Phillips & Nicholson (No 3)
[2025] FedCFamC1F 340
•22 May 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Phillips & Nicholson (No 3) [2025] FedCFamC1F 340
File number(s): SYC 5997 of 2023 Judgment of: CHRISTIE J Date of judgment: 22 May 2025 Catchwords: FAMILY LAW – PROPERTY – Interim hearing – Application for sale of investment properties– Where Applicant is meeting the shortfall on the properties – Where both parties do not seek to retain the properties – Where respondent opposes interim orders for sale due to the possibility that his final relief should he amend may be to retain one of the sold properties –– order made for the all investment properties to be sold at auction. Division: Division 1 First Instance Number of paragraphs: 20 Date of hearing: 7 May 2025 Place: Sydney Senior Counsel for the Applicant: P. Cummings Counsel for the Applicant: M. Weightman Solicitor for the Applicant: Barkus Doolan Winning Senior Counsel for the Respondent: E. Cox Counsel for the Respondent: J. Tabbernor Solicitor for the Respondent: Long Saad Woodbridge Lawyers ORDERS
SYC 5997 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR NICHOLSON
Applicant
AND: MR PHILLIPS
Respondent
ORDER MADE BY:
CHRISTIE J
DATE OF ORDER:
22 MAY 2025
THE COURT ORDERS THAT:
1.Within 7 days of the date of these Orders the parties do all things and sign all documents necessary to open a controlled monies account (Joint Investment Account) and the parties are restrained from operating on this account other than as provided for in these Orders, or as agreed between them in writing.
Suburb K Property
2.The Applicant shall forthwith do all acts and things and sign all documents necessary to sell the property known as and located at J Street, Suburb K (“the Suburb K property”) in a manner as agreed between the parties and failing agreement within 14 days as follows:
(a)the Applicant shall instruct such lawyer as the parties jointly agree upon to have the conduct of the sale of the Suburb K property or, in the absence of agreement reached within 28 days of the date of these Orders, the Applicant will propose three conveyancing lawyers from which the First Respondent will select one within further 7 days ("the lawyer"), the costs of and incidental to such appointment to be borne equally between the parties as and when they fall due;
(b)the Applicant shall instruct such real estate agent as they agree upon to have the conduct of the sale, and in default of agreement within 28 days of the date of these Orders, the Applicant will propose three real estate agents from which the First Respondent will select one within a further 7 days ("the agent"), the costs of and incidental to such appointment to be borne equally as and when they fall due;
(c)the Applicant shall do all acts and things and sign all documents necessary to list the Suburb K property for sale by public auction within 35 days of the date of appointment of the agent or such longer period as is agreed between the parties;
(d)the reserve price for the purpose of such auction shall be such price as the parties agree upon in writing or, in the absence of agreement reached within 28 days of the date of these Orders shall be $1,200,000;
(e)the Applicant shall co-operate in every way with the agent including (without limiting the generality of the foregoing):
(i)making the key available to the agent;
(ii)allowing inspection of the Suburb K property at all reasonable times requested by the agent including liaising with the tenants of the Suburb K property as may be requested;
(iii)doing or saying nothing to hinder or prevent a sale being effected;
(iv)ensuring the Suburb K property including the grounds are in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and
(v)signing all documents requested by the agent in relation to the listing for sale of the Suburb K property except a contract or agreement for sale which has not been authorised by the lawyer;
(f)in the event the bidding at the auction does not reach the reserve price such of the parties as are present at the auction may negotiate with the highest bidders or any other interested person and effect a sale of the Suburb K property at a price which is not more than 5% below the reserve price, or at such other price as the parties agree upon in writing;
(g)in the event the Suburb K property is not sold at the public auction the parties shall do all acts and things and sign all documents necessary so as to list the Suburb K property for sale by private treaty with the agent;
(h)the sale price at which the Suburb K property shall be listed shall be such price as the parties agree upon in writing or, in the absence of agreement reached within 7 days from the date of the auction shall be the price nominated by the agent;
(i)if the Suburb K property remains unsold 6 weeks from the date of being listed for sale by private treaty, the parties shall do all acts and things and sign all documents necessary to continue to relist the Suburb K property for sale by public auction again at three monthly intervals, and the provisions of Orders 2(e) and 2(f) above shall apply successively until the Suburb K property has been sold so that at each successive auction the reserve price shall be 5% less than the reserve price at the immediately preceding auction unless otherwise agreed by the parties in writing;
(j)The Applicant shall authorise the agent and the Solicitor engaged to act on the sale to liaise with the First Respondent and all instructions in relation to the sale of the Suburb K property shall be provided by the parties jointly and in writing.
