LOCKWOOD & LOCKWOOD

[2016] FamCA 545

FAMILY COURT OF AUSTRALIA

LOCKWOOD & LOCKWOOD [2016] FamCA 545

FAMILY LAW – PROPERTY – INTERIM PROCEEDINGS – Where the wife seeks orders that the husband be removed as a trustee of a family trust and that she be appointed trustee instead – Where the wife seeks orders for the sale of two interstate properties with her to receive the rental income generated pending sale – Where the wife seeks orders restraining the husband’s use of his superannuation – Where the Court finds the husband’s actions do not warrant his removal as trustee – Where the Court finds no evidence has been adduced by the wife warranting injunctive orders in relation to the husband’s superannuation – Where the Court is not prepared to make orders for the sale of the two interstate properties in circumstances where the husband seeks to retain them on a final basis – Orders made in terms of the Minute submitted by the husband.  

Family Law Act 1975 (Cth)

APPLICANT: Ms Lockwood

RESPONDENT: Mr Lockwood

FILE NUMBER: SYC 1219 of 2014

DATE DELIVERED: 1 July 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Stevenson J

HEARING DATE: 21 June 2016

REPRESENTATION

THE APPLICANT: Mrs Lockwood appeared on her own behalf

COUNSEL FOR THE RESPONDENT: Ms Kennedy

SOLICITOR FOR THE RESPONDENT: The Norton Law Group

Orders

1. Within fourteen (14) days the husband provide to the wife the following documents:

   (a)all correspondence including loan applications and approvals between the husband and the National Australia Bank relating to his or any entities in which he has an interest borrowings with the bank

2. Within fourteen (14) days the wife provide to the husband the following documents:

   (a)all loan documents which evidence the wife’s borrowings between herself and any bank, building society or financial institution or private individual with respect to her property at B Street, Suburb A.

3. The husband be restrained from further encumbering or drawing down on any loan secured against his property at D Street, Suburb E.

4. Otherwise the wife’s Application in a Case filed 5 May 2016 be stood over to the final hearing of the matter.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Lockwood & Lockwood 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 SYDNEY

FILE NUMBER: SYC 1219 of 2014

Ms Lockwood

Applicant

And

Mr Lockwood

Respondent

REASONS FOR JUDGMENT

The proceedings

1. Ms Lockwood and Mr Lockwood are engaged in litigation concerning, inter alia, alteration of property interests.  By an Amended Application in a Case dated 27 May 2016 the wife sought the following orders:

   1.That for the purposes of the management and future sale of
   F Street, G Town South Australia (“the G Town Property”) (folio identifier …), Lockwood Corporation Pty Ltd … be removed as Trustee for the Lockwood Family Trust ABN ….

   2.For the purposes of Order 1 above, the applicant wife be replaced as Trustee for the Lockwood Family Trust and in her capacity as trustee, within 7 days of the date of these Orders, the applicant wife is authorised to manage the rental of the property and for the purpose of these Orders take all necessary steps and execute all necessary documents to cause the property situated at F Street, G Town South Australia … (“the G Town Property”) to be listed for sale by auction within 12 months of the date of these Orders at a reserve to be agreed upon between the parties and failing such agreement to be determined by the proper officer of the Real Estate Institute or his nominee and that the proceeds of the said sale be disbursed as follows:

   a.The wife shall receive the rental funds into her nominated account;

   b.Payment of all periodic mortgage, rates and outgoing’s until the sale is completed;

   c.The wife permitted to retain any surplus or apply to out of school activities and use at her discretion;

   d.Payment of agent’s commission and advertising expenses and legal expenses of the sale;

   e.Payment upon sale of any monies due and owing to the mortgagee;

   f.Payment of an amount of $350,000 to the applicant wife by way of partial property settlement;

   g.Payment of $122,000 to Mr H, the wife’s forensic accountant.

   h.The net balance to be held in the Trust Account of the conveyancer pending further Court Orders or as agreed by the parties in writing.

   3.That for the purposes of the management and future sale of
   I Street, J Town South Australia … (“J Town”) (folio id …), Lockwood Corporation Pty Ltd ACN ... be removed as Trustee for the Mr and Ms Lockwood Family Trust ABN ...

