REIMES & REIMES - [2019] FCCA 3264

FEDERAL CIRCUIT COURT OF AUSTRALIA

REIMES & REIMES

[2019] FCCA 3264

Catchwords:
FAMILY LAW – Property – value of contaminated land – extent of liabilities – initial contributions – wastage – judgments against the husband – reduction of value of matrimonial assets – s.75(2) factors.

Legislation:

Family Law Act 1975 (Cth), ss.75, 79

Cases cited:

Aleksovski & Aleksovski (1996) FLC ¶92-705
Antmann & Antmann (1980) FLC ¶90-908
Bevan & Bevan (2013) FLC ¶93-545
Biltoft & Biltoft (1995) FLC ¶92-614
Bircher & Bircher (2016) FLC ¶93–721
Black & Kellner (1992) FLC ¶92-287
Browne & Green (1999) FLC ¶92-873
C & C [1998] FamCA 143
Chang & Su (2002) FLC ¶93-117
NHC & RCH (2004) FLC ¶93-204
Clives & Clives (2008) FLC ¶93-385
D & D [2005] FamCA 356
Dickons & Dickons [2012] FamCAFC 154
Dogan & Dogan [2006] FamCA 760 (unreported)
Falcken & Weule [2019] FamCAFC 140
Gollings & Scott (2007) FLC ¶93-319
Hall & Hall (2016) FLC ¶93-709
Jabour & Jabour [2019] FamCAFC 78
Kowaliw & Kowaliw (1981) FLC ¶91-092
Norbis & Norbis (1986) 161 CLR 513
AJO & GRO (2005) FLC ¶93-218
Oriolo & Oriolo (1985) FLC ¶91-653
Pierce & Pierce (1999) FLC ¶92-844
Polonius and York [2010] FamCAFC 228
Stanford & Stanford (2012) 247 CLR 108
Watson & Ling (2013) FLC ¶93-527
Weir v Weir (1993) FLC ¶92-338
Worth & Worth & Anor [2019] FamCAFC 40
Z & Z (2005) FLC ¶93-241

Applicant:

MR REIMES

Respondent:

MS REIMES

File Number:

MLC 6229 of 2017

Judgment of:

Judge Baker

Hearing dates:

15-17 July 2019, 30 August 2019

Date of Last Submission:

30 August 2019

Delivered at:

Hobart

Delivered on:

20 November 2019

REPRESENTATION

Counsel for the Applicant:

Ms Ryan of Counsel

Solicitors for the Applicant:

Wallace Wilkinson & Webster

Counsel for the Respondent:

Mr Trezise of Counsel

Solicitors for the Respondent:

Dobson Mitchell Allport

ORDERS

Within forty-five (45) days from the date of this order the wife pay to the husband the sum of $156,645.
In the event the wife is not able to obtain finance to pay the husband the sum referred to in paragraph 1of this order:
(a)The properties known as and situate at PP(1) Road, Town K in Tasmania, more particularly described in Certificate of Title Volume … Folio … (“PP(1) Road, Town K”) and PP(2) Road, Town K, Town K in Tasmania more particularly described in Certificate of Title Volume … (“PP(2) Road, Town K”) (“the Properties”) be sold, subject to the following conditions:
(i)The listing price of the Properties shall be as agreed between the husband and the wife and failing agreement as determined by a valuer nominated by the President of the Real Estate Institute of Tasmania;
(ii)The Properties shall be listed for sale by private treaty with an agent to be agreed and failing agreement as determined by an agent nominated by the President of the Real Estate Institute of Tasmania at the joint cost of the parties; and
(iii)The husband and the wife shall both forthwith do all acts and things…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading REIMES & REIMES

Details

AGLC: REIMES & REIMES [2019] FCCA 3264
Case: [2019] FCCA 3264
Decision Date: 20 November 2019

CaseChat Overview and Summary

In REIMES & REIMES, Judge Baker of the Family Court of Australia was required to determine property settlement orders between the husband and wife. The dispute involved the valuation of matrimonial assets, including contaminated land, and the extent of liabilities, particularly a significant judgment debt against the husband arising from misappropriation of company funds. The court also considered the impact of initial contributions, wastage of assets, and various factors under section 75(2) of the Family Law Act 1975 (Cth).

The primary legal issues before the court were how to value and divide the matrimonial assets in light of the husband's substantial judgment debt and the associated legal costs incurred in appealing the decision. The court needed to assess the extent to which this debt and the husband's conduct, including the alleged misappropriation of funds and subsequent legal battles, should reduce the value of the matrimonial pool or influence the property division. Furthermore, the court had to consider the wife's financial circumstances and the practicalities of asset division, including the potential sale of properties.

Judge Baker reasoned that the husband's actions, which led to a judgment debt of $548,581 plus interest and costs in the Federal Court for misappropriation of company funds, represented a significant depletion of the matrimonial assets. The court accepted that the husband's appeal further exacerbated these losses. In determining the property division, the court applied principles relating to the valuation of assets and liabilities, the impact of a party's conduct on the matrimonial pool, and the overall justice and equity of the proposed orders. The court also considered the wife's ability to finance a lump sum payment to the husband.

The court ordered that the wife pay the husband a sum of $156,645 within forty-five days. If the wife could not obtain finance for this payment, the properties at PP(1) Road and PP(2) Road, Town K, Tasmania, were to be sold. The proceeds of sale were to be used to discharge existing mortgages and sale costs, with the balance divided such that the husband received 25% of the non-superannuation assets and the wife received the remainder. The husband was also ordered to contribute to the cost of joint valuations. Each party was to retain property in their possession and be solely liable for their respective debts and liabilities.

