Matheson and Matheson

FAMILY COURT OF AUSTRALIA

MATHESON & MATHESON

[2008] FamCA 636

FAMILY LAW – PROPERTY SETTLEMENT—Third party seeking to intervene to have consent orders set aside—declaration of proprietary interest—sale of boat realised $550,000—expectation at time of making order value $770,000—partial orders made—interim property orders may be varied or discharge—partial final property order is final or permanent—third party refused opportunity to intervene in earlier proceedings as application not made until time of trial—clearly had notice—elected not to intervene at earlier point in time—Application dismissed—Trustee for Sale of boat directed to pay funds to other creditors

APPLICANT:

MS MATHESON

RESPONDENT:

MR W MATHESON

FILE NUMBER:

BRF

1279

2005

DATE DELIVERED:

23 JULY 2008

PLACE DELIVERED:

BRISBANE

PLACE HEARD:

BRISBANE

JUDGMENT OF:

BARRY J

HEARING DATE:

14 APRIL 2008

REPRESENTATION

SOLICITOR FOR THE APPLICANT:

The Applicant Wife appeared in person

SOLICITOR FOR THE

RESPONDENT:

The Respondent Husband appeared in person

SOLICITOR FOR MR D MATHESON:

Mr Vaughan Massey solicitor of Barber & Massey appeared by telephone for the husband’s brother

Orders

IT IS ORDERED THAT:

D Matheson’s amended application filed 8 April 2008 be dismissed.
Mr H of P Partners as Trustee for Sale appointed by consent orders of this Honourable Court dated 12 April 2007 to effect the sale of the boat the subject of such orders is hereby directed to pay to the Collector of Public Moneys, Brisbane Registry, Family Court of Australia the balance held in the Trust Account after deduction of any fees and outlays pursuant to paragraph (3) hereof.
Mr H may deduct any fees and outlays claimed for acting as Trustee provided such amount is retained in his Trust Account for a period of thirty days after a final account is rendered to each of the parties to the order of 12 April 2007. In the event no objection is lodged with the Trustee by any party such fees may be paid. In the event any objection is received the matter is to be re-listed in this Honourable Court for a determination in relation to such dispute.
The Trustee is directed to forward to the Registrar of this Court at Brisbane:

a Trust Account cheque as calculated in accordance with the terms of paragraphs (2) and (3) hereof;
a statement setting out all receipts and payments made in the course of acting as Trustee;
a copy of the Trustee’s fees and outlays.

Provided there is sufficient moneys available the Registrar is to forthwith attend to payment of all moneys provided for in the consent orders dated 12 April 2007.
In the event there are insufficient moneys available for distribution the matter is to be re-listed before the Honourable Justice Barry for further determination.
All outstanding applications be dismissed and the proceedings are removed from the Active Pending Cases List.