3.At settlement of the sale of the Suburb K property the gross proceeds of sale shall be applied in the following manner:
(a)to meet the costs and expenses of sale;
(b)in payment of all amounts required to pay all municipal water and council rates fees outstanding with respect to the Suburb K property;
(c)to discharge of the mortgage secured on the Suburb K property (if any);
(d)to pay the balance then remaining into a controlled monies account in the name of both parties (“the joint investment account”).
Suburb M Property
4.That the parties shall forthwith do all acts and things and sign all documents necessary to sell the property known as L Street, Suburb M ("the Suburb M property"), in a manner as agreed between the parties and, failing agreement, within 14 days of the date of these Orders, as follows:
(a)the parties shall instruct such lawyer as they agree upon to have the conduct of the sale of the Suburb M property on behalf of both parties or, in the absence of agreement reached within 28 days of the date of these Orders, the First Respondent will propose three conveyancing lawyers from which the Applicant will select one within further 7 days ("the lawyer"), the costs of and incidental to such appointment to be borne by the parties equally as and when they fall due;
(b)the parties shall instruct such real estate agent as they agree upon to have the conduct of the sale on behalf of both parties, and in default of agreement within 28 days of the date of these Orders, the Applicant will propose three real estate agents from which the First Respondent will select one within a further 7 days ("the agent"), the costs of and incidental to such appointment to be borne by the Applicant as and when they fall due;
(c)the parties shall do all acts and things and sign all documents necessary to list the Suburb M property for sale by public auction within 35 days of the date of appointment of the agent or such longer period as is agreed between the parties;
(d)the reserve price for the purpose of such auction shall be such price as the parties agree upon in writing or, in the absence of agreement reached within 28 days of the date of the Applicant's default shall be $6,000,000;
(e)the parties shall cooperate in every way with the agent including (without limiting the generality of the foregoing):
(i)making the key available to the agent;
(ii)allowing inspection of the Suburb M property at all reasonable times requested by the agent including liaising with the tenants of the Suburb M property as may be requested;
(iii)doing or saying nothing to hinder or prevent a sale being effected;
(iv)ensuring the Suburb M property including the grounds are in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and
(v)signing all documents requested by the agent in relation to the listing for sale of the Suburb M property except a contract or agreement for sale which has not been authorised by the lawyer;
(f)in the event the bidding at the auction does not reach the reserve price such of the parties as are present at the auction may negotiate with the highest bidders or any other interested person and effect a sale of the Suburb M property at a price which is not more than 5% below the reserve price, or at such other price as the parties agree upon in writing;
(g)in the event the Suburb M property is not sold at the public auction the parties shall do all acts and things and sign all documents necessary so as to list the Suburb M property for sale by private treaty with the agent;
(h)the sale price at which the Suburb M property shall be listed shall be such price as the parties agree upon in writing or, in the absence of agreement reached within 7 days from the date of the auction shall be the price nominated by the agent;
(i)if the Suburb M property remains unsold 6 weeks from the date of being listed for sale by private treaty, the parties shall do all acts and things and sign all documents necessary to continue to relist the Suburb M property for sale by public auction again at three monthly intervals, and the provisions of Orders 4(e) and 4(f) above shall apply successively until the Suburb M property has been sold so that at each successive auction the reserve price shall be 5% less than the reserve price at the immediately preceding auction unless otherwise agreed by the parties in writing.
