Loudon & Loudon
[2021] FedCFamC1F 153
•22 October 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Loudon & Loudon [2021] FedCFamC1F 153
File number(s): MLC 13721 of 2018 Judgment of: HARTNETT J Date of judgment: 22 October 2021 Catchwords: FAMILY LAW – PROPERTY –Where the husband made an application for enforcement of final orders – where the wife sought that the husband execute an irrevocable authority in accordance with the final orders – where the husband’s application had no merit - Where the wife sought indemnity costs – consideration of section 117(2A) regarding costs – costs awarded on a party/party basis. Legislation: Family Law Act 1975 (Cth) ss 106A, 117 Division: Division 1 First Instance Number of paragraphs: 44 Date of last submission/s: 14 October 2021 Date of hearing: 14 October 2021 Place: Melbourne The Applicant: In person Counsel for the Respondent: Ms Dellidis Solicitor for the Respondent: Taussig Cherrie Fildes ORDERS
MLC 13721 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1) BETWEEN: MR LOUDON
Applicant
AND: MS LOUDON
Respondent
ORDER MADE BY:
HARTNETT J
DATE OF ORDER:
22 OCTOBER 2021
THE COURT ORDERS THAT:
1.The Application in a Case filed 8 October 2021 by the Applicant husband (“the husband”) be dismissed.
2.The husband pay the costs of the Respondent wife (“the wife”) on a party/party basis fixed in the sum of $8,900.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Loudon & Loudon has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HARTNETT J:
PRELIMINARY
This proceeding was before the Court upon the Applicant husband's (“the husband”) filing of an Application in a Case on 8 October 2021. That application follows the making of final property orders by consent on 27 May 2021, as amended 4 June 2021, being orders made by MacMillan J. (“the final orders”).
In his Application in a Case, the husband, as a litigant in person, sought the following orders:
1.Enforcement of Final Property Order [dated] 27 May 2021 as amended 4 June, 2021 under Order 30, general liberty to apply.
2.Request [the] Wife to pay outstanding 2021 division 293 and excess contribution tax of $7,792.86+$3,750=$11,542,86 specifically outlined in Order 11 that was to be paid from the superannuation pool.
3.Request ruling that Irrevocable Authority to BLLC is sufficient to fulfil order 5(a) and 17(b) specifically;
a. the “all monies payable to him” refers to all monies payable to him after the date of the order,
b. the Irrevocable Authority can be voided if wife fails to fulfil order 5(b) and future outstanding payments become net of the current and future liabilities required to fulfil order 5b.
4.Husband has complied with orders 17(a-c) and TCF to pay to the husband, the Tax Payment Amount, together with accrued interest (if any) IT BEING NOTED this payment is for the purpose of paying the sum due by the husband to the Australian Tax Office as at 3 may 2021 or reimbursing the husband in respect of that payment if already made by him, on, or before 30 November, 2021 pending continued compliance with Order 17 d.
On the hearing of the matter, the husband accepted that the Irrevocable Authority prepared by the solicitors for the Respondent wife (“the wife”) did accord with the terms of the final orders and, in particular, orders 5(a) and 17 (b). The husband thus consented to the order as made by the Court on the date on which the matter proceeded. Otherwise, there remained outstanding the orders as sought by the husband as set out in his application numbered 1, 2 and 4 above.
In support of his application, the husband relied upon an affidavit of evidence sworn by him on 28 September 2021, together with a further affidavit of evidence sworn by him on 12 October 2021.
By her response filed 13 October 2021, the wife sought dismissal of the husband's application filed 28 September 2021. Further, the wife sought that the husband pay her costs of and incidental to the application on an indemnity basis.
The documents relied upon by the wife were as follows:
(a) Case Outline for trial filed 1 February 2021;
(b) Response to an Application in a Case filed 13 October 2021; and
(c) Affidavit of the wife filed 13 October 2021.
BACKGROUND
The parties' cohabitation commenced in 1994. They married in 1997 and separated in 2018. The parties were divorced in 2020.
