Phillips & Nicholson (No 3) [2025] FedCFamC1F 340 (22 May 2025)

1. The Applicant shall forthwith do all acts and things and sign all documents necessary to sell the property known as and located at J Street, Suburb K ("the Suburb K property") in a manner as agreed between the parties and failing agreement within 14 days as follows:

(a) the Applicant shall instruct such lawyer as the parties jointly agree upon to have the conduct of the sale of the Suburb K property or, in the absence of agreement reached within 28 days of the date of these Orders, the Applicant will propose three conveyancing lawyers from which the First Respondent will select one within further 7 days ("the lawyer"), the costs of and incidental to such appointment to be borne equally between the parties as and when they fall due;

(b) the Applicant shall instruct such real estate agent as they agree upon to have the conduct of the sale, and in default of agreement within 28 days of the date of these Orders, the Applicant will propose three real estate agents from which the First Respondent will select one within a further 7 days ("the agent"), the costs of and incidental to such appointment to be borne equally as and when they fall due;

(c) the Applicant shall do all acts and things and sign all documents necessary to list the Suburb K property for sale by public auction within 35 days of the date of appointment of the agent or such longer period as is agreed between the parties;

(d) the reserve price for the purpose of such auction shall be such price as the parties agree upon in writing or, in the absence of agreement reached within 28 days of the date of these Orders shall be $1,200,000;

(e) the Applicant shall co-operate in every way with the agent including (without limiting the generality of the foregoing):

(i) making the key available to the agent;

(ii) allowing inspection of the Suburb K property at all reasonable times requested by the agent including liaising with the tenants of the Suburb K property as may be requested;

(iii) doing or saying nothing to hinder or prevent a sale being effected;

(iv) ensuring the Suburb K property including the grounds are in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and

(v) signing all documents requested by the agent in relation to the listing for sale of the Suburb K property except a contract or agreement for sale which has not been authorised by the lawyer;

(f) in the event the bidding at the auction does not reach the reserve price such of the parties as are present at the auction may negotiate with the highest bidders or any other interested person and effect a sale of the Suburb K property at a price which is not more than 5% below the reserve price, or at such other price as the parties agree upon in writing;

(g) in the event the Suburb K property is not sold at the public auction the parties shall do all acts and things and sign all documents necessary so as to list the Suburb K property for sale by private treaty with the agent;

(h) the sale price at which the Suburb K property shall be listed shall be such price as the parties agree upon in writing or, in the absence of agreement reached within 7 days from the date of the auction shall be the price nominated by the agent;

(i) if the Suburb K property remains unsold 6 weeks from the date of being listed for sale by private treaty, the parties shall do all acts and things and sign all documents necessary to continue to relist the Suburb K property for sale by public auction again at three monthly intervals, and the provisions of Orders 2(e) and 2(f) above shall apply successively until the Suburb K property has been sold so that at each successive auction the reserve price shall be 5% less than the reserve price at the immediately preceding auction unless otherwise agreed by the parties in writing;

(j) The Applicant shall authorise the agent and the Solicitor engaged to act on the sale to liaise with the First Respondent and all instructions in relation to the sale of the Suburb K property shall be provided by the parties jointly and in writing.

1. At settlement of the sale of the Suburb K property the gross proceeds of sale shall be applied in the following manner:

(a) to meet the costs and expenses of sale;

(b) in payment of all amounts required to pay all municipal water and council rates fees outstanding with respect to the Suburb K property;

(c) to discharge of the mortgage secured on the Suburb K property (if any);

(d) to pay the balance then remaining into a controlled monies account in the name of both parties ("the joint investment account").

