HADLEY & HADLEY

[2015] FamCA 323

FAMILY COURT OF AUSTRALIA

HADLEY & HADLEY [2015] FamCA 323

FAMILY LAW – PROPERTY SETTLEMENT – Interlocutory Application – Where previous orders established the husband’s right to acquire another property after the sale of a specified property – where the capacity in which the husband was to acquire that other property was in dispute – where an order is made for the husband to purchase that other property in his own name – where the proceeds of the sale of the specified property is to be held in trust by the current solicitors

Family Law Act 1975 (Cth), ss 79

Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337

In the Marriage of Foda (1997) 21 Fam LR 653

APPLICANT: Ms Hadley

RESPONDENT: Mr Hadley

FILE NUMBER: NCC 2881 of 2011

DATE DELIVERED: 20 April 2015

PLACE DELIVERED: Newcastle

PLACE HEARD: Newcastle

JUDGMENT OF: Cleary J

HEARING DATE: 17 April 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Page SC

SOLICITOR FOR THE APPLICANT: Bridge Street Lawyers

COUNSEL FOR THE RESPONDENT: Mr Duane

SOLICITOR FOR THE RESPONDENT: Kim Monnox & Associates

Orders

1. That Order 2 made by this court in these proceedings on 24 September 2014 be discharged.

2. That pending further Order the monies held in the Harris Solicitors’ Trust Account be applied as follows:

   2.1To Harris Solicitors the sum of $29,039.26;

   2.2Such sums as is necessary to enable the husband to purchase in his own name, the properties at B Street, C Town, 1 C Town Road, C Town, and 2 C Town Road, C Town, (the “C Town properties”), including stamp duty, rates adjustments and the usual costs and disbursements associated with the purchase of these C Town properties;

   2.3The balance to be paid to Kim Monnox & Associates, such sum to be held as controlled monies on a 31 day term deposit with an Australian Bank nominated by the husband or otherwise as agreed between the parties.

3. That pending further Order the husband be restrained from transferring, selling, disposing of/or encumbering the C Town properties except for the purpose of:

   3.1In the ordinary course of business of operating the cattle and farming enterprise on the C Town properties; and

   3.2For the purposes of paying the single expert’s fees and legal costs and disbursements in these proceedings.

4. That the wife’s Application in a Case filed 7 April 2015 and the wife’s Amended Application in a Case filed 7 April 2015 otherwise be dismissed.

5. That the Response to an Application in a Case filed 8 April 2015 by the husband otherwise be dismissed.

6. That the husband advise the wife in writing within 48 hours of all offers made by prospective purchasers of the property at D Street, E Town (“the E Town property”) and to advise the wife in writing within 48 hours of any contract entered into by the husband for the sale of the E Town property.

7. No order as to costs.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Hadley & Hadley 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 NEWCASTLE

FILE NUMBER: NCC 2881 of 2011

Ms Hadley

Applicant

And

Mr Hadley

Respondent

EX TEMPORE

REASONS FOR JUDGMENT

Introduction

1. This was the Amended Application in a Case of the wife filed 7 April 2015. There was also a supplementary order sought, order 10. Ultimately, orders 5 and 10 only were pressed. The Application was supported by an affidavit of the solicitor for the wife filed 7 April 2015.

2. The husband filed a Response to the Amended Application in a Case on

   
   

   8 April 2015.  It was supported by an affidavit of the husband filed on that day.   Orders 1 to 5 of that document were pressed.

3. The application of the wife was opposed.

4. During the course of submissions, order 2.2 of the husband’s proposed orders was varied to include a fall-back position, namely, that the husband buy the proposed property as proprietor rather than through a trust.

5. Order 2.3 of the husband’s proposed orders was varied also to propose that a fixed sum be nominated to be held in trust, perhaps $300,000 from asset sales, as a counterbalance to the property being able to be acquired by a trust.

6. I declined to make an order in respect of the urgent issue which had brought the matter before the Court; that was, determining reserve prices for nominated farming plant and equipment due to be sold in a clearing sale on the following day, 18 April 2015. There was no evidence to support such an order being made. 

7. A 2013 valuation schedule was tendered, objected to and rejected, both on the basis of its age and that different values were proposed in any event based, it was said, on the opinion of the wife.

8. There was consensus between the parties in respect of order 6(a) of the orders sought by the wife.

9. There was no evidence from the wife to support, or the husband to oppose, order 6(b) compelling the husband to continue with the current real estate agent, and I have not made such a restraining order.

10. The issue of substance which emerged was the title of the properties proposed to be acquired by the husband at C Town.

11. The husband’s right to acquire another property after the sale of the property F was established by Order 2 made on 24 September 2014 and the reasons for judgment for that Order. That Order had provided for the husband to be able to purchase a residential property, which was more fully elaborated on in the reasons for judgment in paragraphs 32 to 35.

