FAMILY COURT OF AUSTRALIA
| PATRICE & PATRICE AND ORS | [2009] FamCA 669 |
| FAMILY LAW – PROPERTY – Distribution of property – whether distributions by one party as “alter ego” of a trust is money owed by that party or by the trust (in either legal or equitable terms) – effective distinction of different business valuations conducted on either a “net assets” basis or “maintainable earnings” basis – effect of “maintainable earnings” basis valuation was to render certain transactions outside of the property pool. FAMILY LAW – PROPERTY – ADD‑BACKS – whether legal fees of either party should be added‑back – distinction drawn between treatment of husband and wife’s legal fees because of the sources of funding relating to those fees – whether tax debts of one party should be included as liability where evidence about tax debts not established by evidence. FAMILY LAW – EVIDENCE – where attempts by one party to value wine collection thwarted by other party through effective sale process – inclusion of whatever proceeds already obtained or to be obtained in the future to be distributed according to relevant proportional distribution of property |
| Family Law Act 1975 (Cth) ss 75(2), 90AC, 90AD, 90AE(1)(c), 90AE(2)(b) |
| IABH & HRBH [2006] FamCA 379 Chorn & Hopkins [2005] FamCA 864 Clives & Clives (2008) FLC 93-385 Farnell & Farnell (1996) FLC 92-681 Pastern & Pastern [2007] FamCA 620 Pierce & Pierce (1999) FLC 92-844 Rosati & Rosati (1998) FLC 92-804 Steinbrenner & Steinbrenner [2008] FamCAFC 193 Townsend & Townsend (1995) FLC 92-569 TWN & PAQ [2005] FamCA 677 Williams & Williams [2007] FamCA 313 |
| APPLICANT: | Mr Patrice |
| RESPONDENT: | Ms Patrice |
| SECOND RESPONDENT: | T Pty Ltd |
| THIRD RESPONDENT | K Pty Ltd |
| FILE NUMBER: | CAC | 1076 | of | 2008 |
| DATE DELIVERED: | 20 May 2009 |
| PLACE DELIVERED: | Canberra |
| PLACE HEARD: | Canberra |
| JUDGMENT OF: | Faulks DCJ |
| HEARING DATES: | 11 – 14 May 2009 10 June 2009 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Maurice |
| SOLICITOR FOR THE APPLICANT: | Mr Moore |
| COUNSEL FOR THE RESPONDENTS: | Mr Farrar |
| SOLICITOR FOR THE RESPONDENTS: | Ms Keenan |
Orders
That the Husband and the Second Respondent do all acts and things and sign all necessary documents to cause to be transferred to the Third Respondent, in its capacity as Trustee of the K Family Trust, all of the plant and equipment, fittings and fixtures currently owned by the Second Respondent in its capacity as Trustee of the Patrice Family Trust.
The Third Respondent indemnify and keep indemnified the Husband, the Second Respondent, and the Patrice Family Trust, against all and any liability howsoever existing or arising with respect to:
a.Commonwealth Bank loan account number …1400;
b.Commonwealth Bank loan account number …1304;
c.Commonwealth Bank loan account number …3929;
d.Any debt incurred by the Third Respondent in operating the business known as K Business.
The Husband assign to the Wife any debt owed by the Third Respondent to the Husband and the Wife. IT IS DECLARED THAT there is no debt owed by the Husband and the Second Respondent to…
Keep reading for free
Create a free CaseChat account to read Patrice & Patrice and Ors and more:
- Read every judgment in full
- Ask AI and get answers linked to paragraphs
- See how each paragraph was cited in later cases
- Download judgments as PDF or Word
One click creates your free account or signs you in.
By continuing you agree to the Terms and Privacy Policy.
