Piper & Piper

[2021] FCCA 2130

FEDERAL CIRCUIT COURT OF AUSTRALIA

Piper & Piper [2021] FCCA 2130

File number:	DNC 268 of 2021
Judgment of:	JUDGE YOUNG
Date of judgment:	26 July 2021
Catchwords:	FAMILY LAW – property – urgent application to sell property – where the company jointly owned by the parties has a significant debt with the Australian Tax Office (“ATO”) – where the company has entered into a payment plan with the ATO to reduce the debt – where a downturn in business has caused the company difficulty in repaying the tax debt – where there are funds available in trust from the proceeds of sale of a property – order for funds available in trust to be released for purpose of repaying the tax debt
Legislation:	Family Law Act 1975 (Cth)
Number of paragraphs:	15
Date of hearing:	26 July 2021
Place:	Darwin
Solicitor for the Applicant:	Ms Farmer of Withnalls Lawyers
Counsel for the Respondent:	Mr Heinrich
Solicitor for the Respondent:	Starke Lawyers

ORDERS

DNC 268 of 2021
BETWEEN:	MR PIPER Applicant
AND:	MS PIPER Respondent

ORDER MADE BY:	JUDGE YOUNG
DATE OF ORDER:	26 JULY 2021

THE COURT ORDERS THAT:

1.The balance of the proceeds of sale of the property at B Road, Area C, South Australia in the Withnalls Lawyers trust account be released to the husband for the sole purpose of repaying the tax debt of D Pty Ltd.

2.The husband is to have discretion as to whether the tax debt is repaid in a lump sum or in instalments.

3.The husband is to notify the wife within 7 days of making any such payment in accordance with Order 2 and is to provide documentary evidence to the wife of same.

4.Within fourteen (14) days of the date of this order the parties are to write to each other setting out the particular discovery they seek and each party is to have a further fourteen (14) days to either provide the discovery sought or explain why the discovery cannot be made.

5.This matter is adjourned to 13 December 2021 at 10:30am for mention.

6.The matter is otherwise listed for trial on 31 January, 1 and 2 February 2022 at 10.00am (allowing three days).

7.That each party file and serve on each other party one affidavit of evidence in chief and one affidavit of each witness and an updated financial statement complying with rule 15.28 of the Federal Circuit Court Rules 2001 intended to be relied upon at trial no later than 28 days prior to the trial.

8.That on or before 28 days prior to trial the applicant pay the setting down fee and such further daily hearing fee should the matter continue to day 3 and the respondent pay such further daily hearing fee on day 2 as required pursuant to the Family Law (Fees) Regulation 2012.

9.That at least 48 hours prior to trial, counsel for each party  and the independent children’s lawyer (if appointed) file and serve a case outline document which clearly identifies the following:

Parenting orders

(a)a list of the material relied upon;

(b)a brief chronology listing significant events;

(c)a list of contentions with respect to each of the considerations relevant to determining the best interests of the child (section 60CC factors);

(d)a list of other contentions relevant to the decision;

(e)whether the presumption of equal shared parental responsibility applies (section 61DA), and if not the contentions relied upon;

(f)a list of the considerations relevant to considerations of equal and substantial parenting time (section 65DAA);

(g)a list of other relevant considerations (including the relevant section number) (for example, sections 60CG, 61F, 65DAB and/or 65DAC); and

(h)the actual orders sought.

Property orders

(a)a list of the material relied upon;

(b)a statement of any agreed facts;

(c)a brief chronology listing significant events;

(d)a table listing all of the assets, liabilities and financial resources claimed to be part of the pool, with the values contended for by each party;

(e)main contentions in dispute as to:

(f)inclusion in the pool; and

(g)value of assets;

(h)list of contributions claimed or contended for (including expression as a percentage);

(i)list of other factors relied upon (section 75(2) factors) and percentage adjustment contended for;

(j)other relevant contentions to determining a just and equitable division of property; and

(k)the actual orders sought.

10.That no party shall be entitled to rely on any affidavit material not filed and served in accordance with these directions without leave of the Court.

11.That in the event that either party wishes to cross examine the family report writer at the final hearing, that party shall provide written notice to the family report writer of such intention no later than 14 days before the commencement of the hearing.

12.That in the event that no such notice is given to the family report writer or the family report writer is unavailable, the family report will be admitted into evidence without cross examination.

THE COURT NOTES THAT:

A.If in any proceedings there are allegations of family violence and the provisions of section 102NA of the Family Law Act 1975 apply (see attached Family Violence Information Sheet), any unrepresented party will not be permitted to personally cross-examine the other party/parties.

B.Affected unrepresented parties may apply to the Commonwealth Family Violence and Cross-Examination of Parties Scheme (“the Scheme”) for representation but any such application must be made at least 12 weeks prior to the final hearing.

