Willans & Enmore
[2021] FedCFamC1F 77
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Willans & Enmore [2021] FedCFamC1F 77
File number(s): SYC 4725 of 2017 Judgment of: WILSON J Date of judgment: 27 September 2021 Catchwords: FAMILY LAW – PROPERTY – complications encountered by parties in formulating orders that gave effect to main reasons for judgment in the case. Cases cited: Calvin & McTier (2017) 57 Fam LR 1
Willans & Enmore [2021] FamCA 340
Division: Division 1 First Instance Number of paragraphs: 29 Date of hearing: 24 August 2021, 6 September 2021 Place: Melbourne Counsel for the Applicant: Ms S. Christie SC Solicitor for the Applicant: Greg Alfonzetti Solicitor Counsel for the Respondent: Mr I. Coleman SC Solicitor for the Respondent: Andrew Cohen Solicitor ORDERS
SYC 4725 of 2017 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS WILLANS
ApplicantAND: MR ENMORE
Respondent
ORDER MADE BY:
WILSON J
DATE OF ORDER:
27 SEPTEMBER 2021
THE COURT ORDERS THAT:
1.On or before 4:00pm on 11 October 2021 the parties must bring in a minute that gives effect to these reasons as representing the form of final orders, aside from costs, to dispose of this litigation.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Willans & Enmore are approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT ON FORM OF ORDERS
WILSON J
Following a seven day trial, on 28 May 2021 I handed down reasons for judgment requiring the parties to bring in a minute that gave effect to those reasons by 11 June 2021. Each party provided different proposed orders and each party sought orders in respect of costs. These reasons address the proposed orders. In separate reasons I will address costs.
THE PRECISE FORM OF ORDERS SOUGHT
Previously[1] I recorded my conclusion that the applicant was entitled to a 50% division of the net assets of the parties and that the dollar amount corresponding to a 50% division was $4,371,832. In order to generate that sum, in my earlier reasons I hypothesised that the net value of the parcels of land at W Town and Suburb G was a starting point,[2] to which could be added cash-at-bank totalling $3,797,845. However, that did not generate a 50% division of assets. I invited the parties to more precisely formulate a form of orders that achieved a 50% division of the assets.
[1] [2021] FamCA 340 (at [162]).
[2] Together they aggregated $2,925,000 in value.
On 24 August 2021 both parties provided a minute of consent orders each urged me to make. Each provided short written submissions supporting the version of the minutes each provided.
On behalf of the applicant Ms Christie SC provided a very helpful document headed “minute of orders sought by applicant to give effect to judgment.” It was in the following terms –
DEFINITIONS
A. “J Pty Ltd” means J Pty Ltd, registered in NSW, ABN ...;
B. “Suburb G” means the property at F Street, Suburb G NSW, Folio ...;
C. “the Suburb G mortgage” means the mortgage registered no. ... to HH Bank and BC Bank;
D. “W Town” means the property at JJ Street, W Town NSW, Folio ...;
E. “the Division 7A loan” means the private company loan agreement under Division 7A of Part III of the Income Tax Assessment Act 1936 between J Pty Ltd (the lender) and the parties (the borrower) utilised by the parties to acquire W Town in their joint names;
F. “the joint accounts” means the accounts in the joint names of the parties with HH Bank being account no. ending …14, term deposit account no. ending …14 and term deposit account no. ending …78;
G. “SMSF” means the self-managed superannuation fund of the parties known as J Pty Ltd Super Fund;
H. “the SMSF trustee” means AQ Pty Ltd registered in NSW, ACN …, the trustee of the SMSF and of which the parties are the directors and equal shareholders.
ORDERS
1.That each of the parties do all acts and things and give all consents and execute all documents and writings necessary to give effect to the Orders made herein.
2.In the event of either party failing, refusing or neglecting to sign within seven (7) days after receipt of a written request to do so, any documents necessary to put into effect any term or terms of these Orders, the Registrar or Deputy Registrar of the Family Court of Australia at Sydney is hereby appointed pursuant to Section 106A of the Act, to execute all such documents on behalf of the defaulting party, and to do all other things necessary to give validity and operation to the said Orders.
