Stephens & Stephens & Anor (Enforcement)

Case [2009] FamCAFC 240


FAMILY COURT OF AUSTRALIA

STEPHENS & STEPHENS & ANOR (Enforcement) [2009] FamCAFC 240

FAMILY LAW - APPEAL – From enforcement proceedings regarding property orders – Whether a property order can be made attaching to the assets of a trust – Whether the trial judge erred in making a finding that assets of a trust could be used to satisfy the husband’s personal obligation to the wife – Whether the assets of a trust could be used to satisfy the entitlement of the wife in circumstances where the husband had legal control of the assets of the trust and the wife was an object of that trust – Where the husband made no application seeking relief in respect of his obligations under the property settlement order – Where an order may be made as part of s 79 proceedings that enables an entitlement of a party to the marriage who is an object of a trust, or ceased to be an object of a trust by reason of divorce, to be satisfied out of the assets of the trust – Where an order may be made that enables a party to the marriage who is in control of a trust to satisfy his or her own personal liability to the other party to the marriage who is an object of the trust from that assets of that trust – Where it was within the jurisdiction and power of the trial judge to make orders attaching to the assets of a trust – No error established

FAMILY LAW - APPEAL – Whether the trial judge erred in law by making orders without representation of all legal persons and/or entities with an interest in the balance of the moneys – Where it is contended that in the event that the assets of a trust are to be used for the purposes of satisfying an entitlement pursuant to the property settlement order that a court must have regard to the interests of any third parties who may also be classified as beneficiaries – Where the husband was the only trustee of the Stephens Trust and the sole trustee of the three children’s trusts – Where the children of the marriage, who were also beneficiaries, made clear that they did not wish to be heard before the trial judge – Where the only relevant trust was the Stephens Trust pursuant to 106B of the Family Law Act 1975 (Cth) – No error established

FAMILY LAW - APPEAL – Whether the trial judge erred in not making a finding of the legal and beneficial ownership of the moneys – Whether the trial judge erred in law by finding that the husband had the onus of establishing the legal and/or beneficial ownership of the moneys – Where the trial judge was entitled to conclude that the husband was always open to file evidence explaining the ownership of the funds – Where it was immaterial to determine in what proportions the cash funds were the property of…

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Stephens & Stephens & Anor (Enforcement) [2009] FamCAFC 240
Case
[2009] FamCAFC 240
Decision Date

CaseChat Overview and Summary

In the case of Stephens & Stephens & Anor (Enforcement), the appeal and cross-appeal involved enforcement proceedings concerning property orders made in a family law context. The primary dispute was whether a property order could attach to the assets of a trust, and if so, whether the trial judge erred in concluding that the husband's personal obligation to the wife could be satisfied by the trust's assets. The husband had legal control over the trust assets, while the wife was an object of that trust. The husband did not seek relief regarding his obligations under the property settlement order.

The legal issues before the court encompassed whether the trial judge had jurisdiction to make orders attaching to trust assets, whether the trial judge erred in making orders without representation of all legal persons and entities with an interest in the trust's balance, whether the trial judge erred in not determining the legal and beneficial ownership of the moneys, and whether the trial judge erred in not discharging orders obtained in breach of the duty to make full and frank disclosure. Additionally, the court examined whether the trial judge erred in calculating interest, as well as the husband's and wife's applications to adduce further evidence and extend time to file an application for leave to appeal.

The court reasoned that the trial judge had jurisdiction to make orders attaching to the assets of a trust, and there was no error in the orders made. The court also concluded that there was no error in the trial judge's decision not to involve third parties in the proceedings, as only the Stephens Trust was relevant. Furthermore, the court held that it was not necessary to determine the legal and beneficial ownership of the moneys due to the orders made under s 106B of the Family Law Act 1975 (Cth). The court found no error in the trial judge's failure to discharge orders obtained in breach of the duty to make full and frank disclosure. However, the court held that the trial judge erred in law by not varying the rate of interest as per s 117B of the Act, leading to the wife's cross-appeal being upheld and the husband's appeal being dismissed.

Regarding the applications to adduce further evidence, the court dismissed the husband's applications as they sought to impugn the trial judge's findings and would cause significant prejudice to the wife. Conversely, the wife's application to adduce evidence was granted, as it pertained to the husband's removal of a joint trustee of the children's trusts and the fixing of his signature to share transfers. The court also dismissed the husband's applications to extend the time to file an application for leave to appeal, as the complaints regarding these orders served no practical purpose.

In conclusion, the court dismissed the husband's appeal, allowed the wife's cross-appeal, set aside certain orders, and ordered the husband to pay interest to the wife in accordance with the Family Law Rules 2004. The court also granted the wife's application to adduce further evidence and dismissed the husband's applications to extend the time to file an application for leave to appeal and adduce further evidence. The parties were granted liberty to make written submissions in respect of costs incurred in relation to the applications and appeals.

Orders

Orders of the court

1.

The appeal by the Husband be dismissed.

2.

The cross-appeal by the Wife be allowed.

3.

Order 2 made by Coleman J on 10 March 2009 be set aside.

