Headon and Bolger - [2013] FCCA 172

FEDERAL CIRCUIT COURT OF AUSTRALIA

HEADON & BOLGER

[2013] FCCA 172

Catchwords:
FAMILY LAW – Property – initial contributions – favour husband – wasting of assets – not found – a poor business venture – inclusion of capital gains tax liability – not applicable – no immediate sale on evidence.

Legislation:

Family Law Act 1975, ss.43, 75, 79, 81, pt. VIII

C & C (2005) FLC 93-220
In the marriage of Clauson & Clauson (1995) FLC 92-595
Kouper & Kouper (No. 3) [2009] FamCA 1080
Pierce v Pierce (1999) FLC 92-844
Rosati & Rosati (1998) FLC 92-804
Stanford & Stanford (2012) FLC 93-518

Applicant:

MS HEADON

Respondent:

MR BOLGER

File Number:

BRC 5795 of 2011

Judgment of:

Judge Cassidy

Hearing dates:

20 & 21 March 2013

Date of Last Submission:

21 March 2013

Delivered at:

Brisbane

Delivered on:

17 May 2013

REPRESENTATION

Counsel for the Applicant:

Mr Linklater-Steele

Solicitors for the Applicant:

Best Wilson Family Law

Counsel for the Respondent:

Mr Hamwood

Solicitors for the Respondent:

Hede Byrne & Hall

ORDERS

That by way of property settlement adjustment, upon there being an accounting of the net assets of the Respondent Husband and Applicant Wife, there be a cash adjustment to the Applicant Wife calculated pursuant to Order 3 hereof, so as to effect a 49%;51% overall distribution of the net assets with 49% to the Applicant Wife.
That the cash adjustment described in Order 1 be paid by the Respondent Husband to the Applicant Wife within sixty (60) days of the date of these Orders by way of bank cheque made out to “Best Wilson Family Law Trust Account cr/acc Ms Headon”.
That the cash adjustment to be paid to the Applicant Wife, to achieve a distribution of the net assets pursuant to Order 1 hereof, be calculated as follows:
X = [NP x 49%]-W:
Where:
“X” is the amount to be paid to the Applicant wife on the terms stipulated in Order 2 hereof
“NP” is the net value of the total property and liabilities of the Applicant Wife and the Respondent Husband as at the date of trial in these proceedings; and
“W” is the net value of the property and liabilities that the Applicant Wife will retain as set out in these Orders.
That the parties shall forthwith do all acts and things and sign all such documents as may be necessary (including but not limited to any relevant transfer and/or refinance documentation) to ensure that the Applicant Wife:
(a)Receive and retain all right, title and interest in and to the following items for her sole use and benefit to the exclusion of the Respondent Husband:
(i)The real property located at Property H, in the State of Queensland (more particularly described as Lot (omitted) on RP (omitted), County of (omitted), Parish of (omitted), Title Reference (omitted));
(ii)The real property located at Property H, in the State of Queensland (more particularly described as Lot (omitted) on RP (omitted) and Lot (omitted) on RP (omitted), County of (omitted),…

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 Headon and Bolger

Details

AGLC: Headon and Bolger [2013] FCCA 172
Case: [2013] FCCA 172
Decision Date: 17 May 2013

CaseChat Overview and Summary

This matter concerned a property settlement dispute between the Applicant Wife, Ms Headon, and the Respondent Husband, Mr Bolger, before Judge Cassidy. The core of the dispute involved the division of the parties' net assets.

The court was required to determine how the parties' net assets should be distributed and to make orders to give effect to that determination. This involved identifying the parties' respective legal and equitable interests in the property and considering whether, in all the circumstances, it was just and equitable to make a property settlement order under section 79 of the *Family Law Act 1975* (Cth). The court also had to consider the specific matters prescribed by section 79(4) of the Act.