3. That within 28 days of the date of these Orders:
3.1the Applicant discharge the liability in respect of the Suburb G mortgage;
3.2the Respondent transfer to the Applicant the whole of his right, title and interest in:
a) Suburb G; and
b) W Town.
4.The Respondent shall indemnify the Applicant absolutely and keep the Applicant so indemnified in respect of any liability of the Applicant pursuant to the Division 7A loan.
5That with respect to the joint bank accounts, the parties do all such things and sign all documents necessary within 7 days to close those accounts and pay the balances as follows:
5.1 Accounts ending …14 and …78 paid to the Applicant;
5.2 Account ending …14 to be paid $166,224 to the Respondent and balance to the Applicant.
6. That simultaneously with the Respondent’s compliance with order 3.2 the Applicant transfer to the Respondent her shares in J Pty Ltd.
7. The Respondent shall be solely responsible for and indemnify the Applicant absolutely in respect of:
7.1 any liability of the Applicant to J Pty Ltd, howsoever arising;
7.2any liability to any third party or any liability whatsoever of the Applicant arising out of her interest in or involvement with J Pty Ltd.
8. That in respect of any loan account of the Applicant with J Pty Ltd whereby the Applicant is indebted to J Pty Ltd, the responsibility for the repayment of the loan/s is assigned to the Respondent and the parties are to do all acts and things and sign all documents necessary to give effect to this Order.
9. That within 60 days the parties are to do all such things and sign all documents necessary to cause the Applicant’s entitlement in the sum of $721, 749 in the SMSF to be rolled over to another complying superannuation fund elected by the Applicant.
10. Upon compliance by the parties with Order 9:
10.1 the Applicant resign as a director of the SMSF trustee;
10.2 the Applicant transfer to the Respondent her shares in the SMSF trustee;
10.3The Respondent be responsible for and indemnify the Applicant against any and all liability associated with the SMSF.
11. The Applicant is declared as against the Respondent to have the sole legal and beneficial interest in any items of property which are held in her sole name or which are in her possession and control at the date of the Orders, including but not limited to:
a) bank accounts;
b) shares; and
c) household contents and personal belongings.
12. The Respondent is declared as against the Applicant to have the sole legal and beneficial interest in any items of property which are held in his sole name or which are in his possession and control at the date of the Orders, including but not limited to:
a) motor vehicles and motorcycles;
b) bank accounts;
c) shares; and
d) household contents and personal belongings.
In large measure those minutes followed the thematic and arithmetical composition of the orders I had earlier hypothesised.[3]
[3] [2021] FamCA 340 (at [162]).
On behalf of the respondent, Mr Coleman SC contended in oral submissions that the correct approach when crafting orders for the alteration of property interests involved the isolation of superannuation interests. That was because the parties’ self-managed superannuation fund is presently unaudited, he said. Mr Coleman SC submitted that the last audit of the self-managed superannuation fund was completed in respect of accounts then current for the financial year ended 30 June 2018. Mr Coleman contended that based on my overall determination of the pool, superannuation interests should not be taken into account unless and until the self-managed fund was fully audited. In monetary terms, that was shown as follows –
Pool as determined $8,743,664
less
Superannuation interests $1,799,425
total$6,944,239
50% of pool without superannuation $3,472,119.
Mr Coleman’s client proposed orders for an in specie division of the parties non-superannuation assets and then for an equal division, by splitting order, of the parties’ interests in the self-managed superannuation fund once the accounts of that fund had been brought up-to-date and audited. That involved addressing accounts for the financial years ended 30 June 2019, 2020 and 2021.
That proposal had not been advanced at trial. I was concerned that I would almost certainly fall into appealable error unless I invited the parties to more fully expand on the proposal or to refute it. On 6 September 2021 I fixed a further mention for that purpose. On that hearing Mr Coleman SC submitted –
(a)the accounts of the self-managed superannuation account had not been audited for some time;[4]
(b)any orders in respect of the superannuation fund altered over three successive financial years;[5] and
(c)the applicant and the respondent were not greatly in dispute about superannuation, other than ultimately, whether a superannuation splitting order should be made or whether the applicant should be cashed out in terms of her entitlement, equating to a few hundred thousand dollars.[6]
[4] Transcript, 6 September 2021, T2 L22.