   4.That for the purposes of Order 3 above, the applicant wife be replaced as the Trustee for the Mr and Ms Lockwood Family Trust and in her capacity as Trustee, within 7 days of the date of the Orders the applicant wife is authorised to manage the rental of the property and for the purpose of these Orders take all necessary steps and execute all necessary documents to cause the property situated at I Street, J Town South Australia … (“J Town”) to be sold by auction within 12 months of the date of these Orders at a reserve to be agreed upon between the parties and failing such agreement to be determined by the proper officer of the Real Estate Institute or his nominee and that the proceeds of the said sale be disbursed as follows:

   a.The wife shall receive rental funds into her nominated account;

   b.Payment of all periodic mortgage, rates and outgoing’s until the sale is completed;

   c.The wife permitted to retain any surplus or apply to out of school activities and use at her discretion;

   d.Payment of agent’s commission and advertising expenses and legal expenses of the sale;

   e.Payment upon the sale of any monies due and owing to the mortgagee;

   f.The net balance to be held in the Trust Account of the conveyancer pending further Court Orders or as agreed by the parties in writing.

   5.From the date of these Orders, the respondent Husband be restrained from, removed, or causing, or permitting, to be removed from Australia, or otherwise dealing with or disposing of any superannuation entitlements including by way of rolling out or transferring to another Superannuation Fund or withdrawing any or all of his entitlement with K Super Fund #…

   6.In the event that either party refuses or neglects to comply with any of these Orders in relation to the execution of any deed, instruments and documents, the court authorises pursuant to section 106A of the Family Court Act the Registrar of the Family Court, Sydney Registry, to execute such deed, instrument or document in the name of the party that refuses or neglects and further appoints the Registrar to do all acts and things necessary to give validity and operation to the deed, instrument or document.

   7.I request this be dealt with urgently.

   8.The husband pay the wife’s cost’s of and incidental to this application.

   9.That in the event that the Husband has not provided financial disclosure of all documents, in accordance with her Honour Justice Stevenson’s Order 2 of the Order’s from the adjourned hearing of 18^th May 2016, then the Husband shall provide the Wife with a written authority to NAB and Macquarie Bank, and his accountants, to provide any information to the Wife as she may request in writing in relation to the purchase and re-finance of the properties.

   10.The Husband shall sign the authority requested at Order 9 at Court on 31 May 2016.

2. At the interim hearing on 21 June 2016 the husband submitted a Minute of Interim Orders Sought in the following terms:

   1.That within 14 days the husband provide to the wife the following documents:

   1.1All correspondence including loan applications and approvals between the husband and the National Australia Bank relating to his or any entities in which he has an interest borrowings with the bank.

   2.That within 14 days the wife provide to the husband the following documents:

   1.1All loan documents which evidence the wife’s borrowings between herself and any bank, building society or financial institution or private individual with respect [to] her property at B Street, Suburb A

   3.That the husband be restrained from further encumbering or drawing down on any loan secured against his property at D Street, Suburb E.

   4.That otherwise the wife’s application in a case filed 5 May 2016 be stood over to the final hearing of the matter.

Background

1. On 24 April 2015 interim orders were made by consent, which included the following:

   [G Town Property]

   1.The husband will cause all rental income received from the [G Town Property] to be paid as follows each month:

   1.1.All amounts in respect to payment of council rates, water rates, insurance premiums for the [G Town Property] , GST and Land Tax as and when they fall due;

   1.2.All amounts in respect of the mortgage to ANZ, being mortgage number …, …, … to ANZ secured over the [G Town Property] in the amount of the commercial bill rate per month;

   1.3.The balance to the husband.

   The J Town property

   2.That the husband and the wife shall forthwith do all things and sign all documents  necessary to cause [Lockwood] Corporation Pty Ltd in it’s capacity and as trustee of the [Mr & Ms Lockwood] Family Trust to make application to ANZ Bank to restructure the current facility with ANZ, such as to release the wife from her guarantee in relation to [I Street, J Town] being the whole of the land contained in Certificate of Title Folio Identifier … (“the [J Town] property”) and release the mortgage … and … to the extent the debt secured over the [J Town] property will not be paid down from the sale proceeds of the [Suburb A] property (the application).

