Galvan and Galvan and Ors - [2015] FamCA 1092

FAMILY COURT OF AUSTRALIA

GALVAN & GALVAN AND ORS

[2015] FamCA 1092

FAMILY LAW – PROPERTY – where the property of the parties was difficult to determine – where determining who owned what property depended on onus of proof – where property includes trust property – where distributions from a discretionary trust were made - where property is held by third parties – where the equities are imprecise – where the presumption of advancement may apply – where resulting trusts were found.
FAMILY LAW – PROPERTY – where unsecured liabilities exceed the value of assets – where one party to proceedings was held to be solely responsible for liabilities.

Family Law Act 1975 (Cth) ss 75(2)(o), 79, 79(2), 85A, 90AE, 90AE(1), 90AE(2), 90MT(1), 106B

Baumgartner v Baumgartner (1987) 164 CLR 137
Biltoft and Biltoft [1995] FamCA 45
Chorn and Hopkins [2004] FamCA 633
Coghlan and Coghlan [2005] FamCA 429
Cohen v Sellar [1926] 1 KB 236
Commissioner of Taxation and Worsnop and Anor (2009) FamCAFC 4
Damiani & Damiani [2012] FamCA 535
Davies v Messner [1975] 12 SASR 333
Kennon & Kennon [1997] FamCA 27
Kennon v Spry [2008] FLC 93-388
McGuire & McGuire (No 2) [2012] FamCAFC 90
Muschinski v Dodds (1985) 160 CLR 583
Stanford & Stanford [2012] FamCAFC 1
Weir & Weir [1993] FLC 92-338

APPLICANT:

Mr Galvan Snr

RESPONDENT:	Ms Galvan Snr
SECOND AND THIRD RESPONDENTS	Ms Galvan Jnr and Mr Galvan Jnr
FILE NUMBER:	CAC	31	of	2010

DATE DELIVERED:

9 December 2015

PLACE DELIVERED:

Canberra

PLACE HEARD:

Canberra

JUDGMENT OF:

Faulks DCJ

HEARING DATE:

14-16 November 2011, 27-29 August 2012, 20-24 February 2012, 7 December 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Kumar

COUNSEL FOR THE RESPONDENT:

Mr Howard

SOLICITOR FOR THE RESPONDENT:		Dobinson Davey Clifford Simpson
COUNSEL FOR THE SECOND AND THIRD RESPONDENTS:		Mr de Robillard

Orders

Pursuant to s 106B of the Family Law Act 1975 the distributions made by Galvan Pty Limited as Trustee for the G Family Trust in respect of the sale proceeds of F Street, Suburb H in the Australian Capital Territory are set aside.
That within 60 days the Applicant pay to the Respondent the sum of $105,000.
That pursuant to section 90MT(1)(a) whenever a splittable payment becomes payable in respect of the interest of Mr Galvan Snr in the Public Sector Superannuation Scheme (member no: …)
(a) Ms Galvan Snr is entitled to be paid $37,000;
(b)There is a corresponding reduction in the entitlement of Mr Galvan Snr.
(a) That the operative time for Order 2 is four (4) days after service of a copy of the final Orders on the Trustee.
(b)Noting that due to the circumstances of this matter the Trustee of the Public Sector Superannuation Scheme has not been accorded procedural fairness in accordance with s 90MZD, the Trustee has liberty to apply on short notice in relation to this matter once these orders have been served.
That unless otherwise specified in these Orders, each party be and is solely entitled as…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Galvan and Galvan and Ors

Details

AGLC: Galvan and Galvan and Ors [2015] FamCA 1092
Case: [2015] FamCA 1092
Decision Date: 9 December 2015

CaseChat Overview and Summary

In the matter of *Galvan and Galvan and Ors*, heard by Faulks DCJ, the dispute concerned the distribution of sale proceeds from a property and entitlements from a superannuation scheme. The proceedings involved Mr Galvan Snr (the Applicant), Ms Galvan Snr (the Respondent), Galvan Pty Limited as Trustee for the G Family Trust, Ms Galvan Jnr, and Mr Galvan Jnr.

The court was required to determine whether distributions made by Galvan Pty Limited as Trustee were to be set aside, and to make orders regarding the division of certain assets, including a superannuation interest and property held by the respondents Ms Galvan Jnr and Mr Galvan Jnr. A key issue was whether the Applicant, in his capacity as Director of the Trustee Company, had failed to give due consideration to the interests of the First Respondent (Ms Galvan Snr) as a beneficiary of the Trust when making distributions.

Faulks DCJ reasoned that the Applicant, as Director of the Trustee Company, had a duty to understand who the beneficiaries were and to consider distributions in their favour. The court found that the Applicant had failed to give due consideration to the First Respondent's interests, likely due to a lack of understanding that she was a beneficiary. This failure, coupled with a lack of appropriate advice, constituted an impropriety that could be remedied in equity. The court considered section 106B of the *Family Law Act 1975*, which allows for the setting aside of dispositions made to defeat existing or anticipated orders. While acknowledging a narrow interpretation might suggest the section did not apply as there were no existing orders when the first distribution was made, the court found such an interpretation would unduly restrict the remedial purpose of the section.

