Paul & Shaw
[2022] FedCFamC1F 593
Federal Circuit and Family Court of Australia
(DIVISION 1)
Paul & Shaw [2022] FedCFamC1F 593
File number(s): WOC 1103 of 2016 Judgment of: CHRISTIE J Date of judgment: 17 August 2022 Catchwords: FAMILY LAW – PROPERTY – where final orders were made – where the wife seeks a s 106B relief – where there are no proceedings under the Act - application dismissed Legislation: Sections 79, 79A, 106B Family Law Act 1975 (Cth)
Rule 10.13(1)(h) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
Division: Division 1 First Instance Number of paragraphs: 28 Date of hearing: 10 August 2022 Place: Sydney Solicitor for the Applicant: Mr Oliveri, Oliveri Lawyers First Respondent: Litigant in person Second Respondent: Litigant in person Third Respondent: Did not participate ORDERS
WOC 1103 of 2016 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS PAUL
Applicant
AND: MR SHAW
First Respondent
B PTY LTD
Second Respondent
C TRUST
Third Respondent
order made by:
CHRISTIE J
DATE OF ORDER:
17 AUGUST 2022
THE COURT ORDERS THAT:
1.Order 1 of the orders dated 4 August 2022 is discharged.
2.The Amended Application filed 3 August 2022 is dismissed.
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 Paul & Shaw has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CHRISTIE J:
This is an application by Ms Paul (“the wife”) for orders as against Mr Shaw (“the husband”) personally and in his capacity as director for B Pty Ltd (“the trustee company”) and third parties namely the Trustees of the C Trust (“the purchaser”).
The wife is seeking an order that a contract of sale entered into by the husband as director of the trustee company which is trustee of his self-managed superannuation fund (“SMSF”) for sale of real property be set aside. For the reasons which follow the application will be dismissed.
Background
On 6 April 2022 the Court made final property orders by consent resolving all outstanding property issues then before the Court between the husband, the wife and Mr D, the husband’s uncle (“the final orders”) following three days of hearing. Those orders were amended on 7 April 2022 pursuant to r 10.13(1)(h) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”).
The final orders related to property settlement and were focused around four main assets:
(1)F Street, G Town (a property which at all times has been held in the names of the husband’s parents);
(2)Second property at F Street, G Town (a property purchased by the husband during the parties marriage);
(3)A property (or the right to farm property) inherited by the wife in Country H; and
(4)J Street, Sydney (an apartment owned by the husband’s SMSF).
On 30 November 2012, the husband established a SMSF styled B Superannuation Fund (“the SMSF”). That year the trustee purchased a property at J Street, Sydney. The property was purchased with the use of a mortgage. The parties agreed at the final hearing before me (via the joint balance sheet) that the current value of that property was $1,200,000 and subject to a mortgage in the sum of $263,000.
The final orders provide, in part, that:
4. That within three months from the date of these orders, the husband take all necessary and reasonable steps to prepare and file the [B Superannuation Fund] financial statements, annual accounts, and tax returns with the Australian Tax Office (“ATO”) for the following financial years (if not already completed and filed):
a. Financial Year 2017/2018;
b. Financial Year 2018/2019;
c. Financial Year 2019/2020; and
d. Financial Year 2020/202.
5. Concurrent with Order 4, the Trustee of the [B Superannuation Fund] place the Super Property on the market for sale by public auction with a reserve not less than market price. If the Super Property passes in or fails to sell at public auction then the Super Property is to be sold by private treaty. In the event the Super Property is to be sold by private treaty, then the Trustee of the [B Superannuation Fund] is to nominate three real estate agents and to provide those details to the wife. The wife must nominate and communicate one of those real estate agents for sale by private treaty within 14 days to the Trustee of the [B Superannuation Fund].