In reaching its decision, the court applied the principles established in *Stanford & Stanford* (2012) FLC 93-518. The court emphasised that the initial step in any property settlement is to identify the existing legal and equitable interests of the parties. It further clarified that the power to make property settlement orders is not an unguided discretion but must be exercised in accordance with legal principles. The court stressed that the determination of whether an order is "just and equitable" requires a separate consideration of section 79(2) of the Act, rather than simply assuming a division of property or an interest based on the matters listed in section 79(4).

The court ordered a cash adjustment to the Applicant Wife to achieve an overall distribution of 49% to the Applicant Wife and 51% to the Respondent Husband. The orders detailed the specific assets and liabilities to be retained by each party, including various real properties, bank accounts, company interests, vehicles, and personal effects. Provisions were also made for the refinancing or sale of a particular property and for the consequences of default in the payment of the cash adjustment. The court also addressed the parties' respective beneficial interests in certain trusts.

Orders

Orders of the court

That by way of property settlement adjustment, upon there being an accounting of the net assets of the Respondent Husband and Applicant Wife, there be a cash adjustment to the Applicant Wife calculated pursuant to Order 3 hereof, so as to effect a 49%;51% overall distribution of the net assets with 49% to the Applicant Wife.

That the cash adjustment described in Order 1 be paid by the Respondent Husband to the Applicant Wife within sixty (60) days of the date of these Orders by way of bank cheque made out to “Best Wilson Family Law Trust Account cr/acc Ms Headon”.

That the cash adjustment to be paid to the Applicant Wife, to achieve a distribution of the net assets pursuant to Order 1 hereof, be calculated as follows:

X = [NP x 49%]-W:

Where:

“X” is the amount to be paid to the Applicant wife on the terms stipulated in Order 2 hereof

“NP” is the net value of the total property and liabilities of the Applicant Wife and the Respondent Husband as at the date of trial in these proceedings; and

“W” is the net value of the property and liabilities that the Applicant Wife will retain as set out in these Orders.

That the parties shall forthwith do all acts and things and sign all such documents as may be necessary (including but not limited to any relevant transfer and/or refinance documentation) to ensure that the Applicant Wife:

(a) Receive and retain all right, title and interest in and to the following items for her sole use and benefit to the exclusion of the Respondent Husband:

(i) The real property located at Property H, in the State of Queensland (more particularly described as Lot (omitted) on RP (omitted), County of (omitted), Parish of (omitted), Title Reference (omitted));

(ii) The real property located at Property H, in the State of Queensland (more particularly described as Lot (omitted) on RP (omitted) and Lot (omitted) on RP (omitted), County of (omitted), Parish of (omitted), Title References (omitted) and (omitted)) subject to Orders 6 and 7 herein;

(iii) The real property located at Property T, in the State of Queensland (more particularly described as Lot (omitted) on RP (omitted), County of (omitted), Parish of (omitted), Title Reference (omitted));

(iv) The cash savings held in her individual name including but not limited to cash savings held in the following bank accounts:

A. (omitted) Bank account number (omitted);

B. (omitted) account number (omitted);

C. (omitted) Bank account number (omitted);

(v) Her interest in the company (omitted) Pty Ltd (ACN: (omitted));

(vi) The furniture and contents in her possession; and

(vii) The (omitted) Range Rover motor vehicle in her possession;

(b) Retains sole responsibility for, and indemnifies the Respondent Husband in respect of, any and all liabilities (including but not limited to any taxation liabilities whether past or present and any credit card liabilities or personal loans) held in her individual name or encumbering any property which she retains pursuant to these Orders including but not limited to the:

(i) (omitted) credit card held in her name (referable to account number (omitted));

(ii) (omitted) Visa credit card held in her name (referable to account number (omitted));

(iii) Everyday Woolworths credit card held in her name (referable to account number (omitted)).

