Midden and Galloway
[2013] FCCA 1711
•25 October 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MIDDEN & GALLOWAY | [2013] FCCA 1711 |
| Catchwords: FAMILY LAW – Property – de facto relationship – trusts – uncertainty with respect to the trust – non-disclosure. |
| Legislation: Federal Circuit Court Act 1999, ss.14, 18 |
| Warby & Warby (2002) FLC 93-091 Norbis & Norbis (1986) 161 CLR 513 |
| Applicant: | MR MIDDEN |
| Respondent: | MS GALLOWAY |
| File Number: | DNC 199 of 2012 |
| Judgment of: | Judge Harland |
| Hearing dates: | 26, 27 and 28 June 2013, 4 and 31 July 2013 |
| Date of Last Submission: | 31 July 2013 |
| Delivered at: | Alice Springs |
| Delivered on: | 25 October 2013 |
REPRESENTATION
| Counsel for the Applicant: | Ms Truman |
| Solicitors for the Applicant: | DS Family Law |
| The Respondent: | In Person |
ORDERS
That within 60 days of the date of these orders the Applicant pay to the Respondent the sum of
$340,000*$239,817 less the following amounts:(a)$4,000 for bond money and rent paid in accordance with order 5(a) and (b) of the orders dated 27 June 2012;
(b)$644 for removal costs paid in accordance with order 5(c) of the orders dated 27 June 2012;
(c)One half of the following amounts paid in accordance with order 6 of the orders dated 28 August 2012:
(i)$660 for the Property M property valuation;
(ii)$825 for the Property D property valuation;
(iii)$825 for the Property I property valuation;
(iv)$3,660 for the (business omitted) valuation; and
(v)$992 for the (overseas property omitted) valuations.
(d)One half of the Property A valuation;
(e)30% of the tax the applicant will have to pay for the
2011 and 2012*2007 and 2008 financial years as a consequence of the (omitted) Trust being invalid.That within 42 days of the date of these orders each party shall do all such things and execute all documents necessary to transfer the property situated at and known as Property M, in the Northern Territory of Australia, more particularly described in the certificate of title as volume (omitted) folio (omitted), Lot (omitted), Town of Darwin (“the Property M”) to the sole name of the applicant Mr Midden at the cost of the applicant; and
Simultaneously with the transfer pursuant to order 2 above the applicant shall pay all monies necessary to discharge and remove all mortgages, charges, encumbrances and all other liabilities, whether in law or equity for which the respondent bears any actual or contingent liability at the date of these orders.
That within 30 days of the date of these orders the parties shall do all things necessary to cause:
(a)VW motor vehicle registration number (omitted); and
(b)Isuzu Ute registration number (omitted).
to be transferred to the sole name of the applicant Mr Midden and the applicant does indemnify and shall keep indemnified the respondent in relation to all liabilities in respect of the motor vehicle whenever and however arising.
That within 30 days of the date of these orders the parties shall do all things necessary to cause the ABN for the (omitted) Trust into the name of the applicant Mr Midden.
That within 30 days of the date of these orders the parties shall do all things necessary to cause the transfer of (business omitted) business name into the name of Mr Midden.
That within 30 days of the date of these orders the parties do all necessary things and sign all necessary documents to deregister (omitted) Pty Ltd.
That within 42 days the parties do all necessary things and sign all necessary documents to discharge the (omitted) Line of Credit, at the Applicant’s expense and that the Applicant shall indemnify the Respondent from any and all liabilities in relation to the said liability.
That within 7 days of the date of these orders, the Respondent shall, at her expense, cause all caveats that she lodged against any properties in which the applicant has an interest in, to be withdrawn.
THE COURT DECLARES
That the (omitted) Trust is invalid.
That the Applicant is hereby declared to be the sole and absolute owner at law and in equity of:
(a)Property A;
(b)All items of furniture, furnishings, personalty, chattels and jewellery;
(c)All monies (whether held in cash or in deposit with any financial institution);
(d)All contributions to or benefits or entitlements arising from membership of any fund of insurance or superannuation whether such interest be present, contingent or expectant;
in the possession, custody or control or each or in which the Applicant has an interest which are not otherwise dealt with in these orders.
That the Respondent is hereby declared to be the sole and absolute owner at law and in equity of:
(a)The units in (overseas property omitted) being (omitted), (omitted), (country omitted);
(b)All items of furniture, furnishings, personalty, chattels and jewellery;
(c)All monies (whether held in cash or in deposit with any financial institution);
(d)All contributions to or benefits or entitlements arising from membership of any fund of insurance or superannuation whether such interest be present, contingent or expectant.
in the possession, custody or control or each or in which the Respondent has an interest which are not otherwise dealt with in these orders.
Injunctions
That the Respondent is restrained and an injunction issue restraining the Respondent from engaging in the following behaviour:
(a)Save for the purpose of complying with any orders outlined above, approaching the Applicant at any place where the Applicant is living, staying or working;
(b)Save for the purposes of complying with any orders outlined above, contacting the Applicant directly or indirectly;
(c)Contacting any members of the Applicant’s family directly or indirectly; and
(d)Contacting Ms S or Mr R directly or indirectly.
(e)*That the respondent be restrained from continuing proceedings No. (omitted) in the Supreme Court of the Northern Territory.
(f)*That the respondent be restrained from instituting further proceedings against the applicant in respect of the property of the parties, trusts of the parties or either of them in any Court, apart from the family Court of Australia or the Federal Circuit Court of Australia.
That within 14 days of the date of these orders, the Respondent shall return to the Applicant, the following items:
(a)Entirety of the file removed from Property A containing, amongst other things, building permits, applications, construction inspection certificates and payment receipts, relating to the extensions and construction at Property M;
(b)The Applicant’s LP vinyl collection;
(c)The Applicant’s personal photographs and diaries of his overseas voyage;
(d)The Applicant’s personal diaries;
(e)The Applicant’s winter clothing; and
(f)The Applicant’s dress trousers.
Section 106A
That each party shall do all such things and sign all such papers and documents that are necessary to give effect to the orders provided that in the event a party unreasonably fails or refuses to sign pursuant to these orders, then a Registrar of the Federal Circuit Court pursuant to section 106A Family Law Act 1975 is authorised to sign any such document on behalf of the defaulting party.
Costs
That the Applicant file and serve written submissions with respect to any reserved costs and costs of the hearing generally by 8 November 2013.
That the Respondent file and serve written submissions with respect to costs by 22 November 2013.
NOTATION: These orders have been amended pursuant to rule 16.05(2)(e) of the Federal Circuit Court Rules2001 to reflect:
(i)the deletion of the sum “$340,000” and the insertion of the sum $239,817” in Order 1.
(ii)the deletion of the year 2011 and 2012 and the insertion of the years 2007 and 2008 in Order 1 (e).
(iii)the inclusion of sub order (e) and (f) in Order 13 with the sub orders:
(e)That the respondent be restrained from continuing proceedings No. (omitted) in the Supreme Court of the Northern Territory.
(f)That the respondent be restrained from instituting further proceedings against the applicant in respect of the property of the parties, trusts of the parties or either of them in any Court, apart from the family Court of Australia or the Federal Circuit Court of Australia.
IT IS NOTED that publication of this judgment under the pseudonym Midden & Galloway is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT DARWIN |
DNC 199 of 2012
| MR MIDDEN |
Applicant
And
| MS GALLOWAY |
Respondent
REASONS FOR JUDGMENT
(As Amended)
Introduction
These are property settlement proceedings.
The parties were in a de facto relationship from 1995 to 26 January 2012.
Mr Midden relied on the following the documents:
a)His affidavit sworn 20 June 2013;
b)His financial statement sworn 19 June 2013;
c)Affidavit of Ms S affirmed 18 June 2013;
d)Case outline. His orders were set out in his case outline. The orders he seeks are reproduced at annexure “B” at the end of this judgment.
Ms Galloway relied on the following documents at the final hearing:
a)Her affidavit sworn 11 June 2012;
b)Her affidavit sworn 24 June 2013;
c)Her financial statement 24 June 2013;
d)The orders she seeks are set out at paragraphs [1] – [15]. These are reproduced and set out at annexure “C”.
In addition several documents were tendered by both parties.
At the commencement of the trial, counsel for the respondent handed up a balance sheet setting out the assets and liabilities. There were some amendments to this during the course of the trial.
Both parties made written and oral submissions. I have considered all the material the parties relied on and their oral evidence.
As Ms Galloway is self-represented, at the beginning of the trial I handed down copies of sections 90SF, 90SM and 106B and commented that these are important sections for this case though not the only relevant sections. I highlighted section 106B as being potentially relevant with respect to the trust issues. Neither party sought to rely on section 106B.
I also explained the order of the proceedings and invited Ms Galloway to make an application to change the order of the witnesses so that she would not have to cross-examine first. She declined that invitation.
Background
The applicant was born on (omitted) 1957 and is 56 years old.
The respondent was born on (omitted) 1947 and is 65 years old. The respondent variously uses the names Ms Galloway and Ms Galloway.
The parties commenced their relationship in 1995 and separated on 26 January 2012.
Ms Galloway has three children from a previous relationship, X, Y and Z.
The applicant says he returned to Darwin in July 2005 and recommenced working in his (omitted) business (business omitted).
The applicant says that the respondent stayed in Western Australia to wind up the (business omitted). She returned to Darwin in July 2008. The parties lived in the Property A property until the court made an order requiring the respondent to vacate the property on 11 July 2012.
History of the proceedings
It is necessary to set out the history of the proceedings. The applicant commenced proceedings on 21 May 2012.
Interim consent orders were made on 29 May 2012. The respondent was represented by Mr Barry of Cecil Black Family Lawyers. Consent orders were made with respect to valuations and the parties were ordered to attend a conciliation conference.
