Lewis and Decker (No. 2)

[2012] FamCA 517

FAMILY COURT OF AUSTRALIA

LEWIS & DECKER (NO. 2) [2012] FamCA 517

FAMILY LAW – PROPERTY - Enforcement of property orders where it is said wording is ambiguous - Property of a company controlled by both parties may be seen as their own property if they treat it that way - Onus of proof lies with the party asserting ambiguity.

Family Law Act 1975 (Cth)

APPLICANT: Mr Lewis

RESPONDENT: Ms Decker

FILE NUMBER: MLC 8393 of 2009

DATE DELIVERED: 9 July 2012

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 4 & 5 June 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Fronistas

SOLICITOR FOR THE APPLICANT: John O’Brien & Associates

COUNSEL FOR THE RESPONDENT: Mr O’Shannessy

SOLICITOR FOR THE RESPONDENT: Wilson’s Lawyers

Orders

1. (a)      That the application filed 7 February 2012 is dismissed.

   (b)       The response filed 5 June 2012 is dismissed.

2. That should any party seek costs arising out of these orders, such application be made by written submission and filed and served by no later than 23 July 2012 with such submission being endorsed with the fact that it has been so served on the other party and any recipient of such submission have until 6 August 2012 to file and serve any response and such response be endorsed with the fact that it has been so served on the other party and upon receipt of any such application for costs, it or they be determined in chambers.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Lewis & Decker (No. 2) 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 MELBOURNE

FILE NUMBER: MLC 8393  of 2009

Mr Lewis

Applicant

And

Ms Decker

Respondent

REASONS FOR JUDGMENT

1. Mr Lewis (“the applicant”) and Ms Decker (“the respondent”) disagree about the meaning of a final property order. 

2. Despite the fact that the parties were responsible for the drafting of those orders, it is now said they are ambiguous and require interpretation.  One issue concerns how this Court should treat assets of a company in which the parties were directors and shareholders where the orders refer to possession of assets which it seems were really owned by the company.

3. There are also disputes about compliance with the orders. 

4. In this case, final orders were made by consent on 8 February 2011 by Mushin J.  The dispute arose for determination under the Court’s power to divide property of parties who had lived in a de facto relationship.  No jurisdictional impediment was argued.

5. The applicant filed an enforcement summons which sought to invoke an oral examination procedure abandoned when the Family Law Rules were altered in 2004.  Sensibly, that document was withdrawn.

The current application

1. On 7 February 2012, the applicant filed an application in a case in which he sought that the respondent make available for collection:

   i.the [MG] motor vehicle registered number […];

   ii.The BMW motor cycle registered number […];

   iii.the motor cycle’s panniers and damaged side panel;

   iv.Motor cycle helmet and jacket;

   v.the Toyota Hi-Ace Van registered number […];

   vi.the Fairy Tree;

   vii.the original [Artist A] etching;

   viii.the Aboriginal Art Collection

   (underlining emphasis is mine)

   The applicant also sought that the respondent pay his costs.  

2. The application about the motor cycle helmet seemed to have been abandoned during the hearing or at least some agreement may have been reached about it.  However, it became a subject of cross-examination.  I have presumed that it was still an issue in dispute and have included it in my determination.

Respondent’s position

1. The respondent’s position was simply to either deny the applicant’s entitlement to items of property she clearly retained or to say that the applicant had possession of those items which she claimed had been taken by him.

The power to make orders

1. This is not an application to set aside or vary the 2011 orders. The jurisdiction under s 90SM of the Family Law Act 1975 (Cth) (“the Act”) has been exhausted. It is not an opportunity to run the 2011 case again. It is not an opportunity to look to some philosophical fairness concepts which might amount to palm tree justice. The power is limited to what relief is available in the Act and rules and the parameters of the dispute are largely determined by the way the orders in the application were pursued and the way the case was conducted.

2. The onus of proving that compliance with the order has not occurred or that the meaning of the order is as is the applicant alleges, rests with him. 

The 2011 orders

1. The 2011 orders need to be considered carefully because various disputed paragraphs about possession and ownership have to be read contextually.  Examining the sequence of the litigation events assists.

