Morrison & Jepson & Anor - [2014] FCCA 1937

FEDERAL CIRCUIT COURT OF AUSTRALIA

MORRISON & JEPSON & ANOR

[2014] FCCA 1937

Catchwords:
FAMILY LAW – Property – application for property settlement – where applicant is bankrupt – where second respondents are the applicant’s trustees in bankruptcy – where most of the assets are situated in (country omitted) – vested bankruptcy property – former matrimonial home – small property pool in Australia – contributions – future needs of the wife – interests of the creditors – consideration of Family Law Act 1975 (Cth) s.75(2)(ha) – effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt – consideration of the need for the non-bankrupt spouse to house and support a child of the marriage under the age of 18 years – where order not to take effect until child attains the age of 18 years.

FAMILY LAW – Costs – where costs sought on an indemnity basis.

BANKRUPTCY – Where applicant is bankrupt – where bankrupt’s property vested in trustees in bankruptcy – the interests of unsecured creditors do not automatically prevail over the interests of the non-bankrupt spouse – the legislation requires the court to balance the competing claims of unsecured creditors and the non-bankrupt spouse in the exercise of a wide discretion.

Legislation:

Bankruptcy Act 1966 (Cth), ss.58, 82, 115, 116

Family Law Act 1975(Cth), ss.43, 75, 79, 90AE, 106A, 117

Federal Circuit Court Rules 2001, r.22.01

Cases cited:
Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225; 118 ALR 248
Hickey & Hickey [2003] FamCA 395; (2003) 30 Fam LR 35; FLC 93-143
In the Marriage of Kohan (1992) 16 Fam LR 245; (1993) FLC 92-340
Prantage & Prantage [2013] FamCAFC 105; (2013) 49 Fam LR 197; FLC 93-544
Stanford v Stanford [2012] HCA 52; (2012) 47 Fam LR 481; FLC 93-518
Trustee of the Property of G. Lemnos (a bankrupt) & Lemnos [2009] FamCAFC 20; (2009) 41 Fam LR 120; FLC 93-394 followed
West & West [2007] FMCAfam 681

Applicant:

MR MORRISON

First Respondent:

MS JEPSON

Second Respondent:

MR DION AND MR SUMMERS TRUSTEES IN BANKRUPTCY FOR MR MORRISON

File Number:

SYC 6441 of 2009

Judgment of:

Judge Scarlett

Hearing date:

31 January 2013

Date of Last Submission:

31 January 2013

Delivered at:

Sydney

Delivered on:

26 August 2014

REPRESENTATION

The Applicant:

No appearance

Counsel for the First Respondent:

Mr Mackey

Solicitors for the First Respondent:

Tomaras Lawyers

Counsel for the Second Respondent:

Mr Rosic

Solicitors for the Second Respondent:

Aitken Lawyers

ORDERS

On or before 3 September 2018 the Second Respondents MR SUMMERS and MR DION, Trustees in Bankruptcy of the Applicant MR MORRISON (a bankrupt) are to transfer any interest in the whole of the land in Folio Identifier (omitted) situate at and known as Property N in the State of New South Wales to the First Respondent Wife upon her payment of the sum of $135,500.00 together with interest at the rate…

Grounds of appeal

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

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

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

Consideration

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

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

Continue reading Morrison & Jepson & Anor

Details

AGLC: Morrison & Jepson & Anor [2014] FCCA 1937
Case: [2014] FCCA 1937
Decision Date: 26 August 2014

CaseChat Overview and Summary

This case concerned an application for property settlement brought by the applicant wife against her husband, who was a bankrupt, and his trustees in bankruptcy, the second respondents. The dispute involved a small property pool in Australia, with most of the assets located overseas. A key consideration was the impact of the applicant's bankruptcy on the distribution of assets and the competing interests of the unsecured creditors.

The court was required to determine how to balance the interests of the unsecured creditors of the bankrupt husband with the future needs of the non-bankrupt wife, particularly in relation to her obligation to house and support a child of the marriage under the age of 18. The court also had to consider the effect of any proposed property orders on the ability of a creditor to recover their debt, as mandated by section 75(2)(ha) of the *Family Law Act 1975* (Cth). The question of costs, sought on an indemnity basis, was also before the court.

In its reasoning, the court acknowledged that the interests of unsecured creditors do not automatically take precedence over the claims of a non-bankrupt spouse. Instead, the court must exercise a broad discretion to balance these competing claims. The court ultimately made orders that provided for the wife to acquire the former matrimonial home upon payment of a specified sum to the trustees to satisfy outstanding bankruptcy claims and costs. Alternatively, if payment was not made, the property was to be sold, with proceeds distributed first to cover sale costs, then to the trustees for the bankruptcy claims, and any balance to the wife. The wife was also declared solely entitled to a motor vehicle and personal property in her possession, and she was to indemnify the husband against certain debts.

Orders

Orders of the court

On or before 3 September 2018 the Second Respondents MR SUMMERS and MR DION, Trustees in Bankruptcy of the Applicant MR MORRISON (a bankrupt) are to transfer any interest in the whole of the land in Folio Identifier (omitted) situate at and known as Property N in the State of New South Wales to the First Respondent Wife upon her payment of the sum of $135,500.00 together with interest at the rate prescribed by Rule 22.01 from the date of these Orders to the Second Respondents in payment of their outstanding claims and the Trustees in Bankruptcy’s costs.

Simultaneously with Order (1) above, the Registrar of the Court at Sydney is appointed under the provisions of section 106A of the Family Law Act 1975 to execute all deeds or instruments in the name of the Applicant husband and do all acts and things necessary to give validity and operation to the deeds or instruments.

In the alternative to Order (1) above, if the Applicant Wife is in default of payment within one (1) month from the date specified in Order (1) then the Applicant wife and the Registrar appointed in accordance with Order (2) above are to do al acts and things necessary to sell the property being the whole of the land in Folio Identifier (omitted) being the whole of the land situate at and known as Property N aforesaid by private treaty.

Upon completion of the sale of the property aforesaid situate at and known as Property N, the parties are to do all acts and things necessary to cause the proceeds of the sale to be paid and distributed in the following manner and priority:

(a) In payment of fees due for nomination of the Real Estate Agent, Real Estate Agent’s commission, legal costs and disbursements incurred in relation to the said sale;

(b) Adjustment of rates, if any;

(i) As to the sum of $135,500.00 together with interest at the rate prescribed by Rule 22.01 by way of bank cheque to Aitken Lawyers or their nominee on behalf of the Trustees in Bankruptcy to satisfy the outstanding claims in relation to the bankruptcy of the Applicant Husband; and

(ii) The balance to the First Respondent Wife.

The First Respondent is declared to be solely entitled to the Ford motor vehicle currently in her possession to the exclusion of the other parties.

The Applicant and the First Respondent are otherwise declared to be solely entitled to all personal property possessed by them or registered in their sole name within the Commonwealth of Australia including but not limited to bank accounts, superannuation funds, furniture, furnishings, household appliances, jewellery and all other items of purely personal use and adornment.

The First Respondent is to indemnify and keep indemnified the Applicant in respect of the following debts and liabilities:

(a) Any debt owing by her to the Australian Taxation Office; and

(b) Any debt owing by her to Centrelink; and

If any party seeks an order for costs that party must file and serve an Application in a Case and an affidavit setting out the amount of costs and disbursements claimed and the basis upon which those costs are claimed within one (1) month from the date of this Order.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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