6. The Trustee is to appoint the wife’s nominated selling agent within seven days from the date of nomination. The Trustee is at liberty to retain a solicitor and/or conveyancer for the sale Super Property. Within seven days of appointing the selling agent provide copies of all agency agreements between the Trustee and the selling agent and copy of the retainer between the Trustee and solicitor and/or conveyancer to the wife. The Trustee shall provide the wife with copies of all contracts for sale of land in respect of the Super Property and provide all details relating to the public auction or sale by private treaty to the wife.
7. Upon settlement of the Super Property, the proceeds of sale of the Super Property be distributed in the following manner and priority:
a. Discharge of the mortgage secured on title to [K Bank];
b. Payment of conveyancing fees and real estate agents fees including auction fees;
c. Payment of council, water and sewerage; and
d. Any other associated selling costs or property charges including strata.
(“Super Property Proceeds of Sale”).
8. The balance of the proceeds of sale to remain in the Trustee’s solicitor or conveyancer’s Trust Account pending the outcome of any and all tax liabilities for the relevant financial 4 years or penalties imposed by the ATO on the [B Superannuation Fund] as and when determined by the ATO.
9. The Wife is to be provided with copy of the Settlement Sheet for the sale of the Super Property within seven days of settlement and the husband is to direct and authorise the Trustee (through its solicitor or conveyancer) to advise the wife of the Super Property Proceeds of Sale.
10. That any tax liabilities and penalties be paid to the ATO from the Super Property Proceeds of Sale as and when notice is provided to the Trustee.
11. To give effect to Order 10, the Trustee of the [B Superannuation Fund] do all acts and things reasonably necessary to direct and authorise Trustee’s solicitor or conveyancer to pay the tax liabilities and penalties for the [B Superannuation Fund] to the ATO within 30 days of receiving notice from the ATO.
12. Upon payment or discharge of the [B Superannuation Fund] tax liabilities for the relevant financial years and any penalties, the balance of the Super Property Proceeds of Sale to be held in the trust account of the Trustee’s solicitor or conveyancer (“Balance of the Proceeds of Sale”).
13. Paragraphs 13 - 18 of these orders are binding on the Trustee of the [B Superannuation Fund].
14. That, in accordance with s 90XT(1)(b) of the Family Law Act 1975 (Cth) (“the Act”):
a. The wife is entitled to be paid the specified percentage out of the husband’s interest in the [B Superannuation Fund];
b. The husband’s entitlement in the [B Superannuation Fund] is correspondingly reduced by force of this order; and
c. The percentage specified for the purposes of this order is 45% of the Balance of the Proceeds of Sale.
15. That within 30 days of making payment of tax liabilities and penalties by the [B Superannuation Fund] to the ATO the Trustee of the fund shall do all such acts and things and sign all such documents as may be necessary to:
a. Calculate, in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001 the entitlement awarded to the wife in the immediately preceding clause of this orders; and
b. Pay the entitlement whenever the trustee makes a splittable payment from the Husband’s interest in the [B Superannuation Fund].
16. That this order has effect from the operative time and the operative time is 30 days from the date of payment of tax liabilities and penalties by the [B Superannuation Fund] being paid to the ATO.
17. That, after service of the payment split notice in accordance with the Superannuation Industry (Supervision) Regulations 1994 (“SIS Regulations”) the wife shall do all such acts and things and sign all such documents as may be necessary, including but not limited to exercising the Wife’s request in accordance with the regulations for the transfer or rollover of the non-member spouse’s interest in the Husband’s name in the [B Superannuation Fund].
18. That each party shall do all things necessary including providing all consents to give effect to these Orders in the time periods prescribed in these Orders, as time is of the essence.
19. Leave to the Wife’s solicitors to serve a sealed copy of these Orders upon the Trustee of the [B Superannuation Fund] and the solicitor or conveyancer who will act on the sale of the Super Property.
As is evident the orders provided for a superannuation splitting order after the sale of an asset owned by the SMSF.
The wife says the sale was not in accordance with the orders and should be set aside pursuant to section 106B of the Family Law Act 1975 (Cth) (“the Act”).
The husband opposes the making of an order under s 106B of the Act or at all.