4.

The Husband forthwith pay to the Wife such sum as represents interest calculated in accordance with r 17.03 of the Family Law Rules 2004 payable on moneys owed by the Husband to the Wife pursuant to the order of the Court of 30 November 2005.

5.

It be noted that in the event that sufficient funds are still retained by the Kennedy Wisewoulds, Solicitors (the stakeholders) that the Husband’s obligation to the Wife pursuant to Order 4 hereof may be satisfied from that source.

6.

It be noted that the amount to be paid pursuant to Order 4 hereof is after allowance for any amounts paid pursuant to Order 2 made by Coleman J on 10 March 2009.

7.

The application by the Husband to extend the time to file an application for leave to appeal against the orders made by Watts J on 1 February 2009 be dismissed.

8.

The application by the Husband to extend the time to file an application for leave to appeal against the orders made by Cronin J on 2 February 2009 be dismissed.

9.

The application by the Husband filed on 30 March 2009 for leave to adduce further evidence be dismissed.

10.

The application by the Husband filed on 9 November 2008 for leave to adduce further evidence be dismissed.

11.

The oral application of the Husband made on 4 December 2009 seeking to reopen the hearing of the appeal be dismissed.

12.

The application by the Wife filed on 21 May 2009 for leave to adduce further evidence be granted and the Wife have leave to adduce further evidence.

13.

Each party be at liberty to make an application by way of written submissions in respect of costs incurred in relation to the applications by the Husband to extend the time to file an application for leave to appeal; the appeal by the Husband and the cross-appeal by the Wife by filing such submissions at the Southern Region Appeal Registry of the Family Court of Australia and serving them on the other parties within 21 days of the date hereof.

14.

Each party have a further 14 days in which to make written submissions in answer thereto by filing such submissions at the Southern Region Appeal Registry of the Family Court of Australia and serving them on the other parties.

15.

Each party be at liberty to reply to an answer by way of written submissions by filing such reply at the Southern Region Appeal Registry of the Family Court of Australia and serving it on the other parties within a further seven days.

16.

Each party endorse on the cover sheet of any submissions filed pursuant to orders 12, 13 and 14, the date upon which a copy of that submission was served on the other parties.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

We observe that on 23 September 2005 W Stephens became aged 25 years and hence a trustee of the W Stephens Trust. Mr J then retired. However Mr J apparently remained as a joint trustee of the three children’s trusts.Judgment of Strickland J On 30 November 2005 Strickland J pronounced judgment and delivered reasons. His Honour made the following orders:1. That the wife forthwith transfer to the trustee interveners the 14,600 Westpac Shares held by her as nominee of the [Stephens] Trust together with all dividends received by her thereon and all interest earned on those dividends.2. That pursuant to the provisions of Section 106B of the Act the [Stephens] Trust Instrument of Variation dated 7 December 1998 be set aside.3. That pursuant to the provisions of Section 106B of the Act the instrument entitled “The [Stephens] Trust” dated 18 January 2002 and the dispositions made pursuant thereto whereby the husband:3.1Forgave and released all amounts owing by him to the said Trust;3.2Forgave and released all amounts owing by the wife to the said Trust; and3.3Applied all of the income and capital of the trust fund of the said Trust;3.3.1as to one quarter thereof to the [W Stephens] Trust;3.3.2as to one quarter thereof to the [X Stephens] Trust;3.3.3as to one quarter thereof to the [Y Stephens] Trust;3.3.4as to one quarter thereof to the [Z Stephens] Trust;be set aside.4.That on or before 28 February 2006 the husband pay to the wife the sum of $2,182,302.00.5.That by consent the paintings owned by the husband and the wife be divided equally between them.6.That the wife do retain as her sole property absolutely free of any claim, demand, interest, right or entitlement of the husband the following:6.1The proceeds of the sale of the house property at [Suburb A];6.2Subject to paragraph 276.1 hereof all shares in public companies in respect of which she is registered as owner;6.3Her [motor vehicle];6.4The furniture and chattels in her possession;6.5Her jewellery and personal possessions;6.6Her interest in the … Superannuation Fund;6.7All monies standing to her credit in any bank account.7. Subject to compliance with paragraph 4 hereof the husband do retain as his sole property absolutely free of any claim, demand, interest, right or entitlement of the wife the following:7.1The unit property situated at [Suburb B] registered in his name;7.2The furniture and chattels in his possession;7.3His library and personal effects;7.4The proceeds of his interest in the … Superannuation Fund;7.5All shares in public companies in respect of which he is registered as owner;7.6All monies standing to his credit in any bank account;7.7The … motor vehicle registered in his name.8. Each party do all such acts and things and sign all such documents as may be necessary to give effect to the terms of this order.9. Liberty to each party to apply as to consequential matters.10. That all applications be removed from the pending cases list. In summary Strickland J set aside the 1998 Instrument and the 18 January 2002 Dispositions. However he did not set aside the 1983 Deed (there being no application that he do so) and hence it remained that the Husband was not an object of the capital or income of the Trust.

Ratio Decidendi

Legal Principle Established

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