Orders

Orders of the court

Within forty-five (45) days from the date of this order the wife pay to the husband the sum of $156,645.

In the event the wife is not able to obtain finance to pay the husband the sum referred to in paragraph 1of this order:

(a) The properties known as and situate at PP(1) Road, Town K in Tasmania, more particularly described in Certificate of Title Volume … Folio … (“PP(1) Road, Town K”) and PP(2) Road, Town K, Town K in Tasmania more particularly described in Certificate of Title Volume … (“PP(2) Road, Town K”) (“the Properties”) be sold, subject to the following conditions:

(i) The listing price of the Properties shall be as agreed between the husband and the wife and failing agreement as determined by a valuer nominated by the President of the Real Estate Institute of Tasmania;

(ii) The Properties shall be listed for sale by private treaty with an agent to be agreed and failing agreement as determined by an agent nominated by the President of the Real Estate Institute of Tasmania at the joint cost of the parties; and

(iii) The husband and the wife shall both forthwith do all acts and things and sign all necessary documents to effect the sale of the Properties.

(b) Pending the sale of the Properties:

(i) The wife shall be solely responsible for payment of all rates, insurance, water accounts and the principal and interest repayments of the National Australia Bank mortgage (“the Mortgage”) encumbering the Properties as and when those payments fall due; and

(ii) The wife be restrained from drawing down upon, extending or otherwise increasing the balance owing on the Mortgage.

(i) To discharge the Mortgage and any other encumbrances affecting the Properties;

(ii) To pay all real estate agent’s costs, commissions and expenses arising from the sale of the Properties;

(iii) To pay the solicitors’ costs in effecting the sale of the Properties;

(iv) The balance to be divided between the husband and wife so as to ensure that the husband receives a sum equal to 25% on the non-superannuation assets and the wife receives the balance.

Contemporaneously with the payment to the husband by the wife pursuant to paragraphs 1 or 2, the husband shall pay to the wife one half of the cost of the valuation fees for the joint valuations of the properties at RR Street, Town SS in Victoria, PP(1) Road, Town K in Tasmania, and PP(2) Road, Town K in Tasmania.

Unless otherwise specified in this order:

(a) Each party will be solely entitled to the exclusion of the other to all property in the possession of that party as at this date;

(b) Each party will be solely liable for and indemnify the other party against any liability encumbering any form of property to which that part is entitled pursuant to this order; and

Each party shall do all such acts and execute all such documents as they shall be required to give effect to the terms of this order.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

After W Pty Ltd succeeded in its claim against the husband and the Trust, the catamaran was sold for US$508,000 to satisfy the debt. The husband gave evidence that the balance of the judgment debt has been written off the books of W Pty Ltd.d) Federal Court of Australia Judgment Debt The wife deposed that W Pty Ltd took legal action against the husband in 2014 in relation to the boat T. She said that he “was found guilty of misappropriation and had to pay back approximately $500,000 and the W Pty Ltd legal costs… Mr Reimes appealed the decision and wasted another $50,000 in doing so.”[63] [63] Affidavit of Ms Reimes filed 15 November 2018, [94]. Judgment was given against the husband and C Pty Ltd, the trustee of the Trust, in favour of W Pty Ltd on 18 September 2014 in the Federal Court. The appeal of the decision was dismissed by the Full Court of the Federal Court on 25 May 2015. The orders made by the Federal Court provide:[64][64] Exhibit W7.1.The respondents pay the applicant compensation pursuant to s 1317H of the Corporations Act 2001 (Cth) in the sum of $548,581 on the T claim.2.The respondents pay the applicant interest on the sum of $548,581 pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth), in the amount of $241,262.10.3.The proceeding be otherwise dismissed.4.The respondents pay 95% of the applicant’s costs of the proceeding.5.Paragraph 2 of the Orders of Justice Gordon made 27 November 2013 be varied as follows:This order has effect up to and including 4:00pm on Friday 17 October 2014 or further order of the Court.6.Liberty to apply. Section 1317H of the Corporations Act 2001 (Cth) (“Corporations Act”) provides: (1) A Court may order a person to compensate a corporation, registered scheme or notified foreign passport fund for damage suffered by the corporation, scheme or fund if:(a) the person has contravened a corporation/scheme civil penalty provision in relation to the corporation, scheme or fund; and(b) the damage resulted from the contravention.The order must specify the amount of the compensation. The orders in respect of the appeal provide:1. The appeal be dismissed with costs.2.The notice of contention be dismissed.3.Each party pay their own costs of the notice of contention. Counsel for the husband submitted that the action by W Pty Ltd was a civil suit in respect to the exercise of his fiduciary duties as a director of W Pty Ltd and, as a consequence, there was a judgment debt against him. However, it was conceded that there was a finding that the husband as a director misappropriated company funds. The husband said, “due to the legal action initiated by the new directors of W Pty Ltd and my subsequent losses, both initially and on appeal, any assets I or companies associated with me had (sic) were lost.” In his trial affidavit, the husband did not mention that the claim by W Pty Ltd was about the contravention by him of provisions of the Corporation Act 2001 (Cth) and the involvement of C Pty Ltd in respect of the T. The husband’s evidence about the claim was given in the context of the action he wanted to take against W Pty Ltd for its alleged illegal dumping of slag and waste on the RR Street, Town SS property. He referred to the Federal Court placing a freezing order on him personally and all entities associated with him. He deposed, “it is my understanding that the Freezing Order was based on the idea that I had sold assets to W Pty Ltd without due process of disclosing that I was the owner, which I refute.”

Ratio Decidendi

Legal Principle Established

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