R Accountants and Matthews and Anor

[2018] FamCA 801

FAMILY COURT OF AUSTRALIA

R ACCOUNTANTS & MATTHEWS AND ANOR [2018] FamCA 801

FAMILY LAW – BANKRUPTCY – Application by trustee of wife’s bankrupt estate to be joined in the proceedings – Where the wife was bankrupt – Where the bankruptcy has been annulled - Where there is disagreement as to application of surplus funds – Where the wife proposes transfer of the funds to her – Where the husband proposes a restraint on the trustee from dealing with those funds until further order of the Court or to a solicitor’s trust account nominated by the trustee – Where surplus funds arise from sale of a property purchased by the wife prior to her relationship with the husband – Where both parties are shareholders of a company – Where the husband, as sole director of the company, is obliged to direct funds to liabilities of the company – Where overall assets will be preserved pending final trial - Ordered funds be paid into the husband’s solicitors’ general trust account to pay liabilities incurred by the company.

Family Law Act (Cth) 1975

APPLICANT: R Accountants (Bankruptcy Trustee)

FIRST RESPONDENT:	Mr Matthews
SECOND RESPONDENT:	Ms Norris

FILE NUMBER: NCC 2226 of 2015

DATE DELIVERED: 5 October 2018

PLACE DELIVERED: Newcastle

PLACE HEARD: Newcastle

JUDGMENT OF: Cleary J

HEARING DATE: 2 August 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Not Applicable

SOLICITOR FOR THE APPLICANT: Mullane & Lindsay

COUNSEL FOR THE FIRST RESPONDENT: Ms Carty

SOLICITOR FOR THE FIRST RESPONDENT: Oliver Campbell Heslop Lawyers

COUNSEL FOR THE SECOND RESPONDENT: Not Applicable

THE SECOND RESPONDENT: Representing herself

Orders

1. That the solicitors for the former Trustee of Ms Norris (the wife) shall pay any surplus funds from the sale of E Street, Suburb F after the annulment of the bankruptcy of the bankrupt into the Oliver Campbell Heslop solicitors general trust account to be disbursed by those solicitors upon the direction of the husband, as required from time to time to pay:

   (a)       The following liabilities in respect of Matthews Pty Ltd:

   (i)Loan repayments that fall due and payable to the National Australia Bank in respect of real properties owned by Matthews Pty Ltd (“real properties”);

   (ii)All insurances, rates and utilities due and payable in respect of such real properties;

   (iii)Payment of all lawn mowing, repairs and general maintenance bills due and payable in respect of real properties;

   (iv)All real estate agents listing and marketing fees for the sale or lease or such real properties;

   (v)Any payment in satisfaction of mortgages secured over real properties;

   (vi)All ASIC fees, accounting fees and other professional fees and charges reasonably incurred in the ordinary operation and management of the corporation.

2. That the Application in a Case of the Trustee in Bankruptcy filed 21 March 2018 is otherwise dismissed.

3. That the Response to an Application in a Case filed by the husband on 30 July 2018 is dismissed.

4. The Response to an Application in a Case, filed by the wife 18 May 2018 is dismissed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym R Accounts & Matthews and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT NEWCASTLE

FILE NUMBER: NCC 2226 of 2015

R Accountants

Applicant

And

Mr Matthews

Respondent

And

Ms Norris

Respondent

REASONS FOR JUDGMENT

1. On 21 March 2018, the trustee of the property of the wife, a bankrupt, filed an Application in a Case.

2. On 2 August 2018 that Application came before me, amongst others between these parties.

3. At date of filing, the trustee sought to be joined as a party.

4. By virtue of the wife having paid in full the debts and costs of her bankruptcy on 30 July 2018, her bankruptcy was annulled and a certificate issued on the following day, 31 July 2018. A certificate of annulment and relevant letter of advice were tendered into evidence during the course of this application.

5. All that remained was for the solicitor representing the trustee to bring to the attention of the Court the existence of surplus funds remaining after the sale by the trustee of a property at Suburb F, a property which had been in the sole name of the wife.

6. On 18 May 2018, the wife filed a Response to the Application in a Case proposing orders which would follow annulment of her bankruptcy when that occurred. What she proposed was that all funds from the sale of the Suburb F property be transferred into an account in her sole name.

7. Further, she proposed that the trustee refund [to her] all monies paid to the trustee as fees, and also the fees of the lawyers instructed by the trustee.

8. The husband responded on 30 July 2018 to the application with a proposed order for the trustee to be restrained from dealing with any surplus funds from the Suburb F sale until further order of the Court, other than into the solicitor’s trust account nominated by the trustee.

9. On the day the application was heard, the wife submitted that she had been the sole registered proprietor of the Suburb F property, which she had purchased “with my own money in March 2009 prior to my relationship with [Mr Matthews] [the husband].”[1]

   [1] Affidavit of the wife filed 18/05/2018, par 2

10. The wife may believe that legal title determines the outcome of a matrimonial dispute. If so, her belief is misguided. All property owned before, during and after such a relationship (at least to date of trial) is considered in an application for adjustment of interests in matrimonial or de facto property.

11. The parties are yet to have their property dispute heard and finally determined. Accordingly, the most appropriate course is that proposed by the trustee, that the surplus funds from the sale be paid into the Oliver Campbell Heslop Solicitors’ general trust account to be dispersed by those solicitors, as required from time to time, to pay defined liabilities in respect of Matthews Proprietary Limited.

12. This has the effect of preserving the parties’ assets, in particular, the entity itself, Matthews Proprietary Limited, of which both parties are shareholders.

13. Since the resignation of the wife as director, the husband is the sole director of that company. He is, therefore, burdened with the obligation to properly direct funds to liabilities of the company. It will be a matter for final trial to determine the adjustment of interests in that asset and others.

14. Orders are made accordingly.

Evidence

1. The documents relied on in this application are as follows:

For the Trustee in Bankruptcy:

a)Application in a Case filed 21/03/2018 of the trustee of the property of Ms Norris, a bankrupt;

b)Affidavit of Mr S, the trustee in bankruptcy, filed 31/07/2018;

c)Affidavit of Mr S filed 6/06/2018;

d)Affidavit of Mr S filed 19/03/2018;

For the wife:

e)Response to an Application in a Case filed 18/05/2018;

f)Affidavit of the wife filed 18/05/2018;

For the husband:

g)Response to an Application in a Case filed 30/07/2018;

h)Affidavit of the husband filed 30/07/2018;

i)A decision in Matthews & Norris (No. 4) [2017] FamCA 1160, 27 October 2017 in respect of an earlier interim application with respect to the parties’ property.

Application for Spouse Maintenance contained in Response

1. The wife included in her Response, as a discrete order [Order 5] an application for spouse maintenance of $1000 per week to be paid to her by the husband. The only material in support was 4 paragraphs of her affidavit.[2]  Those paragraphs contained:

   -A complaint that two previous such applications had been dismissed “without reason”;

   -An allegation that the wife had been subjected “to extreme financial abuse during the marriage”;

   -That the husband would not disclose his income;

   -That the wife was unable to work because of permanent back injury caused by the husband.

   [2] Affidavit of the wife filed 18/05/2018, pars 37-40

2. There was no supporting documentation such as a Financial Statement or medical evidence or copies of requests for specific disclosure.

3. It is not sufficient to seek such an order with no evidence for the court to rely on and expect a determination.

4. That aspect of the Response is also dismissed.

I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cleary delivered on 5 October 2018.

Associate: 

Date:  5 October 2018