Haseloff & Kormann
[2013] FamCA 1019
•20 December 2013
FAMILY COURT OF AUSTRALIA
| HASELOFF & KORMANN AND ORS | [2013] FamCA 1019 |
| FAMILY LAW – PROPERTY– final orders – adjustment of property interests – consideration of s 79(2) of the Family Law Act 1975 (Cth) and Stanford v Stanford [2012] HCA 52 – where just and equitable to make a property order – where contributions were assessed as equal – where no adjustment made upon consideration of s 75(2) factors – orders made. FAMILY LAW – PROPERTY – Transaction to defeat claims – where the husband’s father and a business entity have been joined to the proceedings as the second and third respondents – where the wife seeks that certain transactions be set aside pursuant to s 106B of the Family Law Act 1975 (Cth) – consideration of s 106B – orders made. |
| Family Law Act 1975 (Cth) s 4; 75; 78; 79; 106B |
| In the Marriage of Rickie (1979) 4 Fam LR 737 In the Marriage of Heath (1983) 9 Fam LR 97 In the Marriage of D (1984) 10 Fam LR 73 In the Marriage of Turnbull (1990) 15 Fam LR 81 Gelley & Gelley (No 2) (1992) FLC 92-291 Halabi and Artillaga (1993) 17 Fam LR 675 Hickey & Hickey (2003) FLC 93-143 Stephens & Stephens (2007) FLC 93-336 Kennon v Spry (2008) FLC 93-388 Norman & Norman [2010] FamCAFC 66 Bourke & Bourke and Anor (Final Hearing Costs) [2010] FamCA 199 Stanford v Stanford [2012] HCA 52; (2012) 239 ALR 70 Marello & Marello [2013] FamCA 254 Bevan & Bevan [2013] FamCAFC 116 |
| APPLICANT: | Ms Haseloff |
| RESPONDENT: | Mr Kormann |
| SECOND RESPONDENT: | Mr Kormann Snr |
| THIRD RESPONDENT: | Kormann Nominees Pty Ltd |
| FILE NUMBER: | ADC | 4563 | of | 2010 |
| DATE DELIVERED: | 20 December 2013 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Dawe J |
| HEARING DATE: | 4-7 March 2013 & 20 May 2013 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Richards |
| SOLICITOR FOR THE APPLICANT: | Christopher Ganzis & Co |
| COUNSEL FOR THE RESPONDENT: | Mr Scragg |
| SOLICITOR FOR THE RESPONDENT: | Peter Scragg & Co |
| COUNSEL FOR THE SECOND AND THIRD RESPONDENTS: | Mr Jordan |
| SOLICITOR FOR THE SECOND AND THIRD RESPONDENTS: | Jordan & Fowler |
Orders
Within sixty [60] days from this date the husband:
(a)transfer to the wife any interest at law or in equity in the former matrimonial home at Town S in the State of South Australia being the property described in Certificate of Title Register Book Volume … Folio … which shall thereafter be the sole property of the wife;
(b)pay all sums and do all things necessary to discharge the joint liability of the parties pursuant to the Memorandum of Mortgage Number …86 in favour of Westpac Banking Corporation;
(c)pay to the wife the sum of SEVEN HUNDRED THIRTY THREE THOUSAND SIX HUNDRED AND SIXTY EIGHT DOLLARS [$733,668.00].
Upon transfer of the property, discharge of mortgage and the payment of the SEVEN HUNDRED THIRTY THREE THOUSAND SIX HUNDRED AND SIXTY EIGHT DOLLARS [$733,668.00] the wife contemporaneously transfer to the husband all her shares and any interest or claim in any of the entities referred to in this judgment including but not limited to the entities named in the annexure.
The husband do indemnify the wife in respect of any debts or liabilities to any of the entities referred to in this judgment including but not limited to the entities named in the annexure.
Each party retain his or her superannuation entitlements.
Save as herein set out each party retain as their sole property the personal property in their respective power, possession or control.
Pursuant to s 106B of the Family Law Act 1975 (as amended) the following transactions are set aside:
(a)the Deed of Rectification and Amending Kormann Family Trust dated 21 May 2010 between:
the husband;
Mr Kormann Snr; and
Kormann Nominees Pty Ltd ACN …
and
(b)any transfer of the husband’s shareholding in Korman Nominees Pty Ltd to Mr Kormann Snr.
Failing agreement the question of costs is reserved to a date to be fixed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Haseloff & Kormann & Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Annexure
(a)Kormann Nominees Pty Ltd;
(b)Kormann Family Trust;
(c)C Pty Ltd and associated companies;
(d)CG Pty Ltd;
(e)N Pty Ltd;
(f)Korman Jnr Discretionary Unit Trust;
(g)MG Pty Ltd;
(h)K Pty Ltd;
P Pty Ltd;
(j)M Pty Ltd.
| FAMILY COURT OF AUSTRALIA AT ADELAIDE |
FILE NUMBER: ADC 4563 of 2010
| Ms Haseloff |
Applicant
And
| Mr Kormann |
Respondent
And
| Mr Kormann Snr |
Second Respondent
And
| Kormann Nominees Pty Ltd |
Third Respondent
REASONS FOR JUDGMENT
Introduction
Ms Haseloff (“the wife”) and Mr Kormann (“the husband”) separated in November 2009 after approximately 18 years of marriage. These proceedings arise out of the application for property orders pursuant to Part VIII of the Family Law Act 1975 (Cth) (“the Act”) filed by the wife in the Federal Magistrates Court of Australia (as it then was) on 15 March 2011.
