Leeman & Tunnell
[2024] FedCFamC1F 74
•19 February 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Leeman & Tunnell [2024] FedCFamC1F 74
File number(s): BRC 7787 of 2021 Judgment of: JARRETT J Date of judgment: 19 February 2024 Catchwords: FAMILY LAW – PROPERTY – Application in a proceeding – Proposed joinder of respondent’s new partner – Assets transferred to new partner – Prima facie case that assets transferred not at arm’s length – Failure of respondent to explain transfers – Joinder granted
FAMILY LAW – PROPERTY – Application in a proceeding – Application for sale of properties – Mortgages in arrears – Applicant seeks to retain properties on a final basis – No reason applicant not possibly able to retain properties on final basis after trial – Application dismissed
Legislation: Federal Circuit and Family Court of Australia (Family Law) Rules 2021 r 3.01 Number of paragraphs: 34 Date of hearing: 8 February 2024 Place: Brisbane Counsel for the Applicant: Ms Davison Solicitor for the Applicant: Nightingale Law Solicitor for the Respondent: McInnes Wilson Lawyers ORDERS
BRC 7787 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS LEEMAN
Applicant
AND: MR TUNNELL
Respondent
INDEPENDENT CHILDREN’S LAWYER
ORDER MADE BY:
JARRETT J
DATE OF ORDER:
19 FEBRUARY 2024
THE COURT ORDERS THAT:
1.The application in a proceeding filed on 31 January, 2024 by the respondent be dismissed.
2.Pursuant to rule 3.03(4) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), leave is granted to join Ms Curda to the proceedings as the second respondent.
3.Within 14 days of the date of these orders, the applicant file and serve an amended initiating application nominating Ms Curda as the second respondent and setting out all relief claimed against her.
4.Within 28 days of the date of these orders, Ms Curda shall:
(a)file and serve on each other party (except the independent children’s lawyer) a response to the amended initiating application served upon her;
(b)file and serve any other document required by the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) to be filed by her in her capacity as second respondent to these proceedings, including a financial statement.
THE COURT ORDERS, UNTIL FURTHER ORDER THAT:
5.Ms Curda be hereby restrained and an injunction hereby issues restraining her from selling, disposing or transferring:
(a)B Street, Town C, in the state of Queensland;
(b)her ten ordinary shares in D Pty Ltd;
(c)her two ordinary shares held in E Pty Ltd;
(d)F Street, Suburb G, in the state of Queensland;
(e)any other assets owned by Ms Curda or an entity owned or controlled by Ms Curda, where the assets have been transferred or sold to her by:
(i)the respondent Mr Tunnell;
(ii)entities owned or controlled by the respondent (including but not limited to entities in the H Group of companies);
(iii)Mr J; or
(iv)entities owned or controlled by Mr J including but not limited to K Nominees Pty Ltd, K Holdings Pty Ltd, L1 Pty Ltd or L2 Pty Ltd; and
(f)any other assets owned by Ms Curda or an entity owned or controlled by her, where the purchase price of the asset has been funded in part or wholly by:
(i)the respondent Mr Tunnell;
(ii)entities owned or controlled by the respondent (including but not limited to entities in the H Group of companies);
(iii)Mr J; or
(iv)entities owned or controlled by Mr J including but not limited to K Nominees Pty Ltd, K Holdings Pty Ltd, L1 Pty Ltd or L2 Pty Ltd.
THE COURT FURTHER ORDERS:
6.Within 14 days from the date of this order, the applicant, the respondent and Ms Curda are to jointly instruct the forensic single expert, forensic accountant Mr M at N Accountants, to provide a current valuation of the shares in D Pty Ltd.
7.Within 14 days from date of this order, Ms Curda will provide to N Accountants:
(a)the company constitution;
(b)all financial statements and tax returns;
(c)bank statements from the date of registration; and
(d)copies of all assignments or transfer of contracts or assets to/from D Pty Ltd, including any transfers to/from:
(i)entities owned or controlled by Mr Tunnell (including but not limited to entities in the H Group of companies); and
(ii)entities owned or controlled by Mr J, including but not limited to K Nominees Pty Ltd, K Holdings Pty Ltd, L1 Pty Ltd or L2 Pty Ltd.
8.Upon 7 days’ notice, Ms Curda will provide all documents and information requested from N Accountants and Ms Curda will do all things within her power to obtain and provide to N Accountants documents and information in relation to D Pty Ltd and E Pty Ltd.