- Case
- [2009] FamCA 669
- Decision Date
CaseChat Overview and Summary
The primary legal issues before the Court included whether distributions made by one party, acting as the "alter ego" of a trust, constituted a debt owed by that party or by the trust itself, both legally and equitably. The Court was also required to consider the effect of different business valuation methods, specifically distinguishing between a "net assets" basis and a "maintainable earnings" basis, and how these valuations impacted the property pool. Further issues concerned the add-back of legal fees incurred by the parties, with a distinction drawn based on the source of funding for those fees, and the inclusion of tax debts as a liability where the evidence was not sufficiently established. The Court also addressed the valuation and distribution of a wine collection, where one party's attempts to value it were thwarted by the other's sale process.
The Court's reasoning involved carefully distinguishing between the legal and equitable ownership of assets, particularly in the context of trusts and business operations. It applied principles relating to the add-back of legal costs, considering the necessity and source of funds for those expenses. The Court also addressed the valuation of assets, noting that a "maintainable earnings" valuation could effectively remove certain transactions from the property pool. Regarding the wine collection, the Court ordered that the proceeds already obtained and any future proceeds be included in the property distribution, reflecting the impact of the sale process on its valuation. The Court's final orders detailed a comprehensive plan for the division of property, including the transfer of assets, the sale and division of proceeds from a jointly owned property, and the allocation of debts and liabilities. Specific provisions were made for the transfer of various assets, including a motor vehicle, domain name, and the division of household goods and chattels through a mediation and subsequent selection process. The orders also addressed the relinquishment of appointor roles in family trusts and clarified the sole ownership of various assets for each party, subject to the orders made.
Orders
Orders of the court
1.
That the Husband and the Second Respondent do all acts and things and sign all necessary documents to cause to be transferred to the Third Respondent, in its capacity as Trustee of the K Family Trust, all of the plant and equipment, fittings and fixtures currently owned by the Second Respondent in its capacity as Trustee of the Patrice Family Trust.
2.
The Third Respondent indemnify and keep indemnified the Husband, the Second Respondent, and the Patrice Family Trust, against all and any liability howsoever existing or arising with respect to:
a. Commonwealth Bank loan account number …1400;
b. Commonwealth Bank loan account number …1304;
c. Commonwealth Bank loan account number …3929;
d. Any debt incurred by the Third Respondent in operating the business known as K Business.
3.
The Husband assign to the Wife any debt owed by the Third Respondent to the Husband and the Wife. IT IS DECLARED THAT there is no debt owed by the Husband and the Second Respondent to the Third Respondent.
The H property, ACT
4.
The Husband and the Wife forthwith do all acts and things necessary to undertake a tender process with respect to the property known as H property, ACT being Section … in Deposited Plan … (“the [H] property.”)
5.
That for the purposes of the tender process the following shall apply:
a. Within 21 days after the date of these orders on a date and at a time agreed between the parties or in default of agreement on the 21st day after these orders (“the date of the tender”), at 10:00 am the parties shall attend at the office of Farrar Gesini & Dunn for the purposes of tendering for the purchase of the H property.
b. The only bidders will be the Husband and the Wife.
c. The solicitors for each of the parties are to be present at the Tender.
d. The Husband and Wife shall remain in separate rooms.
e. The Husband’s solicitor and the Wife’s solicitor shall procure written bids from their respective clients and provide them to the other party’s solicitor. The bids shall state the gross value of the property for the purpose of the calculation of the amount that the highest bidder will pay to the other party to acquire the interest of that party in the property pursuant to these orders.
f. Each party may only make a total of five bids. The parties shall take it in turns to make their first four bids, with the Wife to have the first bid. Each bid shall be signed by the party making it. Bids shall be in increments of not less than $1,000. Each party shall make their fifth bid simultaneously.
g. Any bid must be made to the other party within 10 minutes of a prior bid being received. If no bid is made within 10 minutes then the highest bidder at that time is the purchaser for the purposes of these orders.
h. Whoever makes the highest bid shall purchase the interest of the other party in the H property based on the amount of the highest bid (“the price”) and shall be “the Purchaser.” The other party shall be the “Seller.”
