Guan and Guo

[2018] FCCA 3346

FEDERAL CIRCUIT COURT OF AUSTRALIA

GUAN & GUO [2018] FCCA 3346

Catchwords:
FAMILY LAW – Interim distribution of sale proceeds.

Cases cited:

Strahan & Strahan [2009] FamCAFC 166

Applicant: MR GUAN

Respondent: MS GUO

File Number: MLC 13378 of 2017

Judgment of: Judge Harland

Hearing date: 12 November 2018

Date of Last Submission: 12 November 2018

Delivered at: Melbourne

Delivered on: 12 November 2018

REPRESENTATION

Counsel for the Applicant: Mr Hall

Solicitors for the Applicant: Robinson Gill

Counsel for the Respondent: Mr Ambrose

Solicitors for the Respondent: James D Mapleston

ORDERS

1. That the balance of the proceeds of sale of Property A referred to in paragraph 1(d) of the minute attached to the orders made 21 February 2018 be applied as follows:

   (a)the sum of $35,000 to meet anticipated Capital Gains Tax owing on the sale of Property A;

   (b)the sum of $100,000  to each party by way of by way of partial property settlement;

   (c)the balance thereof to be paid into the parties joint account Bank 1 and thereafter applied in payment of the instalments of mortgage number secured by the real property at Property B and rates thereof, as and when they fall due, until further order.

2. That in order to give effect to paragraph 1(a) herein:

   (a)The parties shall establish a joint bank account administered by the husband’s solicitors upon the written consent of both parties.

   (b)The sum of $35,000 shall be deposited in to the joint account from the sale proceeds of Property B in respect of anticipated Capital Gains Tax on the sale of Property B.

   (c)Each party shall file their 2018 income tax return recording one half of the capital gain from the sale of Property B by 31 July 2019.

   (d)Upon receipt of the Australian Taxation Office assessment the parties shall provide:

   (e)a copy of their file tax return; and

   (f)a copy of the Australian Taxation Office assessment,

   (g)to the other party.

   (h)The parties shall then jointly instruct the husband’s solicitors to pay their respective shares of the Capital Gains Tax on their respective accounts from the Australian Taxation Office.

   (i)Any surplus of the $35,000 after payment of the Capital Gains Tax shall be divided equally between the parties and characterised as partial property settlement.

   (j)Each party shall contribute one half of any shortfall of tax payable for Capital Gains Tax after the $35,000 has been applied.

   (k)The parties have liberty to apply regarding the implementation of this order.

3. That neither party shall further encumber Property B without the prior written consent of the other party.

4. That within 14 days of the date of these orders the wife, at her expense, withdraw caveat number lodged against the title of the real property situate at and known as Property C more particularly described in certificate of title volume provided that:

   (a)The husband does not increase the secured debt as a result of the refinance; and

   (b)The wife be at liberty to lodge a caveat over the property after the refinance has taken place.

5. The wife’s application in a case filed on 2 May 2018 be dismissed.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 13378 of 2017

MR GUAN

Applicant

And

MS GUO

Respondent

REASONS FOR JUDGMENT

1. These reasons for judgment were delivered orally.  They have been corrected from the transcript.  Grammatical errors have been corrected and an attempt has been made to render the orally delivered reasons amenable to being read.

2. The interim dispute before me relates to how the proceeds of sale of the parties’ Property A property of approximately $240,000 should be disbursed.  The parties have reached an agreement on some issues, including payment of capital gains tax. 

3. The wife seeks that the net proceeds of sale be distributed after the payment of capital gains tax which has been agreed, a sum of $40,000 to be used to reduce the mortgage on the former matrimonial home and pay the rates.  I do not know what the amounts are for the rates or if there are any outstanding.

4. She further seeks that the balance be divided equally between the parties by way of a partial property settlement.  The husband seeks that the whole of the balance of the proceeds of sale be applied to reduce the mortgage on the former matrimonial home.  To date he has been paying the mortgage and he discloses in his financial statement that is about approximately $500 a week.  The wife lives in the former matrimonial home with the parties’ 15 year old son and her mother. 

5. Taking the parties financial statements at face value, neither party is in a strong financial position.  The husband’s financial statement shows liabilities in excess of the income that he is receiving.  He records in his financial statement that he owes his lawyers about $50,000.  The wife works part time and earns about $25,000.  She seeks the release of funds for living expenses and also legal costs.

6. Her lawyers have not filed an affidavit setting out what her estimated costs are and what the position is, but that is not fatal to the application.  The wife’s affidavit filed in July refers to her lawyers giving her an estimate of approximately $45,000 for the work leading up to the final hearing which is listed for three days in August 2019.  She does not say what other fees are outstanding to that law firm.

7. Both counsel have referred to the legal principles.  It is particularly set out in Strahan & Strahan [2009] FamCAFC 166. It is clear that there was a major dispute in this case about what the asset pool consists of and much of this dispute focuses around various loans to individuals, which the husband sets out in his financial statement, which is close to $1,000,000.

8. It is apparent that one of the major disputes in the case will be whether or not these are loans of the relationship that are repayable.  There is also a dispute about a property in China which the husband’s sister lives in and it is the husband’s case that he has no equitable claim to that property. 

9. In her initiating application, the wife seeks to retain the former matrimonial home unencumbered. She has not specified the other orders that she seeks.  Her Counsel points to the difficulty being that there is such a major dispute about the makeup of the pool such that on the wife’s case the pool is close to $3,000,000.  On the husband’s case it is about $1,500,000. 

10. The husband points to the fact that the wife has occupation of a former matrimonial home which he has been paying the mortgage for, and thus is not in a situation where she has no access to any of the pool.  He also says that the wife’s application would see her receive more than 100 per cent of the pool and is unrealistic.  Of course, whether or not it is the case at a final hearing that the property will need to be sold in order to reach a just and equitable settlement will depend on the findings about what the pool is at the time. 

11. The husband, in his response, seeks that the equity in the properties that the parties own be divided between them equally.  A large part of the dispute in exactly what that equity is going to be will depend somewhat on these other debts. What is apparent on both parties’ cases is that it will be possible to achieve a just and equitable outcome between the parties even with an interim distribution to each of the parties because of the equity in the former matrimonial home. 

12. It is clear that there are significant factual issues in dispute in this case.  It is listed for final hearing for three days, and, having looked at the material today, and the number of loans that are in dispute, I have some concerns about whether or not it will be contained within the three days. 

13. I am satisfied it is a matter where both parties are going to have significant legal expenses between now and final hearing, and I am satisfied that the wife will receive more than $100,000 by way of a property settlement. 

I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of Judge Harland

Date: 19 November 2018