[5] Transcript, 6 September 2021, T2 L24.
[6] Transcript, 6 September 2021, T2 L26-29.
Ms Christie SC for the applicant submitted that both parties ran this case at trial as a one pool case.[7] Additionally, Ms Christie submitted –
(a)neither party sought a splitting order at trial;[8]
(b)the parties attributed a dollar value to superannuation for the purpose of the Evidence Act;[9]
(c)the issue raised by the respondent about regularising the fund is an issue of statutory compliance and not a valuation issue;[10] and
(d)the value of the parties’ superannuation interest is that recorded in the joint balance sheet.[11]
[7] Transcript, 6 September 2021, T5 L9-10.
[8] Transcript, 6 September 2021, T5 L16.
[9] Transcript, 6 September 2021, T5 L19.
[10] Transcript, 6 September 2021, T5 L25.
[11] Transcript, 6 September 2021, T5 L27.
In reply, Mr Coleman submitted the court must have regard to the totality of the property[12] and, in the end, the point agitated was a distinction without a difference.[13] In the end both counsel agreed that the total pool to be divided was $8,743,664, with half being ordered to each, namely $4,371,832. The joint balance sheet was set out in my earlier reasons.[14]
[12] Counsel cited Calvin & McTier (2017) 57 Fam LR 1.
[13] Transcript, 6 September 2021, T7 L47.
[14] [2021] FamCA 340 (at [17]).
THE APPLICANT’S PROPOSAL
The two parcels of real estate, namely F Street Suburb G and JJ Street W Town were agreed to be transferred, encumbrance free, to the applicant the total value being $2,925,000.
The applicant also proposed that the cash-at-bank standing to the credit in HH Bank account ending ...14 ($64,520) and the cash-at-bank standing to the credit in a HH Bank term deposit account ending in ...78 ($259,760) making in total $324,280 be paid to the applicant.
Expressed numerically, the running total of those items[15] was $3,249,280.
[15] Being $2,925,000 and $324,280.
To that Ms Christie submitted that the applicant’s entitlement in her self-managed superannuation fund of $721,749 would be rolled over to another compliant fund.
The running total became $3,971,029 with the superannuation.
The applicant proposed that the respondent indemnify her in relation to her liability under the division 7A loan agreement, the total joint liability being $126,470.
The applicant also proposed –
(a)transferring her share in J Pty Ltd so that the respondent owned J Pty Ltd absolutely to the value of $3,230,000; and
(b)for the respondent to have $116,224 of the total sum of $435,579 of the HH Bank term deposit account ending in ...14, with the applicant to have the balance, namely $319,355.
So far as concerned the applicant’s proposal of the way property interests were to be adjusted in her favour, it was best expressed arithmetically in tabular form in the following manner –
Total sum, being 50% of $8,743,644 $4,371,832 To be derived from – · absolute transfers unencumbered of Suburb G and W Town $2,925,00
· cash-at-bank a/c ...14 ($64,520) plus cash-at-bank a/c ...78 ($259,760) $324,280
· term deposit a/c ...14 ($435,579) less a sum for the respondent ($166,224) $319,335
· deficiency $803,217 $4,371,832 $4,371,832
The applicant’s proposal left a deficiency of more than $800,000, created in part by her suggestion that the respondent took a portion of the total amount held in the HH Bank term deposit account ended ...14, namely $435,579. By providing for the applicant to have the totality of the amount in account ...14, the arithmetic appeared as follows –
Total of half amount $4,371,832 Derived from – · 2 properties $2,925,000 · A/Cs ...14 and ...78 $324,280 · A/C ...14 $435,579 $3,684,859 Discrepancy $686,973 $4,371,832 $4,371,832
The discrepancy revealed by the above calculations was $686,973 which could be made up from the sum of $721,749 standing to the applicant’s credit in her self-managed superannuation fund, leaving a credit balance in that superannuation account of $34,776.
