Krueger and Krueger
[2013] FCCA 88
•19 April 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| KRUEGER & KRUEGER | [2013] FCCA 88 |
| Catchwords: FAMILY LAW – Property – asset pool – contributions of the parties – where contributions equal – whether there should be an adjustment for either party based on Family Law Act 1975 (Cth) s.75(2) – where the respondent seeks an adjustment of 5% in her favour – where most of the assets were dealt with by way of consent orders – where parties offered the opportunity to submit a joint balance sheet setting out values of any remaining asset – where parties offered the opportunity to make a further submission about proposed orders. |
| Legislation: Family Law Act 1975, ss.75, 79, 106A |
| Cases cited: Stanford v Stanford [2012] HCA 52 |
| Applicant: | MR KRUEGER |
| Respondent: | MS KRUEGER |
| File Number: | SYC 863 of 2010 |
| Judgment of: | Judge Scarlett |
| Hearing date: | 4-6 May 2011 |
| Date of Last Submission: | 6 May 2013 |
| Delivered at: | Sydney |
| Delivered on: | 19 April 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr Johnston |
| Solicitors for the Applicant: | Swaab Lawyers |
| Counsel for the Respondent: | Mr Dura |
| Solicitors for the Respondent: | Anderson Lawyers |
ORDERS
The Applicant and the Respondent are to do all things and sign all documents necessary to divide any remaining assets not otherwise covered by the Orders of this Court on 6 May 2011 or 7 October 2011 equally between them.
Each party is to be solely responsible for any debt standing solely in his or her own name and shall indemnify the other party against all or any claims arising from such debt.
Written submissions in support of any application for costs are to be filed and served within 21 days and written submissions in opposition to any such application are to be filed and served within a further period of 14 days.
IT IS NOTED that publication of this judgment under the pseudonym Krueger & Krueger is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 863 of 2010
| MR KRUEGER |
Applicant
And
| MS KRUEGER |
Respondent
REASONS FOR JUDGMENT
Application
This is an Application by the husband for property Orders.
The Orders sought relate to the business of the parties, companies known as [Z] Pty Limited and [B] Pty Limited, amongst other matters.
Background
The husband was born [in] 1971 and the wife was born [in] 1972.
The parties were married [in] 1991. They separated on 20 July 2008. There are no children of the marriage.
At the time of the marriage, the husband was working for a [omitted] and the wife was working as a [omitted].
On 4 September 1991 they purchased a house and land package at [omitted] at a combined cost of about $90,000.00. They sold that property in 1993.
In about 1992 or 1994, (the parties’ accounts differ) the parties started a business known as [Z]. The husband commenced working full-time in the business. The wife worked elsewhere at that time.
In May 1995 the parties purchased Property B, [G] for $72,000.00.
On 29 June 1995 they incorporated a company called [Z] Pty Limited. The husband and wife were directors and shareholders.
By 1996 the company had grown in size to the extent that it had rented premises in [omitted]. The wife left her employment and joined the husband in working for the company full-time.
They later employed one of the husband’s brothers to [omitted].
In December 1997 the parties had purchased an investment property at Property Y, [G] for approximately $155,000.00.
Over the years 1998 and 1999 the company began [business activities omitted].
The parties sold the property at Property Y, [G] for about $195,000.00 in February 1999.
In April 1999 they purchased a property at Property C, [C] for $154,000.00. They applied the proceeds of sale of the properties at Property B, [G] and Property Y, [G] toward the purchase price of the property at [C].
The parties borrowed the sum of $250,000.00 from the National Australia Bank to fund the construction of a house on the property and lived with the husband’s parents for about seven months while the house was being built.
On 27 March 2001 the parties registered a company called [B] Pty Limited. This company lay dormant from 2001 to 2007.
In May 2003 the parties financed the purchase of two BMW motor cars for the husband and the wife.
On 14 January 2004 the parties purchased an industrial unit in Property N, [W], for $612,000.00. The purchase was funded by a loan from the St George Bank. The company moved into the [W] property and operated from there.
In June 2004 the parties sold the husband’s BMW convertible and financed the purchase of a Mercedes Benz CLK convertible for the husband.
The husband was working full-time for the company, on his evidence, seven days a week. The wife was employed as an [omitted] one day a week at a salary of $605.00 per week.
In 2005 the husband employed one [name omitted] as Sales manager for the Company. His remuneration package included a Toyota Camry motor car.
In 2006 the parties rented further space for the company in Property N, [W]. The wife states that by then the company had employed nine people, including four of the husband’s siblings, the wife’s sister and the wife’s mother.
