Roland & Argento

Case [2022] FedCFamC1F 84

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Roland & Argento [2022] FedCFamC1F 84

File number(s): PAC 2474 of 2013
Judgment of: RIETHMULLER J
Date of judgment: 1 March 2022
Catchwords:

FAMILY LAW – Property and maintenance of parties – Alteration of property interests – Matters for court's consideration – Just and equitable to make order – Failure of applicant to establish assets of parties – Section 79(2) not satisfied.

FAMILY LAW – Property and maintenance of parties – Alteration of property interests – Matters for court's consideration – Just and equitable to make order – Second marriage late in life – Agreement of parties to hold assets separately – Section 79(2) not satisfied.
Legislation: Family Law Act 1975 (Cth) ss 78, 79, 79(1A), 79(2), 79(8)
Cases cited:

Oamra & Williams [2021] FamCAFC 117

Stanford v Stanford [2012] HCA 52

Division: Division 1 First Instance
Number of paragraphs: 62
Date of hearing: 22, 23 and 24 November 2021
Place: Parramatta
Counsel for the Applicant: Ms Clifton
Solicitor for the Applicant: Norris Somers Maait Lawyers
Counsel for the Respondent: Mr Todd
Solicitor for the Respondent: Jo-Anna F S Moy Solicitor

ORDERS

PAC 2474 of 2013

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MR F AS LEGAL REPRESENTATIVE OF THE DECEASED HUSBAND MR ROLAND

Applicant
AND:

MS ARGENTO

Respondent

ORDER MADE BY:

RIETHMULLER J

DATE OF ORDER:

1 MARCH 2022

THE COURT ORDERS THAT:

1.The applicant husband’s application pursuant to s 79 of the Family Law Act 1975 be dismissed.

THE COURT DECLARES THAT:

2.The sum of $60,000 from the monies held as a result of the liquidation of the Roland Argento Self-Managed Superannuation Funds are superannuation funds held on account of the wife.

3.The wife is entitled to 50 per cent of the proceeds of the company M Pty Ltd, following the winding up of the said company.

THE COURT ORDERS THAT:

4.The solicitor for the estate of the late husband, Mr John Maait,  pay to the respondent wife, from the nett proceeds of the winding up of the parties’ interests in the Roland Argento Self-Managed Superannuation Funds and M Pty Ltd, the sum of $60,000.

5.The solicitor for the estate of the late husband, Mr John Maait,  pay to the respondent wife, from the net proceeds of the winding up of the company M Pty Ltd, following the winding up of the company, the sum of $122,142.48 (noting that this sum represents the wife’s 50 per cent shareholding in the company).

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).

Section 121 of the Family Law Act 1975 (Cth) makes it…

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Roland & Argento [2022] FedCFamC1F 84
Case
[2022] FedCFamC1F 84
Decision Date

CaseChat Overview and Summary

In the case of Roland & Argento, the Supreme Court of New South Wales considered a dispute between the husband’s estate and the wife regarding property settlement following the husband's death. The wife argued against property settlement orders under section 79 of the relevant Act, suggesting that retaining existing property entitlements would be just and equitable. The court needed to determine whether the wife had misappropriated funds from the business or the husband's personal assets. The wife testified that the parties intended to maintain separate assets and only share what they accumulated together during their marriage. She provided evidence that the business finances were managed by the husband, and while she performed bookkeeping, she did not have access to the electronic banking token, limiting her ability to make electronic transactions.

The court found that the wife's evidence was more reliable than that of the husband’s estate, which was represented by an administrator ad litem, Mr V. Mr V, who had been a long-time friend of the husband, appeared to lack independence and substantial knowledge of the proceedings. The court concluded that the wife acted reasonably in securing the business funds to prevent the husband from misappropriating them. The court accepted the wife's explanation regarding the payment of expenses and the rental arrangement for the business property, finding that these were not improper transactions. The court ultimately ruled in favor of the wife's position, deciding that it would not be just and equitable to make property settlement orders under section 79 of the Act.