1. That the parties shall forthwith do all acts and things and sign all documents necessary to sell the property known as L Street, Suburb M ("the Suburb M property"), in a manner as agreed between the parties and, failing agreement, within 14 days of the date of these Orders, as follows:

(a) the parties shall instruct such lawyer as they agree upon to have the conduct of the sale of the Suburb M property on behalf of both parties or, in the absence of agreement reached within 28 days of the date of these Orders, the First Respondent will propose three conveyancing lawyers from which the Applicant will select one within further 7 days ("the lawyer"), the costs of and incidental to such appointment to be borne by the parties equally as and when they fall due;

(b) the parties shall instruct such real estate agent as they agree upon to have the conduct of the sale on behalf of both parties, and in default of agreement within 28 days of the date of these Orders, the Applicant will propose three real estate agents from which the First Respondent will select one within a further 7 days ("the agent"), the costs of and incidental to such appointment to be borne by the Applicant as and when they fall due;

(c) the parties shall do all acts and things and sign all documents necessary to list the Suburb M property for sale by public auction within 35 days of the date of appointment of the agent or such longer period as is agreed between the parties;

(d) the reserve price for the purpose of such auction shall be such price as the parties agree upon in writing or, in the absence of agreement reached within 28 days of the date of the Applicant's default shall be $6,000,000;

(e) the parties shall cooperate in every way with the agent including (without limiting the generality of the foregoing):

(i) making the key available to the agent;

(ii) allowing inspection of the Suburb M property at all reasonable times requested by the agent including liaising with the tenants of the Suburb M property as may be requested;

(iii) doing or saying nothing to hinder or prevent a sale being effected;

(iv) ensuring the Suburb M property including the grounds are in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and

(v) signing all documents requested by the agent in relation to the listing for sale of the Suburb M property except a contract or agreement for sale which has not been authorised by the lawyer;

(f) in the event the bidding at the auction does not reach the reserve price such of the parties as are present at the auction may negotiate with the highest bidders or any other interested person and effect a sale of the Suburb M property at a price which is not more than 5% below the reserve price, or at such other price as the parties agree upon in writing;

(g) in the event the Suburb M property is not sold at the public auction the parties shall do all acts and things and sign all documents necessary so as to list the Suburb M property for sale by private treaty with the agent;

(h) the sale price at which the Suburb M property shall be listed shall be such price as the parties agree upon in writing or, in the absence of agreement reached within 7 days from the date of the auction shall be the price nominated by the agent;

(i) if the Suburb M property remains unsold 6 weeks from the date of being listed for sale by private treaty, the parties shall do all acts and things and sign all documents necessary to continue to relist the Suburb M property for sale by public auction again at three monthly intervals, and the provisions of Orders 4(e) and 4(f) above shall apply successively until the Suburb M property has been sold so that at each successive auction the reserve price shall be 5% less than the reserve price at the immediately preceding auction unless otherwise agreed by the parties in writing.

1. That at settlement of the sale of the Suburb M property the gross proceeds of sale shall be applied in the following manner:

(a) to meet the costs and expenses of sale;

(b) in payment of all amounts required to pay all municipal water and council rates fees outstanding with respect to the property;

(c) to discharge of the mortgage secured on the Suburb M property (if any);

(d) to pay the balance then remaining by way of a deposit into a controlled monies account in the name of both parties (the joint investment account).

1. That the parties shall forthwith do all acts and things and sign all documents necessary to sell the property known as N Street, Suburb O ("the Suburb O property"), in a manner as agreed between the parties and, failing agreement within 14 days of the date of these Orders, as follows:

(a) the parties shall instruct such lawyer as they agree upon to have the conduct of the sale of the Suburb O property on behalf of both parties or, in the absence of agreement reached within 28 days of the date of these Orders, the First Respondent will propose three conveyancing lawyers from which the Applicant will select one within further 7 days ("the lawyer"), the costs of and incidental to such appointment to be borne by the parties equally as and when they fall due;

(b) the parties shall instruct such real estate agent as they agree upon to have the conduct of the sale on behalf of both parties, and in default of agreement within 28 days of the date of these Orders, the Applicant will propose three real estate agents from which the First Respondent will select one within a further 7 days ("the agent"), the costs of and incidental to such appointment to be borne by the Applicant as and when they fall due;

