Pfenning and Snow (No 2)

[2016] FamCA 177

FAMILY COURT OF AUSTRALIA

PFENNING & SNOW (NO 2) [2016] FamCA 177

FAMILY LAW – PROPERTY – where reasons for judgment as to final property adjustment delivered – where parties were given an opportunity to agree on precise form of orders to give effect to reasons for judgment – where parties agreed as to form of all but one of the orders to be made – where the wife sought an order the husband pay to her 45 per cent of rental income from a property pending its sale – where the husband opposed the order – where no application to re-open evidence was brought by the wife – where it was concluded that the disputed order could not be characterised as an order giving effect to the reasons for judgment – where orders were otherwise made in accordance with draft orders.

Family Law Act 1975 (Cth)

APPLICANT: Ms S Pfenning

RESPONDENT: Mr Snow

FILE NUMBER: BRC 8784 of 2013

DATE DELIVERED: 17 March 2016

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Kent J

HEARING DATE: 17 March 2016

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Barry.Nilsson.Lawyers

SOLICITOR FOR THE RESPONDENT: Phillips Family Law

Orders

IT IS ORDERED:

1. That for the purposes of these Orders:

Definitions

1.1“the Husband” means Mr Snow;

1.2“the Wife” means Ms Pfenning;

1.3“the parties” means the Husband and Wife;

1.4“Pfenning-Snow Pty Limited” means the company called Pfenning-Snow Pty Limited, ACN …;

1.5“Snow F Town Pty Ltd” means the company called Snow F Town Pty Ltd, ACN …;

1.6“the PS Trust” means the discretionary trust established pursuant to a deed of trust between Malcolm Scott Menzies as settlor and Snow F Town Pty Ltd as trustees dated 9 November 2012;

1.7“the Mr Snow Superannuation Fund” means the self-managed super fund established pursuant to a Superannuation Fund Trust Deed with Mr Snow and Mr Z Snow named as trustees dated 29 February 2012;

1.8“the I Street property” means the property owned by the parties at  I Street, J Town;

1.9“the H Street property” means the property owned by the Wife and Ms D Pfenning at H Street, L Town;

1.10“the G Street property” means the property owned by the Wife, Ms D Pfenning and Mr LL Pfenning at G Street, K Town;

1.11“Q Street” means the property at Q Street, J Town;

1.12“the Suburb C property” means the property at 1 and 2 B Street, Suburb C;

1.13“the N Town property” means the property at M Street, N Town;

1.14“the P Town property” means the property at O Street, P Town;

1.15“the Husband’s bank accounts” means the funds held in the following bank accounts as at the date of these Orders:

1.15.1            NAB Account ….

1.16“the Husband’s shares” means all shares held in the Husband’s personal name;

1.17    “the Wife’s shares” means all shares held in the Wife’s personal name; 

1.18    “the parties’ shares” means the parties share-portfolio namely:

1.18.1            71 Wesfarmers shares;

1.18.2            2,000 David Jones Limited shares;

1.18.3            827 Westpac shares; and

1.18.4            977 Treasury Wine Estate shares.

1.19“the joint bank accounts” means the funds held in the following bank accounts as at the date of these Orders:

1.19.1            NAB account …; and

1.19.2            Macquarie Bank account ...

1.20“the Wife’s bank accounts” means the funds held in the following bank accounts as at the date of these Orders:

1.20.1            NAB account …; and

1.20.2            NAB account ….

1.21“the Wife’s superannuation” means the Wife’s superannuation entitlement with One Path superannuation fund and Colonial First State superannuation fund;

1.22“the Husband’s property” means the property of the Husband (including the assets, liabilities and superannuation entitlements) referred to in Orders 14.5, 20.2, 22 and 23; and

1.23“the Wife’s property” means the property of the Wife including assets, liabilities, and superannuation entitlements referred to in Orders 2, 4, 20.1, 24 and 25.

Transfer of the I Street Property

1. That within thirty (30) days of the date of these Orders:

   2.1The Husband transfer to the Wife all of the Husband’s right, title and interest in the I Street property; and

   2.2The Husband transfer to the Wife all of his right, title and interest (if any) in and to the insurance policy in respect of the I Street property.

