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your answers regarding a financial...
I used your service in Feb 2014 and was very satisfied with your answers regarding a financial settlement with my ex partner. This is a follow-on with respect but wish to pay etc. as it is a new problem.
I am in the process of a family law financial settlement and because I was bankrupt in 2005 to 2008 whether this affects my settlement. The facts are as follows
I bought a house in late 2003 in my partners name, as I had done since 1999 for reasons of asset protection having a business ......for $600,000 with a clear title . It has recently been sworn-valued at $700,000. She already had property prior in her name worth $200,000, which she recently sold for #300,000.
I was bankrupt in 2005 to 2008 business related.
In 2009 she mortgaged the $600,000 property for $200,000 (interest only) and we used the funds to invest.
In 2014 we separated and have an asset pool of $1,300,000 gross,$1,100,000 net ($1,300,000 less the $200,000 mortgage)
We looked like agreeing to split the $1,100,000 asset pool 65% myself, 35% herself ($715,000 and $385,000 after paying out the mortgage) but she recently believes she is entitled to more.
The most efficient way to disperse the asset pool would be for her to assign the original house to myself it now being worth $700,000 and I have agreed to let her have the other $15,000 in addition to the balance. (ie: she would now get $400,000 ; me $700,000)
My questions though are as follows, since recently she expects more.. and if our continued negotiations fall over it may well go to trial. I am happy to do so, and take a judges decision, but am concerned about the property if the decision follows the above logic.
1) If the property is assigned to myself in the judgement at trial, could I be pursued by the original trustees for a) the $700 value ..b) the $700 value less the mortgage ie: $500 or c) not at all?
2) If the trustees are involved in the trial or prior to ; similarly could they take the value of the property $700 and still leave us owing $200 ($900 from the gross asset pool) or auction the property and take the net proceeds (say $700 less the $200 first mortgage) ie $500 from the gross asset pool?
3) If the property were sold prior to trial and the proceeds split $700 to $400 at judgement could I still be pursued for an amount and how much; since I would now not own that property?
4) Could the trustees go one step further and take all the asset pool.
5) Are there any other relevant answers or precedents you are aware of.
6) Should I employ a barrister who has expertise in my situation that you can recommend in Melbourne. The % split is not contentious in that whatever is decided either in court or before I will abide by.
7) Just on the sale of her property which is part of the asset pool as deemed by the court in April 2014 when orders were made to provide valuations on properties, cars for the next concilliation conference; she since sold the property without notifying anyone and is soon to collect the proceeds (300k) reading a previous response from you it seems she shouldnt have done this without consent....is that the case and can these funds be protected before she spends them?
Thank you in anticipation of your reply
Submitted: 2 years ago.Category: Australia Law
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Answered in 54 minutes by:
5/26/2015
Solicitor: James D. Ford, Solicitor replied 2 years ago
James D. Ford
James D. Ford, Solicitor
Category: Australia Law
Satisfied Customers: 1,601
Experience: Consulting Principal at Nexus Law Group
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Hi, please allow me some time to digest your facts as your have detailed them, and I will revert back to you with my thoughts. Kind regards, James
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Customer reply replied 2 years ago
Thank you James.
