Adamson & Korac (No 3)
[2023] FedCFamC1F 188
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Adamson & Korac (No 3) [2023] FedCFamC1F 188
File number: SYC 4996 of 2019 Judgment of: CAMPTON J Date of judgment: 8 March 2023 Catchwords: FAMILY LAW – PROPERTY – Final orders made by consent – Where the Court is satisfied the proposed orders are just and equitable – Order made pursuant to s 90AE of the Family Law Act 1975 (Cth) Legislation: Family Law Act 1975 (Cth) ss 79, 90AE Cases cited: Adamson & Korac [2022] FedCFamC1F 528
Adamson & Korac (No 2) [2022] FedCFamC1F 638
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Division: Division 1 First Instance Number of paragraphs: 20 Date of hearing: 8 March 2023 Place: Sydney Counsel for the Applicant: Ms Sceric Solicitor for the Applicant: Farrar Gesini Dunn Solicitor for the First Respondent: Ms Torrisi, Family Law Practice Australia Counsel for the Second and Thirds Respondent: Ms Reid Solicitor for the Second and Thirds Respondent: Lander & Rogers ORDERS
SYC 4996 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS ADAMSON
Applicant
AND: MR KORAC
First Respondent
C PTY LTD
Second Respondent
MS B
Third Respondent
order made by:
CAMPTON J
DATE OF ORDER:
8 MARCH 2023
THE COURT ORDERS THAT:
1.The Minute of Order executed by each of the parties to the proceedings, dated 8 March 2023, shall be Exhibit 1.
2.The joint Balance Sheet filed 7 March 2023 shall be Exhibit 2.
3.By consent, orders be made in accordance with Exhibit 1 dated 8 March 2023.
4.Save and except as provided for by way of these orders, all outstanding applications and responses thereto are 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).
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 Adamson & Korac (No 3) has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CAMPTON J:
These are proceedings for property adjustment arising from the breakdown of a marriage between Ms Adamson (“the wife”) and Mr Korac (“the husband”) pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”).
The husband and wife were married in 1999 and separated in either late December 2017 or early January 2018. They have not yet divorced. They have two children together, Ms X, who is now 20 years of age, and Mr Y, who is now 18 years of age (collectively, “the children”). The children have lived with the wife since separation.
I have had the conduct of this matter in recent times, and have delivered two interlocutory and procedural decisions in the proceedings to date. Those are:
(a)An ex tempore judgment delivered on 22 July 2022, being Adamson & Korac [2022] FedCFamC1F 528, granting leave to the wife to amend her final relief sought and vacating the trial dates then listed; and
(b)A judgment recording the joinder, on the wife’s application, of the company C Pty Ltd and Ms B as the second and third respondents to the proceedings, being Adamson & Korac (No 2) [2022] FedCFamC1F 638.
These reasons assume familiarity with each of those decisions.
The proceedings were listed for trial on 21 November 2022 and extensive trial directions were made. The parties have complied with those directions. A single forensic accounting expert, Mr J, has provided a recent opinion as to the value of some of the corporate and trust entities of the parties and specifically, as to the enterprise currently trading by way of C Pty Ltd and Ms B as D Company.
The balance sheet identifying the contended property of the wife and husband, filed 7 March 2023, was marked as Exhibit 2 in the proceedings. It is somewhat of an understatement to say that their contentions as to the items of property available for adjustment between them and the value of that property are disparate. A simple reading of Exhibit 2 would suggest that the wife contends the property available for adjustment has a value slightly in excess of $1 million, and the husband contends that value of that property is close to negative $2 million.
The crux of a dispute between the parties that has emerged under my management of the proceedings relates to a mortgage broking franchise, D Company through his company E Pty Ltd. The husband is the sole owner of the issued shares in E Pty Ltd.
On or about 30 June 2020, the husband either forfeited or did not renew his franchise agreement for D Company, and thereafter Ms B obtained a franchise opportunity for D Company by way of her company, C Pty Ltd.
Ms B was a former employee of D Company when it was operated by the husband and wife. She had been in a personal relationship with the husband after separation. Both Ms B and the husband contend they are no longer in a personal relationship. That is a factual matter put into dispute by the wife.
