KENDALL & KENDALL

[2021] FamCA 185

FAMILY COURT OF AUSTRALIA

KENDALL & KENDALL [2021] FamCA 185

FAMILY LAW – INTERIM PROPERTY SETTLEMENT – Substantial agreement between the parties – Where the parties unable to agree upon amount to be received by each from sale of property – Where wife seeks more than husband – Husband seeks equal distribution – Where husband has greater capacity for earning income – Where parties have agreed orders to create a fund from proceedings of sale for servicing ongoing mortgage payments, rates, utilities and taxes in respect of other properties.

APPLICANT: Ms Kendall

RESPONDENT: Mr Kendall

FILE NUMBER: SYC 5218 of 2020

DATE DELIVERED: 16 February 2021

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Harper J

HEARING DATE: 16 February 2021

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Ford

SOLICITOR FOR THE APPLICANT: Solari & Stock Lawyers

COUNSEL FOR THE RESPONDENT: Mr Hogg

SOLICITOR FOR THE RESPONDENT: Archbold Gittany Lawyers

The Court Orders

1. Orders be made in accordance with the Minute of Consent Orders, marled Exhibit B, noting the following insertions at paragraph 4.3.1 and 4.3.2:

   Sole Occupation of the Former Matrimonial Home

   1.That the Wife forthwith have the right to sole occupation of the former matrimonial home at B Street, Suburb C, New South Wales, to the exclusion of the Husband.

   Sole Occupation of the Investment Property

   2.That the husband forthwith have the right to sole occupation of the investment property at 2 H Street, Suburb C, New South Wales, to the exclusion of the Wife.

   Z Street, Suburb AA.

   3.That the Husband and Wife in their capacity as Trustees of the Kendall Trust forthwith do all acts and things necessary to place the property known as Z Street, Suburb AA being the whole of the land comprised in Folio Identifier … (hereinafter referred to as the "Suburb AA property") on the market for sale by private treaty at the earliest possible date.  That for the purpose of implementing this Order:

   3.1  That the real estate agent nominated to sell the Suburb AA property shall be DD Real Estate of BB Street, Suburb CC, New South Wales or otherwise as selected as nominated by the Wife ("the agent").

   3.2  The sale price at which the Suburb AA property shall be listed shall be mutually agreed upon by the parties or in the absence of agreement reached within 14 days of the date of these Orders, shall be the price nominated as the fair market value by the agent;

   3.3  If the property does not sell within 90 days of first listing or at the first auction if first sold by auction, then the property will be submitted or resubmitted for auction at three monthly intervals until the property is sold, the reserve price to be agreed upon between the parties or if unable to be agreed, 14 days prior to each listed auction, then to be nominated by the agent.

   3.4  The parties shall each cooperate in every way with the agent including (without limiting the generality of the foregoing):

   3.4.1making the key available to the agent;

   3.4.2allowing inspection of the Suburb AA property at all reasonable times requested by the agent;

   3.4.3doing or saying nothing to hinder or prevent a sale being effected;

   3.4.4ensuring the Suburb AA property, including the grounds, are in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and

   3.4.5signing all documents requested by the agent in relation to the listing for sale of the Suburb AA property, except a contract or agreement for sale which has not been authorised by the parties’ Solicitors.

   3.5  the parties shall instruct such Solicitor or Conveyancer as they agree upon to have the conduct of the sale of the Suburb AA property on behalf of the parties, or in the absence of agreement reached within 14 days of the date of these Orders, the Wife is to nominate three Solicitors or Conveyancers within 7 days of the default date and the Husband is to pick one of those Solicitors or Conveyancers, the Solicitor/Conveyancer to be appointed by way of that process, providing that if a party fails to comply with this Order, then the other party is to select the Solicitor/Conveyancer;

   3.6 neither party may confer on the agent, without the consent of the other party, any right to any sole or exclusive agency in respect of the Suburb AA property or to any commission.