2. On 7 October 2010, in an interlocutory hearing, the applicant was ordered to deliver the Toyota Hi-Ace referred to in paragraph 6v above, to the respondent.  She was to have that vehicle for her use.  Although the order seems to have been badly drafted, counsel for the respondent conceded that it was always intended to be an interim order.  Whatever may have been the intention of the parties, it was common ground that that motor vehicle was owned by a company, the shareholders and directors of which, were only the applicant and the respondent.  The vehicle remained in the possession of the respondent and was in her physical possession on 8 February 2011.  On that day, final orders were made.  Paragraph 9 of the final orders said:

   That unless otherwise specified in these Orders and save for the purposes of enforcing and [sic] monies due or any subsequent Orders [sic]:

   Each party be solely entitled to the exclusion of the other to all superannuation and other property (including in choses-in-action) owned by or in the possession of such party as at the date of these Orders and for this purpose the applicant shall be entitled to the chattels in the applicant’s properties save for those listed in Annexure “A” which shall be deemed to belong to the respondent…

   (Underlining emphasis is mine)

   It was common ground that the introductory part of the order was meant to refer to any monies due under these or any subsequent orders.  That clarification makes no difference to the outcome of the matter before me.

   Throughout the 8 February 2011 orders, the applicant in the proceedings before me had been the respondent in the proceedings before Mushin J.  Care needs to be taken not to confuse that distinction.

3. As an example of the dilemma, the applicant argued that he “owned” the MG and motor cycle notwithstanding they were in the “possession” of the respondent on 8 February 2011.  His argument about ownership was that he had bought the items and they had always been treated as his during the relationship.  There was no argument before me about the distinction between legal and equitable interests in the items.

4. To argue ambiguity, the applicant focussed on the apparent contradiction between “owned” and “possession”.  However the whole of the paragraph has to be read together as it is otherwise meaningless.  In context, the ambiguity is not so apparent.

5. It is also helpful to look at the context of the disputed paragraph in the whole of the orders made that day.  Under paragraph 2 of the orders, the applicant was to pay the respondent money.  In return and contemporaneously, each party was to transfer to the other some real property.  The importance is on the word “contemporaneously”.  The order also provided that contemporaneously with those real property transfers, the respondent was to resign her directorship in what they described as their company and transfer to the applicant her shareholdings.  Thus, the evidence disclosed that the respondent remained a director and shareholder of their company for some weeks after 8 February 2011. 

6. There is no dispute that on 8 February 2011, the respondent was not only still a director and shareholder of the parties’ company but also had possession of the Hi-Ace motor vehicle.  The vehicle was registered at that stage in the name of the parties’ company.  The respondent conceded that it was property of the company.  Thus, read literally, paragraph 9 of the orders provided for the respondent to have the Hi-Ace vehicle because it was in her possession.  The applicant’s view seemed to be that it should have been his property because he was to “get” the “company”.

7. The annexure to the February 2011 orders, relevantly provided that the respondent was to make available to the applicant the following (exactly as described in the order):

   i.Bronze Soldier (Large)

   ii.Fairy Tree

   iii.The applicant asserts the respondent already has:

   a.The [Artist A] original; and

   b.Aboriginal Art Collection;

   but if they are found at her property she shall deliver them to the respondent.

   Again, the reference to the respondent in the schedule is a reference to the applicant before me.  It will be immediately noticed that the drafting was not as accurate as the references I have made in paragraph 6 above.

Written submissions

1. In written submissions, the applicant’s counsel argued a number of matters which did not take the applicant’s case much further.  For example, it was said it was unclear why certain chattels were not included in the annexure when they “are clearly owned by the applicant and his company”.  The submission went on to say that the consent orders were patently ambiguous.  It must be remembered that this is not a case in which the  Court has any power to alter existing substantive rights stemming from the orders;  it is an enforcement application (see Molier and Van Wyk (1980) FLC 90-911).

2. The applicant submitted the orders failed to resolve the problem where one party had possession and the other ownership.  That too depends upon whether the order itself transfers property interests by virtue of possession.  Counsel argued that in respect of disputes about an agreement, the Court could have regard to the surrounding facts to resolve an ambiguity.  That can only be the case if there is ambiguity because the Court cannot go behind the orders.  (See Langford and Coleman (1993) FLC 92-346). Reference was made to a letter of offer before the orders but as it was not accepted, I ruled it could not be relied upon.