There are two children of the marriage, namely, J (born in 1993 and now aged 20) and E (born in 1999 and now aged 14), (collectively referred to hereafter as “the children”).
The husband’s father, Mr Kormann Snr (“husband’s father”) and Kormann Nominees Pty Ltd (“K Pty Ltd”) were named as the second and third respondents to these proceedings in the wife’s Amended Initiating Application in a Case filed on 17 December 2011 (Document 11). The joinder was necessary as the wife seeks an order pursuant to s 106B of the Act to set aside certain dealings between the husband and the husband’s father and K Pty Ltd.
Relationship History
The husband’s father was born in 1937 and is currently 76 years of age.
The husband was born on in 1963 and is currently 50 years of age.
The wife was born in 1964 and is currently 49 years of age.
The parties were married in 1991.
The child J was born in 1993. She is now 20 years of age. Her younger brother E was born in 1999. He is now 14 years of age.
The parties separated in late November 2009.
Procedural History
The wife applied for divorce on 2 December 2010. A divorce order was granted by Registrar Scholz on 18 January 2011.
The wife commenced these proceedings by filing an Initiating Application on 15 March 2011. The orders sought in this Initiating Application have been superseded by subsequent amended Initiating Applications. The wife sought property orders that would have the effect of the matrimonial property pool being divided with her receiving 65 per cent and the husband receiving 35 per cent.
The husband filed his Response to the wife’s Initiating Application on 7 July 2011. The orders sought in this Response to the Initiating Application have been superseded by subsequent amended Response to Initiating Application. The husband sought property orders that would have the effect of the matrimonial property pool being divided equally between the parties. Parenting orders were also sought such that the child E lives with each of the parties on a week about basis.
After various procedural and interim matters were dealt with the matter was listed for trial but trial dates were vacated.
In an Amended Initiating Application filed on 12 December 2011 the wife sought, for the first time, an order pursuant to s 106B of the Act such that the Deed of Rectification and Amending Kormann Family Trust dated 21 May 2010 between the husband, the husband’s father and K Pty Ltd and any transfer of the husband’s shareholding in K Pty Ltd to the husband’s father be set aside. As mentioned earlier, this document named the husband’s father and K Pty Ltd as the second and third respondents to these proceedings.
Federal Magistrate Kelly (as she then was) transferred these proceedings to this Court on 30 January 2012.
The wife filed a further Amended Initiating Application on 30 March 2012. It is this application that the wife relied on at the final hearing.
The husband filed an Amended Response to the wife’s Further Amended Initiating Application on 9 May 2012. It is this response that the husband relied on at the final hearing.
The wife filed an affidavit on 14 May 2012 (Document 26) which sought to update the Court on the deponent’s current health issues.
The parties appeared before Justice Fowler on 16 May 2012. His Honour made the following orders:
1. The husband within three months pay to the wife the sum of $40,000 and the nature of the payment, be it costs, be it maintenance, or be it interim property settlement, will be determined by the trial judge.
2. The second and third respondents within 14 days file any Response or Application on which they wish to rely in these proceedings.
3. The Court will not at this stage make any further direction in relation to the preparation of the matter for trial noting that it is listed before a Registrar in late May but notes that in order to procure an early date for hearing the matter will have to be prepared for trial with some alacrity.
4. The Court notes that the wife has informed the Court that it is her intention to take a holiday overseas … in October of this year and accordingly October may not be an appropriate time at which to list this matter for hearing.
5. Leave is granted to the wife to make an oral application for costs to be reserved to the Trial Judge.
6. Costs are generally reserved to the hearing.
The husband’s father and K Pty Ltd filed their Response to the wife’s Further Amended Initiating Application on 8 June 2012.
The parties appeared before Registrar Paxton again on 26 June 2012. The matter was listed as a reserve listing for trial before me on 27 August 2012 as a five day matter. Trial directions were made for the filing and serving of any material that the parties intended to rely upon at the trial.
On 7 November 2012 Registrar Paxton listed the matter before me as a five day matter to commence on 4 March 2013. Further trial directions were made concerning the filing and serving of documents.
The wife filed an Undertaking as to Disclosure and her trial affidavit on 20 February 2013.
The husband filed his trial affidavit on 25 February 2013.
The husband filed an Undertaking as to Disclosure on 26 February 2013. An affidavit of the husband’s solicitor annexing the updated valuations of the C Group and Kormann Jnr Discretionary Family Trust conducted by Mr H was also filed on 26 February 2013.
The second respondent, the husband’s father, filed his trial affidavit on 26 February 2013.
A joint balance sheet was filed on 28 February 2013. An amended version was filed on 1 March 2013.
The wife filed an updated Financial Statement on 1 March 2013. The Case Outlines of the wife and the husband were also filed on this date.
The Case Outline for the second and third respondent was filed on 4 March 2013. A further amended balance sheet and a subsequent further amended balance sheet were filed with my leave during the hearing on 3 March 2013.
