Murillo & Murillo (No 2)
[2022] FedCFamC1F 757
Federal Circuit and Family Court of Australia
(DIVISION 1)
Murillo & Murillo (No 2) [2022] FedCFamC1F 757
File number(s): SYC 3325 of 2017 Judgment of: SCHONELL J Date of judgment: 5 October 2022 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Where the parties were in agreement about the sale of property but were at issue as to who should be involved in the sale – Orders made for independent trustee to be appointed – Where payment of the single expert’s fees remain outstanding – Orders made for the husband to pay the fees within 7 days – Where the second respondent sought a range of documents by way of disclosure – Where the second respondent has not yet filed a Response to Final Orders – No orders for provision of documents made until position of each party and their claims is more clear – Orders made for parties to file Points of Claim in relation to declaratory relief sought by the wife. Division: Division 1 First Instance Number of paragraphs: 24 Date of hearing: 30 September 2022 Place: Sydney Counsel for the Applicant: Mr Todd Solicitor for the Applicant: Mills Oakley Solicitor for the First Respondent: Sarah Bevan Family Lawyers Counsel for the Second Respondent: Mr Lo Schiavo Solicitor for the Second Respondent: Cruz Clowry Law Group ORDERS
SYC 3325 of 2017 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS MURILLO
Applicant
AND: MR MURILLO
First Respondent
MS B
Second Respondent
order made by:
SCHONELL J
DATE OF ORDER:
5 OCTOBER 2022
THE COURT ORDERS THAT:
1.By consent, I make an order in terms of a document described as “Minute of Order” as follows:
1.That within 1 business day of the making of these Orders, the Husband is to sign and return to the Wife’s solicitors the draft joint letter to [Company E] dated 27 September 2022 in relation to payment to the single expert, Ms [C], in the sum of $51,000.
2.The first respondent husband (“the husband”) shall within 7 days pay to F Accounting Firm the sum of $40,160.72. One of the issues at trial shall be whether the applicant wife (“the wife”) shall be required to reimburse the husband for 50% of this amount.
3.The second respondent is to file and serve within 14 days a Response to Application for Final Orders.
4.The wife is to file and serve within 14 days Points of Claim in relation to the declaratory relief she seeks as against the husband and second respondent in relation to the Suburb N property.
5.The husband is to file a Response to the Points of Claim within 14 days together with any cross-claim asserting relief as against the wife and/or the second respondent.
6.The second respondent is to file and serve a Response and any cross-claim identifying the relief she seeks as against the wife and/or the husband within a further 14 days.
7.I direct the parties to submit within 7 days a joint Minute for the sale of the Suburb N property, including a provision for the appointment of an independent trustee for sale.
8.I grant the parties liberty to restore on three days written notice.
9.I dismiss all outstanding interlocutory applications.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Murillo & Murillo has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
These are interlocutory proceedings as between the applicant wife (“the wife”), the first respondent husband (“the husband”) and the second respondent who is a former partner of the husband.
The husband and wife married in 2006 and separated in 2017. On 31 May 2017, the wife commenced proceedings seeking financial and parenting orders.
The parenting aspect of the proceedings was resolved by consent orders made on 16 February 2022. The financial proceedings have now been before the Court for more than five years and, despite hearing dates being allocated and then vacated, the parties are no closer to a resolution.
The involvement of the second respondent arises as a consequence of the acquisition by her of a property at Suburb N (“the [Suburb N] property”) in her sole name for $2,430,000. The funds to acquire that property were provided in part by way of a loan provided by the husband's company as to approximately $700,000 and by way of mortgage advance. In relation to the acquisition of that property, the wife contends as follows in her affidavit filed 28 September 2022:
51.… I only became aware of this property being purchased and held in [Ms B]’s name in or about 2018 after property searches were obtained. I had to issue various subpoenas in May 2018 to ascertain what funds were used in the purchase of the [Suburb N] property.
52. It was not until mid-2018 after documents were produced in accordance with subpoenas I issued that I became aware that [Mr Murillo]’s former solicitor in these proceedings, namely Mr [QQ], also acted on the conveyance for the purchase of the [Suburb N] property and failed to disclose this acquisition to the Court.
53. I contend in these proceedings that the legal title to the [Suburb N] property is held by [Ms B] beneficially for [Mr Murillo], and I seek declaratory relief as such.
