Garibaldi and Garibaldi and Anor
[2013] FamCA 230
•12 April 2013
FAMILY COURT OF AUSTRALIA
| GARIBALDI & GARIBALDI & ANOR | [2013] FamCA 230 |
| FAMILY LAW – EQUITY – Whether the husband holds a share in a company beneficially thereby forming part of the matrimonial pool – Whether the husband holds the share on resulting trust for his father thereby not forming part of the matrimonial pool – Whether the presumption of advancement is rebutted – What the donor’s intention was at the time of allocating the share to the husband and relevant surrounding events – Where the Court found that the presumption of advancement had been rebutted – Where the husband was found to hold his share in the company upon resulting trust for his father. FAMILY LAW – COSTS – As between the wife and the Second Respondent where wife joined the Second Respondent to the proceedings and was wholly unsuccessful in respect of the threshold issue – As between the husband and the wife where costs reserved before the trial Judge at final hearing |
| Companies Act 1961 (NSW) Family Law Act 1975 (Cth) Family Law Rules 2004 (Cth) |
| Buffrey v Buffrey & Anor [2006] NSWSC 1349 Briginshaw v Briginshaw (1938) 60 CLR 336 Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353 Cummins v Cummins (2006) 227 CLR 278 Damberg v Damberg (2001) 56 NSWLR 492 Kawada & Kawada [2012] FamCA 273 Penfold v Penfold (1980) 144 CLR 311 Z & Z (2006) 34 Fam LR 296; [2005] FamCA 996 |
| APPLICANT: | Mr A Garibaldi |
| 1st RESPONDENT: | Ms B Garibaldi |
| 2nd RESPONDENT: | Mr C Garibaldi |
| FILE NUMBER: | PAC | 924 | of | 2012 |
| DATE DELIVERED: | 12 April 2013 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Collier J |
| HEARING DATE: | 25 and 26 February 2013 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Stenhouse |
| SOLICITOR FOR THE APPLICANT: | Ms Munk |
| COUNSEL FOR THE 1ST RESPONDENT: | Mr Byrne |
| SOLICITOR FOR THE 1ST RESPONDENT: | Ms O'Reilly |
| SENIOR COUNSEL FOR THE 2ND RESPONDENT: | Ms Rees S.C. |
| JUNIOR COUNSEL FOR THE 2ND RESPONDENT: | Mr Edwards |
| SOLICITOR FOR THE 2ND RESPONDENT: | Mr Jedrezjczyk Levy Partners |
Orders
That I declare that the Applicant husband holds his one share in the company G Pty Ltd upon trust for his father, the Second Respondent.
That Order 4 made on 5 November 2012 be and is hereby discharged.
That the Applicant, First Respondent and Second Respondent do all things and sign all documents necessary to authorise Mr D, Ms E and Ms F to close and obtain payment of term deposit … and to pay the amount thereby received, being the sum of $400,000, in addition to any interest accrued thereon, to the Second Respondent.
That I dismiss the First Respondent’s application purporting to join the Second Respondent to these proceedings as sought in her Amended Response filed 6 September 2012.
That the First Respondent pay to the Second Respondent his costs of and incidental to the application for relief against him from the date of filing her Amended Response purporting to join him until the conclusion of this threshold hearing.
That I certify for both Senior and Junior Counsel for the Second Respondent in respect of these Orders pursuant to rule 19.50 of the Family Law Rules 2004 (Cth).
That such costs shall be as agreed or assessed on a solicitor and client basis.
That the sum agreed upon or assessed, as the case may be, shall be paid within a time agreed between the Second Respondent and the First Respondent, or failing agreement, within nine (9) months of the date of agreement or the date of issue of an assessment of costs pursuant to these Orders.
That I reserve the costs as between the Applicant and the First Respondent to the trial Judge at the final hearing in respect of the proceedings involving the Second Respondent arising from the First Respondent’s Amended Response filed 6 September 2012.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Garibaldi & Garibaldi & Anor 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 PARRAMATTA |
FILE NUMBER: PAC 924 of 2012
| Mr A Garibaldi |
Applicant
And
| Ms B Garibaldi |
First Respondent
And
| Mr C Garibaldi |
Second Respondent
REASONS FOR JUDGMENT
Introduction & Background
This matter concerns a single issue in dispute between the three parties to these proceedings. The wife, who is the First Respondent to the proceedings, asserts that the husband owns a share in a company G Pty Ltd beneficially, that is to say, in his own right. The wife says therefore that the value of that share can be included in the pool of available assets for distribution between the husband and wife.
