Gee and Luxford and Anor

[2016] FamCA 697

FAMILY COURT OF AUSTRALIA

GEE & LUXFORD AND ANOR [2016] FamCA 697

FAMILY LAW – PROPERTY SETTLEMENT – INTERIM PROCEEDINGS – Where the wife seeks that two transfers made by the husband to his brother be set aside under s 106B of the Family Law Act 1975 (Cth) – Where the husband’s brother has been joined to the proceedings as a respondent – Where the wife has established a prima facie case that money remains owing to the husband as a result of the transfers – Where the wife has given the usual undertaking as to damages – Interim orders made to retain a portion of the proceeds of sale of the Suburb C property in a controlled monies account – Interim orders made to restrain the second respondent from dealing with the Suburb E property

Family Law Act 1975 (Cth), s 106B

APPLICANT: Ms Gee

1ST RESPONDENT:	Mr Luxford
2ND RESPONDENT:	Mr F Luxford
FILE NUMBER:	SYC	6710	of	2012

DATE DELIVERED: 24 August 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 18 August 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Beck

SOLICITOR FOR THE APPLICANT: James & Associates

THE 1^ST RESPONDENT: In Person

COUNSEL FOR THE 2ND RESPONDENT:	Mr Friedlander
SOLICITOR FOR THE 2ND RESPONDENT:	Christie Law

ORDERS

IT IS NOTED

1. That the wife gives the usual undertaking as to damages.

IT IS ORDERED

1. That the second respondent, Mr F Luxford, shall disburse the proceeds of sale of the property at B Street, Suburb C, in the following manner and priority:

   a.In payment of any amount secured by way of mortgage to the National Australia Bank;

   b.In payment of the selling agents’ commission and any other costs of sale;

   c.In payment of the vendor’s legal costs of the sale;

   d.In payment of the amount required to discharge any land tax liability referable to the property;

   e.In payment of the sum of $253,400 to a controlled monies account to be held jointly by the solicitors for the second respondent and the solicitors for the wife, pending further order; and

   f.In payment of the balance to the second respondent.

2. That pending further order the second respondent is restrained from selling or further encumbering the property at D Street, Suburb C without first giving 14 days’ notice of his intention to do so to the solicitors for the wife.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Gee & Luxford & Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 6710 of 2012

Ms Gee

Applicant

And

Mr Luxford

Respondent

And

Mr F Luxford

Second Respondent

REASONS FOR JUDGMENT

1. Ms Gee (“the wife”) and Mr Luxford (“the husband”) are parties to substantive proceedings for property settlement.

2. The husband and his brother, the second respondent, purchased two properties at B Street, Suburb C (“Suburb C”) and D Street, Suburb C (“Suburb E”).

3. On 31 March 2014, the husband transferred his interest in Suburb C to his brother. On 30 April 2014, the husband transferred his interest in Suburb E to his brother.

4. In the substantive proceedings, the wife seeks an order that the transfers of the husband’s interest in the two properties be set aside pursuant to s 106B of the Family Law Act 1975 (Cth) (“the Act”).

5. The husband and the wife separated under the same roof on 11 November 2011 and the application for property settlement was filed by the wife on 27 November 2012.

6. Suburb C has been sold. Suburb E remains in the possession of the second respondent.

7. By an Application in a Case filed 29 July 2016, the wife seeks to restrain the second respondent from dealing with the proceeds of sale of Suburb C (except for the payment of certain specified liabilities) and from dealing with Suburb E.

8. The substantive proceedings came before the Court for the first day of the trial on 29 July 2016. The wife’s Application in a Case also came before the Court on short notice on that day. The husband and the second respondent were not prepared to meet it. Orders were made to preserve the proceeds of sale of Suburb C until the wife’s application could be heard on 18 August 2016, and the husband and the second respondent were ordered to file any affidavit material in relation to the Application in a Case by 10 August 2016.

9. When the matter came before the Court on 18 August 2016, the husband appeared for himself. He had filed no evidence. The Court was directed to an earlier affidavit filed by the husband and sworn on 14 August 2014.

10. The second respondent appeared by counsel and had filed two affidavits.

11. The second respondent opposed the making of any order restraining him from dealing with the two properties. Counsel for the second respondent submitted that he was a bona fide purchaser for value and that the wife could have no possible claim in respect of the properties.

12. The wife, through her counsel, gave the usual undertaking as to damages.

13. In order to assess the strength of the wife’s claim to relief against the properties, it is necessary to consider each transaction.

SUBURB E

1. The second respondent deposed that in 2007, he and the husband purchased Suburb E for $780,000. It is noted that both the husband and the wife contend that the purchase took place in 2005. The husband and the second respondent used funds from a line of credit secured over the home of their parents at Suburb G to fund the deposit.