The wife contends that there have been various representations made by the husband in relation to the acquisition of the Suburb N property. In that respect, counsel for the wife took the Court to both the husband’s affidavit and representations made by the husband to the single expert Ms RR. In that respect, the husband’s trial affidavit sworn 22 December 2021 contends as follows:
144. The funds to purchase [M Street, Suburb N] were given to [Ms B]. I considered this to be my share of the property pool and I needed to purchase an asset for me, [Ms B], [X], [Z], and [Y] to live in. I did not want to put my name on the Title because I wanted to keep this transaction separate to any dealings I had to resolve with [Ms Murillo]
Likewise, the husband represented to the single expert, Ms RR, as follows:
170. With respect to the recent charges related to the mortgage for his current residence, he said ‘I got charged for fraud. We (he and Ms [B]) bought a house together. I’ve offered my ex-wife two properties’. He said ‘I didn’t want my name on it because [Ms Murillo] would have a claim. My lawyer said draw up a mortgage document to show you’re not stealing’. He reported that Ms [B] was appealing her conviction.
(Family Report dated 7 February 2022)
The relationship between the husband and the second respondent ended in or about February 2022. The second respondent contends that upon separation she moved out of the Suburb N property and is now living in rented accommodation.
The second respondent through her counsel informed the Court that she accepts that she is bound by a loan instrument that was entered into between herself and the husband’s company. In that respect, the husband says the following in his affidavit filed 29 September 2022:
12. [Ms B] and I purchased a property situated at [M Street, Suburb N] (“[Suburb N] Property”) in 2017 and this was placed in [Ms B]’s sole name. We both lived in her property and raised our child [X] there. In order to purchase the property [V Pty Ltd]'s loaned the sum of $709, 160 to [Ms B] from the business. A caveat was placed against the property and [Ms B] was made aware that it would only be removed once the business was repaid.
…
20. In the Mortgage document dated 9 December 2017, the amount of the loan to [Ms B] by the new [V Pty Ltd] is stated to be $709,160 with the date of the loan being 17 July 2017. The terms annexed to the Mortgage also state that both the date of repayment and first instalment of interest on the loan, is not due until 16 July 2021. [Ms B] has not repaid this loan. [Ms B] was employed by [V Pty Ltd] and earned an income through the business. At the time of the pandemic, I ceased paying [Ms B] as deposed in my previous affidavit’s filed in this Court.
In her Case Outline, her counsel contends the following on her behalf in relation to the Suburb N property:
33. It is the Second Respondent’s contention that she will ultimately be entitled to some portion of the sale proceeds of the [Suburb N] property. It is therefore plainly in her interest to obtain the highest sale price possible.
Before me, the interlocutory issues as between the parties can be reduced to the following:
(1)All parties are in agreement as to a sale of the Suburb N property. As between the husband and the wife, they are in agreement that all parties should be involved in the sale, that the Minute of Order as proposed by the wife’s counsel is a proper provision for sale of the property, and that the proceeds of sale, after discharge of the secured mortgage to the Westpac Banking Corporation, be initially held in the trust account of the second respondent’s solicitors but thereafter invested in an interest-bearing deposit account. The second respondent is opposed to the other parties being involved in the sale but is otherwise agreeable as to the mechanism for sale and investment of the proceeds.
(2)Approximately $40,000 is required to be paid to a single expert, Ms C, who is undertaking a valuation and tracing exercise. The single expert’s report is necessary to enable the matter to proceed to a final hearing and it would appear to be each party’s contention that it may well provide the basis for the parties to be able to reach a resolution. There is an issue as to how the payment of approximately $40,000 is to be made to the single expert. The wife contends that it should be paid by the husband or alternatively from the proceeds of sale of the Suburb N property. The husband says it should be met from the proceeds of sale of the Suburb N property. The second respondent is opposed to the proceeds being used for such a purpose.
(3)The provision of documents to the second respondent so as to enable her, it is said on her behalf, to understand the issues in the proceedings.
The Sale of the Suburb N Property
In relation to the Suburb N property, the parties are in agreement that the property should be sold and how the proceeds of sale should be invested. The parties are at issue as between the second respondent and the husband and wife as to the involvement of the husband and wife in the sale. The husband and wife say that they should be involved in the sale as they have equitable interests that are at play. The second respondent contends that she is the legal owner of the property and that it is in her interest to maximise the sale. She makes reference to various contentions advanced by the wife in an affidavit sworn 13 May 2020 of a high degree of animosity and bitterness directed to the second respondent. It is certainly the case that there are some florid statements made by the wife. The second respondent essentially contends that it is unrealistic to expect the parties to work cooperatively given the degree of bitterness and distrust.