The wife filed an affidavit of psychiatrist Dr Z on 17 April 2013.
The submissions of the husband were received on 19 April 2013.
The submissions of the second and third respondent were received on 9 May 2013.
The submissions of the wife were received on 17 May 2013.
The Hearing
The trial commenced on Monday 4 March 2013 and proceeded through to Thursday 7 March 2013, at which point the trial was adjourned part-heard to 20 May 2013 for closing submissions and to receive the evidence of one further witness.
The wife was represented by Mr Ross Richards of Counsel. The husband was represented by Mr Jordan of Counsel. The second and third respondents were represented by Mr Scragg of Counsel.
I reserved my judgment on 20 May 2013. The parties filed final balance sheets and calculations on 21 May 2013.
Orders sought
The wife relied on the final orders sought in her Further Amended Initiating Application filed on 30 March 2012. The final orders sought are:
1. That the Court make a declaration as to the husband’s interest in the [Kormann] Family Trust and in the [Kormann Jnr] Discretionary Trust.
2. That in full and final settlement of all claims for settlement of property and spousal maintenance as between the parties for past present and future:-
a. That the net pool of matrimonial assets do be divided as to 65 % to the wife and 35 % to the husband.
3. That pursuant to S. 106B of the Family Law Act 1975 (as amended):
1. The Deed of Rectification and Amending [Kormann] Family Trust dated 21 May 2010 between:
The husband;
[Mr Kormann Snr]; and
[Kormann] Nominees Pty Ltd ACN …
And
2. Any transfer of the husband’s shareholding in [Kormann] Nominees Pty Ltd to [Mr Kormann Snr];
be set aside.
4. Such further and other orders this Honourable Court deems fair and proper to effect a just and equitable division of the assets of the relationship.
5. For costs.
The written submissions filed by the wife on 17 May 2013 note in the heading “conclusion” that “the assets of the parties should be adjusted as to 60 per cent thereof to the wife and as to 40 per cent thereof to the husband.”
The orders sought in the husband’s most recent Response to the wife’s Initiating Application are different to those set out in his Case Outline. I have relied on the orders sought in the Case Outline document as that is the most recently filed document. The orders sought are:
1. That the respondent husband discharge any encumbrance with respect to the former matrimonial home situated at [Town S] (“the former matrimonial home”);
2. That contemporaneously with the discharge in paragraph 1, the respondent husband transfer all of his interests at equity and at law in the former matrimonial home to the applicant wife;
3. That the applicant wife retain the following assets in her possession free from any claim at equity or at law by the husband;
i. The Mazda vehicle;
ii. All furniture and household contents currently in the former matrimonial home;
iii. All shares in the name of the applicant wife.
4. That the applicant wife retain her interests in the BT Super for Life fund free from any claim at equity or at law by the respondent husband.
5. That the sum of $40,000 paid to the applicant wife by the respondent husband pursuant to the orders of Fowler J be retained by the applicant wife as part payment of her entitlements to property settlement.
The husband’s father and K Pty Ltd relied on their Responses to the wife’s Further Amended Initiating Application filed on 8 June 2012. However, the “orders sought” as provided for in the written submissions documents filed on 9 May 2013 on behalf of both the second and third respondents are slightly different than those set out in the Amended Responses. The orders sought in the written submissions documents are as follows:
1. The wife’s S.106B application be dismissed.
2. That the husband and the wife do indemnify the Third Respondent as trustee for KFT in respect of any sum due by it to [M] Pty Ltd.
3.That the wife pay the costs of the Second and Third Respondents.
Documents and witnesses relied upon
The wife relied upon the following documents:
a)Further Amended Initiating Application filed 30 March 2012;
b)Trial affidavit filed 20 February 2012;
c)Financial Statement filed 1 March 2013;
d)Case outline document filed 1 March 2013;
e)Twice further amended balance sheet filed 4 March 2013;
f)Affidavit of psychiatrist Dr Z filed 17 April 2013; and
g)Written submissions document filed 17 May 2013.
In addition to her own evidence, the wife also called Dr Z as a witness.
The husband relied upon the following documents:
a)Affidavit of the accountant Mr L filed 21 September 2011;
b)Financial Statement filed 25 January 2012;
c)Amended Response to the wife’s Initiating Application filed 9 May 2010;
d)Trial affidavit filed 25 February 2013;
e)Affidavit of his solicitor Carla Scragg annexing the valuations conducted by Mr H filed 26 February 2013;
f)Case outlined document filed 1 March 2013;
g)Written submissions document filed 19 April 2013.
The husband relied on his own evidence as well as the oral evidence of accountant Mr L.
The husband’s father relied upon the following documents:
a)Response to the wife’s Further Amended Initiating Application foiled 8 June 2012;
b)Trial affidavit filed 26 February 2013;
c)Affidavit of Mr L filed 21 September 2011;
d)Affidavit of Mr L filed 10 August 2012;
e)Case outline filed 4 March 2013; and
f)Written submissions document filed 9 May 2013.