   3.In the event the ANZ Bank does not accommodate the application referred to in Order 2 within 60 days of these Orders the husband shall forthwith do all acts and things and sign all documents necessary to market for sale and sell  the [J Town] property in the following manner:

   3.1.List the property for sale with [O Agents] Adelaide within 7 days of the date of these Orders (“the agent”);

   3.2.The husband shall in the first instance pay the marketing and selling fees of the [J Town] property within 7 days of the request made by the agent;

   3.3.The husband shall execute all documents requested by the agent for the sale of the [J Town] property and in the event that the husband and the wife cannot agree on the terms of the agents contract within 7 days of the date of the agent being selected, the contract is to be in the agents standard terms and with the agents standard fees;

   3.4.That the husband shall give such instructions as are necessary to a solicitor agreed upon between the husband and the wife within 7 days of the date of this order and failing agreement, the wife shall forthwith in writing nominate 2 solicitors or conveyancers from which the husband shall within a further 7 days select 1 or failing which the wife may select one, who shall be the solicitor appointed (“the solicitor/conveyancer”);

   3.5.The [J Town] property shall be marketed for sale by public auction on a date within 8 weeks of the date of the appointment of the agent (“the first auction”);

   3.6.That the reserve price for the first auction will be $420,000 unless otherwise agreed in writing between the husband and the wife;

   3.7.In the event the [J Town] property does not sell at the first auction it is to be listed for sale by private treaty for a further period of 8 weeks at a listing price of 5 per cent less than reserve price at the first auction; (“the first private treaty period”);

   3.8.In the event the [J Town] property does not sell at the first auction or the first private treaty period it shall be listed for public auction within 4 weeks of the conclusion of the first private treaty period at a reserve price of $400,000 unless otherwise agreed in writing between the husband and the wife (“the second auction”);

   3.9.The husband and the wife shall each attend any auction pursuant to this order and in the event that the reserve price set for that auction is not reached they shall negotiate with the highest bidder and shall accept any offer to purchase made within 5 per cent of the reserve price set for the auction unless the husband and the wife shall otherwise agree;

   3.10.The husband shall execute the contract for sale and in the event that the husband and the wife fail to agree on the terms of the contract for sale the terms are to be as recommended by the solicitor;

   3.11.The husband shall cooperate in every way with the agent in relation to the sale of the [J Town] property at all times requested by the agent and ensure that the [J Town] property is in a neat and clean condition for sale;

   3.12.The husband shall execute all other documents necessary to complete the sale within the time required by the contract for sale to ensure the purchasers do not have a right to terminate or rescind due to failure to do so.

   4.That upon settlement of the sale of the [J Town] property the husband shall cause the proceeds of sale to be paid in the following manner and priority:

   4.1.Payment of the agent’s commission, auctioneers commission and any other agreed expense properly incurred in respect of the sale of the [J Town] property;

   4.2.In payment of the legal costs of sale;

   4.3.In payment of all statutory and consumable utilities in respect of the [J Town] property including but not limited to council rates, water charges, electricity and gas relating to the J Town property;

   4.4.In payment of the amounts required by ANZ Bank to effect a discharge of registered mortgages numbered … and … secured on the title to the property;

   4.5.In payment to the husband of the amount paid by him pursuant to Order 3.2, with the balance to be paid to the wife as a distribution from the Trust. 

   The [Suburb A Property]

   5.That within 14 days of the date of Orders, the husband and the wife shall do all things and sign all documents as may be necessary to list for sale the property situate at and known as [L Street, Suburb A] being the whole of the land contained in Certificate of Title Folio Identifier … (“the [Suburb A] property”) and  the following shall apply:

   5.1.The husband and the wife do all acts and things and sign all documents necessary to list the property for sale with [Ms M] of [N Agents] (“the agent”);

   5.2.The husband and the wife shall execute all documents requested by the agent for the sale of the [Suburb A] property and in the event that the husband and the wife cannot agree on the terms of the agents contract within 14 days of the date of these orders, the contract is to be in the agents standard terms and with the agents standard fees;

   5.3.The husband shall in the first instance pay the marketing and selling fees of the [Suburb A] property within 7 days of the request made by the agent;

   5.4.That the husband and the wife shall give such instructions as are necessary to a solicitor agreed upon between the husband and the wife within 7 days of the date of this order and failing agreement, the wife shall forthwith in writing nominate 2 solicitors or conveyancers from which the husband shall within a further 7 days select 1 or failing which the wife may select one, who shall be the solicitor appointed (“the solicitor/conveyancer”);

   5.5.The [Suburb A] property shall be marketed for sale by expressions of interest campaign for a period of 6 weeks at a price guide as agreed between the husband and the wife and failing agreement as advised by the Agent;

   5.6.In the event the [Suburb A] property does not sell during the first private treaty period, it be listed for sale by public auction with reserve price as agreed and failing agreement as determined by a real property valuer agreed between the parties and failing agreement the wife shall nominate 3 valuers and the husband shall choose one of the three.