These orders included the following (which are summarised):
a)An injunction restraining both parties from selling, disposing of or otherwise dealing with assets owned directly or indirectly by either party;
b)The respondent is to cause a special resolution to be passed withdrawing and otherwise cancelling any previous special resolutions passed in 2012 under the (omitted) Trust;
c)Within 7 days the respondent is to provide documents detailing assets she has disposed of within the past 12 months;
d)Within 14 days the respondent is to provide full financial disclosure including all original trust deeds, any amendments and special resolutions relating to those deeds in which either party is a beneficiary, trustee or appointer;
e)On a without admissions basis each party is restrained from harassing or threatening the other.
When the matter was listed for an interim hearing on 21 June 2012. Further consent orders were made for valuations and for the parties to attend a conciliation conference in September 2012.
The parties were in court again on 27 June 2012. The respondent was still represented by Mr Barry. An interim hearing was conducted. Turner FM (as she then was) delivered a judgment and made orders giving the applicant exclusive occupation of the home. The applicant was required to pay the respondent’s moving costs, bond and first 6 weeks rent.
The matter was next before the court on 28 August 2012. The conciliation conference was vacated and a new date was given. Consent orders were made requiring the respondent to:
2. That pursuant to rule 14.06 of the Federal Magistrates Rules 2001, within 14 days of the dates of these orders, the respondent shall provide to the applicant copies of the following documents:
(a) Copies of all original trust deeds and any amendments and special resolutions relating to those deeds in which the parties are either a beneficiary of, trustee for, appointer or otherwise have an interest in;
(b) Copies of all bank account statements in the name of the respondent or any company, trust or other entity in which the respondent has an interest in for the last 3 years;
(c) Copies of the last three tax return applications and notice of assessments for the respondent, any company, trust, business or other entity that the respondent has an interest in;
(d) A Share portfolio statement for any shares in the name of the respondent or in which the respondent has an interest;
(e) Copies of all bank statements in the respondent’s possession or control related to (omitted) Pty Ltd and any cheque book stubs relating to such accounts.
Copies of all bank statements, taxation documents or any other documents confirming the respondent’s income for the financial years ending 1999, 2000 and 2001 and how the monies were expended
These orders were made in similar terms to the ones made on 29 May 2012. In particular order 2(a) is in the same terms 4(a) of the orders with respect to trust deeds and related documents made on 29 May 2012. Further orders were made for valuations to be undertaken.
Order 6 required the applicant to pay for all the valuations and with the respondent to reimburse the applicant for one half of the valuation costs at settlement. I will make an order requiring the respondent to pay for her share of the valuations. She should also pay for half the valuation cost of the valuation of the Property A valuation.
On 20 November 2012 the case was listed for a two day hearing on 4 and 5 February 2013. Trial directions were made. The respondent represented herself on that occasion.
The matter was before the court again on 20 December 2012. Ms K appeared for the respondent on that occasion by telephone. The hearing dates were vacated and it was listed for a three day hearing from 12-14 April 2013. The orders were amended to reflect the hearing dates of 12-14 June 2013.
On 3 May 2013 the matter was back in court for trial directions. Ms M appeared for the respondent. The hearing dates were confirmed.
The matter next came before the court on 18 June 2013. The respondent was represented by Mr G. The respondent sought to vacate the hearing date. The matter was listed for argument on 21 June 2013. The parties were ordered to exchange a list of issues in dispute and list of witnesses. Mr Gordon again represented the respondent on 21 June 2013.
After hearing argument, much focused on the issue of the Court’s jurisdiction which I will address below, the Court confirmed the hearing dates and made orders for the respondent to file her material.
Jurisdictional argument
The respondent’s then counsel Mr G filed written submissions with respect to this Court’s jurisdiction to determine all the issues in dispute. This document is poorly drafted and ill-conceived. It refers to the wrong sections of the legislation and in some instances the wrong legislation altogether.
The written submissions also erroneously referred to the respondent being unrepresented since November 2012 when she filed a notice of address for service. This is plainly false as the respondent has been represented in court by two different lawyers.
In contrast the applicant’s lawyer succinctly summarised the issues in dispute. The respondent was well and truly on notice of those issues.
Mr Gordon stated that the respondent had only been represented at mentions. An examination of the court file shows that this is clearly not correct. The respondent has been legally represented for a significant portion of the proceedings.
Mr Gordon refers to the judgment of Master Luppino of the Northern Territory Supreme Court where he states that the Federal Circuit Court does not have jurisdiction to deal with the equitable relief the respondent seeks. I am of course not bound by that decision. Master Luppino has stayed the respondent’s application in that court pending the outcome of the proceedings in this court.
Mr Gordon referred to section 31 of the Family Law Act1975 (Cth) (erroneously referred to as the Family Court Act) and stated that this court does not have the same jurisdiction.
Section 14 of the Federal Circuit Court Act 1999 states:
Determination of matter completely and finally
In every matter before the Federal Circuit Court of Australia, the Federal Circuit Court of Australia must grant, either:
(a) absolutely; or
(b) on such terms and conditions as the Federal Circuit Court of Australia thinks just;
all remedies to which any of the parties appears to be entitled in respect of a legal or equitable claim properly brought forward by him or her in the matter, so that, as far as possible:
(c) all matters in controversy between the parties may be completely and finally determined; and
(d) all multiplicity of proceedings concerning any of those matters may be avoided.
Section 18 of the Federal Circuit Court Act is expressed in the same times as section 33 of the Family Law Act1975:
Jurisdiction in associated matters
To the extent that the Constitution permits, jurisdiction is conferred on the Federal Circuit Court of Australia in respect of matters not otherwise within its jurisdiction that are associated with matters in which the jurisdiction of the Federal Circuit Court of Australia is invoked.
Several cases have dealt with the topic of associated and accrued jurisdiction. The Full Court examined this issue in Warby & Warby (2002) FLC 93-091 and said: Accrued jurisdiction” was explained by Barwick CJ in Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) CLR 475 as follows:
It is settled doctrine in Australia that when a court which can exercise federal jurisdiction has its jurisdiction attracted in relation to a matter, that jurisdiction extends to the resolution of the whole matter. This accrued federal jurisdiction is not limited to matters incidental to that aspect of the matter which has in the first place attracted federal jurisdiction. It extends, in my opinion, to the resolution of the whole matter between the parties. This accrued jurisdiction carries with it the authority to make such remedial orders as are necessary or convenient for or in consequence of that resolution.
For this purpose, the court exercising federal jurisdiction may enforce rights which derive from a non-federal source. This exercise of this jurisdiction, which for want of a better term I shall call “accrued” jurisdiction, is discretionary and not mandatory, though it will be obligatory to exercise the federal jurisdiction which has been attracted in relation to the matter.
It is clear that there is one justiciable controversy between these parties. It would be unnecessarily duplicitous and expensive to have two separate proceedings on foot when the parties and the issues in dispute are the same.
I find that I have jurisdiction to deal with the whole of the issues in dispute.
Legal Principles
The parties were in a de facto relationship. There is no dispute about this. Sections 90SM and 90SF of the Family Law Act1975 (Cth) applies. These sections mirror sections 79 and 75(2).
Part VIII of the Family Law Act1975 (Cth) is the part of the Act dealing with property and maintenance.
Pursuant to section 90SM(1) the court is authorised to make such order as it considers appropriate in order to alter the interest of the parties to a marriage in relevant property.
The expression “property” is defined in section 4(1) in relation to the parties to a marriage or either of them as meaning “…property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion.”
Pursuant to section 90SM(3) the court is actively prevented from making such an order unless it is satisfied that it is just and equitable to do so in all the circumstances prevailing. This follows from the use of the prohibitory words “shall not” in the relevant section.
Section 90SM(4) provides the mechanics of how a court is to make an order altering relationship property interests.
Paragraphs (a); (b); and (c); categorise contributions made by marital partners, which are relevant. Paragraph (d) directs the court to take into effect of any order upon the earning capacity of either party to the marriage.
Paragraph (e) directs the court to consider a list of matters contained in section 90SF(3), which are germane to maintenance or the prospective positions of the parties concerned by reference to their respective financial resources, means and needs. Finally, paragraphs (f) and (g) apply to child support and previously made parenting orders, as relevant. There is some overlap between these various provisions and not all will be applicable in every case.
Until recently, the position in respect of the process to be applied to the resolution of matrimonial property cases was said to be well settled with a preferred approach as set out by the Full Court in Hickey & Hickey & Attorney-General (Intervener) (2003) FLC 93-143 at 78,386 [39].
The High Court has recently considered the operation of section 79 in the matter of Stanford & Stanford [2012] HCA 52. In the case, the majority stated at [35]-[36] that:
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.
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. [Footnotes omitted]
The High Court set out three fundamental propositions with respect to the application of section 79, which can be summarised as follows:
1.Firstly, in order to ascertain whether it is just and equitable to make a property settlement order, it is necessary to identify the existing legal and equitable interests of the parties in the property. The High Court emphasised the word existing.
2.Secondly, although section 79 gives the court a broad power to make property settlement orders it may not be exercised in an unprincipled fashion. There must be no assumption that the parties’ interests are or should be different to their existing interests.
3.Thirdly, when considering whether making a property settlement order is just and equitable the court must not assume that one or the other party has the right to a property adjustment order. The court must give separate consideration to section 79(2) in addition the matters referred to section 79(4).
In Stanford & Stanford the High Court indicated that, in the vast majority of matrimonial property cases, the requirements of section 79(2) will be readily satisfied, largely as a result of a consideration of the circumstances of the parties concerned, particularly the nature of their separation. Section 90SM(3) is in the same terms as section 79(2).
