ADAMI & ADAMI - [2020] FamCA 356

FAMILY COURT OF AUSTRALIA

ADAMI & ADAMI

[2020] FamCA 356

FAMILY LAW – PROPERTY SETTLEMENT – Just and equitable – Contributions – Future needs - Where neither party had significant assets at the commencement of the relationship – Long marriage – Where the husband made the greater financial contribution – Where the wife made significant non-financial contributions – Where the husband’s conduct in relation to businesses was detrimental and should be brought to account – Where taxation liabilities may arise but there is a lack of evidence to determine their status – Where there is a significant debt owing to a financial institution but it is yet to crystallise – Where the difference in earning capacity would warrant an adjustment – Appropriate for orders to be made – Orders

FAMILY LAW – PROPERTY SETTLEMENT – Wastage – Add backs – Where the wife seeks various add backs – Where the husband made a significant additional payment to an employee – Where there is no evidence whether the amount paid would have enhanced the valuation of the business – Where the husband entered into a business transaction without commercial foundation but not for an improper purpose – Where the husband engaged in significant expenditure on accounting services – Where the expenditure was not a wanton, negligent or wilful diminution of matrimonial assets.

FAMILY LAW – SPOUSAL MAINTENANCE – Arrears – Where the wife seeks arrears of spousal maintenance – Where consent orders exist requiring the husband to pay spousal maintenance by way of a weekly payment and meeting other expenses– Where the husband ceased making weekly spousal maintenance payments – Where there has been change in the wife’s circumstances – Where the husband has paid other expenses in relation to the children not required of him – Where the wife withdrew monies from the mortgage account – Exercise of Court’s discretion – Orders

Family Law Act 1975 (Cth) ss 75(2), 79, 79(4)(a), 79(4)(b), 79(4)(c)
Income Tax Assessment Act 1936 (Cth) Pt III Div 7A

Bevan & Bevan (2013) FLC 93-545
C & C [1998] FamCA 143
Chorn & Hopkins (2004) FLC 93-204
Kouper & Kouper (No. 3) [2009] FamCA 1080
Kowaliw & Kowaliw (1981) FLC 91-092
Rosati & Rosati (1998) FLC 92-804
Stanford v Stanford (2012) 247 CLR 108
Thurston & Loomis and Ors [2018] FamCA 26

APPLICANT:

Ms Adami

RESPONDENT:

Mr Adami

FILE NUMBER:

DNC

521

2017

DATE DELIVERED:

14 May 2020

PLACE DELIVERED:

Adelaide

PLACE HEARD:

Darwin

JUDGMENT OF:

Berman J

HEARING DATE:

21 August 2019 - 23 August 2019, 20 September 2019, 20 & 21 January 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Looney QC

SOLICITOR FOR THE APPLICANT:

Withnalls Lawyers

COUNSEL FOR THE RESPONDENT:

Ms Picker

SOLICITOR FOR THE RESPONDENT:

Darwin Family Law

Orders

That in full and final settlement of any claim that either party may have against the other or at any time in the future for settlement of property or alteration of interests in property:-
(a)That the wife do within sixty (60)…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading ADAMI & ADAMI

Details

AGLC: ADAMI & ADAMI [2020] FamCA 356
Case: [2020] FamCA 356
Decision Date: 14 May 2020

CaseChat Overview and Summary

This case concerned property settlement and spousal maintenance between Mr and Mrs Adami. The dispute arose in the context of a long marriage where neither party possessed significant assets at its commencement. The husband had made greater financial contributions, while the wife had made substantial non-financial contributions. The court was required to consider the husband's detrimental conduct in relation to businesses, potential future taxation liabilities, an uncrystallised debt to a financial institution, and the disparity in earning capacities between the parties. Additionally, the wife sought various "add backs" to the asset pool, including a significant payment made by the husband to an employee, a business transaction without commercial foundation, and substantial expenditure on accounting services. The wife also sought arrears of spousal maintenance, referencing existing consent orders for weekly payments and other expenses, which the husband had ceased to meet.

The court was tasked with determining whether property settlement orders should be made, considering the just and equitable distribution of assets and liabilities. This involved assessing the parties' contributions, future needs, and the impact of the husband's conduct and business dealings. The court also had to decide whether to include certain expenditures by the husband in the asset pool ("add backs"), and whether these constituted a wilful or negligent diminution of matrimonial assets. Furthermore, the court was required to consider the wife's claim for spousal maintenance arrears, taking into account the consent orders, the husband's cessation of payments, and any changes in the wife's circumstances, as well as the husband's payments for child-related expenses not legally required of him.

In relation to property settlement, the court found that orders were appropriate. It considered the husband's conduct in relation to businesses to be detrimental and subject to account. While acknowledging potential taxation liabilities and an uncrystallised debt, the court noted a lack of evidence to definitively determine their status. The court also recognised that the difference in earning capacity warranted an adjustment. Regarding the wife's "add back" claims, the court determined that the husband's expenditure on accounting services was not a wanton, negligent, or wilful diminution of matrimonial assets. Similarly, the business transaction, while lacking commercial foundation, was not for an improper purpose, and there was insufficient evidence to establish that the payment to the employee would have enhanced the business valuation. In respect of spousal maintenance, the court exercised its discretion, noting the change in the wife's circumstances and the husband's payments for child-related expenses beyond his obligations.