The court ordered that the distributions made by Galvan Pty Limited as Trustee in respect of the sale proceeds of F Street, Suburb H, ACT, be set aside. The Applicant was ordered to pay the Respondent $105,000 within 60 days. Further orders were made regarding the division of Ms Galvan Snr's entitlement from Mr Galvan Snr's interest in the Public Sector Superannuation Scheme, and declarations were made concerning the beneficial interests held by Ms Galvan Jnr and Mr Galvan Jnr in properties at I Street, Suburb J, and K Street, Suburb L, respectively. The court also noted that the Trustee of the Public Sector Superannuation Scheme had not been accorded procedural fairness and had liberty to apply in relation to those orders.

Orders

Orders of the court

Pursuant to s 106B of the Family Law Act 1975 the distributions made by Galvan Pty Limited as Trustee for the G Family Trust in respect of the sale proceeds of F Street, Suburb H in the Australian Capital Territory are set aside.

That within 60 days the Applicant pay to the Respondent the sum of $105,000.

That pursuant to section 90MT(1)(a) whenever a splittable payment becomes payable in respect of the interest of Mr Galvan Snr in the Public Sector Superannuation Scheme (member no: …)

(a) Ms Galvan Snr is entitled to be paid $37,000;

(b) There is a corresponding reduction in the entitlement of Mr Galvan Snr.

(a) That the operative time for Order 2 is four (4) days after service of a copy of the final Orders on the Trustee.

(b) Noting that due to the circumstances of this matter the Trustee of the Public Sector Superannuation Scheme has not been accorded procedural fairness in accordance with s 90MZD, the Trustee has liberty to apply on short notice in relation to this matter once these orders have been served.

That unless otherwise specified in these Orders, each party be and is solely entitled as against the other party to all property (including choses in action) and superannuation in possession or control of such party as the date of these Orders.

All reserved applications for costs other than the costs of these proceedings are dismissed.

All material produced subpoena which did not become the subject of exhibits will be returned by the Court to the persons producing it as soon as practicable.

Any material produced subpoena which became an exhibit will be returned by the Court at the expiration of the appeal period to the person producing it. Any material produced by a party which became the subject of an exhibit will be returned by the Court to the party at the expiration of the appeal period.

That the matter be removed from the pending cases list.

It is declared that:

The Second Respondent, Ms Galvan Jnr, holds such interest as she may have in the property known as I Street, Suburb J (“Suburb J”) as trustee for the Applicant, Mr Galvan Snr, in the sum of $24,036 and otherwise for herself.

The Third Respondent, Mr Galvan Jnr, holds such interest as he may have in the property known as K Street, Suburb L (“K Street”) as trustee for the Applicant, Mr Galvan Snr, in the sum of $23,399 and otherwise for himself.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

It is the assertion of counsel for the wife that the husband failed to take into account the possibility of a distribution to her. Notwithstanding that it is difficult ordinarily for a party to assert that the other party failed to consider the interests of the first party in a distribution, because “consideration” is to some extent a subjective thing, in this matter I cannot but conclude that no consideration was given by the Applicant as Director of the Trustee Company to whether or not any distribution should be made in favour of the First Respondent. It seems to be more likely than not that the Applicant did not understand that the First Respondent was a beneficiary of the Trust. His duty as a Director and even more because he was Director of a Trustee Company was to understand who the Beneficiaries were and properly to give consideration to a distribution in favour of them. His failure to get the appropriate advice and to have the appropriate understanding led to his failure to give due consideration. Although it has been said[2] that in effect the right to a due consideration is in fact in itself property. It is for all practical purposes property without value. Nevertheless, in the context of this matter the failure to give due consideration was an impropriety which could to be remedied in equity by the setting aside of the distributions. [2] Kennon v Spry [2008] FLC 93-388 Two questions flow from that:1.Should such setting aside be done in respect of distributions that have already been made? 2.Are there any other factors in this matter which would suggest that one lot of distributions might be set aside rather than both. Whatever equitable remedy may exist in theory, in practice the remedies may be confined to those that are available under the FamilyLaw Act and I now turn to a consideration of those matters. One possibility in this regard is s 106B. (1)In proceedings under this Act, the court may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or in the interest of, a party, which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order. The language in this section is somewhat difficult to interpret. There are proceedings under this Act – which are the current proceedings – and what is being sought is that the disposition that had been made prior to the commencement of these proceedings by or on behalf of or by direction of Mr Galvan be set aside. It depends a little on the interpretation to be afforded to the words “which is made or proposed to be made to defeat an existing or anticipated order in those proceedings”. There was no existing order at the time that the dispositions were made by the Trustee and there were no proceedings when the first distribution was made to Mr Galvan Jnr. The subsequent distribution of $106,000 (approximately) occurred after the proceedings were commenced. At the time when the second distribution was made, there was no nominated order sought in relation to the family trust and therefore on a narrow construction of the words “anticipated order” it might be said that the disposition did not defeat such an order. Indeed the same might be said in relation to the second half of the section which reads “is likely to defeat any such order”. Nevertheless, such an interpretation would imply too narrow a restriction in relation to what was designed as a remedial section of the Act.