The High Court also pointed out that what is just and equitable is different in every case.
Stanford & Stanford casts doubt on the correctness of adding back notional amounts to the pool for the purposes of property settlement. The Full Court confirmed this in Bevan & Bevan [2013] FamCAFC 116 and noted that section 75(2)(o) provides ample scope to ensure there is a just and equitable outcome between parties taking into account any disposal of assets. Section 90SF(3)(r) is in the same terms as section 75(2)(o).
In Williams & Williams [2007] FamCA 313 the Full Court states as follows at paragraphs [26], [27], [28], [29] and [32]:
26. We think there is force in the proposition that a reference to the value of an item as at the date of the commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution between the parties Thus where the pool of assets available for distribution between the parties consists of say an investment portfolio or a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing of the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation. But in doing so it is equally as important to give recognition to the myriad of other contributions that each of the parties has made during the course of their relationship.
27. In Pierce v Pierce when speaking of the relevance to be paid to initial contributions the Full Court (Ellis, Baker and O’Ryan JJ) referred to Fogarty J in Money v Money (1994) FLC 92-485 at 81,054; (1994) 17 Fam LR 814 at 816:
…respective contributions of the parties over a long period of marriage “offset” the significance which might otherwise be attached to a greater initial contribution by one party…ultimately, when it comes to the trial such a contribution is one of a number of factors to be considered. The longer the marriage the more likely it is that there will be latter factors of significance and in the ultimate the exercise is to weigh the original contribution with all other, later, factors and those later factors, whether equal or not, may in the circumstances of the individual case reduce the significance of the original contribution.
28. The Full Court (Ellis, Baker and O’Ryan JJ) then said at [28]:
In our opinion it is … a question of what weight is to be attached, in all the circumstances, to the initial contributions. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution.
29. Pierce v Pierce was a case in which the husband brought in $200,000 cash into the relationship. He applied that money towards the purchase of a matrimonial home. He was employed throughout the marriage and supported the wife who, whilst in some paid employment primarily attended to domestic tasks and taking care of the children. The Full Court assessed the parties’ respective contributions to a pool of $320,000 as 70 per cent in favour of the husband and 30 per cent in favour of the wife at the end of a 10 year relationship.
32. In Hunt v Zuryn (2005) FLC 93-226; (2005) 34 Fam LR 169 the Full Court (Kay, May and Boland JJ) allowed an appeal in a property case where a pool of assets of $1.12million had been assessed for contribution purposes as 75 per cent in favour of the husband and 25 per cent in favour of the wife. The Court in allowing the appeal indicated that an assessment of 75:25 fell outside the realms of an acceptable range saying at 79,730; 170:
Such an assessment ought adequately recognise that much of the parties’ wealth can be attributed to the capital growth in the assets introduced by the husband at the commencement of the marriage but at the same time bringing into consideration a myriad of other contributions each made in the course of their relationship.
These comments are pertinent to this case. The applicant’s initial contributions need to be given weight. The South Australian properties have been quarantined throughout the relationship.
Procedural fairness to third parties
At the end of the hearing I expressed concern about the need to provide procedural fairness to third parties who might be adversely affected by the orders I make. Those third parties are Y and X, two of the respondent’s sons who are beneficiaries of the (omitted) Family Trust and Mr P who is the legal owner of one of the (country omitted) properties. Y is the legal owner of the other (country omitted) property.
On 4 July 2013 I directed that the applicant’s lawyer write to these parties notifying them of the proceedings. I listed the case for further mention on 31 July 2013 to give them the opportunity to be heard.
The applicant’s lawyer filed an affidavit on 29 July 2013. Annexures “A”, “B” and “C” to his affidavit are letters to the third parties explaining the nature of the proceedings and how their interests could be affected.
Also annexed to that affidavit were signed acknowledgments from all three men indicating that they did not wish to be heard.
The Respondent’s conduct during the course of these proceedings
The applicant complains that the respondent has altered documents and burnt documents. The respondent first addresses the issues in her affidavit filed 12 June 2012 at paragraph [32] to [36]. The respondent says that she altered documents before providing them to the applicant’s lawyer because she was concerned about client confidentiality with respect to (omitted) she had carried out for clients.
The respondent says she regularly uses both surnames Galloway and (omitted).
The applicant discovered her burning some documents and retrieved a partially burnt document which became an exhibit in the interim hearing and exhibit “A4” in the final hearing.
The respondent says she habitually burns documents which she no longer requires. The respondent says she has always worked in high levels of security and has always burnt documents. She says she has not burnt documents of any importance and has not burnt documents that are significant to the case. The respondent says she keeps electronic copies of documents and since the applicant’s lawyer wrote to her lawyer complaining about the burning of documents that she has stopped doing it. I do not accept her evidence that she has not burnt any documents that are significant to issues in dispute in this case. This is yet another area where her evidence was unsatisfactory. She was able to produce a trust deed from a dormant trust dated back to 1989. That is clearly in the category of documents that she would have burnt according to her own evidence.
Annexure “Y” page 176 is a letter from DS Family Law dated 2 April 2012 complaining about the respondent doctoring original documents and burning documents.
In April 2012 the respondent took action to dissolve the trust. The applicant says this is when he first became aware that the trust was a unit and not a discretionary trust. The respondent says she did this because she felt “threatened and upset”. The respondent says she did it without legal advice and “on the basis of what I considered was appropriate trust law”. Significantly she also says “as the sole beneficiary…”[1]
[1] Respondent’s first affidavit, paragraph 37.b.
Annexure “V” to the applicant’s trial affidavit is a letter from the respondent’s then solicitor Cecil Black Family Lawyers to the respondent’s lawyers dated 16 April 2012. The letter included the following paragraph:
Should you not contact us by Monday 23 April, my client has instructed me to provide you with a sealed envelope to deliver unopened to your client, as she believes that the contents of the letter will expedite the resolution of the matter. My client has not disclosed to me what the contents of that letter are.
It is concerning to read this in a letter prepared by a lawyer as it reads as some sort of threat of extortion.
On 24 April 2012 the respondent handed the applicant a letter seeking to sell the assets of the trust. Annexure “V” is a copy of that letter.
The respondent took action to sell the assets including writing to the tenant of the Property M property. Annexure “X” are copies of the letters to the tenant.
The actions the respondent took were highly inappropriate in the context of ongoing proceedings where these assets are the subject of the proceedings. The respondent says at paragraph [37] of the first affidavit that she was frustrated that the negotiations were going slowly and she says “I took the above steps when I was feeling threatened and upset. I took this action without receiving any legal advice, and on the basis of what I considered appropriate trust law.”
The Federal Magistrates Court, as it was then known, made an order on 29 May 2012 requiring the respondent to reverse the special resolution seeking to sell the assets of the trust.
The respondent also doctored documents. She admitted to doctoring documents before providing them to the applicant’s lawyers. The respondent did not disclose that she had done this before she provided the documents. It took the applicant’s lawyer raising the issue for her to admit it.
In his affidavit the applicant sets out a series of complaints about the respondent’s behaviour after they separated when they were living under the same roof and afterwards.
The respondent also engaged in harassing conduct towards Ms S.
The respondent also sent a vindictive and nasty letter to the applicant’s 78 year old mother. During cross-examination the respondent was proud of her actions.
The respondent has gone further than this and communicated with a person called A in a chat forum on the subject of stealth. It is clear from her evidence that she obtained the assistance of A to hack into the applicant’s email account. She obtained emails between the applicant and Ms S and sent them to the applicant’s mother.
Annexure “AB” page 190 is a letter from 25 February 2012 to JK Lawyers complaining about the respondent’s conduct including harassment including contacting the applicant’s mother and former business partner Ms S and her partner. It also complains of an incident where the applicant found the respondent sitting in his car. The applicant sets out other instances of harassing behaviour by the respondent in his affidavit.
In all of the circumstances I think it is appropriate to grant the injunctions the applicant seeks.
Supreme Court proceedings
On 1 March 2013 the respondent commenced proceedings in the Supreme Court of the Northern Territory. In those proceedings she seeks relief with respect to what she alleges to be various breaches by the applicant with respect to his obligations as a trustee.
Exhibit “A11” is the writ the respondent filed in the Supreme Court. In the statement of claim attached to the writ the respondent claims that she resigned as trustee because she was geographically remote from the business. The respondent says the trust was originally set up in 2004 to buy some farmland, that deal fell through. The respondent says the trust was dormant until the applicant purchased the (omitted) business. Paragraph [12] of the statement of claim the respondent says considerable profit was made on tax paid and distributions managed to authorised vehicles and beneficiaries. She goes on to say in the following paragraph that significant assets have been diverted away from the trust. It does not accurately reflect the situation between the parties as will become clear from this judgment.
Master Luppino of the Northern Territory Supreme Court delivered his judgment on 31 May 2013. He says that the respondent is claiming that the applicant breached his fiduciary duties and that the trust has suffered losses as a result of that.
The applicant contends that the Supreme Court proceedings are an abuse of process and that the respondent is seeking to circumvent these proceedings. The applicant seeks an injunction restraining the respondent from continuing these proceedings. I will grant that injunction.
Disclosure
One issue which has loomed large in this case is the issue of non-disclosure I referred to the orders made earlier in this judgment. In addition to this there is the parties’ obligation as set out in the rules. The parties have a positive obligation. It is not dependent on parties asking for documents. Annexures “AE” to “AN” of the applicant’s trial affidavit consists of correspondence addressing disclosure issues.