5.That at settlement of the sale of the Suburb M property the gross proceeds of sale shall be applied in the following manner:
(a)to meet the costs and expenses of sale;
(b)in payment of all amounts required to pay all municipal water and council rates fees outstanding with respect to the property;
(c)to discharge of the mortgage secured on the Suburb M property (if any);
(d)to pay the balance then remaining by way of a deposit into a controlled monies account in the name of both parties (the joint investment account).
Suburb O Property
6.That the parties shall forthwith do all acts and things and sign all documents necessary to sell the property known as N Street, Suburb O ("the Suburb O property"), in a manner as agreed between the parties and, failing agreement within 14 days of the date of these Orders, as follows:
(a)the parties shall instruct such lawyer as they agree upon to have the conduct of the sale of the Suburb O property on behalf of both parties or, in the absence of agreement reached within 28 days of the date of these Orders, the First Respondent will propose three conveyancing lawyers from which the Applicant will select one within further 7 days ("the lawyer"), the costs of and incidental to such appointment to be borne by the parties equally as and when they fall due;
(b)the parties shall instruct such real estate agent as they agree upon to have the conduct of the sale on behalf of both parties, and in default of agreement within 28 days of the date of these Orders, the Applicant will propose three real estate agents from which the First Respondent will select one within a further 7 days ("the agent"), the costs of and incidental to such appointment to be borne by the Applicant as and when they fall due;
(c)the parties shall do all acts and things and sign all documents necessary to list the Suburb O property for sale by public auction within 35 days of the date of appointment of the agent or such longer period as is agreed between the parties;
(d)the reserve price for the purpose of such auction shall be such price as the parties agree upon in writing or, in the absence of agreement reached within 28 days of the date of the these Orders shall be $800,000;
(e)the parties shall cooperate in every way with the agent including (without limiting the generality of the foregoing):
(i)making the key available to the agent;
(ii)allowing inspection of the Suburb O property at all reasonable times requested by the agent including liaising with the tenants of the Suburb O property as may be requested;
(iii)doing or saying nothing to hinder or prevent a sale being effected;
(iv)ensuring the Suburb O property including the grounds are in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and
(v)signing all documents requested by the agent in relation to the listing for sale of the Suburb O property except a contract or agreement for sale which has not been authorised by the lawyer;
(f)in the event the bidding at the auction does not reach the reserve price such of the parties as are present at the auction may negotiate with the highest bidders or any other interested person and effect a sale of the Suburb O property at a price which is not more than 5% below the reserve price, or at such other price as the parties agree upon in writing;
(g)in the event the Suburb O property is not sold at the public auction the parties shall do all acts and things and sign all documents necessary so as to list the Suburb O property for sale by private treaty with the agent;
(h)the sale price at which the Suburb O property shall be listed shall be such price as the parties agree upon in writing or, in the absence of agreement reached within 7 days from the date of the auction shall be the price nominated by the agent;
(i)if the Suburb O property remains unsold 6 weeks from the date of being listed for sale by private treaty, the parties shall do all acts and things and sign all documents necessary to continue to relist the Suburb O property for sale by public auction again at three monthly intervals, and the provisions of Orders 6(e) and 6(f) above shall apply successively until the Suburb O property has been sold so that at each successive auction the reserve price shall be 5% less than the reserve price at the immediately preceding auction unless otherwise agreed by the parties in writing.
7.That at settlement of the sale of the Suburb O property the gross proceeds of sale shall be applied in the following manner:
(a)to meet the costs and expenses of sale;
(b)in payment of all amounts required to pay all municipal water and council rates fees outstanding with respect to the property;
(c)to discharge of the mortgage secured on the Suburb O property (if any);
(d)to pay the balance then remaining into a controlled monies account in the name of both parties (the joint investment account).