The court made detailed orders for the final settlement of property. These included the wife discharging or refinancing a loan secured over the M Town property and receiving the husband's interest in it, or the property being sold with proceeds disbursed in a specified manner. The net proceeds from the sale of the S Town property were to be disbursed, with a portion to the wife's lawyers and the balance to be used for a debt to P Bank, with specific percentages allocated to each party. The orders also stipulated the retention of various assets and liabilities by each party, including the M Town property and shares for the wife, and various business interests for the husband. The parties were to indemnify each other for personal taxation liabilities, with specific indemnities provided by the husband regarding certain entities and amounts owing to P Bank. A Registrar was appointed to execute documents if a party failed to do so. The parties were also ordered to pay half of the setting down and trial fees.

Orders

Orders of the court

That in full and final settlement of any claim that either party may have against the other or at any time in the future for settlement of property or alteration of interests in property:-

(a) That the wife do within sixty (60) days cause the Commonwealth Bank of Australia (“CBA”) loan …20 secured by mortgage over the property situate at L Street, M Town, Victoria (“the M Town property”) to be discharged, refinanced or varied to the effect that the husband will have no residual liability and that the wife will thereafter indemnify the husband as to any past, present or future liability in respect of the CBA loan;

(b) That contemporaneously with the discharge, refinance or variation of the CBA loan in 1(a) herein, the husband will transfer any right, title or interest in the M Town property to the wife and will thereafter not be entitled to make any further claim in respect of the M Town property;

(c) That in default of the discharge, refinance or variation of the CBA loan secured over the M Town property and should such default extend for a further twenty one (21) days, thereafter the parties will do all acts and things necessary to cause the M Town property to be sold by way of private treaty or auction upon such terms as may be agreed or in default of agreement or ordered and that the net proceeds of sale be disbursed as follows:-

(i) Payment of agent’s commission, advertising expenses and legal expenses of the sale;

(ii) Payment of any mortgage due and owing to the mortgagee to discharge the mortgage secured over the property;

(iii) The balance of the proceeds to be paid to the wife.

(d) That the net proceeds of sale of the property situate at R Street, S Town, New South Wales (“the S Town property”) be disbursed as follows:-

(i) Payment of TWELVE THOUSAND NINE HUNDRED AND EIGHTY DOLLARS ($12,980) to Withnalls Lawyers Trust Account for and on behalf of the wife;

The balance of the net proceeds to be placed into an interest bearing account in the joint names of the parties and/or their separate legal representatives pending the agreement of the parties as to the payment of any money owing to the P Bank pursuant to personal guarantees given by the husband in respect of loans made available to E Ltd (ACN …) and D Pty Ltd (ACN …) or as may be ordered by the Court upon further application PROVIDED that if the parties agree upon the amount to be paid to P Bank the sum agreed shall be met by the wife as to 62.5 percent but in any event not exceeding ONE HUNDRED AND SEVENTY THOUSAND THREE HUNDRED AND SIXTEEN DOLLARS ($170,316) whichever is the lesser sum PROVIDED that the balance (if any) remaining of the net proceeds be distributed to the parties as to 62.5 percent together with the further sum of EIGHT THOUSAND ONE HUNDRED AND TWELVE DOLLARS ($8,112) to the wife and the balance to the husband;

(e) That within twenty one (21) days of these orders the wife shall return Motor Vehicle 1 registration number … to A Pty Ltd;

(f) That within thirty (30) days of production of documents prepared by the husband the wife will transfer to the husband at his sole expense two ordinary beneficially held shares in F Pty Ltd (ACN …).

(g) That the wife retain free of any claim by the husband the following:-

(i) Subject to these orders, the M Town property;

(ii) Household contents currently held in the wife’s possession;

(iii) All funds standing to the wife in any bank account;

(iv) The wife’s member entitlements in Super Fund 1 Member No. …35 and Investment Account Member No. …5-J.

(h) That the husband retain free of any claim by the wife the following:-

(i) All funds standing to the husband in any bank account;

(ii) All household contents currently held in the husband’s possession;

(iii) Subject to these orders, his shareholding in F Pty Ltd and in its capacity as trustee of the Adami Trust;

(iv) His shareholding in A Pty Ltd;

(v) His shareholding in C Pty Ltd;

(vi) Any interest either directly or via another entity controlled by him in E Pty Ltd and D Pty Ltd;

(i) That within twenty one (21) days the parties do all things necessary to effect the closure of any joint bank accounts save as to any account set up pursuant to paragraph 1(d)(ii).

(j) That the parties indemnify each other in respect of any personal or individual taxation liability;

(k) That the husband indemnify the wife with respect to the following:-

(i) Any taxation liability with respect to the following entities:-

1. F Pty Ltd as trustee for the Adami Trust;

2. A Pty Ltd;

3. C Pty Ltd;

4. E Pty Ltd;

5. D Pty Ltd;

6. F Pty Ltd;

7. Any amount owing to P Bank in excess of $194,333.

(l) That the parties indemnify the other in respect of any personal taxation liability arising from a Capital Gains Assessment against each of them arising from the sale of O Street, U Town, Northern Territory, B Street, Darwin, Northern Territory and any Div 7A loan for or on behalf of the parties in F Pty Ltd and/or A Pty Ltd;

(m) Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled to retain pursuant to these orders;

(n) That the husband and wife do all things necessary and sign all documents as may be required to give effect to the orders made herein and in the event of any failure by either party within fourteen (14) days of a written request to do so a Registrar of the Family Court of Australia is hereby appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to execute any necessary documents.

That the parties each pay one half of the setting down and trial fees.

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

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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