In March 2007, at the husband’s instigation on the advice of his accountant, the parties set up the [J] Investment Trust. The company [B] Pty Limited was the trustee. Later that year the Trust entered into a contract to purchase vacant land at Property W. The purchase price was $790,000.00. The Trust paid a deposit of $200,000.00 and borrowed $600,000.00 to complete the purchase.
The company relocated to the premises at Property W and the company entered into a lease from [B] Pty Ltd.
The parties’ relationship started to deteriorate in late 2007 or early 2008.
In early 2008 the term of the finance for the wife’s BMW was up for renewal but, after discussions between the parties, the husband would not agree to purchasing a new car for the wife. The car was refinanced.
However, the husband wished to purchase a Porsche motor car and traded in his Mercedes Benz on a new Porsche Carrera at a purchase price of $217,000.00. The wife did not agree to this purchase.
The parties separated on 20 July 2008.
After the parties’ separation, the husband continued to work at the company on a full-time basis. The wife worked from home. The company continued to pay her the amount of $605.00 per week and she retained the use of the BMW motor vehicle.
The premises in Property N, [W], were sold in August 2008 for $790,000.00.
In 2009 the wife commenced attending the company premises for about three to five hours on one day each week.
Between November 2008 and August 2009 the parties took part in negotiations with the assistance of their lawyers in an attempt to resolve financial issues between them, but without success.
In September 2009 the parties attended a settlement conference where they reached some agreement. However, over the ensuing months, the parties were involved in a number of disputes about financial matters, with the husband complaining that the wife was interfering in the running of the company business.
On 12 February 2010 the husband commenced proceedings in this Court.
On 30 April 2010, after an interim hearing[1], the Court made interim injunctive orders, providing that:
[1] Krueger & Krueger [2010] FMCAfam 466
Until further order, the Respondent is restrained from interfering with the day-to-day operations of the company [Z] Pty Limited, including but not limited to communicating with:
(a)Company staff;
(b)Clients and potential clients of the said company;
(c)Creditors and debtors of the company;
(d)Suppliers or potential suppliers of the company;
(e)All sub-contractors of the company; and
(f)All persons, corporations and entities that provide service to the company.
Within three (3) days of the date of these Orders the Respondent is to deliver to the Applicant the following:
(a)The keys to the premises of the company at Property W;
(b)The swipe card to the company premises; and
(c)The remote control to the external gate of the company premises;
And that in order to give effect to these orders the Respondent is to deliver those items to her solicitor and that she instruct her solicitor to send those items immediately to the solicitor for the Applicant;
UNTIL FURTHER ORDER the Respondent be restrained from operating any banking account or facility of the company including its St George Bank Visa Card account, the trading account of the company, the [B] account and the home loan mortgage and re-draw facility of the parties.
That the Respondent within seven (7) days deliver to the Applicant all cheque books and copies of all hard drives of the company in her possession custody or control and that in order to give effect to these Order the Respondent deliver those items to her solicitor and that she instruct her solicitor to send them immediately to the solicitor for the Applicant.
UNTIL FURTHER ORDER:
(a)The Respondent be restrained from entering the premises at 19 Property W without the prior written consent of the Applicant.
(b)The Applicant provide to the Respondent by sending to her electronically to an address provided by the Respondent by 4:00 pm on the last working day of each month, copies of the following:
(i) Bank statements for the past month in relation to the company and [B].
(ii) Cheque butts for the past month in relation to the company and [B].
(iii) Invoices from suppliers for the past month.
(iv) Wage reconciliations for the past month.
(v) Business activity statements in relation to the company if lodged during the past month.
(c)The Applicant cause to be met the repayments to BMW Finance in relation to the Porsche motor vehicle and the BMW motor vehicle as and when they fall due.
(d)The Applicant cause to be met as and when they fall due from the re-draw facility at St George Bank, all payments of the mortgage secured against the home, the home and contents insurance and the council rates relating to the home.
(e)The Applicant cause the company to pay to the Respondent $700.00 gross per week by way of wages.
Within three (3) days of the making of this Order, the Respondent must cause to be returned to the company all copies of the back-up computer hard drive of the company, [Z] Pty Limited, and that in order to give effect to these Orders the Respondent must deliver those copies to her solicitor and instruct her solicitor to send those items immediately to the solicitor for the Applicant.
UNTIL FURTHER ORDER, the Respondent is restrained from copying, downloading, sending or in any way using or dealing with any information obtained from the back-up hard drives that the Respondent removed from the premises of the Company on 14 April 2010 or on any other date or occasion.
The Respondent is to pay the Applicant’s costs as assessed or taxed.
The parties were directed to attend a Conciliation Conference with a Registrar on 31 May 2010. No settlement was reached.
The Application came on for final hearing on 4 May 2011 and continued until 6 May 2011.
