FEDERAL CIRCUIT COURT OF AUSTRALIA
| LABELLA & LABELLA | [2020] FCCA 948 |
| Catchwords: FAMILY LAW – Property – undefended – where response entered – where respondent stopped engaging in proceedings – where service demonstrated on respondent – court satisfied that respondent had made choice not to appear – final hearing proceeding undefended – where husband made greater contribution – where the wife has predominant care of children – husband pays no child support – addbacks asserted by the wife – whether wastage of property by husband –where it is just and equitable to make property adjustments – property adjustments made in favour of wife. |
| Legislation: Child Support Assessment Act 1987 (Cth) s.58 Family Law Act 1975 (Cth), ss.75(2), 78, 79, 117 Federal Circuit Court Rules 2001 (Cth), rr.1.05(2), 13.04 |
| Cases cited: In the Marriage of Kowaliw, J.I. and Kowaliw, A.G [1981] FLC 91-092 Yannes & Judkins [2019] FCCA 1656 |
| Applicant: | MS LABELLA |
| Respondent: | MR LABELLA |
| File Number: | WOC 1080 of 2018 |
| Judgment of: | Judge Morley |
| Hearing date: | 24 October 2019 |
| Date of Last Submission: | 24 October 2019 |
| Delivered at: | Sydney |
| Delivered on: | 1 June 2020 |
REPRESENTATION
| Counsel for the Applicant: | Ms Eldershaw |
| Solicitors for the Applicant: | Heard McEwan Legal |
No appearance for the Respondent.
ORDERS
THE COURT NOTES THAT:
(A)For the proper interpretation of these Orders the following defined terms apply:
(1)“A Street, Suburb B property” means the property known and situate at A Street, Suburb B, in the State of Queensland, being the whole of the land in Lot ... Registered Plan ..., Title Reference ..., of which the Husband is the sole registered proprietor;
(2)“Caveats” means the caveat registered on the title of the property situate at C Street, City D, in the State of New South Wales, by Access Law Group registered no. ... and the caveat registered on the title of the A Street, Suburb B Property, F Street, Suburb G Property, H Street, Suburb G Property and J Street, Suburb K Property by Access Law Group registered no. ...;
(3)“L Street, City D Property” means the property known and situate at L Street, City D, in the State of New South Wales, being the whole of the land in folio identifier Lot ... Strata Plan ..., of which the Wife…
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- LABELLA & LABELLA [2020] FCCA 948
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- [2020] FCCA 948
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CaseChat Overview and Summary
The legal issues before the court included determining whether the Husband had made a greater financial contribution to the marriage, the impact of the Wife having the predominant care of the children, the absence of child support payments from the Husband, and whether certain asserted addbacks by the Wife constituted wastage of property by the Husband. The court was required to consider whether it was just and equitable to make property adjustments in favour of the Wife.
The court reasoned that a property adjustment in favour of the Wife was just and equitable. The Husband was found to have made a greater financial contribution, while the Wife had the predominant care of the children and the Husband paid no child support. The court ordered the sale of several properties, with the proceeds to be distributed according to a detailed scheme that accounted for sale costs, legal fees, and tax liabilities. The Wife was appointed Trustee for Sale of the properties.
The final orders provided for the sale of specified properties, with the net proceeds to be applied first to sale costs and mortgage repayments. Remaining funds were to be held for capital gains tax payable by the Husband, with the balance split equally. Further provisions detailed the distribution of funds to address the Husband's tax liabilities and to achieve a final distribution of 63% of the net matrimonial assets to the Wife and 37% to the Husband, excluding superannuation entitlements. The Wife was also allocated a portion of the Husband's superannuation. The Husband was ordered to indemnify the Wife for certain school fees.