K Pty Ltd relied upon the following documents:
a)Response to the wife’s Further Amended Initiating Application foiled 8 June 2012;
b)Affidavit of the husband’s father filed 26 February 2013;
c)Affidavit of Mr L filed 21 September 2011;
d)Affidavit of Mr L filed 10 August 2012;
e)Case outline filed 4 March 2013 and
f)Written submissions document filed 9 May 2013.
The husband’s father gave oral evidence at the hearing.
Certain other documents became evidence as a result of their deponent’s being cross-examined on their contents. Those documents are:
a)The wife was cross-examined by counsel for the husband on her Financial Statement filed 12 December 2011;
b)The wife was cross-examined by counsel for the second and third respondents on her affidavit filed 12 December 2011;
c)The wife was cross-examined by counsel for the husband on her affidavit filed 7 March 2011; and
d)The husband was cross-examined by counsel for the wife on his affidavit filed 8 may 2012.
Various other documents were received by way of exhibit during the course of the hearing. I have had regard to those documents where appropriate during the preparation of this judgment.
The Law
Property Orders under the Act
Part VIII of the Act is entitled “Property, spousal maintenance and maintenance agreements.” “Property” is defined in s 4(1) of the Act as meaning, “in relation to the parties to a marriage or either of them”, as the “property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion.” Of relevance to these proceedings are sections 78 and 79 of Part VIII of the Act, which are respectively entitled “Declaration of interests in property” and “Alteration of property interests” and read as follows:
Section 78
Declaration of interests in property
(1) In proceedings between the parties to a marriage with respect to existing title or rights in respect of property, the court may declare the title or rights, if any, that a party has in respect of the property.
(2) Where a court makes a declaration under subsection (1), it may make consequential orders to give effect to the declaration, including orders as to sale or partition and interim or permanent orders as to possession.
Section 79
Alteration of property interests
(1) In property settlement proceedings, the court may make such order as it considers appropriate:
(a) in the case of proceedings with respect to the property of the parties to the marriage or either of them--altering the interests of the parties to the marriage in the property; or
(b) in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage-- altering the interests of the bankruptcy trustee in the vested bankruptcy property;
including:
(c) an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i) either or both of the parties to the marriage; or
(ii) the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
…
(2) The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last- mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
Subsection 75(2) is relevant as it is referred to in subsection 79(4) (e) of the Act. Subsection 75(2) states:
Section 75(2)
(2) The matters to be taken into account are:
(a) the age and state of health of each of the parties; and
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d) commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain; and
(e) the responsibilities of either party to support any other person; and
(f) subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l) the need to protect a party who wishes to continue that party's role as a parent; and
(m) if either party is cohabiting with another person -- the financial circumstances relating to the cohabitation; and
(n) the terms of any order made or proposed to be made under section 79 in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
(naa) the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i) a party to the marriage; or
(ii) a person who is a party to a de facto relationship with a party to the marriage; or
(iii) the property of the person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p) the terms of any financial agreement that is binding on the parties to the marriage; and
(q) the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.
Until recently, the process for the making of orders pursuant to s 79 of the Act was commonly dealt with by reference to a four stage process (see, eg, Hickey & Hickey (2003) FLC 93-143 at [39]). That process involved:
a)Identification and valuation of the property of the parties;
b)Identification and evaluation of contributions to the property (including property no longer owned by the parties);
c)Identification and assessment of the various matters in s 79(4)(d) to (g) including, to the extent they are relevant, the matters in s 75(2); and
d)Consideration of matters of justice and equity.
The recent High Court of Australia decision of Stanford v Stanford [2012] HCA 52 has implications for the abovementioned four step process involved in the making of property orders under s 79 of the Act. The joint judgment of French CJ, Hayne, Kiefel and Bell JJ noted three fundamental propositions relevant to the operation of s 79 at (2012) 239 ALR 70, 78–79. Those propositions were conveniently summarised by Bryant CJ and Thackray J in Bevan & Bevan [2013] FamCAFC 116 (8 August 2013) at [73]:
The High Court in Stanford has laid down three “fundamental propositions” which will provide useful guidance to trial judges in approaching the task under s 79. These were recited above, and could be summarised thus:
1. Determination of a just and equitable outcome of an application for property settlement begins with the identification of existing property interests (as determined by common law and equity);
2. The discretion conferred by the statute must be exercised in accordance with legal principles and must not proceed on an assumption that the parties’ interests in the property are or should be different from those determined by common law and equity;
3.A determination that a party has a right to a division of property fixed by reference only to the matters in s 79(4), and without separate consideration of s 79(2), would erroneously conflate what are distinct statutory requirements.
It is unclear how the decision in Stanford will alter the usual four step approach to s 79 property distributions (see, eg, the comments of Bryant CJ and Thackray J in Bevan (Supra) at [65]). However, as noted by Finn, May and Murphy JJ in Norman & Norman [2010] FamCAFC 66 at [60], the established four step approach “merely illuminates the path to the ultimate result” and is not an approach that is mandated by the Act. Rather, it is the “mandatory legislative imperative (to reach a conclusion that is just and equitable) that drives the ultimate result.”