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

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRF1279/2005

MS MATHESON

Applicant

And

MR W MATHESON

Respondent

REASONS FOR JUDGMENT

D Matheson and the respondent husband, W Matheson, are brothers. When their father died in 1995 he left his unencumbered property at G solely to D.
In March 1997 the husband sought to borrow $70,000 from D. To this end D mortgaged the G property and paid the money to his brother. At paragraph 10 of D’s affidavit he notes that the Office of State Revenue stamp duty form in relation to this transaction had the notation, ‘O/A W [Matheson]’.
I interpret the initials ‘O/A W [Matheson]’ to mean ‘on account of W [Matheson]’. D further says in his affidavit that to the best of his recollection from looking at that document it related to money required by his brother in relation to a property which he and the wife then owned at P he adds:
“I cannot recall any of the conversations that led to my agreeing
to this mortgage.”
There was a further borrowing in 1999 in the sum of $39,500. Circumstances in relation to this transaction are set out in paragraphs 11 and 12 of D’s affidavit sworn 30 March 2007 filed 6 August 2007:
“11. It then appears from the historical search that on 28 May 1997 caveat […] was registered against the title to the [G] property to secure an advance of $39,500 recorded by way of a Real Property Act mortgage dated 27 May 1999. The mortgage was to [AA] Finance Pty Limited through [Mr B]. I did not receive any part of the money loaned by [AA] Finance Pty Limited pursuant to that mortgage. I did not make any repayments of that loan to [AA] Finance Pty Limited.
12.It was prior to my brother bringing [Mr B] to my house for me to sign the mortgage documents for [AA] Finance Pty Limited that I had a conversation with my brother to the following effect. He said:
“I need some money for a spray booth in my workshop. How about using the house as security?”
I said:
“Why don’t you use your money?”
He said:
“All my money is tied up in the company and I need to borrow.”
I said:
“No, I want to purchase a unit.”
He said:
“You won’t make any money on real estate. All the money is in trucks.”
I still said:
“No, I don’t want to.”
Then about a week later I had a further conversation with my brother and at the conclusion of that I said:
“Look, you’ve talked me into (sic) but I don’t want my house to be mortgaged for 25 years. When will it be paid?”
He said:
“I’ll knock it over in a year or two. I’m making heaps of money in the truck business.””
Subsequently D sold the G property and purchased a property at N. The mortgage liability was transferred to this second property (refer paragraph 21 of D’s affidavit).
At paragraph 16 of his affidavit D deposes:
“16.On 4 August 1999 Mortgage […] to the National Australia Bank was registered against the title to the [G] property. I am informed by my Solicitor and believe that it appears from the Office of State Revenue stamps endorsed upon pages 1 and 3 of that document the mortgage was stamped exempt as it replaced the original $70,000 mortgage to the ANZ Bank and was then assessed liable to duty of $260 on the upstamping consequent upon the increase of the sum secured on 20 July 1999 by a further sum of $65,000 bringing the total amount secured by that mortgage to $135,000. Annexed hereto and marked with the letter “F” is a copy of that mortgage.”
In assessing the merits of the current application I propose to accept the affidavit material of D at face value namely it may well be an honest account of events.
The reality is I have no valid reason to doubt D’s version of events although his account set out in his affidavit filed August 2007 differs significantly from the account given in his affidavit sworn 9 May 2006. It is likely the later version is the correct one.

Consent orders for property settlement

The husband and the wife separated in about March 2005. By May 2005 they had entered into consent orders for property settlement.
It is noteworthy that in setting out the liabilities of the parties in the application for consent orders there is no specific reference therein to any moneys said to be owing to D.

issues to be determined

The consent orders of May 2005 were set aside (by consent) and after a lengthy complex process with numerous parties added, that litigation was resolved by consent orders for partial property settlement on 12 April 2007.
D now seeks to have the consent orders dated 12 April 2007 set aside and to have the liability to him fully recognised and paid out of moneys that are held in a Trust Account consequent on the sale of the wave piercer boat.
To more fully understand D’s position it is necessary to retrace the history of the proceedings in this Court.

