Moore and Moore and Ors

[2011] FamCA 551

FAMILY COURT OF AUSTRALIA

MOORE & MOORE AND ORS [2011] FamCA 551

FAMILY LAW – PROPERTY – Property in trust – Husband’s creditors seeking to claim charge over husband’s interest in joint property - Whether financial agreement between created trust under Conveyancing Act NSW – Whether property held in trust by the husband for the benefit of the wife could be the subject of a valid charge by husband’s creditors – Whether wife has duty to disclose husband’s financial position to creditors

Family Law Act 1975 (Cth)
Conveyancing Act 1919 (NSW)
Family Law Rules 2004 (Cth)

APPLICANT: Ms Moore

3^RD RESPONDENT: D Pty Ltd

1^ST RESPONDENT: Mr Moore

4^TH RESPONDENT: B Pty

FORMERLY 2^ND RESPONDENT: C Pty

FILE NUMBER: SYC 7754 of 2007

DATE DELIVERED: 6 July 2011

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Fowler J

HEARING DATE: 3 June 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Johnston

COUNSEL FOR THE 3^RD RESPONDENT: Mr Lloyd SC

1^ST RESPONDENT: No appearance

4^TH RESPONDENT: No appearance

2^ND RESPONDENT: No longer a party

Orders

1. The wife is declared to be, as from the 1 July 1995, solely entitled to the legal and beneficial interest in the property situated at and known as E Street, F Town, being the whole of the land more fully described in Folio Identifier 2/539971 (F Town).

2. The husband is to forthwith do all such acts and things and sign all such documents as may be necessary to procure the transfer to the wife all his right title and interest in F Town.

3. The third and fourth respondents are declared to have no caveatable interest in F Town and are ordered to forthwith do all such acts and things as may be necessary to remove such caveats as they have lodged against the title to the property and are by these orders restrained from lodging any further caveat on the title to the property.

4. The application of the third respondent is dismissed as is the application by the fourth respondent.

5. By way of settlement of property, each of the husband and the wife is declared to be the legal and beneficial owner and entitled to retain all superannuation annuity entitlements and pension benefits to which they are or might become entitled in their own right and are declared as against the other the owner of all personalty in their possession title power or control.

6. The husband is ordered to do all such acts and things and execute all such documents as may be necessary to transfer to the wife the beneficial ownership of motor vehicle Registration number ...

7. In the event that any party refuses, fails or neglects to execute any deed or instrument necessary to give effect to these orders, the Registrar of the Family Court of Australia is appointed to execute such deed or instrument in the name of such party and to do all acts and things necessary to give validity to the operation of any such instrument.

IT IS NOTED that publication of this judgment under the pseudonym Moore & Moore has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 7754  of 2007

Ms Moore

Applicant

And

D Pty Ltd

3^rd Respondent

And

Mr Moore

1^st Respondent

And

B Pty

4^th Respondent

And

C Pty

Formerly 2^nd Respondent

REASONS FOR JUDGMENT

Introduction

1. The proceedings before the Court are proceedings in which the wife seeks orders by way of declaration as to her ownership of the legal and beneficial interests in E Street, F Town (“the F Town property”) and an order as to alteration of interests in property. She seeks orders, consequential to the declaration sought, to give effect to that declaration of her ownership of the real estate and orders pursuant to the provisions of section 90AE of the Family Law Act that certain alleged creditors of the husband look to him for recourse in the recovery of their debt. She also seeks that it be declared that they have no caveatable interest in the F Town property and that they withdraw such caveats as they may have lodged against the title to the property.

2. To those proceedings the respondent makes no answer save that he has filed an affidavit saying that he consents to the orders sought by the wife.

3. There were three other respondents to the proceedings who are creditors of the husband.  One of those respondents, the second respondent C Pty Ltd, was dismissed from the proceedings by consent.