2. That the Wife shall be responsible for the costs and preparation of the documents for the Husband’s signature pursuant to Order 2 herein.

First Payment to Wife

1. That within thirty (30) days from the date of these Orders the Husband pay to the Wife a sum of $500,000 to a bank account nominated by the Wife.

Sale of Joint Shares

1. That within thirty (30) days from the date of these Orders the parties cause the parties’ joint shares to be sold. 

2. That upon the sale of the joint shares, the Husband shall instruct his accountant Mr X of MM Accountants, Suburb HH to calculate any tax payable taking into account any capital gain/loss arising from the sale of the shares and upon the calculations being completed those calculations shall be provided to the Wife’s accountant, Ms Y of NN Pty Ltd.

3. In the event that the Husband and Wife’s accountants are unable to agree upon the calculations pursuant to Orders 6 herein, the parties shall jointly instruct Mr OO of PP accountants to undertake the calculation and shall share those costs equally. 

4. That the joint share sale proceeds (less any sale costs) shall be distributed in the following manner and priority:

   8.1payment of such sums calculated pursuant to Order 6 or 7 herein to be paid to the Husband and Wife to be applied and included in their tax returns for such specified year; and

   8.2      the balance be paid 45 per cent to the Wife and 55 per cent to the Husband.

Joint Bank Accounts

1. That within thirty (30) days of the date of these Orders, the parties do all acts and things and sign all documents as necessary to withdraw and distribute any balance funds 45 per cent to the Wife and 55 per cent to the Husband and forthwith thereafter effect a closure of the joint bank accounts.

Sale of the Suburb C property

1. That within thirty (30) days of the date of these Orders the Husband shall do all acts and things and sign all necessary documents to cause Pfenning-Snow Pty Limited to cause the Suburb C property to be sold and for that purpose the following shall apply:

   10.1the property shall be listed for sale by private treaty on an expressions of interest basis with QQ Real Estate, Brisbane or with such real estate agent as is agreed between the parties in writing and failing agreement within fourteen (14) days from the date of these Orders the real estate agent will be as nominated by the then president of the Real Estate Institute in Queensland at the request of the parties or either of them;

   10.2that the Wife shall be included in any and all correspondence exchanged between the real estate agent referred to in Order 10.1 and this Order shall act as sufficient authority to the agent for such purpose;

   10.3that the Wife be at liberty to contact the real estate agent to discuss the sale of the Suburb C property and the Husband is to forthwith and irrevocably authorise and direct the real estate agent to provide any and all information to the wife in respect of the sale;

   10.4the parties are to co-operate in every way with the real estate agent in relation to the marketing of the property for sale;

   10.5the Husband shall cause Pfenning-Snow Pty Limited to pay the estate agent any sums requested for advertising or auction expenses;

   10.6the sale price of the property shall be not less than $6,000,000 (excluding GST) or such amount as is agreed between the parties in writing; and

   10.7the contract of sale shall provide for completion within thirty (30) days after the date of the contract or any other time period as agreed by the parties in writing.

2. In the event that the property is not sold by private treaty pursuant to the preceding Order on or before six (6) months from the date of listing then the Husband shall do all acts and things and sign all necessary documents to cause Pfenning-Snow Pty Limited to sell  the property by auction and the following shall apply:

   11.1the property shall be listed with any agent as agreed by the parties in writing and failing agreement with the agent appointed under the preceding Order (“the auctioneer”) for sale by auction within a further two (2) months;

   11.2that the Wife shall be included in any and all correspondence exchanged between the real estate agent referred to in Order 11.1 and this Order shall act as sufficient authority to the agent for such purpose;

   11.3that the Wife be at liberty to contact the real estate agent to discuss the sale of the Suburb C property and the Husband is to forthwith and irrevocably authorise and direct the real estate agent to provide any and all information to the Wife in respect of the sale;

   11.4the reserve price of the property shall be such amount as is agreed between the parties in writing and failing agreement the parties are to do all such acts and things to engage RR Valuers or such valuer as agreed in writing between the parties, to value the Suburb C property and such valuation will then constitute the reserve price;

   11.5the Husband shall cause Pfenning-Snow Pty Limited to pay the auctioneer any sums requested for advertising or auction expenses;

   11.6the parties agree to co-operate in every way with the auctioneer in relation to the sale by auction; and

   11.7the sale price of the property shall be any amount in excess of the reserve price, but in the event of the reserve price not being reached the sale price of the property shall be such amount as is agreed between the parties in writing.