proceedings in family court

As noted above on 12 May 2005 orders in final terms for property settlement issued. In the Form 11 application for consent orders the husband and the wife are shown as joint owners of both the R and N properties. At the behest of the husband D agreed to transfer the N property to the wife. Both properties are heavily mortgaged. R property is shown as being valued at $317,000 with a mortgage of $270,000 and the N property is shown as being valued at $380,000 with a mortgage of $350,000. The parties are shown as joint owners of the boat having a total value of $600,000. The consent orders application indicates they each held a $300,000 interest in the boat and there is no liability listed attributable to the boat.
The consent orders of May 2005 were in the following terms:
“BY CONSENT IT IS ORDERED:
1.That the Husband and the Wife do all acts and things necessary to sell the property stated at [R] being the whole of the land more particularly described in Lot […] on RP[…], Parish of […], the proceeds of the sale paid in the following manner and priority:
a.in payment of the amount required to discharge the mortgage […] to Westpac Banking Corporation;
b.          in payment of agents commission and auction expenses if any   due on the sale;
c.          in payment of legal costs;
d.          the balance to be payable to the Wife.
2.That the Wife do all such acts and things and sign all such documents as may be required to transfer to the Husband all of her right, title and interest in the property situated at [N], NSW and being the whole of the land more particularly described as Lot […] on RP[…].
3.That the Husband do all acts and execute all documents submitted by the Wife to transfer to the Wife the registration and the parties interest in the […] BMW, Queensland registered number […] on or before 31 December 2005 and that the Husband is to be responsible for all repayments with GE Capital for this vehicle.
4.That the Wife must do all acts and execute all documents submitted by the Husband to transfer to the Husband the registration and the parties interest in the [Toyota], Queensland registered number […] and that the Husband will be responsible for all GE Capital finance repayments in regard to this motor vehicle.
5.That the Husband will be responsible for the weekly rental of $625.00 for the premises at [C] until 16 June 2005.
6.That the Husband will be responsible for the outstanding SPUR liability in the name of [the wife] to the extent of $5,800.00.
7.That the Husband will be responsible for the Westpac Visa Card minimum monthly repayment in the Wife’s name until such time as the sale of the [R] property and that the Wife will in turn incur no further liability on this account until the settlement of the [R] property.
8.That while the Wife is the primary carer of the children:
a.the Husband pay to the wife the sum of $500.00 per week by way of weekly payments until 31 March 2006;
b.the Husband will be responsible for the children’s school       fees upon the forwarding of the invoice by the Wife.
9.That the Husband be responsible for the expenses associated with the child, [J’s] orthodontic plan payments of $220.00 per month for a period of 14 monthly payments.
10.That unless otherwise specified in these Orders and except for the purposes of enforcing the payment of any money due under any subsequent Orders:
a.each party be solely entitled to the exclusion of the other/or property including chooses and action, in the possession of such party as at that date. All the chattels in the matrimonial home are considered to be in the possession of the Wife;
b.money standing in the credit of the parties in any bank account is to become the property of the person named in that account;
c.each party hereby foregoes any claim that they may have to any superannuation benefits belonging to or earned by the other.
d.that the Wife as soon as possible do all and necessary acts and things and sign all necessary documents to transfer to the Husband, at the expense of the Husband, all her interest in the […] Boat named “[…]”.”
What was not disclosed at any stage until 11 April 2007 to the Court or to anyone else seemingly was the fact that the husband was from late 2000 an undischarged bankrupt.
At about the time of separation the husband entered into a relationship with Ms S. He established a company Q Pty Ltd of which he was the sole director. In March 2005 he resigned as a director and Ms S was appointed in his place. It appears that this company was to operate the boat as a commercial enterprise. At some stage the boat was registered in the name of the company.
For the purpose of dealing with the current application I am satisfied Ms S was at all times the alter ego of the husband.
On 16 March 2006 the wife filed an application seeking that the consent orders o May 2005 be set aside on the basis that the Husband had not honoured his side of the obligations pursuant to such orders.
The parties agreed to the setting aside of the original consent orders for property settlement made in May 2005.
Thereafter numerous interlocutory applications followed. The husband claimed a friend of his Mr I was the owner of the boat. He said he had sold his interest in the boat to Mr I as early as 2003.
Paragraphs 5 and 6 of the order made on 29 September 2006 were made with the consent of the wife and the husband:
“5.Pursuant to section 106B of the Family Law Act 1975 the purported transfer off 85 ordinary shares in the company [Q] Pty Ltd ACN […] (a company) from the first respondent to the third respondent which was purportedly effected through a Corporations Act 1991 form 484 identified as Australian Securities & Investments Commission document number […] and purportedly signed on 29 June 2005 by the second respondent as a director of the company and which was lodged with the Australian Securities & Investments Corporation on or about 13 July 2006 be set aside.
6.The third respondent forthwith and upon the making of these orders transfer to the first respondent his interest in the said shares.”