9.Within 14 days from date of this order, the Applicant, the respondent and Ms Curda are to jointly instruct the real property single expert, P Valuers, to provide:
(a)a historical valuation for B Street, Town C, in the state of Queensland as at July 2022; and
(b)a current valuation of B Street, Town C, in the State of Queensland.
10.Ms Curda and the respondent will arrange and facilitate access to the property at B Street, Town C for the purpose of valuation in paragraph 9.
11.Within 28 days from the date of these orders Ms Curda disclosure any documents parties evidencing:
(a)any and all documents, including bank statement/s or deposit or withdrawal bank receipts, pertaining to the purchase of B Street, Town C, Queensland from Mr Tunnell in or around July 2022 for $1.1 million, including but not limited to:
(i)a bank statement or deposit receipt pertaining to an alleged payment of $700,000 from Ms Curda to the bank account of Q Pty Ltd, BSB … and account number …, on or around 28 July, 2022;
(ii)a bank statement or deposit receipt pertaining to an alleged payment of $400,000 from Ms Curda to the bank account of Q Pty Ltd, BSB … and account number …, on or around 29 July, 2022.
(b)evidence of any consideration paid for the purchase of the two ordinary shares in E Pty Ltd from the respondent;
(c)any payments or gifts made by Ms Curda to the respondent or entities controlled by the respondent during the period of their relationship over the sum of $5,000;
(d)any payments or gifts purchased by the respondent or entities controlled by the respondent to Ms Curda during the period of their relationship over the sum of $5,000; and
(e)any payment made from D Pty Ltd to the respondent, Mr J or entities controlled by either the respondent or Mr J.
12.The application is otherwise adjourned for case management hearing to 9.30am on 16 April, 2024 in the Federal Circuit and Family Court of Australia (Division 1) at Brisbane.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JARRETT J:
In the context of proceedings for property adjustment and parenting orders, each party has filed an interlocutory application concerning the property aspect of the proceedings only. I will deal with each application in turn.
THE APPLICANT’S APPLICATION IN A PROCEEDING
By her amended application in a proceeding filed on 5 February, 2024 Ms Leeman seeks:
(a)the joinder of Ms Curda, Mr Tunnell’s present de facto partner, to the proceedings;
(b)orders for the historical and current valuation of B Street, Town C;
(c)orders for the valuation of a company controlled by Ms Curda, namely D Pty Ltd;
(d)compliance with any request of the single expert in relation to the valuation of another company controlled by Ms Curda, namely E Pty Ltd; and
(e)restraints on Ms Curda from transferring the Town C property, her shares in D Pty Ltd, E Pty Ltd and other entities.
Some factual background is necessary.
The parties commenced their relationship in 2012. They separated in January, 2021. They were never married. During their relationship, the parties established two family trusts, each with a corporate trustee, namely:
(a)the Q Family Trust (Q Pty Ltd as trustee); and
(b)the E Trust (E Pty Ltd as trustee).
Q Pty Ltd, in its capacity as trustee for the Q Family Trust purchased the Town C property during the parties’ relationship. Following separation, Mr Tunnell moved into the property and currently lives there with Ms Curda.
A single expert appointed by the parties valued the Town C property in January, 2022 and assessed the value at $1.6 million.
Notwithstanding that, on 5 July, 2022 Mr Tunnell arranged a valuation of the Town C property by a financier. That valuation, made in about August, 2022 valued the property at $1.1 million.
Soon thereafter, in July, 2022 Mr Tunnell caused Q Pty Ltd to transfer the Town C property to Ms Curda for $1.1 million. There had been an order made on 8 December, 2021 (by consent) that required Mr Tunnell to provide Ms Leeman with at least 14 days’ notice if he planned to sell or transfer the Town C property. But he gave no such notice to her of his intention to sell the property.
The parties are in dispute as to whether Mr Tunnell has properly identified the fate of the monies received from the sale of the Town C property, if they were paid at all. Ms Leeman contends that in the 18 months since Mr Tunnell caused the transfer of the Town C property to Ms Curda, no evidence has been produced to support his contention that Ms Curda paid him $1.1 million to purchase the Town C property.
Ms Curda appeared on this application. She filed no evidence disputing these claims by Ms Leeman. It is possible therefore that after a trial a court might find that the transfer of the Town C property was not an arm’s length transaction and that Ms Curda holds the property on trust for Q Pty Ltd as trustee for the Q Family Trust (which is controlled by Mr Tunnell). If the joinder is permitted, Ms Leeman will seek a declaration to that effect, although it does not seem to be suggested that she will seek to have that transfer set aside.