The husband, who is the Applicant, and the husband’s father, who is the Second Respondent, say that this is not so. Rather, and notwithstanding the share is in the husband’s name, they say that the husband holds the share as trustee for his father. Accordingly, they say the value of that share is not available to be dealt with, or taken into account, in the dispute between the husband and the wife.
For simplicity, hereafter I will refer to the Applicant Husband as “the husband”, the Respondent Wife as “the wife” and the Second Respondent as “the father”. I shall refer to G Pty Ltd as “the company” or “G”.
On 11 December 2012, I agreed to hear this matter as a threshold issue. On 25 and 26 February 2013, I heard evidence from each of the husband, an accountant for the father, Mr J, and the father. The wife’s affidavit, subject to objection, was read. The wife was not required for cross-examination.
Thereafter, I heard submissions from counsel and senior counsel appearing for each of the parties. I indicated that I would reserve my Judgment and publish my reasons.
Brief history
There appears to be little controversy as to the chronology relating to this matter. Accordingly, I set out what I understand to be an undisputed chronology in this matter.
·The husband was born in 1962 and as at the time of hearing, he was 51 years of age.
·The wife was born in 1963 and as at the time of hearing, she was 49 years of age.
·The Second Respondent, the husband’s father, was born in 1935 and as at the time of hearing, he was 77 years of age.
·In about 1981, K Pty Ltd (“K”) was incorporated to be the corporate trustee of the Mr C Garibaldi Family Trust.
·On 26 February 1982, G Pty Ltd (ACN …) (“G” or “the company”) was incorporated. The husband and his father became directors and each held one ordinary share. The father says he received advice from his accountant to purchase a property in Suburb L through a “shelf company” to save in respect of taxation purposes.
·In about April 1982, G Pty Ltd purchased the property M Street, Suburb L. The father says the property purchase was funded by K in respect of the deposit and he paid the balance. He says the husband did not contribute towards the purchase.
·On 15 February 1986, the husband and wife married. There are three children of the marriage. At the time of hearing, only one of those children was under 18 years of age.
·In about 1986, the father took steps to sell the Suburb L property, but it ultimately did not sell.
·In about 1986/1987, the father acquired other investment properties in the name of G Pty Ltd, and purchased two properties at Suburb N. The father sold those properties five years later. The father says he did not discuss the buying or selling of those properties with his son.
·In about 1988, the husband and wife purchased a property at O Street, Suburb P and took out a mortgage of $70,000.
·Between about 1989 and 1992, the wife says the husband owned a property in Suburb Q, which she says he did not disclose to her.
·Since 1992, Mr J has been the accountant for the father and for G Pty Ltd.
·From about 1993, the father developed the Suburb L property. He says the funds were provided by himself and K, and that the husband had no involvement in the development or funding of same.
·In about 1995, the father subdivided the Suburb L property.
·In about 1996, one lot of the Suburb L property, upon which two townhouses were constructed, were sold.
·In about 1997, the husband and wife sold a property at O Street, Suburb P and purchased a property at R Street, Suburb P. They took out a loan of $280,000. That loan was refinanced on several occasions in the years following.
·In about 2007, the husband and wife obtained a second loan secured by way of a caveat over their home.
·Also in about 2007, the wife applied for and was granted release of some of her superannuation entitlements as the parties were experiencing financial hardship in meeting their expenses. She says the husband requested she do so, and she took out $13,000 which was applied to the home mortgage.
·In August 2010, the husband and wife sold the R Street, Suburb P home. The sale proceeds discharged the mortgage and paid outstanding debts amongst other things.
·In about December 2010 or January 2011, the husband and wife separated on a final basis.
·On 5 March 2012, the husband initiated property proceedings in relation to the matrimonial assets.
·In about September 2012, the wife sought the husband’s father be joined in the proceedings, seeking to restrain half the sale proceeds of the Suburb L property (owned by G Pty Ltd) as a matrimonial asset.
·On 27 October 2012, the Suburb L property owned by G Pty Ltd was sold at auction for $830,000.