Orders
Orders of the court
THE COURT NOTES THAT:
(A) For the proper interpretation of these Orders the following defined terms apply:
(1) “A Street, Suburb B property” means the property known and situate at A Street, Suburb B, in the State of Queensland, being the whole of the land in Lot ... Registered Plan ..., Title Reference ..., of which the Husband is the sole registered proprietor;
(2) “Caveats” means the caveat registered on the title of the property situate at C Street, City D, in the State of New South Wales, by Access Law Group registered no. ... and the caveat registered on the title of the A Street, Suburb B Property, F Street, Suburb G Property, H Street, Suburb G Property and J Street, Suburb K Property by Access Law Group registered no. ...;
(3) “L Street, City D Property” means the property known and situate at L Street, City D, in the State of New South Wales, being the whole of the land in folio identifier Lot ... Strata Plan ..., of which the Wife is the sole registered proprietor;
(4) “J Street, Suburb K Property” means the property known and situate at J Street, Suburb K, in the State of Queensland, being the whole of the land in folio identifier Lot ... Registered Plan ..., Title Reference ..., of which the Husband is the sole registered proprietor;
(5) “F Street, Suburb G Property” means the property known and situate at F Street, Suburb G, in the State of Queensland, being the whole of the land in folio identifier Lot ... Survey Plan ..., Title Reference ..., of which the Husband is the sole registered proprietor;
(6) “the Act” means the Family Law Act 1975 (Cth);
(7) “the Agent” means the real estate agent or agents appointed by the Wife to assist with the sale of the Properties;
(8) “the Auctioneer” means the auctioneer appointed by the Wife or the Agent to effect the auctioning off of any of the Properties;
(9) “the Fund” means the Labella Family Superannuation Fund;
(10) “the Net Sale Price” means the remainder of the proceeds of sale from each of the Properties after orders (5)(a)-(6)(a) have been followed after the sale of each property;
(11) “the Operative Time” means four (4) business days from the date of these orders;
(12) “the Parties” means the Applicant Wife and the Respondent Husband as set out in the Reasons;
(13) “the Properties” means the A Street, Suburb B Property, the J Street, Suburb K Property, the F Street, Suburb G Property and the H Street, Suburb G Property collectively;
(14) “the Property” means each and any of the A Street, Suburb B Property, the J Street, Suburb K Property, the F Street, Suburb G Property, and the H Street, Suburb G Property as each is placed on the market for sale and as each is sold;
(15) “the Reasons” are the Reasons for Judgment delivered by Judge Morley on 1 June 2020 in the matter of Labella & Labella [2020] FCCA 948;
(16) “the Regulations” means the Family Law (Superannuation) Regulations (Cth) 2001;
(17) “the Wife’s Solicitors” means the solicitors instructed by the Wife in these proceedings, or such other solicitor or solicitors that may be instructed by the Wife to carry out these orders;
(18) “H Street, Suburb G Property” means the property known and situate at H Street, Suburb G, in the State of Queensland, being the whole of the land in folio identifier Lot ... Registered Plan ..., Title Reference ..., of which the Husband is the sole registered proprietor.
THE COURT ORDERS THAT:
1.
Upon receipt by them of a written request from the solicitors for the Wife, Access Law Group are to provide a Withdrawal of Caveat in relation to any of the Caveats registered by Access Law Group on title to any of the Properties, in circumstances where the Property has been sold and the Withdrawal of Caveat is required for settlement.
2.
The Wife is appointed as the Trustee for sale of the Properties and the Wife, as Trustee for sale, shall forthwith do all things and sign all documents necessary to place the J Street, Suburb K Property, the A Street, Suburb B Property, the H Street, Suburb G Property, and the F Street, Suburb G Property on the market for sale as soon as practicable after the making of these orders, but not later than 90 days from the date of these orders, and for the purposes of each sale:
(a) The Property shall be listed with the Agent;
(b) The Property shall be sold by private treaty or by auction, as determined by the Wife, with the recommendation of the Agent as to the method of sale;
(c) The listing or reserve price of the Property shall be as determined by the Wife on the recommendation of the Agent;
(d) The solicitors instructed to act on the sale of the property shall be appointed by the Wife;
(e) The Parties shall pay equally for all reasonable expenses necessary to prepare the Property for sale including cosmetic repairs and painting, sale costs, legal costs and, if applicable, auction costs, provided that if either party fails to meet their share of such costs, then the party incurring those costs shall be entitled to recover them from the Net Sale Price, prior to the disbursement of those proceeds to the Parties; and
(f) The Wife shall execute any contract for sale of the Property at or above the listed or reserved price within two (2) days of a request being made of her.
3.
In the event that Contracts for Sale of the Property have not exchanged by, or before, a date two (2) months from the date of first listing, then the Wife shall, unless otherwise agreed or recommended by the Agent, make all arrangements and do all such actions and sign all such documents necessary to procure a sale by public auction or further public auction of the Property upon the following terms:
(a) The Auctioneer shall be as determined by the Wife in writing and failing agreement as nominated by the Agent;
(b) The auction shall take place within four (4) months of the date of first listing;
(c) The reserve price shall be 95% of the previous listing or reserve price;
(d) The Parties shall equally pay and be responsible for payment of all auction expenses payable before the Property is auctioned, provided that if either party fails to pay such costs, then the party incurring those costs shall be entitled to recover them from the Net Sale Price, prior to the disbursement of those proceeds to the Parties; and
(e) That in the event that the Property does not reach the reserve price at the auction, the Wife shall negotiate with the highest bidders or any such interested persons and effect the sale of the Property at a selling price as recommended by the Agent and/or the Auctioneer as to the selling price of the Property and shall sell the Property at that price, provided that the selling price is not less than 95% of the reserve price; and
(f) That in the event that the Property is not sold by auction or by private negotiation within fourteen (14) days after the said auction then the Parties shall do all acts and sign all necessary documents and pay all moneys as necessary to procure a second auction within a further five (5) weeks of the date otherwise upon the same terms and conditions as applied to the first auction.
