Singleton and Singleton and Anor

[2012] FMCAfam 1093

FEDERAL MAGISTRATES COURT OF AUSTRALIA

SINGLETON & SINGLETON & ANOR [2012] FMCAfam 1093

FAMILY LAW ─ Property ─ whether impracticable to carry out provision in property orders for sale of property and distribution of proceeds.

Family Law Act 1975 (Cth), ss.79A, 79A(1)(b), 106A

Applicant: MS SINGLETON

Respondents:

MR SINGLETON

[S] PTY LTD

File Number: DGC 4287 of 2007

Judgment of: Phipps FM

Hearing date: 25 September 2012

Date of Last Submission: 25 September 2012

Delivered at: Dandenong

Delivered on: 25 September 2012

REPRESENTATION

Counsel for the Applicant: Mr Stanley

Solicitors for the Applicant: Hicks Oakley Chessell Williams

Counsel for the Respondent: Ms Cantwell

Solicitors for the Respondent: Cantwell Family Lawyers

ORDERS

1. That the matter be adjourned for mention on 31 October 2012 at 10.00am in the Federal Magistrates Court of Australia at Dandenong.

2. The property known as and situated at Property C, Victoria (Certificate of Title Volume [omitted]) (“the [C] property”) be placed upon the market for sale forthwith on the following terms and conditions:

   (a)By way of private sale listing the property with [omitted] Real Estate, [C];

   (b)At a reserve price as agreed between the parties and in default of agreement as determined by the President of the Real Estate Institute of Victoria or his or her nominee and any associated cost be equally shared by the parties;

   (c)That [omitted] Solicitors be appointed to handle the conveyance of the [C] property;

   (d)That the terms and conditions of sale, other than price, be agreed between the parties and in default of such agreement to be nominated by [omitted] Solicitor.

3. That upon the Contract of Sale becoming unconditional the parties jointly engage an accountant to calculate the Capital Gains Taxation incurred in the most effective manner on the sale of the [C] property.  The accountant appointed be one agreed between the parties and in default of such agreement as nominated by the President of the Association of Chartered Professional Accountants and that the party/ies responsible for payment of tax shall receive these monies from the settlement to pay the tax identified by the accountant and will cooperate with each other to execute any necessary documents to effect same.

4. That upon the sale of the property the proceeds of sale be applied in accordance with paragraphs 9(i),(ii) and (iii) of orders of the Family Court of Australia made 16 March 2009.

5. Pursuant to s.106A of the Family Law Act 1975 (Cth) in the event that either party fails to sign any documents necessary to give effect to these orders the Registrar of the Federal Magistrates Court of Australia sign the necessary documents upon first receiving an affidavit by the solicitor on record for a party addressing the need for such signature.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT DANDENONG

DGC 4287 of 2007

MS SINGLETON

Applicant

And

MR SINGLETON

Respondent

[S] PTY LTD

Respondent

REASONS FOR JUDGMENT

(Revised from Transcript)

1. This is a property application which on the wife’s side, she puts as an enforcement application. On the husband’s side he puts it as an application under s.79A of the Family Law Act 1975 (Cth). The parties reached agreement embodied in consent orders made on 16 March 2009 in the Family Court of Australia. It provides for the parties to sell a property to their son Mr S and to divide silver bullion, 50% to each and for the wife to transfer her interest in Property W, Victoria to the husband.

2. Paragraph 7 of the order made in the Family Court of Australia on 16 March 2009 refer to the parties family trust.  [S] Pty Ltd is trustee for the [S] Investment Trust.  The trust documents are not part of these proceedings, but it is common ground that it was a discretionary trust.  Paragraph 7 provided that by 10 July 2009 the trustee sell shares to the value of $170,000, that amount be paid to the wife, and contemporaneously with that payment the wife transfer to the husband all her interest in the investment trust and the trust company by executing any deed or amendment or rectification of the deed of trust as necessary, relinquishing her interest in the trust, resigning from any office in the company and transferring her shares in the company to the husband.  Paragraph 8 provides that the husband be liable for and indemnify the wife and keep her indemnified in respect to any liability of whatsoever nature and kind relating to or arising out of her involvement with various entities including [S] Pty Ltd and the [S] Investment Trust.

3. Paragraph 9 reads:

   That by 23 February 2011:

   (a)The parties sign all necessary documents and do all acts and things necessary to cause [S] PTY LTD as trustee for the [S] INVESTMENT TRUST to sell the [C] property with the proceeds to be applied as follows:

   (i)First in payment of all costs and expenses of and incidental to the sale including agents fees and legal costs;

   (ii)Secondly the parties discharge the mortgage registered over the [C] property;

   (iii)Thirdly in payment of the Capital Gains Tax incurred on the sale of the [C] property (estimated to be for example $35,000 at a selling price of $300,000.00);

   (iv)Fourthly in payment of 50% of the balance to the wife and 50% to the husband.