·On 29 October 2012, the parties attended upon Registrar Tran for a conciliation conference. The matter did not resolve and the husband and father proposed that the threshold issue be dealt with first. The wife did not consent to this course.
·On 5 November 2012, the matter came before me in a duty list. I placed the substantive issues in the pool of matters awaiting allocation of hearing dates, for a four day final hearing, and made orders in respect of the husband and father dealing with the settlement monies arising from the sale of the Suburb L property. In this regard, the balance of the sale proceeds of $400,000 were to be held in a term deposit in the names of all of the parties’ solicitors as trustees for the parties.
·In November 2012, the husband and wife divorced.
·On 11 December 2012, the matter was again before me and I set the threshold issue down for a two day hearing.
·As at the time of the hearing of the discrete issue, the husband was a director of three companies – G Pty Ltd, K Pty Ltd and S Pty Ltd. The wife was working full time. She had the care of the parties’ minor child.
The parties’ documents
I set out the parties’ documents below.
The husband seeks to rely upon the following documents:-
a)Affidavit of husband sworn and e-filed 23 November 2012;
b)Financial Statement of husband verified by affidavit on 23 November 2012 and e-filed 23 November 2012.
The wife seeks to rely upon the following documents:-
a) Affidavit of wife sworn 1 February 2013 and filed 4 February 2013.
The father seeks to rely upon the following documents, as well as a number of exhibits that were tendered before me:-
a)Affidavit of father sworn 29 October 2012 and filed 30 October 2012;
b)Paragraphs 1 - 19 and 22(c) and (d) of father’s affidavit sworn 23 November 2012 and e-filed 23 November 2012;
c)Affidavit of father sworn 4 February 2013 and filed 5 February 2013;
d)Affidavit of Ian J sworn 23 November 2012 and e-filed 23 November 2012 (accountant of G);
e)Tender bundle Exhibit DG-1 (other than tabs 28, 30 and 31) and Exhibit DG-2.
The evidence before me
The husband asserts that he considered and believed that the share was his father’s and that he had no entitlement to it. He dealt with the circumstances of him being allocated that share. He set out the matters that have occurred since that allocation in his affidavit material.
He was cross-examined by counsel for the wife, who sought to involve issues of his, the husband’s, credit. I heard argument concerning this issue and restricted the mother’s counsel from continuing to any great extent in this regard.
The husband was cross-examined regarding his completion of a statement of his financial affairs on 5 March 2012. He was unable to give a completely satisfactory explanation as to how he came to set out the material that he did in that document, particularly at Part O.
He was further cross-examined as to how he had allowed the share in his name to be described as to its ownership as “beneficial”. Again, his explanation in this regard was not completely satisfactory.
He agreed that his father had been a generous father and had made gifts to him of a property at Suburb Q, and had otherwise made gifts for his benefit.
So far as the evidence of the husband is concerned, I found him to be unreliable as a witness. He was closely cross-examined as to two matters, which were relied upon to establish that he had made admissions against interest. These items were (a) his indication in his earlier statement of financial circumstances of his shareholding in the company. As I have said, I have found his evidence unreliable. His evidence in this regard I found lacked candour. It is clear on the face of a document, that he asserted that the share described in that document was his at the time he completed that document and verified it to be correct. It was put to me, with some force, by counsel for the husband that he had not attributed a value to the share elsewhere in the document. However, I am by no means satisfied that that indicates that he was of the view that the share was not his.
I am also concerned (b) about his evidence in respect of the meaning of the word “beneficial”. It is to be remembered that the husband is an accountant and, in my view, can be taken to understand the meaning of words that would be used in documents familiar to accountants.
In this case, however, I am satisfied that the husband took very little care in relation to documents he signed, or allowed to be published, with his name included. Rather, I am satisfied, on the evidence I have heard, that he left these matters to his father and his father’s accountant and took no care, nor had any interest, in the documents so far as they related to him.
The next witness called was Mr J, an accountant, who has been the accountant for the father and the company (G Pty Ltd) since 1992. Mr J said that the description of the share in the husband’s name as beneficially owned was carried over in the documents that had been prepared by the father’s previous accountant. He agreed that the husband’s participation in the affairs of the company was non-existent.
I found Mr J an expert witness who was entitled to give the opinions that he did. I found those opinions to be a proper expression of his expertise and knowledge.