The crux of the recent amendments made by the wife to her substantive relief is a claim that the husband’s conduct in relinquishing the D Company franchise, while Ms B either simultaneously or soon thereafter undertook the scaffolding to acquire that very same franchise, was in reality a sham transaction or a series of sham transactions to defeat or frustrate the wife’s claim for property adjustment. The husband, C Pty Ltd and Ms B deny that contention. The wife, by way of her amended relief, sought declaratory orders as to the husband being the beneficial ownership of the trading enterprise conducted by C Pty Ltd and that he is or was the beneficial owner of the shares in C Pty Ltd legally held on the wife’s case by Ms B.
It is relatively uncontroversial that in the event that the wife’s case failed, the property pool of the husband and wife is extremely modest. It consists of some value held by the husband in the Korac Family Trust and the funds held in the trust account of the wife’s solicitors, sourced from the sale of a property formerly owned by the husband and wife.
The husband and wife agree that they each made minimal direct financial contributions at the commencement of cohabitation. Subject to evidentiary dispute, it appears the husband primarily undertook a role as wage earner throughout the relationship, supplementing the wife’s primary role as a homemaker and parent. The wife undertook most of the homemaking and parenting responsibilities throughout the relationship, and also engaged in some of the trading enterprises of she and the husband.
With the benefit of counsel appearing on their behalf, the parties have today engaged in an alternate dispute resolution process with a senior judicial registrar as part of the Sydney Rolling List. They have come to what is described as a commercial compromise of their outstanding disputes. That compromise is recorded in a Minute of Order, which was marked Exhibit 1 in the proceedings today.
Before me the wife’s counsel made submissions as to the justice and equity of that compromise. She contended that the orders sought as contained in Exhibit 1 are just and equitable in circumstances where the wife is currently confronted with extreme financial distress, including obligations to pay significant legal fees (that may be reduced with the agreement of her solicitors). She identifies the wife’s relatively modest income earning capacity compared with the trail income the husband will receive from his corporate interests of $4,000 per week until the end of 2024 (or into 2025) and implicitly concedes that she will face challenges in the prosecution of her case against C Pty Ltd and Ms B.
The husband, by way of his solicitor, also agrees that it is just and equitable in all of the circumstances of the case for orders to be made on a commercial basis in accordance with Exhibit 1. He submitted that would allow the parties to get on with their lives.
C Pty Ltd and Ms B, by way of counsel, have identified that Exhibit 1 provides for a payment to be made by Ms B to the wife pursuant to s 90AE of the Act. They submit that such payment is reasonably appropriate to achieve a firm, commercial resolution of the dispute.
In the circumstances of this matter, I am satisfied the requirements identified by the High Court in Stanford v Stanford (2012) 247 CLR 108 have been met in that it is just an equitable to adjust property in the terms of Exhibit 1, having regard to:
(a)Firstly, the length of the relationship between the husband and the wife; and
(b)Secondly, the myriad of contributions made by them to their property that may or may not be currently reflected in their current legal and potential beneficial interests in that property; and
(c)The fact of the husband and wife’s relationship having broken down and them living apart; and
(d)The concession of the husband and wife that there should be an adjustment, at least in relation to how the funds held in the wife’s solicitors’ trust account are to be divided between them, and in relation to the continuing aspects of the trail commission received by the husband and importantly, as to indemnities for outstanding revenue and other imposts.
Each of the parties are represented by experienced counsel and/or solicitors. It is often considered that in circumstances where the Court has been advised by legal representatives that the proposed compromise represents both an appropriate commercial resolution of the litigation, and a just and equitable outcome as between the husband and wife, nothing more is required for the Court to be satisfied in making the proposed consent orders. I have received comfort from the submissions made on behalf of each party as to the justice and equity of the proposed orders, and as to ensuring compliance with the mandates identified in s 90AE of the Act.
I am satisfied that it is appropriate in all the circumstances to make orders in accordance with Exhibit 1 and allow these parties to get on with their lives.
It remains for me to congratulate the legal representatives on the parts they have played in achieving a very difficult compromise to what I considered would have been an interesting case to hear. The parties would be aware arising from the judgments that I have delivered in these proceedings so far as to the range of results that may have fallen had the matter been determined by me. They have adopted a position of safety rather than risking the all-or-nothing outcomes that confronted the Court. There was no middle ground in this case, and in my view, a compromise is very sensible way to go forward.
I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Campton. Associate:
Dated: 8 March 2023
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