JACK & JOSIPOVIC

[2017] FamCA 762

FAMILY COURT OF AUSTRALIA

JACK & JOSIPOVIC [2017] FamCA 762

FAMILY LAW – PROPERTY – Final consent orders – Where the Respondent is the trustee in bankruptcy –  power of the Court to make an order altering the interests of the trustee in bankruptcy  –  superannuation not included as divisible property of bankrupt estate.

Bankruptcy Act 1966 (Cth) ss 58, 116
Bankruptcy and Family Law Legislation Amendment Act 2005 No.20, 2005 (Cth)
Family Law Act 1975 (Cth) s 79

Harris v Caladine [1991] HCA 9; (1991) 172 CLR 84; (1991) FLC 92-217
Redman & Redman [2013] FamCAFC 183

APPLICANT: Ms Jack

RESPONDENT: Mr Josipovic

FILE NUMBER: SYC 2710 of 2017

DATE DELIVERED: 20 September 2017

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: McClelland J

HEARING DATE: 20 September 2017

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Mr Stubbs of Harris Freidman Lawyers

COUNSEL FOR THE RESPONDENT: Mr Ahmad

SOLICITOR FOR THE RESPONDENT: Slf Lawyers

Orders

THE COURT ORDERS BY CONSENT THAT:

1. Pursuant to s79 of the Family Law Act, as between the Applicant Wife and the Respondent Trustee, each parties’ respective legal and equitable title be adjusted such that both parties do all acts and things and sign all authorities and documents required to direct ERA Legal to disburse the monies held by them in the controlled monies account in the joint names of the parties as to:

   (a)       $265,000 to the Respondent;

   (b)       The balance to the Applicant.

2. That the Respondent releases the Applicant in respect to any and all claims with respect to the vested bankruptcy property of Mr B Jack.

3. That the Applicant releases the Respondent in respect to any and all claims with respect to the vested bankruptcy property of Mr B Jack.

4. That the Applicant retain all property and financial resources owned by her to the exclusion of and free of any claim by the Respondent.

5. That each party do all acts and things reasonably required including the signing or execution of all necessary documents to give effect to the provisions of these Orders within 14 days of being requested to do so.

6. That in the event that either party refuses or neglects to sign or execute and return a document within 14 days of presentation to them or a solicitor representing them pursuant to Section 106A of the Family Law Act 1975 (Cth), a Registrar of the Family Court of Australia is appointed and empowered and directed hereby to sign or execute the same in the name of that party upon presentation of such document and an Affidavit of a solicitor on behalf of the requested party as to the said neglect or refusal.

7. The proceedings, including those aspects of the proceedings that were transferred from the Federal Court are otherwise dismissed with no order as to costs.

AND THE COURT NOTES THAT:

A. The sum in Order 1(a) reflects the adjusted interests of the parties following the parties agreed position as to the existing beneficial interests disposing of the relief sought in the Federal Court as transferred to the Family Court.

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 Jack & Josipovic 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 2710 of 2017

Ms Jack

Applicant

And

Mr Josipovic

Respondent

EX TEMPORE

REASONS FOR JUDGMENT

1. This matter concerns an application for approval of proposed consent orders arising from an agreement reached by the wife and the trustee of the bankrupt estate of the husband Mr B Jack on 29 August 2017.

2. By way of brief background, on 8 May 2017 the wife filed an Initiating Application in the Family Court seeking payment of 75 per cent of the monies left in the controlled monies account to her. The monies in the controlled monies account represented the net proceeds of the sale of the former matrimonial home at Suburb C.

3. On 30 June 2017, the respondent, being the Trustee in Bankruptcy, filed a Response in the Family Court that pleaded distribution of its asserted 50 per cent beneficial interests with no statutory adjustment to the wife pursuant to section 79 of the Family Law Act 1975 (Cth) (“the Act”).

4. Proposed consent orders were agreed to in principle at the Conciliation Conference held on 29 August 2017. Those orders ultimately enlarged the wife’s interests in the property from her starting interest of 50 per cent to a total of 75 per cent.

5. By section 58(1)(a) of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”), any interest the husband had in property, owned in his own right, jointly with his wife or jointly with any third party, either at law or in equity, vested in the Trustee in Bankruptcy on his bankruptcy.

