Owen & Owen
[2021] FedCFamC1F 60
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Owen & Owen [2021] FedCFamC1F 60
File number(s): CAC 1752 2016 Judgment of: GILL J Date of judgment: 16 September 2021 Catchwords: FAMILY LAW – PROPERTY – Stay and injunction pending determination of s 79A proceedings – Risk to and preservation of the subject matter of the dispute Legislation: Family Law Act 1975 (Cth) s 79A
Real Property Act 1900 (NSW) ss 40, 41
Division: Division 1 First Instance Number of paragraphs: 24 Date of hearing: 14 September 2021 Place: Canberra Counsel for the Applicant: Mr Batey Solicitor for the Applicant: Frank Law Solicitor for the Respondents: Self-representing Solicitor for the Respondents: Self-representing ORDERS
CAC 1752 2016 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS OWEN
Applicant
AND: MR OWEN
First Respondent
MS A OWEN
Second Respondent
ORDER MADE BY:
GILL J
DATE OF ORDER:
16 SEPTEMBER 2021
THE COURT ORDERS THAT:
1.Save insofar as the orders made on 14 September 2021 reflect the interim relief pursued by the Applicant, the Applicant’s interim application as contained in her Amended Application for Interim and Final Orders filed 25 January 2021 and as amended by her Outline of Case document filed 14 September 2021 are dismissed.
2.The proceedings are adjourned to the Judicial Registrar’s list for the making of trial directions on a date to be notified.
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 Owen & Owen has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
GILL J
These proceedings concern the appropriate interim arrangements pending the hearing of the applicant wife’s s 79A claim, being a claim instituted following the parties having entered into consent terms in February 2019 for the resolution of their property dispute. Following the resolution of their property dispute, the first respondent husband has taken enforcement steps as against the wife, being steps toward the sale of a property at H Town, on the basis that the wife did not secure his release from liability in respect of that property.
The issues in play in these interim proceedings concern preventing the sale of that property (the sale being a step that the husband has indicated he does not desire to see occur) and the restraint of any net proceeds of sale of a property at G Town, on the basis that the wife is not adequately protected against a potential land tax liability.
MATERIAL RELIED UPON
The applicant wife relied upon:
(a)Amended Application for Final and Interim Orders filed 25 January 2021;
(b)Affidavits of the applicant filed 9 September 2021 and 13 September 2021; and
(c)Indexed tender bundle O.
The respondent husband relied upon:
(a)Affidavit of the Respondent of 9 September 2021; and
(b)Tender bundle.
The second respondent filed no material, but opposed the relief sought by the wife in respect of the G Town property.
The contested matters
The first issue, in respect of the H Town property, has been the subject of orders made at the hearing of this matter on 14 September 2021, wherein the orders relating to the sale of that property were stayed pending further order. I indicated that reasons would be given for those orders.
The sale mechanism contained in the original consent orders was designed to protect the husband from liability in respect of borrowings secured against the H Town property, a property to be retained by the wife under the orders. He indicated that he does not desire the sale of the property. The wife adduced evidence strongly persuasive (but not as yet tested) that not only has the husband been removed as a guarantor (a step that he concedes has occurred) of the borrowings in respect of the property, but that he has also been removed from the loan account (a step that he does not concede has occurred).
Pending the resolution of the s 79A claim by the wife, which in part appears based on the proposition that the husband’s non-compliance with orders had caused the delayed compliance by the wife, the continued liability of the property for sale is strongly to the prejudice of the wife. The staying of the sale mechanisms does not appear to place the husband at any significant risk, and accords with the ultimate outcome that he represents he seeks, being that the property not be the subject of sale.
Under those circumstances, whilst it is not, on an interim basis, appropriate to discharge the sale mechanism orders as sought by the wife, particularly prior to the ultimate proof of the matters that she contends for, it is appropriate that the sale mechanisms be stayed in order to preserve the subject matter of the litigation pending resolution of the substantive claim.
The second issue concerns the G Town property, which does not feature directly in the impugned orders, but is impacted by the orders in relation to the wife’s withdrawal from, and indemnification in relation to, a corporate trustee, K Pty Ltd and the P Family Trust, the trustee being the title holder of the G Town property.
The G Town property is, apparently, to be sold. No party seeks to restrain the sale. The contest is as to whether there should be a restraint in respect of the net proceeds of sale.
The wife sought an injunction to restrain the first and second respondents from distributing the proceeds of their proposed sale of the G Town property to the second respondent. This was said to be justified in order to ameliorate the risk that the wife might become liable for payment of land tax in respect of the G Town property as a previous director of K Pty Ltd.
Against such a risk, the wife is, pursuant to the orders, indemnified by the second respondent in relation to such a liability. Further, the husband asserts that there is no land tax liability to be protected from.
Although the husband has provided a certificate from the State Revenue Office, certifying there is no outstanding land tax, the wife asserts there still remains an outstanding risk, both of land tax, and of the liability falling upon her for the following reasons:
(a)The certificate guarantees that the purchaser of the property will not accrue liability for outstanding land tax but does not guarantee that the seller will have no liability for land tax;
(b)Although in 2012 the parties obtained a ruling from the Office of State Revenue NSW that they would not accrue land tax in respect of the G Town property, this was on the basis that they had each been granted a life interest in that property;
(c)Although a deed granted such a life interest, the interest was never placed on the land titles register and the wife asserts was therefore ineffective; and
(d)If the granting of the life interest was ineffective, then an issue remains as to whether the ruling previously granted applies.
Accordingly, to ensure she is not left with liability as a previous director of the entity that holds formal title for the G Town property, she seeks that funds from the sale be protected pending the assessment of any land tax and correspondence be sent to the commissioner to obtain a ruling.
As to the second of these aspects, the husband has consented to such correspondence being sent and orders have been made accordingly. Correspondence seeking such a ruling will shortly be sent to the Commissioner.
Against the wife’s contentions, the husband says that the certificate evidences that there is no outstanding land tax, which is a result consistent with the ruling they obtained in 2012. He asserts that the deed was sufficient to create the life estate, and that registration was not a necessary step to grant such estate to the parties. Accordingly, he says there can be no liability for any land tax.
The wife’s pursuit of the injunction is conceded by her to be reliant on the risk that she faces in respect of land tax, being the risk contingent upon the applicability of the previous ruling, which on her case, is potentially undermined by the lack of registration.
The provision dealing with the registration is s 41 of the Real Property Act 1900 (NSW). The effect of the Real Property Act appears to be that registration will give the protections set out at s 40 of that Act, including the conclusive proof of title before a court.
It is far from clear that a lack of registration undermines the land tax ruling based upon the life interests.
While that is not a matter to be conclusively determined at this stage, it leaves the position that the Office of State Revenue has not identified that there is a land tax liability and has represented, both by virtue of the certificate protecting purchasers, and by virtue of the private ruling, that there is not. Further, it has not been established that if a land tax liability was to accrue that the indemnity provided by the second respondent would be insufficient protection.
Under those circumstances, whilst a theoretical risk has been identified, it is not of a magnitude to warrant the restraints pursued by the wife, and the balance of convenience does not favour the granting of the application.
The wife’s application for restraints of the proceeds of sale of the G Town property will be dismissed.
The matter will otherwise be listed before the Judicial Registrar to enable direction to be made to progress the matter to trial.
I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Gill. Associate:
Dated: 16 September 2021
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