Issues
Counsel for the Applicant husband contended that the issues for trial were:
a)The parties appointed Mr P as a single expert of the corporate entities.
b)The wife appointed Ms W as an accountant/valuer and served a report dated 14 February 2011.
c)Has the valuer for the wife of the corporate entities complied with the Rules relating to expert evidence or is she acting as an advocate for the wife?
d)What is the value of the corporate entities of the parties?
e)What sum should be added back against the wife for monies removed from the corporate entities?
f)Does the husband own land in Lebanon?
g)What are the contribution based entitlements?
h)Should there be any adjustment for either party pursuant to section 75(2)?
It was the position of the husband that the parties’ contribution based entitlements were approximately equal. It was also put by counsel for the husband that there was no case for an adjustment under s.75(2) of the Family Law Act for either party.
Counsel for the wife submitted that the main issues in contention requiring judicial determination were:
a)The value of the business known as [Z].
b)Has the husband made a full and frank disclosure of his financial circumstances, in particular, does the husband own land in Lebanon?
c)What are the contribution based entitlements of the parties?
d)What, if any, adjustment should be made pursuant to s.75(2) in favour of either of the parties?
Orders Sought
The husband sought the following Orders, set out in his Minute of Orders:
Final orders and declarations:
[Z] Pty Limited (ACN [omitted])
1. A declaration that it is just and equitable that [Z] Pty Limited (ACN [omitted])(“[Z]”) be wound up.
2. An order pursuant to section 461(1)(k) of the Corporations Act 2001 be wound up.
3. An order that Mr H of [omitted], Chartered Accountants, of [address omitted], Sydney be appointed Liquidator of [Z].
4. An order that the husband and wife deliver all assets of [Z] to the Liquidator in his or her possession custody or control.
An order that the Liquidator have the powers of a Trustee for Sale and of a Receiver pursuant to the provisions of section 420 of the Corporations Act 2001.
6. An order that the Liquidator be authorized, in addition to the powers the Liquidator may have apart from this order, to:
6.1 take possession of, collect and get in any stock and book debts of [Z];
6.2 sell or otherwise dispose of the property and assets of [Z] by private treaty, private tender or public auction such sale to be under his control and there be liberty to any party to bid at the auction (if any);
6.3 to demand and call upon one or more of the debts of the company;
6.4 to make debtors bankrupt, to wind up companies and do all acts and things in connection with any bankruptcy or winding up and to take possession in any court or other tribunal or forum in the name of the company for the purpose of enforcing payment of any of the debts.
[B] Pty Limited (ACN [omitted])
A declaration that it is just and equitable that [B] Pty Limited (ACN) [omitted])(“[B]”) be wound up.
An order pursuant to section 461(1)(k) of the Corporations Act 2001 that [B] be wound up.
An order that Mr H of [omitted], Chartered Accountants, of [address omitted], Sydney be appointed Liquidator of [B].
10.An order that the husband and wife deliver all assets of [B] to the Liquidator in his or her possession custody or control.
11.An order that the Liquidator have the powers of a Trustee for Sale and of a Receiver pursuant to the provisions of section 420 of the Corporations Act 2001.
12.An order that the Liquidator be authorized, in addition to the powers the Liquidator may have apart from this order, to:
12.1take possession of, collect and get in any stock and book debts of [B];
12.2sell or otherwise dispose of the property and assets of [B] by private treaty, private tender or public auction such sale to be under his control and there be liberty to any party to bid at the auction (if any);
12.3to demand and call upon one or more of the debts of the company;
12.4to make debtors bankrupt, to wind up companies and do all acts and things in connection with any bankruptcy or winding up and to take possession in any court or other tribunal or forum in the name of the company for the purpose of enforcing payment of any of the debts.
The [J] Investment Trust
13.An order that the said Mr H be forthwith appointed Trustee (“the Trustee”) for sale of the assets of the [J] Investment Trust (“the Trust”).
14.An order that the husband and wife deliver all assets of the Trust to the Trustee in his or her possession custody or control.
15.An order that the Trustee be authorized, in addition to the powers the Trustee may have apart from this order, to:
15.1take possession of, collect and get in any stock and book debts of the Trust;
15.2sell or otherwise dispose of the property and assets of the Trust by private treaty, private tender or public auction such sale to be under his control and there be liberty to any party to bid at the auction (if any);
15.3to demand and call upon one or more of the debts of the Trust;
15.4to make debtors bankrupt, to wind up companies and do all acts and things in connection with any bankruptcy or winding up and to take possession in any court or other tribunal or forum in the name of the Trust for the purpose of enforcing payment of any of the debts.