3. In the event that the property is not sold at the auction pursuant to the preceding Order or within fourteen (14) days after the date of the auction by further negotiation, then the Husband shall cause a further auction of the property to be held within four (4) months after the date of the first auction and for that purpose the sub-provisions of the previous Order shall apply in relation to the sale except that the reserve price of the property shall be such amount as is agreed between the parties in writing and failing agreement being reached between the parties seven (7) days prior to the auction, then the reserve price shall be nominated by the auctioneer.

4. That pending the sale of the Suburb C property the Husband:

   13.1shall do all things and sign all documents necessary to cause Pfenning-Snow Pty Limited to maintain the Suburb C property in good order and condition and meet all expenses of and in relation to the Suburb C property as and when same fall due; and

   13.2shall be and hereby restrained from causing or permitting any dealing in respect of the Suburb C property other than in accordance with these Orders, including but not limited to transfer or encumbrance of all or any interest in the same.

5. That the proceeds of sale of the Suburb C property shall be paid in the following manner and priority:

   14.1any statutory rates, charges and outgoings payable in respect of the property;

   14.2payment of the agent’s commission and advertising or other expenses, if any, payable on the sale;

   14.3    payment of the legal costs and outlays relating to the sale;

   14.4    payment to the Wife in accordance with Order 21 herein; and

   14.5    payment of the balance as the Husband solely may direct.

Calculation of tax on sale of Suburb C Property

1. Upon Pfenning-Snow Pty Limited entering into an unconditional contract for the sale of the Suburb C property, the Husband shall instruct his accountant Mr X of MM Accountants, Suburb HH to calculate:

   15.1the tax payable by Pfenning-Snow Pty Limited consequent upon the sale of the Suburb C property in the year of the contract of sale taking into account both any capital gain/loss arising and any capital or other losses properly available to Pfenning-Snow Pty Limited in respect of any taxation payable; and

   15.2the tax payable by the Husband on any dividend to be paid by Pfenning-Snow Pty Limited such taxation be limited to that amount necessary to effect payment to the Wife of the amount determined to be payable in accordance with Order 18 herein and after taking into account all available franking credits, and all credits, losses and other property available offsets available to the Husband in respect of his taxation liability in that year.

2. Upon the calculations pursuant to Order 15 being completed, the Husband shall provide those calculations to the solicitors of the Wife for review and certification by the Wife’s accountant, Ms Y of NN Pty Ltd.

3. In the event that the Husband’s accountant and Wife’s accountant are unable to agree upon the calculations pursuant to Orders 15 and 16 herein, the parties shall jointly instruct Mr OO of PP accountants to undertake the calculation and shall share those costs equally. 

4. Contemporaneously with the settlement of the sale of the Suburb C property and upon receipt by Pfenning-Snow Pty Limited of the proceeds of sale of the Suburb C property, the Husband shall cause Pfenning-Snow Pty Limited to declare a fully franked dividend in not less than such amount as is necessary to effect payment to the Wife in accordance with Order 21. 

Distribution of proceeds of sale of Suburb C Property and overall property division

1. Contemporaneously with the settlement of the sale of the Suburb C property and the declaration of the dividend pursuant to Order 18, the Husband pay to the Wife a lump sum (“second payment to the Wife”) to be determined in accordance with Orders 20 and 21 to achieve an overall property division to the Wife of 45 per cent and to the Husband of 55 per cent.