4. That sale has not taken place and the wife says that she approached an agent and had sale authority documents ready but they were not signed by the husband.  The husband proposed to her that she transfer her 50% interest for $300,000, because he had a potential purchaser for half the interest in the property.  No documents were signed.  The wife agreed and the husband paid her a total of $125,000 in three payments;  $30,000 on 4 April 2011;  $45,000 on 9 June 2011;  and $50,000 on 22 July 2011.  He borrowed the money in order to make that payment.

5. The contemplated sale of half the property did not proceed and so nothing happened.  The husband made no more payments to the wife and eventually she brought these proceedings as enforcement proceedings.  Mr Stanley for the wife submits that this is a simple matter of interpreting the order and then enforcing the order.  The parties now have agreement to sell the property and have some proposed minutes of orders signed to that effect, but there is a disagreement about what should happen.

6. The husband says that there should be some sharing of various expenses.  There was a mortgage securing $50,000 over the property at the time the order was made on 16 March 2009. He has been paying the mortgage payments and the rates and charges. A surveyor was employed so that a sewerage easement could be created.  That was at a cost of $2,062.50.  The husband has paid land tax and interest on the $125,000 he borrowed to pay the wife. He proposes that the wife be responsible for half of those amounts.

7. Mr Stanley’s argument is that there is an order for the sale of the property and that should go ahead.  The wife concedes the $125,000 must be taken into account.  Mr Stanley submits that paragraph 8 of the order made in the Family Court of Australia on 16 March 2009 makes the husband liable for the mortgage payments and costs in relation to the [C] property.  Paragraph 8 of the orders says that upon the wife receiving $170,000 and transferring her interest in the trust, all of which has happened, the husband is liable for and indemnifies the wife and keeps her indemnified with respect to any liability relating to or arising out of her involvement with the trust.  The [C] property is owned by the trust and therefore that means, Mr Stanley argues, that the wife is not liable for any of the mortgage payments or outgoings in relation to that property.  They are trust liabilities and the husband’s responsibility.

8. Ms Cantwell for the husband argues that that is not the proper interpretation.  She argues that when the parties deferred the sale for some two years and provided for a payment of costs and expenses upon sale that included the costs and expenses of the property from the time of the order up until the actual sale and they include rates and taxes, other outgoings, land tax, maintenance and upkeep.

9. I consider that Mr Stanley’s submission is correct.  The order needs to be interpreted in a commonsense way so that it makes sense.  The scheme in relation to the trust in paragraphs 7, 8 and 9 of the orders made in the Family Court of Australia on 16 March 2009 is that the wife is paid an amount of money and the husband receives complete control.  The wife no longer has any interest.  The wife receives $170,000 by 10 July 2009 and then by 23 February 2011 or somewhere around about that date she receives another amount of money which depends upon the sale price of the [C] land.

10. If the property had been sold the wife would have received half the net balance, and the husband or the trust would have been liable for, and the wife not required to contribute to any of the expenses.  This did not happen by 23 February 2011 and I consider that it was essential to the scheme of the orders that the sale was to be by 23 February 2011, otherwise the financial arrangements could not be put into effect.  Now it is impossible to carry out what was contemplated because what was contemplated by paragraphs 7, 8 and 9 of the orders made in the Family Court of Australia on 16 March 2009 was that the husband through the trust company and the trust would be responsible for mortgages, outgoings, land tax and maintenance up until a sale which was underway by 23 February 2011, not that he would be responsible for an indefinite time after that.

11. True it is that the sale did not take place because there was an agreement that the wife would be paid a cash amount in return for transferring her interest. That has not taken place but she has received a partial payment. It is not possible to put an interpretation on the orders which accounts for what has happened. It is impracticable to carry out paragraph 9 so that s.79A(1)(b) is satisfied. There should be an order setting aside paragraph 9. That means there must be a hearing and a decision made under s.79 of what the adjusted property settlement should be.

12. Mr Stanley says that the wife is not in a position to argue that at the moment, but I am happy to give an indication of how I see a result could be obtained.  It does not appear to be a case where the whole s.79 process should be gone through again, because the parties have agreed the property should be sold.  It is more a matter of looking at what is just and equitable.  What would be just and equitable would be for the husband to be responsible for the costs and expenses under paragraph 8 as I have interpreted it.  He would be responsible for those expenses up to 23 February 2011. 

13. After 23 February 2011 the husband and wife should share the mortgage payments on $50,000, rates and taxes and other outgoings.  The $125,000 must be taken into account.  I do not see that the wife should be responsible for any of the mortgage payments.  The husband took a commercial risk and so a just and equitable result would be that he bears the cost of that commercial risk.  As far as the surveyor’s fees are concerned, I would interpret that as being one of the costs and expenses incidental to the sale because it was being done in contemplation of making the property saleable. This is just an indication.

I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of Phipps FM

Date:  12 October 2012