Loomis & Ors and Thurston (No. 2)

[2014] FamCA 627

FAMILY COURT OF AUSTRALIA

LOOMIS AND ORS & THURSTON (NO. 2) [2014] FamCA 627

FAMILY LAW – PROPERTY – Interim – where the first applicant seeks a litigation funding order – where the respondent seeks further orders in her response to an application in a case – Where the sale proceeds of three of the properties are held in a solicitor’s trust account – Where the respondent seeks an order that a sum of money held in the trust account be paid into the parties’ self-managed superannuation fund – Where an Order is made to provide for this – Where previous Orders provided for part of the money in the trust account to be applied to purchase a specific home for the benefit of the respondent – Where the contract did not proceed to settlement – Where the respondent then entered into a contract to purchase another, more expensive property – Where the respondent and child have suitable alternative accommodation in the interim and do not need to purchase another home at this point in time – Where the money in the trust account is to be preserved pending finalisation of the property proceedings save for the expenses of single expert valuation reports – Where the respondent seeks an Order that money be used to pay for the child’s private school fees – Where the first applicant opposes the application claiming that he never agreed to the child attending a private school – Where no finding can be made until trial – Where the first applicant’s application is dismissed – Where the balance of the respondent’s application is dismissed.

Family Law Act 1975 (Cth)
Child Support (Assessment) Act 1989 (Cth)

FIRST APPLICANT: Mr Loomis

SECOND APPLICANT: L Limited

THIRD APPLICANT: C Pty Ltd

RESPONDENT: Ms Thurston

FILE NUMBER: BRC 1010 of 2012

DATE DELIVERED: 6 August  2014

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Forrest J

HEARING DATE: 4 August  2014

REPRESENTATION

SOLICITOR FOR THE FIRST APPLICANT: Mr Rosen
Rosen Lawyers

FOR THE SECOND APPLICANT
AND THIRD APPLICANT: Mr Loomis in Person

COUNSEL FOR THE RESPONDENT: Mr Baston

Orders

1. That the application of Mr Loomis for interim litigation funding orders contained within his amended Application in a Case filed 16 April 2014 is dismissed.

2. That of the funds currently held in the Trust Account of Mitchell Lawyers, the sum of $269,043.45 be paid into a bank account in the name of the R Superannuation Fund and those funds shall not be drawn on at all for any reason by Mr Loomis or Ms Thurston without the written agreement of Mr Loomis and Ms Thurston or earlier order of this Court.

3. That the amount of $35,419.24 due to be placed into the Westpac Account …60 account in joint names as compensation from the ANZ Bank be deposited into the Trust Account of Mitchell Lawyers as soon as it is received by Mr Loomis and Ms Thurston.

4. That Ms Thurston take all steps necessary to cause any of the money received from the sale of the properties at W Street, Suburb X; Property 1, FF Street, Suburb GG and Property 2, FF Street, Suburb GG not currently held in the Trust Account of Mitchell Lawyers, such as any of that money that may currently be held by real estate agents as money paid as deposit for the purchase of real property in the last year, to be paid in to the Trust Account of Mitchell Lawyers forthwith.

5. That from the funds held in the Trust account of Mitchell Lawyers for Mr Loomis and/or  Ms Thurston pursuant to earlier Orders of this Court or the Federal Circuit Court and after compliance with paragraphs (2), (3) and (4) of this Order, the obligations of Mr Loomis and Ms Thurston to pay the costs of obtaining single expert valuation reports pursuant to paragraphs (16) and (17) of this Court’s Order of 13 May 2014 shall be met, with Mitchell Lawyers being hereby authorised to make any such payments from those funds as and when they fall due and with the categorisation and treatment of such payments on behalf of Mr Loomis and Ms Thurston in the final property adjustment orders proceedings to be a matter for the Trial Judge who presides over the trial of the competing applications.  

6. That thereafter Mitchell Lawyers are hereby authorised to take all steps necessary to cause all remaining funds held in their trust account for Mr Loomis and/or Ms Thurston pursuant to an order of this Court or the Federal Circuit Court to be invested into an interest bearing bank deposit and held on trust for Mr Loomis and Ms Thurston pending written agreement between Mr Loomis and Ms Thurston as to how any such funds might be dispersed or earlier order of this Court.