   6.That upon settlement of the sale of the [Suburb A] property the husband and the wife shall do all acts and things necessary to distribute the proceeds of sale in the following manner and priority:

   6.1.In payment of the agent’s commission and any other expense properly incurred in respect of the sale of the [Suburb A] property;

   6.2.In payment of the legal costs of sale;

   6.3.In payment of such amount as is required by ANZ Bank to effect a discharge of registered mortgage number … secured on title of the [Suburb A] property;

   6.4.In payment of all statutory and consumable utilities in respect of the [Suburb A] property including but limited to council rates, water charges, electricity and gas relating to the [Suburb A] property;

   6.5.In payment to the husband of the marketing or selling fees paid by him to the agent pursuant to Order 5.3;

   6.6.In payment to the husband’s solicitors on behalf of the husband the sum of $250,000 for interim legal costs;

   6.7.In payment to the trust account of the wife’s solicitors, Broun Abrahams Burreket Lawyers Pty Ltd the sum of $200,000 for the wife’s interim legal costs;

   6.8.In payment to the husband of $44,908 for the purposes of discharging his K Credit Union loan;

   6.9.The balance to the wife.

   ...

   Injunctions

   …

   9.That other than to comply with these Orders, the husband, his servants and/or agents be and are restrained from doing any act or thing that has the effect of selling, transferring, disposing of, mortgaging, charging or further encumbering his interest in any and all of the following assets (or any underlying asset or liability):

   9.1.The [Suburb A] property, the [G Town] property or [J Town] property;

   9.2.The [Mr and Ms Lockwood] Family Trust;

   9.3.The [Lockwood] Family Trust except to refinance the G Town Property at its existing level of indebtedness;

   9.4.[Mr Lockwood Family] Trust;

   without the  consent in writing of the wife or Order of this Court.

   ...

2. These provisions were varied by way of further interim orders which provided, inter alia, as follows:

   BY CONSENT

   1.That Order 1.2 made 24 April 2015 be varied by deleting the words “in the amount of the commercial bill rate per month”, and replace with the words, “meeting the interest on the loan facility with the ANZ Bank with respect to the mortgages to the ANZ Bank secured by the [G Town Property], and otherwise to meet the interest on loan facility to the National Australia Bank as is hereinafter provided for in these Orders”.

   2.That Order 2 made 24 April 2015 be varied by adding after the words “make application to ANZ Bank to re-structure the current facility with the ANZ”, the words “or make application to and proceed with the re-structure of the current facility with the ANZ Bank, with the National Australia Bank, and including
   re-financing and re-structuring the current loan facility with the ANZ Bank relating to the [G Town Property] substantially in accordance with the loan approval conditions contained in correspondence from the National Australia Bank dated 7 August 2015”.

   3.For the avoidance of doubt, the Court notes:

   3.1that for the purposes of re-structuring the loan in accordance with Order 2 above, the Husband will transfer ownership of the [J Town Property] from its current ownership namely, [Lockwood] Corporation Pty Limited as trustee for the
   [Mr and Ms Lockwood Family Trust] into the [Lockwood Family Trust], being the same owner as the [G Town Property]; and

   3.2that it is not conceded by the Wife that the Husband may be entitled to retain either of the [J Town Property] or the [G Town Property] as part of any property settlement.

   4.That Order 3 made 24 April 2015 be varied by deleting the words commencing “In the event the ANZ Bank does not accommodate the application referred to in Order 2 within 60 days of these Orders”, and replace with the words “In the event that neither the ANZ Bank nor the National Australia Bank accommodates the application/applications referred to in Order 2 by 20 January 2016”.

   5.That Order 6 made 24 April 2015 be varied by vacating Order 6.9 and replacing it with:

   Order 6.9“The balance of the Wife to be used solely for the purpose of purchasing a property in New South Wales, in the Wife’s name and in meeting the associated costs of such purchase, including stamp duty and legal fees, and that such monies be categorised as interim property settlement.

