STENSON & OSMUND (No.2)

[2014] FCCA 3109

FEDERAL CIRCUIT COURT OF AUSTRALIA

STENSON & OSMUND (No.2) [2014] FCCA 3109

Catchwords:
FAMILY LAW – Adjournment.

Legislation:  

Family Law Act 1975 (Cth), ss.90S, 90ST

Applicant: MS STENSON

Respondent: MR OSMUND

File Number: DGC 1706 of 2012

Judgment of: Judge Phipps

Hearing date: 13 October 2014

Date of Last Submission: 13 October 2014

Delivered at: Dandenong

Delivered on: 13 October 2014

REPRESENTATION

Counsel for the Applicant: Mr Davis

Solicitors for the Applicant: Ascot Solicitors

Counsel for the Respondent: Mr Busby

Solicitors for the Respondent: Mackellars Lawyers

ORDERS

1. That the matter be adjourned for Telephone Mention on 17 February 2015 at 9.30am in the Federal Circuit Court of Australia at Dandenong.

2. That the applicant’s solicitors hold the respondent’s court books and financial documents on escrow and not allow the applicant access to the financial document.

3. That the applicant provide the respondent with a list of further documents required within 21 days.

4. That the respondent respond to request for list of documents within 21 days of receiving request.

5. That the valuation of the respondent’s assets be obtained at the cost of the applicant.

6. That the applicant to provide documents showing her current financial status within 21 days.

7. That the applicant pay the respondent’s costs thrown away in the sum of $9,800.

8. That proceedings are stayed until payment of respondent’s costs in paragraph 7 above.

9. That the applicant is restrained from spending payment received from administer unless applied to cost order paragraph 7 above.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA

AT DANDENONG

DGC 1706 of 2012

MS STENSON

Applicant

And

MR OSMUND

Respondent

REASONS FOR JUDGMENT

(Revised from Transcript)

1. This is an application for adjournment.  It is the third time this case has been fixed for final hearing.  The application was put on the basis that there had not been proper discovery given by the respondent.  I consider the real basis for the application for an adjournment is that the applicant, on the state of the evidence that she has available at present, cannot succeed for a very basic reason.  The state of the evidence is that the one asset in the property pool, a (omitted) business, has no value.

2. The applicant had a valuation done in the latter part of 2013, which puts a value of $120,000 on that business.  A low valuation is given of nothing, and a higher valuation of $240,000.00 and the valuer uses the mid-point of $120.000.00.  There is now a tax debt of about $350,000.00 and so there is no property to argue about. 

3. All the other arguments that are between the parties about contributions and adjustments under s.90S or s.90ST of the Family Law Act 1975 (Cth) would become irrelevant. The case would not get past the first hurdle.

4. The applicant makes the application for an adjournment on the basis that she considered that if the valuer has access to more information and, if there is an actual valuation of the plant and equipment of the business, she will establish that there is a greater value in the property.

5. There are many other issues in the case.  A complication, if that is the way to describe it, is that at the point at which the applicant became involved, started living with the respondent, the business was owned by other companies. 

6. At that point the shares in the company were not wholly owned by the respondent. They were owned by him and, to somewhat simplify it, another party. Disputes between the respondent and that other party led to litigation and a judgment debt against the respondent. That led to further litigation. There was a notice to pay under the Corporations Law. That was resolved by a deed of agreement which included that the three shares which were held by the other party, for simplicity’s sake I will say held by the other party, Mr C, were to be transferred to the applicant and the respondent upon payment of the sums of money agreed upon, some hundreds of thousands of dollars.

7. The money was all paid and about $180,000.00 came from the applicant.  There is a dispute about whether it was a loan or whether it was consideration for the purchase or assignment of shares or transfer of shares.  She obtained that money by mortgaging or extending the mortgage on a property she had in Victoria.

8. The dispute between the former partner, Mr C, and those associated with him and the respondent here, Mr Osmund, was resolved by the deed and the payment of money.  It was never completed because the share transfer of the three shares from Mr C’s son-in-law to the applicant and the respondent did not take place.  The respondent says that was because the applicant would not sign the share transfer.  He alleges that she claimed the shares should all be transferred to her.  She says there was an agreement between her and the respondent that those three shares would all be transferred to her so that she would have a half-share of the company.

9. At around about that time, in disputed circumstances, the relationship between the parties came to an end and the applicant moved from Sydney down to Melbourne.  The respondent kept operating the business but he says that it was impossible to do so.  He could not raise the finance he needed to keep maintaining the business because of the share registry.  If he did need to raise finance it is understandable that the state of the share registry would stop financiers lending the money.  He says he had no choice but to place the company into administration, otherwise it would have been liquidated.  There would have been a winding up application made by a creditor.  He had no choice but to place the company into administration which he did.

10. That led to a deed of arrangement where the respondent paid a sum of money to the administrator and the administrator then transferred all the assets to new companies with similar names to the old companies.  The applicant alleges that was a “Phoenix operation,” a liquidation or deliberate insolvency of one company, the transfer of the assets to a new company, and no real change in what is happening.

11. Whether that is true or not is not something I have to resolve now. All the documents which support what the respondent says are available.  He has kept operating the company and the applicant now says that his interest in that company should become part of the property considered in this application.  Why the applicant is applying for proper discovery is because she alleges accounts have not been supplied.  This has been complained about on an earlier occasion and there have been orders made which, if complied with, should have provided all of the necessary information.

12. Mr Busby, who appears for the respondent and has appeared for the respondent throughout, says that the normal statements, profit and loss accounts, bank statements, balance sheets and annual balance sheets have all been supplied.  The valuation that the applicant had prepared by Mr J shows that he had quite a range of documents, including BAS statements and other similar sorts of statements.  He was relying on documents from the earlier companies, the old (business omitted) companies which includes the (business omitted) and (business omitted) and (business omitted) Trust companies, all is known as (business omitted).  The applicant says that more information is required.

13. The main complaint the applicant makes is that there has been no valuation of the plant and equipment at the business.  Without going back through the whole history of the proceedings I cannot see that that is the fault of the respondent.  There is no suggestion that any of the applicant’s solicitors or the applicant herself has notified the respondent’s solicitor that an identified valuer, with his credentials disclosed, is ready to conduct the valuation.

14. Overall I am not satisfied that the predicament the applicant now faces is the fault of the respondent.  I accept that sufficient discovery has been given so that the financial state of the company can be ascertained by a suitably qualified valuer and suitably qualified accountants.  The asset valuations that the valuer has relied on are the valuations contained in the books of accounts.  There were valuations done by the administrator at the time of the sale.  There might be another valuation which is what the applicant alleges.  The question is this, is the applicant at a point where she should be locked out if I said the case must proceed.  I am satisfied that that is effectively what I would be doing if I do not grant an adjournment. 

15. The only valuation that can be put before the Court is Mr J’s valuation.  The taxation debt cannot be argued about.  Unless there is an objection on foot, it is one of the occasions where there can be certainty that a debt is a real debt.  I am prepared to adjourn the case but only on a condition that costs are paid.

I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Judge Phipps

Date:  20 February 2015