Poyzer and Tritton (No 3)

[2010] FamCA 559

FAMILY COURT OF AUSTRALIA

POYZER & TRITTON (NO. 3) [2010] FamCA 559

FAMILY LAW – PROPERTY – interim orders pending delivery of reserved judgment – where the parties’ super fund is liable to penalty from the Australian Taxation Office – where the parties’ debt to the bank is accruing interest – just and equitable – various orders directing parties to pay necessary sums to avoid further financial penalty

Family Law Act 1975 (Cth) s 79

APPLICANT: Mr Poyzer

RESPONDENT: Ms Tritton

FILE NUMBER: ADF 1063 of 2001

DATE DELIVERED: 18 June 2010

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide

JUDGMENT OF: Dawe J

HEARING DATE: 18 June 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT: N/A

SOLICITOR FOR THE APPLICANT: In Person

COUNSEL FOR THE RESPONDENT: N/A

SOLICITOR FOR THE RESPONDENT: In Person

Orders

1. Within ten [10] days from today the husband pay to the Poyzer Family Trust sufficient funds and thereafter do all things necessary to ensure that the Family Trust pays all interest due and owing and which thereafter becomes due and owing to the Poyzer Investments Pty Ltd Superannuation Fund in relation to the loan between the Poyzer Family Trust and the Poyzer Investments Pty Ltd Superannuation Fund.

2. The husband to provide within fourteen [14] days written confirmation of the compliance with this order to the wife by forwarding to the wife at her address for service full particulars of the account and date of the payment to the Poyzer Investments Pty Ltd Superannuation Fund.

3. The husband and wife do jointly have the conduct of the sale of the properties being the properties at Lot 22 and Lots 51 and 52 M in the State of South Australia for and on behalf of the registered owners and that:

   (a)failing agreement as to the appointment of a real estate agent within ten [10] days then such agent be appointed as determined by the President of the Real Estate Institute of South Australia;

   (b)failing agreement as to the method of sale and sale price then the same shall be determined by the appointed agent.

4. The agent so appointed shall ensure that all instructions are joint instructions in the first instance and that all offers and other information are provided to both parties at the same time.

5. Upon settlement of the sale of the properties that the net proceeds of the sale after payment of the costs of sale and discharge of the Commonwealth Bank secured loans (being Bills Matured Accounts formerly Bills Discount Facilities Account No … 6003 and … 8113 principal amounts THREE HUNDRED AND FIFTY FIVE THOUSAND AND FIVE HUNDRED AND SIXTYY FIVE DOLLARS [$355,565.00] and FOUR HUNDRED AND THIRTY SIX THOUSAND AND FOUR HUNDRED AND TWENTY EIGHT DOLLARS [$436,428.00] are to be placed into a joint interest earning account in the names of the parties and such account shall only be operated with the joint signatures of the parties or further order.

IT IS NOTED that publication of this judgment under the pseudonym Poyzer & Tritton is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT ADELAIDE

FILE NUMBER: ADF 1063 of 2001

MR POYZER

Applicant

And

MS TRITTON

Respondent

EX-TEMPORE REASONS FOR JUDGMENT

1. This is a matter in which the property settlement proceedings between the husband and wife have been before the Court for many years.  The final trial in relation to those property settlement proceedings commenced before me in 2007.  At that time it became clear that it was not able to be completed within the time the parties estimated and which had been set aside for it.  After more than 50 days of final hearing and over 400 exhibits, judgment was reserved last year.

2. There have since been applications in a case filed which came on to be determined.  In particular the Court agreed to allow the evidence to be re‑opened, taking into account matters which had occurred since judgment had been reserved.

3. This week such further evidence was heard, both in relation to the final orders which should be made by way of property settlement and in relation to interim orders in relation to the applications in a case filed by the husband this year.

4. The affidavit evidence of the parties was received.  The oral evidence of the parties and the witnesses called by the husband were heard, in particular, the evidence of the officer from the Commonwealth Bank of Australia, the evidence of the husband’s accountant, Mr I and the evidence of the auditor of the superannuation funds, Mr V.

5. Both parties appear before me unrepresented.  That has increased the difficulties which the Court faces in attempting to determine both the issues and the relevant facts in this matter.

6. The material received will form part of the evidence which will be considered by the Court when making the final orders.  However, it is appropriate to make interim orders in relation to two of the issues raised in the current set of proceedings before the Court.  First the risk that the super fund called “the old super fund” (being the super fund which was in existence for a considerable period of time and is known as the Poyzer Investments Pty Ltd Superannuation Fund) may be deemed non-compliant and as a result the Australian Taxation Office may impose a significant penalty on that fund and thus reduce the available funds for distribution and consideration by the Court in the property settlement proceedings between the husband and wife.