Suburb Q Property
8.That the parties shall forthwith do all acts and things and sign all documents necessary to sell the property known as P Street, Suburb Q ("the Suburb Q property"), in a manner as agreed between the parties and, failing agreement, within 14 days of the date of these Orders, as follows:
(a)the parties shall instruct such lawyer as they agree upon to have the conduct of the sale of the Suburb Q property on behalf of both parties or, in the absence of agreement reached within 28 days of the date of these Orders, the First Respondent will propose three conveyancing lawyers from which the Applicant will select one within further 7 days ("the lawyer"), the costs of and incidental to such appointment to be borne by the parties equally as and when they fall due;
(b)the parties shall instruct such real estate agent as they agree upon to have the conduct of the sale on behalf of both parties, and in default of agreement within 28 days of the date of these Orders, the Applicant will propose three real estate agents from which the First Respondent will select one within a further 7 days ("the agent"), the costs of and incidental to such appointment to be borne by the Applicant as and when they fall due;
(c)the parties shall do all acts and things and sign all documents necessary to list the Suburb Q property for sale by public auction within 35 days of the date of appointment of the agent or such longer period as is agreed between the parties;
(d)the reserve price for the purpose of such auction shall be such price as the parties agree upon in writing or, in the absence of agreement reached within 28 days of the date of these Orders shall be $1,125,000;
(e)the parties shall cooperate in every way with the agent including (without limiting the generality of the foregoing):
(i)making the key available to the agent;
(ii)allowing inspection of the Suburb Q property at all reasonable times requested by the agent including liaising with the tenants of the Suburb Q property as may be requested;
(iii)doing or saying nothing to hinder or prevent a sale being effected;
(iv)ensuring the Suburb Q property including the grounds are in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and
(v)signing all documents requested by the agent in relation to the listing for sale of the Suburb Q property except a contract or agreement for sale which has not been authorised by the lawyer;
(f)in the event the bidding at the auction does not reach the reserve price such of the parties as are present at the auction may negotiate with the highest bidders or any other interested person and effect a sale of the Suburb Q property at a price which is not more than 5% below the reserve price, or at such other price as the parties agree upon in writing;
(g)in the event the Suburb Q property is not sold at the public auction the parties shall do all acts and things and sign all documents necessary so as to list the Suburb Q property for sale by private treaty with the agent;
(h)the sale price at which the Suburb Q property shall be listed shall be such price as the parties agree upon in writing or, in the absence of agreement reached within 7 days from the date of the auction shall be the price nominated by the agent;
(i)if the Suburb Q property remains unsold 6 weeks from the date of being listed for sale by private treaty, the parties shall do all acts and things and sign all documents necessary to continue to relist the Suburb Q property for sale by public auction again at three monthly intervals, and the provisions of Orders 8(e) and 8(f) above shall apply successively until the Suburb Q property has been sold so that at each successive auction the reserve price shall be 5% less than the reserve price at the immediately preceding auction unless otherwise agreed by the parties in writing.
9.That at settlement of the sale of the Suburb Q property the gross proceeds of sale shall be applied in the following manner:
(a)to meet the costs and expenses of sale;
(b)in payment of all amounts required to pay all municipal water and council rates fees outstanding with respect to the property;
(c)to discharge of them mortgage secured on the Suburb Q property (if any);
(d)to pay the balance then remaining into a controlled monies account in the name of both parties (the joint investment account).
10.Liberty to either party to relist in the event that the National Australia Bank raises a concern about the security for loan ending …51.
11.The Amended Application in a Proceeding and Amended Response to Application in a Proceeding are otherwise 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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CHRISTIE J
On 17 April 2025 the First Respondent in the primary proceedings, Mr Nicholson, filed an Amended Application a Proceeding dealing with financial matters. The application related to Division 7A loans in the names of the parties and proposed sale of jointly owned real property.
On 29 April 2025 Mr Phillips filed an Amended Response to an application in a proceeding.
On 7 May 2025 the parties reached agreement and I made consent orders which disposed of that aspect of the application which related to Division 7A loans. That left for determination that aspect of the application which related to sale of real property. The applicant in the primary proceedings, Mr Phillips, opposes the orders for sale of real property on an interim basis, although he did not file a formal response to the Amended Application in a Proceeding.