7. All other applications contained in the Response to an Application in a Case filed by Ms Thurston on 1 August 2014 are dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Loomis and Ors & Thurston (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 BRISBANE

FILE NUMBER: BRC 1010 of 2012

Mr Loomis

First Applicant

And

L Limited

Second Applicant

And

C Pty Ltd

Third Applicant

And

Ms Thurston

Respondent

REASONS FOR JUDGMENT

1. On Monday 4 August 2014, in a busy judicial duty list, I heard competing applications of Mr Loomis and Ms Thurston for interim orders in their highly conflictual property adjustment orders proceedings that are currently in this Court having been transferred to this Court from the Federal Circuit Court earlier this year.

2. I have previously made interim and procedural orders in these proceedings on 24 April 2014 and 13 May 2014. Those orders included the listing of Mr Loomis’s application for an interim litigation funding order for hearing on 4 August.

3. At the hearing of that application on 4 August, 2014, Ms Thurston also sought the hearing and determination of applications that she had included in her Response to an Application in a Case filed on Friday 1 August, 2014. Mr Loomis, represented by Mr Rosen, solicitor, applied to have that application adjourned for hearing on a later date because of the very recent notice. That was supported by the two companies, again represented by Mr Loomis himself, who stood at the bar table beside Mr Rosen who was representing him.

4. I determined to dismiss the adjournment application, satisfied that justice could in fact be done in the proceedings by hearing Ms Thurston’s applications despite the late notice of them to Mr Loomis and the companies. I was also acutely mindful of the interests of all other litigants who are awaiting the use of this Court’s judicial resources and the need for efficient management of those resources.

The Applications

1. Previous orders of this Court and the Federal Circuit Court have, on the evidence, resulted in the sale of three real properties of the parties, or either of them, situated at W Street, Suburb X; Property 1, FF Street, Suburb GG; and Property 2, FF Street, Suburb GG in the State of Queensland and the deposit of the net proceeds of sale of those properties into the Trust Account of solicitors who were previously on the record as being the solicitors acting for Ms Thurston in the proceedings.

2. The undisputed evidence of Ms Thurston is that W Street, Suburb X was sold with $381,164.87 paid into Mitchell Lawyers Trust Account on settlement on 5 May 2014. The balance of the deposit held, namely $29,880, was paid into that Trust Account on 6 May 2014. There is further undisputed evidence that $232,261.75 plus $416.70 interest was paid into Mitchell Lawyers Trust Account on 1 May 2014 from the proceeds of sale of Property 1, FF Street, Suburb GG with a further sum of $13,330 being the balance of the deposit that had been held by the agent paid into Mitchell Lawyers Trust account on 30 July 2014.

3. Ms Thurston’s evidence was also that an amount of $23,035 of the proceeds of sale of that property was used to pay a deposit on the purchase of a property at Z Street, Suburb AB. That property was purchased for $490,000 for Ms Thurston by her mother, in her mother’s name, but because that contract, entered into by her mother before 24 April 2014, had not proceeded to settlement that amount of $23,035 was still being held in the trust account of the stakeholder real estate agent.

4. Ms Thurston’s evidence was that there was, therefore, $657,053.32 in Mitchell Lawyers Trust account with $23,035 in the real estate agent’s trust account. At the hearing on 4 August, I was informed by counsel for Ms Thurston that it was understood that the sum of $23,035 had also now been deposited into Mitchell Lawyers Trust Account, resulting in there being a total of $680,088.32 in the solicitors’ Trust Account.

5. Mr Loomis seeks an interim litigation costs funding order that $77,000 of that be paid to his solicitors, Rosen Lawyers, on account of costs in the proceedings. He did not oppose the suggestion, from the bench, that Ms Thurston might have legitimate claim, in such circumstances, to payment of the same amount for interim litigation costs funding for herself in these proceedings. Ms Thurston though did not seek such an order and opposed Mr Loomis’s application.

6. Ms Thurston sought orders that of the money in the Trust Account $269,043.45 be paid into the R Superannuation Fund, a Self-Managed Superannuation Fund of the parties, out of which a lot of money has been withdrawn in recent years, attracting allegation and counter-allegation from each party as to the responsibility for such drawings. This issue has been the subject of previous orders of the Federal Circuit Court in respect of repayment of the funds withdrawn from the SMSF out of the proceeds of sale of the two FF Street properties.

7. When asked about this issue, Mr Loomis conceded to the Court that he did not oppose the order sought by Ms Thurston provided the parties were restrained from drawing against any of those funds without written agreement or order of this Court. Accordingly, I will so order to provide for this.