16.An order that upon the sale of the assets of the Trust the Trustee shall:
16.1 Pay amounts required to discharge any mortgage, charge or liability on any Trust property;
16.2 Pay the cost, expenses, commission of any agent or agents acting on the sale of any Trust property;
16.3 Pay the legal costs associated with the sale of any Trust property;
16.4 Pay the costs and disbursements of the Trustee in respect of the implementation of these orders as approved by the Court such approval to be deemed to have been given by the filing of an affidavit setting out such costs and disbursements;
16.5 Pay the costs and disbursements of any lawyer necessarily retained by the Trustee in respect of the implementation of these orders;
16.6 Pay the balance in equal proportions to the husband and the wife.
Property C, [C]
17.An order that the said Mr H be forthwith appointed Trustee for sale of the property situate at and known as Property C, [C] (“the [C] property”).
18.An order that the husband and the wife deliver possession of the [C] property to the Trustee.
19.An order that the Trustee have the powers of a Trustee for Sale and of a Receiver pursuant to the provisions of section 420 of the Corporations Act 2001.
20.An order that the Trustee be authorized, in addition to the powers the Trustee may have apart from this order, to sell or otherwise dispose of the property by private treaty, private tender or public auction such sale to be under his control and there be liberty to any party to bid at the auction (if any).
21.An order that upon the sale of the [C] property the Trustee shall:
21.1Pay amounts required to discharge any mortgage, charge or liability on the property;
21.2Pay the cost, expenses, commission of any agent or agents acting on the sale;
21.3Pay the legal costs associated with the sale;
21.4Pay the costs and disbursements of the Trustee in respect of the implementation of these orders as approved by the Court such approval to (be)[2] deemed to have been given by the filing of an affidavit setting out such costs and disbursements;
21.5Pay the costs and disbursements of any lawyer necessarily retained by the Trustee in respect of the implementation of these orders;
21.6Pay the sum of $315,715.00 to [Z] Pty Limited in discharge of the loan accounts of the parties;
21.7Pay the balance in equal proportions to the husband and the wife.
A declaration that otherwise each of the husband and the wife is the sole and beneficial owner of all other items of property in their respective possession custody or control including but not limited to superannuation entitlements.
[2] presumably
23.That in the event that either party shall fail, neglect or refuse to execute any deed instrument or document to give validity and effect to these orders then upon the other party filing an affidavit setting out such failure, neglect or refusal then a Registrar or Deputy Registrar of the Sydney Registry of the Court is hereby appointed pursuant to section 106A of the Family Law Act to execute any such deed, instrument or document in the name of the party who defaults and to do all things necessary to give validity to the operation of the deed, instrument or document.
24.That the parties have liberty to apply on 7 days notice in respect of the implementation of these orders.
25.That the wife pay the husband’s costs of and incidental to these proceedings.
On the third day of the hearing, counsel for the wife submitted a document entitled “Wife’s Minute of Orders” which set out the orders that she sought. There were many similarities to the orders sought by the husband, but some important differences.
The wife agreed with Orders 1 to 6.4 sought by the husband. However, she sought an order 6.5 that gave the power to the Liquidator:
To determine the liability of each of the parties in respect of the joint loan account of (each)[3] of them.
[3] presumably
The wife agreed with Orders 7 to 16.5 sought by the husband. However, she did not agree with Order 16.6 sought by the husband, which proposed that the Trustee should pay the balance of the proceeds after the sale of the assets of the [J] Investment Trust to the husband and wife in equal proportions.
The wife’s proposed order 16.6 stated that the Trustee should:
Pay the balance as to 55% to the Wife and 45% to the husband.
The wife agreed with Order 17 sought by the husband, but not Orders 18 to 21, which empowered the Trustee to sell the property at Property C, [C].
Orders 18 to 24 of the wife’s Minute of Orders stated:
An order that upon the sale of the [C] property the parties shall provide all necessary instructions and authorities to cause the proceeds of sale to be distributed as follows:
18.1Pay amounts required to discharge any mortgage, charge or liability on the property;
18.2Pay the costs, expenses, commission of any agent or agents acting on the sale;
18.3Pay the legal costs associated with the sale;
18.4Pay the costs and disbursements of any lawyer/conveyancer acting on the sale;
18.5Pay the sum of $300,715.00 to [Z] Pty Limited in discharge of the loan accounts of the parties;
18.6Pay the balance as to 55% to the wife and 45% to the husband.
For the purpose of implementing Orders 17 and 18 above:
a.the Wife shall nominate to the Husband three (3) real estate agents and three (3) Solicitors/Conveyancers to conduct the sale of the [C] property within seven (7) days from the date of the Orders;
b.within seven (7) days of the receipt of such lists by the Wife, the Husband shall select one Real Estate Agent and one Solicitor/Conveyancer that the parties shall then instruct to conduct the sale of the [C] property.