Several orders were also made about disclosure. On 29 May 2012 orders were made by consent. Ms Galloway was legally represented at the time. Order 4(a) requires the respondent to provide the following within 14 days:
Copies of all original trust deeds and any amendments and special resolutions relating to those deeds in which the parties are either a beneficiary of, trustee of, appointer or otherwise have an interest in
This order goes to the heart of one of the main issues in dispute which is the original trust deed for the (omitted) Trust. It is curious that the respondent would consent to such an order which is consistent with the applicant’s claim that the respondent has these documents in her possession, and then to claim at the final hearing that she gave the applicant the original trust deed when she resigned as trustee in 2006.
I accept the applicant’s evidence over the respondent’s on this point.
When the respondent engaged new lawyers, JK Lawyers, the lawyers for the applicant wrote to her new lawyers about the outstanding disclosure issues.[2]
[2] Applicant’s trial affidavit, annexure AK page 258
On more than one occasion during the hearing the respondent produced a document which she had not previously discovered. She was legally represented when many of the disclosure orders were made. Some of them were made by consent. She was well aware of her obligations and of the applicant’s complaints that she had not discharged those obligations.
I am comfortably satisfied that the respondent has not complied with her obligations to make full and frank disclosure. I am further satisfied that she was aware of her obligations and has chosen to ignore them. She produced several documents during the course of the hearing that she had failed to produce previously. One example is exhibit “A17” to the red folder containing original documents relating to the (omitted) Trust includes the original trust deed stamps in Western Australia stamp duty paid on it on 22 November 1989.
In Weir & Weir 16 Fam LR 154 the Full Court said where there is clear evidence of non disclosure the court should not be unduly cautious about making findings in favour of the innocent party.
The principles in Weir & Weir and Black & Kellner (1992) FLC 92-287 apply here. I am satisfied that the respondent has deliberately failed to comply with her obligations to make full and frank financial disclosure. I cannot make an accurate finding about the respondent’s financial position.
Assets at the beginning of the relationship
The applicant says he had the following assets at the beginning of the relationship:
a)Property A. He says he purchased the property in December 1983 for about $83,000;
b)50% of the property in Property I in South Australia which his former business partner Ms S;
c)A partnership in a farm at (omitted) in partnership with his former business partnership Mr O;
d)(business omitted) which the applicant states he started in 1983;
e)A Landrover which the applicant says he bought through the farm in or around June 1995;
f)Superannuation from working on (employer omitted) from 1988 to 1993. He does not provide a figure for this.
The respondent says that she had a Porsche and cash worth about $40,000. She says the applicant’s assets had an equity of about $45,000. On her version of events the initial contributions of parties cancel each other out. The applicant says that the respondent had an old Porsche of little value and an interest in an (omitted) business.
The respondent denies the applicant’s assertion that he had (business omitted) before the relationship. The name of the business may have been different but I accept that the applicant had an (omitted) business before the commencement of the relationship. It does not impact on my assessment of contributions as the (omitted) business really represents the applicant’s ability to earn an income.
I do not accept the respondent’s argument that the assets the parties had at the beginning of the relationship cancel each other out.
The applicant’s collapsed business and litigation
Around the time the parties’ relationship commenced the applicant’s business partnership collapsed and litigation ensued.
I accept that the respondent made financial contributions during this period and provided the applicant with practical assistance during litigation. I also find that the applicant also made contributions during that period.
At paragraph [53] of the first affidavit the respondent sets out the table of what she says are loans the parties had during the course of the relationship. Without source documents this is only hearsay, it does not assist me in my determination.
Property C property
The applicant says that this property was purchased on or around 27 April 1999 for more than $600,000. He says he contributed the whole of the purchase price. He says he funded it from the following sources:
a)Money from the settlement of the court cases;
b)$60,000 borrowed from his brother Mr A;
c)$5,000 borrowed from a friend Ms H;
d)Refinancing the mortgage on Property A.
The respondent says she contributed approximately $13,100 for stamp duty and for the preparation of the documents required for settlement of the bank.
In August 2003 the parties travelled to Western Australia and carried out renovation work on the Property C property. The applicant says he did most of the heavy work whilst the respondent did some of the light work including painting and gardening.
She says the parties lived in the property from about 1997 to 2003. They carried out some renovations on the property and then sold it in 2004.
Both parties made contributions to this property.
Period overseas 1999 to 2001
The applicant says the parties lived overseas from about September 1999 to April 2001 to follow the respondent’s (omitted) career.
The parties agreed that during this period they lived off the respondent’s income. The applicant says that he acted as the respondent’s personal assistant and that he therefore helped her earn her income. The respondent agreed that the applicant provided her with some assistance.
The respondent says that during this period she earned $2,500,000. This is the subject of controversy. The respondent has been asked to produce documents verifying her income for several months. On the third day of the hearing the respondent produced documents which she said verified her income. The respondent was cross-examined on those documents.
The documents do not verify the respondent’s income. The documents show transfers. It is impossible to tell the source of the income. Some of the documents relate to transfers of her client’s money with respect to the (omitted) the respondent carried out for her clients.
The respondent was very defensive when being cross-examined, as she was throughout the hearing generally.
Whilst I accept and the applicant concedes that the respondent was the income earner during this period. I do not accept that she earnt anything like the amounts she claimed.
South Australian properties
In or around September 2003 the applicant purchased a 50% interest in Property D, South Australia with Mr R, Ms S’s husband. The total price was $225,000. The purchase was funded by using the equity in the Property I property. The applicant had his interest in the Property I property prior to the relationship.
The rental incomes from these properties paid for the mortgages apart from small top up payments the applicant and his business partner made from time to time. The respondent did not make any contributions to these properties.
The applicant still has an interest in those properties.
The (business omitted)
The parties purchased a (business omitted) in (omitted) in Western Australia in January 2004. The respondent had arranged finance but the finance fell through when a lawyer misappropriated funds.
The applicant says he extended the loan on the Property A property by $100,000 to contribute to the property after finance arranged by the respondent in (country omitted) fell through. The applicant says the rest of the purchase price came from the sale of the Property C property for about $800,000.
The parties worked in the (business omitted) for the next few years. The (business omitted) failed and the parties are each carrying forward a capital loss of about $198,000.
The respondent claims that she contributed over $600,000 to the (business omitted).[3] The (business omitted) documents were amongst the documents she burned. She says these documents were unimportant. In annexure “AG” of the applicant’s trial affidavit being a letter from DS Lawyers to the respondent’s lawyers they say:
As previously, noted, your client seems to have no difficulty in locating specific documents relating to the (business omitted) to assist her case but has been unable to produce any of the other documents despite being ordered to do so. We ask that your client produce the (business omitted) documents forthwith.
[3] Respondent’s first affidavit para [57].
The respondent annexed just 2 pages of a margin loan and part of a deed of release which she says proves her contributions. The margin loan document refers to the sum of $344,000 but they do not prove that this sum came from Mr B as she alleges.
The applicant asked the respondent to produce the (business omitted) bank accounts as part of her disclosure obligations given that she was claiming that she has made significant payments as contributions.[4]
[4] Applicant’s trial affidavit, annexure AF page 236 letter from DS Family Law dated 23 August 2012.
It is suspicious that the respondent, the applicant’s lawyer pointed out, was able to annex (business omitted) documents to her affidavit which she thought were helpful to her case but not documents she was obliged to provide as part of her disclosure obligations.
(business omitted)
The applicant purchased (business omitted) for $30,000 in or around October 2006. The applicant says he funded the purchase by placing the $10,000 deposit on his credit card and the making 11 payments of $2,000 over the next year.
The respondent says she helped in the business making (omitted). The applicant says the respondent did assist in the business in 2010 when she was unemployed. I accept that the respondent made a small contribution to this business during that period.
This business has an agreed value of $57,500.
The applicant continues to operate this business.
(omitted)
The parties purchased a unit at the Property T for $295,000 which was financed through a mortgage and a refinance from the Property A property.
The parties carried out renovation work on the unit. The applicant says he paid for the costs of the renovations from his earnings from his (omitted) businesses.
They sold the property several months later for $345,000 plus $3,000 for the furniture. The applicant says he believes they broke even taking into account the expenditure they incurred to improve the unit.
Property M property
In August 2009 the parties purchased a property at Property M for $630,000. The total purchase price was borrowed.
The applicant says that the respondent advised him to purchase the property in the trust because upgrades to the property could be written off to reduce his tax as he was earning a high income from the (omitted) businesses and was paying a high rate of tax.
The respondent arranged for the loans on this property and provided a guarantee.
The property is rented. The rental income is applied to the debt.
Property A
The applicant had to obtain a valuation of the Property A property on his own because the respondent failed to respond to the applicant’s requests for a joint valuation to be carried out. The respondent was legally represented at the time. The respondent did not obtain her own valuation. The respondent agreed to the valuation figure at the final hearing. I find that in these circumstances it is appropriate that the respondent pay for half the valuation as the respondent seeks.
The applicant purchased the Property A property in 1984.
The parties carried out some renovations on that property.
The respondent contributed the sum of $10,000 for a stone fence but otherwise did not make financial contributions to this property.
This property was a significant contribution by the applicant as it was used by the parties on several occasions during the relationship as security to enable them to buy other assets.
(country omitted) properties
In 2000 the respondent purchased two adjoining properties in (country property omitted). The respondent says she purchased the properties with her earnings from (omitted). She purchased the properties in her sons’ names on trust.
The applicant says that it was the respondent’s decision to buy the (country omitted) properties in her son Y’s name and in a family friend Mr P’s name on trust for her son Z, who was too young to own property in his own name at the time.
The applicant says that the respondent paid for the expenses on the (country omitted) properties except for the odd occasion when he paid the rates when the respondent did not have the funds.
After separation the applicant discovered that the (country omitted) properties were on the market for sale at a price of 340,000 euros.