(c) the parties shall do all acts and things and sign all documents necessary to list the Suburb O property for sale by public auction within 35 days of the date of appointment of the agent or such longer period as is agreed between the parties;

(d) the reserve price for the purpose of such auction shall be such price as the parties agree upon in writing or, in the absence of agreement reached within 28 days of the date of the these Orders shall be $800,000;

(e) the parties shall cooperate in every way with the agent including (without limiting the generality of the foregoing):

(i) making the key available to the agent;

(ii) allowing inspection of the Suburb O property at all reasonable times requested by the agent including liaising with the tenants of the Suburb O property as may be requested;

(iii) doing or saying nothing to hinder or prevent a sale being effected;

(iv) ensuring the Suburb O property including the grounds are in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and

(v) signing all documents requested by the agent in relation to the listing for sale of the Suburb O property except a contract or agreement for sale which has not been authorised by the lawyer;

(f) in the event the bidding at the auction does not reach the reserve price such of the parties as are present at the auction may negotiate with the highest bidders or any other interested person and effect a sale of the Suburb O property at a price which is not more than 5% below the reserve price, or at such other price as the parties agree upon in writing;

(g) in the event the Suburb O property is not sold at the public auction the parties shall do all acts and things and sign all documents necessary so as to list the Suburb O property for sale by private treaty with the agent;

(h) the sale price at which the Suburb O property shall be listed shall be such price as the parties agree upon in writing or, in the absence of agreement reached within 7 days from the date of the auction shall be the price nominated by the agent;

(i) if the Suburb O property remains unsold 6 weeks from the date of being listed for sale by private treaty, the parties shall do all acts and things and sign all documents necessary to continue to relist the Suburb O property for sale by public auction again at three monthly intervals, and the provisions of Orders 6(e) and 6(f) above shall apply successively until the Suburb O property has been sold so that at each successive auction the reserve price shall be 5% less than the reserve price at the immediately preceding auction unless otherwise agreed by the parties in writing.

1. That at settlement of the sale of the Suburb O property the gross proceeds of sale shall be applied in the following manner:

(a) to meet the costs and expenses of sale;

(b) in payment of all amounts required to pay all municipal water and council rates fees outstanding with respect to the property;

(c) to discharge of the mortgage secured on the Suburb O property (if any);

(d) to pay the balance then remaining into a controlled monies account in the name of both parties (the joint investment account).

1. That the parties shall forthwith do all acts and things and sign all documents necessary to sell the property known as P Street, Suburb Q ("the Suburb Q property"), in a manner as agreed between the parties and, failing agreement, within 14 days of the date of these Orders, as follows:

(a) the parties shall instruct such lawyer as they agree upon to have the conduct of the sale of the Suburb Q property on behalf of both parties or, in the absence of agreement reached within 28 days of the date of these Orders, the First Respondent will propose three conveyancing lawyers from which the Applicant will select one within further 7 days ("the lawyer"), the costs of and incidental to such appointment to be borne by the parties equally as and when they fall due;

(b) the parties shall instruct such real estate agent as they agree upon to have the conduct of the sale on behalf of both parties, and in default of agreement within 28 days of the date of these Orders, the Applicant will propose three real estate agents from which the First Respondent will select one within a further 7 days ("the agent"), the costs of and incidental to such appointment to be borne by the Applicant as and when they fall due;

(c) the parties shall do all acts and things and sign all documents necessary to list the Suburb Q property for sale by public auction within 35 days of the date of appointment of the agent or such longer period as is agreed between the parties;

(d) the reserve price for the purpose of such auction shall be such price as the parties agree upon in writing or, in the absence of agreement reached within 28 days of the date of these Orders shall be $1,125,000;

(e) the parties shall cooperate in every way with the agent including (without limiting the generality of the foregoing):