The father then gave evidence. He continued to assert that he did not know what the word “beneficial” meant. He gave evidence that he had, indeed, been generous to his son in various respects. However, he made it clear that he considered the company to be his property, which he used as he saw fit and decided in respect of his business dealings. He made it clear that his son had played no part in the administration or conduct of the company itself, nor had any involvement in the business activities conducted by the company. He made it clear that all funds in relation to the acquisition of the property that formed the major asset of the company had been provided by either himself or another company in which he (and the husband) were directors. He asserted the husband had never received monies from the company, or made monies available to the company.
The balance of purchase monies for the Suburb L property were provided from his own funds. The precise figures appear to be as follows:-
Current loans - Unsecured
D Garibaldi $129,306.44
K Investments Pty Ltd $38,017.73 (as a loan to the company)
$167,324.17
The total cost of the purchase, including legal costs and disbursements and stamp duty, was $166,520.33, and that the excess of the loans over the purchase price of $803.84 represented what was in a bank account.
It is clear, on the evidence before me, that no request or demand was ever made upon the husband to provide any monies to, or on behalf of, the company. It remained the father’s contention that it was never intended that the husband would benefit in any way from the conduct or operation of the company.
I accept the father’s evidence that he became confused. I found the father’s evidence to be acceptable and believable. I formed the opinion that he was doing his best to answer truthfully and to assist the Court.
The parties’ submissions
I then heard submissions from each of counsel for the husband, the father and the wife. I allowed a right of reply.
Counsel for each of the parties provided me with written submissions, which I do not propose to reproduce here. I express my gratitude to counsel for the assistance provided to me in this matter.
The wife’s submissions are that the father indeed intended to benefit the husband by making him both a director and shareholder of the subject company. It was the wife’s case that the fact that the husband took no active part in the operation of the company, or the activities undertaken by it, was not something that would in any way interfere with the presumption of advancement. It was the wife’s case that the husband was, at all times, a non-participating director, but that the benefit of ownership of the share was, indeed, something that attached to him.
In their submissions, Counsel for the husband and Senior Counsel for the father both asserted that the presumption for advancement had been rebutted in this case. It was put by Ms Rees of Senior Counsel that the evidence required to rebut the presumption was not such that it was required to meet the test set out in Briginshaw[1]. This was conceded by Counsel for the wife. However, counsel for the wife indicated that I needed to be satisfied to an appropriate level that the evidence was sufficient to rebut the presumption. It was Senior Counsel for the father’s submission that the situation in this present case was such that that which occurred was, to use her words, a classic resulting trust.
[1] (1938) 60 CLR 336
Senior Counsel, in her submissions, dealt with the evidence in this matter. She identified matters that arose. She submitted firstly that the admission against interest by the husband (the material in his statement of financial circumstances and his use of the word “beneficial”) did not operate so as to bind the father. In that respect, she relied upon the decision of Buffrey v Buffrey & Anor[2] of Palmer J in the Supreme Court of New South Wales.
[2] [2006] NSWSC 1349
She further submitted that the relevant intention in a case such as this was solely the intention of the donor, that is, the father. She conceded that the father had been generous to his son. However, when one looked specifically to the affairs of the company, and in this regard there was a tender of documents consisting of returns of the company, there is no evidence, (nor does it appear to be asserted by the wife), that the company, at any time, made any distribution or paid any monies to the husband. Further, it was submitted that the father thereby clearly quarantined the affairs of the company, and his dealings with the company from his son.
As to the document signed by both the father and the husband, in which it was asserted that the husband held his share “beneficially”, it is clear that at the time of the acquisition of the company, which as I understand it, was acquired initially as a shelf company, the requirement of the law in New South Wales at that time was that a company required two directors and shareholders to enable it to be incorporated and appropriately registered. In this regard, I was referred to sections of the Companies Act 1961 (NSW), namely sections 14 and 114, as to incorporation and directors and officers respectively.
In this particular case, it appears that the father and the husband each took a transfer of a share from the persons who incorporated the company, who were its first shareholders.
Senior Counsel went on to say that even if I were not satisfied that I could find a resulting trust as between the husband and the father, I would, indeed, be able to find a constructive trust for the benefit of the father.