2. That for the purpose of paragraph 19 of these Orders, the following assets, liabilities and superannuation are in the possession of each party:

   20.1    Wife  ($)

20.1.1	I Street property	2,150,000.00
20.1.2	H Street property	1,050,000.00
20.1.3	G Street property	134,000.00
20.1.4	Wife's bank accounts	53,086.00
20.1.5	Wife's shares	5,030.00
20.1.6	Motor Vehicle 3	20,000.00
20.1.7	Wife's paid legal fees	95,763.00
20.1.8	Wife's superannuation interests	264,205.00
20.1.9	Wife's credit card	(6,010.00)
20.1.10	TOTAL	$3,766,074.00

20.2    Husband  ($)

20.2.1	Q Street, J Town	920,000.00
20.2.2	PFENNING-SNOW PTY LIMITED
20.2.2.1	Loan to PS Trust	2,404,009.00
20.2.2.2	The N Town Property	2,100,000.00
20.2.2.3	The P Town Property	1,400,000.00
20.2.2.4	NAB Account …	229,174.00
20.2.2.5	Motor Vehicle 1	66,500.00
20.2.2.6	Motor Vehicle 2	34,000.00
20.2.2.7	Tools	Nominal
20.2.2.8	Trailer	750.00
20.2.2.9	Future Income Tax benefit	99,267.00
20.2.2.10	GST payable	-16,278.00
20.2.2.11	PAYG instalments	-29,281.00
20.2.2.12	Taxation	-60,428.00
20.2.2.13	Amounts withheld from salary and wages	-7,800.00
20.2.2.14	Land Tax	-41,922.00
20.2.3	PS Trust	979,271.00
20.2.4	Husband's bank accounts	7,650.00
20.2.5	Husband's shares	35,123.00
20.2.6	Furniture - Husband	10,000.00
20.2.7	Husband's tax refund	7,644.00
20.2.8	Legal fees paid (Husband)	280,530.00
20.2.9	Mr Snow Superannuation	1,071,008.00
20.2.10	Loan Q Street property	-682,750.00
20.2.11	Credit card Husband	-2,040.00
20.2.12	TOTAL	$8,804,427.00

1. That the second payment to the Wife is to be determined as follows:

   21.1    property of the Wife   $3,766,074

   Plus

   21.2    property of the Husband  $8,804,427

   Plus

   21.3    gross sale price of Suburb C property exclusive of GST

   Less

   21.4costs of sale of the Suburb C property paid in accordance with Order 14.1, 14.2 and 14.3:

   Less

   21.5taxation determined to be payable in accordance with Order 15.1, and then taking 45 per cent of the total at this point of the calculation pursuant to 15.1 and deducting:

   21.6    property of the wife   $3,766,074

   and

   21.7    payment to the Wife in accordance with Order 4             $   500,000

   to determine the minimum dividend to be paid pursuant to Order 18 and from which is to be deducted:

   21.845 per cent of the taxation determined to be payable on the minimum dividend amount in accordance with Order 15.2

   to determine the amount of the second payment to the Wife. 

Husband to Retain

1. That except as otherwise provided for in these Orders, the Husband retain as his property absolutely, and the Wife relinquish and transfer to the Husband all right, title and interest, if any, in and to the following:

   22.1    The Husband’s bank accounts;

   22.2    The Husband’s shares;

   22.3    Q Street;

   22.4    the Husband’s interest in Pfenning-Snow Pty Limited; 

   22.5    the Husband’s interest in the PS Trust;

   22.6    the Husband’s interest in Snow F Town Pty Ltd;

   22.7the Husband’s superannuation entitlement in the Mr Snow Superannuation Fund; and

   22.8    the furniture and effects in his possession.

2. That the Husband retain sole responsibility and liability for and indemnify the Wife against the Husband’s credit cards and NAB loan 15-007-1912 in the Husband’s name. 

Wife to Retain

1. That except as otherwise provided for in these Orders, the Wife retain as her property absolutely, and the Husband relinquish and transfer to the Wife all right, title and interest, if any, in and to the following:

   24.1    the Wife’s bank accounts;

   24.2    the Wife’s shares;

   24.3    the Wife’s interest in the H Street property;

   24.4    the Wife’s interest in the G Street property;

   24.5    the Wife’s beneficial interest in the Pfenning Family Trust;

   24.6    the Wife’s superannuation with One Path and Colonial; and

   24.7    the furniture and effects in her possession. 