Paragraph 11 of the orders of that day was in the following terms:
“11.Except as otherwise provided for in these Orders, that until further Order the First, Second, Third and Fourth Respondents be restrained without the consent of the Applicant or leave of this Court from doing any of the following things in respect of the Company, that is to say:
a.to issue any further shares in the Company;
b.to register any shares already issued but not as yet registered in the Company;
c.to alter the rights attaching to any shares already issued in the Company;
d.to appoint any further directors of the Company or to appoint any additional Secretary or alternate Secretary of the Company;
e.to dismiss all or any directors presently appointed of the Company;
f.to sell, mortgage, charge or encumber any asset of the Company;
g.to make any loan or advance to any other person or other corporation or entity;
h.to guarantee any loan or contractual liability of any other person or other corporation or entity;
i.to alter or vary the signatories to the bank account of the Company;
j.to increase the superannuation benefits of or payments on behalf of any director or employee of the Company;
k.to declare and/or pay a dividend; and
l.to affix the common seal of the Company to any contract, agreement, instrument or other document.”
By paragraph 13 of those orders the matter was adjourned for a three day trial commencing on 10 April 2007.
Mr and Mrs Y had acquired a 15 percent interest in the company, Q Pty Ltd for the sum of $150,000.
In the reasons for judgment of 29 September 2006 (paragraphs 20 and 21) I observed:
“20.In the Wife’s affidavit of 23 August 2006 annexure “A” exhibits the transfer by the Husband of 15 percent in [Q] Pty Ltd to the [Ys] on 29 June 2005. The document has been signed by the Husband as seller and by the [Ys]. The full name of the company is [Q] Pty Ltd and it has fifteen shares transferred in the company for a consideration of $150,000.
21.Prima facie, I am satisfied that this is an arms length transaction. If it be an accurate transaction it evidences three things:
i.the [Ys] have a 15 percent interest in [Q] Pty Ltd which appears to be the owner of the boat;
ii.the Husband purported as at 29 June 2005 to be the person able to effect that sale; and
iii.the value of the boat is approximately $1 million, if one is a buying a 15 percent interest in the boat for $150,000.”
The Husband shortly prior to trial placed the company, Q Pty Ltd in liquidation. Mr A an accountant from Sydney was appointed liquidator. In his role as liquidator of this company he elected to be joined as a party to the litigation.
In written submissions lodged on 14 December 2006 in proceedings heard in my absence before Jordan J, Counsel for the Wife noted:
“4.5The proceedings to date have been difficult and complicated. This has been due to the failure of all of the respondents in the proceedings (of all whom are self represented) to properly comply with their obligations and duties under the Act and the Family Law Rules 2004.
4.6More particularly, the respondents have failed in their duty to make full frank and ongoing disclosure of all matters, particularly financial matters, that are relevant to the proceedings.
4.7The failure of the respondents to make proper disclosure has, in almost all respects, been total.
4.8It is the submission of the applicant wife that the respondents are seeking to deliberately frustrate and stymie the applicant wife’s application for property settlement orders.”
On 14 December 2006 Jordan J made orders joining Q Pty Ltd (in Liquidation) as a party to the proceedings.
I accept the accuracy of the submissions made by Counsel for the Wife to Jordan J in December 2006.

