Tolarno and Tolarno

[2019] FamCA 626

FAMILY COURT OF AUSTRALIA

TOLARNO & TOLARNO [2019] FamCA 626

FAMILY LAW – PROPERTY – interim orders – partial property settlement – where the wife seeks partial property settlement of $350,000 pursuant to s 79 of the Family Law Act 1975 – where the husband seeks $120,000 be paid to each party by way of partial property settlement – where the wife disputes the husband’s need - just and equitable to make orders for partial property settlement in the terms sought by each party and there is sufficient scope for that order – orders for the wife to receive a partial property settlement of $350,000 and for the husband to receive a partial property settlement of $120,000 – further orders made for the payment of accounts and operation of entities on an ongoing basis.

Family Law Act 1975 (Cth)
Family Law Rules 2004

Strahan & Strahan (Interim Property Orders) (2009) FamCAFC 166

APPLICANT: Ms Tolarno

RESPONDENT: Mr Tolarno

FILE NUMBER: MLC 4394 of 2018

DATE DELIVERED: 6 September 2019

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: 9^th and 21^st August 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Dunlop

SOLICITOR FOR THE APPLICANT: Nicholes Family Lawyers

COUNSEL FOR THE RESPONDENT: Mr Strum QC

SOLICITOR FOR THE RESPONDENT: Barbayannis Lawyers

Orders

1. That on or before the 13 September 2019 the husband and the wife do all acts and things and sign all necessary documents to cause the sum of $350,000 to be paid to the wife’s solicitors Nicholes Family Lawyers by way of partial property settlement.

2. That on or before 13 September 2019 the husband and the wife do all acts and things necessary to cause the sum of $120,000 to be paid to the husband’s solicitors Barbayannis Lawyers.

3. That the husband account to the wife on a monthly basis with respect to all income and expenditure of Tolarno Pty Ltd (CAN …), the Tolarno Family Trust, Tolarno Unit Trust (“the Unit Trust”) and Tolarno Staff Superannuation Fund (“the entities”)

4. That the wife forthwith sign all documents and do all things necessary to instruct the National Australia Bank to:

   (a)close term deposit BSB …, account number …94 in the approximate sum of $96,240; and

   (b)pay such funds into the Unit Trust account BSB …, account number …78 (“the Unit Trust account”), in addition to the balance of the funds in or formerly in the term deposit number … in the name of Tolarno Pty Ltd which were or were to be paid into the Unit Trust account.

5. That the wife forthwith sign all Unit Trust account cheques for $10,000 or less signed by the husband and presented to the wife from time by the husband for expenses of the entities.

6. In respect of any Unit Trust cheque signed by the husband for expenses of the entities in excess of $10,000:

   (a)the husband provide to the wife, via their accountant, Mr C, of B Accountants, any cheque required to be counter-signed by the wife, together with the supporting invoice; and

   (b)within seven days thereafter, if Mr C advises the parties in writing that he is of the opinion that such expense if a proper expense of the entities, the wife counter-sign such cheque and leave same available for collection by the husband at the Town D office of MJA Accounting.

7. By 4.00 pm on 20 June 2019 the parties file and serve any written submissions in support of any application for costs arising out of or incidental to the wife’s Third Amended Application in a Case filed 2 August 2019 and the husband’s Further Amended Response to Third Amended Application in a Case filed 8 August 2019.

8. By 4.00 pm on 4 October 2019 the parties file and serve any written submissions in reply to any application for costs.

9. That all extant interim applications save and except any application for costs be dismissed and removed from the list of cases awaiting hearing.

10. That all extant applications for final orders be placed in the list of cases awaiting allocation to a judicial docket as soon as practicable.