12. It had been the husband’s intention, and still is, to sell that property and to buy another one and to continue with farming.

13. The reference to residential property in the Order and rural property in the reasons for judgment did not create, in my view, any confusion, given he intended to continue farming.

14. In respect of Order 5 of the wife’s proposed orders, the wife put the proposition that if the husband purchased his next property, C Town, as the proprietor and not through a trust, she would be content with the purchase occurring conditional on the defined amount being held in a controlled monies account by his solicitor, although that was not the basis for the proposal put on behalf of the husband during submissions.

Short History

1. The history and background is set out in the reasons for judgment of the September 2014 Orders, and I include paragraphs 8 to 11 inclusive from those reasons in this judgment:

   8.The parties met in January 2006 when the wife was employed to work on the husband’s property, [F].  The wife was a farm [worker].  The wife is 57, the husband is 67.  The relationship changed after about three months and the parties began living together on the property.

   9.[In] 2006 the parties married. 

   10.On 3 May 2011 they separated.  Accordingly, there was a relevant relationship of five years.  The wife says, and the husband disputes, that the relationship ended as a result of a violent assault on her by the husband.  That may be an issue in the final hearing.

   11.The wife left the [F] property and moved away taking [animals]; some owned initially by her, others bred during the course of the marriage.  The wife had 12 [animals] at the commencement of the relationship, 36 by the date of separation.

Acquisition of a Further Property

1. The husband proposed the purchase of related properties at C Town in the name of Hadley Pty Ltd as trustee for the Hadley Trust.

2. The wife submitted that such a course had the potential to cause additional costs to be incurred by the joining of third parties to the proceedings and could represent an overall disadvantage to her. I accept that it could.

3. I also accept that the husband proposes this course for succession planning.

4. Further, I accept that a second transfer from the husband to the trust after the conclusion of final proceedings, if that took place, would incur a second payment of stamp duty estimated in documents put before me to be about $100,000. However, it is appropriate to take a conservative approach to this issue.

5. It was conceded from the outset on behalf of the wife that the husband is the alter ego of the company. Where a company is the alter ego of a party, the assets of the company will be treated as property of the parties.[1]  The company in this case is the initial trustee and presumably has no, or minimal assets.

   [1]In the Marriage of Foda (1997) 21 Fam LR 653

6. That concession does not represent a solution to the objection of the wife. A decision of the High Court established that where a party to the marriage effectively treats trust property as his or her own, the trust property can be treated in s 79 of the Family Law Act 1975 (Cth) applications as property of that party.[2] 

   [2]Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337

7. I accept the bona fides of the husband where he asserts:[3]

   [3] Husband’s Affidavit filed 08/04/2015, par 19

   I do not intend to prevent this Court from dealing with the [Hadley Trust[, [Hadley Pty Ltd] as Trustee for the [Hadley Trust].

8. And he goes on to say that he would not sell, transfer, dispose of or encumber the C Town assets.  However, the purpose of establishing this trust is to hold the property for succession planning.

9. A trustee cannot be directed to act in any manner which is inconsistent with duties pursuant to the Trust Deed or contrary to due administration of the trust.

10. In this matter, the primary beneficiary of the trust is the husband.[4]  The secondary beneficiaries are a spouse, any children, grandchildren and other remote issue.

    [4] Exhibit 6

11. Circumstances of both the primary and secondary beneficiaries could change, including by death or misadventure, prior to this matter being heard and determined in a way which compels the trustee to act in the interests of beneficiaries. There is thereby a real, even if remote, possibility that there could be countervailing circumstances against the Court treating trust assets as property of the husband.

12. In circumstances where the trust has very recently been established, the balance of the financial disadvantage to the husband of paying stamp duty twice against circumstances arising which persuade the Court to treat the trust assets as financial resources rather than property favours the wife.

Conclusion

1. Accordingly, an Order is made for the husband to purchase the proposed properties in his own name.  This decision preserves the whole of the value of the properties to be purchased to meet the wife’s application.

2. Consistent with the Orders made on 24 September 2014 and for the same reasons, the undefined balance of proceeds is to be held in trust by the current solicitors.

3. In respect of order 5 sought by the wife, there is no basis then for a nominated amount to be held in trust as well.

4. The position of the wife was stated to be a cash payment to her on a final basis of approximately $800,000.  Sufficient assets are preserved to meet that position and more.

5. The husband had submitted that the retention of $300,000 in a controlled monies account would be adequate to meet the wife’s claim and would be a counterbalance to the new C Town properties being acquired by the husband’s trust.

6. Having found that the appropriate course is for the property to be acquired by the husband in his own name, that proposition falls away.

7. Orders are made accordingly.

I certify that the preceding forty (40) paragraphs are a true copy of the ex tempore reasons for judgment of the Honourable Justice Cleary delivered on

20 April 2015.

Associate:

Date:  5 May 2015