The three younger children of the marriage, X born in 2003 (“X”); Y born in 2008 (“Y”), and Z born in 2010 (“Z”) (collectively “the children”) are now aged 17, 13 and 11 years respectively. Final Parenting Orders were made by consent of the parties on 8 February 2021 granting the wife sole parental responsibility for the children, and permitting her to relocate with the children to Country O (“Country O”) once the child X completes secondary school at the end of 2021. The parties' eldest child, Mr W born in 2001 (“Mr W”), is aged 19 years and undertaking university studies in Queensland. The younger three children spend no time with the husband.
The wife is engaged in home duties; reliant on spousal maintenance, child support and government benefits. She lives as a tenant in the parties' former matrimonial home which the parties sold in 2020, and cares for the children.
The husband is formerly a partner and director of B Company LLC (“BLLC”), a USA company based in State D. His gross annual income (including bonuses) for the financial year ended 30 June 2020 was $701,207 plus superannuation. Having redeemed his equity shares in BLLC for a promissory note dated 1 January 2020, and amended 7 May 2020, the husband is now employed as director with BLLC earning $434,460 per annum according to his financial statement on which he relies, sworn 12 October 2021 (the husband has a total average weekly income of $8,355). The husband lives with his partner, Ms C, in rental accommodation in Suburb E. Ms C is in receipt of an average weekly income of $1,950.
The husband essentially sought in his Application in a Case:
(a)the sum of $11,542 to be paid by the wife for his 2021 Division 293 tax liability, regarding his M Super Fund interest; and
(b)the payment to him, pursuant to order 17 of the final orders, of the balance of the "Tax Payment Amount" held by Taussig Cherrie Fildes (“TCF”), solicitor for the wife, of at the time of the hearing , approximately $53,000.
Order 17 of the final orders is as follows:
The Tax Payment Amount
17. Upon the last of the following occurring, if before 30 November 2021:
(a)Being paid to the wife, via the trust account of TCF the total anticipated US 2020 refund (in accordance with order 4(a)(iii)), estimated to be $USD 43,917;
(b)The husband providing the signed BLLC Authority in respect of the Promissory Note to the wife (in accordance with order 5(a));
(c)The superannuation split being effected pursuant to orders 6 and 7 and the husband having complied with order 11; and
(d)the husband having complied with all requests made of him by K Lawyers (or their nominee) and orders made in the USA for the purposes of order 14,
TCF to pay to the husband, the Tax Payment Amount, together with accrued interest (if any) IT BEING NOTED this payment is for the purpose of paying the sum due by the husband to the Australian Tax Office as at 3 May 2021 or reimbursing the husband in respect of that payment if already made by him.
The wife's counsel argued in response, that the husband's application was:
…defective, arguably premature, and should never have been filed.
In her orders sought, the wife included an order that:
A judicial registrar of this honourable Court execute the irrevocable authority (annexure L4), [sic] pursuant to order 5 of the final property orders made on 27 May 2021 ("the final property orders") and section 106A of the Family Law Act 1975.
As referred to in paragraph 3 above, the husband consented during the course of the hearing to his execution of the Irrevocable Authority in the form as provided by the solicitors for the wife, and as contained in annexure L-6 of the wife's affidavit sworn 13 October 2021.
CONSIDERATION
The final orders are orders as to property, spousal maintenance sums, which commenced on the date of the making of the final orders, and which conclude on 31 December 2028 being weekly amounts as provided for in order 22 of the final orders, and child support departure.
M Super Fund Interest
Orders 6 to 11 of the final orders pertain to the husband’s interest in the M Super Fund (“M Super Fund”), with the trustee of that fund being L Proprietary Limited. Those orders are as follows:
M Super Fund
6.In accordance with section 90XT(1)(b) of the Family Law Act 1975 (Cth) ("the Act"):
(a)The wife is entitled to be paid the specified percentage out of the husband's interest in the M Super Fund ("Fund") as member number …44;
(b)The husband's entitlement (or the entitlement of such other person to whom a payment may be made out of the husband's interest) in the Fund, is correspondingly reduced by force of this order; and
(c) the percentage specified for the purposes of this order is 100%.
7.The trustee of the Fund, L Pty Ltd ("the trustee") do all such acts and things and sign all such documents as may be necessary to:
(a)calculate, in accordance with the requirements of the Act and the Family Law (Superannuation) Regulations 2001 the entitlement awarded to the wife in the immediately preceding clause of this order;
(b)pay the entitlement whenever the trustee makes a splittable payment from the husband's interest in the fund.