The respondent would not agree to adopt the list price as a value of the (country omitted) properties for the purpose of the hearing. She obtained an appraisal and attempted to rely on that. An appraisal is a very different thing to a valuation. Typically an appraisal is provided by a real estate agent free of charge. Real estate agents provide appraisals in the hope of securing the business of the sale of the property. A valuation is carried out by a person qualified to carry out a valuation of the property taking into account various factors including sale comparisons. Parties may of course agree to an appraisal figure if they wish to. They take a risk in doing so as the figure may not be accurate. If the parties cannot agree on a figure then they need to obtain a valuation so that there is evidence of value before the court.
It is clear that the respondent interfered with the valuation process for the (country omitted) properties. Annexures “D” and “E” of the applicant’s trial affidavit consists’ of the first and second valuation of the (country omitted) properties. Page 18 and 25 of the annexures both set out the figures for the valuations. It is clear from both valuations that the area referred to is (omitted). The figures are different. There is no evidence on the face of the documents that suggest the area of (omitted) was used in error.
This is also another instance where the respondent has refused to provide documents in response to a request up until the last minute during the hearing. After it became clear to the applicant that the respondent had been unilaterally communicating with the single expert he asked for all copies of correspondence. She did not provide them until during the course of the hearing. The respondent could have and should have produced the emails much earlier. The respondent’s lawyer ceased acting for her around this time. The applicant’s lawyer wrote to her again about this request on 13 November 2012. The respondent could have been under no illusions that her previous lawyer had supplied the information.
Annexure “G” to the applicant’s trial affidavit where the respondent’s then lawyer wrote to the applicant’s lawyer proposing that an application in a case be filed seeking to join Y and Mr P and seeking an order that they hold the (country omitted) properties on trust for the parties. They sought the applicant’s agreement to this course. Annexure “L” to the applicant’s trial affidavit is a response to the letter found at Annexure “G”. The applicant’s lawyer points out the necessity for the transparency with respect to all communications with the single expert. The applicant’s lawyer also states that his client has no objection to the (country omitted) properties being sold but he has no control of those properties and it is a matter between her and her children.
I am satisfied that because of the respondent’s interference with the valuations the first valuation should be used. Exhibit “A13” is a letter from the respondent to her then lawyer Ms Khoo stating that she thought she could get approval from Mr P to sell the unit but believed she would have to get a court order to make Y sell the unit in his name. Email is that at 12 September 2012. The respondent was clearly well aware that she had options with respect to gaining control of these units but has chosen to do nothing about it
I do not accept the respondent’s argument that these properties should be excluded from the pool. I am comfortably satisfied that she has remedies she can pursue with respect to these properties if she is not able to secure agreement from her son and from Mr P to transfer the properties to her.
I will include the (country omitted) properties in the asset pool. The applicant only made very minor contributions to the (country omitted) properties.
(business omitted)
The applicant originally operated his (omitted) business under the name (business omitted). He obtained a (omitted) Contractors License in December 1998.
When he returned from overseas in April 2001 he found that his business name had lapsed and there was another business name in use which was too similar to his old business name. He registered a new business name of (business omitted).
The applicant says he transferred his business into the (omitted) Trust on the respondent’s advice. I accept his evidence on this point.
After the respondent passed a resolution requiring his business to be excised from the trust, the applicant started using his old ABN. By this time he had discovered that he was not a beneficiary of the trust. It would have made no sense for him to continue to operate his business within the trust. He continued to pay his income into the trust (omitted) Line of Credit.
The applicant says that the business does not have any value as any good will is personal to him. It is the vehicle through which he earns income. He does not have any employees. He used sub-contractors from to time when he takes on a big job. He says he obtains most of his work through his personal contacts.
The applicant attributed a value of $170,000 to the business on a mortgage application in August 2009. He says that reflected his income at the time.
Wall & Wall [2000] FamCA 1302. At paragraphs [68]–[69] The Full Court discusses personal goodwill. Personal goodwill is not transferrable. Personal goodwill attaches to the individual. It is that person’s ability, skill, experience, training and reputation.
I find that the only value of (business omitted) is the applicant’s ability to earn income from it. Any goodwill would be personal to him. There is no evidence before me to enable me to find that the applicant could sell his business. The business merely provides his income stream.
Other contributions by the respondent
The applicant acknowledges that the respondent earnt significant sums whilst the parties lived overseas. He does not accept that she earnt anything like $2,500,000 that she claims. The applicant has sought documents verifying the respondent’s income. He obtained an order to that effect on 28 August 2012. The applicant says of the documents he has seen he could not tell which funds belonged to the investors and which funds were the respondent’s commissions. The respondent produced a bundle of documents during the course of the hearing (which should have been produced much earlier) which she says is evidence of her income during that period. Exhibit A5 and A6 are examples. These documents do not establish the respondent’s income at all. All they are a document showing transfers of funds, there is nothing to indicate the primary source of these funds and her own evidence is that she received monies from clients which was not her money and then transferred them. Exhibit A6 and A7 are also examples of documents which the respondent has admitted altering. She changed her name and signature she says for completeness sake. Her evidence on this point is unconvincing. Then she conceded that large amounts of money were coming into the account which were monies that she was investing on behalf of clients. In the same breath she says that these transactions show her income.
She was then asked why she had kept these documents dating back to 2000 when she said she destroyed documents that were no longer necessary. She replied that these had been stored and archived.
In her first affidavit the respondent said she injected over $1,000,000 in the (country omitted) bank account.[5] She also says that she deposited a substantial amount of money into the joint (country omitted) account.[6] The respondent knew for many months that she was obliged to disclose documents verifying her claims. She has failed to do so. She provided no credible explanation as to how these alleged sums were used.
[5] Respondent’s first affidavit, para.47.
[6] Ibid, para.48.
The applicant acknowledges other contributions by the respondent which includes assisting him restructure the business and manage the documents and assisting him prepare tax returns.
The respondent says that apart from the $1,000,000 she earned between 1999 and 2001 and over $600,000 she says she paid into the (business omitted), she and the respondent earnt similar amounts of money.[7] Paragraphs [53] and [59] are mere assertions. They are not evidence. The respondent had many opportunities over several months to produce documents to substantiate her claims.
[7] Ibid, para.57.
He also says that the respondent did most of the domestic chores during the periods they lived together during the relationship. He says he did the dishes and washed his own clothes. The parties spent significant periods apart during their relationship.
The applicant says that the Property I and Property D properties were mostly served by the rental income and that the respondent did not contribute to these properties.
Superannuation
The applicant says that he earnt all of his superannuation prior to the relationship during the years he worked on (omitted) from 1988 to 1993. During the relationship he rolled over his superannuation into a self-managed superannuation. The respondent set this up for him. The applicant says she did this incorrectly and it had to be fixed.
He says neither of them made contributions to superannuation during the relationship. He has made contributions to his superannuation post the relationship. Neither party contributed to his superannuation during the relationship.
He was not cross-examined about this. I accept the applicant’s evidence.
The respondent has not disclosed any superannuation. She would have some superannuation from her employed positions. This is another example of her failure to make full and frank disclosure.
The (omitted) Trust
This is the most controversial aspect of the hearing.
The applicant says that as far as he was aware the trust was formed initially to invest in the (business omitted) but that did not go ahead.
He says he signed the deed as founder at the respondent’s request on 5 January 2004. He says that the respondent advised him to put his assets into the trust to minimise his tax. He says that he did not know that the trust was a unit trust. He says his understanding was that he could be trustee and that he, the respondent and the respondent’s children would be the beneficiary.
He says he relied on the respondent’s advice and that she told him he had control of the trust and that he could choose to make distributions and to add and remove beneficiaries at will.
He says that the respondent already had the (omitted) Family Trust which is a discretionary trust. He says that the respondent lead him to believe that the (omitted) Trust was a similar type of trust.
On 6 October 2006 the respondent resigned as the trustee and the applicant was appointed as the trustee.
The applicant says he found two documents which purport to be his resignation as trustee on 6 December 2009. He says he has no recollection of signing those documents and no recollection of any discussion with the respondent about him resigning.
The respondent disclosed a document showing (omitted) Pty Ltd being appointed as the corporate trustee on 11 December 2009. The applicant says he was not aware of this at the time. He also says he was not aware that the respondent was the sole shareholder of (omitted) Pty Ltd.
The existence and location of the trust deed has been a controversial issue in this case.
The applicant says that to the best of his knowledge the respondent retained the original trust deed.
He says he did not know the trust was a unit trust until the respondent produced a document which she alleges to be a copy of the trust deed.
Significantly some of the pages of the trust deed appear in different font and formatting. It is of significance that one of the pages which has been changed is the page setting of the schedule with the unit holders of the trust.
The applicant says that he left it to the respondent to manage the paperwork for the trust and their taxes. He says the respondent told him he would be able to utilise the income and distribute it as he saw fit. He says that is how they treated the trust during the relationship. The applicant says he did not understand how the trust worked and left it to the respondent. He trusted her.
Annexure “P”, page 62 of the respondent’s first affidavit extracts the (omitted) Trust’s tax return for 2007 and 2008. They show the trust income being distributed to the parties. That was the purpose of the respondent including those documents. Clearly the respondent knew this was what the parties did with the trust income each year. She also annexes emails which show she communicated with their accountant about income distribution. In all the circumstances, her complaints about the applicant continuing to receive income from the trust, bearing in mind her two businesses are in the trust, is disingenuous.
During the relationship the parties used electronic signatures on faxed instructions to financial institutions.
Annexure “F” of the respondent’s affidavit is the first page of a deed which shows the Western Australian stamp duty was paid on the deed on 9 October 1995. The respondent says she annexed this as an example. It is not apparent which deed this is.
Annexure “S” on page 153 of the applicant’s trial affidavit is a resolution signed by the respondent as trustee making a distribution to herself and the applicant. It is dated 28 June 2008.