7. I say “may be deemed non-compliant”.  The evidence before the Court when the matter commenced at the beginning of this week was that there had been correspondence sent by the husband to the Australian Taxation Office asserting that the fund was non-compliant.  The husband was one of the trustees of the super fund.   The wife was another trustee of the super fund.  She did not join with the husband in sending that letter, nor did she consent to him so doing.

8. As the evidence developed, however, exhibit 6 was received being a document addressed to Poyzer Investments Pty Ltd Superannuation Fund from the Australian Taxation Office dated 11 June 2010 indicating that the auditor has informed the Taxation authorities that the “old super fund” had contravened the Superannuation Laws for the 2007/08 financial year.  This was as a result of the husband, through his accountant Mr I, arranging for an auditor to be appointed for the super fund, being an independent auditor, Mr V.  He was appointed as the auditor in circumstances which again did not involve the consent or prior knowledge of the other trustee of the super fund, the wife.

9. It is therefore a possibility that unless appropriate steps are taken a considerable penalty may be applied.  At this stage it is not appropriate to set out in ex tempore interim reasons any findings as to the background to the matter and how or if this situation could have been avoided.

10. However, it is appropriate, within the provisions of the Family Law Act and in particular section 79 of the Family Law Act, to make an interim order which would protect, if possible, the financial interests of the parties. The Court is required to make a decision in relation to that because the parties, the husband and wife, have been unable to agree on the method to be undertaken to reduce the possibility of any penalty being imposed.

11. The possibility of a penalty being imposed and the non-compliant status of the Poyzer Investments Pty Ltd Superannuation Fund is due to the failure of that fund to receive interest on a loan given to a related party, namely the Poyzer Family Trust.  There has been in existence for a considerable period of time a loan from the Poyzer Investments Pty Ltd Superannuation Fund to the Poyzer Family Trust of $219,003. 

12. The provisions of the legislation are such that it is necessary for such a loan from a related entity to be on commercial rates.  Therefore, before the fund can be deemed compliant it is necessary for it to receive an appropriate rate of interest on that loan.

13. Interest was paid up until 2007 but there has been no interest paid to the super fund for the financial years ended 30 June 2008 and 30 June 2009.  The super fund is described as “the old super fund”, the husband having moved assets from the old super fund to a new super fund of which he has total control.

14. The Poyzer Family Trust is a family trust which forms part of the intricate complex web of entities set up by the parties before separation and since separation by the husband which form part of the assets and liabilities which the Court will be required to take into account in assessing what is an appropriate order to be made by way of final property settlement.

15. The husband controls the Poyzer Family Trust and the associated companies and trusts which are the entities which form the substantial assets and bring in the substantial income to be considered by the Court.

16. The husband has had, and continues to have, access to professional advice at the cost of the various entities in relation to the operation of the various entities.  The Poyzer Family Trust has continued to make distributions to various beneficiaries and entities but did not, during the financial years ended 30 June 2008 and 30 June 2009, make any payment of interest in relation to the loan from the super fund.

17. In making an interim order it is necessary for the Court to take into account the specific factors of section 79 and to come to an order that is just and equitable in all the circumstances. As indicated, it is appropriate to make an order which will be just and equitable by making an order reducing the possibility of significant income tax consequences being applied to the super fund.

18. The husband has made submissions that he would pay half of the interest and wants the wife to pay the other half of the interest. The wife has made submissions which indicate that she wishes the husband to pay all of the interest. This is an order which is being made by way of an interim order under section 79 and the Court must take that into account the financial circumstances of the parties, the control of the trust by the husband and of the businesses operated by the various entities.

19. Any interim order and the consequences of that interim order will be factors which will be taken into account in the assessment of the appropriate final orders yet to be made.

20. Considering all of those factors and in particular the financial circumstances of the parties, some emphasis is placed on the fact that the wife has continued to receive payment of $1000 per week from the business entities (the categorisation of the amount received by her, having been reserved for determination by the trial Judge when the order was made by another Judge some considerable period ago). 

21. The wife has also given evidence about her earnings from recent employment and her capacity to earn. 

22. Both parties have also provided the Court with a summary of the distribution of proceeds of sale of other properties since the litigation commenced.

23. The husband gave evidence, when questioned about his recent financial dealings, that since late December 2009 up to a period in March 2010 he had sent at least $300,000 from his own moneys to be held for him by his brother in the United Kingdom.