That should the Husband fail to comply with Order 19 above, the wife shall then select a Real Estate Agent and Solicitor/Conveyancer who shall be instructed to conduct the sale of the [C] property.
That the [C] property be listed with an asking price of $850,000.00.
An order that within 14 days of the date of these Orders the Husband sign all documents necessary to transfer all his right, title and interest in the BMW motor vehicle, currently in the wife’s possession, to the Wife.
A declaration that otherwise the husband shall be and remain the sole and beneficial owner of all other items of property in his possession, custody or control including but not limited to:
(a)All funds in bank accounts in his name;
(b)The Porsche motor vehicle currently registered in his name;
(c)Any property in which he has an interest in Lebanon; and
(d)Any superannuation entitlements currently standing in his name.
A declaration that otherwise the wife shall be and remain the sole and beneficial owner of all other items of property in her possession, custody and control including but not limited to:-
a.All funds in bank accounts in her name;
b.The entire contents of [C] property; and
c.Any superannuation entitlements currently standing in her name.
The wife’s Minute of Orders shows that she agrees with the husband’s proposed Orders 23 and 24, at 25 and 26 of her Minute.
The wife does not agree with the husband’s proposed Order 25, which seeks that she pay his costs. In her proposed Order 27, the wife seeks an order:
That the husband pay the wife’s costs of and incidental to these proceedings.
Evidence
The husband relied on the following documents:
a)His Minute of Orders;
b)His affidavit sworn 9 February 2011;
c)His Financial Statement sworn 9 February 2011;
d)The affidavit of Mr M sworn on 10 March 2010;
e)The affidavit of Mr Z sworn 29 April 2011;
f)The affidavit of Mr K sworn 13 April 2011;
g)The affidavit of Mr H (consent to act) sworn on 4 May 201; and
h)The Report of Mr P of [omitted], Accountants.
As it turned out, only the husband and Mr Z were required for cross-examination.
The wife relied on the following documents:
a)Her Response filed on 10 March 2010;
b)Her affidavit of 15 February 2011;
c)Her Financial Statement of 15 February 2011; and
d)The affidavit of Ms W filed on 21 February 2011.
Ms W was not required for cross-examination. The wife gave oral evidence and was cross-examined by counsel for the husband,
Mr Johnston.
A Partial Resolution
On the third day of the hearing, after the wife had completed her evidence, the parties entered into some discussions. Later that afternoon they presented to the Court a set of Consent Orders that resolved a significant amount of the issues between them. In short, the Consent Orders provided that (inter alia):
a)The company [Z] Pty Limited would be wound up;
b)The company [B] Pty Limited would be wound up;
c)Mr H would be appointed Trustee for sale of the assets of the [J] Investment Trust;
d)The parties would list the property at Property C, [C] for sale at an asking price of $850,000.00; and
e)The parties would retain their current motor cars.
The Consent Orders state:
By consent the Court orders:
[Z] Pty Limited (ACN [omitted])
1. A declaration that it is just and equitable that [Z] Pty Limited (ACN [omitted]) (“[Z]”) be wound up.
2. An order pursuant to Section 461(1)(k) of the Corporations Act 2001 that [Z] be wound up.
3. An order that Mr H of [omitted], Chartered Accountants, of [address omitted], Sydney be appointed Liquidator of [Z].
4. An order that the husband and wife deliver all assets of [Z] to the Liquidator in his or her possession custody or control.
5. An order that the Liquidator have the powers of a Trustee for Sale and of a Receiver pursuant to the provisions of Section 420 of the Corporations Act 2001.
6. An order that the Liquidator be authorized, in addition to the powers the Liquidator may have apart from this order, to:
6.1 take possession of, collect and get in any stock and book debts of [Z];
6.2 sell or otherwise dispose of the property and assets of [Z] by private treaty, private tender or public auction such sale to be under his control and there be liberty to any party to bid at the auction (if any);
6.3 to demand and call upon one or more of the debts of the company;
6.4 to make debtors bankrupt, to wind up companies and do all acts and things in connection with any bankruptcy or winding up and to take possession in any court or other tribunal or forum in the name of the company for the purpose of enforcing payment of any of the debts.
6.5 to determine the liability of each of the parties in respect of the joint loan account of the them.[4]
[4] Sic – presumably the word “each” has been accidentally omitted
[B] Pty Limited (ACN [omitted])
7.A declaration that it is just and equitable that [B] Pty Limited (ACN [omitted]) (“[B]) be wound up.
8.An order pursuant to Section 461(1)(k) of the Corporations Act 2001 that [B] be wound up.
9.An order that Mr H of [omitted], Chartered Accountants, of [address omitted], Sydney be appointed Liquidator of [B].
