Filby & Northcott (No 2)
[2022] FedCFamC1F 912
Federal Circuit and Family Court of Australia
(DIVISION 1)
Filby & Northcott (No 2) [2022] FedCFamC1F 912
File number(s): TVC 909 of 2016 Judgment of: BAUMANN J Date of judgment: 21 November 2022 Catchwords: FAMILY LAW – PROPERTY – Form of order consistent with Reasons previously delivered which achieves justice and equity to both parties Legislation: Family Law Act 1975 (Cth) Cases cited: Filby & Northcott [2022] FedCFamC1F 529
Swaney & Ward (1988) FLC 91-928
Division: Division 1 First Instance Number of paragraphs: 10 Date of last submission/s: 14 September 2022 Date of hearing: In chambers on the papers Place: Brisbane Counsel for the Applicant: Mr Fellows Solicitor for the Applicant: J Hamilton & Associates Solicitor for the Respondent: Campbell & Co ORDERS
TVC 909 of 2016 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR FILBY
Applicant
AND: MS NORTHCOTT
Respondent
order made by:
BAUMANN J
DATE OF ORDER:
21 NOVEMBER 2022
THE COURT ORDERS:
1.That all previous property Orders be discharged save for that part of any order which reserves the costs of either party.
2.That this Order authorises the husband to complete and lodge all tax returns for each of the entities referred to in Order 12.
3.That the dates for compliance with the terms of this Order shall be:
(a)prior to that date which is thirty (30) days from the date of this Order (which if falling on a weekend shall be the Monday immediately following that weekend) the husband shall cause to be prepared all documents necessary to give effect to these Orders as referred to Orders 3(a) and (b) below, and submit them to the solicitors for the wife and thereafter prior to or no later than that date which is forty (40) days from the date of this Order (which, if falling on a weekend shall be the Monday immediately following that weekend) the husband and the wife shall execute and return to the solicitors for the husband all documents that each of them must execute to give effect to this Order including in particular:
(i)the husband’s obligations under Orders 4, 13 and 14; and
(ii)the wife’s obligations under Orders 12, 15 and 16.
(b)the documents that are executed by the husband and wife and returned to the solicitors for the husband shall be held in escrow by that firm and not released to the husband until the settlement date contemporaneously with the payment of the settlement monies;
(c)within thirty (30) days of the date of this Order or such further time as required by XX Bank, the husband and the wife shall do all such acts and sign all such documents as required by XX Bank sons to facilitate the transfers and releases as provided for in Order 8;
(d)provided that the husband and wife have attended to and complied with their obligations under Order 3(a) (b) and (c), then the settlement date will be the date which is ninety (90) days from the date of this Order (which, if falling on a weekend shall be the Monday immediately following that weekend) the husband shall pay to the trust account of Campbell & Co. Solicitors, on behalf of the wife $762,150.
4.That in accordance with s 90XT(1)(b) of the Family Law Act 1975 (Cth) (“the Act”) whenever a splittable payment within the meaning of s 90XE of the Act becomes payable in respect of the interest of Mr Filby in BR Super Fund (“the Fund”), then Ms Northcott is entitled to be paid by the trustee of the Fund in accordance with Part 6 of the Family Law (Superannuation) Regulations, 100% of the Fund and there is a corresponding reduction in the entitlement that Mr Filby would have had but for these Orders.
5.That the service of this Order (“service date”) on the trustees shall be deemed to have occurred on the date of these Orders and the Court notes that this will enliven the operating standards of the Superannuation Industry (Supervision) Regulations 2001.
6.That this Order binds the trustees of the Fund.
7.That immediately following the superannuation split in favour of the wife referred to in Order 4 of these Orders. the husband shall sign all documents and do all acts necessary to:
(a)resign as a member of BR Super Fund: and
(b)resign from any offices in BR Super Fund, including from his position as a trustee of BR Super Fund.
8.That within ninety (90) days of the date of this Order, the husband shall do all things and sign all documents to cause the property at AJ Street, AG Town, Queensland (being Lot … Registered Plan …) to be transferred to the wife free of mortgage encumbrance.
