Swale and Swale And Anor

[2010] FamCA 298

FAMILY COURT OF AUSTRALIA

SWALE & SWALE AND ANOR [2010] FamCA 298

FAMILY LAW – PROPERTY – Justice and equity of orders made between the wife and the estate of the husband

Family Law Act 1975 (Cth) Part VIIIAA, s 75(2), s 79, s 106B
Succession Act 1981 (Qld)

Spry v Kennon & Ors [2008] HCATrans 130

APPLICANT: Ms Swale

RESPONDENT: Mr Swale

SECOND RESPONDENT: Mr Latona

FILE NUMBER: BRF 3761 of 2004

DATE DELIVERED: 1 March 2010

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Murphy J

HEARING DATE: 1 March 2010

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Mr Greer

SOLICITOR FOR THE RESPONDENT: Mr Hartley

Orders

IT IS ORDERED BY CONSENT THAT

1. Pursuant to Rule 10.17 of the Family Law Rules 2004, Orders, declarations and notations be made in terms of the document titled “Minutes of Consent” sealed and attached hereto.

IT IS ORDERED THAT

1. All extant applications be otherwise dismissed and removed from the list of cases awaiting finalisation.

2. All subpoenaed documents be returned to the persons or institutions from which they emanated and all exhibits are returned to the person or persons who tendered the same.

IT IS DIRECTED THAT

1. The Minutes of Consent remain upon the Court file.

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

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRF 3761 of 2004

MS SWALE

Applicant

and

MR SWALE

Respondent (Deceased)

MR LATONA

Second Respondent (Executor of Deceased Estate)

EX TEMPORE

REASONS FOR JUDGMENT

1. The orders sought to be made in this case involve the applicant wife and a solicitor, Mr Latona, who acts as the executor of the husband’s estate.

2. The husband and wife commenced cohabitation in 1976, married in 1978, and separated finally in 2003.  The relationship was thus a long one and produced four children, one of whom is still a minor.

3. The husband remarried in August 2005 and died only some two months thereafter.  The husband’s new wife had a child from a previous relationship.  The husband’s new wife commenced, after his death, proceedings pursuant to the Succession Act 1981 (Qld) in respect of an asserted entitlement by her in respect of the estate. That matter has now resolved between all of the parties.

4. What remains here is a determination about the justice and equity of orders made between the wife and the estate of the husband.

5. The parties’ property, as that expression is used in section 79 of the Act, includes a number of inter-related corporate and trust entities.  That presents significant issues for the parties and this court which have been dealt with via a lengthy process of negotiation involving the parties’ legal advisers, specialist taxation legal advisers, and specialist accountancy advisers.

6. The minutes of consent arrived at between the applicant and the estate reflect that complexity and are based upon that advice.  The orders have a number of unusual features about them.

7. First, they involve a number of respondent parties, seven of whom are corporate entities, and three of whom are corporate entities as trustees of discretionary trusts. 

8. The orders provide, in some instances, for those corporate entities to do certain things.  It is clear also that the orders provide for the assets of corporate and trust entities to be, as it were, redistributed to one extent or another, and, therefore, for the corporate and trust entities to be involved in that process.

9. An issue live between the parties was whether the assets of those corporate and trust entities formed part of the property of the parties or either of them within the meaning of section 79 of the Act.

10. Reference is made in written submissions prepared by the solicitors for the estate to the effect that the recent decision of the High Court in Spry v Kennon & Ors [2008] HCATrans 130 is indicative of the property forming the subject of the orders being “property” within the meaning of section 79 of the Act.

11. Issues might be thought to arise in that respect in circumstances where the husband, who was in effect, the controlling mind of those corporate and trust entities is now deceased.

12. Submissions are made in that respect, emanating primarily from the High Court’s decision in Spry v Kennon & Ors [2008] HCATrans 130 in the written submissions handed up by the solicitor for the estate. I accept the arguments contained in those submissions.

13. I am accordingly satisfied that the orders deal with “property” within the meaning of section 79, to the extent that same might be an issue by reference to those assets being held in the corporate trust structure to which I have just referred.

14. A second issue is the extent to which the orders might require entities (that is, third parties to the relationship) to do, or not do, certain things.

15. A number of submissions are made in respect of the jurisdiction of this court to make those orders. Included among the submissions is reference to

    
    

    Part VIIIAA of the Act, and this Court’s accrued jurisdiction.

16. Again, I am satisfied, on the basis of the submissions made, that there is jurisdiction for this court to make those orders which, in effect, bind third parties to do certain things.

17. Finally, it is plain on the face of the orders that the vast bulk of the “property of the parties or either of them” within the meaning of section 79, comes to the wife.

18. Pursuant to the minutes of consent the written submissions on behalf of the estate indicate an overall effect in that respect as somewhere between 80 and 90 per cent of the net assets going to the wife.

19. There are a number of considerations relevant to that result being just and equitable.

20. Included among those considerations is the important factor that the schedule of assets and liabilities taken into account in the orders does not include substantial assets transferred by the husband after separation and before his death, to his second wife.  An issue joined between the parties prior to agreement being reached between them, was the application of section 106B of the Act in respect of those assets.

21. In a similar vein, the settlement does not take into account substantial legal costs spent by the husband’s estate in defending the Succession Act 1981 (Qld) proceedings in the Supreme Court, which were ultimately settled.

22. Further, a number of considerations relevant to contribution are submitted as justifying an award in the region of 70 per cent of the net assets in any event.  I accept those submissions.

23. Finally, the death of the husband obviously has a dramatic effect on the application of such section 75(2) factors as are relevant to the overall settlement between the parties.  The overall effect of those considerations favour a substantial adjustment to the wife.

24. There are then, in my view, a number of factors indicative of a significant imbalance in favour of the wife in the particular circumstances of this case being just and equitable.

25. Further, I note that the parties are represented by highly experienced and competent solicitors who, as I have said, have received advice from other highly competent and experienced legal and accounting professionals.

26. In the latter respect there may be, as the written submissions for the estate refer, a number of potential taxation liabilities that also impact upon the overall justice and equity of the settlement reached between the parties.

27. In all of the circumstances of this case I am satisfied that:

    (1) the orders relate to “property of the parties or either of them”   within the meaning of section 79 of the Act;

    (2) the court has jurisdiction to make all of the orders contained in the minutes of consent;

    (3) the orders represent a settlement of property as between the wife and the husband’s estate which in all of the circumstances of this particular case are just and equitable.

28. Accordingly, I will make the orders earlier set out, which add to the minutes a notation that the trustees of the superannuation fund referred to within the minutes of consent are the applicant wife and the estate and have therefore received procedural fairness.

29. I order in accordance with the minutes of consent sought to be approved by the solicitors for each of the parties, and to which they each signify their respective client’s consent, and initialled by me, and placed with the papers.

I certify that the preceding twenty-nine (29) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy

Associate: 

Date:  16 March 2010