(i) making the key available to the agent;

(ii) allowing inspection of the Suburb Q property at all reasonable times requested by the agent including liaising with the tenants of the Suburb Q property as may be requested;

(iii) doing or saying nothing to hinder or prevent a sale being effected;

(iv) ensuring the Suburb Q property including the grounds are in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and

(v) signing all documents requested by the agent in relation to the listing for sale of the Suburb Q property except a contract or agreement for sale which has not been authorised by the lawyer;

(f) in the event the bidding at the auction does not reach the reserve price such of the parties as are present at the auction may negotiate with the highest bidders or any other interested person and effect a sale of the Suburb Q property at a price which is not more than 5% below the reserve price, or at such other price as the parties agree upon in writing;

(g) in the event the Suburb Q property is not sold at the public auction the parties shall do all acts and things and sign all documents necessary so as to list the Suburb Q property for sale by private treaty with the agent;

(h) the sale price at which the Suburb Q property shall be listed shall be such price as the parties agree upon in writing or, in the absence of agreement reached within 7 days from the date of the auction shall be the price nominated by the agent;

(i) if the Suburb Q property remains unsold 6 weeks from the date of being listed for sale by private treaty, the parties shall do all acts and things and sign all documents necessary to continue to relist the Suburb Q property for sale by public auction again at three monthly intervals, and the provisions of Orders 8(e) and 8(f) above shall apply successively until the Suburb Q property has been sold so that at each successive auction the reserve price shall be 5% less than the reserve price at the immediately preceding auction unless otherwise agreed by the parties in writing.

1. That at settlement of the sale of the Suburb Q property the gross proceeds of sale shall be applied in the following manner:

(a) to meet the costs and expenses of sale;

(b) in payment of all amounts required to pay all municipal water and council rates fees outstanding with respect to the property;

(c) to discharge of them mortgage secured on the Suburb Q property (if any);

(d) to pay the balance then remaining into a controlled monies account in the name of both parties (the joint investment account).

1. Liberty to either party to relist in the event that the National Australia Bank raises a concern about the security for loan ending ...51.
2. The Amended Application in a Proceeding and Amended Response to Application in a Proceeding are otherwise dismissed.

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).

Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).

1. On 17 April 2025 the First Respondent in the primary proceedings, Mr Nicholson, filed an Amended Application a Proceeding dealing with financial matters. The application related to Division 7A loans in the names of the parties and proposed sale of jointly owned real property.
2. On 29 April 2025 Mr Phillips filed an Amended Response to an application in a proceeding.
3. On 7 May 2025 the parties reached agreement and I made consent orders which disposed of that aspect of the application which related to Division 7A loans. That left for determination that aspect of the application which related to sale of real property. The applicant in the primary proceedings, Mr Phillips, opposes the orders for sale of real property on an interim basis, although he did not file a formal response to the Amended Application in a Proceeding.
4. The assets, liabilities, financial resources and superannuation of the parties (prior to the implementation of the agreement concerning Division 7A loans) is reflected in a Joint Balance Sheet which became an exhibit on 7 April 2025:

HH Bank ...20 Per Respondent: As at 31 December 2024 Foreign currency: 117,868.80 = AUD41,726.11 as at February 2025

HH Bank ...93 Per Respondent: as at 31 December 2024 Foreign currency 107,622.03 = AUD38,100.09 as at February 2025

NAB Accounts ...02 Per Respondent: As at 27 March 2025

NAB Account ...94 Per Respondent: As at 27 March 2025

NAB Account ...94 Loan) Per Applicant: -- Per Respondent: As at 27 March 2025

NAB Account ...35 as at Per Applicant: As at 6 March 2025 Per Respondent: As at 6 March 2025

JJ Financial Services Account ...18 as at Per Applicant: As at 6 March 2025 Per Respondent: As at 6 March 2025

JJ Financial Services Account ...66 as at Per Applicant: As at 6 March 2025 Per Respondent: As at 6 March 2025

