to sign the contract of sale for the real property F Street, Suburb G on behalf of the defaulting party.

10.The applicant respondent must file and serve any written submissions upon which he intends to rely regarding the issue of costs by 4.00pm on 7 September, 2021.

11.The respondent applicant must file and serve any written submissions upon which she intends to rely regarding the issue of costs by 4.00pm on 21 September, 2021.

12.The application is adjourned to 14 September, 2021 at 9:30am for directions.

Notation: These orders have been amended pursuant to Rule 10.13(1)(g) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) to show the full orders made by the court and to reflect the parties as recorded on the Initiating Application filed 13 February, 2020 rather than as they stand in regards to the Amended Application in a Case filed 28 May, 2021.

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

IT IS NOTED that publication of this judgment under the pseudonym Faigle & Wadell is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

JUDGE JARRETT:

1. This is an application in a case, and a cross-application in response to that application in a case by two parties to property adjustment proceedings that are presently pending in the court.  By his application, the respondent seeks a range of orders.  Look, most significant of which is directed to the control of a particular company, which is a trustee of a particular trust through which the respondent, according to the applicant’s evidence, has ordinarily earned his income as a professional.

2. Some of the orders sought by the respondent in his amended application in a case have fallen by the wayside, and I need not concern myself with them.  So to, some of the orders sought by the applicant in her response, her amended response to the application in a case have fallen by the wayside.  Some are agreed.  The evidence of the parties reveals that centrally to the application before me is a company called B Pty Ltd.  That company is the trustee, as best as I can make out on the evidence, two trusts, but more significantly, for present purposes, it is the trustee of the C Family Trust.  The wife controls B Pty Ltd.

3. She is the director and secretary of that company, and she has shares in the company.  The C Family Trust has as its trustee B Pty Ltd.  The appointor of the trust is the wife.  And it has interests in the company that conducts a concern of which, in very broad and general terms, the husband is a partner, together with two others.  I say in very broad terms, because the business of the company is conducted through corporate and vehicles who are – who it seems are trustees for – and which are trustees for trusts associated with each of the three, and I have described them loosely as partners.  That is not intended to be a legal description; but simply a handy way of describing them.

4. The difficulty has arisen because there were some orders made last year that required the wife, via the trust and the trustee company to distribute to the husband certain distributions made from the company that conducts the concern.  The evidence is uncontroversial in that the husband does not receive a wage or a salary from the company, but rather, he receives distributions by way of income.  That has been the case for a considerable period of time.  The wife, through the trustee company and the trust, controls or controlled the distributions such that last year, it was necessary to make an order that required the wife to pay those distributions, or at least part of them, to the husband.

5. She retained a portion of them herself.  She did not comply with that order, in some respects, and it was necessary for the husband to bring an enforcement application, but that was by and large resolved, and the distribution of funds from the company and the trust occurred.  However, more recently, the wife has commenced proceedings as a – through the trust and the trustee company as a shareholder in the company that conducts the concern, for the winding up of that concern on the just and equitable ground.

6. She says that the other shareholders, or perhaps directors of that company are conducting the business of the company in such a way as to prejudice the trust.  She has commenced those proceedings in the Family Court of Australia, and one of the orders that she seeks is a transfer of these proceedings to that court, so that these proceedings might be joined with the proceedings she has commenced there, and the matters can be dealt with all at once.  The purpose of the husband’s application is to wrest control of B Pty Ltd and the trust from the wife, so that he can bring an end to the proceedings that are pending in the Family Court.

7. He says in his evidence that he will discontinue those proceedings in the event that he obtains the orders he wants made in this application.  He says that the actions of the wife are mischievous and have caused difficulties between he and the others at the firm.  They have been dragged into litigation that they really have no business being a part of, and it is all difficult, prejudicial and inconvenient.  One can understand that that might indeed be so.  The husband seeks the orders that he seeks as a partial property settlement.  There are many cases that inform the court as to the principles that might apply on such an application.

8. It is necessary to identify a source of power for the making of the orders.  The husband pins his colours to the mast in that respect by suggesting that it is a partial property settlement.  The relevant principles in that respect are set out in Strahan & Strahan (Interim property orders) [2009] FamCACF 166.  They are well known, and I will not recount them.  Ordinarily, one of the significant matters to be taken into account is whether, if the orders for partial property settlement are made, but at a trial the court reaches a conclusion which means those orders ought to be undone, they can in fact be undone.  Or perhaps more plainly, if an order for partial property settlement seeks the division of assets which is well within that, which is within the possible range of outcomes in the proceedings, then the court will be more disposed to making such an order, although in such a case, such an order does not necessarily follow.