Once again, expressed arithmetically and in tabular form the composition of the sum to be paid to the applicant is set out below –
Total sum
$4,371,832 Derived from – · 2 properties $2,950,000 · A/Cs ...14 and ...78 $324,280 · A/C ...14 $435,579 · Superannuation $686,973 $4,371,832 $4,371,832 THE RESPONDENT’S PROPOSAL
The respondent’s starting figure was not half of the overall assets ($4,371,832). Instead it was the total figure for non-superannuation assets, namely $3,472,119. To achieve a just and equitable result I must make orders that have the effect of altering property interests to a figure corresponding to 50% of the total net asset position of the parties, namely $4,371,832. The draft orders proposed by Mr Coleman SC were premised on a division of assets that did not include superannuation assets. The debate on that issue has already been recorded.
The major asset sought by the respondent was complete ownership and control of J Pty Ltd, valued after judgment in the sum of $3,230,000. In order to give effect to that, the shares in J Pty Ltd held by the applicant needed to be transferred to the respondent. Once that transfer of shareholding had been effected it followed that the respondent’s proposal in relation to his provision of indemnification of the applicant in relation to J Pty Ltd, various directors’ loans and other company related liabilities was appropriate.
In addition, the respondent proposed a transfer to him of a combination of various items. They were –
(a)cash-at-bank and shares;[16]
(b)the retention of household furniture in the agreed sum of $11,000 on the balance sheet at item 11;
(c)other cash-at-bank and motor vehicles totalling $118,949; [17]
(d)the transfer of funds in HH Bank accounts …14 and …78 totalling $324,280;[18] and
(e)the transfer to him of a portion of funds in HH Bank account …14 totalling $435,579.[19]
[16] Those were recorded in paragraph 2 of the respondent’s proposed orders.
[17] Those were recorded in paragraph 5 of the respondent’s proposed orders.
[18] This was the gravamen of paragraph 5 of the respondent’s proposed orders. Those funds have been ordered to be paid to the applicant addressed above.
[19] This was recorded in paragraph 6 of the respondent’s proposed orders.
Expressed arithmetically, the respondent’s proposal was as set out below –
Total $4,371,832 Derived from – · J Pty Ltd $3,230,000 · cash-at-bank & shares $121,503 · household items $11,000 · other cash, motorcycles $118,949 · cash in A/Cs …14 & …78 $324,280 · partial amount in A/C …14 $26,579 $3,832,311 $4,371,832
The above proposal proceeded on the assumption that certain funds were not already accounted for, especially the whole of the funds in accounts …14, …78 and …14. The respondent’s proposal did not factor in superannuation funds. The total of superannuation was $1,799,425. Applying the mechanism set out above in respect of the applicant’s proposal, the sum in superannuation of $686,973 had already been applied in order to bring the applicant’s share of the net assets to $4,371,832. That left the amount of superannuation that was available for division of $1,112,452 (being $1,799,425 on the balance sheet less $686,973 already applied towards the applicant). If the major dollar value assets were first recognised, the position was as follows –
Total $4,371,832 Derived from – · J Pty Ltd $3,230,000 · superannuation $1,112,452 · discrepancy $29,378 $4,371,832 $4,371,832
The sum of the discrepancy of $29,378 was readily made up by item 16 on the balance sheet, namely the motorcycle said to be worth $30,000.
In the above circumstances, the parties should proceed on the basis that the above reasons record my preliminary views on the form of orders. The parties should absorb the above comments and bring in a form of agreed order within 14 days that finally disposes of the orders to be made consequent upon my reasons handed down on 28 May 2021. This case has run its course post-judgment long enough.
I direct that on or before 4:00pm on 11 October 2021 the parties bring in a minute that gives effect to these reasons as representing the form of final orders, aside from costs, to dispose of this litigation.
I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wilson. Associate:
Dated: 27 September 2021.
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