(a) Receive and retain all right, title and interest in and to the following items for his sole use and benefit to the exclusion of the Applicant Wife:

(i) The real property located at Property S in the State of Queensland (more particularly described as Lot (omitted) on RP (omitted), County of (omitted), Parish of (omitted), Title Reference (omitted));

(ii) The boat and trailer in his possession;

(iii) The cash savings held in his individual name including but not limited to cash savings held in the following bank accounts:

A. (omitted) Bank Account number (omitted);

B. (omitted) Bank Account number (omitted);

C. (omitted) Bank Account number (omitted);

(iv) The furniture and contents in his possession;

(v) His interest in the company (omitted) Pty Ltd (ACN: (omitted));

(vi) His interest in the company (omitted) Pty Ltd; and

(vii) Any superannuation entitlements held within his member’s account within the self-managed superannuation fund known as the “Bolger Superannuation Fund”;

(b) Retains sole responsibility for, and indemnifies the Applicant Wife in respect of any and all liabilities (including but not limited to any taxation liabilities whether past or present and any credit card liabilities or personal loans) held in his individual name or encumbering any property which he retains pursuant to these Orders including but not limited to the (omitted) Bank Visa credit card held in his name (referable to account number (omitted)).

That:

(a) The Applicant Wife indemnify and keep indemnified the Respondent Husband in relation to any liability with respect to the mortgage with the (omitted) Bank Account number (omitted) over the property situate at Property H, in the State of Queensland in the amount of approximately $144,417.00 and take such steps as may be necessary to cause the mortgage debt to be refinanced and the Respondent Husband to be released from any liability in relation to that mortgage debt;

(b) Should the Applicant Wife be unable to refinance the mortgage debt within forty (40) days referred to in paragraph 6(a) herein so as to release the Husband, the property at Property H shall be sold and the balance proceeds of sale, after the costs of sale and the discharge of the mortgage debt, be divided 49% to the wife and 51% to the husband.

That should the Respondent Husband not facilitate the cash adjustment as contemplated by Order 2 and calculated in accordance with Order 3 within the prescribed timeframe then the Respondent Husband shall be deemed to have “defaulted under the Orders” and:

(a) The real property located at Property S in the State of Queensland (in this Order 7 referred to as “the property”) shall be listed for sale by way of private treaty with an agent as agreed between the parties and if there is no agreement between the parties within fourteen (14) days of the date the Respondent Husband defaults under the Orders, the agent shall be nominated by the CEO of the Real Estate Institute of Queensland (and the costs of that appointment be borne solely by the Respondent Husband);

(b) The listing price for the property shall be as agreed between the parties and if there is no agreement within fourteen (14) days of the date the Respondent Husband defaults under the Orders, the listing price shall be as advised by the agent appointed pursuant to the preceding subparagraph of this Order;

(c) In the event that the property has not been sold by or before a date three (3) months after the listing of the property for sale, then the parties shall make all such arrangements and do all such acts and sign all such documents and the Respondent Husband will pay all moneys necessary to procure a sale by public auction of the property upon the following terms:

(i) The auctioneer shall be as agreed between the parties and if there is no agreement within fourteen (14) days of the deadline date for sale by private treaty (which falls three (3) months after the listing of the property for sale by private treaty), the auctioneer shall be nominated by the CEO of the Real Estate Institute of Queensland (and the costs of that appointment be borne solely by the Respondent Husband);

(ii) The auction shall take place within one (1) month after the deadline date for sale by private treaty;

(iii) The reserve price shall, unless agreed upon by the parties within fourteen (14) days of the deadline date for sale by private treaty, be as proposed by the auctioneer;

(iv) The Respondent Husband is to be responsible for payment of any auction expenses payable before the real property is auctioned.