9. Here, the husband points to the relief sought by each of the parties in their principal documents.  The wife’s principal orders are set out in her initiating application filed on 13 February, 2020.  The husband’s in his response to that document, filed on 24 March, 2020.  In the wife’s document, she sets out that as part of the parties property adjustment, the husband will in fact receive control to shares and other things that go with that, of B Pty Ltd, together with the trusts in respect of which that company is a trustee.

10. She seeks to retain the parties’ former matrimonial home, and otherwise seeks an adjustment of the parties’ property, with her receiving 60 per cent of the net value of that property.  The parties’ interests in property are relatively complex.  They have a number of interests through trusts and the like, which in turn have interests in various parcels of real property.  The most recent balance sheet is set out in the wife’s affidavit filed on 16 June this year.  In that balance sheet, which is part of the wife’s own evidence, she values the parties’ net assets at about $3.5 million, nearly $3.6 million, which includes superannuation.

11. Of that, she ascribes a value to the C Family Trust of $160,021.  B Pty Ltd does not have a value, it being a trustee company.  At the commencement of the hearing before me, there was a little bit of agitation about – there was a section of some evidence – the ….. the trust to which I have just referred, and the companies have been subject of a valuation by an accountant, and there was an objection for the receipt of evidence from that accountant as to the value, the wife took exception to the value.  But having had the opportunity to reflect on all of the material that the parties rely upon, it is difficult to understand the wife’s stance about that, given that she, on her evidence, includes the relevant assets in her balance sheet at the amount that I have just referred to.

12. That is, an amount consistent with what is in the accountant’s report.  In any event, it does not matter what the accountant says, I am going to treat the wife’s statement in the balance sheet about the value of those assets as a statement against her own interest, and for the purposes of this application only, I am satisfied that it has a value of at least $160,000.  As the submissions that have been made to me point out, that is a very small part of this property pool.  In his response to the proceedings, generally, the husband seeks order which are consistent with those sought by the wife, insofar as B Pty Ltd is concerned, and the C Family Trust is concerned.

13. He seeks orders that he would retain those ….. and that makes perfect sense, of course, because they are the vehicles, as I have indicated, through which he derives his income from J Pty Ltd.  So the orders that the respondent is seeking now are orders which are consistent with those sought by the applicant in the principal application, and sought by him in the principal application.  They represent, in terms of value, a small portion of the property pool that is available for division between the parties, and it is difficult to identify any prejudice whatsoever if those orders were made now.

14. If they were made now, they could be undone, because what is being asked to – what the court is being asked to order are transfers of shares and the like, and that, of course, can be undone by reciprocal transfers.  So the conclusion that I have come to is that I ought to make the orders that the husband seeks.  That would relieve both of these parties of a great deal of pressure in terms of the proceedings that are presently pending in the Full – in the Family Court concerning the winding up of the company.  It would relieve the stress associated with that on the other partners of the business, and their respective interests.

15. And it seems that there is no good reason not to make them.  The wife complains that the husband receives the dividend or the distributions from the business, and apart from the amount that she has received deposed to in her affidavit of 10 June, she says the husband has received the lion’s share of those distributions, and he has used them for his own purposes.  She set down in her material how he has enjoyed holidays and she has not.  Those things will have their place, of course, in the argument about the parties’ contributions, but they do not have any place in the argument at the moment.

16. They are matters that can be taken into account when the court comes to assess the parties’ contributions to the acquisition, conservation and improvement of their property.  It might be the case that the husband receives more by way of distribution than the wife from the company, but as she deposes, it is his source of income, and it is not unusual at all in cases of this nature for there to be – that is, property adjustment cases – for one party to have a greater income than the other.

17. So for all of those reasons, in terms of the orders sought by the applicant in his amended application in a case filed on 28 May 2021, I will make orders numbered 1, 2, 3, 4.  The husband offers to be done by certain injunctions set out in paragraph 5, and I will make that order as well.  Order 6 is unnecessary, because that is an order in the alternative.  And as I understood the argument before me, orders 7, 8, 9 and 10 have fallen away.  In terms of the response, amended response to the application, I was informed during the course of argument that orders 4, 6 and 9 are agreed.  It seemed to me that I should also make order 10 as a consequential order as a result of making order 9.

18. But as to the other orders sought by the applicant, I decline to make any of them.  Some of them are not pressed, but to the extent that the wife presses her application for orders in paragraphs 13 and 14 and 15 with consequential changes imposing those obligations on the husband as being the person in control of the trust and the receipt of dividends, I decline to make those orders.  As I have indicated already, the receipt of funds and the use of them will be the subject of, no doubt, evidence and the assessment of the court when it makes its contribution-based assessments in the fullness of time.

19. So for all of those reasons, the amended application in a case in all other respects will be dismissed.

I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Jarrett delivered on 24 August, 2021.

Associate: 

Dated:       20 October 2021