10.An order that the husband and wife deliver all assets of [B] to the Liquidator in his or her possession custody or control.
11.An order that the Liquidator have the powers of a Trustee for Sale and of a Receiver pursuant to the provisions of section 420 of the Corporations Act 2001.
12.An order that the Liquidator be authorized, in addition to the powers the Liquidator may have apart from this order, to:
12.1 take possession of, collect and get in any stock and book debts of [B];
12.2 sell or otherwise dispose of the property and assets of [B] by private treaty, private tender or public auction such sale to be under his control and there be liberty to any party to bid at the auction (if any);
12.3 to demand and call upon one or more of the debts of the company;
12.4 to make debtors bankrupt, to wind up companies and do all acts and things in connection with any bankruptcy or winding up and to take possession in any court or other tribunal or forum in the name of the company for the purpose of enforcing payment of any of the debts.
The [J] Investment Trust
13.An order that the said Mr H be forthwith appointed Trustee (“the Trustee”) for sale of the assets of the [J] Investment Trust (“the Trust”).
14.An order that the husband and the wife deliver all assets of the Trust to the Trustee in his or her possession custody or control.
15.An order that the Trustee be authorized, in addition to the powers the Trustee may have apart from this order, to:
15.1 take possession of, collect and get in any stock and book debts of the Trust;
15.2 sell or otherwise dispose of the property and assets of the Trust by private treaty, private tender or public auction such sale to be under his control and there be liberty to any party to bid at the auction (if any);
15.3 to demand and call upon one or more of the debts of the Trust;
15.4 to make debtors bankrupt, to wind up companies and do all acts and things in connection with any bankruptcy or winding up and to take possession in any court or other tribunal or forum in the name of the Trust for the purpose of enforcing payment of any of the debts.
16. An order that upon the sale of the assets of the Trust the Trustee shall:
16.1 Pay amounts required to discharge any mortgage, charge or liability on any Trust property;
16.2 Pay the cost, expenses, commission of any agent or agents acting on the sale of any Trust property;
16.3 Pay the legal costs associated with the sale of any Trust property;
16.4 Pay the costs and disbursements of the Trustee in respect of the implementation of these orders as approved by the Court such approval to be deemed to have been given by the filing of an affidavit setting out such costs and disbursements;
16.5 Pay the costs and disbursements of any lawyer necessarily retained by the Trustee in respect of the implementation of these orders;
16.6 Pay the balance as determined by the Court.
Property C, [C]
An order that the parties do all acts and things necessary to list for sale of the property situate and known as Property C, [C] (“the [C] property”).
An order that upon the sale of the [C] property the parties shall provide all necessary instructions and authorities to cause the proceeds of sale to be distributed as follows:
18.1 Pay amounts required to discharge any mortgage, charge or liability on the property;
18.2 Pay the costs, expenses, commission of any agent or agents acting on the sale;
18.3 Pay the legal costs associated with the sale;
18.4 Pay the costs and disbursements of any lawyer/conveyancer acting on the sale;
18.5 Pay the sum of $300,715.00 to [Z] Pty Limited in discharge of the loan accounts of the parties;
18.6 Pay the balance as determined by the Court.
For the purposes of implementing Orders 17 and 18 above:
a. the Wife shall nominate to the Husband three (3) real estate agents and three (3) Solicitors/Conveyancers to conduct the sale of the [C] property within seven (7) days from the date of the Orders;
b. within seven (7) days of receipt of such lists by the Wife, the Husband shall select one Real Estate Agent and Solicitor/Conveyancer that the parties shall then instruct to conduct the sale of the [C] property.
That should the Husband fail to comply with Order 19 above, the Wife shall then select a Real Estate Agent and Solicitor/Conveyancer who shall be instructed to conduct the sale of the [C] property.
That the [C] property be listed with an asking price of $850,000.
An Order that within 14 days of the date of these orders the Husband sign all documents necessary to transfer all his right, title and interest in the BMW motor vehicle, currently in the wife’s possession, to the Wife.
A declaration that otherwise the husband shall be and remain the sole and beneficial owner of all other items of property in his possession, custody or control including but not limited to:-
a. All funds in bank accounts in his name;
b. The Porsche motor vehicle currently registered in his name;
c. Any property in which he has an interest in Lebanon; and
d. Any superannuation entitlements currently standing in his name.
A declaration that otherwise the wife shall be and remain the sole and beneficial owner of all other items of property in her possession, custody or control (excluding the husband’s golf clubs and his personal papers located in the home) including but not limited to:-
a. All funds in bank accounts in her name;
b. The entire contents of [C] property; and
c. Any superannuation entitlements currently standing in her name.
