FAMILY COURT OF AUSTRALIA
| SEBASTIAN & SEBASTIAN (NO. 5) | [2013] FamCA 191 |
| FAMILY LAW – PROPERTY – Complex and extensive s 79 proceedings – Parties’ significant wealth – Successful sale of business established during the marriage – Property largely controlled by husband post-separation – Initial contributions – Substantial gifts to husband including a 50 per cent remainderman interest in a deceased estate – Approach to s 79 post-Stanford – Assessment of contributions – Add-backs sought for post-separation expenditure – Add-backs for paid legal fees – Mathematical approach –Full and frank disclosure – Duty of parties – Subpoenas – Specific questions and answers – Exhaustive and meticulous investigation of the property of the parties and their financial conduct – Section 75(2) relevant matters – Section 75(2)(o) adjustment – Future earning capacity and the resources of the parties – Standard of living – Whether real property was held on trust for a third party – Global or two-pools approach – Ascertaining the value of a deceased estate where party is a remainderman subject to a life interest – Possible future litigation regarding taxation advice – Extensive objections to affidavit evidence – Division of any proceeds received therefrom – Conduct of parties during the proceedings – Observation of conduct of parties and witnesses – Dispute as to ownership and possession of former matrimonial home – Dispute as to whether a transfer of property or a cash lump sum is appropriate – Split of superannuation entitlements. |
| Family Law Act 1975 (Cth) ss 75(2), 79, 117 Black and Kellner (1992) FLC 92-287 |
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- Case
- [2013] FamCA 191
- Decision Date
CaseChat Overview and Summary
The primary legal issues before the court were the appropriate percentage division of the parties' non-superannuation property, the specific allocation of various assets and liabilities to each party, and the method by which the wife's superannuation entitlement would be calculated and transferred. Additionally, the court was tasked with determining the terms of a lump sum payment from the husband to the wife, including provisions for default and interest, and the circumstances under which certain properties would be sold to satisfy this payment. The court also considered the husband's potential claim against an accounting practice and the wife's potential participation in any such proceedings.
Young J applied section 79 of the *Family Law Act 1975* (Cth) to divide the property. The court ordered a division of 66.5 per cent to the husband and 33.5 per cent to the wife, excluding superannuation. The wife was to retain specific assets and liabilities, and the husband was ordered to pay a significant lump sum to the wife within ninety days. The orders detailed the consequences of default, including the sale of the former matrimonial home and the Peninsula property, with proceeds applied first to sale costs, then to the outstanding lump sum, and any balance to the husband. The court also made detailed orders regarding the splitting of superannuation entitlements pursuant to sections 90MT(4) and 90MT(1)(a) of the Act and relevant regulations. Provisions were made for the husband to provide notice and share legal advice concerning a potential claim against X Partners, with the wife having the option to contribute to costs and share in any recovery.
The court made extensive orders regarding the property division, including the transfer of specific assets and liabilities, a substantial lump sum payment, and the division of superannuation entitlements. The orders also established a mechanism for the sale of properties in the event of default on the lump sum payment and outlined the wife's potential participation in legal proceedings against X Partners. Liberty to apply was reserved for various matters, and the court reserved all questions of legal costs for a future hearing.
Orders
Orders of the court
IT IS ORDERED:
1.THAT pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) the property of the parties, excluding their superannuation entitlements, be divided:
(i) as to 66.5 per cent to the husband; and
(ii) as to 33.5 per cent to the wife.
2.THAT as part of her property division the wife retain ownership and possession of the following, at a total net value of $1,616,441:
§ Property 2, Suburb K;
§ her 2010 Mercedes Benz;
§ the household contents of Property 1, Suburb K (“former matrimonial home”);
§ her jewellery;
§ the first and second partial property settlements;
§ the monies in her NAB bank account number …67;
§ the monies in her ANZ bank account number …78;
§ the value of her legal fees already paid;
§ her credit card liability owing to ANZ bank;
§ her credit card liability owing to NAB bank; and
§ her liability to Mercedes Benz Finance.
3.THAT in addition to the items identified in Order 2, within ninety (90) days of the date of these Orders (“the Date”) the husband pay to the solicitors for the wife, on trust for her, a lump sum cash payment of $3,374,365 (“the Lump Sum”).
4.THAT in default of payment of the Lump Sum by the Date the husband thereafter pay to the wife interest on the lump sum or on any outstanding balance that may exist from time to time, with interest to be calculated and payable quarterly in arrears at the rate prescribed from time to time in the Family Law Rules 2004.
5.THAT within twenty-one (21) days of her solicitors receipt of the whole of the Lump Sum the wife:
(a) vacate the former matrimonial home;
(b) resign any office held by her and transfer and assign to the husband at his expense any beneficial interest or shares held by her in any of:
i) Sebastian PM Pty Ltd;
ii) Sebastian PM Trust;
iii) PPG Pty Ltd;
iv) S Family Trust;
v) LG Pty Ltd;
vi) LG Trust;
vii) PP Pty Ltd;
viii) PP Trust;
ix) RRR Pty Ltd; and
x) RRR Trust
(“the Entities”).