KK Bank Account ...90 Per Respondent: As at 27 March 2025

KK Bank Account ...87 Per Respondent: As at 27 March 2025

NAB Account ...26 Per Respondent: As at 27 March 2025

Sole Trader NAB ...67 Per Respondent: As at 27 March 2025

Funds in Barkus Doolan Winning Trust Account (as at 02/04/25)

Partial property settlement (Pursuant to Orders made 24/4/24)

Partial property settlement (Pursuant to Orders made 24/4/24)

Partial property settlement (Pursuant to Orders made 15/11/24)

NAB Loan ...36 | Per Respondent: As at 27 March 2025

NAB Loan ...51 | Per Respondent: As at 27 March 2025

NAB Loan ...19 (secured on the Suburb W property) Per Respondent: As at 27 March 2025

NAB Loan ...30 | Split of loan #19 : As at 27 March 2025

AMEX Credit Card ...08 Per Respondent: As at 22 March 2025

AMEX Credit Card ...08 Per Respondent: As at 13 March 2025

KK Bank Credit Card ...78 Per respondent: As at 27 March 2025

NAB Visa ...49 Per Respondent: As at 27 March 2025

Sole Trader NAB Visa ...23 Per Respondent as at 27 March 2025

ANZ Credit Card ...10 as at Per Applicant: 26 February 2025 Per Respondent: as at 2 December 2024

LL Bank Credit Card ...54 Per Applicant: As at 26 February 2025 Per Respondent: as at 13 August 2023

ANZ Credit Card ...56 Per Applicant: 6 March 2025 Per Respondent: as at 6 March 2025

Division 7A Loan/Directors Loan - AA Pty Ltd as at 31 December 2024

Division 7A Loan/Directors Loan - AA Pty Ltd as at 31 December 2024

Division 7A Loan/Directors Loan - AA Pty Ltd as at 31 December 2024

Division 7A Loan/Directors Loan - FF Pty Ltd as at 31 December 2024

Division 7A Loan/Directors Loan - DD1 Pty Ltd as at 31 December 2024

Division 7A Loan/Directors Loan - DD2 Pty Ltd as at 31 December 2024

Personal income tax liability for period ending 30 June 2024

Personal income tax liability for period ending 30 June 2023

Personal tax liability on 2023 deemed dividend (exclusive of interest and penalties)

Personal tax liability on 2024 deemed dividend (exclusive of interest and penalties)

Personal income tax liability for period ending 30 June 2024 (Refund)

Personal income tax liability for period ending 30 June 2023 (Refund)

Personal tax liability on 2023 deemed dividend (exclusive of interest and penalties)

Personal tax liability on 2024 deemed dividend (exclusive of interest and penalties)

Personal income tax liability for the period post 1 July 2024

Personal income tax liability for the period post 1 July 2024

Notional additional Top-Up Tax to access retained profits

Notional additional Top-Up Tax to access retained profits

Tax and other realisation costs - P Street, Suburb Q

Tax and other realisation costs - L Street, Suburb M

Tax and other realisation costs - S Street, Suburb T

Tax and other realisation costs - U Street, Suburb W

Tax and other realisation costs - N Street, Suburb O QLD

Tax and other realisation costs - J Street, Suburb K NSW

Tax payable by DD1 Pty Ltd on CGT Event A1 resulting from transfer of business to CC2 Pty Ltd

Tax payable by DD2 Pty Ltd on CGT Event A1 resulting from transfer of business to CC3 Pty Ltd

Superannuation Fund 1 as at Per Applicant: as at 6 March 2025. Per Respondent: As at 6 March 2025

Superannuation Fund 1. Per Respondent as at 25 March 2025

Superannuation Fund 2. Per Respondent: As at 25 March 2025

1. Mr Phillips seeks order for sale of the following items of real property:

(a) J Street, Suburb K;

(b) L Street, Suburb M;

(c) N Street, Suburb O;

(d) P Street, Suburb Q.