That in the event that either party shall fail, neglect or refuse to execute any deed, instrument or document to give validity and effect to these orders then upon the other party filing an affidavit setting out such failure, neglect or refusal then a Registrar or Deputy Registrar of the Sydney Registry of the Court is hereby appointed pursuant to section 106A of the Family Law Act to execute any such deed, instrument or document in the name of the party who defaults and to do all things necessary to give validity to the operation of the deed, instrument or document.
That the parties have liberty to apply on 7 days notice in respect of the implementation of these orders.
After some discussion about the golf clubs referred to in Order 24 above, the parties consented to a further order:
The Respondent Wife is to transfer to the Applicant Husband the golf clubs currently on the premises at Property C, [C] within seven (7) days by delivering the clubs in good condition to the premises of [Z] Pty Limited.
Further Consent Order
On 7 October 2011, the Applicant’s solicitors, with the consent of the Respondent’s solicitors, wrote to the Court seeking an urgent order amending the Consent Orders made on 6 May 2011. That same day, Monahan FM[5] made the following Orders in Chambers:
[5] In the absence of Scarlett FM who was in hospital recovering from surgery
1. Discharge Order 18.5 made 6 May 2011. Make a new order 18.5 as follows:-
“18.5 Pay the balance of the proceeds of sale of Property [C] in discharge of all loan accounts of the parties with [Z]”.
Notations
2. The Court is asked to note that:-
(a) Following the making of the Orders of 6 May 2011 St George Bank, a secured creditor of [Z] Pty Limited, [B] Limited, [J] Investment Trust and the parties appointed a Receiver, [name omitted].
(b) The parties have effected a sale of Property C under Order 17 of 6 May 2011 and settlement of the sale of Property C was scheduled for 23 September 2011.
(c) Whilst the amount owing to St George Bank in respect of the mortgage over [C] is $250,000.00 the Receiver claims that there is a shortfall of $161,000 in the realisation costs of the other assets and that this shortfall is to be paid from the proceeds of sale of [C]. As a consequence there will be insufficient monies to repay the loan account of the parties with [Z].
(d) In arriving at the estimated shortfall of $161,000 the Receiver has included as outgoings:-
·Current legal costs $20,000
·Future legal costs (estimated) $10,000
·Current Receiver’s Remuneration and expenses $64,000
·Future Receiver’s remuneration (estimate) $20,000
·Future Receiver’s expenses (estimate) $ 1,000
TOTAL $115,000
(e)The Receiver directed the solicitor appointed by the parties to act on the sale of Property C ([D]) to pay the entire net proceeds of sale of Property C to St George Bank, notwithstanding the provisions of Order 18.5.
(f)Neither the Applicant nor the Respondent concede that the Receiver was entitled to direct [D] to pay and disburse the net proceeds of sale of Property C other than in accordance with the Orders of the Court.
(g)For various reasons the parties are anxious to conclude the sale of Property C and in those circumstances have consented to the discharge of existing Order 18.5 and for a new Order 18.5 to be made.
In the circumstances, it is difficult to ascertain what assets are remaining that require an Order under s.79 of the Act.
The Proper Approach to Determination of a Property Application
The way a court approaches property matters has been set out by the Full Court of the Family Court in its decision of Hickey & Hickey[6] where Nicholson CJ, Ellis & O’Ryan JJ held at [39]:
The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s. 79. That approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss. 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss. 79(4)(d),(e),(f) and (g), (the “other factors”) including, because of s. 79(4)(e), the matters referred to in s. 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case…
[6] [2003] FamCA 395; (2003) 30 Fam LR 35; FLC 93-143
The Court should also have regard to the recent decision of the High Court of Australia in Stanford v Stanford[7], which has some interesting comments about the operation of s.79(2). The majority (French CJ, Hayne, Kiefel and Bell JJ, held at [35]-[40]:
35 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 “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…
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.
[7] [2012] HCA 52
Clearly, the decision in Stanford means that the Court must consider s.79(2) before embarking on the four-step process set out in Hickey, or at least before taking the second step, identifying and assessing the contributions of the parties. In other words, satisfaction that it is “just and equitable” to make an order is a condition precedent to considering the matters referred to in s.79(4). The Court must be satisfied that it is “just and equitable” to make an order at all.
It would follow that the Court must consider whether it is just and equitable to make a particular order when the Court is considering “what order (if any)” should be made under s.79. Thus, the requirements of s.79(2) must be born in mind after the Court has undertaken the third step of the process, as the Full Court held in Hickey.
Just and Equitable
In this case, the parties owned property in common, including a business called [Z] and the former matrimonial home at Property C, [C]. The parties separated on 20 July 2008 and the husband had moved out of the matrimonial home. The relationship between them was acrimonious, with the husband complaining that the wife was coming onto the business premises and interfering with the running of the business. This led to the interim injunctive orders made on 30 April 2010.