The assets, liabilities, financial resources and superannuation of the parties (prior to the implementation of the agreement concerning Division 7A loans) is reflected in a Joint Balance Sheet which became an exhibit on 7 April 2025:
Ownership
Description
Applicant’s Value
First Respondent’s Value
ASSETS
1.
Joint
R Street, Suburb E
9,250,000
9,250,000
2.
Joint
P Street, Suburb Q
1,125,000
1,125,000
3.
Joint
L Street, Suburb M
6,200,000
6,200,000
4.
Joint
S Street, Suburb T
6,300,000
6,300,000
5.
Joint
U Street, Suburb W
975,000
975,000
6.
Joint
N Street, Suburb O, QLD
820,000
820,000
7.
Mr Nicholson
J Street, Suburb K, NSW
1,425,000
1,425,000
8.
Mr Nicholson
V Street, Suburb W
4,400,000
4,400,000
9.
Mr Nicholson
Shares - BB Shares
106,765
106,765
10.
Mr Nicholson
CC1 Pty Ltd
-
-
11.
Mr Nicholson
CC2 Pty Ltd
TBA
(22,309)
12.
Mr Nicholson
CC3 Pty Ltd
TBA
1,156,292
13.
Mr Nicholson
DD1 Pty Ltd
Inc in 18
Inc in 18
14.
Mr
Nicholson
DD2 Pty Ltd
Inc in 18
Inc in 18
15.
Joint
AA Pty Ltd
9, 876,460
9, 876,460
16.
Joint
EE Pty Ltd
Inc in 18
Inc in 18
17.
Joint
FF Pty Ltd
Inc in 18
Inc in 18
18.
Joint
FF Trust
2,434,208
2,434,208
19.
Mr Phillips
GG Pty Ltd
(44,225)
(44,225)
20.
Mr Nicholson
Motor Vehicle 1 Registration Number …
115,000
115,000
21.
Mr Phillips
Motor Vehicle 2 Registration Number …
115,000
115,000
22.
Mr
Nicholson
Motor Vehicle 3 Registration Number …
70,000
70,000
23.
Mr Phillips
Motor Vehicle 4 Registration Number …
5,500
5,500
24.
Mr Phillips
Motor Vehicle 5 Registration Number …
8,000
8,000
25.
Mr
Nicholson
HH Bank …20 Per Respondent: As at 31 December 2024 Foreign currency: 117,868.80 = AUD41,726.11 as at February 2025
41,726
41,726
26.
Mr
Nicholson
HH Bank …93 Per Respondent: as at 31 December 2024 Foreign currency 107,622.03 = AUD38,100.09 as at February 2025
38,100
38,100
27.
Mr
Nicholson
NAB Accounts …02 Per Respondent: As at 27 March 2025
155,408
155,408
28.
Joint
NAB Account …94 Per Respondent: As at 27 March 2025
138,936
138,936
29.
Joint
NAB Account …94 Loan) Per Applicant: -- Per Respondent: As at 27 March 2025
6,124,328
6,124,328
30.
Mr Phillips
NAB Account …35 as at Per Applicant: As at 6 March 2025 Per Respondent: As at 6 March 2025
4,386
4,386
31.
Mr Phillips
JJ Financial Services Account …18 as at Per Applicant: As at 6 March 2025 Per Respondent: As at 6 March 2025
6
6
32.
Mr Phillips
JJ Financial Services Account …66 as at Per Applicant: As at 6 March 2025 Per Respondent: As at 6 March 2025
16,651
16,651
33.
Mr
Nicholson
KK Bank Account …90 Per Respondent: As at 27 March 2025
18,220
18,220
34.
Mr
Nicholson
KK Bank Account …87 Per Respondent: As at 27 March 2025
16,394
16,394
35.
Mr
Nicholson
NAB Account …26 Per Respondent: As at 27 March 2025
3,467
3,467
36.
Mr
Nicholson
NAB …72 Per Respondent: As at 27 March 2025
6,893
6,893
37.