4. Orders are sought against the remaining respondents as generally outlined above.

5. The fourth respondent did not appear, and informed the Court that if the Court makes the orders which are sought by the wife then it would seek to recover from the husband the debt due to it from the husband and would, if so ordered, remove the Caveat lodged by it against the title to the F Town property as sought by the wife.

6. There remained the third respondent, D Pty Ltd.  That company seeks to maintain a charge that it says it has over the husband’s interest in the property to secure sums due to it by the husband.  In the alternative, it seeks for provision to be made for its debt to be met in an appropriate way in the orders to be made by the Court.

7. The first step the Court must take in proceedings of this nature is to identify the pool of assets.  The wife supplied a balance sheet in the following terms:

Asset Pool	Value ($)	Source
1	E Street, F Town	800,000	Expert
2	Contents of F Town	10,000	F 13
3	Wife’s Intec Credit Union account	53,211	F13
4	Wife’s ANZ account	2,370	F13
5	Wife’s Telstra Shares	2,835	F13
6	Wife’s CBA Shares	34,186	F 13
7	Wife’s jewellery	8,000	F 13
8	Monies received by Husband from DMR shares	774,777	Wife
9	Monies received by husband from IBM Shares	24,000	Wife
10	Proceeds of sale of G Town property received by the husband	370,000
11	Husband’s other assets	Unknown
Total	2,079,379
Superannuation
12	Wife’s Superannuation	253,960
Total	$ 2,332,339

Less wife’s liabilities
13	Legal Costs	TBA
Husband’s liabilities
14	2nd Respondent	Nil Matrimonial
15	3rd Respondent	Nil Matrimonial;
16	4th Respondent	Nil Matrimonial

1. The wife annexed to her affidavit an annexure, Q, which is an agreement made between herself and the husband in relation to their property.  It is an agreement made after the parties separated and is in the following terms:

   July 1, 1995

PROPERTY SETTLEMENT AGREEMENT BETWEEN [MS MOORE] AND [MR MOORE]

Background

1.We separated in October 1994 as the marriage had broken down.

2.We agreed at that time to make arrangements between ourselves to deal with our property interests.

3.Since that time we have lived apart.

Agreement

At that time we reached the following agreement;

1.[Mr Moore] would have the sole use of the property [H Property], located outside [G Town], currently owned by [Moore & Associates Pty Limited] as bare trustee for the [E Trust].

2.[Mr Moore] would have full control and ownership of
[Moore & Associates Pty Limited].

3.[Ms Moore] would receive from [Mr Moore] his whole interest (50 per cent) and entitlement in the property currently held as Tenants-in-Common located at [E Street, F Town] (“the Property”).

4.[Mr Moore] would transfer his interest in that property to [Ms Moore] and until that transfer was recorded, hold his interest in the Property in trust for [Ms Moore].

5.[Ms Moore] would be entitled to full ownership of the internal fixtures and fittings inside the Property with the exception of the piano that was the property of [Mr Moore’s] mother at the time of her death.

6.[Mr Moore] would also be entitled to sole use and possession of the … motorcar currently owned by [Mr Moore], NSW registered number ...

7It is our intention that this agreement is a record of an agreement we made for the division of our property interests at the point of our marriage breakdown in October 1994.

Signed

Ms Moore                 1/7/1995               Mr Moore  1/7/95

1. The Counsel for the third respondent conceded that if the agreement was effective to create the husband as trustee of his interest in the property for the wife then his client’s claim to a valid charge over the husband’s interest in the property could not be sustained as against the wife.

2. The Court’s attention was drawn to section 23C(1) of the Conveyancing Act 1919 (NSW) by the third respondent’s counsel. That section provides:

   23C   Instruments required to be in writing

   (1) Subject to the provisions of this Act with respect to the creation of interests in land by parol:

   (a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by the person’s agent thereunto lawfully authorised in writing, or by will, or by operation of law,

   (b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by the person’s will,

   (c) a disposition of an equitable interest or trust subsisting at the time of the disposition, must be in writing signed by the person disposing of the same or by the person’s will, or by the person’s agent thereunto lawfully authorised in writing.