Orders

Orders of the court

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Background

Background to the litigation

The wife does not seek property settlement orders under s 79, arguing that the parties should simply retain their existing property entitlements (and to the extent necessary orders made to give effect to that proposal pursuant to s 78 of the Act) on the basis that it would not be ‘just and equitable’ to make orders under s 79 of the Act.Background The parties were born in 1936 and 1953, respectively. They were married in 2004, after living together for a little over a year, when the husband was 66 years of age and the wife 50 years of age. At the time they commenced their relationship, they each had three children from previous marriages, all six of which are adults living independently. The parties separated in 2013 when the husband was 76 and the wife 60, after a relationship of a little over 10 years. The following month, the husband commenced proceedings seeking property settlement orders. The parties were divorced later in the same year. In 2016 the husband died and the proceedings have been continued by a Special Administrator ad litem, Mr V, appointed by the Supreme Court of NSW in 2019. The death of the husband does not preclude his estate from prosecuting these proceedings: ss 79(1A) and (8) of the Act. On the evidence before the Court, the assets of the husband’s estate have been assigned to his solicitor in satisfaction of legal fees pursuant to a deed entered into in August 2017. At trial the applicant’s solicitor said (through counsel at the bar table) that he had renounced the assignment, although there was no evidence to that effect.EVIDENCE BEFORE THE COURT The main issue of dispute in this case was whether the husband or wife had inappropriately dealt with the business’ funds and whether the wife had inappropriately dealt with the husband’s funds.The administrator ad litem The applicant administrator, Mr V, was called to give evidence. Mr V was an older man who had been a friend of the husband for 50 years. Mr V confirmed that the benefits of the estate had been assigned to the solicitor acting for the estate (formerly acting for the husband) in August 2017, and that he had been appointed as Administrator by the Supreme Court on 15 March 2019. He has no expectations of receiving any payment for his role, nor any benefit from the husband’s estate. From initial set up, Mr V had acted as the auditor of M Pty Ltd (“M Pty Ltd” and “the business”) which was established and operated by the husband and wife. Whilst a long term friend of the husband, he considered that he was impartial in carrying out his duties as an auditor. Mr V audited the business books from 2011 to 2013, although was not privy to the underlying transactions of the business. He said that the wife had declined to give him the books of the business, offering instead that he come into the office at night. However, he did not take up that offer. Mr V appears to have been almost entirely reliant upon the solicitor for all of his responsibilities as Administrator of the estate and the conduct of the litigation. Importantly, he was unaware of what steps (if any) had been taken to obtain all of the husband’s shares, and unaware that notices with respect to shares (in publically listed companies) in the husband’s name continued to be sent to the wife’s home, at least until recently. He did not appear to be aware that the line item for the husband’s shares in the statement of assets and liabilities was simply noted with the letters ‘TBA’. He was unable to provide any detail as to the shares owned by the husband, and appears to have taken no steps himself to determine what shares the husband may have owned. When Mr V was asked about the costs paid to the solicitor to date ($172,687.57) he was unable to say from where those funds came. Presumably, they were paid from the husband or his estate.