8.Orders 6 and 7 of these orders have effect from the operative time and the operative time is four business days after the date of service of a sealed copy of these orders upon the trustee ("the operative time").
9.Order 5 of the September 2020 orders be discharged with effect from the operative time and the payment flag over the husband's interest in the Fund be lifted from the operative time.
10.After service of the payment split notice in accordance with the Superannuation Industry (Supervision) Regulations 1994 ("SIS Regulations"), the wife do all such things and sign all such documents as may be necessary, including but not limited to exercising a request in accordance with the SIS Regulations, for the transfer or rollover of the wife's non-member interest to a complying superannuation fund of the wife's choice ("the wife's fund") in accordance with the SIS Regulations.
11.Pending the transfer of the transferable benefits on behalf of the wife to the wife's fund, the husband immediately upon the making of these orders revoke any binding death benefit nomination already made by him in respect of his interest in the Fund save for in respect of the wife, and is hereby, restrained from:
(a)making any binding death benefit nomination in favour of any other person;
(b)making any other nomination where the effect of such nomination would be to render the splittable payment not splittable;
(c) paying insurance premiums from his entitlements in the fund; and
(d)doing any such act or thing which would defeat, extinguish or reduce the entitlement of the wife pursuant to the provisions of order 6, save that the husband may make a nomination for division 293 taxation for the financial year ended 30 June 2020, and 30 June 2021 and payment of excess contribution of no more than $15,293.18 to be paid from the fund.
On 11 June 2021, the wife's lawyers wrote to the husband informing him that they:
…will serve a certified copy of the sealed orders upon the trustee of M Super Fund.
On 21 June 2021, the wife's lawyers sent M Super Fund a certified copy of the final orders and a signed Regulation 72 notice to effect the superannuation split pursuant to the final orders.
On 24 June 2021, M Super Fund sent a letter to the wife's lawyers confirming that the flag was removed from the husband's member entitlement with M Super Fund.
On 17 August 2021, M Super Fund sent a letter to the wife's lawyers confirming, relevantly, that the:
…payment split has now been finalised, and both parties have been notified by post.
Pending the transfer of the 100 per cent superannuation split to the wife as provided for in the final orders and described in the preceding paragraphs, the husband was specifically restrained (by Court order) from making any nomination regarding his interest in M Super Fund, save for, at his election, a nomination to pay Division 293 tax referable to excess concessional superannuation contributions made by him to his M Super Fund.
The husband did not elect to make such nomination prior to the transfer of the 100 per cent superannuation split to the wife.
On 21 September 2021, the husband emailed the wife's lawyers seeking that the wife pay his Division 293 taxation liability of $7,792.86.
The final orders do not provide for the wife to pay the husband's Division 293 taxation liability, but rather provide that the husband could make a nomination for payment pending the transfer of the 100 per cent superannuation split to the wife.
On 28 September 2021, the wife's lawyers sent the husband a letter by email, responding to his request that the wife pay the tax, stating relevantly:
Order 11 of the final orders, provided that you may make a nomination for the Division 293 taxation for the financial year ended 30 June 2020, and 30 June 2021, and payment of excess contributions of no more than $15,293.18 to be paid "from the fund", "[p] ending the transfer of the transferable benefits on behalf of the wife to the wife's fund".
On 17 August 2020, we were notified by M Super Fund that the payment split had been finalised, and we are instructed our client's non‑member interest has been transferred to her own fund in accordance with order 10. Therefore, order 11 of the final orders no longer applies. Our client is not personally responsible for your Division 293 taxation liability.
I accept the submission of counsel for the wife that the wife ought not now be required to pay this liability from her periodic spousal maintenance or child support payments, or from what cash remains available to her from her property settlement. To require the wife to now personally pay this liability is to vary the final orders rather than to enforce the final orders. The husband's application has, therefore, no merit.