i. In the event that the party who successfully bids for the H property does not complete the purchase in accordance with these orders within 90 days after the date of the Tender (“the defaulting party”) and that failure to complete is not due to the failure of the other party to comply with any provision of these orders, the other party shall have the option to acquire the H property based on a gross value of $1,240,000 and shall become “the Purchaser.” The defaulting party shall pay any costs incurred by the other party as a result of their failure to complete.
j. On the Due Date, which shall be a date not later than 90 days of the date of the Tender (“the Due Date”):
i. the Seller shall do all things necessary to transfer to the Purchaser (at the expense of the Purchaser) all of their interest in the H property, and to that end will sign, execute and deliver up to the Purchaser, or their solicitor, a Memorandum of Transfer to give effect to this order.
ii. The Purchaser shall do all things necessary to cause to be repaid all debts outstanding with respect to housing loan account number …5009 secured by mortgage over the H property and discharge mortgage registered number …. The Seller will sign any discharge of mortgage documents necessary to enable the discharge of the mortgage within seven days of being requested to do so.
iii. In the event that the Purchaser is the husband the following provisions shall apply:
A. The Husband shall pay to the Wife 42.5 per cent of the difference between the price and the amount outstanding on Commonwealth Bank of Australia Housing Loan Account Number …5009;
B. If the rates are in credit in relation to the H property, the Husband shall pay to the Wife such amount as equals the unexpired credit.
C. If the rates are in arrears, the amount payable under order 5(j)(iii)(A) will be reduced by those arrears up to the date of payment.
D. The Wife will vacate the H property within 14 days of the Due Date.
E. If the Husband has settled the sale of any of the properties (other than the H property) identified in the Consolidate List of Assets and Liabilities in the Judgment, of which title is in his name (“the investment properties”) within 12 months of the date of these orders, each of the parties will either pay to, or receive from, the other in accordance with the proportions as found in the Judgment in this matter (namely the Husband 57.5 per cent and the Wife 42.5 per cent), such amount as is calculated in accordance with the following formula:
o The difference between the values found in the Judgment for the investment properties and the actual sale price, being the price realised after the reasonable costs of sale (which includes agent’s commissions and lawyer’s fees for conveyancing, if any). IT IS NOTED THAT the effect of this order is that if after sale expenses a property sells for more than the value in the Judgment, the Husband will be liable to pay to the Wife 42.5 per cent of that increased value. If after sale expenses a property sells for less than the value in the Judgment, the Wife will be liable to pay to the Husband 42.5 per cent of that decreased value.
o Any money due to the Wife under the previous paragraph will be paid to her at the time of settlement of the sale from the sale proceeds.
o If the Husband receives a taxation assessment in respect of the financial year or years in which the sale of the properties referred to above are settled and have consequently incurred a net liability for Capital Gains Taxation (after offsetting any capital losses) in respect of the investment properties, the Wife will, within 30 days of notification in writing of that assessment, pay to the Husband 42.5 per cent of such liability. IT IS NOTED THAT the intent of this order is that the Wife will be liable for 42.5 per cent of the Husband’s increased tax liability by reason of the Capital Gains incurred consequent upon the sale of any of the invested properties. The Husband will provide documentation to the Wife evidencing the Capital Gains Taxation assessment for each of the sold investment properties.
iv. In the event that the Purchaser is the Wife:
A. The Wife shall pay to the Husband 57.5 per cent of the net equity of the H property.
B. The Husband will do all things necessary so that by the Due Date the property is not security for any debt other than the mortgage over the H property, and the debts referred to in orders 2(a), 2(b) and 2(c).
C. Any amount payable by the Husband to the Wife under order 7(b)(i) will be deducted from the moneys payable by the Wife to the Husband under this order.
k. That from the date of the payment, the Purchaser indemnify the Seller against all rates, land tax (if any), and other outgoings with respect to the H property.
l. That until the Due Date:
i. The Wife have the sole right to occupy the H property.
ii. The Wife pay the loan instalments that fall due with respect to the Housing Loan Account Number …5009, and any instalments that fall due with respect to house insurance rates and land tax (if any) with respect to the H property.
iii. Neither party shall mortgage, encumber or otherwise offer the H property as security.