Turning now to E Pty Ltd, Mr Tunnell owned all of the shares in that company soon after its incorporation. In September, 2022 he transferred those shares to Ms Curda, resigned as the sole director of the company and appointed Ms Curda as sole director of it. No notice of his intention to that effect was given to Ms Leeman. The arrangements within the E Trust are not particularly clear from the evidence but it seems that Mr Tunnell controls that trust.
Despite being asked to explain the transaction, Mr Tunnell has not apparently provided an explanation. He has not revealed what, if any, consideration was paid for the shares. In those circumstances, Ms Leeman submits she has reasonable prospects of establishing at a trial that Ms Curda’s shares are held on trust for Mr Tunnell. If the joinder is permitted, Ms Leeman will seek a declaration to that effect, although it does not seem to be suggested that she will seek to have that transfer set aside.
As counsel for Ms Leeman points out, curiously Mr Tunnell accepts that E Pty Ltd forms part of the “property pool” and seeks final orders that he retain the company (and presumably the related trust).
The final entity for consideration is D Pty Ltd. The entity was incorporated in 2023. The following month its name was changed to D Pty Ltd. Ms Curda is the sole director and shareholder of D Pty Ltd. The principal place of business is registered as the Town C property. In short, Ms Leeman’s case is that D Pty Ltd has received assets that were initially part of Mr Tunnell’s business interests when the parties were in their relationship. In respect of this company, she effectively seeks disclosure so as to ascertain the nature and source of its assets. That reason, she says, also justifies the joinder of Ms Curda to the proceedings.
Ms Leeman argues that Ms Curda is a “necessary party” within the contemplation of rule 3.01 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 because Ms Curda is a person whose rights may be directly affected by an issue in a proceeding and whose participation as a party is necessary for the court to determine all issues in dispute in the proceeding. I accept that submission. I also accept that there is the possibility that the relief envisaged against Ms Curda might change as the proceedings mature to seek the sale of some of the property in which she holds a legal interest.
I find that Ms Curda is a necessary party and I order that she be joined to the proceedings as the second respondent.
Ms Leeman seeks consequential orders upon Ms Curda’s joinder. In particular she seeks that Ms Curda be restrained from transferring, disposing of and selling specific assets in her sole name. I think that order is appropriate given the uncontested evidence as to how Ms Curda came to hold the assets in the first place. Mr Tunnell’s unilateral sale of assets without notice to Ms Leeman in contravention of consent orders and Ms Curda’s complicity lead to the conclusion that whether the assets are those of Ms Curda or remain assets of Mr Tunnell or interests controlled by him, at least in equity, is a triable issue. The balance of convenience favours the grant of the injunctions sought. There was no real argument to the contrary.
The other consequential orders relating to the valuation of D Pty Ltd and the Town C property are appropriate and necessary. So too, the orders for specific disclosure.
THE RESPONDENT’S APPLCIATION IN A PROCEEDING
The parties jointly own two parcels of real property in Town R, Queensland, namely S Street and T Street. Mr Tunnell seeks the sale of the S Street and T Street properties. By his application filed on 31 January, 2024 he seeks that the nett proceeds of sale from both properties be paid to “the McInnes Wilson Lawyers Trust Account for the funds to be held the joint names of the parties and the caveators”. The orders set out in his case outline are to a similar effect although they are not in identical terms.
Six non-lapsing caveats are lodged over Mr Tunnell’s half interest in the S Street and T Street properties (three over each property), pursuant to default judgments in favour of U Limited, V Pty Ltd and W Pty Ltd.
Mr Tunnell’s evidence is that the caveators have agreed to remove their caveats to permit a sale of those properties. Remarkably, however and save for the judgment in favour of U Limited, Mr Tunnell claimed to have no knowledge of the amounts of the judgment debts against him.
The properties are both subject to mortgages. The S Street mortgage is $29,626.19 in arrears and the T Street mortgage is $20,748.98 in arrears.