As such, the approach I will adopt throughout this judgment is as follows:
a)identification of the existing legal and equitable interests in property of the parties, the effect of which will be to identify all of the assets which are available for distribution;
b)determinate pursuant to s 79(2) of the Act whether, “having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order” and in doing so avoid “a determination that a party has a right to a division of property fixed by reference only to the matters in s 79(4), and without separate consideration of s 79(2), [as such a determination] would erroneously conflate what are distinct statutory requirements” as outlined in the third fundamental proposition identified by the joint judgment in Stanford & Stanford (Supra);
c)identification and evaluation of contributions to the property (including property no longer owned by the parties) and contributions to the welfare of the family as set out in s 79(4)(a) to (c) of the Act;
d)identification and assessment of the various matters in s 79(4)(d) to (g) including, to the extent they are relevant, the matters in s 75(2); and
e)a final consideration of whether the result arrived at upon the conclusion of the above processes is a just and equitable outcome for the parties.
Setting Aside Transactions under s 106B of the Act
The wife also seeks an order pursuant to s 106B of the Act. That section states:
Section 106B
Transactions to defeat claims
(1) In proceedings under this Act, the court may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or in the interest of, a party, which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.
(1A) If:
(a) a party to a marriage, or a party to a de facto relationship, is a bankrupt; and
(b) the bankruptcy trustee is a party to proceedings under this Act;
the court may set aside or restrain the making of an instrument or disposition:
(c) which is made or proposed to be made by or on behalf of, or by direction or in the interest of, the bankrupt; and
(d) which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.
(1B) If:
(a) a party to a marriage, or a party to a de facto relationship, is a debtor subject to a personal insolvency agreement; and
(b) the trustee of the agreement is a party to proceedings under this Act;
the court may set aside or restrain the making of an instrument or disposition:
(c) which is made or proposed to be made by or on behalf of, or by direction or in the interest of, the debtor; and
(d) which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.
(2) The court may order that any money or real or personal property dealt with by any instrument or disposition referred to in subsection (1), (1A) or (1B) may be taken in execution or charged with the payment of such sums for costs or maintenance as the court directs, or that the proceeds of a sale must be paid into court to abide its order.
(3) The court must have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser or other person interested.
(4) A party or a person acting in collusion with a party may be ordered to pay the costs of any other party or of a bona fide purchaser or other person interested of and incidental to any such instrument or disposition and the setting aside or restraining of the instrument or disposition.
(4AA) An application may be made to the court for an order under this section by:
(a) a party to the proceedings; or
(b) a creditor of a party to the proceedings if the creditor may not be able to recover his or her debt if the instrument or disposition were made; or
(c) any other person whose interests would be affected by the making of the instrument or disposition.
(4A) In addition to the powers the court has under this section, the court may also do any or all of the things listed in subsection 80(1) or 90SS(1).
(5) In this section:
"disposition" includes:
(a) a sale or gift; and
(b) the issue, grant, creation, transfer or cancellation of, or a variation of the rights attaching to, an interest in a company or a trust.
"interest" :
(a) in a company includes:
(i) a share in or debenture of the company; and
(ii) an option over a share in or debenture of the company (whether the share or debenture is issued or not); and
(b) in a trust includes:
(i) a beneficial interest in the trust; and
(ii) the interest of a settlor in property subject to the trust; and
a power of appointment under the trust; and
(iii) a power to rescind or vary a provision of, or to rescind or vary the effect of the exercise of a power under, the trust; and
(v) an interest that is conditional, contingent or deferred.
Section 106B(3) requires the Court to have “regard to the interest of, and shall make any order proper for the protection of, a bona fide purchaser or other persons interested.”
The wording of s 106B is such that the following questions must be answered affirmatively for the wife’s claim to succeed:
a)are there “proceedings under this Act”?
b)is there an “instrument or disposition”?
c)was the “instrument or disposition” made “by or on behalf of, or by direction or in the interests of, a party”?
d)is the interests or disposition “made or proposed to be made to defeat an existing or anticipated order in those proceedings” or “irrespective of intention, is likely to defeat any such order”?
Such an approach was highlighted by Murphy J in Bourke & Bourke and Anor (Final Hearing Costs) [2010] FamCA 199 (17 March 2010) at [45], with a similar approach being used when s 106B was known as s 85 prior to an amendment to the Act occurring in late 2000 (see, eg, the approach of Gee J in In the Marriage of D (1984) 10 Fam LR 73 at 82 and the approach of Nygh J in In the Marriage of Heath (1983) 9 Fam LR 97 at 104).
The onus of proof rests with the wife, as the applicant, and the standard is the civil standard (Treyvaud J in Gelley & Gelley (No 2) (1992) FLC 92-291 at 79,153.
Cases referred by husband and wife
The wife’s list of cases/materials refers to the decision of the High Court of Australia in Kennon v Spry (2008) FLC 93-388, the decision of the Full Court of this Court in Clauson & Clauson (1995) FLC 92-595, the decision of the High Court of Australia in Stanford v Stanford (2012) 293 ALR 70 and the article of Patrick Parkinson entitled “Family trusts and third parties under the Family Law Act 1975” (2012) 26 Australian Journal of Family Law 5.
The husband’s written submission document also refers to the decision of the High Court of Australia in Kennon v Spry as well as the decision of this Court in Stephens & Stephens (2007) FLC 93-336.