(d) In the event that the property has not sold by auction or by private negotiation within the fourteen (14) days following the said auction, then the parties shall do all acts and sign all necessary documents necessary to procure further auction within each subsequent six (6) month period upon the same terms and conditions as applied to the first auction save for the reserve price for the property being lowered by 10% at each auction described in this subparagraph of this Order;

(e) That from the proceeds of the property the following amounts be paid and disbursed by the parties:

(i) The reasonable costs, expenses, commissions, advertising fees and disbursements of the agent and/or auctioneer conducting the sale;

(ii) The reasonable costs and fees of any solicitor acting for the parties in respect of such sale (who will be chosen by the Respondent Husband and to that end the Respondent Husband will pay for any fees payable to that solicitors which are due before the sale of the property);

(iii) The balance to be distributed as follows:

A. To the (omitted) Bank, the sum which is sufficient to discharge and release the mortgage (referable to account number (omitted)) encumbering the real property located at Property H, in the State of Queensland;

B. To the Applicant Wife, the sum sufficient to give effect to Orders 1 and 3 hereof;

C. The remainder thereafter to the Respondent Husband.

That from the date of these Orders, the Respondent Husband will be responsible for and indemnify the Applicant Wife from any outgoings or payments of whatsoever nature required to be made with respect to or in relation to the property located at Property S in the State of Queensland.

That from the date of these Orders, the Applicant Wife will be responsible for and indemnify the Respondent Husband from any outgoings or payments of whatsoever nature required to be made with respect to or in relation to the property located at:

(a) Property H in the State of Queensland;

(b) Property H, in the State of Queensland; and

10.

That the Respondent Husband retain his beneficial interest in, and the Applicant Wife forever and irrevocably relinquishes any entitlement or right she has to be considered as a beneficiary of, the Bolger Trust (ABN: (omitted)).

11.

That the Applicant Wife retain her beneficial interest in, and the Respondent Husband forever and irrevocably relinquishes any entitlement or right he has to be considered as a beneficiary of, the Headon Family Trust.

12.

That in the event either party refuses or neglects to sign any documents to effect the terms of these Orders (within seven (7) days of a written request to do so), the Registrar of the Federal Circuit Court of Australia, Brisbane Registry, is hereby appointed pursuant to s.106A of the Family Law Act 1975 (Cth), to execute such documents on behalf of the defaulting party.

13.

That unless otherwise specified in these Orders:

(a) The Applicant Wife and the Respondent Husband are each entitled to be the sole legal and beneficial owners of all items of property including money, motor vehicles, insurances, equities, superannuation entitlements and personal effects currently in the possession or control of each of them respectively; and

(b) The Applicant Wife and the Respondent Husband will each be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders or any liability held in their individual name.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

In the High Court decision of Stanford & Stanford (2012) FLC 93-518, the majority of the Court said:“The operation of s 7935. It will be recalled that s 79(2) provides that “[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”. Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order. 36. The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds. And while the power given by s 79 is not [86641]“to be exercised in accordance with fixed rules”, nevertheless, three fundamental propositions must not be obscured. 37. First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. So much follows from the text of s 79(1)(a) itself, which refers to “altering the interests of the parties to the marriage in the property” (emphasis added). The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order. 38. Second, although s 79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion. In Wirth v Wirth, Dixon CJ observed that a power to make such order with respect to property and costs “as [the judge] thinks fit”, in any question between husband and wife as to the title to or possession of property, is a power which “rests upon the law and not upon judicial discretion”. And as four members of this Court observed about proceedings for maintenance and property settlement orders in R v Watson; Ex parte Armstrong: “The judge called upon to decide proceedings of that kind is not entitled to do what has been described as ‘palm tree justice’. No doubt he is given a wide discretion, but he must exercise it in accordance with legal principles, including the principles which the Act itself lays down”. 39. Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is “just and equitable” to make the order is not to be answered by assuming that the parties’ rights to or interests in marital property are or should be different from those that then exist. All the more is that so when it is recognised that s 79 of the Act must be applied keeping in mind that “[c]ommunity of ownership arising from marriage has no place in the common law”. Questions between husband and wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be “decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses”. The question presented by s 79 is whether those rights and interests should be altered. 40. Third, whether making a property settlement order is “just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised “in accordance with legal principles, including the principles which the Act itself lays down”. To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.” (Footnotes omitted.)