On the first day of the hearing, Mr Johnston of counsel, who appeared for the father, told the Court that the parties were hopelessly deadlocked and neither of them wanted the company.
I am satisfied that, in all the circumstances, it is just and equitable to make orders under s.79 of the Act altering the interests of the parties in the jointly-owned property.
The Parties’ Property and Liabilities
There was no joint balance sheet submitted. Counsel for the Applicant tendered on the final day of the hearing a document entitled Asset pool contended for by husband. That document listed the following assets and liabilities:
Asset
1. Property C, [C] 850,000
2. Home contents 25,000
3. [Z] P/L (Mr P) 684,600[8]
4. [B] P/L 100
5. Husband’s savings 500
6. Wife’s savings 1,000
7. 2008 Porsche 135,000
8. BMW 20,000
9. [B] loan account 89,260
10. Add back against Wife 8,000[9]
[8] Could be up to $1,111,000 if wife correct
[9] If $22,000 repaid to [Z] account
11. Wife’s super 33,036
12. Husband’s super 35,503
The liabilities were set out as:
13. Home loan 240,000
14. Wife’s debt to the [J] Trust 7,358
15. [Z] loan account 300,760
16. Porsche debt 169,238
17. Joint tax liability 70,893
These figures are no longer relevant, noting that [Z] Pty Limited, [B] Pty Limited and The [J] Trust have all been wound up and the former matrimonial home at Property C has been sold in accordance with the Consent orders made on 6 May 2011.
In my view, noting the effluxion of time since the orders were made, it would be appropriate for the parties to prepare an agreed balance sheet setting out the current state of the remaining assets. The parties will be given leave to make short submissions as to any relevant matter that should be considered by the Court before making final orders.
The Parties’ Contributions
There is no controversy between the parties that they made equal contributions to the acquisition of the matrimonial property over a marriage that lasted for approximately 17 years. Counsel for both parties have made submissions to this very effect.
The parties worked throughout the marriage, first for other people and then in building up their business, which was clearly very successful.
In all the circumstances, I assess the parties’ contributions at 50% by the husband and 50% by the wife.
Other Factors taken into account under Subsection 79(4)(d) to (g)
This is the third step in the four step process laid down by the Full Court of the Family Court in Hickey – identification and assessment of the “other factors” including the matters referred to in s.75(2) where relevant, with a view to determining the adjustment (if any) that should be made to the parties’ contribution based entitlements.
Mr Johnston for the husband submits that there should be no adjustment. However, Mr Dura for the wife submits that there should be a 5% adjustment in her favour.
Paragraph (d) of subsection 79(4) requires the Court to take into account the effect of any proposed order upon the earning capacity of either party to the marriage. There will be no effect.
Paragraph (e) requires a consideration of the matters referred to in subsection 75(2) so far as they are relevant.
The husband was born [in] 1971. He is 41 years of age. He will turn 42 in [omitted] this year. He is in good health.
The wife was born [in] 1972. She is also 41 years of age. There is no evidence to show that she is not in good health but she deposed in her affidavit of 15 February 2011 that she was still seeing a psychologist and taking medication to deal with the psychological trauma of having suffered four miscarriages.[10]
[10] Affidavit of Ms Krueger 15.2.2011 at [46]-[47]
Neither party has the care or control of a child of the marriage. There are no children. There are no child support issues (see also s.79(4)(g)). Neither party has the responsibility to support any other person.
Counsel for the wife submitted that there should be a 5% adjustment because the husband has the ability to earn a greater income of the wife. He referred to the evidence that after the parties separated the husband virtually ran the business himself. Up until 30 June 2009 the parties were drawing equal amounts by way of wages but from 1 July the husband felt he was entitled to an increase in his wages and thereafter derived a significantly greater benefit from the business than the wife did.
That may be so, but the situation has changed because the business has gone into liquidation. The evidence does not show that the husband has a greater earning capacity than the wife.
I am not persuaded that the wife has made out a case that there should be a 5% adjustment in her favour of the parties’ contribution based entitlements.
The Consent orders of 6 May and 7 October 2011 have dealt with virtually all of the assets and liabilities.
Accordingly, in the absence of any evidence of any specific asset that needs to be referred to separately, I propose to order that the parties are to do all things and sign all documents necessary to divide any remaining assets equally between them.
If either party seeks to pursue an application for costs, as Mr Johnston submitted on 6 May 2011 that the husband may seek to do, he or she may do so by way of written submissions, to be filed and served on the other party within 21 days. A further 14 days will be allowed for any written submission in reply.
I certify that the preceding eighty-six (86) paragraphs are a true copy of the reasons for judgment of Judge Scarlett
Date: 19 April 2013
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