Mr
Nicholson
Sole Trader NAB …67 Per Respondent: As at 27 March 2025
65,855
65,855
38.
Mr
Nicholson
Recreational Vehicle
17,000
17,000
39.
Mr
Nicholson
Trailer
1,000
1,000
40.
Mr Phillips
Jewellery
Not included by agreement
Not included by agreement
41.
Mr
Nicholson
Jewellery
Not included by agreement
Not included by agreement
42.
Joint
Household Contents (Suburb E)
Not included by agreement
Not included by agreement
43.
Mr
Nicholson
Household Contents (Suburb W)
Not included by agreement
Not included by agreement
44.
Mr
Nicholson
Funds in Barkus Doolan Winning Trust Account (as at 02/04/25)
192,106
192,106
45.
Mr Phillips
Funds in Long Saad Woodbridge Trust Account
379,526
379,526
46.
Joint
Loan owing from GG Pty Ltd
36,296
36,296
47.
Joint
Loan owing from EE Pty Ltd
24,942
24,942
48.
Joint
Loan owing from FF Pty Ltd
-
-
49.
Mr
Nicholson
Loan owing from CC1 Pty Ltd
454,679
454,679
49(b)
Mr
Nicholson
Loan owing from CC3 Pty Ltd
15,152
15,152
Total
$50,932,779
$52,066,761
ADDBACKS
50.
Mr
Nicholson
Partial property settlement (Pursuant to Orders made 24/4/24)
See item 8
NIL
51.
Mr Phillips
Partial property settlement (Pursuant to Orders made 24/4/24)
300,000
300,000
52.
Mr Phillips
Partial property settlement (October 2024)
30,000
30,000
53.
Mr Phillips
Partial property settlement (Pursuant to Orders made 15/11/24)
80,000
80,000
54.
Mr Phillips
Partial property settlement (December 2024)
70,474
70,474
55.
Mr
Nicholson
Paid legal fees
TBA
52,987
56.
Mr Phillips
Paid legal fees
TBA
NK
Total
$480,474
$533,461
Liabilities
57.
Joint
NAB Loan …36 | Per Respondent: As at 27 March 2025
7,236,891
7,236,891
58.
Joint
NAB Loan …51 | Per Respondent: As at 27 March 2025
6,762,332
6,715,609
59.
Mr
Nicholson
NAB Loan …19 (secured on the Suburb W property) Per Respondent: As at 27 March 2025
2,836,492
2,836,492
59(b)
Mr
Nicholson
NAB Loan …30 | Split of loan #19 : As at 27 March 2025
650,000
650,000
60.
Mr
Nicholson
AMEX Credit Card …08 Per Respondent: As at 22 March 2025
69,631
69,631
61.
Mr
Nicholson
AMEX Credit Card …08 Per Respondent: As at 13 March 2025
9,270
9,270
62.
Mr
Nicholson
KK Bank Credit Card …78 Per respondent: As at 27 March 2025
10,865
10,865
63.
Mr
Nicholson
NAB Visa …49 Per Respondent: As at 27 March 2025
1,870
1,870
64.
Mr
Nicholson
Sole Trader NAB Visa …23 Per Respondent as at 27 March 2025
-
-
65.
Mr Phillips
ANZ Credit Card …10 as at Per Applicant: 26 February 2025 Per Respondent: as at 2 December 2024
15,747
15,747
66.
Mr Phillips
LL Bank Credit Card …54 Per Applicant: As at 26 February 2025 Per Respondent: as at 13 August 2023
3,820
3,820
67.
Mr Phillips
ANZ Credit Card …56 Per Applicant: 6 March 2025 Per Respondent: as at 6 March 2025
6,858
6,858
68.
Joint
Division 7A Loan/Directors Loan - AA Pty Ltd as at 31 December 2024
697,766
697,766
68(b)
Mr
Nicholson
Division 7A Loan/Directors Loan - AA Pty Ltd as at 31 December 2024
67,679
67,679
68(c)
Mr Phillips
Division 7A Loan/Directors Loan - AA Pty Ltd as at 31 December 2024
70,000
70,000
69.