Solicitor: James D. Ford, Solicitor replied 2 years ago
Hi, Firstly -- has the $300k property settled? if not, when it due to settle? it might be too late, but in my opinion you need to get a caveat on the property pronto!! work with me and we will see what can be done... or if that is not possible, my suggestion is at the minimum to request urgent Court orders that the proceeds from the sale be paid into Court pending the outcome of your property settlement. This is assuming you are happy for the property to be sold, and are also happy with the price it has been sold for... If not, you may want to consider an application to the Court to set aside the sale, and restrain your ex, from selling again.. until the property settlement is agreed, or decided by the Court. I am confused by the status of your Court proceedings, as you noted that the Court decided on the asset pool in April 2014... that was a long time ago... when is the conciliation conference scheduled? if that is not the next step, what is? and when is it scheduled? As you are now discharged from your bankruptcy... and the transfer to your wife in late 2003 (approx. 2 years before your bankruptcy), I need to know the following: 1. was the matter of the transfer disclosed to your trustee in bankruptcy when you went bankrupt??2. could the reason for the transfer be argued to be to defeat any creditor's claims, as you were, or were about to become insolvent at the time of the transfer?3. what was the state of your financial affairs at the time of the transfer?4. exactly how long (in months) before you went bankrupt was the transfer of the property to your wife's name? Here is the relevant section of the Bankruptcy ActBANKRUPTCY ACT 1966 - SECT 121Transfers to defeat creditorsTransfers that are void (1) A transfer of property by a person who later becomes a bankrupt (the transferor ) to another person (the transferee ) is void against the trustee in the transferor's bankruptcy if: (a) the property would probably have become part of the transferor's estate or would probably have been available to creditors if the property had not been transferred; and (b) the transferor's main purpose in making the transfer was: (i) to prevent the transferred property from becoming divisible among the transferor's creditors; or (ii) to hinder or delay the process of making property available for division among the transferor's creditors.Showing the transferor's main purpose in making a transfer (2) The transferor's main purpose in making the transfer is taken to be the purpose described in paragraph (1)(b) if it can reasonably be inferred from all the circumstances that, at the time of the transfer, the transferor was, or was about to become, insolvent.Other ways of showing the transferor's main purpose in making a transfer (3) Subsection (2) does not limit the ways of establishing the transferor's main purpose in making a transfer.Transfer not void if transferee acted in good faith (4) Despite subsection (1), a transfer of property is not void against the trustee if: (a) the consideration that the transferee gave for the transfer was at least as valuable as the market value of the property; and (b) the transferee did not know, and could not reasonably have inferred, that the transferor's main purpose in making the transfer was the purpose described in paragraph (1)(b); and (c) the transferee could not reasonably have inferred that, at the time of the transfer, the transferor was, or was about to become, insolvent. The amount of money at stake, in my opinion, if she goes crazy on what she is requesting, and the matter proceeds to Court, I highly recommend using a Barrister to best represent your interests. I await your further information, before continuing, kind regards, James
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Customer reply replied 2 years ago
q1 )Thank you for answering so promptly James, firstly the property was sold 26th March 2015 . It was in the UK . Her solicitor informed mine at the end of April that she ""had it up for sale"" and I found the agents ""sold"" advert ""sold in 4 days"" on the net. Unsure of settlement terms but the usual 60 days is tomorrow...but then she has to transfer the funds to Australia etc etc.So my solicitor is aware that it has been sold, at a reasonable price by the way, so I am surprised that he didnt do as you say, that is freeze the proceeds in some way. He is away till June 4th now (as is my barrister) but will contact them first thing in the morning and if his offsiders cannot move quickly pass it back to you to action.
q2) We had the initial court proceedings April 2014, (initiating and response etc) where discovery orders were issued etc. There was the following Concilliation conference in June 2014, and I think one in August where the trial Date was set for June 2015. (Judges busy schedule!) Meantime a lot of discovery items and letters to and fro.
background to bankruptcy.....
The Company was doing well, I had 49%, the other directors 51% , we were making money and solvent.
Our major customer wanted to buy us out...agreeable to all, me included. Unbeknown to me until the last day the other directors wanted to ""push our customer into a sale"" by taking advantage of a contra-arrangement with them, in that this particular month we owed them say 2 million (for them purchasing raw ingredients being a multinational with superior buying power) instead of the usual they owing us for product. The other directors had this bright idea that if they went into voluntary administration (thus our company not liable for the 2m debt to them) this would force them into speedily buying the Company !! I fought that but with 49%..... And of course the multinational did exactly as I said....cancelled further orders and said they would pick us up at a bargain price when we folded!
And since they owed more than the 2m in the following month didnt pay ...legally they should have ...but why would they? So from administration (with a supposedly ""friendly administrator""...who turned sour) the company went into receivership., never saw the other directors from day 2 onwards, and worked with the receivers until it was sold 9 months later. So it was sudden...totally unnecessary...and I continued to manage for the new owners till 2009 or 10. I wasnt aware of the Administration until the day it happened....in fact an hour later I was told the $15,000 the company owed me for expenses for the last three months wouldnt be paid!.....so the short answer to you is NO....I wasnt aware. This all happened early 2003.There were a few debts that emerged which the Company I then worked for were to take care of , and some I was going to pay off myself, not unsurmountable given my wages.The total was about 1 years wages of which I was to pay 1/3rd. My partner signed for the house in June 2004, settled in September 2004. In November 2004 the Bank hit me for a bill of over $2.5 million ! ....I had no idea that I could be liable given the circumstances and perhaps should have fought it ...it was too much to pay back so I went bankrupt in June 2005...discharged in June 2008. The Bank didnt charge the other directors...they had bought in 18 months previously and somehow had protection..I dont know how; the bills from the Bank were charged to myself and my original partner who had left when these new directors took over his share. He too went bankrupt I believe since the debt somehow got charged from when we originally started the business in 2000.