8. Ms Thurston then sought an order that she be entitled to use the balance of the money held in the Mitchell Lawyers Trust Account to purchase the real property at Property LL, Z Street, Suburb AB. Mr Loomis opposed this.

9. This application must be seen in the light of these facts:

   (i)Having been previously told (on 24 April 2014) Ms Thurston’s mother had already entered into a contract to purchase, for Ms Thurston, the property at Z Street, Suburb AB for $490,000 for which funds from the sale of the property at W Street, Suburb X were needed to complete the purchase, the Court had made orders on 24 April 2014 that permitted Ms Thurston to contribute the net sale proceeds of the W Street property to that purchase so as to avoid actionable default on the contract and provide Ms Thurston and their child with somewhere to live;

   (ii)Mr Loomis had maintained opposition and objection to that being permitted, expressing concern about the funds going into the purchase of a property that was to be registered in the name of a non-party to the proceedings such because of the risk that they could be put beyond the reach of this Court in s 79(1) property adjustment proceedings;

   (iii)Mr Loomis maintained in his evidence that Ms Thurston and the child had suitable accommodation for their needs in the home of Ms Thurston’s mother at Suburb AB for the interim period in any event;

   (iv)Certain orders were made and undertakings sought and obtained on 24 April, 2014 that the Court considered gave Mr Loomis a satisfactory degree of protection in the circumstances presenting at the time, whilst still allowing the contract the Court was told of to proceed to completion;

   (v)Notwithstanding the orders made and the undertaking given to the Court by Ms Thurston’s mother, the contract to purchase Z Street, Suburb AB did not proceed to settlement;

   (vi)Clearly cognisant of Mr Loomis’s opposition to the use of the funds from the sale of the W Street property in the purchase of a property in the name of a non-party to the proceedings, as well as Mr Loomis’s view that those funds should be preserved in trust pending the determination of the property adjustment proceedings, and his view that Ms Thurston and their child could continue to live in the home of Ms Thurston’s mother, also situated at Suburb AB, and knowing that the proceedings were back before this Court on Monday 4 August 2014, Ms Thurston approved or authorised, or at least acquiesced in, her mother’s actions in entering into another contract to purchase another property at Property LL, Z Street, Suburb AB on 29 July 2014, only a few days before the hearing of these applications, without first seeking the agreement of Mr Loomis or an order of this Court permitting same;

   (vii)The fresh contract entered into by Ms Thurston’s mother is for a purchase price of $535,000, some $45,000 more than the previous contract for purchase of Z Street, Suburb AB;

   (viii)The copy of the contract in evidence provides for an initial deposit of $1,000 to be paid and a balance deposit of $26,500 to be paid “upon [the] contract becoming unconditional”. The contract is subject to finance “sufficient to complete property purchase” being approved by a “Bank, Building Society or other Financial Institution of buyers choice” within 14 days from the date of the contract;

   (ix)Ms Thurston’s mother proffered another undertaking to the Court in similar terms to the previous one she had proffered in April this year;

   (x)Ms Thurston did not depose to any evidence answering or refuting Mr Loomis’s claim that she and their son have suitable alternative accommodation in the home of Ms Thurston’s mother and do not need to buy another home right at this point in time (although the Court was told from the bar table that she does not like living there);

   (xi)Ms Thurston’s case in the property adjustment proceedings is that all of the money from the sale of W Street and the FF Street properties will be ordered to be paid to her and retained as her property to the complete exclusion of Mr Loomis and/or the two companies in the proceedings;

   (xii)Mr Loomis’s case in the property adjustment proceedings is that all of the money from the sale of W Street and the FF Street properties will be ordered to be paid to him and/or the two companies and retained by him and/or the companies as his and/or the companies’ property.

10. In all the circumstances, I have determined the most appropriate outcome, on an interim basis, is to be for all of the funds from the sale of the said properties, not now having been required to complete settlement on the purchase of the property at Z Street, Suburb AB, that did not settle, to be preserved pending finalisation of the very complicated dispute between the parties, save for using some of the money to pay for single expert valuation reports already previously ordered to be obtained but which have been delayed due to apparent lack of access by the parties to sufficient funds to pay for them.

11. I was very concerned by the apparent further unilateral action taken, or at least acquiesced in, by Ms Thurston whilst Court proceedings were immediately pending that saw another purchase contract entered into without Mr Loomis’s agreement or the Court’s sanction. I considered this to be some evidence of bad faith on the part of Ms Thurston, that in turn, gave additional weight to Mr Loomis’s submissions that there would an unacceptable level of risk in allowing a large amount of the funds of the parties or either of them to be put into the purchase of property in the name of a third party who is not a party to these proceedings in circumstances where his case is that none of those funds will ultimately be determined to be settled in Ms Thurston’s favour.