I am of the view that binding the husband, wife and the second respondent to act collaboratively to sell the Suburb N property is more likely than not to be a disaster. It has the potential to lead to conflict and in circumstances where the parties are in joint agreement about the sale, then it seems to me that a pragmatic solution needs to be brought to bear. Accordingly, I propose to appoint an independent trustee to act on the sale, with such independent trustee to keep all three parties informed as to the progress of the sale and with the balance of the proceeds of sale of the property to be invested by the solicitor on behalf of the second respondent in an interest-bearing deposit account in the names of all three parties to wait a final determination in the proceedings.
There is agreement that the orders proposed by the wife’s counsel set out in his Case Outline are appropriate to effect a sale. Accordingly, I will direct the parties to submit a Minute of Order incorporating such orders as to a sale and the investment of the proceeds, including a provision for appointment of an independent trustee.
Payment of the Single Expert’s Fees
There remains approximately $40,000 owing to the single expert, Ms C. The wife proposed that the husband meet the payment from his own resources or alternatively it was proposed as between the husband’s and wife’s representatives that these funds be paid from the proceeds of sale of the Suburb N property. The second respondent is opposed to that course in circumstances whereby she contends that she has had nothing to do with the appointment of the single expert and that the investigations undertaken by the single expert have been arranged as between the husband and wife. Her counsel, however, frankly conceded that a payment from the Suburb N bank account would not imperil in any way her final relief to some part of the Suburb N proceeds.
I am, however, of the view that the quicker the parties have access to the single expert’s report the better and consequentially, the more likely they will be to reach some final resolution to the proceedings. Further, it is likely that the parties may propose questions to the single expert, which will require answers. It is not apparent to me why it should be the case that the single expert should await payment until the sale of the Suburb N property, as appeared to be suggested by the husband’s solicitor.
I note that the husband’s solicitor identified that the husband has to date paid approximately $262,000 in legal fees, the source of such payment having been made by the husband from his wages and salary drawn from various companies that he controls. One of those companies is ‘[V Pty Ltd]’ of which the husband is the sole director and shareholder. The husband’s solicitor confirmed to the Court that the husband conceded that V Pty Ltd is the husband’s alter-ego. The most recent evidence before the Court as to the financial position of V Pty Ltd is contained in Annexure E to the wife’s affidavit, which identifies that the net assets of the company as at 30 June 2021 are approximately $489,663 in negative. In large part, that negative liability arises as a consequence of a significant loan account owed to the husband of in excess of $1,250,000.
Enquiries made with the husband’s solicitor indicated that the company currently has approximately $242,000 cash at bank. He further indicated that the current loan owing to the husband remains in excess of $1,250,000.
In those circumstances, it appears that the husband’s loan account is recoverable to at least $750,000, having regard to the 2021 figures. I propose in those circumstances to order that the husband within 7 days make a payment to the single expert of the balance required to pay her account, with such monies to be drawn by the husband from V Pty Ltd in reduction of his loan account. The wife’s contribution of 50% of that sum will be an issue at trial.
Documents Sought by the Second Respondent
The second respondent was joined to the proceedings in April 2021. She has, until recently, taken no part whatsoever in the proceedings and to date remains in default of her obligations to file a Response to the Application for Final Orders. Upon enquiries made with her counsel, it was indicated that she could file a Response within 14 days.
The broad sweep of documents that she seeks extends well beyond what could possibly be required at this stage. Thus, for example, it is unclear as to why she would need superannuation statements, credit card statements and correspondence between the husband and wife and the single expert.
I do not propose to make any orders in relation to the provision of documents until the position in respect of the claims as between the wife, husband and second respondent are clearer.
In circumstances where the wife is seeking declaratory relief as against the husband and second respondents, then it appears to me that Points of Claim should be filed. Enquiries with each of the parties representatives revealed that the wife can file a Points of Claim within 14 days and the husband and second respondent can respond within a further 14 days each. The question of the provision of further documents can await completion of that process when the Court and the parties will be in a better position to know the various assertions made by each party as against the other.
I propose, therefore, to dismiss the second respondent’s Application seeking such documents without prejudice to her right to file a further application should that be necessary. If that is the case, one hopes a more carefully targeted request will be made.
I propose to make orders to give effect to my reasons as referred to above.
I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 5 October 2022
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