Discussion of section 106B factors
The wife seeks to have two transactions that occurred on 21 May 2010 set aside:
a)the Deed of Rectification and Amending Kormann Family Trust dated 21 May 2010 between the husband, the husband’s father and K Pty Ltd (see Exhibit 11); and
b)any transfer of the husband’s shareholding in K Pty Ltd to the husband’s father.
The history of these entities needs to be explored before the s 106B applications are considered.
The History of the Kormann Family Trust and K Pty Ltd
In 1965, the husband’s father and Mr R started a business together known as B Company. They were equal partners. The husband started working for B Company as an apprentice around 1980.
The Kormann Family Trust (“KFT”) was first settled on 10 July 1983. The following information concerning that settlement and the trust it produced are relevant to the proceedings:
c)Mr R was the settlor of the KFT;
d)the company RR Pty Ltd was the trustee;
e)the “primary beneficiaries” of the KFT as defined in the Schedule are listed as the husband’s father, the husband’s mother, the children of the husband’s father and the husband’s mother, and the spouses of the children of the husband’s father and the husband’s mother;
f)the trust was a discretionary trust as no beneficiary has any fixed entitlement to the trust property, rather, as Clause 2a provides, the distribution of the trust property was to be as follows:
Until the vesting day the trustee shall hold the trust fund upon trust to pay divide or apply the whole of the income of the trust fund as it arises to or between or for the maintenance support or benefit of all or any or more exclusively of the others or other of the persons or bodies corporate for the time being living or in existence and included in the specified class in such proportions and manner and subject to such terms limitations and provisions (if any) as the trustee shall in its uncontrolled discretion think fit.
g)the trust does not identify an appointor, nor does it speak of a method by which an appointor could be appointed;
h)Clause 16 allows variations to be made to the KFT that:
(i)may relate to the management or control of the trust fund or the investment thereof or to the trustee’s powers or discretions in these presents contained.
Such variations
(ii)shall not be in favour of or for the benefit of the settlor or result in any benefit to the settlor but shall otherwise be for the benefit of all or any one or more to the general beneficiaries or the next of kin or any of them or the next of kin of the primary beneficiary or primary beneficiaries or any of them.
i)Clause 18 provides that any existing trustee can appoint a new trustee and that no other person is able to be a trustee.
The entity known as C Pty Ltd was established by unknown persons in approximately 1985. It operates a group of companies including K Pty Ltd, CG Pty Ltd, C Pty Ltd and CB Company (para [57] husband’s affidavit).
In 1990 or 1991, Mr R retired from B Company and sold his 50 per cent interest in B Company to C Pty Ltd and there was a “general restructure” of B Company (para [10] the husband’s father’s affidavit). The husband’s father, through the KFT, is said to have taken shares in C Pty Ltd (chronology the husband’s father and K Pty Ltd Case Outline). The husband begins to “work on the [C Company] side of the new business ([CG] Pty Ltd was the name of the company)” (para [11] the husband’s father’s affidavit – Document 42).
K Pty Ltd was registered in January 1992. The husband’s father and the husband’s mother were the initial sole shareholders and directors.
On 28 June 1992 K Pty Ltd became the sole trustee of the KFT in lieu of the original trustee RR Pty Ltd. A Deed of Acknowledgement to that effect was drawn on 29 July 1983 (para [57] husband’s affidavit contained in full in Exhibit 11). At this time, the husband’s father and the husband’s mother were the directors of K Pty Ltd and each held one share in the company, with those two shares comprising the totality of the shares in K Pty Ltd.
N Pty Ltd was incorporated in 1993. N Pty Ltd is the trustee of the Kormann Jnr Discretionary Unit Trust (“KJDUT”). The husband is the sole director and shareholder of N Pty Ltd. The husband therefore controls KJDUT. According to the report of Mr H, the assets of KJDUT include real estate, a marina berth, and various business holdings. Mr H estimated the value of the KJDUT to be $1.023 million at the end of June 2012. N Pty Ltd holds in its own name various shares in C Pty Ltd.
A further Deed of Variation to the KFT (full document in Exhibit 11) was executed on 29 September 1993 which made a minor amendment to the trust that is not relevant to the matter at hand.
In 1993, CG Pty Ltd was formed, the shares of which were held by the following entities: 50 per cent C Pty Ltd, 25 per cent K Pty Ltd; and 25 per cent N Pty Ltd (Exhibit 15).
Between 1993 and 1996, MG Pty Ltd and K Pty Ltd were purchased by C Pty Ltd, K Pty Ltd and N Pty Ltd in the same proportions as the shares held in C Pty Ltd (Exhibit 15).
The husband was appointed a director of K Pty Ltd on 16 May 1996 alongside the existing directors, being the husband’s father and the husband’s mother (Exhibit 15).
Between 2001 and 2005 the shares held in the CG Pty Ltd, MG Pty Ltd and K Pty Ltd were transferred to CG Pty Ltd.
On 29 June 2001 the husband became the sole director of K Pty Ltd upon the retirement of the husband’s father and the husband’s mother. The husband’s father and the husband’s mother transferred their shares in K Pty Ltd to the wife. The effect of this is that the husband is the sole director of the trustee of KFT. This makes him the effective appointor of the trust and further means that he has sole control of the day to day financial affairs of the trust.