6.THAT on vacating the former matrimonial home the wife is permitted and authorised to remove the furniture and chattels therein and her personal contents but all fixtures and fittings must remain in place.
7.THAT the husband indemnify and keep indemnified the wife for all debt(s) and liabilities of or arising out of the wife’s involvement in the Entities or any of them, as director, shareholder or otherwise howsoever.
8.THAT in the event that the Lump Sum is not paid in full by the Date the husband, at his expense, forthwith do all acts and things and sign all documents required to forthwith transfer the former matrimonial home to the wife on trust for sale (“the Sale”) upon the following terms:
(a) the selling agent be as agreed between the parties and failing agreement as nominated by the President of the Real Estate Institute of Victoria or his or her nominee;
(b) the reserve price be $3,000,000 or such other sum as may be agreed in writing between the parties;
(c) the sale be by public auction and the contract be prepared on an unconditional cash settlement basis; and
(d) such other terms or conditions as are agreed in writing between the parties.
9.THAT the proceeds of the Sale be applied as follows:
(a) first, to pay the costs and commissions and all other necessary and proper expenses of the Sale and in the adjustment of rates, taxes and other outgoings properly payable;
(b) secondly, to pay to the wife’s solicitors on her behalf so much of the Lump Sum as remains outstanding together with default interest payable thereon; and
(c) thirdly, the balance then remaining, if any, to the husband.
10.THAT there be liberty to apply, both as to the terms and conditions of the sale and the division of the sale proceeds, reserved to both parties upon proper documents being filed and served.
11.THAT liberty be further reserved to the wife, if there is a shortfall in the monies paid to her upon the Sale of former matrimonial home, to thereafter apply for the immediate sale, on terms and conditions to be agreed or otherwise determined, of the Peninsula property.
12.THAT until the whole of the Lump Sum has been paid to the wife, and save and except for the sole purpose of raising or securing monies to pay that Lump Sum, the husband personally and in his capacity as director of RRR Pty Ltd and as appointor of the RRR Trust be and is hereby restrained by himself or his servants or agents from selling, encumbering, mortgaging, charging or in any way disposing of or dealing with the real properties situate at and known as:
(a) the former matrimonial home; and
(b) the Peninsula property.
13.THAT the husband be and is hereby restrained from dealing with the P Superannuation Fund (“the P Fund”) or the S Family Superannuation Fund (“the S Fund”) other than in compliance with these Orders and without limiting the generality thereof and pending compliance with these Orders the husband must not make or cause any transaction to take place in relation to either superannuation fund without the wife’s prior written consent which must not be unreasonably withheld.
14.THAT pursuant to Section 90MT(4) of the Act a base amount equivalent to 33.5 per cent of the combined value of the parties’ superannuation entitlements in the P Fund and the S Fund as at 4 January, 2013 (“the Superannuation Split Date”) less the value of the wife’s entitlement in the S Fund as at the Superannuation Split Date be allocated to her out of the interest of the husband in the P Fund.
15.THAT pursuant to Section 90MT(1)(a) of the Act the wife is entitled to be paid the base amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (“the Regulations”) and the husband’s entitlement to payments out of his interest in the P Fund is correspondingly reduced by force of this Order.
16.THAT these Orders bind the Trustee of the P Fund (“the Trustee”) and take effect from the operative time being the Superannuation Split Date.
17.THAT the Trustee must comply with their obligations as are imposed upon eligible superannuation plans under the provisions of the Act and the Regulations.
18.THAT after service of the payment split notice pursuant to the provisions of Regulation 7A.03 of the Superannuation Industry (Supervision) Regulations 1994 (“SIS Regulations”), the wife do all such acts and things as may be necessary, including but not limited to, exercising her request pursuant to Regulation 7A.06(1) of the SIS Regulations for the rollover or transfer of the transferrable benefits out of the husband’s interest in the P Fund to a fund of her choosing in accordance with Regulation 7A.12 of the SIS Regulations.
19.THAT until the happening of any of:
(a) the transfer or 'rolling over' into another superannuation fund or superannuation account of the payment split; or
(b) the wife satisfies a condition of release and is paid the payment split created by these Orders; or
(c) the wife executing a waiver of rights within the meaning of Section 90MZA of the Act in relation to the payment split;
the husband be and is hereby restrained by himself his servants or agents from executing a Death Benefit Nomination in favour of any person or doing any other act or thing which would render any part of his interest in the P Fund a 'not splittable payment' within the meaning of Regulations 12 or 13 of the Regulations.
20.THAT within thirty (30) days the parties do all such things and sign all documents required to roll out the wife's member entitlements with the S Fund to a complying fund nominated by her and thereupon she resign any office held and transfer to the husband at his expense any shareholding held by her in S Family Superannuation Pty Ltd and in order to effect the rollout, the husband be authorised to liquidate fund investments on behalf of the Trustee.
