LAWS & LAWS

[2015] FamCA 818

FAMILY COURT OF AUSTRALIA

LAWS & LAWS [2015] FamCA 818

FAMILY LAW – PROPERTY – INTERIM ORDERS – former matrimonial home to be sold – property to vest in the wife as trustee for the sale – spousal maintenance orders suspended pursuant to section 83 – consideration of whether payment of sale proceeds are a partial property settlement – consideration of the percentage of sale proceeds to be distributed to the parties if, at all.

Family Law Act 1975 (Cth) s 83

Strahan & Strahan (interim property orders) 2011 FLC 93-466

APPLICANT: Ms Laws

RESPONDENT: Mr Laws

FILE NUMBER: TVC 618 of 2014

DATE DELIVERED: 25 September 2015

PLACE DELIVERED: Townsville

PLACE HEARD: Townsville

JUDGMENT OF: Tree J

HEARING DATE: 25 September 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Fellows

SOLICITORS FOR THE APPLICANT: J Hamilton & Associates

THE RESPONDENT: In Person

Orders

1. The return date for the subpoena to produce documents issued to the husband’s father to be enlarged to 9:30am Wednesday 14 October 2015.

2. The property situated at B Street, C Town more properly described as Lot … on Registered Plan …, County of D, Parish of E, Title Reference …, registered in the name of Mr Laws, forthwith vest in the Applicant, Ms Laws, as Trustee for the sale of this property.

3. The proceeds of sale of the property situated at B Street, C Town be disbursed as follows:

   (a)To pay Real Estate Agent’s commission, legal costs associated with the conveyance and other adjustments associated with the sale;

   (b)In payment to Westpac Banking Corporation to discharge the Mortgage No. … secured against the property described in Order 10 above;

   (c)In payment of any statutory charges;

   (d)The balance, if any shall be applied as follows:

   (i)     The Wife shall cause 50 per cent of the net sale proceeds to be paid to the Trust Account of J. Hamilton & Associates to be held upon trust for the Husband and Wife pending any agreement in writing between them or Order of the Court;

   (ii)    The Wife shall be entitled to retain 50 per cent of the net sale proceeds with the characterisation of that sum to be determined by the Court in due course.

4. In the event that Westpac Bank Corporation exercises powers of sale as mortgagee and so prevents the Wife from exercising powers as Trustee for sale, the Husband shall forthwith give an irrevocable written authority to Westpac Banking Corporation to pay the net proceeds of sale to the Trust Account of J. Hamilton & Associates where upon the said proceeds shall be dealt with in accordance with Order 3 hereof.

AND IT IS FURTHER ORDERED UNTIL FURTHER ORDER THAT:

1. Pursuant to s 83(1)(d), of the Family Law Act 1975, Order 1 of the orders of Judge Coker made 20 October 2014 will be forthwith suspended until further order.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Laws & Laws has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT TOWNSVILLE

FILE NUMBER: TVC 618 of 2014

Ms Laws

Applicant

And

Mr Laws

Respondent

EX TEMPORE

REASONS FOR JUDGMENT

1. Before me are a number of matters requiring my determination.  The first deals with the sale and distribution of proceeds of the parties’ former matrimonial home.  Both parties are agreed that the property needs to be sold, because the mortgage is no longer being served, in consequence of which both parties anticipate that there will shortly be mortgagee action with a view to selling the property.

2. For her part, the wife seeks that she be appointed trustee for sale of the property, and that the sale proceeds be divided, according to her Amended Application, 50 per cent to her and 50 per cent to be retained in a solicitor’s trust account pending further determination of the Court.  I should note that during the course of her counsel’s submissions she changed the percentage which should be paid to her to 60 per cent.  Perhaps that was in large part because the husband’s position in relation to the distribution of proceeds was, indeed, to pay 60 per cent to the wife.

3. However, the husband’s position is that he says that the wife should not be appointed as trustee for sale of the property, but rather that there should be a cooperative regime whereby the property would be offered for sale by private treaty, and if such sale did not occur by 30 October 2015, that it then would be auctioned on 21 November 2015.  If that action was not successful then he proposed there be a second auction on 12 December 2015 or earlier.  The husband seeks, as I have previously indicated, that from the net proceeds of sale 60 per cent be paid to the wife, and 40 per cent be paid to him. 