I was told that the sale of the property owned by the SMSF was due to settle on approximately 20 August 2022 being six weeks after the auction and exchange.
The purchaser was served at the registered address of the trustee company who is the corporate trustee of the purchaser.
The documents relied upon by the wife are:
(a)An Amended Application in a proceeding filed 3 August 2022; and
(b)An affidavit of Ms Paul filed 28 July 2022.
The husband did not file any evidence.
The third respondent did not appear.
I heard submissions on behalf of the wife and the husband made brief oral submissions.
The law
The wife filed an application on 28 July 2022– this was amended on 3 August 2022. In both documents the wife sought as her primary relief an order under s106B of the Act.
Section 106B provides:
(1)In proceedings under this Act, the court may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or in the interest of, a party, which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.
…
(2)The court may order that any money or real or personal property dealt with by any instrument or disposition referred to in subsection (1), (1A) or (1B) may be taken in execution or charged with the payment of such sums for costs or maintenance as the court directs, or that the proceeds of a sale must be paid into court to abide its order.
(3)The court must have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser or other person interested.
…
(4A) In addition to the powers the court has under this section, the court may also do any or all of the things listed in subsection 80(1) or 90SS(1).
As is plain from the statute, s 106B is not a provision which operates in isolation from other proceedings under the Act. It acts utilised in aid of the existing proceedings.
consideration
On 9 July 2022 contracts were exchanged following auction, providing for the sale of the SMSF real property at a contract price of $890,000. It is this transaction that the wife seeks to set aside.
The wife did not argue, but it may be inferred that the wife submitted, that it was open to the Court to use s 106B in aid of enforcement (or contravention) proceedings since it is submitted by the wife that the husband has not complied with the final orders.
The wife did not file an application for enforcement or contravention.
I am satisfied the wife sought to bring to the attention of the purchaser the fact that there was an application before the Court which sought orders which, if made, purported to effect the interests of that third party. The court documents were served on the registered address of the company. As I do not intend to grant the application, the fact that the third party did not appear is of less significance.
The wife asserted that the husband had failed to comply with the terms of the final orders which required him to place the SMSF real estate on the market for sale by auction at the “market price”. By the time the matter was heard the husband’s agent had confirmed that the property was indeed auctioned and provided the names of the registered bidders and I did not understand the wife to be maintaining the complaint that the property had not been auctioned. If I am wrong about that, for the reasons that follow, that will not affect the outcome.
The wife contended that the husband had not sold the property for market price as required by the orders. The term “market price” appeared in the orders. The wife’s case before me was that “market price” referred to the parties’ agreement as to the value of the property adopted in the Joint Balance Sheet for the purpose of the trial. In the alternative, it was argued regard should also be had to the price attached to the property by an online bank estimate as to value or a real property estimate range provided by an internet site “Domain”. The difficulty with that approach is that in the absence of a definition in the final orders as to the “market price” then the ordinary meaning of the expression is the price that the market is willing to pay – in this case at a public auction.
While it is understandable that the wife is aggrieved that the property did not sell for the amount that the parties expected, that does not give rise to an application to set aside the transaction, in particular as against a third party to the marriage who is a bona fide purchaser.
However, more fundamentally, the wife cannot use s 106B of the Act to set aside a transaction absent proceedings, as much is clear by the opening words of the section “In proceedings under the Act…”.
The wife’s application pursuant to s 79 of the Act is completed by the making of the final orders. The wife has not filed an application under s 79A (not should this observation be taken as an indication that such an application can or should be contemplate by her). The wife’s complaint as articulated by her solicitor is that she has received less by way of superannuation split because the property sold for less than anticipated. This is an unfortunate but not uncommon experience. If the wife was in a position to demonstrate through admissible evidence that the husband had through malfeasance received less than the parties’ entitlements on the sale of the SMSF asset, then she may have a remedy against him but it would not necessitate the setting aside of the transaction.
Accordingly, the wife’s application is dismissed.
I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Christie. Associate:
Dated: 17 August 2022
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