3. Finally, the applicant’s counsel referred to a judgment of Gillard J in Yunghanns and Yunghanns [1999] VSC 254. That does not reflect the law as expounded by the Full Court of this Court.

4. In submissions on behalf of the respondent, counsel referred to Langford and Coleman (supra) and said this was a “straight forward” case of interpreting orders.  He went on to analyse the wording of the orders and submitted that there was no ambiguity.

Credit of the parties

1. In final written submission, counsel for the respondent submitted that there should be a finding that the applicant was not an accurate or reliable witness in that he gave opinion rather than actual evidence.  It was submitted that the applicant ignored any inconvenient fact that affected his position and that his evidence was unreliable and that it was not frank.

2. In his final written submission, counsel for the applicant submitted throughout 20 pages that not only had the respondent not been a truthful witness but that she had lied and misled the Court.  He said that the respondent had a “history of telling lies and making false statements”.  It was submitted that those lies and false statements were directed to cheating the applicant out of his property and that of the company retained by the applicant.  The submission asserted that the respondent had lied to the VicRoads and that she had motives for being untruthful.  It was further submitted that subsequent to the final orders being made, the respondent had deliberately undertaken a course of action to ensure that identifiable property (as the applicant saw it) was no longer in the condition that it had been (see paragraph 10(b) of the final submission).

3. Counsel for the applicant submitted that the respondent had not disclosed that there was “another” piece of artwork in existence.  I have inferred that that was another example of the respondent’s purported dishonesty.

4. It was also submitted that the respondent was “candid on very few occasions” and that her evidence in court was not “consistent” with her affidavit.

5. For the reasons that follow in dealing with the specific items involved, I reject the submission by the applicant’s counsel about the respondent.  The reference to “a history” of telling lies and making false statements is inappropriate.  I am satisfied that the respondent had possession of the orders and by virtue of the wording of them, believed that she was entitled to the property in her possession notwithstanding all that had gone on between the parties up to that point.  Apart from an incorrect date which was an obvious error (and not one attributable directly to her notwithstanding she signed the document at VicRoads) the transfer of the vehicle was based on her belief as to her entitlement under the order. 

6. The applicant’s submission focussed on what could only be described as deliberate actions of the respondent in thwarting the orders.  I find the evidence does not support that assertion.  That will be evident when I deal with the “Bronze Soldier” below and the “Fairy Tree”.  In respect of both, the respondent subjected herself to cross-examination and gave plausible answers none of which would suggest that she thwarted the applicant’s attempts to obtain his property. 

7. Counsel for the applicant submitted that the respondent had said there was “another” Artist A painting.  That was not her evidence.  As will be evident below, she said there was only one and what she took into a gallery in Sydney for authentication purposes was a copy of the Artist A etching from a collection of books.  She said it was the same etching as had been shown on a wall.  She was cross-examined vigorously and it was clear to me that she was only referring to the existence of one etching.

8. The applicant gave his evidence succinctly but admitted that when the matter had been listed early in 2012 before Bell J and was not heard, he took the law into his own hands.  He said he did so on legal advice but did not elaborate.  That position must be contrasted with the respondent who could be accused of similar unilateral action but at least she had an order which I find she believed entitled her to the action she took. 

9. The applicant stridently said there was no misunderstanding and in his mind, it was clear what he should have been receiving under the orders. Unfortunately, I agree with the submissions of counsel for the respondent that his belief cannot be supported by the reading of the orders. 

10. The respondent calmly responded to questions acknowledging that some items had been treated by them as being owned by the applicant if not bought by him but she pointed to the terms of the order constantly.  I do not find that she was being obtuse about the meaning of the order.  When the evidence was tested about the position of the items of property before and after the orders were made, she candidly admitted that some of the items that were ultimately left in her possession had in fact been “owned” up to that point by the applicant.  Nothing in her evidence suggested she was lying and any inconsistencies between her affidavit and her oral evidence were minor. 

11. I am left therefore to determine the matter not on credit but on two things.  First, what is the correct interpretation of the order?  Secondly, having determined what each should have received, has the applicant persuaded the Court to the appropriate standard that he is entitled to property in possession of the respondent and which is his by virtue of that order or has the respondent property which belongs to the applicant in contravention of the order?