9.That the wife shall retain the following:
(a)The property situated at AA Street, Town BB in the State of Queensland (“the Town BB property”), together with all loans and mortgages secured by that property;
(b)Furniture and contents in her possession;
(c)Monies standing to her credit in bank accounts;
(d)Her superannuation entitlements;
(e)Her interest in CF Company; BU Company, BV Pty Ltd and BW Pty Ltd and all liabilities of these entities;
(f)The interim property payment of $150,000.00 paid 9 February 2021; and
(g)The interim property payment of $12,000.00 paid 20 November 2020.
10.That within thirty (30) days of the date of this Order, the husband undertake all such necessary acts and sign all such necessary documents to transfer from V1 Pty Ltd to the wife the Motor Vehicle 2.
11.That save as otherwise provided for in these Orders, the wife shall remain responsible for any debts in her name.
12.That the wife shall transfer/assign to the husband all her right, title and interest, including any interest as partner and or beneficiary and/or shareholder in the following entities (referred to as the Filby entities) and she shall resign from any position she holds in those entities not limited to but to include Trustee, Secretary, Appointor, Director including Director of any Trustee company and/or relinquish any right, title, interest and/or claim that she may have in the following properties or financial resources:
(a)J Partnership;
(b)J Family Trust;
(c)K Trust;
(d)L Pty Ltd;
(e)P Trust;
(f)O Family Trust;
(g)M Family Trust;
(h)S Trust;
(i)BM Trust;
(j)T Trust;
(k)U Trust;
(l)V Pty Ltd;
(m)Z Family Trust & T Trust Partnership;
(n)G Unit Trust; and
(o)Filby Family Company.
13.That the husband shall be responsible for the debts owing to XX Bank by the husband and wife in respect of the entities referred to in Order 12 and he shall case the wife to be released from those debts (with the exception of any XX Bank debt which is secured over the Town BB property).
14.That subject to the wife’s compliance with these Orders, the husband shall be responsible for and indemnify the wife in respect of any other debts and liabilities of the Filby entities save for the circumstances provided for and referred to in Order 18.
15.That the wife resign from any position she holds in the Filby entities, including positions she holds in the Trustee companies of any the Filby entities.
16.That the husband shall take such steps as are necessary to register V Pty Ltd and DE Pty Ltd with ASIC and the wife shall, as part of her obligations under Order 12 consent to that process occurring and surrender to the husband her directorship of those entities.
17.That the husband shall indemnify the wife in respect of any taxation liabilities of V Pty Ltd.
18.That in the event the National Australia Bank lawfully pursues either or both parties in respect of liabilities owing by them personally. or as guarantors or as Trustees in respect of debts alleged to be owed by them in respect of loans for:
(a)Company Vehicle 1 and attachments previously owned by V Pty Ltd as Trustee for the K Trust;
(b)Company Vehicle 2 and attachments previously owned by V Pty Ltd;
(c)CN Street, CP Town previously owned by the S Trust;
(d)NN Street, PP Town previously owned by the P Trust,
the parties shall be jointly responsible for those liabilities.
19.That if either patty refuses or neglects to sign (within seven (7) days of a request to do so) any documents to give effect to these Orders, then pursuant to the provisions of the Act:
(a)the Registrar of this Court is hereby appointed pursuant to s 106A of the Act to execute all such deeds, instruments or documents in the name of the defaulting party and to do all acts and things necessary to give validity and operation to these Orders; and
(b)the affidavit of the solicitor for the party seeking to five effect to these Orders shall be sufficient proof of the default of the other party necessary to give effect to this Order.
20.That for the purposes of giving effect to these Orders herein, both parties shall be at liberty to provide a copy of these Orders to their financier, accountant and government departments.
21.That this Order is binding on the parties’ heirs, executors and assigns respectively.
22.That by way of enforcement of the Orders dated 9 February 2017, the husband pay the wife the sum of $49,150 within thirty (30) days of the date of this Order.
23.That each party have liberty to apply to the Court upon the giving of seven (7) days· notice each to the other in relation to the carrying out of the terms of these Orders or enforcement of these Orders.
