Thurston and Loomis and Ors (No. 3)

[2018] FamCA 169

FAMILY COURT OF AUSTRALIA

THURSTON & LOOMIS AND ORS (NO. 3) [2018] FamCA 169

FAMILY LAW – PROPERTY – Orders – Where the Court heard further and final submissions from the parties in respect of the form of the final orders to be made having regard to the Reasons for Judgment published on 25 January 2018 – Where both parties are to retain certain property and monies as their sole property absolutely  – Where it would not be just and equitable for the Wife to be left in the position where most of what she retains is as a superannuation interest – Where a superannuation split of 100 per cent to the Husband is appropriate in the circumstances – Where the Husband is ordered to take all of his superfund interest as a lump sum payment – Where the money is held on trust for the Husband until payments are made on his behalf to the Wife, the Child Support Registrar, the Intervener, the Trustee and one of the Husband’s previous solicitors.

Family Law Act 1975 (Cth)
Family Law (Superannuation) Regulations 2001(Cth)

APPLICANT: Ms Thurston

FIRST RESPONDENT: Mr Loomis

SECOND RESPONDENT: L Limited

THIRD RESPONDENT: C Pty Ltd

INTERVENER: ML Lawyers

FILE NUMBER: BRC 1010 of 2012

DATE DELIVERED: 21 March 2018

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Forrest J

HEARING DATE: 16 February 2018

REPRESENTATION

THE APPLICANT:

In Person

THE RESPONDENTS:

In Person

SOLICITOR FOR THE INTERVENER:

Mr ML

ML Lawyers

Orders

1. That the Applicant shall retain as her sole property absolutely:

   (i)All furniture, chattels and other personal property currently in her possession;

   (ii)All of her shares in the company, T Pty Ltd;

   (iii)Any monies in bank accounts in her name.

2. That the Applicant shall retain the business equipment in her possession and she shall be entitled to sell that equipment or cause it to be sold by T Pty Ltd (or any other entity) if she chooses, and she shall be entitled to retain any proceeds of sale of that equipment as her own or T Pty Ltd’s, as she may be advised, and all previous orders made referring to the disposition of the sale proceeds of that equipment is discharged.

3. That the First Respondent shall do all things that may be necessary on his part, including assigning to, or conferring on the Applicant or her nominee, any trade-mark and/or lawful authority for her or her nominee to be able to sell the business equipment that she retains.

4. That the First Respondent shall retain as his sole property absolutely:

   (i)All furniture, chattels and other personal property currently in his possession;

   (ii)All of his interest, however held, in the companies, L Limited and C Pty Ltd;

   (iii)Any monies held in bank accounts in his name.

5. That the First Respondent shall indemnify the Applicant and keep her indemnified against any and all liability to L Limited, C Pty Ltd, and/or the taxation and revenue authorities of the United Kingdom or the Commonwealth of Australia, arising out of the Applicant and the First Respondent’s dealings and involvement with either of those companies or any other company they had interests in during the last twelve years, save for any liability the Applicant may have to the Australian Taxation Office arising out of her interest in the company, T Pty Ltd.

6. That any previous injunctions issued on an interim basis in these proceedings are hereby discharged.

7. That the First, Second and Third Respondents are hereby restrained from taking any further steps to recover amounts alleged to be owed by the Applicant to any of the three Respondents, including by way of issuing demand to her for payment of any alleged liabilities, and, to the extent that any court proceedings in the United Kingdom commenced in the past by any of the Respondents against the Applicant in which recovery of alleged debts has been sought remain on foot, any such proceedings are to be immediately discontinued.

8. That the First Respondent shall indemnify the Applicant and keep her indemnified against any liability in his name to any bank or other financial institution in Australia or elsewhere, including, in particular, any credit card liability in his name.

9. That save as otherwise provided in these Orders, the Applicant shall indemnify the First Respondent and keep him indemnified against any liability in her name, or in the name of T Pty Ltd, to the Australian Taxation Office or any other authority of the Commonwealth of Australia or to any bank or financial institution in Australia or elsewhere, including, in particular, any credit card liability in her name.

10. Pursuant to s 90MT(1)(b) of the Family Law Act 1975 (“the Act”), whenever a splittable payment becomes payable in respect of the Applicant’s (Ms Thurston) interest in the R Superannuation Fund, the First Respondent (Mr Loomis) shall be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001, being 100 per cent of that splittable payment and that there be a corresponding reduction to the entitlement the Applicant, Ms Thurston, would have had in the R Superannuation Fund but for this Order.

11. Paragraph (10) binds the Trustee/s of the R Superannuation Fund and that Order takes effect from the operative time being the fourth business day after the date of service of a sealed copy of these Orders upon the Trustee/s of the Fund.