Submissions on the law

1. The applicant submitted that s 80(1)(k) of the Act enabled the Court to do whatever it thought necessary to do justice. That included making orders in relation to property that belonged to a company that was not a party to the proceedings. There are two reasons why that submission has no foundation. First, I cannot alter substantive rights under an existing order once the jurisdiction is exhausted. Secondly, for reasons to which I shall turn below, the company was the alter ego of the parties and its absence as a party in its own right becomes irrelevant.

2. Counsel for the applicant submitted that a standard clause was normally included in the final property orders.  Be that as it may, this is not a case in which it was suggested that the “slip rule” should be applied.  That provision can be used in circumstances where it is clear that the parties’ intention was not carried out by virtue of the wording of the orders or the Court itself is of the view that its order is not reflected in the wording.  In this case, it is not suggested that there was an error in the drafting but rather that the order is ambiguous.  It is not appropriate to go behind the orders and try and work out what the intentions of the parties were unless it can be shown that they were indeed ad idem which is clearly not the case here.  Thus, the “standard clause” in orders is irrelevant.

3. It was further submitted that the Court could determine the “common intention” of the parties on an objective basis.  As I have earlier pointed out, the respondent was candid in saying that certain items were clearly “owned” or used by the applicant prior to the orders being made but having accepted her evidence on the issue of her understanding that she was getting everything that was in her possession other than those items set out in the defined schedule, there was no reason for me to objectively look for a common intention.

4. Counsel for the applicant submitted that the omission of the transfer of two motor vehicles supported the applicant’s case but the orders had to be construed in the context of other orders.  The transfer issue becomes irrelevant if the Court is satisfied that the wording of the order amounts to a transfer of property by virtue of that property being left in the possession of a particular party.  As counsel for the respondent submitted, this was simply a case involving the construction of the orders. 

5. Counsel for the applicant referred to Langford and Coleman (1993) FLC 92-346 and said that it was distinguishable because there was no ambiguity in that case. However as counsel for the respondent pointed out, the Full Court said that it was to the orders alone that the Court must look and not, in so doing, take into account whatever agreement might or might not have been reached between the parties leading up to the making of the order.

6. It was also submitted by counsel for the applicant that s 79(2) of the Act required the Court to not make an order unless it was satisfied that it was just and equitable in all of the circumstances to do so. It was therefore submitted that to do justice, the Court could grant the applicant the orders to be sought. That ignores again, the question of the capacity of the Court to alter its orders in a substantive way once the jurisdiction is exhausted.

The bronze soldier

1. In support of the application, the applicant relied upon an affidavit filed on 1 June 2011 as his evidence in chief.  He said that in respect of the Bronze Soldier, initially the respondent provided him with a plaster cast of Ned Kelly covered with bronze paint but after some dispute, provided him with “the” bronze soldier.  But, even on that, the parties could not reach agreement.  It was the respondent’s evidence that the parties had had four statues.  One of them was Ned Kelly which the respondent said she understood was something to which the applicant was attracted but it would seem that it was not Ned Kelly that he wanted.  She said the other three statues were Shakespearean figures none of which was a soldier.  There was considerable cross-examination and argument about whether the respondent had deliberately provided the Ned Kelly to avoid handing over “the” soldier but there was also cross-examination about what she had done to the statue because she painted it bronze.  The issue only went to the respondent’s credit because it was acknowledged by the applicant that he had received what he described as “the” bronze soldier.  However, on the evidence, that statue was known to the respondent as a Shakespearean figure.  Nothing I could find in the respondent’s evidence would make me doubt her truthfulness on that issue.

The Artist A etching

1. The applicant described the Artist A original as an etching of a fish.  The respondent said the only Artist A etching she had was of a mermaid.  The mermaid etching which was copied and tendered in evidence certainly has fish in it but that did not seem to be what the applicant was pursuing.  He said that the parties went to Sydney specifically with the etching to have it authenticated by a gallery specialising in Artist A work and although it was unsigned, the Gallery confirmed that it was an original.  The respondent’s version was that she had a photocopy of a drawing with her when they went to Sydney.  She said they had not made a special trip to authenticate the Artist A etching but had gone to visit friends who were artistically inclined.  None of these people was called to give evidence nor was there any evidence from the gallery about what it was that the applicant and respondent had taken there.  It was the respondent’s evidence that at no stage was any original etching taken.  She said that she happened to have photocopies from books of Artist A’s work with her when they went to Sydney and it was not unusual for her to have these things.

