LIVINGSTON & LIVINGSTON

[2017] FCCA 1885

FEDERAL CIRCUIT COURT OF AUSTRALIA

LIVINGSTON & LIVINGSTON [2017] FCCA 1885

Catchwords:
FAMILY LAW – Property – consequential orders.

Legislation:

Family Law Act 1975

Applicant: MS LIVINGSTON

Respondent: MR LIVINGSTON

File Number: DNC 187 of 2013

Judgment of: Judge Young

Hearing date: 25 July 2017

Date of Last Submission: 25 July 2017

Delivered at: Darwin

Delivered on: 25 July 2017

REPRESENTATION

Applicant in person:

Respondent in person:

ORDERS BY CONSENT:

1. The sum of $21,302.00 held in Trust A’s trust account be divided and paid in equal shares to the husband and wife.

THE COURT ORDERS ON A FINAL BASIS THAT:

1. From the amount owing pursuant to Order 7(g) of the Orders dated 7 July 2015 for the proceeds of sale for the property situated at and known as Property A, the husband is to pay the wife the sum of $129,440.00 within fourteen (14) days of the date of this Order.

2. The sum of $16,406.66 from the Trust B Trust Account is to be paid to the wife and the balance paid to the husband and the parties are to authorise and direct (omitted law firm) accordingly.

3. After the deduction of any amount owing to Company A from the amount of $922.00 held in the Company A Trust Account, the balance is to be paid out equally to the husband and wife.

IT IS NOTED that publication of this judgment under the pseudonym Livingston & Livingston is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT DARWIN

DNC 187 of 2013

MS LIVINGSTON

Applicant

And

MR LIVINGSTON

Respondent

REASONS FOR JUDGMENT

Ex Tempore

1. These reasons for judgment were delivered orally. They have been corrected from the transcript. Grammatical errors have been corrected and an attempt has been made to render the orally delivered reasons amenable to being read.   

2. This is a matter that arises out of orders made by Judge Harland on 25 March 2015 and 8 July 2015.  The latter orders were the final orders made in property proceedings.  Those latter orders provided, at Order 7, that a property at Property A, which I understand was the former matrimonial home of the parties, be sold.

3. The property could not be sold for various reasons that I do not need to go into at the moment.  At what is a very significant undervalue, perhaps, or a very significant decline in value from the time of the judgment in 2015, the property was the subject of an offer by Mr Livingston to Ms Livingston for purchase at $205,000.  She accepted that in Court and accordingly I made an order that the property be transferred to Mr Livingston for $205,000.

4. There were to be various deductions from the sale price provided for in Order 7.  As it turns out, all of those deductions have fallen by the wayside and are not relevant, except for Order 7(a) and 7(b). Order 7(a) concerns the wasted sale costs on the Property A property after it did not sell, $750, and 7(b) an amount of $2,000 owing to Mr Livingston for the wife’s share of the sale costs on two other properties.  The parties are agreed that those deductions ought to be made. 

5. The order provided that after the relevant deductions, which are $2,750 in total, the balance of the sale price, which is $202,250, ought to be distributed so that the husband receives 70 per cent of the asset pool and the wife receives 30 per cent of the asset pool.

6. I set out my calculation to the parties based on, essentially, the property values used by Judge Harland in 2015 with the exception of the Property A property.  So on my calculation, which I checked with the parties and with which they were happy, I concluded that of the balance of the proceeds, so to speak, for the Property A property, 64 per cent, or $129,440, would have to be paid to the wife, to get her up to the 30 per cent of the total pool, and 36 per cent, or $72,810, to the husband.

7. As the husband is actually retaining the property the only transfer that is relevant is an order for payment to the wife of $129,440. So I declare that the amounts owing under Order 7(g) are $129,440 to the wife, and $72,810 to the husband, with the net result that the husband is to pay the wife $129,440.

8. The other issue that was raised by the parties related to Order 2(d) made on 25 March 2015, which relates to $75,000 in a (omitted law firm) trust account.  That money was to be subject to two deductions, a capital gains tax (‘CGT’) liability of the parties relating to the sale of Property B and a property at Property C.  The balance was to be shared equally between the parties.  That was an interim order made by the Judge on, as I say, 25 March 2015.