The next several pages are more detailed distributions in 2010. Paged 186 to 188 are further distribution of income statements. One of them the copy of a sign here sticker on it. This is suggestive of the respondent preparing the document and asking the applicant to sign it. I find that this is what the respondent habitually did throughout the relationship. She now seeks to distance herself from this.
Annexure “T” page 158 is significant. It is a copy of facsimile from the respondent to Mr L. The respondent refers to the (business omitted) becoming incorporated and taking over as trustee. She also refers to it taking over “Mr Midden’s shares/units” in the (omitted) Trust. She asks him to divide the income over one fiscal year.
Annexure “V” at page 169 is a letter from the respondent to the applicant dated 24 April 2012 requiring him to terminate the trust and sell the assets. She refers to the (omitted) Unit Trust. ‘Unit’ is not part of the trust’s name.
Annexure “X” page 173 is a letter from the respondent to Mr Y, the tenant of Property M, requiring him to vacate the premises as the property is listed for auction. Her actions were inflammatory and inappropriate given there were proceedings on foot in this Court.
The respondent’s affidavit filed on 12 June 2012 (“the respondent’s first affidavit”) refers to the (omitted) Trust as the (omitted) Unit trust. She includes ‘unit’ in the name of the trust several times despite it not appearing anywhere in the trust deed or earlier documents she has prepared with respect to the trust.
The respondent says that she has used the unit trust format of trusts since 1988 or 1989. She says that on the basis of financial advice she received she moved from using discretionary trusts to unit trusts.[8] It is clear from the transactions that they treated the trust as a discretionary trust not a unit trust.
[8] Respondent’s first affidavit, para 38.
She also seeks to explain why some of the pages of the trust deed appear in different formatting. She says:
While there were several copies of documents stored, sometimes the scanned and saved documents become corrupted; if it was impossible to recreate the page rather than hunt through years of storage documents, I retype it. The text remains the same but it is reformatted. I have done this from time to time but can’t remember exactly when. [9]
The difficulty with this proposition is that if the document was corrupted none of the document would be able to be read. Therefore what document was she relying on to retype the pages?
[9] Respondent’s first affidavit, para 39.
Paragraphs [60] to [64] of the respondent’s first affidavit are significant. She says that she and the applicant split their income for taxation purposes for several years including 2007 and 2008. She annexes tax documents at annexure “P” to show this. The document she annexes is consistent with the applicant’s understanding of the trust being that it is a discretionary trust with both parties being beneficiaries.
At paragraph [61] she says:
From at least 2003 I was responsible for the preparation of all our accounts, tax returns and financial structures, and instruction to our account Mr L from (omitted) (“Mr L”). I have used Mr L as an accountant on and off since about 1998 and Mr Midden has also used him since around 2003.
At paragraph [62] she says:
Mr Midden and I used to have various trusts to minimise tax. I have always initiated the establishment of these trusts and [sic] overseen their establishment and management. Mr Midden has always made the comments to the effect of and included ‘if I get audited you need to be there to explain it, because I have no idea how all this hangs together’.
The respondent says she has an (omitted qualifications) and qualifications in (omitted) and (omitted). She says she developed all the business infrastructure plans and business structures including identifying the most appropriate structures and registering them. She did all the work placing the businesses into the trust and all the compliance work with respect to the trust deeds and arranging distributions of profits.[10]
[10] Respondent’s first affidavit, para 75 and 76.
Trust documents and tax returns for the trust including when she was no longer the trustee are annexed to her affidavit.
In her second affidavit the respondent claims that the applicant has diverted funds or assets from the trust to himself in breach of the trust. This is a disingenuous argument on behalf of the respondent.
At the hearing I put the respondent on notice that there were aspects of her case which did not make sense. It was appropriate to do so, particularly as she was a litigant in person. Her own affidavit and other documents relied on her are consistent with the parties treating the trust as a discretionary trust, not a unit trust.
The applicant’s version of events make sense. It makes no sense at all for the applicant to put his assets into a trust that he has no beneficial interest in. The respondent was not able to provide any credible response to this proposition. I accept the applicant’s evidence.
The Trust Deeds
At paragraphs [38] and [39] of her first affidavit the respondent denies doctoring trust deeds. She says she scanned and stored several copies of the documents but some became corrupted and she had to recreate the page otherwise she would have to hunt through years of storage documents. She was also cross-examined about this. She said that the dot matrix printer changed the look of the documents. This does not make sense because it would apply to the whole of the document not individual parts of the document as is the case here. She then said that rather than scanning some of these documents some were retyped by her. The schedules are different and have different addresses.
The respondent densities first time during cross-examination on the third day of the trial suggested that the applicant made changes to the deed and sent them to Mr L and Mr L sent them back. I reject that evidence. My impression is that at this stage she was making things up as she went along.
She agreed that she had told the applicant that the trust would benefit all of them being him, her and her children. She then said that he will benefit by being the trustee and having control of the money. However a short time later in her evidence she said that he had to comply with the deed and cannot act against the interests of the beneficiaries. She now complains that he is stealing from the trust. Her evidence simply does not make sense.
She conceded that she treated the trust herself as if the applicant was a beneficiary [p46 day 3]. (omitted) Pty Ltd now the trustee of the (omitted) Trust and the applicant is the director of that company. The respondent as trustee of the (omitted) Trust is the sole shareholder.
During the course of the proceedings the respondent placed great emphasis on her knowledge of trust law and the workings of trusts. She would know the importance of keeping the original trust deeds and not tampering with those types of documents. The evidence with respect to parts of the trust deeds appearing in different fonts and in different positions on the pages lacks credibility.
In her second affidavit filed 24 June 2013 the respondent says that the original trust document was typed on an electric IBM typewriter and not computer. She claims that the body of the trust document has remained the same but the schedule changes when a new trust is formed. In this affidavit she also claims at paragraph [12] that as the sole unit holder of the (omitted) Trust to the property in the (omitted) Trust is not part of the property pool in these proceedings. The respondent’s statement is wrong at law and would lead to a substantial injustice between the parties.
She also says at paragraph [17] that the structure was implemented on instruction of their accountant Mr L. This is inconsistent with the evidence in her prior affidavit and I do not accept it. I find that she was the architect behind the trust and corporate structures.
The respondent annexes a series of emails between her and Mr L. It appears that the emails have been copied and pasted together. The page also has typed number down the bottom along with the words deponent and witness. I cannot be satisfied that the email chain is complete or accurate.
She says she had cause to report Mr L to the Australian Taxation Office (“ATO”) in 2011 but does not annex her complaint or any letter from the ATO. It is difficult to see what she sought to achieve in these paragraphs of affidavits and by annexing these documents.
The applicant says the respondent advised him not to read the trust deed as it was a standard document.
The respondent’s evidence was that her understanding is that the trustee cannot be a unit holder in a unit trust. However the (omitted) Trust, which is a unit trust created in 1989, has the respondent as trustee and also as beneficiary along with the children.
Exhibit “A14” and “A15” are the documents produced by the respondent with respect to the (omitted) unit trust. The respondent admitted in cross-examination that she made handwritten additions in one of the documents and signed another. Some pages of the documents that she produced with respect to the (omitted) Trust are browned with age others are very white. She only produced these documents on the third day of hearing despite being aware of many months that she was obliged pursuant to orders made in 28 August 2012. She had no reasonable explanation as to why she had not produced those documents in accordance with the orders much earlier.
She did not produce deeds of appointment when (business omitted) became the trustee of the (omitted) Trust as she conceded that she was aware that that was the requirements in order to affect the appointment of a new trustee.
It is significant that she has a trust deed for (omitted) and Ms Galloway upon which stamp duty was paid. This is an old dormant trust yet she did not produce a stamped trust deed for the (omitted) Trust.
The respondent submits a trust deed would have had to be submitted to the bank in order for the bank to open an account in the name of (omitted) Trust. This does not assist the respondent as it is clear that the respondent has no difficulty producing trust deeds. This does not mean that the trust deeds are accurate. I am not satisfied that they are.
The Law relating to trusts
One of the issues to be determined is can a trust be re-enlivened after a special resolution has been passed terminating the trust. I cannot be certain about either of these things as I have no evidence of the special resolutions. The other in the alternative is whether the (omitted) Trust never validly existed.
It is clear that this Court has power to deal with the trust. In Kennon & Spry (2008) 238 CLR 366 dealt with the issue of whether a party’s interests in a trust could constitute property under the Family Law Act 1975 (Cth). In that case the husband was the appointor of the trust and the wife was one of the objects of that power. The majority of the High Court held that those factors were enough to constitute property.
The facts of this case are more straight forward than the facts in Kennon & Spry. French CJ said at paras.[52 to [54]:
The word “property” is used in different ways in different statutory contexts. There have been, for example, many cases in which the question has arisen whether and when the objects of a discretionary trust have “property” interests for the purpose of revenue legislation.13
Section 79(1) of the Family Law Act and the non-exhaustive definition of “property” in s 4(1) of the Act had their antecedent in s 86(1) of the Matrimonial Causes Act 1959 (Cth). The collocation “property to which the parties are, or either of them is, entitled (whether in possession or reversion)” can be traced back to its gendered ancestor in s 45 of the Matrimonial Causes Act 1857 (UK), which applied to the property of an adulterous wife.
Section 79 confers a wide discretionary power to vary the legal interests in any property of the parties to a marriage or either of them and to make orders for a settlement of property in substitution for any interest in the property. It is subject to the limitation that it validly applies only with respect to a claim based on circumstances arising out of the marriage relationship.14 The word “property”, appearing in the section, construed by reference to its ancestry in matrimonial causes statutes, has been given a wide meaning. …
Beneficiaries of a unit trust have a fixed interest in the capital and income of the trust. Trustees of a discretionary trust are able to select beneficiaries to receive any benefit to be paid from the trust.[11]
[11] G E Dal Pont, Equity and Trusts in Australia, 5th edition, Thomson Reuters, 2011 at [20.100]-[20.120].