2. I could not be satisfied that the parties were talking about the same item.  Having regard to the wording in Schedule “A” to the orders, the applicant cannot succeed in respect of that issue.  He has not satisfied me on the balance of probabilities that the respondent has what he is asserting belongs to him.

The Aboriginal art collection

1. The parties disagreed on the meaning of the items in The Aboriginal Art Collection.  The applicant maintained that there was a folio of artwork obtained from Arnhem Land which was under the bed in the second bedroom of the home in which both parties lived.  The respondent said that the artwork purchased in Arnhem Land would not have fitted under the bed.  She said it was in the wardrobe.  It was the respondent’s evidence that when the applicant left the home, he must have taken the items with him because she did not have them and she maintained she had looked for them.   The applicant referred to some Mastercard statements to prove that artwork was purchased in the Arnhem Land and the respondent agreed but said that it was different to that which was described by the applicant.  She produced photographs of what she described as the items purchased in Arnhem Land.  Again, having regard to the wording of Schedule “A” to the orders, there is no evidence to satisfy me that the respondent still has possession of the items that the applicant is talking about and he must be seen to have failed to prove the case in respect of the collection.

The Fairy Tree

1. A significant amount of time was spent on examining evidence about an item called The Fairy Tree.  The applicant said that the respondent had provided a bare branched tree “which is not The Fairy Tree” and that she had provided none of the tree’s adornments.  Photographs from some years ago of the parties’ shop were produced showing a variety of Christmas decorations which were used for the purposes of attracting customers and which were not for sale.  This attraction was something of an icon to bring customers to the shop.

2. The genesis of this dispute seems to have been that the parties acquired a number of coffee trees some of which were disposed of but three in particular, were retained.  These trees had holes drilled in them for the purposes of attaching various adornments.  It seemed common ground that the parties had engaged an artisan to build such things as little houses, stairs and ladders which were then attached to the tree by screws.  I find on the evidence that these adornments were not permanent fixtures even though the respondent agreed that for some years, there was little movement of them because of her own physical incapacity. 

3. The applicant asserted that the tree that was given to him and which was photographed, was not The Fairy Tree.  He said he did not get any of the adornments in any event.  The respondent’s evidence was that she gave him one of the coffee trees and a variety of adornments.  Just what adornments were said to be a part of, or go with, the relevant tree remains confusing.  The closest I could get to an impression was from the large photograph tendered in evidence but even there, as I have found, the adornments were not fixtures.  As the respondent said, and I accept, she altered the various decorations around.  The Court was shown a film which showed plastic containers stacked on top of one another.  It was the respondent’s evidence, and I again accept it, these contained a variety of decorations all of which presumably could be used for these trees.

4. It will also be clear from the annexure to the February orders that there was no reference to any adornments nor was there any reference to “The” Fairy Tree.  The applicant submitted that the respondent was being deliberately mischievous in not complying with the orders in that she well knew what Fairy Tree the applicant was talking about.  The respondent’s view was that the structure shown in the photograph had been dismantled and in any event, there were at least two trees depicted in it.

5. Counsel for the applicant cross-examined the respondent on the basis that the structure as depicted in the photograph had been in a settled position for a number of years prior to the separation and the respondent agreed but she said it had been dismantled at the time of the orders. 

6. Without a finding that the respondent was deliberately mischievous and disingenuous about her description of The Fairy Tree, there is no basis for me to find that there was any clear consensus on 8 February 2011 as to what was The Fairy Tree.  I do not find the evidence supports such a finding.  It may have been sloppy drafting but the parties have conducted this litigation on the basis of asking the Court to make an objective assessment of the meaning of the order.  It is clear on the applicant’s view that The Fairy Tree is a specific item with specific adornments made specifically for that purpose.  The respondent’s evidence was that all of the trees had holes and had been used from time to time with these particular items that had been specifically built by the artisan.  I therefore could not find on the evidence that the respondent was being mischievous or disingenuous.  I refer again to the fact that the schedule refers to “Fairy Tree” and accordingly, I have no idea what each of the parties was thinking at the time the orders were completed.  As the onus is on the applicant to prove there has been non-compliance with the order, I could not say on the balance of probabilities that he has done so and that part of the application must fail.