6.
a. In the event that the successful bidder defaults, and the other party does not acquire the property pursuant to these orders, then the parties shall do all things necessary to cause the property to be sold. They have liberty to apply in relation to the manner, terms and conditions of the sale.
b. The Husband and Wife do all things necessary to cause the proceeds of the sale of the H property to be distributed as follows:
i. To pay all costs commissions and expenses of the sale.
ii. To pay the usual rates adjustments.
iii. To pay the amount required to repay the Housing Loan Account Number …5009, to discharge the Mortgage.
iv. To pay the balance as to 42.5 per cent to the Wife and 57.5 per cent to the Husband.
7.
a. In this order, the “Payment Date” is the Due Date under order 5(j) of these orders.
b. On the Payment Date:
i. The Husband pay to the Wife the sum of $461,678, less the sum of $86,346 being money due by the Third Respondent to the Husband for the 2008 trust distribution of the K Trust.
ii. The Wife do all things necessary to cause the discharge of any mortgage on the title of any real estate registered solely in the name of the Husband (“the Husband’s property”), which is security for the debts referred to in orders 2(a), 2(b) and 2(c) (“the loans.”) Nothing in this order shall render the Wife liable for any debt secured by mortgage over the Husband’s property in excess of the amounts due on the loans (“the excess”). The Husband shall indemnify the Wife with respect to the excess.
iii. If the Wife fails to comply with order 7(b)(ii) above then:
A. The moneys due under Order 7(b)(i) above shall be paid towards the amount outstanding on the loans.
B. The Wife do all tings necessary to sell Unit 30, C, ACT (“the Wife’s [C] property”) and cause the net proceeds of the sale of the Wife’s C property to be paid towards the loans.
C. The Payment Date provided in Order 7(a) is postponed to the date of settlement of the sale of the Wife’s C property.
D. Any balance outstanding on the loans after the payments referred to in order 7(b)(iii)(A), 7(b)(iii)(B) and 7(b)(iii)(C) above shall be recoverable by the husband from the Wife and Third Respondent or either of them by way of enforcement proceedings, and any amount recovered will be paid off the remaining balance of the loans.
c. In the event that the Husband fails to pay all moneys due under this order by the Payment Date and his failure is not due to the failure of the Wife to comply with a provision of these orders, then:
i. Interest shall accrue on the amount outstanding at the rate prescribed by section 117B of the Family Law Act 1975 (Cth), and Rule 17.03 of the Family Law Rules 2004.
ii. The Wife shall have liberty to seek orders for enforcement of payment, including orders for costs.
8.
a. The Husband transfer to the Wife the whole of his interest in the contents of Commonwealth Bank account number …7868 being the rental bond security deposit for the premises occupied by K Business, and to that end within seven days he do all things necessary to cause the balance in that account to be paid into an account nominated by the wife.
b. Thereafter the Wife indemnify the Husband against liability for, and keep him indemnified against liability for, any liability howsoever existing or arising out of the lease of the premises occupied by the K business.
c. Within 28 days the Wife provide to the Husband:
i. A release of any guarantee that he and/or the Second Respondent have given to the landlord of the premises.
ii. A release of any guarantee that he and/or the Second Respondent have given to the Commonwealth Bank of Australia for the rent or bond provided by the Commonwealth Bank of Australia as security for the lease.
9.
Within 7 days of the date of these orders the Husband and the Second Respondent do all acts and things to transfer to the First Respondent:
a. Ownership of the ACT motor vehicle number plate ... “[K].”
b. All rights owned by them with respect to the domain name or URL www…., including any password, register key or other information necessary to enable her to control and operate that domain name.