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 Tolarno & Tolarno 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 MELBOURNE

FILE NUMBER: MLC 4394 / 2018

Ms Tolarno

Applicant

And

Mr Tolarno

Respondent

REASONS FOR JUDGMENT

1. This matter was listed before me in the Judicial Duty List on 17 July 2019 and on that date, albeit somewhat reluctantly, I adjourned the matter for hearing before me on 9 August 2019. I agreed to list the matter in anticipation of the husband having the opportunity to seek the advice of the parties’ accountant and on that basis signing the various tax returns prepared by that accountant in draft, it appeared that being the most pressing of the orders sought by the wife. In order to facilitate the husband’s attendance upon the accountant I also made orders by consent requiring the parties to pay the accountant’s outstanding account in the sum of $22,568.

2. Unfortunately, when the matter came on for hearing before me on 9 August 2019 as a result of a dispute about signing the cheque to pay their accountant, Mr C, the husband had still not been able to obtain that advice. That dispute was in relation to the wife not wanting to sign a cheque for an amount that differed from the amount referred to in the order, notwithstanding that the accountant’s outstanding account was for a lesser amount. It was equally open to the husband to pay the accountant the amount referred to in the order, putting the parties in credit, in circumstances where the accountant was to provide further services. This impasse appears to be symptomatic of the nature of the entrenched dispute in this case. In my view the parties would benefit from some reflection upon the costs they have incurred to date as a consequence of the way in which they have conducted this litigation and the additional costs they will incur if the matter ultimately requires a final hearing. 

3. One of my concerns when I was asked to adjourn the matter for hearing before me, which proved to be accurate at least in part, was that there would be further applications and/or disputes requiring the court’s determination on that date. Although the matter required a further adjournment with respect to the wife’s application that the husband be required to sign the tax returns I was able to deal with the remaining aspects of the parties interim applications. They included the applications of both parties for a partial property settlement and orders with respect to the payment of accounts and the operation of the entities on an ongoing basis. Although there is a significant degree of factual dispute and I cannot make findings as to those disputed facts, the issues I am asked to determine are limited and can be determined without the necessity for the evidence to be tested. These disputed facts can be tested in the course of the final hearing, in the event that they are relevant to the determination the court is required to make at that time. I will turn first to the applications for a partial property settlement.

Partial Property Settlement

1. Although it is generally accepted that it is preferable for the court to exercise its power pursuant to s 79 of the Family Law Act 1975 (Cth) at a final hearing the court can make orders for partial property settlement. As the Full Court said in Strahan & Strahan (Interim Property Orders) (2009) FamCAFC 166 (“Strahan”) at [132] all that is required is that “…in the circumstances it is appropriate to exercise the power”. The Full Court in referring to the requirement that the court consider the matters in s 79(4) also said that “…consideration of such matters may be brief and if it is established that ‘it seems likely to the Court that … the applicant … will be likely receive by way of property settlement a sum sufficient to cover the advance, that would seem sufficient to enable the order sought to be made’” (at [137]).

2. Both parties set out in great detail their version of the facts including the monies they each said the other had retained, withdrawn or otherwise received by way of interim distributions. This evidence was of limited relevance in circumstances where both parties were seeking further partial property settlements and it was common ground that each would be likely to receive a final settlement sufficient to cover the monies they have each been paid by way of partial property settlement. The dispute was one primarily as to the availability of funds to meet the $350,000 sought by the wife as against the $120,000 the husband proposed they should each receive and for the wife’s part whether the husband should receive any payment by way of partial property settlement.

3. The wife set out in detail the balances in the various accounts in the parties’ joint names, in the husband’s name, their names in trust for the children and in the name of Tolarno Pty Ltd (‘Tolarno”) as trustee of Tolarno No. 2  and the Tolarno Unit Trust (“the Unit Trust”) a total of $1,406,013. Of that amount there was a significant dispute with respect to the sum of $318,000, part of the $351,861 in the NAB Account ending in …19 in the name of Tolarno as trustee of the Unit Trust trading as Tolarno No. 2which the husband said was owed to E Pty Ltd. The husband also deposed that $15,000 of that amount was to be applied to accounting fees leaving a balance of approximately $19,000.