2. That the Wife retain sole responsibility and liability for and indemnify the Husband against:

   25.1    the Wife’s credit cards; and

   25.2any liability associated with the H Street property and G Street property.

The PS Trust

1. That within thirty (30) days from the date of these Orders, and at the sole expense of the Husband, the Husband and Wife shall sign all documents (including but not limited to a Deed of variation amending the Trust Deed for the PS Trust) and do all acts necessary (whether in their personal capacity or in his capacity as trustee, director, shareholder, or other office holder) so that:

   26.1the Wife irrevocably surrenders and renounces any and all of her beneficial interest, whether contingent or otherwise, or to capital or income of the PS Trust;

   26.2the Wife irrevocably relinquishes, surrenders and abandons any interest of claim to or right to be considered for a distribution of the capital or income in the trust, whether as specified, discretionary, default or other beneficiary of the PS Trust; and

   26.3the parties cause the respective trustees of the PS Trust to acknowledge that subsequent to the Wife’s surrender and relinquishment in accordance with Order 26.1, no further sums, whether of income or capital may be paid, applied or set aside for the Wife’s benefit.

2. That the Husband in his personal capacity and/or his capacity as director of the trustee company Snow F Town Pty Ltd:

   27.1cause the release of the Wife from all personal covenants and/or obligations and/or guarantees, if any, pertaining to Snow F Town Pty Ltd and/or Snow F Town Pty Ltd as trustee for the PS Trust; and

   27.2indemnify the Wife and keep her indemnified in respect of any and all liability arising in relation to Snow F Town Pty Ltd and Snow F Town Pty Ltd as trustee for the PS Trust whenever and howsoever arising.

Pfenning-Snow Pty Limited

1. That the Husband in his personal capacity and/or his capacity as director of Pfenning-Snow Pty Limited shall:

   28.1fully release the Wife from all personal covenants and/or obligations and/or guarantees, if any, pertaining to Pfenning-Snow Pty Limited; and

   28.2indemnify the Wife and keep her indemnified in respect of any and all liability arising in relation to Pfenning Snow Pty Limited whether and howsoever arising.

Declaration

1. That unless otherwise specified in these Orders:

   29.1each party is solely entitled (to the exclusion of the other) to the legal and beneficial ownership of all items of property including money, motor vehicles, insurances, equities, superannuation entitlements and personal effects in the possession or contact of each of them respectively as at that date of these Orders and to which they may each be or become entitled;

   29.2    each party be solely liable for and indemnify the other against:

   29.2.1any liability encumbering any item of property to which that party is entitled to pursuant to these Orders; and

   29.2.2any liability whatsoever in the name of that party whether past, present or future.

   29.3Any joint tenancy in any real or personal estate is hereby expressly severed.

Procedural

1. That the parties have liberty to apply to the Family Court of Australia at Brisbane in respect of matters relating to enforcement or interpretation of these Orders upon giving seven (7) days’ notice in writing to the other party.

2. That the parties do all acts necessary including signing all necessary documents so as to give full force and effect to the provision of these Orders and in the event that either party refuses or neglects to comply with the provision of these Orders within fourteen (14) days of a written request to do so by the other party, then a Registrar of the Family Court of Australia hereby be appointed pursuant to section 106A of the Family Law Act 1975 (Cth), to execute all documents in the name of that party and to do all acts and things necessary to give validity and operation to these Orders.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Pfenning & Snow (No 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 8784 of 2013

Ms S Pfenning

Applicant

And

Mr Snow

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. On 27 January 2016, I delivered Reasons for Judgment in respect of the parties’ competing applications for final property adjustment orders pursuant to s 79 of the Family Law Act 1975 (Cth). Those Reasons are necessarily incorporated into these Reasons and are to be read with these Reasons.