12. That Mr BG, of E Chartered Accountants, shall continue to act for and on behalf of the Trustee/s of the R Superannuation Fund for the purposes of implementing the superannuation splitting order provided for in paragraph (10) hereof, with his reasonable fees in that respect to be paid by the R Superannuation Fund.

13. That immediately the superannuation splitting order provided for in paragraph (10) hereof is effected, the First Respondent shall do all things necessary, including signing any document that is required to be signed to give effect to an election to take all of his superannuation interest (including all of that amount split to him from the Applicant’s interest pursuant to paragraph (10) hereof) in the R Superannuation Fund by way of a lump sum payment.  

14. That Mr BG shall continue to act for and on behalf of the Trustee/s of the R Superannuation Fund for the purposes of acting on and giving effect to the First Respondent’s election to take all of his superannuation interest (including all of that split to him from the Applicant’s interest in the fund) in the R Superannuation Fund by way of a lump sum payment, with Mr BG’s reasonable fees in that respect to be paid by the First Respondent.

15. That Mr BG shall continue to act for and on behalf of the Trustee/s of the R Superannuation Fund for the purposes of finalising the affairs of the said superannuation fund, including preparation of the 2018 financial year financial statements and tax return, undertaking the audit and preparation of the compliance documents for the said superannuation fund and taking steps to wind-up or close down the said superannuation fund with Mr BG’s reasonable fees in that respect to be paid by the said superannuation fund or the Applicant and the First Respondent as to a 52.45 and 47.55 share respectively.

16. That Mr BG shall ensure, and the Applicant and the First Respondent shall take no steps to interfere with Mr BG in carrying out the duties imposed upon him by this Order, that the lump sum that the First Respondent is paid from the R Superannuation Fund upon his election made pursuant to paragraph (13) hereof is held by Mr BG, in the first instance, on trust for the First Respondent until the following payments are made on the First Respondent’s behalf by Mr BG:

    (i)Payment to the Applicant of a sum which she shall be entitled to retain, along with the property she retains pursuant to paragraph (1) hereof, as her sole property absolutely, such sum to be calculated according to the following formula:

    Payment to Applicant = (40 per cent x ($66,559 + $355,607 + the total of the lump sum paid to the First Respondent pursuant to the first part of this paragraph of these Orders)) - $66,559);

    (ii)Payment to the Child Support Registrar of such amount as is required by the Child Support Registrar to discharge all arrears of child support owing by the First Respondent calculated pursuant to the child support departure orders made by Justice Forrest on 25 January 2018 and as is also required to put the First Respondent in credit in respect of the child support payable by him pursuant to those same child support departure orders for all of the period from the date of payment of the arrears owing up until the 30 June 2019;

    (iii)Payment to the Intervenors, ML Lawyers, of the sum of $20,335 being the total of costs ordered to be paid by the First Respondent to ML Lawyers in orders made by Judge Howard of the Federal Circuit Court, Justice Murphy of the Appeal Division of this Court and Justice Forrest of this Court, plus interest payable pursuant to those orders and/or any applicable Rules of Court;

    (iv)Payment of the balance, after payment of Mr BG’s reasonable fees for undertaking the work required of him pursuant to this paragraph of these Orders, to the First Respondent, to be paid to him by transfer by Mr BG to Mr RO, solicitor, who shall invest the remaining funds of the First Respondent in an interest bearing deposit to be held by him on trust for the First Respondent;

17. That the funds to be held on trust for the First Respondent by Mr RO shall be held until there is agreement reached between Mr RO and the First Respondent as to the amount the First Respondent shall pay Mr RO to discharge his liability to Mr RO for legal costs and outlays incurred when Mr RO was acting for Mr Loomis in these proceedings or until that issue has at least been determined in the way in which disputes about legal fees owing by client to solicitor are determined, with the funds to be distributed by Mr RO only on written agreement between him and the First Respondent or further Order of this Court.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Thurston & Loomis and Anor (No. 3) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 1010 of 2012

Ms Thurston

Applicant

And

Mr Loomis

First Respondent

And

L Limited

Second Respondent

And

C Pty Ltd

Third Respondent

And

ML Lawyers

Intervener

REASONS FOR JUDGMENT

1. On 25 January 2018, I published my Reasons for Judgment in these property settlement and child support departure proceedings and made orders for child support departure, but did not make final property settlement orders. Instead, I listed the matter to receive further and final submissions from the parties in respect of the form of the final orders to be made having regard to the Reasons for Judgment.