In order for a court to find that a trust exists, it must be satisfied as to the three certainties being: the certainty to create a trust, the certainty of the subject of the trust and the certainty of objects of the trust. I am unable to make that finding. I accept the applicant’s evidence as to his understanding of the type of trust he understood it to be. The respondent’s own actions were also consistent with the trust being discretionary trust not a unit trust.
It is the respondent’s case that she put together the trust deed for the (omitted) Trust and she understands the terms of the trust. She further confirmed that she had directed that distributions be paid from the trust to the applicant. She was asked to point out which clauses in that trust she relied on for that statement. She said that firstly as she is the trustee of the (omitted) Family Trust and it is a discretionary trust that, she can use it at her discretion. She says all the income should live in the (omitted) Family Trust. As a result of that clause 39 (2) enables her to use the distributions. Clause 39 (2) reads as follows:
Notwithstanding anything contained in sub-clause (1) of this Clause the Trustees made with the consent of the holders of a majority of the issue voting Units and subject to any law in force at the time in relation to this Deed so permitting accumulate all or any part of the income arising during such accounting period and such accumulation shall be dealt with as an accretion to the Trust Fund but so that the Trustees made any time or times resort all such accumulations and pay reply the whole or any part or parts thereof as if they were income of the Trust Fund.
Page 153 of the applicant’s trial affidavit is a (omitted) Trust resolution dated 28 June 2008 directing distribution of profits to the applicant and the respondent signed by the respondent as trustee. She was not the trustee of the trust at that time. She again said that clause 39(2) allows her to do that as the major beneficiary whereas she says that trustee cannot. Clause 39(2) does not give her the power she said it does.
The respondent said in her first affidavit at paragraph [37] that as the beneficiary of the (omitted) Trust she felt she had the full right to terminate the trust. In her financial statement sworn on 19 November 2012 she stated that she was 100% beneficiary of the (omitted) Trust. She is the trustee, Guardian and a pointer of the (omitted) Family Trust. She said that the trustee of a unit trust cannot organise distributions but the beneficiary can. This is not accurate.
Tax issues
The respondent says that they split the income for taxation purposes for a number of years including 2007 and 2008. At paragraph [60] of her first affidavit she annexes at annexure “P” an extract of (omitted) Trust’s tax return showing equal income distributions to both parties. This is significant. This is consistent with the applicant’s understanding that the (omitted) Trust was a discretionary trust and that he was a beneficiary.
She also says at paragraphs [61] and [62]:
From at least 2003 I was responsible for the preparation of all our accounts, tax returns, and financial structures, and instruction to our accountant Mr L from (omitted) (“Mr L”) since around 2003.
Mr Midden and I have used various trusts to minimise tax. I have always initiated the establishment of these trusts and overseeing their establishment and management. Mr Midden has always made comments to the effect of and included quite if I get audited you need to be there to explain it, because I have no idea how all this hangs together.
The respondent used trust structures before she met the applicant. One of the trusts she had prior to the relationship with the (omitted) unit trust. She says she was responsible for the legwork, establishment and management of the trusts. I accept that this is the case. Her comment with respect to the applicant in paragraph [62] is also significant. I find that the applicant relied on the respondent and trusted the respondent to set up and manage the trusts for both of them.
The respondent also says at paragraph [63(e)] that she placed the businesses (business omitted) and (business omitted) into the trust. She said that initially she was the trustee of the (omitted) Trust and remains the sole unit holder.
There is a real question mark as to whether or not the trust deed for the (omitted) Trust is accurate. If the (omitted) Trust is a unit trust with the respondent as the sole unit holder then she misled the applicant with respect to the nature of the trust and his entitlements. It makes absolutely no sense to agree to put all of his assets into a trust that he never had any beneficial interests in. The respondent was not able to give an explanation to this evidence with respect to this lacked credibility. There was also evidence which shows that the parties treated this trust as a discretionary trust not a unit trust.
The respondent says she has an (omitted qualifications) and qualifications in (omitted) and (omitted). She refers to her business acumen and setting up business structures for parties. I accept that she was driving force behind the trust structures and business structures.
On 29 July 2013 the applicant filed a further affidavit annexing an email from his accountant. The applicant will have additional tax to pay of approximately $29,582.83 if he has to amend his tax returns for the years 2007 and 2008 to reflect the trust’s income being his own income. He has already amended his 2010 tax return and has paid additional tax in the sum of $31,266.94 as a result. This is an estimate only and has not been tested.
The respondent should be responsible for 30% of the additional tax the applicant will have to pay which is in proportional with her property entitlements.
Mr L, accountant
In a letter of 14 June 2013 (annexure “C” of the applicant’s trial affidavit) the respondent was put on notice that the applicant would be relying on an affidavit from Mr L, the parties’ accountant about the instructions he received to prepare tax returns.
At the commencement of the trial the applicant no longer sought on the affidavit from Mr L because the respondent annexed the same document to her affidavit which Mr L annexed to his which meant to do it which resolved that dispute.
During the hearing Ms Galloway submitted that Mr L was a very important witness. She attempted to get him to give evidence in her case but was unable to. It is not entirely clear what evidence Ms Galloway thought he would give which would make such a difference to the outcome of this case. It is clear that Mr L had a copy of the trust deed and that he sent a copy of that deed to the applicant’s lawyer when he requested it. He was the parties’ joint accountant for many years during the relationship. It does not matter how or when the accountant received a copy of the trust deed. The crucial issue is the existence of the original deed. The respondent conceded during the course of the hearing that Mr L did not draw up the trust deed.
The respondent sets out several reasons at paragraph 10 of her written submissions as to what it was important to hear from Mr L. I do not accept her submissions that he would be able to give evidence of any of those things. He did not create the trust. He acted on the respondent’s instructions with respect to distributions on the respondent’s own evidence.
The respondent’s submissions with respect to her early contributions of income. The documents she refers to simply do not verify the amount of income she claims. I also do not accept her assertion that the applicant did not work for a living for 9 years prior to 2004.
Section 90SF(3) factors
The parties were in a de facto relationship for 17 years. There is no evidence that either party’s earning capacity has been adversely affected by the relationship.
The respondent is 10 years older than the applicant.
She says she has used her cash over the years in the joint adventures whereas the applicant has accumulated considerable property in his name and as the trustee. This is not an accurate reflection of what has happened. She has not made out her case in this regard.
The respondent has current interest in a business venture about which she has not made proper disclosure.
I do not propose to make any adjustments pursuant to section 90F(3) as any adjustment that could be made for the parties’ differences in ages and earnings is cancelled out by the respondent’s non-disclosure which I take into account pursuant to section 90SF(3)(r).
Presentation of the witnesses
Ms Galloway is clearly an intelligent woman with a sound understanding of financial issues. Ms Galloway was self-represented but was across the issues and was able to present her case well. She managed cross-examination well bearing in mind she was self-represented. It is not an easy task to cross-examine on documents.
The focus of the first part of her cross-examination was on the monies the applicant had to pay for legal proceedings and mortgages over an eight year period. The respondent says that she made significant contributions.
My impression on Mr Midden was that he was an honest witness doing his best to answer the questions truthfully.
Where there is a conflict in evidence I prefer the applicant’s evidence to the respondent’s.
Submissions
Both parties relied on written submissions and spoke to those submissions.
In many aspects the respondent’s submissions do not reflect the case which was run before this Court. She sets out a property pool that differs significantly from the balance sheet which was agreed to at the beginning of the hearing (with minor amendments being made during the course of the hearing). Submissions are not evidence. Where the respondent has referred to matters not in evidence I have ignored them.
The respondent included her version of the property pool. It is of concern that is bears little resemblance to the balance sheet which was handed up at the beginning of the hearing and which the respondent well knew was the property pool the parties were relying on. I disregard the pool set out in her submissions. It reveals also a misunderstanding as to the requirement to determine the asset and liability pool as at the date of hearing.
The respondent submits that either the applicant has diverted funds to himself in breach of his obligations as a corporate trustee or if the trust was terminated in 2012, he has not carried out the terms of the trust.
The applicant urged the Court to take an asset by asset approach taken in preference to the global approach. The Full Court addressed these approaches in Norbis & Norbis (1986) 161 CLR 513. The result should be the same regardless of which approach is used. I have applied both in order to cross-check the results. He also submitted that the Court should find that the respondent has failed in her duty of disclosure. The applicant also sought that the South Australian properties and the (country omitted) properties be excluded from the asset pool and treated as financial resources. This submission is misconceived. It is clear that these three properties fall within the definition of assets and not financial resources. All three have been valued. They must be included in the asset pool. The issue is the contributions that have been made to them.
The respondent also seeks to have several amounts added back to the pool. Much of this argument rests on her argument about the trust. She seeks to have the home loan repayments and superannuation contributions he has made added back as well as all profits from the trust. There is no basis for this. Most of the income generated from the trust, assuming for the moment it exists, has come from the applicant’s businesses. To follow the respondent’s argument it would be necessary to add back her income post separation. The fact that the applicant has continued to pay the mortgages benefits both parties as it reduces the liability on that property. Both the property and the mortgage are included in the pool for division.