1. It is important to understand the orders which each of the parties seek on a final basis in order to evaluate the appropriateness or otherwise of making the orders which Mr Nicholson seeks.
2. The final orders which Mr Phillips seeks are set out in his Amended Initiating Application filed 12 March 2025. Mr Phillips does not seek to retain any of the properties which Mr Nicholson proposes are sold.
3. Originally, Mr Nicholson sought to apply the proceeds of sale to repayment of the Division 7A loans. That course was abandoned when the parties reached agreement about the repayment as contained in the consent terms. Mr Nicholson identified the following reasons for the proposed sale:

(a) Establish value of four properties without the need for valuation;

(b) Given shortfall of income over expenses (approximately $5,000 per month) prevent further expenditure;

(c) Establish capital gain and accordingly establish capital gains tax liability;

(d) Crystallise balance sheet issues with potential to aid resolution.

1. Mr Phillips opposed orders for sale on the basis that he may at a later stage elect to amend the relief he seeks on a final basis to retain one of the properties which Mr Nicholson proposes be sold.
2. In oral submissions on the hearing of this application, senior counsel for Mr Phillips said his client may seek to retain one of the properties as his residence if Suburb E is to be sold, and the Suburb M property may be suitable given the parties had previously lived in the property which would have an impact on any future capital gains tax liability. Senior counsel for Mr Nicholson submitted such a change to Mr Phillips' final relief would be unlikely since that property has now been converted into 13 studio apartments. I agree it is unlikely that Mr Phillips would choose to retain Suburb M as his home in those circumstances. The reality is that I must approach this application on the basis that each party has filed an application for final relief and their primary evidence, and no party seeks to retain any of these properties. The applicant should not be obliged to continue meeting the shortfall in case the respondent changes his mind.
3. In written submissions on his behalf, Mr Phillips' senior counsel said that the court ought not sell the properties with a final hearing pending, absent evidence as to the consequences of sale which the "applicant has failed to adduce". The parties had filed all their trial material prior to bifurcation. It is no answer to contend that Mr Nicholson has failed to file evidence about the sale of property neither party sought to retain.
4. It was also suggested that the cross-collateralisation of the loans secured over these properties was a bar to sale, since it is not plain what the impact of the order of sale might be on the lending ratio and "cross-security" of other properties.
5. There is no evidence that the loan which is secured by the four properties is cross-secured against any other property. The applicant's trial affidavit says that in about 2017 all the separate mortgages on the investment properties were cross-collateralised on one loan account ending #...51 with a mortgage offset account #...94 linked.
6. According to the balance sheet which became an exhibit, the liability for loan #...51 is between $6,762,332 (Mr Phillips' figure) and $6,715,609 (Mr Nicholson's figure). The properties which it is proposed be sold are said to be worth: $9,570,000.
7. In addition, it is not proposed to sell U Street, Suburb W which the parties presently agree is valued at $975,000; S Street, Suburb T which the parties agree is presently valued at $6,300,000.
8. It is not clear (but also not material) whether the Suburb MM property owned by AA Pty Ltd is security for ...51.
9. I am confident that the investment properties which provide security for loan ...51 will be more than sufficient to satisfy the lender, but for abundant caution, will make an order permitting liberty to relist.
10. I accept that this is not a case where the sale of real property is urgent or required as an asset preservation strategy, but in circumstances where one party is meeting the shortfall and the other party does not seek to retain any of the properties to be sold, then on balance it is appropriate to make the orders for sale.
11. If Mr Phillips genuinely wishes to retain one of the properties which is to be sold, he will not be prevented from acquiring it as purchaser.
12. It is not necessary for me to make any orders about capital gains tax at this stage since the properties are likely to be sold in the taxation year commencing 1 July 2025 and the matter is listed for final hearing in February 2026.

I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Christie.