The wife alleges that on 23 November 2009, mere days before separation was initiated by the husband on 28 November 2009, the husband asked the wife to sign various documents “over the breakfast table” without giving her an opportunity to read them. The wife now understands that these documents resulted in the transfer of the wife’s single share in N Pty Ltd and the wife’s two shares in K Pty Ltd to the husband. The effect of this is that the husband is now the sole shareholder and sole director of K Pty Ltd, which is the sole trustee (and thereby the de facto appointor) of the KFT.
The impugned transactions occurred on 21 May 2010, on which date a Deed of Rectification and Amending Kormann Family Trust was executed. The notations include that the husband’s father has directed the husband to transfer the shares in K Pty Ltd back to him and to resign as director and secretary of K Pty Ltd, the husband’s father will be appointed in his place and that the husband agrees to do this as a matter of urgency. In his trial affidavit, the husband provides the following reason for these transactions:
I ceased being a director of the trustee company [[K Pty Ltd]] following separation on advice that my father and I received from a lawyer who has not represented me in this action. His advice was that my retention of ownership and management of the third respondent [[K Pty Ltd]] could create a perception that the KFT was owned solely by me and solely for my benefit. That was not the case. I therefore returned the ownership and control of the trustee company to my father as the trust in question was for the benefit of my parents. The alterations were effected by another firm of lawyers appointed by the family’s accountant.
Other entities must also be mentioned. The husband’s father is in control of P Pty Ltd, a corporate beneficiary of the KFT. The husband is the sole director of M Pty Ltd, which is a corporation that receives profits from the investments of the KFT and KJDUT. The husband is the sole director of M Pty Ltd and the wife is the sole shareholder.
The section 106B applications
The first issue is whether there are “proceedings under this Act.” This phrase means that there must be other proceedings on foot pursuant to the Act before an application can be made under s 106B (see, eg, Pawley J in In the Marriage of Rickie (1979) 4 Fam LR 737 at 741 referring to the earlier iteration of s 106B being s 85). Clearly, there are other proceedings on foot pursuant to the Act, those being the proceedings for property orders sought pursuant to Part VIII of the Act.
The second issue is whether the impugned transactions are an “instrument or disposition.” “Disposition” is defined in s 106B(5) as including “the issue, grant, creation, transfer or cancellation of, or a variation of the rights attaching to, an interest in a company or a trust.” I consider that both the Deed of Rectification and Amending Kormann Family Trust and the transfer of the husband’s shareholding in K Pty Ltd to the husband’s father fall within this definition. The transferring of shares in a company is clearly the “transfer” of “an interest in a company” (see also the approach of Baker J in In the Marriage of Turnbull (1990) 15 Fam LR 81). I also consider the Deed of Rectification and Amending Kormann Family Trust falls within the definition of “disposition” as it clearly involved the transfer or variation of the rights which the husband had in the KFT. In effect, the transaction resulted in the husband removing himself as trustee and appointing the husband’s father as the trustee and appointor of the trust.
The third issue is whether the “instrument or disposition” was made “by or on behalf of, or by direction or in the interests of, a party.” Both transactions were clearly made “by” the husband.
The fourth issue is whether the interests or disposition was “made or proposed to be made to defeat an existing or anticipated order in those proceedings” or “irrespective of intention, [was] likely to defeat any such order.” The recitals contained in the Deed of Rectification and Amending Kormann Family Trust confirms that to be the case. Recital A to G state:
A. The [Kormann] Family Trust (“Trust”) was established by deed dated 1 July 1983 (“Original Deed”) between [Mr R] as settlor and [RR] Pty Ltd CAN … as original trustee. As confirmed in a deed of acknowledgement dated 29 July 1993 the original trustee resigned as trustee of the Trust on 28 June 1992 and was replaced by the Trustee (that being [K Pty Ltd]). The Original deed has been amended by a deed made by the trustee of the Trust dated 29 September 1993 (“Amending Deed”). Together the Original Deed and Amending Deed are hereinafter referred to collectively as the “Trustee Deed”.
B. On or around 29 June 2001 [Mr Kormann Snr] and his wife [Mrs Kormann] ceased to act as directors of the Trustee.
C. The Trust does not have an appointor, though [the husband’s father] and [the husband] have always considered [the husband’s father] to hold this role.
D. On or about the date of change of officeholders described above, [the husband’s father] transferred control of the Trustee to his son, [the husband]. [The husband’s] wife, [Ms Haseloff], may have also held shares in the Trustee and/or been an officeholder, but she does not hold shares and is not an officeholder at the date of this Deed.
E. [Mr Kormann Snr] has 3 children, including [the husband].
F. [The husband’s father] and [the husband] have always considered that notwithstanding the chance of officeholders and shareholders of the Trustee described above [that being a reference to 29 June 2001 on which date the husband’s father and his wife ceased being directors of the Trustee and were replaced by the husband]:
despite [the husband’s] control of the trustee, [the husband’s father] has continued to control the Trust on a de facto basis; and
the Trust assets are intended to benefit all of [Mr Kormann Snr’s] 3 children – not just [the husband].