9. I should say that pursuant to that order, (omitted law firm) have disbursed to the Tax Office the sum of approximately $61,000.  It was challenged by the wife that there is no evidence that that relates to CGT alone.  She points to the husband’s income tax assessment, which is included in his affidavit in these proceedings, and it is also included in the wife’s affidavit file on 8 March 2017, at page 41. 

10. The item description in the tax assessment is “tax return, individuals:  income tax for the period from 1 July 2014 to 30 June 2015”.  It does not actually specify “capital gains tax”. Ordinarily, it is my understanding that a tax assessment of that kind would not specify whether the tax payable relates to CGT or tax from working, for example, PAYE or PAYG.

11. So neither party is able to bring forward clear evidence that the $61,000 disbursement related to anything other – well, in the case of the wife, that it related to anything other than CGT, and in the case of the husband, that it related to CGT at all.  So the issue is unresolved on the evidence.

12. Mr Livingston pointed out that the lawyers would be at risk themselves if they paid out money that was not authorised by an order of the Court.  And that, of course, is correct.  So while I cannot make any finding about whether or not (omitted law firm) have complied with the order because there is no evidence before me, I accept that while it is certainly possible that they have paid out money not in compliance with an order, I think it is on balance, unlikely, though again, as I say, I make no finding about that. 

13. If, for example, it were the case that (omitted law firm) had paid out money that was not authorised by the orders, then the wife would have an action against them for conversion.  She has told me from the bar table that she has made a complaint to the Law Institute of Victoria about this in the hope of having that investigated.  I would have thought that she should be able to obtain some information about that.  But as I say, at this stage, I do not think that I have any information about the matter that lets me form any opinion.  I am afraid if there has been a payment out not authorised by the orders, then the wife is going to be left with her ordinary civil remedies.

14. I am proceeding on the basis that the moneys have been paid out by the lawyers to the Tax Office in conformity with the orders.  As of this morning, there was $16,824.98 left in the trust account.  The wife says that her CGT liability on the sale of those properties, in particular 10 Mosec Street, is $11,998.34.  She has not provided a tax assessment for that but she has provided a letter from her accountants attesting that that is the CGT liability and I see no reason not to accept that.

15. The orders provided that the balance of the amount would be divided equally, which would be $2,418.32 to each of the parties.  To add some complexity to the matter, Mr Livingston, in complying with a costs order I made some time ago that he pay the wife $2,355, unilaterally deducted $2,000 from the amount he paid her, in purported satisfaction of his entitlement under Order 7(a) made on 8 July.

16. He was not entitled to do that.  So I have to make some further adjustment.  He has already, in the amount that I have ordered he pay the wife, the $129,440, had allowance made for the $2,000 due under 7(a).  So there has to be an adjustment.  And I propose to make the adjustment from the moneys held in the (omitted law firm) trust account.

17. I am going to make an order that the amount of $14,406.66, which is the sum of the capital gains tax liability of $11,998.34 of the wife plus 50 per cent of the balance, that is, the $2,418.32 – that equals $14,406.66 – plus $2,000 be paid to the wife. I am going to make an order that from the (omitted law firm) trust account the sum of $16,406.66 be paid to the wife and the balance to the husband.

18. I have already made orders about the amount held by Trust A by consent, that is, the sum of $21,302 sitting in the Trust A trust account be paid out equally to the parties. That amount arises because it was overlooked in the trial.  Neither party brought the matter to the Judge’s attention, and accordingly, no order was made.  It is to their credit that they can agree now on its equal division and I thank them for that.

19. There is also another amount, which is $922, which remains in the trust account of Company A. Mr Livingston points out, and the wife does not disagree, that there may be some charges levied by Company A in respect of a failed sale of the former matrimonial home at Property A.  So I will make an order about that and she does not object if that is the only amount deducted. 

20. In addition, the wife seeks a costs order (she was previously legally represented) in respect of her application to the Court.  Now, her application was necessitated by the inability of the parties to agree on the resolution of the orders made by Judge Harland.  It has taken me approximately two hours to go through the calculations with the parties.  As it turned out, they each adopted reasonably rational positions in relation to the matters raised.  However, that was as a result of me ruthlessly keeping the parties to what are relevant issues.  Both were inclined to raise irrelevant issues or issues that I could not resolve.  I am not satisfied that a costs order is appropriate so I will not make any order for costs.   

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Judge Young.

Date: 9 August 2017