Costs certificates
24.That the Court grants to the Applicant husband a costs certificate pursuant to s 10(2) of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise payment under that Act to the Applicant husband in respect of such part as the Attorney-General considers appropriate of any costs incurred by her in relation to the aborted proceedings.
25.That the Court grants to the Respondent wife a costs certificate pursuant to s 10(2) of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise payment under that Act to the Respondent wife in respect of such part as the Attorney-General considers appropriate of any costs incurred by her in relation to the aborted proceedings.
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).
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 by this Court under the pseudonym Filby & Northcott has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BAUMANN J:
On 27 July 2022, the Court published Reasons in this mater (see Filby & Northcott [2022] FedCFamC1F 529) and at [131]–[140] of those Reasons I set out the parameters for what, subject to the final orders being made, would achieve justice and equity to both parties.
The parties were directed to try and negotiate the “form of order” consistent with the extensive Reasons delivered, with an obligation, if unable to agree on the form of orders, they file their minute of order by 17 August 2022.
What has followed since the delivery of the Reasons and these directions is that:
(a)by letter dated 4 August 2022 from the solicitors for the husband to the solicitors for the wife, a draft of orders was produced by the husband with, in effect, an explanation for those orders – including a contention of a small mathematical error;
(b)on 17 August 2022, the wife produced her minute of order and on 29 August 2022, a further email was sent as an “aide memoire” relating to the effect of orders sought
(c)on 30 August 2022, further oral submissions were received from Mr Fellows of Counsel for the husband and the wife’s solicitor Ms Campbell;
(d)in circumstances where Counsel for the husband contended there has not been sufficient time to make a considered response to the “aide memoire” sent in the early evening of 29 August 2022, a further written response was filed by the husband on 7 September 2022. This response also related to a further written submission filed by the wife dated 2 September 2022 (which I have also considered);
(e)the wife felt it was necessary to make a further submission on 9 September 2022 explaining that she “did not wish to enter into any further dialogue but were instructed to correct and respond to the Applicant’s submissions filed yesterday”; and
(f)on 14 September 2022, Counsel for the husband filed a final submission titled “re-joinder to the submission on behalf of the Respondent filed 9th September2022” noting that “there was no provision made by [y]our Honour for the parties to engage in continual submissions but a response is required.”
Thankfully, that seemed to exhaust the parties’ need to make submissions as to the form of order. I have considered the submissions and say that:
(a)I accept the husband’s submission that his form of order, as a template, is “neat, simple, and maximises the amount of cash that can be made available to the wife”, subject to the discussion to follow in respect of the AE Street property;
(b)I do not accept that at paragraph 132 of the Reasons a mathematical error occurs. There was an error in Appendix Three. Appendix Three should have revealed the nett value of the Town BB property at $442,000, not $422,000. This then means that the nett pool one interests amount to $2,078,829. 65% of the pool one interests as identified at Appendix Three ($2,078,829) is as the Judgment indicates, $1,351,239. It is consistent with longstanding authority that a trial judge may amend reasons at any time prior to the issue of final orders (Swaney & Ward (1988) FLC 91-928);
(c)although the wife contends that, as her form of order indicates at proposed orders 1 and 2, the Court should appoint a trustee for sale “if required”, such an order at this time is not necessary;
(d)I accept that if the husband is not able to work through the required many complexities associated in this case to enable true separation of interests (a statutory focus of s 81 of the Family Law Act 1975 (Cth)), where a number of trusts and corporations are involved, then not only is there a risk the timetable which the orders I now pronounce set out could not be achieved, but every condition that current secured creditors like banks impose, could also create issues. Mr Fellows for the husband submits that the husband will be able to meet the timetable and raise the funds required by the orders;
(e)I accept that the wife’s case, reflected in the tenor of her submissions, is that she seeks more than merely cash – she seeks to retain some entities (perhaps because she sees greater value in them than the Court has attributed) and property. Again, considering the litigation history and the continuing capacity to enter into costly conflicts (of which the submissions about the form of order is an example), a neat and effective order is what the Court says will help achieve justice and equity;