2. I heard those submissions on 16 February 2018.

3. I now make my final orders and give these brief reasons for the particular orders I make.

The Property and Superannuation Interests of the Parties

1. I have already determined the property interests of the parties or either of them to be as follows:

   First Respondent’s interest in L Ltd   $318,000

   First Respondent’s personal possessions  $2,000

   Amounts Notionally Added-back

   First Respondent received from boat sale   $10,000

   First Respondent spent on legal fees   $47,711

   First Respondent spent on L’s accountants  $7,701

   First Respondent spent on C’s accountants   $495

   First Respondent’s credit card liability included   - $30,300

   Sub-Total $355,607

   Applicant’s interest in T Pty Ltd   $19,559

   Business equipment with Applicant   $32,000

   Applicant’s personal possessions   $5,000

   Amount Notionally Added-back

   Applicant received from boat sale   $10,000

   Sub-Total $66,559

   TOTAL $422,166

2. As at the date hereof, the superannuation interests of the parties total $562,669.82 (after allowing for a tax liability that is yet to be paid). I admit into evidence as exhibit number 18 a further email exchange with Mr BG and my chambers of 16 March 2018 and a copy of a printout from the account in which the parties’ current member entitlements are shown. The Applicant’s member interest is $295,128.32 and the First Respondent’s member interest is $267,541.50.

3. I also refer to the email of Mr BG dated 8 March 2018 that is part of exhibit 17. An amount sufficient to pay outstanding tax liability of $7,708.45 has already been set aside and is not included in the above total. He also estimates that there will be a further $300 tax liability for the current financial year. He also estimates the following further expenses:

   Cost of preparing paperwork for a splitting order                $330

   Cost per further withdrawals to make payments                   $110 per withdrawal

   Cost of preparing 2018 financial year tax return

   and preparation of compliance documents  $3,000

4. I intend to make a splitting order, splitting all of the wife’s superannuation entitlement to the husband before ordering him to elect to take all of the superannuation funds as a lump sum and then ordering certain payments to be made out of his lump sum entitlement.

5. Pursuant to my Reasons for Judgment the net pool of property and superannuation interests is to be divided 60 per cent to the First Respondent and 40 per cent to the Applicant. On the current figures provided for the superannuation fund, that would see the First Respondent retaining and receiving property and superannuation to the net value of approximately $591,000 and the Applicant retaining property and superannuation to the approximate value of $394,000.

6. The Applicant made oral submissions that the business equipment that is in her possession should be ordered to be retained by the First Respondent, asserting that he had a greater prospect of being able to sell them then she does. She also made some reference to not owning the trade mark. The First Respondent does not want the equipment. The Applicant retained it at the separation of the parties and, indeed, sold some others that she had also retained (with some assistance from the First Respondent at the time). That proves, to my satisfaction, that it can be done – that she can sell them. There was no evidence that the Applicant ever sought to hand over possession of the equipment she retained to the First Respondent. She never sought an order that he take them or that some particular arrangements for their sale be made whilst they remained in her possession. She continues to operate through T Pty Ltd so she has a business through which the equipment could be sold. Finally, it was her own evidence at the trial that the equipment she retained was worth $32,000. With no other evidence of their value, I accepted that.

7. In all of these circumstances, I am satisfied that she should retain the business equipment and at the value of $32,000 that she ascribed to them. I will order though, that the First Respondent take any steps that may be necessary, such as assigning any trade mark rights to her or her nominee, for the Applicant to be able to sell the equipment.

8. Accordingly, the Orders I will make will see the Applicant retain her interest in T Pty Ltd, the business equipment and her personal possessions. I will also take into account that she already received $10,000 from the proceeds of sale of the boat. Those items all add up to $66,559. Being credited with having already received or retained property to this value, sees her entitled to retain superannuation and property, in addition to the property she already has, as matters currently stand, to the approximate value of $327,500.

9. Her member entitlement in the R Superannuation fund is currently worth something around $293,000 after allowing for expenses yet to be incurred by the fund consequent upon the orders I will make. Accordingly, she would be entitled to retain that amount and be paid a further sum of around $34,500 from the First Respondent.

10. I am satisfied that it would not be just and equitable in the circumstance of this case for the Applicant to be left in the position, after property settlement orders are made, where most of what she retains is superannuation interest that she is not able to lawfully access for many years to come, whilst at the same time, the First Respondent can, because he satisfies the conditions of being able to do so, lawfully access all of his and turn it into cash in his hands.  

11. Having heard the submissions of the parties, I am satisfied that the just and equitable outcome will be for both parties to be able to access all of the funds that have been preserved through orders I have made throughout the course of these long proceedings as per the percentage entitlements I have determined appropriate. In order to achieve that, I have decided to make a superannuation splitting order that splits all of the Applicant’s superannuation interest to the First Respondent. The Applicant and the First Respondent are the trustees of their SMSF (or the directors of a company that is the corporate trustee), so I am satisfied that procedural fairness has been given in respect of the proposed splitting order as I have already foreshadowed to the parties this proposed course and called for their submissions on it.