24. It is clear from the evidence before the Court that both parties have assets and income and should have been able to reach an agreement as to the basis upon which the interest required to be paid could be paid.  Because of the total breakdown in any cooperation between the parties and the ongoing antagonism between the parties it is, however, necessary for the Court to make an order.

25. When taking into account therefore the significant sums sent by the husband overseas, earning a small amount of interest and therefore clearly, on the face of it, not being essential for the husband’s current needs and assessing the other factors and that this is an interim order which will be taken into account in the final orders it is just and equitable that the husband pay the amount required by lending the money to the Poyzer Family Trust (which the husband says does not have sufficient funds to meet the interest payable, notwithstanding the assessment of the value of the Poyzer Family Trust in Mr J’s valuations of the entities in exhibit 397.

26. It is appropriate for the husband to be ordered to lend the money to the Poyzer Family Trust and to ensure that the Poyzer Family Trust forthwith make payment of the interest to the Poyzer Investments Pty Ltd Superannuation Fund to attempt to offset the possible consequences of the prior failure to pay the interest.

27. The other matter that needs to be dealt with on an interim basis is the matter which relates to the Commonwealth Bank indicating that they wish to have loans which have fallen due, paid.

28. The evidence of the husband is that the term of the loans has now concluded and he was unable to convince the Commonwealth Bank to grant a fresh loan for the same amount. 

29. The history of the matter is significant in that the husband has previously sought leave of the Court to sell the properties without the input of the wife.  He has been restrained from dealing with assets unless he has the consent of the wife.  The Court has not prevented appropriate dealing with the assets.  Rather, the Court has required the husband and wife to agree about the steps to be taken, particularly in relation to significant assets such as real estate.

30. The husband seeks to have sole control over the sale of the assets without recourse to the wife.  The history of the matter clearly indicates that the parties are unable to carry out sensible or cooperative negotiations and are unable to deal civilly with each other.  Their submissions made it clear that this continues to be the most significant factor so far as the Court is concerned.

31. The Commonwealth Bank loan period expired.  The husband’s evidence was that he was unable to obtain another loan from the Commonwealth Bank.  The bank has issued a notice of sale.  I was impressed with the neutral evidence of Mr C from the Commonwealth Bank who indicated that the notices of sale had issued but since they had been issued in March of this year no other steps had been taken by the bank nor were any other steps currently planned to be taken by the bank to bring about the actual sale of the properties.

32. The evidence of the husband did not convince the Court that all the steps have necessarily been taken in relation to overcoming the failure of the Commonwealth Bank to provide fresh loans.  The evidence from the husband indicated that in recent times he has obtained from Bank SA significant overdrafts with a credit limit of in excess of half a million dollars.  The amount of the loans which the Commonwealth Bank is seeing to recover is in the region of $780,000.  The loan is currently incurring a significant penalty interest which is not being paid.

33. The wife calls into question the husband’s motives behind the sale of the real estate.  She does not accept that it is a genuine problem brought about by the financial circumstances but seeks to attribute the difficulties solely to the husband and the alleged failure by him to take certain steps.

34. Again, by way of interim order, it is not appropriate to make significant findings.  However, it is clear to the Court that the current situation is that the Commonwealth Bank wants to be paid and that significant interest is accruing.

35. The wife seeks to have sole control of the sale of the real estate, claiming that this will protect her interests and avoid any sham transactions by the husband.  The husband seeks to have sole control over the sale of the properties and points to the inability of the parties to cooperate or agree upon steps to be taken.

36. The Court accepts that the parties have in the past not readily agreed or come to any arrangements which would be in their best interests.  They continue to litigate about matters.  The wife alleges that this ongoing litigation is part of a ploy by the husband deliberately to upset her.

37. It is one of the obligations of the Court to make orders which would attempt to reduce ongoing litigation between the parties.  It is appropriate in these circumstances that, notwithstanding that the assets are owned by the husband and other entities, that both parties be kept informed and both parties assured that any steps taken are steps taken on a basis that is both beneficial and independent.

38. Weighing the factors up in this difficult matter it is appropriate that the parties learn to set aside their ongoing antagonism and deal with this matter in a civil and sensible way.  Taking into account the interests of both parties and not ignoring the husband’s reference to the possible costs that would be incurred with ongoing delays but balancing off against that the need for both parties to be assured that the process is fair, I have determined that the order is just and equitable in the circumstances

39. Otherwise the orders sought are matters which will be dealt with by way of the final judgment.

I certify that the preceding thirty-nine (39) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dawe

Associate: 

Date:  8 July 2010