(f)despite the husband’s submissions that the interest in the AE Street property was derived from his inheritance, I see no reason to depart from my conclusion that I should accede to the wife’s agitated position at the hearing, for the AE Street property to vest in the wife. I accept the AE Street property is in one of the parties’ trusts, but am not satisfied that makes its transfer from the trust to the wife impossible. I will order that the property shall vest in the wife, as was her case, in the part, at the trial. It is not possible on the evidence to assess what, if any, tax issues, arise from such a transfer, which could have been the subject of evidence during the trial but was not;
(g)a dispute on the submissions arises as to the deregistered entities V Pty Ltd (in particular) and also DE Pty Ltd. By adopting the valuation of the value to the J Family Trust of $398,360 attributed by the wife’s expert Mr C (at paragraph 65), it did not become necessary to try, as the wife now seeks to do, to separate various specific items or machinery in the deregistered entity. Again, in an endeavour to achieve finality, I have adopted the husband’s form of order at 8.5 and 8.6;
(h)although the wife says she wanted to retain some property, as her aide memoire sets out, I regard the alteration of interests as broadly explained at paragraph 133 to the wife as more appropriate. In this respect, I accept that in providing, by these orders, the wife with less of the current property interests in trusts and the like, she may feel that growth in value will be unfairly a positive outcome only achieved by the husband – and to her detriment. However, Courts are bound to making findings of values on the evidence at the time of trial and, in the absence of leave to re-open (which has not occurred in this case), speculating about how values may have changed is unhelpful. I also accept that it is the husband who not only must attend to the numerous documents, preparation and minutes of entities at his cost, but also must accept (as he does) some consequential regulatory and taxation implications. The wife, on the orders, will have the benefit of suitable indemnities;
(i)the wife’s proposed order 10 relating to cattle was not ultimately, and sensibly, pressed by the wife. Some sort of “retrospective” accounting relating to sale of cattle over the last 12 months (presumably whilst the judgment was reserved) was not appropriate. The reasons (at [78]–[85]) explained, on the evidence, my findings about cattle – a matter of significant controversy;
(j)the wife at proposed order 8 seeks an order for the husband to “forthwith lodge all tax returns for all entities and provide to the wife… copies of all tax returns and assessments”. Where the husband is essentially providing the wife suitable indemnities and where he, as the sole or remaining director, has statutory obligations under income tax laws, I see no reason for order 8. I muse whether this is merely an attempt for the wife to compel the husband to keep her informed of other tax strategies or asset management, post orders being made. That would not be appropriate;
(k)I can see no reason why the sum found to be payable by the husband to the wife, by way of enforcement of the Order made by a Court on 9 February 2017, of $49,150 cannot be paid within 30 days. Frankly, if the husband, who I found has not complied with the Order for spouse maintenance, cannot raise or access a mere $49,510 within 30 days (which is before Christmas) doubts as to his capacity to raise the significantly larger sum payable, arise. The wife should not be required to wait the 90 days that I intend to allow the husband to reorganise his financial arrangements so as to pay the settlement sum on the property adjustment orders. I have no objection if the sum held by the husband’s solicitors in trust of $3,232.62 are immediately paid to the wife towards the husband’s spouse maintenance liability of $49,150 and no order is required for that to occur;
(l)in my assessment, if the wife now says the mortgage liability to XX Bank in respect of her Town BB property has increased, that is a matter for her and reflects both her capacity (perhaps) but more importantly her decisions about how she has managed that liability. It would be no more just and equitable to allow the husband to benefit from payments made by the wife that may have reduced the debt below $148,800, then to allow the wife to merely, and perhaps in a calculated endeavour, allow the liability to increase in the hope the husband will meet the liability. I rely upon my findings at [66] of the Reasons in this respect;
(m)at proposed order 14, the husband proposes the issue of costs certificates arising from the history of this matter, where a judge of the then Federal Circuit Court of Australia, in effect, caused proceedings to be re-heard It is appropriate for that order to be made; and
(n)at proposed order 15, the husband seeks to have $250,000 of the funds he is required to pay the wife held in the trust account of his solicitors “in the event the husband files an application for costs”. In my view, both parties are entitled to the benefit of the orders now pronounced. If an application for costs, as required under the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) is made, then the Court can be asked to restrain funds that would be payable. However, that discretion (pending determination of any costs application), can only be properly exercised when the Court has a properly articulated and quantified application for costs. The same principles in effect might be applied if a party wished to stay the operation of the orders or part of them, pending an appeal, if lodged. For those reasons, I do not make proposed order 15 as contended for by the husband.