C.Further information about the legislation and the Scheme can be found at Part 4 of the attached Family Violence Information Sheet.

D.If s102NA applies and a party becomes unrepresented after trial directions have been made, that party is required to promptly advise the Court.

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 under the pseudonym Piper & Piper is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT
Ex Tempore

JUDGE YOUNG:

1. This is an urgent interim application brought by the husband to sell property owned by D Pty Ltd which is a company jointly owned by the parties. The husband seeks orders for the purpose of reducing or liquidating the company’s running account with the Australian Taxation Office (ATO). The account is in evidence at exhibit A1. Listed at 1 June 2021 the debit balance was $209,763.07. 

2. The husband, who remains sole director of the company, is evidently anxious that the debit amount has steadily grown over the past year or so. He says that because there has been a business downturn for the company it is increasingly difficult to service the debt.  He has an agreement with the ATO to repay the debt by a payment plan. Judging by the running account, he appears to be paying periodic amounts of about $10,000 every week to reduce the debt. 

3. There appears to be evidence that the company is having some difficulty paying the tax debt from revenue. That would appear to be the reason why a payment plan has been entered into by Mr Piper as director of the company. However, there is no evidence that the ATO is threatening enforcement proceedings or about to impose significant penalties. There is no doubt the ATO expects the payment plan to be adhered to, however, at the moment it appears that the payment plan is being adhered to.

4. I am not satisfied that the situation for the company is sharply urgent. There appears to be an indication that there is some reason to attempt to deal with the problem.  However, given the fact the parties have a trial date commencing on 31 January 2022, I am not satisfied that anything dire is likely to happen to the company in the meantime. This is particularly the case given the order I propose to make which will see $105,000-odd released to be put towards that debt. 

5. The difficulty is that the parties own a number of properties jointly and it appears the company itself also owns properties. The parties also have debit loan accounts with the company.  Various proposals have been put forward to raise money, apart from the money in trust which is $105,000 – only approximately half of the debt.  Ideally, some other money will be found. 

6. In relation to the other money, the husband says he wants to sell a property at E Court in Town F. This is a residential property which is apparently on the market. There is some evidence that there is an interested buyer, however, I did not see evidence that there was a firm offer.  That would appear to be a property that would be readily sold, however, the wife says that that property is tenanted at the moment and the tenancy ends in about February 2022. 

7. The wife also says that she is very keen to retain the property at E Court as a home for herself and the children of the parties. While some criticisms were made of the evidence in support of that assertion, I am not satisfied that the assertion is untrue or unreasonable.  At the moment, I simply do not know.  The wife is currently resident elsewhere in Town F. 

8. The wife also proposed the sale of the property at G Court, Town H. This is a commercial property with three units on a single title which are leased to the housing commission of the Northern Territory.  I am not satisfied that that would be property that could easily be sold. 

9. Another proposal that the wife put forward is that a property at I Parade, Area C in South Australia be sold and if there were not enough funds from that then the adjoining property at J Parade, Area C also be sold.  The husband says, from the bar table, that he wants to keep that property because he may wish to reside there. 

10. Some of these issues raised are not amenable to resolution at an interim hearing and emphasise the difficultly of crafting appropriate orders at an interim hearing. I am not satisfied I can craft appropriate orders in all the circumstances. However, I see no reason why the tax debt of the company owned by the parties should not be reduced, or at least attempts made to stop it increasing, until the trial can address all these issues. 

11. I am satisfied that while the matter is not necessarily urgent in the sense that something must be done today to save this company, I am satisfied that in the longer term there are financial risks to this company in not attempting to reduce its tax debt.  As I have mentioned, there is no evidence that the ATO has brought any enforcement proceedings or is threatening any enforcement proceedings. I would have thought, however, that it is not beyond the realms of possibly that something of that nature could occur in the coming months.  Hence, I am satisfied that in that sense, at least, it is urgent that some available money be put towards reducing the tax debt. 

12. I will make an order that the balance of the proceeds of sale of the property at B Road, Area C in South Australia presently in the Withnalls Lawyers trust account be released to the husband only for the purpose of reducing or repaying the tax debt of D Pty Ltd. 

13. The husband is to have discretion as to how that money is to be paid, whether by lump sum or instalments.  There will also be an order that the husband is to notify the wife within 7 days of making any such payment, providing the documentary evidence of same.

14. Otherwise, I propose to adjourn the matter for trial commencing on 31 January 2022 with three days set aside. 

15. Within 14 days, the parties are to write to each other setting out what particular discovery they seek and each party is to have a further 14 days to either provide the discovery sought or explain why discovery cannot be made. 

I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Young.

Associate:

Dated:       1 September 2021