THE APPLICATION TO INTERVENE

By letter of 30 March 2007 Barber & Massey, solicitors, forwarded to the Court on behalf of their client, D Matheson, a form 2 application in a case seeking to intervene together with an affidavit of their client and a request to attend by electronic communication.
The documents were not received until 3 April 2007, a week prior to the trial. It was not possible to hear this application prior to the date of hearing.
At the commencement of the trial on 10 April 2007 I heard Mr Battley on behalf of D as town agent for Barber & Massey. I was informed that in the event the application to intervene by D was successful, D would not be legally represented at the hearing.
Having regard to the number of legal representatives appearing and the number of parties I was concerned if I was to grant D leave to intervene it would necessitate an adjournment of the trial. This much was indicated by the husband who supported the application to intervene. The Wife opposed the application to intervene.
On 10 April 2007 for reasons I gave at the time I dismissed the application by D to intervene.
On 11 April 2007 I was informed by Counsel for the wife that a search had revealed the husband was an undischarged bankrupt.
A further complication was that truck company M Pty Ltd had been placed in administration. I was informed that company had advanced “a large sum of money” towards the purchase of the vessel. I was further informed that this loan was repaid by the sale of a houseboat and the injection of $150,000 by the Ys. The exact financial position of the company in administration was not known.
In the period throughout the proceedings the husband continued to operate the boat on contract to a cruise company. The Husband regularly received moneys from the cruise company which remained unaccounted for.
Consent orders for partial property settlement were made on 11 April 2007 in the following terms:
“IT IS ORDERED:
Property Issues
1.That the Husband, his servants or agents be restrained from attending at or upon the [boat] known as "[…]" and/or "[…]" or coming within 100 metres of the said vessel.
2.That the Second Respondent, her servants or agents be restrained from attending at or upon [boat] known as "[…]" and/or "[…]" or coming within 100 metres of the said vessel.
3.[Mr Y] and {Mrs Y] as trustees for the [Y] Family Trust have leave to intervene in this proceeding as the Sixth Respondents.
Notation
That the Official Trustee in Bankruptcy in respect of the Husband’s bankruptcy dated 16 August 2000, ITSA reference NSW […], be requested to file and serve a Notice of Address for Service within fourteen (14) days.
IT IS ORDERED BY CONSENT BY WAY OF PARTIAL PROPERTY
SETTLEMENT:
4.Pursuant to section 78 of the Family Law Act 1974, a declaration issues that the Wife is the legal and beneficial owner of the [boat] known as "[…]" and/or "[…]" (the vessel).
5.That [Mr H] of [P] Partners be appointed as trustee for the sale of the vessel to be held by him on trust to sell the same and to stand possessed of the net proceeds of sale, after payment of reasonable costs, sale costs, commissions and any taxation consequences arising out of the sale, and that such trustee appoint a Marine Broker or Agent for the purposes of listing and selling the vessel for the best price reasonably obtainable.
6.Upon completion of the sale, the trustee will apply the proceeds of sale as follows:
a.in payment of reasonable costs, sale costs, commissions and any taxation consequences arising out of the sale;
b.Lumley Finance Ltd in the amount of $10,661.10;
c.[M Marina] Pty Ltd in the amount of $4,806.50;
d.[…] Diesel Australia Pty Ltd in the amount of $25,840.71;
e.[Mr and Mrs Y] as trustees for the [Y] Family Trust in the amount of $150,000;
f.[Mr A] as liquidator of the Fifth Respondent in the amount of $11,000 for insurance paid by him for the vessel;
g.[Mr A] as liquidator of the Fifth Respondent in the amount of $40,000 for the costs of the administration and liquidation of the Fifth Respondent;
h.Westpac Visa Card in the name of the Wife being account number […] in the sum of $12,323;
i.BMW Financial Service Collections loan number […] in the name of the Wife in the amount of approximately $78,058;
j.Esanda Hire Contracts […] and […] in the name of the Wife in the amount of approximately $33, 592;
k.GE Finance in the name of the Wife in the amount of approximately $31, 862;
l.Suncorp bank account in the name of the Wife being account number […] in the sum of approximately $2,412;
m.Queensland State Penalties Enforcement Registry (SPER) Fines in the name of the Wife;
n.UNTIL FURTHER ORDER by this Court the balance to the trust account of the Wife's solicitors, Barry & Nilsson Lawyers, and such sum may be invested in an interest bearing account in the Wife's name.
7.Pursuant to section 90AE of the Family Law Act 1974, the Husband will be solely responsible for any liability or debt owed to:
a.[Mr I] (the Third Respondent); and
b.[Ms S] (the Second Respondent).
8.That the Fifth Respondent by its liquidator do all things reasonable and necessary to have the Wife’s interest and the trustee’s interest noted on any policy of insurance of the vessel and that the Fifth Respondent by its liquidator is authorised to provide a copy of these Orders to the insurer of the vessel.
9.That order 4(b) of the Orders made by His Honour Justice Jordan on 14 December 2006 be discharged.
10.That leave be given to the Wife's solicitor to provide a copy of this Order to:
a.the Official Trustee in Bankruptcy;
b.Australian Securities and Investments Commission;
c.[…] Jetty;
d.[…] Shire Council; and
e.[…] Security Services.
11.That each party retain all personal items, superannuation benefits, goods and chattels to the exclusion of the other as are in their possession at the date of these Orders.
12.That the further determination of the proceedings in respect of property settlement, the children’s issues and the Wife’s contravention application be adjourned for hearing to 6 and 7 August 2007.
13.That [D Matheson] be given leave to appear on the adjourned date to determine whether pursuant to section 90AE the Wife should be liable for any money said to be owed to him.”