To the extent that other issues have been raised in the wife’s submissions, it is not necessary to set out a view in respect of every issue. In the end, based on the findings that are now made, and which build on the extensive considered Reasons published 27 July 2022, I find the orders which are set out at the commencement of these Reasons achieve justice and equity for both the husband and the wife.
The effect of the orders are as follows.
Appendix Three to the Reasons delivered 27 July 2022 incorrectly showed a nett value of the wife’s Town BB property at $422,000 when the correct nett figure is $442,000. On that basis, the correct calculation for nett pool one is $2,078,829. On this basis, annexed to these Reasons and marked Appendix One is a corrected version of Appendix Three annexed to the Reasons delivered 27 July 2022 which corrects the Town BB property from $422,000 to $442,000.
If the wife receives 65% of the pool one interests ($1,351,239) and 20% of the pool two interests, this combines a total sum of $1,878,211 of the total nett pool of $4,713,688 made up as follows under the orders I propose to make:
AA Street, Town BB $590,000 Motor Vehicle 2 $10,000 AE Street, AG Town $415,000 Super Fund 2 $16,167 BR Super Fund interest $99,223 Add back $162,000 $1,292,390 Less Mortgage over Town BB $148,000 HECS debt $101,194 $249,194 $1,043,196 Plus superannuation split (100% of the husband’s self-managed superannuation interest) $72,865 $1,116,061 Plus payment by the husband $762,150 $1,878,211
If the husband receives 35% of the pool one interests ($727,590) and 80% of the pool two interests, this combines to a total sum of $2,835,477 made up as follows, under the orders I propose to make:
J Partnership ($750,903) J Trust $2,961,584 L Pty Ltd ($276,429) M Trust ($177,301) O Trust ($74,960) S Trust $100,732 BM Trust ($530,243) U Trust ($499,926) V Pty Ltd $398,360 Filby Family Company ($247,309) Add back – interim distributions $360,000 Super Fund 1 $114,163 $1,377,768 Plus nett pool two interests $2,634,859 $4,012,627 Adjustment for AG Town property transferred to the wife $415,000 $3,597,627 Less payment due to the wife $762,150 $2,835,477
Such an outcome is just and equitable, noting that I accept merely making an adjustment for the value of AG Town at its agreed value of $415,000 from the husband’s side of the ledger is a shorthand approach rather than adjusting the “value” for the entity which owns it.
I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Baumann. Associate:
Dated: 21 November 2022
APPENDIX ONE
POOL ONE Owner Particulars Amount Joint J Partnership ($750,903) Joint J Partnership $2,961,584 Husband L Pty Ltd ($276,429) Joint M Trust ($177,301) Joint O Family Trust ($74,960) Joint S Trust $100,732 Joint BM Trust ($530,243) Joint U Trust ($499,926) Joint V Pty Ltd $398,360 Wife AA Street, Town BB (nett) $442,000 Wife Motor Vehicle 2 $10,000 Husband Filby Family Company ($247,309) ADD BACKS Wife Interim distributions $162,000 Husband Legal fees $360,000 SUPERANNUATION Husband Super Fund 1 $114,163 BR Super Fund $72,865 $187,028 Wife Super Fund 2 $16,167 BR Super Fund $99,223 $115,390 TOTAL POOL ONE ASSETS $2,160,023 Wife Less HECS debt $101,194 NETT POOL ONE $2,078,829 POOL TWO Owner Particulars Amount Husband K Trust $3,799,159 Husband T Trust ($1,164,300) NETT POOL TWO $2,634,859 TOTAL NETT CONSOLIDATED POOLS $4,713,688
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