..
1) No the house purchase wasnt disclosed since it was not in my name (sorry it was bought in 2004 not 03)The house wasnt "transferred" ...simply bought in 2004 and it was purchased in her name with her name on title. She signed the sale document, the sale was never in my name. At the time of sale the solicitors had her sign a declaration of trust on this property which they said didnt carry much weight legally (not like a caviat/mortgage etc. ) but declared that I had an interest in the property. My solicitor looked at it when we were seeking some recompense from the builder of the property through the courts in 2007 and said the same ...legally it wasnt worth the paper it was written on.
2) No again since she purchased the property a year before bankruptcy in 2005
3) When the property was purchase I had $370 thousand in the bank on a salary of $100,000 plus.
4) she purchased the property 11 months prior to bankcruptcy ..I hadn't owned property since 1999. In fact at the time of bankruptcy I was renting in another area of Melbourne. (We had fought and I moved out)Hope this helps James.
Solicitor: James D. Ford, Solicitor replied 2 years ago
Ok, let me know what happens regarding the sale proceeds.. though if settlement has occurred... as she has cash.. there is no telling what she has done or will do with the money.. your lawyers will most likely say that the amount will be deemed paid to her from the asset pool... though in my opinion, this cash settlement takes all of the pressure off her financially.. therefore her negotiating position is much stronger.. she no longer needs to settle in order to access the money.. she already has the money... and in my view this may become a major problem for you.. I am not saying that an application to pay the funds into Court would have definitely have been successful, but given the impact of this cash on your respective bargaining positions, I suggest it is something that at least should have been attempted... in fact, since you were already in litigation, there is an established application pursuant to the Family Law Act 1975 whereby a party can apply for orders to restrict the other party from selling any assets, until the property settlement is finalised... I suggest that this is what should have been applied for either when the asset pool was decided, or at the latest back at the end of April when you were informed the property was up for sale... The next question is what is the position regarding the second property, in her name? is she able to sell this property as well? what would stop her from signing a Contract today to sell it? With regard to your questions about the Trustee in Bankruptcy.. the facts show that you paid for a valuable property worth $$$, in exchange for no consideration (presumably as a gift) in June - September 2004, approx. 9 months before you declared bankruptcy in June 2005, and approx. 2 months before the bank hit you with the bill for over $2.5 million. This fact was not disclosed to the Trustee in Bankruptcy. When you declare bankruptcy - please refer to Q33 on the Form 3 - Statement of Affairs paperwork... that asks the following:https://www.afsa.gov.au/resources/forms/form-3-statement-of-affairs-pdf33 Sale, Transfer or Gift of Assets in the last 5 yearsHave you sold, transferred or given away any assets worth more than $1000 in the last 5 years? Provide a copy of the receipt or settlement statement No Yes please give details What did you sell, transfer or give away? To whom was it sold, transferred or gifted? Date transferred What was it worth? How much was it sold for? ($) How much did you receive net? ($) If you did not disclose anything regarding the gift... what did you answer in response to this question?I strongly suggest you obtain a copy of the Form 3 that was completed and signed by yourself.. and advise me what it says...We may need to take the matter offline... I have sent you an offer of additional service to discuss the matter with you privately.I await your response before continuing, kind regards, James
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Customer reply replied 2 years ago
James, obviously we havent finished yet but I am gathering some more information for you which will possibly take me till Wednesday to get it. Can we carry on then and would it be better (if I am allowed) to continue in text or is it better I accept the phone call. Please let me know which way to go, Thanks
Solicitor: James D. Ford, Solicitor replied 2 years ago
Hi, my answer depends upon the information you are gathering... in any event, I think it best you accept and rate my above response, and accept the phone call. You can then email me the information you are collecting, and we can discuss in more detail offline. Kind regards, James
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