MAXWELL & MAXWELL - [2015] FamCA 1171

FAMILY COURT OF AUSTRALIA

MAXWELL & MAXWELL

[2015] FamCA 1171

FAMILY LAW – PROPERTY – Interests in a rural family enterprise – Where the husband holds minority interests in corporate and partnership assets – Where there is an issue regarding the application of appropriate discounts to the value of the National Australia Bank husband’s minority interests – Whether a large liability which the husband owed to a family partnership business should be disregarded or discounted because the repayment of same was questionable – Where it was found that the husband’s liability to the family partnership business may result in a tax advantage – Where the husband will continue to occupy the former matrimonial home – Where the husband has not paid child support since separation – Where the contributions of the parties are assessed as equal – Where the wife receives approximately one third more of the net assets due to s 75(2) factors.

Family Law Act 1975 (Cth) ss 79, 81, 106A

Family Law Rules 2004 (Cth) rule 17.03

Af Petersens and Af Petersens (1981) FLC 91-095
Bevan & Bevan (2013) FLC 93-545
Biltoft and Biltoft (1995) FLC 92-614
Chapman & Chapman (2014) FLC 93-592
Ferraro and Ferraro (1993) FLC 92-335
Georgeson (1995) FLC 92-618
Hickey and Hickey (2003) FLC 93-143
JS & GP (2006) 35 Fam LR 88
KD & PA Reynolds (1985) FLC 91-632
McLay and McLay (1996) FLC 92-667
Prince (1984) FLC 91-501
Stanford & Stanford (2012) FLC 93-518

APPLICANT:

Ms Maxwell

RESPONDENT:

Mr Maxwell

INDEPENDENT CHILDREN’S LAWYER:

Legal Aid NSW Parramatta Family Law

FILE NUMBER:

PAC

3271

2011

DATE DELIVERED:

7 July 2015

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Le Poer Trench J

HEARING DATE:

20 April 2015 – 22 April 2015, 29 April 2015 – 30 April 2015.

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Kenny

SOLICITOR FOR THE APPLICANT:

Campbell Paton & J

COUNSEL FOR THE RESPONDENT:

Ms Kennedy

SOLICITOR FOR THE RESPONDENT:

Biddulph & Salenger

Orders

The husband pay to the wife the sum of $404,905.00 by four (4) instalments as follows:
(a) $154,905.00 within three (3) months of these Orders; and
(b) Three (3) instalments of $83,334 annually thereafter.
That commencing from the due date of the first payment referred in Order 1(a), and annually thereafter, the husband pay to the wife interest on the unpaid amount of property settlement, calculated at the rate of 7 per cent per annum or the rate calculated pursuant to Rule 17.03 of the Family Law Rules 2004 (Cth), whichever be the lower. The husband may, at his option, pay any of the instalments payable under Order (1)(b) hereof at an earlier time than is required by that Order.
Until such time as the husband has paid to the wife all money owing to her pursuant to Orders (1) and (2) hereof he is not to sell, further charge or otherwise dispose of his interest in any of the following entities and assets without first giving the wife 21 days’ notice of his…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: MAXWELL & MAXWELL [2015] FamCA 1171
Case: [2015] FamCA 1171
Decision Date: 7 July 2015

CaseChat Overview and Summary

This case concerned property settlement orders made by Le Poer Trench J. The orders detailed the financial obligations of the husband to the wife, including specific payment schedules and interest on unpaid amounts. They also imposed restrictions on the husband's ability to deal with certain business interests and assets until his obligations were met, while also outlining the transfer of partnership interests and the wife's sole ownership of specific sale proceeds. The court also addressed the return of personal heirlooms and established general entitlements and liabilities for each party regarding remaining property and debts.

The court was required to determine the just and equitable nature of the property settlement orders under section 79 of the *Family Law Act 1975* (Cth). This involved considering the distinct requirements of section 79(2), which mandates satisfaction that an order is just and equitable in all the circumstances, and section 79(4), which outlines matters to be taken into account when considering what order, if any, should be made. The court also had to address the principle that property disputes between spouses are to be decided according to ordinary common law and equitable principles governing legal and equitable interests, rather than assuming a community of ownership arising from marriage.

Le Poer Trench J applied the principles established in *Stanford* and other High Court decisions, emphasizing that the requirements of section 79(2) and section 79(4) must not be conflated. The court's reasoning underscored that the initial step in considering a property settlement order is to identify the existing legal and equitable interests of the parties. The power to make such orders is not an unguided judicial discretion but must be exercised in accordance with legal principles, including those laid down in the Act. The court stressed that a just and equitable outcome is not to be presumed or determined solely by reference to the factors in section 79(4) without a separate consideration of section 79(2), and that marital property rights are to be determined by existing legal titles and equitable principles.

The court made detailed orders regarding the payment of a substantial sum by the husband to the wife, including provisions for instalments, interest, and restrictions on the disposal of assets. The wife was to transfer her interest in a partnership upon the husband's initial payment, and the husband was to indemnify her for partnership liabilities. The wife was declared the sole owner of the proceeds from a motor vehicle sale, and the husband was restrained from dealing with a combine harvester except for income-earning purposes or to meet his payment obligations. The court also ordered the return of heirlooms and clarified the parties' entitlements and liabilities concerning other property and debts. The Registrar of the Family Court was appointed to execute documents if a party defaulted, and liberty to apply for further orders was granted.