4.
Upon completion of the individual sale of each of the Properties to be sold, whichever they may be, the proceeds of sale are to be applied as follows:
(a) Firstly, to pay all costs, commissions, the costs of the Agent, legal fees and expenses of the sale and in adjustment of rates on sale;
(b) Secondly, to repay the loan accounts secured by way of mortgage on the Property to the extent required by the lender so as to obtain a Discharge of Mortgage.
5.
Upon completion of Order (4) herein, if there are any funds remaining from the proceeds of sale they are to be applied as follows:
(a) Firstly, to set aside in the Wife’s solicitor’s trust account, in trust for the parties jointly, a sum calculated as the capital gains tax payable by the Husband in consequence of the sale of the Property, calculated in accordance with Order 19 herein; and
(b) Secondly, of the then remaining Net Sale Price, one half be paid to the Wife, and the other half be held upon trust for the Husband by the Wife’s Solicitors, to be applied by the Wife’s Solicitors in the following way:
(i) Firstly, to pay to Access Law Group so much of the sum of $11,530.84 as remains owing by the Husband to those solicitors;
(ii) Secondly, to pay to the Wife a sum equal to 50% of the amount paid by the vendor on the sale in adjustment of water rates and council rates on the Property;
(iii) Thirdly, in payment to the Wife of any amounts paid by the wife on behalf of the Husband under Orders (2)(e) or (3)(d) of these Orders; and
(iv) Fourthly, any remaining money to be held in the trust account of the Wife’s Solicitors as part of the Husband’s share of the property pool, and dealt with by the Wife’s Solicitors in accordance with these Orders.
6.
Upon completion of the sale of the last of the Properties to be sold, whichever that may be, the Wife’s Solicitors are to do the following:
(a) Firstly, replace the values of the Properties in the balance sheet in paragraph 141 of the Reasons with the Net Sale Price of each Property;
(b) Secondly, delete from the balance sheet in paragraph 143 of the Reasons all of the liabilities except for the two “Debts for Outstanding School Fees”;
(c) Thirdly, adjust accordingly the figures in paragraphs 142, 144 and 145 of the Reasons so as to ascertain at paragraph 145 the net matrimonial assets, not including superannuation entitlements, available for distribution between the parties in the real figures consequent upon the sales of the Properties;
(d) Fourthly, calculate a sum being 63% of that net matrimonial asset pool, not including superannuation entitlements, available for distribution between the Parties; and
(e) Fifthly, pay to the Wife from the moneys held by them upon trust for the Husband pursuant to Order (5)(b)(iv) such sum as will result in the Wife ultimately receiving in total value 63% of the net matrimonial assets, not including superannuation entitlements, available for distribution between the Parties.
7.
The funds held in the Wife’s Solicitors trust account on behalf of the parties jointly pursuant to Order 5(a) and held on behalf of the Husband pursuant to Order (5)(b)(iv) after Order (4) has been fulfilled are to be dispersed in the following way:
(a) Upon presentation by the Husband to the Wife’s Solicitors of his Notices of Assessment issued by the Australian Taxation Office for each year from Tax Year ended 30 June 2007 to Tax Year ended 30 June 2020, inclusive:
(i) The money held in the Wife’s Solicitor’s trust account pursuant to Order (5)(a) herein is to be paid towards any capital gains tax payable by the Husband arising from the sale of the Properties only;
(ii) The money held in the Wife’s Solicitor’s trust account pursuant to order (5)(b)(iv) is to be paid toward any other capital gains tax, personal income tax, fee, fine, penalty or any other debt referred to in these Orders or otherwise owed by the Husband to the Australian Taxation Office, including capital gains tax which is left outstanding in the event that the moneys held by the Wife’s Solicitors under Order (5)(a) are exhausted, such moneys to be paid out by the Wife’s Solicitors only by cheque or cheques made payable to the Australian Taxation Office;
(iii) Any moneys remaining in the Wife’s Solicitor’s trust account pursuant to Order (5)(b)(iv) herein after the Husband has paid off all debts owed by him to the Australian Taxation Office are to be paid to the Husband; and
(iv) Once the capital gains tax payable by the Husband arising from the sale of the Properties only has been paid, if there is any money remaining in the Wife’s Solicitor’s trust account pursuant to Order (5)(a) herein those moneys are to be paid out as to 63% thereof to the Wife and as to 37% thereof to the Husband.