It was conceded that if I found a resulting trust to be in place, there was no need for me to go further and deal with the issue of the existence of a constructive trust.
The Law to be Applied
In their submissions, both written and oral, each of the respective counsel made reference to a considerable body of case law.
The factual situation in this matter, that is the father placing the share in the company in his son’s name, would give rise to the application of the presumption of advancement to this present case.
In Z & Z[3], the Full Court of the Family Court of Australia said at paragraph 143:
The law relevant to the presumption of advancement is well settled and applies only to a limited range of relationships. The presumption was explained by Gibbs CJ in Calverley at 247 as arising “when a husband makes a purchase in the name of his wife, or a father in the name of his child or other person to whom he stands loco parentis.” The presumption also applies between a mother and child (Nelson) and to a purchase by a man in the name of his fiancée (Wirth v Wirth (1956) 98 CLR 228).
[3] (2006) 34 Fam LR 296; [2005] FamCA 996
However, there are circumstances in which the presumption can be rebutted by appropriate evidence. It is the case of the father that one of the reasons for placing a share in the name of the husband, and making him a director of the company, was in order to comply with the law in New South Wales as it applied at the date the share was allocated, that is to say 26 February 1982. At that time, sections 14(1) and 114(1) of the Companies Act 1961 (NSW) Act required that a company incorporated in New South Wales had to have two directors and shareholders.
The law was subsequently amended to require a company have only one director and one shareholder. It is obvious that following that change in the law, the father did not seek to have the husband transfer his share to him and/or resign his directorship. However, to my mind, nothing of great event turns on this failure.
I was referred to the decision of O’Reilly J in Kawada & Kawada[4]. It is put to me by Senior Counsel for the father, and I accept, that what might be extrapolated from that decision and applied to this present case is as follows:-
· The starting point in the present case is that the husband is the legal owner of one share in the company G Pty Ltd. On the face of it, the husband is therefore entitled to 50 per cent of the assets of the company.
· The fact that the father put the share in the name of the husband gives rise to the presumption of advancement.
· The presumption of advancement may be rebutted by evidence that it was intended that the husband would hold the share on trust for the father. Reference was made to the decision of Charles Marshall Pty Ltd v Grimsley[5] in the High Court of Australia. In that case, it was stated at paragraph 364:-
… the relation of parent and child is only evidence of the intention of the parent to advance the child, and that evidence may be rebutted by other evidence, manifesting an intention that the child shall take as a trustee …
· That which occurred at the time the husband became a shareholder is of particular relevance. I am satisfied that evidence in this regard must be the subject of careful scrutiny. The husband and the father are interested parties and/or witnesses to that which occurred. I am satisfied that the evidence of the father, particularly, must be scrutinised as it comes from an interested witness (see Damberg v Damberg[6]).
[4] [2012] FamCA 273
[5] (1956) 95 CLR 353
[6] (2001) 56 NSWLR 492
As was said in Buffrey (supra) by his Honour Palmer J:-
… the Court is more assisted in determining the subjective intention of the person making the payment by evidence of that person’s contemporaneous statements of intention, subsequent admissions against interest, subsequent dealings with the property, and by evidence of other relevant surrounding circumstances.
Further, as to evidence of actions occurring after the allocation of the share are concerned, their Honours of the High Court in Cummins v Cummins[7] found, at paragraph 65, that “evidence of facts as to subsequent dealings and of surrounding circumstances of the transaction may be received”. Their Honours reasoning appears to be that, if evidence were to be limited to the date at which an asset were purchased, it “would produce a distorted and artificial result, at odds with practical and economic realities”[8].
[7] (2006) 227 CLR 278
[8] Ibid at 67.
I am satisfied, therefore, that the authorities make it clear that I can examine, with care, that which occurred subsequent to the allocation of the share to determine the intention of the father and the husband at the time the share was allocated.
It is clear that at the time the father’s share was allocated or transferred to him, that is to say 26 February 1982, sections 14(1) and 114(1) of the Companies Act 1961 (NSW) required that a company incorporated in New South Wales have two directors and shareholders. The law was subsequently amended to require a company have only one director and shareholder.
I am satisfied that, as a matter of law, the evidence need not be brought to the level of proof described by their Honours of the High Court in Briginshaw (supra) in determining whether or not the presumption of advancement is displaced (see Damberg (supra)).