Mr Tunnell argues that Ms Leeman has been ordered to service “the mortgage” (although he does not say which one) since 8 December, 2021. There was an order made on 8 December, 2021 by consent between the parties. However, it does not require Ms Leeman to service any mortgage. The only order dealing with this issue is order 13 which provides:
[S Street] Property
13.That the Applicant and Respondent shall sign all such necessary documents to allow for the real property at [S Street, Town R] QLD (“[S Street] property”) to be rented out by the Applicant on the following terms and conditions:
a.For a lease/rental term of not greater than six (6) months from date of this Order;
b.That the rental income be paid into a bank account that the Respondent will set up within 7 days from date of this Order and provide to the Applicant through his solicitors;
c.From the rental income being paid into the above bank account all expenses associated with the [S Street] property are to be paid a first priority as and when due which include but are not limited to the following: mortgage repayments, rates, insurance, water & sewerage charges and pool maintenance but not including arrears as at date of this Order; and
d.That any residual rental income can be retained by Applicant once the above has been met.
All this order requires is the payment of the rent received from the property into a particular account from which expenses, including the mortgage, will be paid. The applicant is entitled to any surplus after expenses have been met, but there is no obligation upon her to make up any deficit if the rent is insufficient to defray expenses.
An order made on 20 October, 2022 extended the time the property might be let under order 13a. above for a further six months (see order 14).
On 10 May, 2023, order 13 made on 8 December, 2021 and order 14 made on 20 October, 2022 were discharged and in their place, the following orders were made:
4.That the Applicant shall forthwith meet payment of the arrears owing for the Westpac loan secured by mortgage encumbering the [S Street] property, with the Respondent to do all acts and things necessary to provide the Applicant with the necessary authority to liaise with Westpac to meet payment of these arrears to Westpac directly.
5.That until further Order, the Applicant shall be responsible for payment of the Westpac mortgage repayments (except for the arrears which are to be paid pursuant to paragraph 4 of these orders) and all outgoings for the [Town R] properties as and when they fall due.
6.That the Applicant shall be at liberty to advertise the [S Street] property on [a short term rental website], or otherwise be permitted to let the property for short term rental, and receive 100% of the income associated with tenanting the property.
Mr Tunnell says that neither party can afford to service the mortgages and outgoings on either property. Ms Leeman argues that the arrears in respect to the T Street property can be paid using funds that are presently held in a solicitor’s trust account. But she makes no proposal as to how the arrears of the S Street mortgage will be repaid.
Ms Leeman seeks to retain both of the Town R properties as part of the final orders to be made by the court. Mr Tunnell argues that neither party will have the capacity to retain those properties, but that is by no means clear, especially given the transfers to Ms Curda identified by Ms Leeman. Just what effect those matters, if accepted by the court, will have was not explored in argument. In any event, just what the position of the parties will be when the application is heard is unknown.
Whilst Ms Leeman acknowledges that she has been late and missed payments to the mortgage, her explanation is that she has been struggling to meet the necessary payments because of a reduction in the child support payments received from Mr Tunnell consequent upon him ceasing his business activities – something which Ms Leeman wishes to pursue in these proceedings. Her evidence is that the current assessment is $480.00 per week and she has not received child support from Mr Tunnell since September, 2022. She uses the income she receives from S Street to pay her and the parties’ sons’ living expenses.
Ms Leeman says that she has made enquiries with the mortgagee (a bank) to see if she can reduce the repayments on the T Street property as they have been set by Mr Tunnell at $700 per week. That sum seems high given that the outstanding amount on the mortgage is only $88,000. There is no evidence of the bank’s response.
Ms Leeman’s evidence is that she has been paying all of the outgoings over the Town R properties. There is no evidence to the contrary.
Having regard to these matters, I consider that it is inappropriate and premature to order a sale of the Town R properties before the final hearing in this case. Whilst Ms Leeman has an obligation to meet the mortgage repayments on those properties and they have fallen into arrears, these are matters that can be adjusted for and taken up in the contribution-based assessment of the parties’ entitlements. So too, if her delinquency leads to a diminution of the assets or nett value of the parties’ property that can also be taken up in the assessment process. No cogent reason is demonstrated to conclude that Ms Leeman will not possibly be able to retain the Town R properties as part of her entitlement under the final orders.
Mr Tunnell’s application in a proceeding filed on 31 January, 2024 must be dismissed.
There was in Mr Tunnell’s affidavit what appeared to be a claim to use some of the proceeds of one or other of the Town R properties to fund his legal expenses. However, there was no claim for such relief in his application in a proceeding and in any event, I have not made an order for the sale of those properties.
I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jarrett. Associate:
Dated: 19 February 2024
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