(b) In the event that the Husband fails to present to the Wife’s solicitors his Notices of Assessment issued by the Australian Taxation Office for each year from Tax Year ended 30 June 2007 to Tax Year ended 30 June 2020, inclusive, by a date being two (2) years from the date of settlement of the sale of the last Property to sell, the Wife’s Solicitors shall then:
(i) Transfer the money held by them upon trust for the Husband pursuant to Order (5)(b)(iv) to NSW Revenue to be held as unclaimed moneys; and
(ii) Pay to the Wife 63% of the moneys held upon trust for the parties jointly pursuant to Order (5)(a), and transfer the balance to the NSW Revenue to be held as unclaimed moneys.
(c) The Wife’s Solicitors may pay to themselves from the moneys held by them upon trust for the Husband pursuant to Order (5)(b)(iv) such money as is proper to pay their costs and disbursements, as invoiced to the Husband, incurred by them in complying with this Order ,Order (7), and Orders (5)(a), (5)(b)(i), and (5)(b)(iv).
8.
As between the Parties the Husband is responsible for paying the sum of $6,395 to E School and M School and he shall indemnify the Wife and keep her indemnified in relation to that sum.
9.
As between the Parties the Wife is responsible for paying the sum of $4,601 to E School and M School and she shall indemnify the Husband and keep him indemnified in relation to that sum.
10.
Unless otherwise specified in these Orders, the Wife shall retain and be declared to be the sole legal and beneficial owner of all her right, title and interest in and to:
(a) The L Street, City D Property;
(b) All cash at bank and other moneys invested by her;
(c) All shares registered in her name;
(d) All personal effects in her possession;
(e) Her motor vehicle being the Motor Vehicle 1 registered in her name;
(f) Her superannuation entitlements; and
(g) All other personal and real property in her possession, custody or control as at the date of these Orders.
11.
Unless otherwise specified in these Orders, the Husband retain and be declared to be the sole legal and beneficial owner of all his right, title and interest in and to:
(a) All shares registered in his name;
(b) All cash at bank and other moneys invested by him;
(c) His motor vehicle being the Motor Vehicle 2 registered in his name; and
(d) All other personal and real property in his possession, custody or control as at the date of these Orders.
12.
Pursuant to subsection 90XT(4) of the Act, a base amount, being 50% of the amount in dollars by which the balance of the Husband’s member account in the Labella Family Superannuation Fund exceeds the Wife’s member account in the Fund as at 30 June 2019 is allocated to the Wife out of Husband’s member account in the Fund.
13.
Pursuant to paragraph 90XT(1)(b) of the Act, whenever the Trustees of the Fund make a splittable payment out of the Husband’s interest in the Fund the Trustees shall:
(a) Pay to the Wife or her administrators, executors, beneficiaries, heirs or assigns the entitlement calculated in accordance with Part 6 of the Regulations, using a base amount in accordance with Order (12) herein; and
(b) Make a corresponding reduction in the entitlement the Husband would have had in the Fund but for these Orders.
14.
These Orders have effect from the Operative Time.
15.
Having been accorded procedural fairness in relation to the making of these Orders, these Orders bind the trustees of the Fund.
16.
Simultaneously with Order (13) herein:
(a) The Parties will do all things necessary to roll out of the Fund the Wife's then member balance in the Fund into a compliant superannuation fund of her selection; and
(b) Within a further 21 days, the Wife will do all acts and things and sign all such documents as are necessary to resign as a member and trustee of the Fund, and relinquish any rights or interests in the Fund.
(c) The Husband indemnifies the Wife and keeps her indemnified from and against any breach of the Superannuation Industry (Supervision) Regulations 1994 (Cth), together with any penalty, claim or loss therefrom, if any, in relation to the Fund.
17.
In the event that the Husband or Wife refuses or neglects to comply with any of the provisions of these Orders within seven (7) days of a document being forwarded to either of them for their completion, the Registrars of the Federal Circuit Court of Australia at Sydney are appointed pursuant to subsection 106A(1) of the Act, to execute all such deeds and documents in the name of the defaulting party and to do all acts and things necessary to give validity to the said Orders.
18.
That the Registrars are authorised to execute any such necessary instrument upon being satisfied by Affidavit that refusal, neglect or default, as the case may be, has occurred.
19.
That for the purposes of the calculation by the Wife’s Solicitors of the amount to be retained for payment of capital gains tax pursuant to Order (5)(a) herein, the calculation for each of the Properties upon sale is to be as follows:
(a) The sale price of the Property, minus the purchase price of the Property by the Husband, divided by two, multiplied by 48.5%.
20.
The Parties are at liberty to restore these proceedings to the list in relation to the implementation of these Orders on seven (7) days notice to the Court.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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