Discussion & Conclusion
The facts of the matter appear uncontroversial. At the time the company was incorporated, the law in New South Wales required that a company incorporated in that state have two directors and shareholders. The father allocated, or perhaps more correctly, had transferred to his son, one share and the son was made a director of the company. The husband did not pay or make available form his own funds, or from borrowings, any funds in relation to the acquisition and/or formation of the company.
Throughout the time the company existed, the father paid monies to or on behalf of the company and, for a significant period of time, received fees from the company for services he provided to it.
The major asset of the company was clearly the Suburb L property. That property was sold and proceeds of sale were held in a term deposit.
The manner in which that property was acquired, and the funding for that acquisition is, in my view, of particular significance. It is clear that the deposit was funded, by way of a loan subsequently repaid, by K Pty Ltd, another company entity in which both father and son had an interest. It is clear that the balance of the funds required to complete the purchase were paid by the father from his own funds.
There is no suggestion that at any time the husband provided funds in respect of the purchase price for the property. There is no suggestion he provided funds for payment of costs and disbursements in respect of the purchase. There is no suggestion his consent was sought in respect of the advance from K Pty Ltd to the company to acquire the Suburb L property.
Since the Suburb L property was acquired, the husband has received no benefit from it. He has made no payment to or on behalf of the company, nor has he been asked or requested to do so.
Neither, I am satisfied, has he taken any part in what might be described as the management of the Suburb L property. This was all done by the father to the absolute exclusion of his son.
Further, the husband has not participated in the affairs of the company, or its management at any time since he became a shareholder and director of the company.
As I have said, counsel for the wife relied upon the husband’s evidence and material in respect of his Financial Statement and his use of the word “beneficial” thereon.
However, and even assuming that these matters could be categorised as admissions against interest by the husband, I am satisfied, on the material that I have referred to and endeavoured to deal with earlier in these reasons for Judgment, that the intention to be examined is the intention of the donor. I am further satisfied that whilst the intention of the donor at the time of creation of the husband’s shareholding is the principle matter to be taken into account, one can, and in this case should, look to subsequent events as they may effect, impact upon or explain that earlier decision.
I am satisfied, having regard to the volume of material properly produced by the father, which became the Second Respondent’s Exhibit 2, that the father conducted the business, in all its aspects, entirely without reference to the husband. The husband was at no time to provide, nor did he provide, any funds either for the general management and administration of the company, or in relation to the purchase of the Suburb L property. Once that property was acquired, the husband was not requested, nor did he make payments of any sort for any purpose whatsoever concerned with the ongoing upkeep and management of the property. He did not participate or assist in the subsequent development of the Suburb L property. He was not involved in the sales of portions of the property.
The husband received no benefit directly or indirectly from any asset of the company, including, but not limited to, the property. He did not receive any funds or monies for any purpose or under any description whatsoever from the company.
Whilst I accept the father was generous to his son, I am not able to infer from that fact, in the absence of any other evidence, that it was the intention of the father to benefit the son by placing the share in his name.
The father himself received benefits from the company. The father, for a time, received management fees. Further, in an application for finance, it is clear that the father considered and regarded the property, which was of course owned by the company, to be his own property.
The wife’s Counsel relied upon the use of the word “beneficial” by the father. As the father was the donor, this is a matter of some significance. The father gave evidence that he was unaware of the meaning of “beneficial”. I accept the father’s evidence that he was not aware of the meaning of this word. I am further satisfied that the father, unlike the husband, cannot be taken to be versed in words of particular meaning. I accept his evidence that the meaning of the word “beneficial” was never conveyed to him by any professional person, qualified to do so. I accept there was a state of confusion on his part. Accordingly, I am satisfied that his allowing the word “beneficial” to be used in documents is not such that it constitutes an admission against interest so far as he, the father, is concerned.
In all the circumstances of this case, I am satisfied that it was the intention of the father, at all times, that the company would be his, and his alone. It was to be his “alter ego”, to be used for his purposes and entirely for his benefit. I am satisfied that the reason for the allocation of a share to the husband, and for the husband being created a director of the company, was that at the time this was done, it was a requirement that a company registered in New South Wales have two directors and shareholders.