1. The Court is asked by the third respondent to find that the agreement of the parties is an “agreement to agree” and as such is not effective to create the trust.

2. The Court is not persuaded by the argument.  The agreement, in clause 4 and clause 7, unambiguously creates a trust until the title to the property is transferred.  The agreement complies with the provisions of the Conveyancing Act.

3. The suggestion of Counsel, that it could not be effective to do that because the wife would need to bring proceedings under the provisions of the Family Law Act 1975 (Cth) to make it a final settlement, is rejected to the extent that it suggests that the agreement did not operate forthwith upon its signing.

4. Although rights still remain under the Act, the transfer of property between spouses prior to the making of orders under section 79 is entirely permissible and will be effective to transfer the title to the property even if the rights under the Family Law Act have not coalesced in an order or are altered subsequently by order.

5. The Court is asked, in the event that it so found, that it nevertheless make a provision for the debt of the third party from the property known to be available and in the hands of the wife.

6. The parties’ agreement in annexure Q was made long before the debt was incurred and the ineffective charge was created.

7. The third respondent has not taken proceedings to enforce its judgment against the husband.  It has not sought to enforce its charge against the property of the husband.  It has not taken other proceedings such as bankruptcy proceedings to enforce its debt.

8. There is no evidence adduced by the third respondent as to the husband’s financial position.  The wife has said that he is not without assets although the assets which he held at the date of separation had, she thought, been significantly dissipated.  That evidence was, however, unacceptable as evidence of the husband’s financial position currently.

9. The third respondent tendered a financial statement of the husband sworn in these proceedings in 2008.  It is an historical document which is also untested and does not, of course, give any hint as to the husband’s present position.

10. The third respondent has not inquired of the wife as to the husband’s whereabouts. The wife has said, in her oral evidence, that she has an address for the husband in Western Australia and was prepared to provide it to the third respondent. She noted that she had not hitherto been asked to provide it. She has complied with her duty set forth in Rule 13 of the Family Law Rules 2004 (Cth).

11. There is no evidence that the third respondent has been recently active in the pursuit of the husband and its debt.  It seems, rather, that the third respondent has simply relied upon these proceedings as affording a means for its payment.

12. The third respondent concedes that the debt arose well after the parties’ separation and the creation of the trust.  It also concedes that it has done nothing to seek information as to the whereabouts and asset position of the respondent.  It is suggested by the third respondent that the applicant has a duty to disclose and should, even if she does not know the respondent’s financial position, have taken those proceedings which would have revealed her husband’s financial position to its benefit.

13. The duty of disclosure as between husband and wife is an important one.  It is clearly established by the authorities and one can see a reason for it in the interpersonal relationships which exist between parties to a marriage.

14. Those relationships are built on trust and frequently they involve someone who is ignorant of the financial affairs of the family and a spouse of that person who is not. In pursuit of the obligation to disclose, a party must not only reveal what is within their personal knowledge but must take steps to provide that information. The obligation is, however, on the party to make disclosure and is found in Rule 13.04 of the Family Law Rules.

15. The Court finds that it is incumbent on the wife to provide information in relation to her financial position.  This she has done.  All the information which is available as to the husband’s position can be procured by the creditor in the same way as the wife could procure it.  The information which the wife has can also be provided to the creditor if it asks.  In this case it did not.

16. It is, of course, incumbent on the wife to produce any document relevant to an issue in the case which is not otherwise privileged.  There is no evidence that there has been a failure by the wife in compliance with this obligation.