2. The husband deposed that Suburb E was mortgaged to Bankwest for $700,000 and that loan was secured over the home of his parents. The repayments on any loans raised for the purchase of Suburb E were made by the husband and his brother.

3. In 2014 the husband agreed with his brother, the second respondent, to transfer his interest in Suburb E to the second respondent.

4. H Valuers were engaged to prepare a valuation. They valued Suburb E at $1,045,000. The Transfer from the husband dated 30 April 2014 shows the consideration as $522,500 and stamp duty was paid on that sum.

5. The wife has not demonstrated that the second respondent did not agree to pay full value for the husband’s share of Suburb E or that the second respondent should not be treated as a bona fide purchaser for value.

6. The issue is whether the second respondent actually paid the amount due to the husband.

7. The second respondent borrowed $723,149.44 to fund the purchase of the husband’s interest in Suburb E. On settlement those funds, excluding some small amounts, were paid as follows:

   Bankwest$529,868.86

   The husband’s parents  $73,101.60

   Office of State Revenue                  $19,022.50

   Second Respondent  $80,519.81

8. The husband deposed that he consented to the payment of $264,934.43, which I infer to be his half share of the mortgage debt to Bankwest.

9. The husband’s share of Suburb E was purchased for $522,500. From that sum the husband discharged his share of the mortgage, leaving a balance of $257,565.57 owing to him.

10. The second respondent deposed that the husband owed him $80,519.81 being funds that the husband had withdrawn from their joint business enterprise to pay legal fees and living expenses. The cheque in the sum of $73,101.60 payable to the husband’s parents was paid into an account with the National Australia Bank (“NAB”) to reduce the liability of the husband’s parents. Thus, the husband accounts for $153,621.41.

11. The wife contends that $95,920 remains unaccounted for. Further, the wife contends that by directing that $73,101.60 be paid off his parents’ line of credit with NAB, the husband was benefitting the second respondent. If, as the second respondent deposed, the deposit of $78,000 was drawn from the line of credit when Suburb E was purchased, then it is reasonable to assume that the payment of $73,101.60 was in fact a repayment of the whole of the advance for the deposit, not a repayment of half of the advance which was all the husband should have paid.

12. I accept that, in relation to the transfer of the husband’s interest in Suburb E, the wife has established a prima facie case that the husband is owed $95,920 plus half of $73,101.60, a total of $132,470.80, by the second respondent.

13. If the husband has not received the consideration due to him as vendor, then he has a vendor’s lien over the property to secure the payment. Since the husband will take no step to secure his lien, the order restraining the disposition of Suburb E will be made as sought by the wife.

SUBURB C

1. Suburb C was purchased in January 2011 by the husband and the second respondent for $929,000. Funds were raised by mortgage from the NAB. The husband deposed that security was given by way of mortgage over his parents’ home at Suburb G.

2. Suburb C was valued by I Valuers in February 2014 at $1,250,000.

3. The husband’s interest in Suburb C was transferred to the second respondent in about April 2014 for a stated consideration of $625,000. Stamp duty was paid on the consideration.

4. To fund the purchase, the second respondent deposed that he borrowed $278,153.20 from the NAB and he assumed responsibility for the existing mortgage debt of $743,199.53. (The husband’s half share of that debt would have been $371,560).

5. The husband should have received $625,000 less his share of the mortgage, a net amount of $253,400. In fact he received nothing and the sum of $248,698.20 was paid to the husband’s parents. The second respondent deposed that this amount was paid to the NAB to reduce the liability of his parents on their line of credit.

6. The wife contends that the payment of $248,698 to the husband’s parents was a payment of funds which should have gone to the husband, and that the payment has reduced the funds available for distribution between the husband and the wife in these proceedings. It may be that, at trial, the husband can demonstrate that he had a legal obligation to make the payment, but he has not done so here.

7. If the husband has not received the consideration due to him as vendor, then he has a vendor’s lien over the property to secure the payment.

8. Suburb C was sold for $1,540,000.

9. The mortgage debt to the NAB is conceded by the wife to be about $995,000. In addition, the wife contends that agents’ commission, legal costs, land tax and rates must be paid on completion. She estimates those charges to amount to about $57,955. This leaves about $487,045 available on settlement.

10. The second respondent deposes that he has significant debts to pay from his business and has need of funds.

11. The wife has not demonstrated a prospective entitlement greater than $253,400 in relation to Suburb C. That amount should be preserved and the balance released to the second respondent.  

I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 24 August 2016.

Associate: 

Date:  24/8/2016