Clearly, the law was changed. However, I am not satisfied that I can infer from the fact that following the change nothing was done to transfer the husband’s share to the father, that there was an intention for the husband to benefit, even from that point onwards, from the share that he held.
In the circumstances of this case, I have come to the conclusion that I am comfortably satisfied that, on the evidence before me, the presumption of advancement has been rebutted, and further, I am satisfied upon the evidence that a resulting trust exists whereby the husband holds his share in the company G Pty Ltd upon trust for his father.
Having reached this decision, it is not necessary for me to proceed further in relation to a constructive trust.
I propose to make appropriate orders in this regard, set out at the forefront of these reasons for Judgment. I turn then to the issue of costs.
Costs
The father has sought costs against the wife who involved him in these proceedings.
Accordingly, I propose to deal with the costs as between the father and the wife. However, it occurs to me that on a full hearing of the facts of this matter, the trial Judge may find that the wife is able to obtain some benefit or contribution from the husband in respect of the amount that she may have to pay to the father, should I so order. The husband has, indeed, sought the costs issue as between he and the wife be reserved to the final hearing, and this is what I propose to do.
So far as the costs as between the father and the wife are concerned, I turn then to the relevant section of the Family Law Act 1975 (Cth), section 117. Section 117(1) provides that each party should pay their own costs in proceedings in this Court. However, section 117(2) provides that if the Court is satisfied there are circumstances that justify it in so doing then an order can be made for costs. Those circumstances need not be special or exceptional (see Penfold v Penfold[9]). In considering what order, if any, to make, I am required to take into account the matters set out in section 117(2A) of the Act.
[9] (1980) 144 CLR 311
The first of those is the financial circumstances of the parties (subparagraph (a)). I am not given any great detail as to the parties’ finances. However, it was not put to me that neither the father, nor the wife, are totally impecunious and unable to meet any order. In the circumstances of this case, I am prepared to find that each of the father and the wife have moderate means at their disposal from which a costs order, if made, could be satisfied.
Neither party has informed me that they are in receipt of legal aid (subparagraph (b)).
As to the conduct of the parties (subparagraph (c)), the wife joined the father as a Second Respondent in these proceedings. In so doing, she must have been aware that if the father contested her assertion that the husband was the beneficial owner of the share then litigation, such as that which has transpired in this case, would follow. I am satisfied that to involve a person not a party to the marriage in proceedings in this Court is obviously a matter that is at least unusual, and in any case, an application to which the end result could not be known. Accordingly, I am satisfied the wife knew full well the risks that were involved in joining a third party to the proceedings, if she were unsuccessful in obtaining the orders she sought as against, or as they affected, that third party.
It may be argued that the husband alerted the wife to a situation which gave rise to her application against the father. That is a matter that I will leave to the trial Judge in a fashion that I have already referred to in these reasons for Judgment.
The father’s costs were not incurred as the result of a failure by any person or party to comply with an earlier order of the Court (subparagraph (d)).
I take into account that the wife has been wholly unsuccessful in these proceedings as against the father (subparagraph (e)). They are not proceedings between the parties to the marriage, but proceedings between one party to the marriage and a third party. The other party to the marriage, the husband, was supportive of the third parties’ case.
The wife failed to obtain the relief she sought as against the father, and, indeed, as against the husband. In the circumstances of this case, involving a third party, I am of the view that the failure of the wife to obtain the relief she sought is a factor that must weigh heavily against her in the determination of the issue of costs.
There was no offer of settlement to which I was referred (subparagraph (f)).
In all the circumstances of this case, I am satisfied that it is an appropriate course to take to order the wife to pay the father’s costs of and incidental to the application brought against him. I propose to order that those costs be paid on a solicitor – client basis. So that there is no misunderstanding, I certify for Senior Counsel and Junior Counsel pursuant to rule 19.50 of the Family Law Rules 2004 (Cth).
So far as a time for payment is concerned, I am of the view that I should extend the wife some leniency in this regard. I am not, however, persuaded (nor was it suggested to me) that I should make any order for costs dependent upon the outcome of the property proceedings. Rather, I propose to give the wife nine months from the date of these Orders to pay.
The orders that I make are therefore as set out at the commencement of these reasons for Judgment.
I certify that the preceding seventy-nine (79) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Collier delivered on 12 April 2013.
Legal Associate:
Date: 12 April 2013
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