   4.Upon completion of sale of the Suburb AA property the proceeds of sale be paid in the following manner and priority:

   4.1 all costs and expenses of sale, including legal costs and disbursements, agent’s commissions, advertising expenses, Valuer’s fees and auction expenses (including repayment of any such expenses as have been paid by either or both of the parties);

   4.2 in discharge of any mortgage over the Suburb AA property; and

   4.3 the net balance to be divided as follows:

   4.3.1$200,000.00 to the Wife;

   4.3.2$150,000.00 to the Husband;

   4.3.3The balance to be held in the Trust Account of Solari & Stock Lawyers in trust for both parties pending further Order or joint written direction of the parties, save that the parties hereby authorise Solari and Stock Lawyers to release such funds from the said trust monies from time to time as may be directed by the Wife in writing, with copy of same to be provided to the husband,  for the purposes of paying expenses as to the regular mortgage instalments and any arrears owing, Council rates, water rates, strata levies, insurance premiums and taxes in relation to the following properties :

   a) B Street, Suburb C

   b) D Street E Town

   c) F Street, G Town

   d) 1 H Street, Suburb C

   e) 2 H Street, Suburb C.

   Restraints

   5.That in relation to the following entities:

   5.1  Kendall Holdings Pty Ltd as Trustee for the Kendall Family Trust;

   5.2 J Business;

   5.3 K Business (Suburb L);

   5.4 M Pty Ltd;

   5.5 P Family Trust;

   5.6 Q Pty Ltd;

   5.7 The Kendall Trust;

   5.8 R Pty Ltd Trading as K Business (Suburb T) Suburb W;

   (hereinafter referred to as "The Kendall Group of Entities"), the Husband, without admission, be and is hereby restrained from doing or saying any act or thing that will:

   5.8.1Interfere with the orderly conduct of the business of the entities; or

   5.8.2Damage, devalue or dissipate any business, property or asset of the entities; or

   5.8.3Remove any asset from the business premises of the entities other than for the proper use in the normal course of the business of the entities.

   6.That without admission, the parties are restrained from denigrating each other including, previous and current employees and/or clients or contractors, or any other third party associated with The Kendall Group of Entities.

   Plant & Equipment

   7.Noting that with the inclusion of any plant and equipment, which is currently held by the Husband and is reflected in any of The Kendall Group of Entities Financial Statements, the parties will do all acts and things and sign all documents to cause all plant and equipment in The Kendall Group of Entities to be valued by S Consultants of V Street, Suburb W, or unless otherwise agreed between the parties, and then sold in the following manner:

   7.1  Do all acts and things to facilitate the inspection of the plant and equipment by the valuer; and

   7.2 Subject to Order 8 below, cause the plant and equipment to be sold.

   8.The Husband will be at liberty to within 7 days of receiving the valuation, acquire at the valuation price, any item or items, which is subject of the valuation. 

   Disclosure

   9.That the Husband provide to the Wife within 14 days of the quarter close, the previous quarter’s profit & loss statements, BAS returns, together with a list of current creditor and debtors as they relate X Company.

THE COURT NOTES THAT:

1. Notations be made in accordance with paragraph 10 and 11 in the document titled Minute of Consent Orders, marked Exhibit B:

   Valuations

   10.The Court notes the parties have engaged Mr Y, under Chapter 15, as a single expert to value the Wife’s interests of Kendall Holdings Pty Ltd.

   11.The single expert valuation of Kendall Holdings Pty Ltd is to be undertaken by Mr Y as at;

   8.1.     30 June 2020; and

   8.2.     31 March 2021.

THE COURT ORDERS THAT:

1. Pursuant to Rule 15.5 of the Family Court Rules 2004 (Cth), if the parties are unable to agree on the value of the property of Kendall Holdings Pty Ltd and any loan to M Pty Ltd (ABN …), and subject to Division 7A of the Income Tax Assessment Act1936 (Cth), the parties are to appoint a single joint expert, Mr Y, to value any property. The parties are to share equally in the costs of the valuation.

2. Orders be made in accordance, with paragraph 12 , 13 and 14 in the document titled Minute of Consent Orders, marked Exhibit B:

   12.The parties do all acts and things to engage Mr Y as a single expert to determine and value and provide advice in relation to the potential Division 7A of M Pty Ltd (ABN …).

   Costs

   13.Costs reserved.