   6.That Application in a Case filed 3 December 2015 be adjourned to a date suitable to this Honourable Court after 1 April 2016 noting that the Husband will not be pressing for the proposed Orders 4(b)(i) and (ii), but will be pressing for proposed Orders 5, 6 and 7.

   7.The Court otherwise notes that the parties are intending to undertake a private mediation on all issues in dispute both in the substantive proceedings and in relation to the Application in a Case in on or before 31 March 2016.

1. Essentially, the wife’s case was that the husband has breached these orders and that she ought therefore assume control of two trusts.  The wife sought that she replace the company Lockwood Corporation Pty Ltd as trustee of the Lockwood Family Trust and the Mr and Ms Lockwood Family Trust.

2. The wife sought further orders to the effect that she receive all rental generated by the G Town Property and a house at J Town in South Australia.  The wife sought also that the husband be restrained from dealing in any way with his K superannuation benefit.  The wife sought the sale of the two South Australian properties within twelve months of the date of the orders of the Court.

3. Order 2 made on 21 December 2015 permitted the husband to refinance “substantially in accordance with the loan approval conditions contained in correspondence from the National Australia Bank dated 7 August 2015.”  The husband refinanced existing ANZ bank loans by borrowings in the sum of $1,314,229 from NAB.

4. The property L Street, Suburb A was sold for $5,100,000, with settlement taking place on 29 January 2016.  The wife received the sum of $1,700,177 from the sale proceeds pursuant to the orders of 24 April 2015.  She then purchased a property at B Street, Suburb A for $2,060,000.

5. On 29 February 2016 the husband exchanged contracts for the purchase of the property D Street, Suburb E.  The purchase price was $1,090,000, the whole of which the husband borrowed from NAB.  He drew a sum of approximately $206,255 according to his affidavit, or $266,255 according to written submissions, from a loan facility created by the refinancing and borrowed an additional amount of $872,000.

6. On 18 March 2016 the husband was admitted to hospital, where he remained until 26 March 2016.  He is presently unable to work but is in receipt of full pay.

Consideration

1. In written submissions under the hand of his solicitor, the husband made the following concessions:

   ·His counsel was in error when she stated, on 18 May 2016, that the husband’s actions had resulted in no diminution of the net pool of assets.

   ·His actions had caused a deficit of $48,255, being the difference in the purchase price of the Suburb E property and the total borrowings associated with its acquisition.

   ·The additional borrowing of $266,255 “was not in strict compliance with order 9 of 24 April 2015”, in that he obtained neither the consent of the wife nor an order of the Court.

   ·On his value of the net pool of assets, being some $4,004,798, this diminution equates to approximately 1.2 per cent.

2. The husband has given a personal guarantee to NAB in respect of all bank borrowings.  The sum so guaranteed by the husband is $1,596,000.

3. The husband proffered his consent to an order to restrain him from further encumbering or otherwise dealing with the Suburb E property.  That course seems appropriate and I will make such an order.

4. It was submitted on behalf of the husband that orders sought by the wife, whereby she receives rental generated by the two South Australian properties, would reduce his income by $1,789 per week.  It was submitted further that this reduction would have a significant impact on his capacity to pay spouse maintenance of $840 per fortnight, child support of $1,250 per week, private school fees and expenses, private health insurance and gap fees for the parties’ children.

Conclusion

1. On behalf of the husband it was submitted that his actions are not such as “would warrant his removal of trustee of the Lockwood Family Trust.”  I am inclined to agree with this submission, as the wife’s potential overall position has not been jeopardised by his further borrowings and purchase of the Suburb E property.

2. I am far from persuaded that the husband “has no respect for the law”, as submitted by the wife.  I cannot accept, on the basis of the evidence adduced by the wife, that the husband will fail to abide by court orders “unless he is forced by a Registrar signing on his behalf”.

3. In my view the wife adduced no evidence which would warrant the injunctive orders which she seeks in relation to the husband’s superannuation.  In this regard, she offered nothing more than suspicion and speculation as to his motives.

4. The husband seeks to retain the two South Australian properties on a final basis.  I am not prepared to remove that option, at this stage of the proceedings, by an order for their sale.

5. For all of these reasons I propose to make orders in terms of the Minute submitted by the husband.

I certify that the preceding nineteen (19) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 1 July 2016.

Associate: 

Date:  1 July 2016