12. I do not consider that such orders as now sought by Ms Thurston are required by any circumstances that could be described as compelling or that they are otherwise justified or demanded by the interests of justice at this interim point in the proceedings.

13. I am also satisfied, given the contract remains conditional upon the purchaser (Ms Thurston’s mother) obtaining sufficient finance to complete the purchase, that Ms Thurston’s mother can still legitimately terminate the contract without concern if she is unable to complete the contract without access to the funds held in Mitchell Lawyers Trust Account.

14. Accordingly, I dismiss that part of Ms Thurston’s application. The remaining funds held in Mitchell Lawyers Trust Account are to be preserved pending agreement of the parties or earlier order of this Court, invested in an interest bearing deposit but available to be used to meet the costs of the single expert valuation reports that are so urgently required now to assist the parties and this Court unravel the complex array of transactions, allegations and counter-allegations and to make the matter ready for trial as soon as possible.

15. The Court was informed that Ms Thurston pressed other applications for orders in respect of the SMSF and Mr Loomis’s position in respect of the joint venture agreement said to have been entered into with the SMSF, the investment strategy of the SMSF and the alleged shortfall of funds from that SMSF. At this interim point in the proceedings, where the facts alleged about these matters are so seriously in dispute, and cross-examination has not taken place, I cannot make any findings sufficient in my mind to justly support the making of those orders. Suffice to say though, that I do not understand the submission of an investment strategy for an SMSF by the trustees of that SMSF to be a problematic issue. Mr Loomis may consider it beneficial to his interests, in any event, to do that. I will not order it though.

16. The only other application that counsel for Ms Thurston pressed was her application that an amount of $35,419.24 due to be paid back to Mr Loomis and Ms Thurston as compensation from the ANZ Bank be used to pay for their child’s school fees at the private school that Ms Thurston proposes to send him to from next year.

17. Mr Loomis opposed that application. He denied that he had ever agreed that the child would be educated at a private school in any event. He opposed Ms Thurston’s unilateral choice of private school as well. He agreed that the said amount of money was due to be paid back to both of them but submitted that it should, like the other remaining funds, be preserved pending finalisation of the current property adjustment dispute between them.

18. Again, I am not in any position to make any findings about matters such as choice of school, including as to whether Mr Loomis should be held to an alleged agreement that he denies ever having made, at this point in the proceedings.

19. In any event, I am of the view, although I called for or heard no submissions on the point, that such an order would be a child maintenance order in relation to the parties’ child and, as such, s 66E of the FLA applies.  That section prohibits the Court from making such order whilst application can properly be made under the Child Support (Assessment) Act 1989 for child support assessment. I am aware that the parties have had assessment of child support made under that legislation as I recently heard and determined an appeal from a decision of the Social Security Appeals Tribunal in respect of child support assessment matters brought to this Court by Mr Loomis.

20. This application of Ms Thurston in respect of the amount of $35,419.24 will be dismissed too, and the funds ordered to be preserved in Mitchell Lawyers Trust account when received.

21. Finally, Mr Loomis’s application for interim litigation costs funding will be dismissed. In circumstances where both parties argue strongly that the other party will receive nothing at all out of the money that remains from the sale of the three real properties, I am not satisfied that it is appropriate or just and equitable or otherwise just to use any of the sources of power available to the Court to make an interim litigation costs funding order to order that $77,000 of the money that is to be preserved is to be made available to Mr Loomis. I cannot, in any way, be satisfied that he will obtain $77,000 or more in the property adjustment proceedings so as to make such an order an appropriate use of the s 79(1) power on an interim basis. I do not consider that these circumstances justify using the s 117 costs power and I do not consider a spousal maintenance order providing for interim costs funding to be appropriate.

1. Should either party wish to retain legal representation as these proceedings progress, each is, of course, entitled to do that, just as they have to date.  At this point in time, I do not consider it appropriate to allow either or both of them access to the funds that remain in this country from the sale of the properties to fund what appears will be complex and potentially lengthy property adjustment litigation in this Court.

2. I make the orders set out at the commencement of these reasons.

I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Forrest delivered on 6 August 2014.

Associate: 

Date:  6 August 2014