The wine
10.
a. The Husband provide to the Wife, within 14 days, a list of all bottles of … (“the wine”) removed by him at separation, such list to show the vintage and other particulars necessary to identify the wine.
b. The Husband cause to be sold all bottles of the wine which he removed from the family home after separation.
c. The Husband provide to the Wife copies of documents evidencing the sale of the wine to date and pay to her within seven days an amount equal to 42.5 per cent of the proceeds of those sales that he had received.
d. The Husband provide to the Wife within seven days documents evidencing the balance of the wine which is yet to be sold or which has been sold but the proceeds of which the Husband has not received.
e. Upon the receipt of the balance of the proceeds of the sale of the balance of the wine the Husband provide to the Wife documentary evidence of the amount received for the sale and pay to her with seven days of receipt of the proceeds of those sales an amount equal to 42.5 per cent of those proceeds.
Division of goods and chattels
11.
a. Within 21 days of the date of these orders the parties shall do all things necessary to attend a mediation for the purposes of, and make a bona fide effort to agree upon, the division of the goods, chattels and furniture in their respective possession
b. In the event that the parties do not reach agreement at Mediation then each party shall prepare two lists of all of the goods, chattels and furniture in their possession with each list to be approximately equal as to the value of their content.
c. Each party shall then provide a copy of their lists to the other party.
d. Within 7 days of provision of the lists each party shall allow the other party to attend at their respective residences for no longer than 2 hours for the purposes of verifying the contents of the list.
e. Each party shall then choose one of the lists provided to them to be the list of items which that party shall keep.
f. The parties shall do all things necessary to make available for collection by the other within 14 days the goods, chattels and furniture contained in the list which the other party has chosen.
g. The list of items shall not include their respective clothing and shoes, children’s clothing and shoes, children’s furniture, parties’ personal effects, crockery, cutlery, linen, jewellery, food, groceries, perishable items, books, alcoholic drinks, stationery, toys, games and puzzles.
12.
Pursuant to the provisions of clause 7.2 of the Deed of Settlement made 27 September 2005 under which the K Family Trust was created (which deed is Annexure F to the affidavit of the wife on 1 May 2009 in these proceedings), the Husband forthwith sign all documents and do all things necessary to relinquish his position as appointor of the K Family Trust, and cause that notice to be delivered to the Wife’s solicitor.
13.
Pursuant to the provisions of clause 7.2 of the Deed of Settlement made 27 September 2005 under which the Patrice Family Trust was created (which deed is Annexure G to the affidavit of the wife on 1 May 2009 in these proceedings), the wife forthwith sign all documents and do all things necessary to relinquish her position as appointor of the Patrice Family Trust, and cause that notice to be delivered to the Husband’s solicitor.
14.
Subject to these orders, as against the Husband, the Wife is declared to be the sole owner of:
a. Any money in any account in her name with any bank or other financial institution.
b. All benefits accrued or to accrue to her pursuant to her membership of any scheme or fund providing superannuation benefits.
c. Any property transferred to her pursuant to these orders.
d. The assets of the K Family Trust.
e. Any interest in real estate registered in her sole name.
f. Any other chose-in-action or property of whatsoever nature in her possession or ownership.
15.
Subject to these orders, as against the Wife, the Husband is declared to be the sole owner of:
a. Any money in any account in his name with any bank or other financial institution.
b. The Holden HSV Senator motor vehicle registration …
c. All benefits accrued or to accrue to him pursuant to his membership of any scheme or fund providing superannuation benefits.
d. Any property transferred to him pursuant to these orders.
e. The assets of the Patrice Family Trust (other than those transferred to the wife or the Third Respondent pursuant to these orders).
f. Any interest in real estate registered in his sole name.
g. Any other chose-in-action or property of whatsoever nature in his possession or ownership.
16.
If either party refuses, fails or neglects to execute any document necessary to put these orders into effect within 14 days of being requested to do so by the other party, and any such refusal, failure or neglect is proven by affidavits filed and served by or on behalf of the party alleging this, the Registrar of the Family Court of Australia at Canberra be and is hereby appointed pursuant to section 106A of the Family Law Act 1975 (Cth) to execute such document in the name of such party.
17.
The parties have liberty to apply in relation to the implementation of these orders.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
Full text does not contain this section.