4. The husband’s case was that the accounts in their joint names, which he said had a total balance of $245,346, should be used to pay them each $120,000 by way of partial property settlement. The difference between the figure the husband said was in the joint accounts and the wife’s figure is the sum of $95,667 in NAB account No …94 which was not included in the husband’s list of accounts in circumstances where he said the funds in that account had been earmarked for the payment of other expenses.

5. Although both the husband and wife were seeking orders for partial property settlement in order to meet their legal fees, they each opposed the order sought by the other party albeit somewhat less strenuously so on the part of the husband whose opposition was to the quantum of the order sought by the wife.  Counsel for the wife referred me to the decision of Cronin J delivered on 18 October 2018 in which his Honour declined to make an order for partial property settlement in the husband’s favour. In his reasons his Honour described the husband’s claim with respect to money being held in trust for the parties adult son as “mystifying” and said at [39] of those reasons that “having regard to the unexplained conduct about allowing the son to have money and his own diminution of the accounts, I see no basis to make an order of the type that he seeks even if he wants the funds for his own litigation”. Counsel for the wife further submitted that in circumstances where the husband had previously received $170,000 by way of partial property settlement, albeit it was his case that he had lent $100,000 of this to their adult son, he has other sources of funds available to him to meet his legal fees and there remain significant sums unaccounted for by the husband that the court should not accede to his application.

6. Although describing the proceeds of sale of the crop as being held in trust for the party’s adult son may have led to some confusion, the explanation in the husband’s affidavit did provide some clarification.  In circumstances where the wife would say the husband has acted unilaterally with respect to these funds, it is likely to be the wife’s case at the final hearing that, however they are characterised, they should be treated as part of the husband’s entitlements. Significantly for the purposes of the matters I must determine I am satisfied on the balance of probabilities that these are not funds that are likely to be currently available to him to meet his legal costs or make a payment to the wife by way of partial property settlement. Similarly the $100,000 the husband says that he lent to the parties adult son to purchase livestock is not money their son can immediately repay so that the husband can either pay his legal costs or make a payment to the wife by way of partial property settlement.

7. Although initially the husband said that $318,000 of the $351,861 in the Tolarno No. 2 account was owing to E Pty Ltd as he had deposed, counsel for the husband ultimately conceded that he was not “in a position to maintain any longer to the court that the $318,000 in the Tolarno No. 2 account would not be available to meet a partial property settlement order.” In these circumstances there would appear, even on the husband’s case, to be sufficient funds to meet the order for partial property settlement sought by the wife which was the primary basis of his opposition to that order. In so far as the husband opposed the order in the wife’s favour on the basis of the other monies he said the wife had received, I am satisfied that there is sufficient property to make whatever adjustment may be required when the matter comes on for final hearing.

8. There does not appear to be any dispute that both parties have contributed both financially and otherwise during the relationship albeit there may be a dispute as to the weight to be afforded to their respective contributions. Whilst there may also be relevant s 75(2) factors given the likely size of the asset pool they are not factors that would preclude an order for partial property settlement being made in either parties favour. In all of the circumstances I am satisfied that I should make the orders for partial property settlement sought by the husband and the wife respectively.

Other Issues

1. Not surprisingly given what occurred in relation to the cheque drawn to pay Mr C there was also a dispute with respect to the payment of Tolarno’s expenses on an ongoing basis. Having little confidence in the parties’ capacity to co-operate with each other I invited counsel to consider a suitable mechanism to facilitate those payments. Unfortunately, although perhaps also not all that surprising given the history of this matter, the parties could not reach agreement as to that mechanism. The husband proposed that he be responsible for collecting the income and paying the outgoings of the various entities. In the alternative in respect of any expense payable by any of the entities from time to time the husband proposed that he provide the wife with the cheque for countersigning, via their accountant, together with the supporting invoice. Thereafter, Mr C having advised the parties in writing that in his opinion it was a proper expense, the wife be required to countersign the cheque and leave it for the husband to collect from the accountant’s office.