12. My orders will then, after the splitting order is given effect to, oblige the First Respondent to elect to take all of his superannuation interest as a lump sum. He is over the preservation age as he is now 62 years of age and he is not in gainful employment, having told the Court that he is in receipt of Centrelink benefits and not in gainful employment for at least ten hours each week. Accordingly, he is entitled to elect to take all of his superannuation entitlements as a lump sum without any expected taxation consequences.

13. When I heard oral submissions of the parties as to the form of the orders that I should make, after having giving notice of my consideration of taking this particular course, I did not understand the First Respondent to make any submission in opposition to the proposed course, save for some obscure references he was making to the Superannuation Industry (Supervision) Act 1993, which he did not expand upon and were not comprehensible. I do not consider that there is any good reason why I should not order that he elect to take all of his superannuation interest, including the 100 per cent of the Applicant’s interest split to him, in a lump sum and I will so order. I will then order that he pay an amount of that to the Applicant in satisfaction of her entitlements as determined by me.

14. The Applicant and the First Respondent have each foreshadowed costs applications, contravention applications, and probable appeals against my orders. I accept that raises the possibility of further amounts being ordered to be paid by one to the other or even applications for stay of the execution of the Orders that I am now making. Without predetermining the outcome of any costs applications or stay applications, I am conscious that if the final amount of the wife’s payment is determined on the current values of their interests in the superannuation fund but it is not able to be paid out to her for any length of time, that the value of the superannuation fund will probably continue to grow with the interest the relatively large amount of invested money continues to generate. Accordingly, the orders I will make will provide for the amount that is to be paid out to her to be calculated at the time it is paid out to her by use of a formula that takes into account the value of what she will already be retaining, the value of what the First Respondent will already be retaining and the total value of the superannuation fund at the time the lump sum payment is made to the First Respondent. In this way, the figure will be able to be calculated by Mr BG and even the parties themselves from day to day until actual payment.

1. The First Respondent’s child support arrears will then be paid from the balance of the money he retains, as will an amount that puts him in credit in respect of his child support liability up until 30 June 2019. I consider this necessary and appropriate as I am not satisfied that the First Respondent would pay his ongoing child support liability periodically as it falls due and owing if it is left to him.

2. The amount that the First Respondent owes ML Lawyers will also then be paid from the money retained by the First Respondent, including interest calculated on the amount ordered to be paid. The costs incurred in having Mr BG make these payments will be met by the First Respondent alone. My orders will provide for this to happen this way, as again, I am not satisfied that the First Respondent will make the payments himself if the money is put in his hands and it is left up to him to comply with Court orders.

3. After Mr BG has made all of the payments required to be paid, my orders will require him to transfer all of the remaining cash funds to Mr RO, solicitor, who will hold it in an interest bearing account on trust for the First Respondent, Mr Loomis, until there is agreement reached between him and Mr Loomis as to the amount Mr Loomis shall pay him to discharge his liability to Mr RO for legal costs and outlays incurred when Mr RO was acting for Mr Loomis in these proceedings or until that issue has at least been determined in the way in which disputes about legal fees owing by clients to their solicitors are determined.

4. Only by written agreement between Mr Loomis and Mr RO or further order of this Court will the money invested and held on trust for Mr Loomis by Mr RO be able to be withdrawn and distributed by Mr RO.

5. These orders will be made as Mr RO notified the Court that he was claiming a solicitor’s lien over the fruits of a judgment in respect of costs and outlays owing to him by the First Respondent in this matter when he was still holding all of the parties’ superannuation funds on trust for the fund. When Mr RO appeared before the Court when submissions on final orders were heard, he conceded that the lien could not attach to the First Respondent’s superannuation interest, but nevertheless pressed his interest as a creditor of the First Respondent and made submissions, effectively, that the Court should give consideration to his interests.

6. Mr Loomis told the Court that he and Mr RO were in dispute about the amount of money he owes Mr RO and submitted, when given the opportunity to be heard on the course proposed by me, (which is the course I have now adopted in the Orders) that the balance of his cash entitlement should not go to Mr RO to be held by him on trust for Mr Loomis. I did not understand Mr Loomis to support that position with any sound or comprehensible argument.

7. Mr RO told the Court that the disputed liability is in the order of $200,000. Clearly, that is likely to be about the amount that Mr Loomis will have left after all the other liabilities provided to be paid in the Orders are paid. Mr RO’s interests are met by permitting him to hold the balance of Mr Loomis’s cash funds until that matter is resolved by agreement or due process. I am satisfied that if the money was released to Mr Loomis without payment to Mr RO of what is owed to him, that Mr Loomis would, in all likelihood, never pay Mr RO.

8. I make the Orders set out at the commencement of these written reasons.

9. I will hear further submissions in respect of the disposition of any costs applications and any outstanding contravention applications.

I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Forrest delivered on 21 March 2018.

Associate

Date:  21 March 2018