4. There is also a further distinction between the husband’s and wife’s positions as to the characterisation of the payment to the wife.  The husband says that it should be by way of partial property settlement, irrespective of whether it be 50 per cent or 60 per cent, whereas the wife wants the characterisation of it deferred. 

5. That is the first matter in dispute between the parties and it is convenient to deal with that now.

6. Mr Fellows, who appears as counsel for the wife, contends that the property needs to be sold and, indeed, that is not in dispute.  However, he says that the only reasonable means for effecting that sale is by way of the wife having the power to conduct the sale and he points to two things, in particular.  Firstly, he says that these parties cannot presently trust each other because of the wife’s concerns, the correctness of which I do not need to determine, that the father has in recent times acted so as to, without the wife’s prior knowledge or consent, remove from his control valuable assets comprising his interest in a family business, for less than its true value.  Whether he has done so or not is not the point.  Mr Fellows says that, plainly these parties do not presently trust each other and could not sensibly cooperate to effect a sale. 

7. The second reason which he puts forward as to why the wife should be made trustee for sale of the property is because, even if it be the case that the husband has not acted so as to put out of his control those valuable business assets, that the circumstances in which the sale of those assets to his father occurred reflect poorly upon his businesslike behaviour.  Particularly he points to the lack of retention of relevant documents by the husband and his failure to obtain relevant advice in relation to aspects of those transactions, including the valuations which apparently underpin them. 

8. Finally, Mr Fellows took up a point which I raised with him, namely, that the husband’s position in relation to how the sale should be effected was very rushed and almost in the nature of a fire sale, obliging the parties to have, potentially, two auctions by 12 December this year.  As to that second auction, the husband proposes that the property would be obliged to be sold if an offer made was at 90 per cent of the reserve price.

9. For his part, the husband says that the parties have an interest in effecting the quick sale of the property, in that they need to act quickly so as to forestall any mortgagee sale, and that it is therefore in the parties’ best interests to cooperate to achieve the best sale outcome. 

10. Weighing those two arguments in the balance, I am satisfied that, indeed it is unlikely that these parties could sufficiently cooperate to effect a joint sale of the property, and the best means by which the sale should be effected is by having the wife appointed as the trustee for sale.

11. I do not overlook the husband’s arguments that the wife having that capacity may not achieve a sale in the timetable that the father says is appropriate.  However, I do note that it is presently the residence of the wife and where the parties’ children spend one-half of their time, and that the circumstances which have seen the mortgage fail to be maintained by the parties largely relate to the circumstances of the father’s recent renegotiation of the terms of his employment with what is now his father’s business.

12. So I am satisfied that the interests of justice require that the orders in the form which are sought by the wife appointing her as trustee for sale by paragraphs 10, 11 and 12 of her amended application filed 15 September 2015 be made. 

13. The next issues are firstly, the distribution of the proceeds, and particularly whether the wife should have 50 per cent or 60 per cent of them and, if so, on what basis they should be attributed to her and, secondly, whether there should be any distribution of proceeds to the husband.

14. Dealing with the proportion of the proceeds of sale to go to the wife, there was something in the nature of opportunism by the wife in seizing upon the 60 per cent figure offered by the husband.  The role of the Court in making interim property divisions of this kind is well established by the decisions of the Full Court of which Strahan & Strahan (interim property orders) 2011 FLC 93-466 is one of the most recent iterations. Particularly the Court is obliged to act conservatively and to not make divisions which may subsequently be unable to be undone.

15. I am satisfied that in this case the state of the evidence and the parties’ positions is unclear, and whether or not one party may have a disproportionate entitlement to the net proceeds of the sale of the house remains up in the air.  However, I am satisfied that the wife’s entitlement to the property pool is likely to be at least in the order of 50 per cent and therefore, I determine that there should be a payment to her of 50 per cent of the net sale proceeds of the property.  As to whether or not it should be characterised at this point as being a partial property settlement, or whether that should await later determination, in my view, it is appropriate, particularly given the present state of arrears of spouse maintenance, that the characterisation of that payment await further determination.