2. The wife for her part proposed an even more complex mechanism which involved a cap of $2,000 for each creditor and/or transaction, that the husband be required to provide a copy of the cheque and a copy of the quote, invoice or receipt to the accountant, that thereafter the wife attend upon the accountant and countersign the cheque if satisfied as to the legitimacy and reasonableness of the proposed payment and leave it for the husband to collect. With respect to any expense or outgoing exceeding $2,000, the wife proposed that if the parties could not agree about the payment they consult with the accountant.

3. In my view the wife’s proposal did not provide any resolution in the event that the husband and the wife could not agree and on that basis I prefer the husband’s proposal. However, in circumstances where it is common ground that the expenses that will need to be paid are likely to be limited both in number and amount, I am satisfied that the husband should only be required to approach the accountant if the proposed expense is over $10,000 and the wife should be otherwise required to countersign the cheques the husband presents to her. This would allow the husband to pay rates, insurance and like expenses. The lack of trust between these parties is clear and I also propose to require the husband to account to the wife on a monthly basis. However even if the husband does make payments that are not legitimate or as the wife submits necessary, these are matters that can be dealt when the matter comes on for final hearing.   

4. The husband also sought an order that the wife sign all documents and do all things necessary to instruct the National Australia Bank to close term deposit BSB …, account number …94 in the approximate sum of $96,240 and pay the funds into the Unit Trust Account BSB …, account number …78 together with the funds previously ordered to be paid into that account from another term deposit in Tolarno’s name. I have some difficulty understanding the basis of the wife’s opposition to this order both with respect to the submission that there might be tax implications and generally. Whilst the wife submitted that the order was not necessary because of the funds already transferred into the account pursuant to the orders made on 19 July 2019 I accept counsel for the husband’s submission that there may not be sufficient funds in the Unit Trust’s accounts to meet the ongoing expenses. In this case that would more than likely be fertile ground for further dispute. Counsel for the wife did not demonstrate to my satisfaction that the wife would be in any way disadvantaged by the order the husband seeks. To the contrary I am satisfied that the order may simplify the management of the parties’ finances and avoid further dispute.

5. Finally I am not satisfied that the order the husband seeks for service of the orders upon the National Australia Bank are necessary having regard to the orders I propose to make.

6. The matter was again listed for mention before me on 21 August 2019 in anticipation of the husband having consulted with Mr C and the parties convening a mediation and ultimately, if unsuccessful, there being a trial. This was dependent upon the husband having signed the tax returns for the various entities prepared by Mr C as the various entities cannot be valued until the returns are lodged. 

7. The husband had not signed those returns and it now appears that new issues have arisen which will likely require some of those returns to be amended. To their credit, although it took some time, the parties were able to agree upon a way forward and I have made orders by consent setting out a timetable which will see the returns signed and lodged by mid-September of this year at the latest. It is on that basis that the matter has been placed in the list of cases awaiting allocation to a judicial docket as soon as practicable.

8. The wife also sought an order reserving her costs. The husband’s case was that the costs of both parties should be reserved. In circumstances where I may not be the judge hearing the matter, if either party has an application for costs that application needs to be determined now rather than reserving the costs for determination at a later date. However I note that there is a dispute between the parties as to whether the necessity for the returns to be amended was a result of the husband having provided Mr C with further documentation at their recent meeting or because of information provided by the husband during the course of that meeting. This is an issue which in my view may be relevant to the question of what if any costs should be ordered. In these circumstances I propose to make the usual orders for the filing of submissions with respect to costs in the event that either or both parties seeks such an order. The parties have agreed that if there is an application for costs they will provide me with a letter from Mr C clarifying whether in fact as the husband says he provided Mr C with information not documents at their recent meeting.

I certify that the preceding nineteen (19) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 6 September 2019.

Associate: 

Date:  6 September 2019