Orders

Orders of the court

The husband pay to the wife the sum of $404,905.00 by four (4) instalments as follows:

(a) $154,905.00 within three (3) months of these Orders; and

(b) Three (3) instalments of $83,334 annually thereafter.

That commencing from the due date of the first payment referred in Order 1(a), and annually thereafter, the husband pay to the wife interest on the unpaid amount of property settlement, calculated at the rate of 7 per cent per annum or the rate calculated pursuant to Rule 17.03 of the Family Law Rules 2004 (Cth), whichever be the lower. The husband may, at his option, pay any of the instalments payable under Order (1)(b) hereof at an earlier time than is required by that Order.

Until such time as the husband has paid to the wife all money owing to her pursuant to Orders (1) and (2) hereof he is not to sell, further charge or otherwise dispose of his interest in any of the following entities and assets without first giving the wife 21 days’ notice of his intention to do so and in such notice setting out how he proposes to deal with any funds raised by such action.

(a) B Pty Ltd;

(b) C Pty Ltd;

(d) E Trust;

(e) Property known as “B” and water licences jointly owned by the husband and his brothers, Mr F and Mr G Maxwell; and

(f) “H” Pty Ltd.

Upon payment of the sum required to be paid by Order 1(a) hereof the wife shall do all acts and things and sign all necessary documents to transfer to the husband all her right, title and interest in the partnership known as Mr & Ms Maxwell.

In the event that the Mr & Ms Maxwell Partnership has not yet been dissolved the parties are to cause it to be dissolved forthwith and the husband is to indemnify and keep indemnified the wife in respect of any and all liabilities, including her personal taxation liability, assessed to be paid in relation to the income which may be or has been ascribed to her although the stated distribution of profit not been paid to her, with respect to the partnership.

The wife be declared as the sole and absolute owner of the sale proceeds of a 4WD motor vehicle.

The husband is restrained, until completion of his obligation under Orders (1) and (2) hereof, from selling, encumbering or otherwise dealing with the John Deer Combine harvester owned by the Mr & Ms Maxwell Partnership (otherwise than in the normal course of operating the harvester for the purpose of earning income) except for the purpose of meeting any of the payments required by Orders (1) or (2), without the written consent of the wife first having been obtained.

Notwithstanding Order (3), the husband is permitted to deal with his interest in the entities/property referred to in Order (3) for the purpose of raising funds to make payment to the wife in accordance with Order (1).

The wife is to deliver to the husband, forthwith, his great grandmother’s ring and any other of his family’s heirlooms which are in her possession or control.

10.

That unless otherwise specified in these Orders:

(a) Each party be solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party as at the date of these Orders;

(b) Each party be solely liable for and indemnify the other against any liability encumbering any items of property to which that party is entitled pursuant to these Orders; and

(c) Each party shall be solely responsible for the payment of any debts or loans in their name as at the date of these Orders and shall indemnify the other and keep the other indemnified in relation thereto.

11.

In the event that either party refuses or neglects to sign any Deeds and/or instruments in compliance with the preceding Orders, the Registrar of the Family Court of Australia at Sydney is hereby appointed to execute all Deeds and/or instruments in the name of the defaulting party and to do all acts and things necessary to give validity and operation to the said Orders pursuant to s 106A of the Family Law Act 1975 (Cth).

12.

Each party has liberty to apply for further orders to implement these Orders.

13.

All outstanding applications are otherwise dismissed.

14.

The Court notes all proceedings in the Court have now been finalised by the making of these Orders.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

In Stanford the High Court warned against "conflating" the requirements of s 79(4) and s 79(2): The operation of s 7935. It will be recalled that s 79(2) provides that "[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order". Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two sub‑sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order. 36. The expression "just and equitable" is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds. And while the power given by s 79 is not "to be exercised in accordance with fixed rules", nevertheless, three fundamental propositions must not be obscured.37. First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. So much follows from the text of s 79(1)(a) itself, which refers to "altering the interests of the parties to the marriage in the property" (emphasis added). The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.38. Second, although s 79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion. In Wirth v Wirth, Dixon CJ observed that a power to make such order with respect to property and costs "as [the judge] thinks fit", in any question between father and mother as to the title to or possession of property, is a power which "rests upon the law and not upon judicial discretion". And as four members of this Court observed about proceedings for maintenance and property settlement orders in R v Watson; Ex parte Armstrong:"The judge called upon to decide proceedings of that kind is not entitled to do what has been described as 'palm tree justice'. No doubt he is given a wide discretion, but he must exercise it in accordance with legal principles, including the principles which the Act itself lays down". 39 Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is "just and equitable" to make the order is not to be answered by assuming that the parties' rights to or interests in marital property are or should be different from those that then exist. All the more is that so when it is recognised that s 79 of the Act must be applied keeping in mind that "[c]ommunity of ownership arising from marriage has no place in the common law". Questions between father and mother about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be "decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses". The question presented by s 79 is whether those rights and interests should be altered.40. Third, whether making a property settlement order is "just and equitable" is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised "in accordance with legal principles, including the principles which the Act itself lays down". To conclude that making an order is "just and equitable" only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act. (references removed)