The court is satisfied that the present legal and equitable interests of the parties in property is as follows:
ASSETS
$
Property A
750,000
Property M
690,000
(business omitted)
Nil
(business omitted)
57,000
Toyota Ute
3,150
Isuzu
16,500
VW Van
20,000
Applicant’s furniture
3,000
Respondent’s furniture
3,000
Respondent’s shares
725
Applicant’s case at bank
31,261
Applicant’s superannuation
116,420
Property I
427,000*213,500Property D
318,000*159,000(country omitted) properties
353,488
TOTAL ASSETS
2,789,544*2417,044LIABILITIES
$
Property A variable mortgage
52,983
Property A
80,492
Property M (omitted) line of credit
235,958
VW Van loan
3,477
Respondent’s credit cards
18,200
Property I mortgage
9,000*9,500Property D mortgage
184,000
TOTAL LIABILITIES
584,110*487,610NET POOL
2,205,434*1929,434
Conclusion
One of the great difficulties the respondent faces is that the way the parties treated the trust during their relationship is completely inconsistent with the nature of the trust the respondent now asserts it is.
This is a case where I am satisfied that it is just and equitable to make orders for property adjustment. These parties need to untangle their financial affairs and go their separate ways.
The respondent will retain the (country omitted) properties, her furniture, shares and her credit card debt. The net figure for these items are $339,103 which is 15% of the pool.
The applicant will retain the other assets and liabilities.
The applicant will made a cash payment of
$339,103*$239,817.20 which is a further 15% adjustment to the respondent. I will round this figure up to$340,000*$239,817. This payment is subject to some adjustments which are set out in the order. This is a just and equitable outcome because of the initial contributions and other contributions the applicant made.
Costs
There are several reserved costs orders for interlocutory appearances which are yet to be determined. The applicant had also indicated that he may wish to seek further costs. I will order that both parties file written submissions. I will then determine the costs issues in chambers unless a party makes an application to make oral submissions.
I certify that the preceding two hundred and fifty four (254) paragraphs are a true copy of the reasons for judgment of Judge Harland
Original Judgment Date: 25 October 2013
Amended Judgment Date: 23 December 2013
Orders sought by the Applicant
In event that the court finds that the (omitted) Trust is an invalid trust:
It is declared that the Applicant is the sole owner of the following property:
(a)(business omitted);
(b)(business omitted);
(c)VW Motor vehicle;
(d)Isuzu Ute; and
(e)Property M.
That the Registrar General of the Northern Territory is directed to transfer the property situated at Property M in the Northern Territory of Australia, more particularly described in the certificate of title as volume (omitted) folio (omitted), Lot (omitted), Town of Darwin (“the Property M”) property into the name of Mr Midden.
That the Motor Vehicle Registry of the Northern Territory is directed to transfer the following vehicles into the name of Mr Midden:
(a)VW Motor vehicle registration number (omitted); and
(b)Isuzu Ute registration number (omitted).
That the Commonwealth Commissioner of Taxation is directed to transfer the ABN for the (omitted) Trust into the name of Mr Midden.
That the Commissioner of the Australian Securities and Investments Commission is directed to transfer the (business omitted) business name into the name of Mr Midden.
That the Applicant shall indemnify the Respondent from any and all liabilities in relation to the assets listed in order 1.
That the parties do all necessary things and sign all necessary documents to deregister (omitted) Pty Ltd.
That the parties do all necessary things and sign all necessary documents to discharge the (omitted) Line of Credit, at the Applicant’s expense and that the Applicant shall indemnify the Respondent from any and all liabilities in relation to the said liability.
In event that the court finds that there is a trust and that the Respondent is the beneficiary:
It is declared that the Respondent holds all trust assets in favour of the Applicant pursuant to a resulting of constructive trust.
That the parties do all necessary things and sign all necessary documents to dissolve the (omitted) Trust.
As far as is necessary, each party do all necessary things and sign all necessary documents to transfer the following assets to the Applicant:
(a)(business omitted);
(b)(business omitted);
(c)VW Motor vehicle registration number (omitted);
(d)Isuzu Ute registration number (omitted); and
(e)Property M.
That the Applicant shall indemnify the Respondent from any and all liabilities in relation to the assets listed in order 3.
That the parties do all necessary things and sign all necessary documents to deregister (omitted) Pty Ltd.
That the parties do all necessary things and sign all necessary documents to discharge the (omitted) Line of Credit, at the Applicant’s expense and that the Applicant shall indemnify the Respondent from any and all liabilities in relation to the said liability.
Distribution of remaining assets
That within 60 days of the date of these orders the Applicant pay to the Respondent the sum of $340,000 less the following amounts:
(a)Any costs ordered by this honourable court in relation to the costs reserved on 27 June 2012 regarding the interim hearing;
(b)$4,000 for bond money and rent paid in accordance with order 5(a) and (b) of the orders dated 27 June 2012;
(c)$644 for removal costs paid in accordance with order 5(c) of the orders dated 27 June 2012;
(d)Any costs ordered by this honourable court in relation to the costs reserved on 28 August 2012 regarding the Application in a Case filed 23 August 2012;
(e)One half of the following amounts paid in accordance with order 6 of the orders dated 28 August 2012:
(i)$660 for the Property M property valuation;
(ii)$825 for the Property D property valuation;
(iii)$825 for the Property I property valuation;
(iv)$3,660 for the (business omitted) valuation; and
(v)$992 for the (country omitted) valuations.
(f)Any costs generally ordered by the court.
That within 7 days of the date of these orders, the Respondent shall, at her expense, cause all caveats that she lodged against any properties in which the Applicant has an interest in, to be withdrawn.
That within 14 days of the date of these orders, the Respondent shall return to the Applicant, the following items:
(a)Entirety of the file removed from Property A containing, amongst other things, building permits, applications, construction inspection certificates and payment receipts, relating to the extensions and construction at Property M;
(b)The Applicant’s LP vinyl collection;
(c)The Applicant’s personal photographs and diaries of his overseas voyage;
(d)The Applicant’s personal diaries;
(e)The Applicant’s winter clothing; and
(f)The Applicant’s dress trousers.
That the Respondent is restrained and an injunction issue restraining the Respondent from engaging in the following behaviour:
(a)Save for the purpose of complying with any orders outlined above, approaching the Applicant at any place where the Applicant is living, staying or working;
(b)Save for the purposes of complying with any orders outlined above, contacting the Applicant directly or indirectly;
(c)Contacting any members of the Applicant’s family directly or indirectly; and
(d)Contacting Ms S or Mr R directly or indirectly.
That unless otherwise specified in these orders, each party shall be solely liable for all loans, credit cards, mortgages and any other liability, in that persons sole name as at the date of these orders.
That the Respondent be restrained from continuing proceedings No.(omitted) in the Supreme Court of the Northern Territory.
That the Respondent be restrained from instituting further proceedings against the Applicant in respect of the property of the parties, trusts of the parties or either of them in any Court except the Family Court of Australia of the Federal Circuit Court of Australia.
That, unless otherwise provided in these orders, and save for the purposes of enforcing any monies due under these orders or any subsequent Family Law Act 1975 orders:
(a)Each party be solely entitled to the exclusion of the other, to all other property including but not limited to choses in actions, motor vehicles, furniture, jewellery and any other chattels or possessions of whatsoever nature and kind in the possession of that party as at the date of these orders;
(b)Each party be solely entitled to the exclusion of the other, to any monies, shares, debentures, investments and superannuation entitlements which stand in their sole name or to their credit;
(c)Each party forego any claim they may have to any superannuation, long service leave, redundancy, retirement, retrenchment and like benefits belonging to or earned by the other;
(d)Insurance policies remain the sole property of the owner named thereon;
(e)Each party is solely liable for and indemnifies the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
Orders sought by the Respondent
A declaration the following properties were held at the time of separation by (omitted) Trust:
a)Property M ;
b)(business omitted);
c)(business omitted); and
d)(omitted) Line of Credit for (omitted) Trust.
A declaration that these properties are the properties of the (omitted) Family Trust.
That Mr Midden return all funds and property diverted to himself from (omitted) Trust and (omitted) Pty Ltd – this includes the re-submission of the tax returns of 2010, 2011, 2012 with (omitted) Pty Ltd as Trustee for (omitted) Trust.
That the property at Property A be divided on a 50-50 basis.
That the nett proceeds of (business omitted) be split 66% to 34% Midden:Galloway.
That Mr Midden return and deliver up to (omitted) Pty Ltd, $77,855.00 distributed to it in 2010.
That Mr Midden return and deliver up to (omitted) Family Trust $267,481.31 from 2011 (omitted) Trust income to its bank account to be nominated.
That Mr Midden return and deliver up to the (omitted) Family Trust $242,315.14 from 2012 Trust income.
That Mr Midden resign as Director of (omitted) Pty Ltd.
There be a forensic accounting exercise undertaken to assess the status of the trust.
In the alternative if the court finds that (omitted) Trust was terminated and the orders of 28 May 2012 are ineffective then a declaration that Clause 35(3) of the (omitted) Trust Deed becomes operational.
· Property M be handed over to the beneficiary being (omitted) Family Trust;
· (business omitted) be sold and the proceeds go to the beneficiary being (omitted) Family Trust;
· All profits – including the additional tax payments made as a result of diversion of funds – be returned to the beneficiary being (omitted) Family Trust;
· (business omitted) be excised and the value of the company, be divided equally between the parties.
That Mr Midden return and deliver up to (omitted) Pty Ltd, $77,855.00.
That Mr Midden return and deliver up $267,481.34 to the beneficiary being (omitted) Family Trust;
That Mr Midden return and deliver up $242,315.14 to the beneficiary being (omitted) Family Trust.
Mr Midden be replaced as director of (omitted) Pty Ltd and deliver up all material pertaining to the entity including but not limited to register, minutes, books, bank accounts.
That any property division apart from superannuation be divided on a 50-50 basis.
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
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Civil Procedure
Legal Concepts
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Remedies
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Injunction
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Costs
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Constructive Trust
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Res Judicata
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Jurisdiction
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