On the 6 August 2007 the application by D was adjourned to 10 December 2007.
On 21 January 2008 the wife and the husband each filed an application in a case seeking orders in identical terms:
“1. That the orders made by consent on 12 April 2007 before Justice Barry as far as they relate to the payment of creditors be set aside.
2.That the Court order the trustee Mr [H] of [P] Partners not pay any dispersements (sic) and hold the proceeds of the sale of the vessel known as “[…]” approximately $500,000 in there (sic) trust account until further order.”
On 14 April 2008 the wife sought to withdraw her application in a case filed 21 January 2008. I permitted the wife to do so. As the husband was still an undischarged bankrupt I ruled he had no standing to bring the application to set aside the consent orders without the permission of the Official Trustee in Bankruptcy. On 18 April 2007 the Official Trustee in Bankruptcy had filed a notice of address for service. There was no evidence the husband had made any attempt to seek permission to initiate the application of 21 January 2008.
On the same date (14 April 2008) I heard from Mr Vaughan Massey a solicitor acting on behalf of D Matheson. Mr Massey appeared by telephone link.
On 6 August 2007 Mr Massey had filed on D’s behalf a form 2 seeking that D have leave to intervene in the proceedings. This application was supported by two affidavits by D one sworn 30 March 2007 (which had been handed up before me at the hearing on 10 April) and the other sworn on 9 April 2007 together with a financial statement sworn 30 March 2007.
On 8 April 2008 an amended application was filed on D’s behalf.
That application was in the following terms:
“1.That [D Matheson] have leave to intervene in these proceedings.
2.That pursuant to section 79A of the Family Law Act 1975 orders (4) and (6) of the orders made by consent on 12 April 2007 be set aside.
3.That this matter be remitted for re-hearing.
4.That pending further order [Mr H] of [P] Partners be and is hereby restrained from disposing of the net proceeds of sale of the commercial wave piercer motor vessel known as “[…]” and/or “[…]”.
On the same date two further affidavits each sworn 3 April 2008 were also filed together with an updated financial statement.
There was no evidence the amended application had been served on the numerous parties who had signed up on the consent orders but at the very least the Ys had been served as they briefed Counsel, Ms Heyworth-Smith to appear on their behalf. The husband also appeared in person.
At the hearing on 11 April exhibit 3 was the Citec National Bankruptcy search results for the husband. They indicated that the application for bankruptcy was entered on the National Personal Insolvency Index on 16 August 2000. The hearing date was 4 December 2000. The petitioning creditor was the Australia & New Zealand Banking Group Limited.
The summary on that document reveals:
“This individual is an undischarged bankrupt.”
It appears that in his typical lackadaisical fashion the husband decided to ignore letters received from the Official Trustee or to make any other attempts to communicate with the Official Trustee. The Bankruptcy Act provides that the period of bankruptcy does not commence until the bankrupt has filed a statement of assets and liabilities. Information from the Bar Table would indicate that no such statement of assets and liabilities was ever filed.
The advances deposed to by the husband in his affidavit totalling $135,000 (paragraph 16) together with the additional $39,500 (paragraph 11) would have been debts provable in the bankruptcy. All of the evidence from D would indicate that the moneys were advanced at the request of his brother and were advanced to his brother. As the bankruptcy was in late 2000 that money is not recoverable in any jurisdiction other than attempting to prove in the bankruptcy as an unsecured creditor. I expect the petitioning creditor was a secured creditor but as the husband has no assets it matters little.
To his affidavit filed on 6 August 2007 as annexure “A” D attaches an application for final orders which he would seek to file in the event leave was given to him to intervene. Those final orders are in the following terms:
“1.That the Husband and the Wife pay to the Intervenor [D Matheson] the sum of $350,000 no later than the day which is forty-two (42) days after the date of this order.
2.That the Husband and Wife shall on or before the day which is forty-two (42) days from the date of this order the Husband shall pay to Esanda Corporation Limited all moneys owing to Esanda Corporation Limited with respect to hire purchase commercial account reference […].
3.That the Husband and Wife shall on or before the day which is forty-two (42) days from the date of this order pay to Austar United Broadband Pty Ltd all moneys due and owing to that company with respect to the telecommunication account established with that company in the name of [D Matheson] on or about 23 February 2004.
4.That pending compliance by the Husband and the Wife with orders (1), (2) and (3) they each be and are hereby restrained from disposing of any real property, personal property, chattels or financial resources in their joint names or in their separate names.”
It appears from paragraph 12 of D’s affidavit that the sum of $39,500 was to be expended on a spray booth for the Husband’s workshop.
In paragraph 18 D deposes to the fact that to his knowledge all cheques drawn in repayment of the mortgage amounts were drawn on Matheson Trucks.
There is no evidence before the Court as to who was the registered proprietor of this business name or whether it was a company and if so who had the controlling interest in the company.
At paragraph 25 D sets out what his versions are of conversations had with his brother, the husband, in 2004. Although the property was to be transferred into the wife’s name it is clear from the terms of the conversations that it was the husband who was borrowing the funds:
“It’s the only way I can fix everything and clear the other loan up - - I’ll make sure I transfer the house back to you and pay the loans out fully in six weeks.”
At paragraph 33 of the affidavit D deposes:
“33.The commercial credit enquiry made by Esanda on 28 July 2003 related to a hire purchase commercial account in my name for a loan of $96,089 to refinance a tow truck that was used by [the husband] in the business [M Pty Ltd]. I worked for that company on a casual basis between 2002 and about March or April 2004 as best as I can recall. However I did not receive any benefit from the hire purchase commercial account for $96,089 established by Esanda. I did not make any repayments towards that account. I do not recall any conversations that lead up to my signing the Esanda documents. My brother gave me the documents to sign as far as I can recall. I recall receiving several default letters from Esanda and each time I said to [the husband]:
“What are you doing about this loan?
and he replied:
“I will fix it.”
At paragraph 43 of his affidavit D deposes to a telephone call with the husband when the affidavit of May 2006 was forwarded to him for signature. At that time the husband was requesting that D place a caveat on the title:
“…so [the wife] doesn’t get any more loans on that house.”
It is to be borne in mind that this was after separation, after the consent orders and after the proceedings had been instituted by the wife in early 2006.
Interestingly D replies:
“Don’t put this on [the wife]. I know the loans were for you. Pay the loans out and put the house back in my name. Just sell the boat and fix everything up.”
In relation to the property at R, D deposes to the fact that he has no recollection of ever owning a property at that address.
In the second affidavit sworn on 9 April 2007 it has to be recalled that this was the day before trial. At paragraph 3 D deposes to the fact that he did not become aware the matter had been listed for trial until 8 March 2007.
There is no explanation as to why he was not put on alert at a much earlier time to ascertain from various sources when the matter had been listed for hearing. He had sworn an affidavit in the proceedings as early as May 2006.
In his financial statement D deposes to the fact that he is unemployed and is only in receipt of unemployment benefits of $210 per week. He has assets of $1,001 consisting of $1.00 in a bank account a $1,000 of personal items. He has liabilities of $27,700.