16. Then as to whether or not there should also be a distribution to the husband, he seeks by his response that there be a 40 per cent distribution to him by way of interim property division; no doubt in light of the fact that I am only proposing to permit the wife to receive 50 per cent of the net proceeds of sale, he would seek 50 per cent rather than 40 per cent.  Here however, the recent business dealings of the husband do come into play, and particularly the effect which they may have upon his entitlement to any part of the proceeds of sale of the home.

17. The potential difficulty is twofold.  Firstly, some of the proceeds of the sale of his business interest have been paid to his father, albeit only by book entry, to reduce amounts which the father has loaned the husband for legal fees in recent times.  The sum in question is not small; it seems to be something in the order of $300,000.  Mr Fellows says it is likely that the Court may add that back as being, in effect, property already taken by the father from the net pool of assets.

18. The second matter is that it may be, if the husband has disposed of valuable business assets for less than they are worth, that there is a wastage argument, or at least to the extent that receipt of net proceeds of sale may be deferred, that such an argument applies.  I am indeed satisfied, that there is sufficient ambiguity in relation to the recent transactions that I cannot confidently assert that the husband would be entitled to 50 per cent of the net proceeds of sale of the house, or if I were to make an interim division on that basis, that it could be undone by subsequent adjustment of other payments.  I therefore decline to permit any payment to the husband from the net proceeds of sale and will require those funds to be kept in a solicitor’s trust account pending any further order as proposed by the wife.

19. The second matter for my determination is what should happen in relation to the extant orders for spouse maintenance. They were initially made by Judge Coker on 29 July 2014 (albeit subsequently revisited on 20 October 2014) and the husband seeks that they be discharged. There is certainly, on the face of the materials, no present capacity on the part of the husband to fund them, and I am satisfied that he indeed, at least on the face of his present income and asset position, has changed circumstances of a kind which fall within section 83(2) of the Family Law Act.

20. However, it may well be at the subsequent trial of these proceedings, if I am satisfied that in fact he has manipulated his affairs so as to achieve that outcome, that may cause the Court to form the view that in fact, notwithstanding the face of the material, the father has always the capacity to fund such an order. In those circumstances, I decline to discharge the order, but will suspend its operation under section 83(1)(d), from this day forth until further order.

21. The third matter for my determination relates to whether or not there should be an extension for the time for the return of a subpoena which is yet to be served upon the husband’s father.  The subpoena was due to be served and returnable prior to today, but service upon the husband’s father has not been able to be effected.  It appears as though he has been in F Town rather than G Town where service was being attempted.  I am satisfied that there should be an extension on the return date for the subpoena, and that the time for compliance with the subpoena, given that it is a subpoena to produce documents, should be to 14 October at 9.30 am, and I will list the matter for a subpoena hearing before the Registrar on that occasion.

22. There is one final matter which I need to determine, and that is whether or not the proceedings should be remitted to the Federal Circuit Court.  They came to this Court by way of transfer from that Court in consequence of what was said by the wife to be increasing complexity of the proceedings and particularly the need for the wife to join the husband’s father and perhaps other related business entities to these proceedings.  That has not yet been done.  Mr Fellows says that it could not be done without a sufficient foundation to do so, and his client will not bring proceedings which may not have a sufficient legal basis.  Specifically he says that until a particular share sale agreement is able to be scrutinised by him and those who instruct him, he will not be able to form a view as to whether or not those parties should be joined.  He says, therefore, that the application to remit these proceedings back to the Circuit Court is premature.

23. I accept that argument and hence do not at this point dismiss the application made for remission, however, I will simply adjourn that aspect of the husband’s amended response indefinitely in order that – in the event that, ultimately, after the share sale agreement, assuming it is presented, is in evidence – that he can press that application for determination, if indeed no other party is subsequently added.

I certify that the preceding twenty three (23) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Tree delivered on 25 September 2015.

Associate: 

Date:  25 September 2015