21.THAT in the event that the husband, his servants or agents or any of the Entities obtains legal advice as to a potential claim against X Partners, or any member of that accounting practice, with respect to monies paid in capital gains tax, penalties, interest or other costs or expenses arising from the sale of the Business Y business and/or any entities associated with that business (“the Claim”), he provide the wife with notice in writing of his intention to obtain that advice and thereafter serve upon her a copy of any invoice or account received by him for such advice.
22.THAT irrespective of the contents of any such legal advice the husband is under no binding legal obligation to commence court proceedings against X Partners or any member of that accounting practice.
23.THAT in the event that within thirty (30) days of receipt of the invoice the wife:
(a) pays or causes to be paid her required financial contribution fixed at 33.5 per cent of the invoice; and
(b) provides to the husband an acknowledgement in writing that she will keep such advice confidential and only disclose the contents to obtain her own independent legal advice and that the advice furnished by the husband to her is subject to a common legal professional privilege which may not be waived by her without the husband’s express consent first having been obtained in writing
the husband within fourteen (14) days of receipt of the payment and acknowledgement referred to in (a) and (b) herein provide to the wife true and complete copies of all advice obtained by him with respect to the Claim.
24.THAT in the event that the husband institutes Court proceedings in respect of the Claim (“the Proceedings”), he provide notice to the wife not less than fourteen (14) days prior to the commencement of such action.
25.THAT upon receipt of such notice the wife has twenty-one (21) days to elect, in writing to the husband, to participate in the Proceedings with respect to the Claim.
26.THAT in the event that the wife makes such an election:
(a) the wife be responsible for 33.5 per cent of all legal costs and disbursements incurred in the Proceedings and she is to pay in that proportion all invoices within thirty (30) days of her receipt thereof and any failure to pay the same by the due date shall be deemed an election by her to withdraw from the Proceedings;
(b) the husband be responsible for the balance of all legal costs and disbursements incurred in the Proceedings;
(c) the husband be at liberty to make all decisions with respect to the conduct of the Proceedings including decisions to compromise or abandon the Proceedings or any claim made within the Proceedings without the prior consent of the wife;
(d) the husband provide the wife with copies of all written communications with his legal practitioners in the Proceedings within seven (7) days of receipt of the same;
(e) the wife may at any stage elect to withdraw from participating in the Proceedings and cease to be then obliged to contribute to costs incurred by the husband after the date on which he is served with a written notice of withdrawal; and
(f) in the event that the Proceedings result in the husband recovering any monies in satisfaction of the Claim, or any part thereof, and the wife has contributed to the costs of the Proceedings in accordance with these orders, the husband pay her a sum equal to 33.5 per cent within fourteen (14) days of receipt of the same, only if at the time that the husband becomes entitled to the monies the wife is still a participant in the Proceedings and has not exercised her right of withdrawal.
27.THAT if at any time the husband should become liable for the legal costs or disbursements, by reason of Court order or otherwise howsoever, of any other party that joined, or was joined, to the Proceedings, then the wife is to pay to the husband a sum equal to 33.5 per cent of all such costs that were incurred whilst she remained a participant in the Proceedings.
28.THAT unless otherwise specified in these Orders and save for the purpose of enforcing any monies due under these or any subsequent Orders:
(a) each party be solely entitled to the exclusion of the other to all property (including choses in action) in the possession, management or control of such party as at the date of these Orders; and
(b) each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled or controls pursuant to these Orders.
29.THAT subject to the rules of the Qantas Frequent Flyer Plan the husband forthwith do all acts and things and sign all necessary documents required to transfer or assign, by instalments if required, as soon as practicable but within twelve (12) months of these Orders, a total of 1,000,000 points to the wife’s Qantas Frequent Flyer account.
30.THAT all questions of legal costs and expenses of and incidental to these proceedings be reserved for hearing to Monday 8 April 2013 at 10.30 am.
31.THAT any such costs application be filed and served by 1.00pm on Thursday 4 April 2013 and be accompanied by a written summary of legal argument of not more than two (2) pages in length.
32.THAT if no such application is filed by that time the hearing date of 8 April 2013 be vacated.
33.THAT otherwise, and save for any and all issues of costs, all extant applications, both interim and final, are dismissed and the proceedings are removed from the docket of Young J.
34.THAT after the expiration of thirty (30) days and if no Notice of Appeal has been filed, all documents, records and files that were subpoenaed to Court in the s 79 proceedings, be forthwith returned by the Subpoena Clerk of the Family Court of Australia Melbourne Registry, to the person or organisation who had forwarded same to the Court.
35.THAT unless otherwise ordered all exhibits tendered during the proceedings are to remain on the Court file.
IT IS CERTIFIED
36.THAT pursuant to Rule 19.50 of the Family Law Rules this matter reasonably required the attendance of Counsel including Senior Counsel for each of the husband and wife.
Background
Background to the litigation
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Evidence
Evidence Before The Court
Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
Established by: YOUNG J
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