The vehicles and equipment

1. The focus then turns to the items claimed by the applicant which he says he owned but which were not specifically referred to in Annexure A to the orders.

2. The applicant’s evidence was the MG and BMW motor cycle were registered to him. Pursuant to s 9B of the Road Safety Act 1986 (Vic) the register of vehicles is not evidence of title. Much of the evidence revolved around registration certificates and documents produced by Vic Roads under subpoena. In this case, the respondent conceded that the applicant had purchased the vehicles but she said from the time of separation up until and including the date of the orders, the MG and the BMW were in her possession. The applicant submitted that the panniers and side panel were attachments to a part of the motor cycle. I have no evidence about that and the items were not referred to in the orders. According to the applicant, none of these were mentioned in the orders because he claimed an entitlement to them by virtue of ownership. The respondent claimed them by possession.

3. The respondent said the helmet was not found and apart from saying the jacket was not mentioned in the order, she said nothing further.  There is no evidence that would entitle the applicant to pursue the respondent for the helmet and panniers.  The panel is in the same category.

4. The respondent acknowledged that she had received mail addressed to the company but it was to her address not that of the company.  That letter was some sort of traffic fine for use of the toll road by the MG motor vehicle.  The document was dated 30 December 2011 and therefore long after the order was made.  The respondent said she thought she sent the unopened letter directly to the company at what she knew to be the applicant’s address without opening it.  Because the letter was addressed to the company and she said she did not know what it was she ignored it and sent it to the company.  When eventually the applicant received it, he nominated the respondent as the person in possession of a vehicle at the time.  The applicant was cross-examined about whether she returned the envelope to the toll company rather than sending it directly to the respondent.  Her response was that she thought she sent it to the respondent.  In any event, rather than contacting the respondent through his solicitors, it was the applicant who simply notified the toll company by the nomination form that the fine belonged to the respondent.  If this was not so serious, all of this would be seen as descending into a farcical comedy. 

5. On the issue of ownership, the respondent denied that the applicant owned the motor cycle before the parties commenced their cohabitation.  She said she was with him when he purchased it.  There was never any doubt that the motor cycle was registered throughout the relationship in the applicant’s name and that he had been its main rider.  Apart from the applicant’s assertion that he owned the motor cycle and the respondent’s assertion that she was with the applicant when it was purchased, I have no way of knowing on the evidence who had an entitlement to ownership or title.  That issue must therefore be determined on legal principles.

6. In relation to the MG motor car and BMW motor cycle, the respondent in cross-examination conceded that the applicant had been the “owner” of the items up until the orders were made but like all of the issues around the chattels, she said the items were hers because they were in her possession thereafter.

Ownership

1. The legal concept of ownership was not explored but I have accepted that even if the respondent did have some equitable interest arising by implication from the nature of her de facto relationship with the applicant, that implication cannot be drawn if there is a clear contrary intention as to title.  I will presume for the purposes of this hearing that the acknowledgment by the respondent related to all aspects of title when she described the applicant as the owner.  Therefore, I can find that the applicant was the owner of the MG motor car and the BMW motor cycle immediately prior to the orders being made.  Unfortunately, that does little to assist in this determination for the reasons that follow.

The February orders

1. In my view, there is no ambiguity in these orders.  The unusual words in paragraph 9.1 “and for this purpose” are explanatory and clear.  The sentence goes on further to refer to the respondent’s “entitlement” to chattels.  “Entitlement” reinforces the words “in the possession of”.  That same sentence does not alter the parties’ interests in the property described in Annexure “A” because it deems those items to be notionally in the applicant’s possession.  Were it not for the deeming provision, the items in Annexure “A” would have clearly fallen to become the property of the respondent.  The order thereby effects an alteration of property interest because a reference to the deeming and the entitlement to possession, extinguish any equitable interest in those items in the hands of the respondent.  Paragraph 9.5 of the orders also reinforces that position by severing any joint tenancy in the personal estate thereby giving rise to the exclusive and absolute entitlement as described by the orders.

2. Accordingly, the applicant is not entitled to the MG motor car nor the motor cycle nor any of those items associated with those two chattels.  No declaration of ownership was sought by the respondent.