Joint
Division 7A Loan/Directors Loan - FF Pty Ltd as at 31 December 2024
9,993,751
9,993,751
70.
Joint
Division 7A Loan/Directors Loan – DD1 Pty Ltd as at 31 December 2024
14,904
14,904
71.
Joint
Division 7A Loan/Directors Loan – DD2 Pty Ltd as at 31 December 2024
-
-
72.
Joint
Division 7A Loan/Directors Loan - GG Pty Ltd
374,242
374,242
72(b)
Mr
Nicholson
Division 7A Loan/Directors Loan - CC2 Pty Ltd
29,433
29,433
73.
Mr
Nicholson
Personal income tax liability for period ending 30 June 2024
Excluded
138,916
73(b)
Mr
Nicholson
Personal income tax liability for period ending 30 June 2023
NIL
NIL
73(c)
Mr
Nicholson
Personal tax liability on 2023 deemed dividend (exclusive of interest and penalties)
NK
388,870
73(d)
Mr
Nicholson
Personal tax liability on 2024 deemed dividend (exclusive of interest and penalties)
NK
2,284,551
74.
Mr Phillips
Personal income tax liability for period ending 30 June 2024 (Refund)
Excluded
(37,840)
74(b)
Mr Phillips
Personal income tax liability for period ending 30 June 2023 (Refund)
(39,711)
(39,711)
74(c)
Mr Phillips
Personal tax liability on 2023 deemed dividend (exclusive of interest and penalties)
NK
388,870
74(d)
Mr Phillips
Personal tax liability on 2024 deemed dividend (exclusive of interest and penalties)
NK
2,285,446
75.
Mr
Nicholson
Personal income tax liability for the period post 1 July 2024
NK
-
76.
Mr Phillips
Personal income tax liability for the period post 1 July 2024
NK
-
77.
Mr
Nicholson
Notional additional Top-Up Tax to access retained profits
NIL
NK
78.
Mr Phillips
Notional additional Top-Up Tax to access retained profits
Inc above
Inc above
78(c)
Joint
Tax and other realisation costs - P Street, Suburb Q
144,235
144,235
78(d)
Joint
Tax and other realisation costs - L Street, Suburb M
587,151
587,151
78(e)
Joint
Tax and other realisation costs - S Street, Suburb T
315,000
315,000
78(f)
Joint
Tax and other realisation costs - U Street, Suburb W
113,811
113,811
78(g)
Joint
Tax and other realisation costs - N Street, Suburb O QLD
95,530
95,530
78(h)
Mr Phillips
Tax and other realisation costs - J Street, Suburb K NSW
238,917
238,917
78(i)
EE1 Pty Ltd
Tax payable by DD1 Pty Ltd on CGT Event A1 resulting from transfer of business to CC2 Pty Ltd
Excluded
290,500
78(k)
EE2 Pty Ltd
Tax payable by DD2 Pty Ltd on CGT Event A1 resulting from transfer of business to CC3 Pty Ltd
Excluded
239,000
Total
$30,306,484
$36,823,923
SUPERANNUATION
Member
Name of Fund
Applicant’s value
First Respondent’s value
79
Mr Phillips
Superannuation Fund 1 as at Per Applicant: as at 6 March 2025. Per Respondent: As at 6 March 2025
504,333
504,333
80
Mr
Nicholson
Superannuation Fund 1. Per Respondent as at 25 March 2025
573,897
573,897
81
Mr
Nicholson
Superannuation Fund 2. Per Respondent: As at 25 March 2025
84,540
84,540
Total
$1,162,770
$1,162,769
FINANCIAL RESOURCES
Ownership
Description
Applicant’s value
First Respondent’s Value
82
Joint
AA Trust
NIL
NIL
Total
$ NIL
$ NIL
TOTAL NET ASSETS
$22,269,538
$16,939,059
(Exhibit 1 – notes not included)
Mr Phillips seeks order for sale of the following items of real property:
(a)J Street, Suburb K;
(b)L Street, Suburb M;
(c)N Street, Suburb O;
(d)P Street, Suburb Q.