6. The proposed consent orders in this matter do not deal with the husband and wife’s respective superannuation entitlements. This is because, pursuant to section 116(2)(d)(iii)(A) of the Bankruptcy Act, divisible property does not include the interest of the bankrupt in “a regulated superannuation fund (within the meaning of the Superannuation Industry (Supervision) Act 1993)”.

7. The Bankruptcy and Family Law Legislation Amendment Act 2005 No.20, 2005 (Cth) (“the 2005 Amendment Act”) enhanced the powers of the Court in respect to proceedings in which a party to a marriage was bankrupt or had become bankrupt after proceedings were commenced. Most relevantly, section 79(1) of the Act was amended to include paragraph 79(1)(b), which empowers the Court to make an order altering the interests of the trustee in bankruptcy in the vested bankruptcy property.

8. A new paragraph 79(1)(d)(ii) was also included to empower the Court to make an order against a trustee in relation to the settlement or transfer of property. Incorporating those amendments, section 79(1) now provides:

   (1) In property settlement proceedings, the court may make such order as it considers appropriate:

   (a) in the case of proceedings with respect to the property of the parties to the marriage or either of them--altering the interests of the parties to the marriage in the property; or

   (b) in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage--altering the interests of the bankruptcy trustee in the vested bankruptcy property;

   including:

   (c) an order for a settlement of property in substitution for any interest in the property; and

   (d) an order requiring:

   (i) either or both of the parties to the marriage; or

   (ii) the relevant bankruptcy trustee (if any);

   to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.

9. Section 79(2) of the Act imposes a precondition to the Court making an order adjusting the property interests of parties. The pre-condition is that the Court must be satisfied that it is “just and equitable” to make such an order having regard to those matters set out in section 79(4) of the Act.

10. In Redman & Redman [2013] FamCAFC 183 the Full Court said at paragraph 36:

    The Court is not relieved from its obligation to consider whether the making of the Order is just and equitable under s 79(2) simply because the order is said to be by consent.

11. This is consistent with the observations of Brennan J in Harris v Caladine [1991] HCA 9; (1991) 172 CLR 84; (1991) FLC 92-217 where at 78474, his Honour said:

    It does not follow that, when a consent order is sought in a s. 79 application, it is necessary to conduct an inquiry into each of those factors. The Court may be satisfied that a provision is proper by reference not only to the material before the Court relating to the factors mentioned in s. 79(4) but by reference to the advice available to the respective parties and the consent which they respectively give to the making of the order. In the majority of cases, once it appears that the parties are conscious of the factors mentioned in pars (a) to (f) and have taken them into account before consenting, the provisions “with respect to financial matters” proposed for incorporation in the consent order will be seen to be “proper” ... Nevertheless, when an application for a consent order in a section 79(1) matter is made there is a discretion to be exercised with reference to the propriety of the provisions with respect to financial matters. The making of a consent order in a s 79(1) matter is not automatic.

12. I agree with counsel for the Trustee in Bankruptcy that the statutory adjustment task in circumstances where a trustee is a party to property proceedings requires the following matters to be taken into account:

    a)The nature of the direct and indirect financial contributions to the acquisition of the Suburb C property;

    b)The nature of the direct and indirect non-financial contributions to the welfare of the home and the family;

    c)The source and consequences of joint and sole liabilities of the family;

    d)The ability to consider the legitimate interests of creditors of the parties;

    e)The future needs of the wife.

13. In this matter, I have had regard to a draft balance sheet proposed by the parties identifying the property.  I have also had regard to the Financial Questionnaire filed 16 August 2017 and the Financial Statement filed 9 May 2017 of the wife, and I have had regard to the Financial Questionnaire filed 21 August 2017 of the husband and an affidavit of Ms D on behalf of the trustee in bankruptcy dated 30 June 2017.

14. Having regard to those matters, I am satisfied that the consent orders reflecting the agreement between the parties achieves an appropriate and just and equitable adjustment of the parties’ property interests in accordance with section 79 of the Act.

15. I make orders in accordance with the consent orders agreed to on 29 August 2017.

I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of the Honourable Justice McClelland delivered on 20 September 2017.

Associate: 

Date:  26 September 2017.