The Hi-Ace vehicle

1. I turn then to the Hi-Ace motor vehicle.  It was common ground that this vehicle was owned by the parties’ company even though no proof of ownership was put in evidence.  I have already rejected any suggestion that the Vic Roads registry documents prove title.  Paragraph 9.1 of the orders referred to the property owned by or in the possession of a party.  There can be no argument about where the vehicle was when the orders were made. 

2. Both the applicant and the respondent put evidence before the Court about the unilateral removal of the Hi-Ace vehicle by the applicant from the respondent after an aborted hearing before Bell J in February 2012 and the subsequent involvement of the Victoria Police on the issue of who was entitled to possession. Having regard to my finding as to the interpretation of the order, those events have no relevance. I refer above to the statement by the applicant to Toll authorities that the respondent was the driver of the vehicle to avoid a penalty being imposed on him. That evidence too is of little consequence if the interpretation of the order is clear. Curiously, when the vehicle was removed from the respondent, the pre-paid registration was cancelled and a refund paid to the company rather than the respondent.  The applicant’s explanation was that it was something to do with his bookkeeper. That was a cavalier response as he had made no inquiries about it and, having regard to the duration of the registration period, should have appreciated that the money had been paid by the respondent in the first place and belonged to her.

3. On my view of the order, the applicant had no right to unilaterally remove the vehicle from the respondent in February 2012 but equally, had every right to nominate the respondent as the driver in respect of the toll issue.

4. If the property was owned by a third party, an order of the nature set out in paragraph 9.1 could normally not bind a third party who is not a party to the proceedings.  The vehicle did not belong to either the applicant or the respondent even if it was in the respondent’s possession.  What then is the situation with property of a family company?

5. It has always been the law in Australia that a company’s property is not the property of its members although in this Court, there seems to be an assumption sometimes to the contrary.  The legal entitlement to property of the company even in the hands of the parties lies in the shareholding of the company not the assets.

6. The exception to that rule which applies in family law proceedings can be seen as articulated by Gibbs J (as his Honour then was) in Ascot Investments Pty Ltd v Harper [1981] HCA 1; (1981) 148 CLR 337. The facts of that case are well-known and I do not intend to cover them again. In dealing with the concept of an alter ego, his Honour discussed shams and where companies were the mere puppets of a party to the marriage. His Honour said that sham transactions could always be disregarded and that similarly, if a company was completely controlled by one party to a marriage, the reality was that an order against the company was in fact an order against the party and his Honour did not think that in its form, an order appearing to affect the rights of the company, necessarily invalidated it.

7. In Harper, Gibbs J was referring to one party whereas here, I have both parties controlling the company. 

8. I am satisfied on the evidence that each of them treated the property of the company as if it was their own.  That can be seen from the fact that a variety of items of chattels were referred to as being their property notwithstanding, when questioned about ownership, it transpired that the property belonged to the company. 

9. The ultimate question is whether or not the control by the parties is such that their rights of ownership and that of the company are subsumed into one to such an extent that the well-known rule that the company’s property was not the property of its members can in cases like this, be ignored.  That would not be the situation if a liquidator or receiver was involved with the company’s assets but that is not the situation here. 

10. I am satisfied that the parties treated the Hi-Ace motor vehicle as effectively personal property.  No consideration was given at the time of the orders as to the impact on the balance sheet of the company nor the consequences of simply removing such an asset from the ownership and books of the company.  This was not a case in which the company as a legal entity was ignored because paragraph 4.2 of those orders dictated that the respondent resign as a director and transfer to the applicant any shareholding that she had.  In turn, the applicant had to indemnify the respondent in relation to various activities arising out of the roles as director, shareholder or employee of the company which included any taxation liabilities.  That must include any consequential problems arising from property removed from the company pursuant to these orders.

11. Having regard to my earlier finding about the unambiguous nature of paragraph 9.1 of the orders, I find that the Hi-Ace was the property of both of the parties on the day that the orders were made and consequentially, it being in the possession of the respondent, she became the absolute owner upon the making of the orders regardless of what subsequently happened with the transferring of the shares in the company and the resignation of directorships.

12. For those reasons, the application of the applicant filed 7 February 2012 must be dismissed and the response to that application filed by leave on 5 June 2012 must succeed.

13. To avoid the parties being engaged in further litigation, I propose to make orders for the determination of any costs applications by written submissions.

I certify that the preceding Seventy (70) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 9 July 2012.

Associate: 

Date:  9 July 2012