It is important to understand the orders which each of the parties seek on a final basis in order to evaluate the appropriateness or otherwise of making the orders which Mr Nicholson seeks.
The final orders which Mr Phillips seeks are set out in his Amended Initiating Application filed 12 March 2025. Mr Phillips does not seek to retain any of the properties which Mr Nicholson proposes are sold.
Originally, Mr Nicholson sought to apply the proceeds of sale to repayment of the Division 7A loans. That course was abandoned when the parties reached agreement about the repayment as contained in the consent terms. Mr Nicholson identified the following reasons for the proposed sale:
(a)Establish value of four properties without the need for valuation;
(b)Given shortfall of income over expenses (approximately $5,000 per month) prevent further expenditure;
(c)Establish capital gain and accordingly establish capital gains tax liability;
(d)Crystallise balance sheet issues with potential to aid resolution.
Mr Phillips opposed orders for sale on the basis that he may at a later stage elect to amend the relief he seeks on a final basis to retain one of the properties which Mr Nicholson proposes be sold.
In oral submissions on the hearing of this application, senior counsel for Mr Phillips said his client may seek to retain one of the properties as his residence if Suburb E is to be sold, and the Suburb M property may be suitable given the parties had previously lived in the property which would have an impact on any future capital gains tax liability. Senior counsel for Mr Nicholson submitted such a change to Mr Phillips’ final relief would be unlikely since that property has now been converted into 13 studio apartments. I agree it is unlikely that Mr Phillips would choose to retain Suburb M as his home in those circumstances. The reality is that I must approach this application on the basis that each party has filed an application for final relief and their primary evidence, and no party seeks to retain any of these properties. The applicant should not be obliged to continue meeting the shortfall in case the respondent changes his mind.
In written submissions on his behalf, Mr Phillips’ senior counsel said that the court ought not sell the properties with a final hearing pending, absent evidence as to the consequences of sale which the “applicant has failed to adduce”. The parties had filed all their trial material prior to bifurcation. It is no answer to contend that Mr Nicholson has failed to file evidence about the sale of property neither party sought to retain.
It was also suggested that the cross-collateralisation of the loans secured over these properties was a bar to sale, since it is not plain what the impact of the order of sale might be on the lending ratio and “cross-security” of other properties.
There is no evidence that the loan which is secured by the four properties is cross-secured against any other property. The applicant’s trial affidavit says that in about 2017 all the separate mortgages on the investment properties were cross-collateralised on one loan account ending #...51 with a mortgage offset account #...94 linked.
According to the balance sheet which became an exhibit, the liability for loan #...51 is between $6,762,332 (Mr Phillips’ figure) and $6,715,609 (Mr Nicholson’s figure). The properties which it is proposed be sold are said to be worth: $9,570,000.
In addition, it is not proposed to sell U Street, Suburb W which the parties presently agree is valued at $975,000; S Street, Suburb T which the parties agree is presently valued at $6,300,000.
It is not clear (but also not material) whether the Suburb MM property owned by AA Pty Ltd is security for …51.
I am confident that the investment properties which provide security for loan …51 will be more than sufficient to satisfy the lender, but for abundant caution, will make an order permitting liberty to relist.
I accept that this is not a case where the sale of real property is urgent or required as an asset preservation strategy, but in circumstances where one party is meeting the shortfall and the other party does not seek to retain any of the properties to be sold, then on balance it is appropriate to make the orders for sale.
If Mr Phillips genuinely wishes to retain one of the properties which is to be sold, he will not be prevented from acquiring it as purchaser.
It is not necessary for me to make any orders about capital gains tax at this stage since the properties are likely to be sold in the taxation year commencing 1 July 2025 and the matter is listed for final hearing in February 2026.
I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Christie. Associate:
Dated: 22 May 2025
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