Evidence

Evidence Before The Court

In 2016 the husband died and the proceedings have been continued by a Special Administrator ad litem, Mr V, appointed by the Supreme Court of NSW in 2019. The death of the husband does not preclude his estate from prosecuting these proceedings: ss 79(1A) and (8) of the Act. On the evidence before the Court, the assets of the husband’s estate have been assigned to his solicitor in satisfaction of legal fees pursuant to a deed entered into in August 2017. At trial the applicant’s solicitor said (through counsel at the bar table) that he had renounced the assignment, although there was no evidence to that effect.EVIDENCE BEFORE THE COURT The main issue of dispute in this case was whether the husband or wife had inappropriately dealt with the business’ funds and whether the wife had inappropriately dealt with the husband’s funds.The administrator ad litem The applicant administrator, Mr V, was called to give evidence. Mr V was an older man who had been a friend of the husband for 50 years. Mr V confirmed that the benefits of the estate had been assigned to the solicitor acting for the estate (formerly acting for the husband) in August 2017, and that he had been appointed as Administrator by the Supreme Court on 15 March 2019. He has no expectations of receiving any payment for his role, nor any benefit from the husband’s estate. From initial set up, Mr V had acted as the auditor of M Pty Ltd (“M Pty Ltd” and “the business”) which was established and operated by the husband and wife. Whilst a long term friend of the husband, he considered that he was impartial in carrying out his duties as an auditor. Mr V audited the business books from 2011 to 2013, although was not privy to the underlying transactions of the business. He said that the wife had declined to give him the books of the business, offering instead that he come into the office at night. However, he did not take up that offer. Mr V appears to have been almost entirely reliant upon the solicitor for all of his responsibilities as Administrator of the estate and the conduct of the litigation. Importantly, he was unaware of what steps (if any) had been taken to obtain all of the husband’s shares, and unaware that notices with respect to shares (in publically listed companies) in the husband’s name continued to be sent to the wife’s home, at least until recently. He did not appear to be aware that the line item for the husband’s shares in the statement of assets and liabilities was simply noted with the letters ‘TBA’. He was unable to provide any detail as to the shares owned by the husband, and appears to have taken no steps himself to determine what shares the husband may have owned. When Mr V was asked about the costs paid to the solicitor to date ($172,687.57) he was unable to say from where those funds came. Presumably, they were paid from the husband or his estate. My impression of Mr V was that he was a genuine and reliable friend of the husband since childhood. He is undertaking the current role simply to ensure that the husband’s affairs are finalised. However, Mr V has no real knowledge of any matters relevant to the current dispute and has been entirely reliant upon the solicitors who are acting in the proceedings.The husband

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

On the limited evidence actually before the Court I prefer the wife’s evidence. I accept that the parties approached their marriage on the basis that each would retain their separate assets and share what they accumulated. Of course, this is not a binding agreement but merely provides evidence of the nature of the particular approach to the relationship by these parties. The operation of the business of the parties The wife was cross-examined at some length about who opened bank accounts (as her signature appeared upon a number of forms) and who had access to the accounts. I accept her evidence that the arrangement with the bank was such that they could open joint accounts with one person’s signature as this facilitated creating an account for each new property-related group whose affairs they managed. The arrangement allowed either her or the husband to operate the account, although there was only one electronic ‘token’ which she held and as such she was the only one who could undertake electronic banking on the accounts. Whilst she did most of the data entry and bookkeeping transactions for the business, it was the husband that made decisions about the finances of the business. This is unsurprising given that the husband was a financial, legal and property professional and was the one with long experience in running this type of business. After the receiver was appointed to run the business, the receiver continued to employ the wife in the business until the business was sold. Various line items from the business records were put to the wife, which demonstrated that expenses were paid directly from the business (such as the cost of a holiday). However, there was no evidence that these expenses were not taken up in the accounts as wages, as so commonly occurs with small business. The wife said that after the husband had a heart attack in 2011 she had modifications made to the bathroom for the benefit of the husband, and the costs were met from the business, but accounted for as part of her wages. Whilst a number of individual transactions were put to the wife, no schedule showing the yearly drawings or wages for the business over any representative period was put to her in cross-examination. It was accepted that the business rented a dwelling at the wife’s property. However, the wife’s evidence is that this was a market rent and that when the business was not paying the rent she was renting the dwelling to other tenants. In such circumstances, it is difficult to see this as a contribution by the wife to the business or a contribution of the business to the wife. Following separation the husband withdrew funds from the business account (over $70,000). The money was from money held on trust in the business for various property-related schemes they were managing. The wife contacted the bank to have the account locked and when the bank would not do so she withdrew almost all the funds to prevent the husband taking them. Once the accounts were again secure, she returned almost all of these funds. The course of conduct, not surprisingly, attracted the attention of regulators who placed a receiver into the business.