Irrevocable Authority
I note the husband has consented to the signing of the Irrevocable Authority in the form presented to him by the solicitors for the wife, as enclosed in correspondence of 11 June 2021 from the wife's solicitors to the husband. That Irrevocable Authority was addressed to BLLC and requested that the husband sign and return the authority in accordance with order 5(a) of the final orders. There was an exchange of correspondence between the husband and the wife's lawyers, which essentially went to the husband's refusal to sign the Irrevocable Authority prepared by the wife's lawyers in compliance with order 5(a) of the final orders. I accept that the Irrevocable Authority as prepared by the wife's solicitors was in accordance with the final orders, and given the husband's refusal, the wife's seeking of an order pursuant to section 106A of Family Law Act 1975 (Cth) (“the Act”) was justified.
Balance of Tax Payment Amount Pursuant to Order 17
The evidence before the Court as set out in the wife's affidavit of 13 October 2021 makes clear, and is not effectively challenged by the husband in his evidence, that the husband has not met the preconditions for the release to him of the balance of the Tax Payment Amount in accordance with orders 17(a), 17(b) and 17(c) of the final orders( see paragraph 12 above) namely:
(a)the husband has not yet provided documents to evidence that the funds he paid to the wife via her lawyers on 16 June 2021 represents the total of the husband's US 2020 taxation refund pursuant to order 4(a)(iii); and
(b)the husband had failed to sign the BLLC Irrevocable Authority prepared by the wife's solicitors in accordance with order 5(a), at the time of the hearing; and
(c)a Qualified Domestic Relations Order (“QDRO”) has yet to be made in the USA to transfer to the wife the husband's interest in the BLLC Plan pursuant to order 12, and the husband's continued compliance is required; and
(d)the time limitation of 30 November 2021 has not expired.
Order 12 of the final orders is as follows:
B Company LLC defined benefit plan
12. IT BEING NOTED:
(a)The husband is a participant ("the participant") in the B Company LLC Defined Benefit Plan ("the Plan");
(b) The Plan had a balance of USD$131,269.08 at 1 January 2021;
(c) The wife ("the alternate payee") has a marital interest in these benefits;
THE COURT ORDERS THAT each of the husband and the wife forthwith do all acts and things and sign all such documents, specifically including but not limited to obtaining a Qualified Domestic Relations Order ("QDRO"), at the wife’s expense save for in respect of taxation, as may be required to allocate to the wife 100% of the husband's interest in the Plan.
On 11 June 2021, the wife's lawyers requested the husband to sign an investment authority prepared by them, authorising the wife's lawyers to pay $63,651.75 ("the Tax Payment Amount") as defined in order 2(a) of the final orders) into an "at call" interest bearing account, and for those funds to be applied in accordance with the final orders. The letter also confirmed:
Our office will then make monthly payments of $2652 to the ATO from June until November 2021 in accordance with order 18 of the final orders, such sums to be deducted from the Tax Payment Amount.
On 16 June 2021, the husband emailed the signed investment authority to the wife's lawyers.
On 21 September 2021, the husband sent an email to the wife's lawyers seeking that the Tax Payment Amount be paid to him within seven (7) days.
On 28 September 2021, the wife's lawyers clarified for the husband that the requirements of order 17 of the final orders had not yet been met and, therefore, they would not pay him the Tax Payment Amount he sought. The wife's solicitors' letter said, relevantly:
The requirements of order 17 of the final orders have not yet been met.
Specifically, order 17(b) remains outstanding as addressed earlier in this letter (because you have not provided the signed BLLC authority "in accordance with order 5(a)"), and order 17(d) remains outstanding as orders have not been made in the USA for the purpose of order 14 (the QDRO).
Given the above, our office will not be paying you the Tax Payment Amount until order 17 of the final orders has been complied with.
We await receipt of the enclosed authority and your timely cooperation in respect of the QDRO.
The Court notes the largely unchallenged evidence of the wife as set out in paragraph 33 of the wife's affidavit sworn 13 October 2021, when considering this matter. That evidence is relevantly as follows :
…
33.1In relation to order 17(a) and Mr Loudon’s anticipated US 2020 tax return of an estimated US$43,917 which was to be paid to me:
33.1.1 On 16 June 2021, Mr Loudon emailed my lawyers providing:
33.1.1.1A screen shot from his internet banking of his H Bank account ending in #...65, which showed $54,720.05 being deposited on 7 June 2021. The description of the deposit, ‘Exp Collection … Sa…01” does not show the source or nature of the deposit. The screenshot shows a fee of $40 debited on the same day; and
33.1.1.2a G Bank customer receipt dated 16 June 2021 for account ending in #...14, showing a withdrawal of $54,680.05.