law to be applied

The orders made by consent on 11 April 2007 were expressed to be orders for partial property settlement. After the sale of the boat the orders provided for the balance of moneys to be held by the Wife’s solicitors in their Trust Account. By the time of the hearing before me in relation to D’s application the Wife’s solicitors had been given leave to withdraw and the Wife was not legally represented.
As I understand the position their fees have not been paid. I have a recollection of being given an estimate that their unpaid fees were in excess of $100,000. Having regard to the amount of work involved this would not be surprising. The expectation at the time of making the consent orders was that the boat would sell for a figure in excess of $700,000. It was likely there would be a surplus of funds even after the payments provided for in the orders of 11 April were made. The likely outcome thereafter was a contest between the Wife’s former legal representatives as unpaid creditors of the Wife and D who in the fullness of time would expect to be given leave to intervene.
Unfortunately the sale of the boat only realised $550,000. Total receipts including refund of insurance brought this amount up to $564,000. The chartered accountant appointed as trustee for sale pursuant to the order of 11 April 2007 estimated in a letter to the Case Co-Ordinator of 21 September 2007 that the surplus was to be in the order of $15,000.
I proceed on the basis that as between the parties themselves there is no property left to be divided. Both the wife and the husband appear to accept this as fact and I am confident it is so.
As I understand the position interim property orders may be varied or discharged. A partial final property order is a final or permanent order and only deals with the part of the property specified in the order. Refer Bassi K D Sales for Specialists Pty Ltd v Maas [1999] FLC 92 867.
As noted above the only reason the orders were framed as partial was because the precise surplus could not be ascertained at that particular point in time.
Where parties to Family Court proceedings enter into consent orders concerning property in which some third party might have a proprietary interest, such consent orders are amenable to being set aside for a miscarriage of justice on the application of such third party where the third party did not receive notice of the proceedings and, as such, was not afforded an opportunity to intervene (refer Semmens v Commonwealth [1983] 13 Fam LR 715). However the making of a declaration that one party to the property proceedings holds an interest in the subject property will not be invalid where a third party having better title has notice of the proceedings and chooses not to intervene to assert his or her title (refer In the marriage of Lanceley [1994] 18 Fam LR 71.
I propose to dismiss the application to intervene in these proceedings. I do so for the following reasons:
·    It is likely a considerable portion of the moneys advanced by D to his brother were “lost” in the husband’s bankruptcy. On my calculations this amount would be in the order of $175,000 which is 50 percent of the amount claimed in the draft application for final orders annexed to the amended application. This amount could not be claimed by D as a creditor of the parties or either of them but could only be claimable in the bankruptcy. As noted earlier it is likely that there would be no assets in the bankrupt’s estate.
·    The order made was for partial property settlement. Such an order could only be set aside pursuant to the terms of section 79A. Where D had knowledge of the Family Court litigation as early as May 2006 he is unable to plead he did not have notice of the proceedings. He clearly had notice and for whatever reason he elected not to intervene until it was too late.
·    Absent a successful application pursuant to the terms of section 79A the likely surplus (if any) is of such a minor amount as not to justify leave being granted. It is likely at this point in time the surplus has been taken up by additional costs of the trustee for sale endeavouring to obtain financial records from the husband.
·    Whilst D would have standing to intervene in the proceedings his late notice of his desire so to do would have added unduly to the cost of the litigation. The parties would have been unprepared to meet the issues he intended to raise with the consequent necessity for an adjournment. This had been foreshadowed by the husband and in the circumstances which had arisen would have been difficult to refuse. I note as an aside it is likely that the husband wanted the adjournment so he could continue to derive an income by operating the boat rather than requiring time to oppose D’s claim. I find it is likely the other parties would have been prejudiced if the adjournment was not acceded to.
·    The consent orders and the declaration of proprietary interest therein cannot be set aside by D on the basis of a miscarriage of justice as he had sufficient notice of the proceedings and was thus afforded natural justice.
For the above reasons the amended application filed 8 April 2008 is dismissed.
I make this order reluctantly as D deserves considerable sympathy. He has done no wrong. His only mistake was to trust his only brother. I have to place on record that the husband has been one of the most dishonourable deceitful litigants ever to have appeared in a Court room where I have been presiding. As shown in his behaviour to his wife and to his brother D he cannot be trusted in any way, shape or form. If he was in any way an honourable man he would set about making an honest living and doing all in his power to repay the moneys lent by his all too trusting younger brother.
The Trustee for Sale appointed under the orders of 12 April 2007 still has money in his Trust Account. The creditors have not been paid. There has been no distribution to the parties notwithstanding the fact that the sale took place approximately twelve months ago. Apparently the Trustee is awaiting Business Activity Statements and associated financial records from the husband to allow him to make a calculation of any capital gains tax payable on the sale as well as any outstanding tax liabilities arising from the operation of the business.
I am more than confident the husband will not produce any information to allow such calculations to be made. In the unlikely event such information was provided I expect little reliance could be placed on its accuracy. I propose to arrange for a Registrar to attend to payment of the sums provided for in the consent orders.
I propose to make an order directing the Trustee to pay the moneys into Court. The orders will be in the following terms:
1.Mr H of P Partners as Trustee for Sale appointed by consent orders of this Honourable Court dated 12 April 2007 to effect the sale of the boat the subject of such orders is hereby directed to pay to the Collector of Public Moneys, Brisbane Registry, Family Court of Australia the balance held in the Trust Account after deduction of any fees and outlays pursuant to paragraph (2) hereof.
2.Mr H may deduct any fees and outlays claimed for acting as Trustee provided such amount is retained in his Trust Account for a period of thirty days after a final account is rendered to each of the parties to the order of 12 April 2007. In the event no objection is lodged with the Trustee by any party such fees may be paid. In the event any objection is received the matter is to be re-listed in this Honourable Court for a determination in relation to such dispute.
3.The Trustee is directed to forward to the Registrar of this Court at Brisbane:
·a Trust Account cheque as calculated in accordance with the terms of paragraphs (1) and (2) hereof;
·a Statement setting out all receipts and payments made in the course of acting as Trustee;
·a copy of the trustee’s fees and outlays.
4.Provided there is sufficient moneys available the Registrar is to forthwith to attend payment of all moneys provided for in the consent orders dated 12 April 2007.
5.In the event there are insufficient monies available for distribution the matter is to be re-listed before the Honourable Justice Barry for further determination.

I certify that the preceding seventy-eight (78) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Barry

Associate:

Date: 23 July 2008

[2008] FamCA 636

23 July 2008

Key Legal Topics

Areas of Law

Family Law

Civil Procedure

Legal Concepts

Consent

Costs

Remedies

Procedural Fairness