   Other

   14.That the balance of orders sought in the Amended Application in a Case filed by the Applicant on 15 December 2020, relating to interim parenting matters, be adjourned for further hearing on a date and time to be allocated by the 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 Kendall & Kendall 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 5218 of 2020

Ms Kendall

Applicant

And

Mr Kendall

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. Proceedings SYC5218/2020 were listed before me for interim hearing on 15 February 2021.  On that occasion, both parties were represented by experienced counsel and engaged in fruitful discussions which resulted in a document signed by both the parties entitled “Minute of Consent Orders”.  That document was marked Exhibit B.  Exhibit B represents the extent of the agreement reached between the parties on the resolution of their interim property issues including an agreement that the wife would have sole occupation of the former matrimonial home whilst the husband would have a right of sole occupation to an investment property at 2 H Street, Suburb C.

2. The parties also agree on the sale of Z Street, Suburb AA.  The significance of the property is that it is the commercial premises upon which there had been conducted, up until approximately August 2020, a business known ultimately as “J Business”.  This business was conducted through a corporate entity known as “Kendall Holdings Pty Limited” which is also the trustee of, at least, one relevant trust in these proceedings.  The parties have also agreed upon the husband entering into a number of restraints, for the valuation and potential purchase by the husband of some plant and equipment and the appointment of Mr Y as the single expert to value the wife’s interest in Kendall Holdings Pty Limited as at 30 June 2020 and 31 March 2021.

3. The parties agreed that the Suburb AA property should be sold and that there should be a distribution to each party from the proceeds of sale after the payment of conveyancing costs and the discharge of any mortgage.  They were unable to agree upon the amount to be disbursed to each of them.  The competing contentions are, by the wife, that she should receive $200,000 with the husband to receive $100,000.  The husband contends that they should each receive $200,000.

4. One purpose of Order 4.3.3, in particular, which comes into operation upon completion of the sale of the Suburb AA property, is for there to be constituted a fund from which ongoing mortgage payments for other properties, together with strata levies, insurance premiums, rates and taxes, can be paid, on an interim basis, while the parties move towards progressing the matter towards finality.  Accordingly, I can make orders by consent, as set out in Exhibit B, but it is necessary to adjudicate upon the amounts to be disbursed to each of the parties from the proceeds of sales of the Suburb AA property. 

5. In support of her contentions, the wife argues that the husband has already received an amount of money from the sale of a marine vessel.  The sale of this vessel and the receipt of its proceeds of sale are not in dispute.  She also points to the fact that the husband is paying no child support and that he will receive a benefit from the payment of the mortgage over the property in which he will reside, namely, 2 H Street, Suburb C, from the proceeds of sale of Suburb AA and that of the two parties, it was not in dispute that the husband is the one who is able to generate income.

6. In support of his contentions, that each should receive the same amount, the husband points out that there is no dispute that, on a final basis, there will be sufficient assets for an adjustment to be made in respect of the matrimonial pool taking account of an equal distribution of proceeds of sale, now, from the Suburb AA property.  It was common ground that the likely net proceeds of sale from the Suburb AA property are likely to be between $550,000 and $600,000.  It was also common ground that after the sale of the Suburb AA property the cost of servicing the residual mortgages over other properties of the parties would approximate $180,000 per annum.

7. Accordingly, if distribution was made as the wife contends there would be somewhere between $250,000 and $300,000 available to meet the purposes of the agreed Order 4.3.3. On the husband’s figures there would be $250,000. 

8. Taking account of all these matters, in particular, the fact the husband has received some money from the sale of the boat and has, at least, slightly better prospect of earning income than the wife, together with the need for ongoing servicing of mortgages over and costs of the other properties owned by the parties, it seems to me that an equal distribution, on balance, is not warranted.

9. However, there is no doubt that neither party is presently placed to earn a particularly adequate income to cover the likely expenses of their current property holdings.  Although it is an arbitrary process, I am satisfied in the circumstances that the figure to be inserted in 4.3.1 of Exhibit B should be $200,000 and that the figure to be inserted in 4.3.2 of exhibit B should be $150,000. 

10. I will make orders accordingly.

I certify that the preceding ten (10) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Harper delivered on 16 February 2021.

Associate: 

Date:  6 April 2021