2. As is explained in the Reasons for Judgment of 27 January 2016, orders were made for the parties to have an opportunity to agree upon the precise form of orders to be made to give effect to those Reasons for Judgment or, failing such agreement, for the orders to be determined by the Court at a further hearing for that purpose.

3. In the event the parties have reached agreement on the form of orders to be made to give effect to the Reasons for Judgment delivered on 27 January 2016, on all issues, save in one respect.  This hearing takes place to afford the parties the opportunity to make submissions in respect of their sole area of disagreement as to the form of orders. 

4. The Reasons for Judgment record the Court’s determination that orders are to be made for a commercial property, referred to in these proceedings for convenience as “the Suburb C property”, owned by the husband’s company, Pfenning-Snow Pty Limited, to be sold.

5. Admitted and marked as Exhibit 1 on this hearing is the form of orders provided jointly by the parties; and admitted and marked Exhibit 2 on this hearing is a jointly authored and counter-signed letter dated 8 March 2016 from the parties’ respective solicitors. 

6. As can be seen from those respective documents, proposed order 29 in the form of orders document, Exhibit 1, is in dispute; and the correspondence, Exhibit 2, outlines each party’s position with respect to order 29.  Those positions are supplemented now by written submissions that have been provided on this hearing on behalf of each party.

7. Proposed order 29 is in these terms, under the heading Rental Income:

   29.That pending the sale of the Suburb C property, the husband shall pay to the wife on a monthly basis (in arrears) to an account nominated by the wife a sum which is equivalent to 45 per cent of the net rental income of the Suburb C property.

8. In summary, it is the wife’s position that proposed order 29 ought be made whilst the husband opposes that order being made, essentially on the contention that proposed order 29 “is not consistent with” the Reasons for Judgment. 

9. It is agitated on behalf of the husband that there is no and has been no application to re-open the evidence.  The wife contends that the order ought be made, notwithstanding the acknowledgement in the correspondence referred to in Exhibit 2, that the Reasons for Judgment delivered on 27 January 2016 are “silent” as to the question of any rental income.

10. It is submitted on behalf of the wife that the proper characterisation of the Reasons for Judgment delivered on 27 January 2016, give rise to an equitable interest of the wife in respect of the Suburb C property.  I do not accept that submission.  The orders provided for a payment of a sum of money to the wife, albeit it was necessary for orders to be made for the Suburb C property to be sold to achieve liquid funds to enable the payment to be made.  Nothing in the Reasons, nor in any orders made today, suggests that there was to be any transfer of any interest in the Suburb C property per se, a property owned by the company Pfenning-Snow Pty Limited.

11. The Reasons for Judgment delivered on 27 January 2016 reflect the parties’ competing contentions at trial in the event that the Court determined, as has occurred, that property is to be sold to effect property settlement. 

12. As can be seen from those Reasons, that was a prospect plain to the parties depending upon the Court’s determination as to the extent of the wife’s entitlement.  The wife’s contentions, as recorded in the Reasons for Judgment, did not include any contention or argument to the effect that the wife ought receive rental income from any property pending its sale.  That explains why, as it seems to me, as it is expressed on behalf of the wife, that the Reasons for Judgment are silent on that issue.

13. The wife did contend that she ought receive interest on her determined entitlement, however that contention is dealt with in the Reasons for Judgment. 

14. As it seems to me, there was thus no issue joined in the trial as to the wife receiving rental income from the Suburb C property pending its sale, that is, the husband did not address that issue in the trial as it was not an issue raised or agitated by the wife, notwithstanding the prospects I have referred to as to the prospective need for the sale of property, including the Suburb C property being that identified by the husband in his evidence at trial as the first property he would propose to sell in order to fund property settlement.

15. There has never been any application to re-open the evidence (since the trial); and I am not persuaded that the disputed order 29 can, in the circumstances, be characterised as an order which gives effect to the Reasons for Judgment delivered on 27 January 2016. 

16. For these Reasons, I decline to make the proposed order 29 but otherwise propose to make orders in terms of the draft orders submitted as contained in Exhibit 1 on this hearing.

I certify that the preceding sixteen (16) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Kent delivered on 17 March 2016.

Associate: 

Date:  21 March 2016