17. I now turn to the provisions of section 90AE of the Act.

18. The Court has clear power to make orders which require a third party to do something.  In light of my findings as to the efficacy of the agreement made between the husband and wife, it is the Court’s intention to order the third and fourth respondents to remove the caveats which they have lodged against the title of the wife to the F Town property.  In doing so, I simply reflect the concession made by the third respondent that if the agreement comprising annexure Q has the effect claimed by the wife, their charge on that property could not be maintained against the wife.  The Court so finds and will therefore so order.  The like position exists in relation to the fourth respondent.

19. Such an order is reasonably appropriate and adapted to effect an appropriate division of property between the parties to the marriage.

20. It is not reasonably foreseeable, on the evidence before me, that that order would result in the debt not being paid in full.

21. The respondent Creditors did not have an effective charge over the property and the orders which I make for the Creditors to remove his caveat place it in no different position.

22. The Creditors retain their charge over such of the property as is in the title of the husband.  The only evidence put before me by the respondents in relation to the husband’s financial position is a financial statement made by the husband in 2008.

23. That statement does not give a current picture of the husband’s financial position and this creditor, the third respondent, has not sought to bring before the Court any information in relation to that.  Its charge remains in relation to any property of the husband.  The husband has been employed in the past.  The husband was said by the wife to have artwork and a car.  Nothing is known of their current value as no evidence was brought before the Court on that issue.

24. It is not reasonable for a creditor to complain that his debt recovery is in danger and put nothing before the Court as to the real possibility of that being so.

25. The wife in her evidence offered an opinion without knowledge that the husband now had very little in the way of assets save a car and some artwork.  She produced a list of artworks which the husband had sold and said that they had been but a small part of the collection that he had taken from the home.  The artworks which were sold were by known artists and procured an amount on sale of about $17,000.

26. The Court does not therefore, in the circumstances of this case, come to a conclusion that the order that it makes would result in the debt not being paid in full.

27. The third party has been afforded procedural fairness in relation to the making of the orders proposed to be made. It is just and equitable to make the order and the Court takes into account the matters referred to in section 90AE(4).

28. The third party then says that in calculating the asset pool I have to consider its liability and I will do so.  I find that in the present circumstances the wife’s claim is modest given the length of the marriage, the contributions made by her, her role in the marriage, and the monies and property received by the husband pursuant to the parties’ agreement.

29. Given the division of the parties’ assets in the agreement, the wife would be receiving approximately one-third of the assets which were available at the time of separation.  Her claim is modest indeed having regard to her contributions made to this marriage as set out in her evidence.

30. In that latter regard, neither party made any significant initial financial contribution.  The acquisition, conservation and improvement of the property of the parties was as a result of their several efforts.  The wife earned some income and contributed it to the household expenses, as well as being the primary caregiver for the children of the marriage.  For the past 18 years, the wife has made the more significant contribution to the conservation and improvement of the home in which she resides, with only some contribution being made by the husband.

31. The husband, in pursuit of his occupation, spent significant time away from the home and placed a greater burden on the wife as a homemaker and parent.  The wife has made the sole contribution as homemaker and parent since separation.

32. It is noted that the balance sheet contains add backs of amounts which the husband had at the time of the separation. The amounts received by the husband approximated $1,170,000. The fate of those assets is largely unknown. The husband has had a higher earning capacity than the wife. I take into account under the provisions of section 75(2)(o) of the Family Law Act the fact that he had those assets, the fact that he and the wife entered into an agreement in settlement of their claims, and the fact that the wife relied upon the agreement to her detriment and acted upon it.

33. I do not consider that justice and equity, in the circumstances of this case, requires the Court to require of the wife that from her just entitlements she should meet a debt incurred by the husband in the pursuit of a business venture so long after the separation and in respect of which the wife had no prior knowledge.

34. The Creditors must look to the husband for the repayment of any debt found to be due to them.

35. Looking at the matter overall I find it is just and equitable to make the orders as asked by the wife and I will do so.

I certify that the preceding forty-five (45) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Fowler delivered on 6 July 2011.

Associate:

Date:  6 July 2011