…
33.1.3Mr Loudon wrote in his email to my lawyer on 16 June 2021 in respect of this sum,“4. Tax Refunds – I have attached deposit information and receipt for transfer to your trust.” He did not provide any further explanation or documentation to confirm this transfer reflects the US 2020 Refund (as defined in paragraph 4(a)(iii) of the Final Orders) paid to him, as required by order 4 of the Final Orders. In particular, Mr Loudon has not provided:
33.1.3.1“notices of assessment, payment notifications and copy cheques” or the American equivalent (which I understand to be called Record of Account Transcript); and
33.1.3.2has provided only a screenshot of his internet banking for his Australian H Bank account not “bank statements evidencing receipt of funds”, including statements for his J Bank account (or another US account) to which his US tax refund was paid, before transfer to his Australian H Bank account.
These documents were requested in the letter sent to Mr Loudon by my lawyers, dated 11 June 2021 (annexed at L-2). Accordingly, I cannot confirm this payment represents the full sum of the US 2020 Refund and therefore, cannot confirm Mr Loudon has complied with order 4(a)(iii) and therefore order 17(a) of the Final Orders.
…
33.2 In relation to order 17(b):
Mr Loudon has not provided my lawyers with the signed BLLC Authority in accordance with order 5(a) of the Final Orders;
33.3 In relation to order 17(d):
A Qualified Domestic Relations Order (QDRO) has not been made in the United Stated of America for the purposes of order 14 of the Final Orders. Ms F from Q Lawyers confirmed to my lawyers on 12 October 2021 that such an order had not been made. Annexed hereto and marked with the letters “L-8” is a true copy of the email sent from Ms P of Taussig Cherrie Fildes to Ms F from Q Lawyers on 8 October 2021 and Ms F’s response sent on 12 October 2021.
The husband's orders as sought in his application are not supported by the evidence and the final orders, and his application will be dismissed.
COSTS
The wife made an application that the husband pay her legal costs of and incidental to responding to the husband's Application in a Case on an indemnity basis.
Section 117 sets out the position with respect to the incurring and payment of the parties' costs in litigation, that is, ordinarily each party will pay their own costs.
The awarding of costs against a party is a discretionary matter. In the exercise of that discretion, the Court is required to consider those matters as set out in section 117(2A) of the Act. Those matters are as follows:
(2A)In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a) the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f) …
(g) such other matters as the court considers relevant.
The husband has been entirely unsuccessful in this proceeding. His application had no merit in respect of any orders as sought. The wife received as a property settlement approximately $503,709 less taxation and other liabilities, and including retention of her Motor Vehicle 1 and home contents. That part of those funds received by way of part property settlement, have been expended by her on legal fees and living expenses. Superannuation entitlements received by the wife were her N Super Fund interest of $14,836; 100 per cent of the husband's M Super Fund interest of $408,570; and QDRO for 100 per cent of the husband's interest in the BLLC Plan, with an estimate of $169,576 less tax.
The wife is reliant upon spousal maintenance payments from the husband until 2028, and child support payments until the youngest child attains 18 years of age. The wife is otherwise on government benefits for her support and the support of the parties' three children under the age of 18. The wife also makes provision for the partial support of the parties' adult son, who is undertaking his first year of university studies. The husband has considerable income and earning capacity.
The wife incurred legal costs of approximately $ 382,761.92 up until the morning of the hearing of the Application in a Case on 13 October 2021. Of those costs, approximately $4,600 relate to the Application in a Case filed by the husband on 28 September 2021, those costs including the preparation of the wife's response, affidavit and brief to counsel.
Counsel's fees for the hearing on 14 October 2021 were $3,300, and the solicitors' costs as claimed are $2,400 for further preparation and instruction at the hearing on 14 October 2021.
The Court, in the exercise of its discretion, shall make an order for costs against the husband in favour of the wife, on a party/party basis in the sum of $4,600+$3,300+$1,000=$8,900. Such quantum is determined as reasonable by the Court, the Court having considered the schedule scale of costs applicable.
I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Hartnett. Associate:
Dated: 22 October 2021
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