G. [The husband’s father] and [the husband] wish to confirm [Mr Kormann Snr’s] position as “appointor” of the Trust in this Deed to as to more formally evidence [Mr Kormann Snr’s] control over the trust.
I find that the two transactions were made with the intention of defeating an anticipated order in these proceedings. The recitals confirm this to be the case. The only reason the Deed of Rectification and Amending Kormann Family Trust and transfer of the husband’s shareholding in K Pty Ltd to the husband’s father was made was to prevent the assets of the KFT being considered as part of the matrimonial asset pool in these proceedings. There is no reason why the husband and the husband’s father would have needed to confirm the husband’s father’s supposed “position as “appointor” of the Trust in this Deed” and in doing so “more formally evidence [Mr Kormann Snr’s] control over the trust” if the husband was not concerned that the assets of the KFT may be at risk of being altered in these proceedings.
Exhibit 18 confirms this to be the case. In one email from a Mr T, (a lawyer not involved in these proceedings but apparently involved in the Deed of Rectification and Amending Kormann Family Trust), Mr T is seen to be responding to the husband’s email in which the husband is asking “how long will it take you to get me the document to me for signing, once we agree, then once it is signed, how long to have it in place?” That email was received on 13 May 2010. Mr T’s reply was sent on the same date and reads:
“Hi [Mr Kormann] issuing execution copy is quick and easy so once we have wording agreed it will take as long as it takes you and [Mr Kormann Snr] to executive it.
You can suggest to [Mrs Kormann] that she speak to us re any issues. She might be a bit intimidated by us having [Mr Kormann Snr] say that he is openly seeking to deal with family law issues but there is no substitute for the truth and it is not his family dispute
Happy to progress as soon as somebody comes back to us
[Mr T]
The Deed of Rectification and Amending Kormann Family Trust was signed about a week later.
In any event the transactions have had the effect of reducing the wife’s claim.
I find that the requirements of s 106B(1) are satisfied. Nicholson CJ outlined the procedural consequences of such a finding concerning proceedings under s 79 in his decision in Halabi and Artillaga (1993) 17 Fam LR 675 at 681 in the following way:
I think that the proper approach is to first determine whether the requirements of ss (1) have been satisfied, and if so, to treat the disposition as not having been made for the purpose of arriving at an appropriate order pursuant to s 79, and then having done so, to determine whether, having regard to the rights of the bona fide purchaser or person interested under ss (3), a discretion should be exercised to set the instrument or disposition aside. The exercise of such a discretion may well depend upon whether if this is not done there are sufficient funds available to the party who has made the disposition to satisfy the order without setting the instrument or disposition aside.
I will proceed to determine the s 79 application as if the impugned transactions had been set aside. Once that process has been concluded in determining what orders to make I will assess whether it is necessary to actually set aside the transactions. If it is necessary to set aside the transactions then I will consider the interests of third parties prior to doing so in accordance with s 106B(3) of the Act.
The existing legal and equitable interests in property
The further, further amended balance sheet, filed with my leave, on 4 March 2013 is a convenient starting point from which to begin identifying the existing legal and equitable interests of the parties in the matrimonial asset pool as required by the High Court of Australia in Stanford & Stanford (Supra).
| Item Number | Ownership | Description | Wife’s Value | Husband’s Value | |
| ASSETS | |||||
| 1 | W | Residence at [Town S] | 1,050,000 | 1,050,000 | |
| 2 | H | [N] Pty Ltd ATF [KJDUT][1] | 1,023,000 | 973,000 | |
| 3 | H | Addback – [M]Loan A/C in [N Pty Ltd][2] | 374,524 | 374,524 | |
| 4 | H | [Kormann] Nominees Pty Ltd ATF KFT [per Balance Sheet 30/6/2012 adjusted per [Mr H] valuation][3] | 22,902 | NIL | |
| 5 | H | Addback – 30/5/2012 dividend paid to [P] Pty Ltd by [Kormann] Nominees Pty Ltd[4] | 137,012 | NIL | |
| 6 | W | [M] Pty Ltd Loan A/C in KFT[5] | 963,187 | NIL | |
| 7 | W | Mazda [vehicle] … “Red Book” | 8,850 | 8,850 | |
| 8 | W | Contents of former matrimonial home[6] | NIL | 60,000 | |
| 9 | W | Personal effects[7] | NIL | 20,000 | |
| 10 | H | Personal effects[8] | NIL | 20,000 | |
| 11 | H | Toyota … 4 wheel drive | 15,000 | 15,000 | |
| 12 | H | Trailer boat[9] | 60,000 | 55,000 | |
| 13 | H | [Ford motor vehicle] | 10,000 | 10,000 | |
| 14 | H | BMW [motor vehicle][10] | 55,000 | 45,000 | |
| 15 | W | Shares owned by wife | 47,549 | 47,549 | |
| Total | $3,767,024 | $2,678,923 | |||
| ADDBACKS | |||||
| 16 | Nil | ||||
| 17 | Nil | ||||
| Total | |||||
| LIABILITIES | |||||
| 18 | H | Westpac mortgage over former matrimonial home | 147,000 | 147,000 | |
| 19 | H | Westpac credit card | NIL | 15,000 | |
| 20 | H | Loan to [Mr Kormann Snr] | NIL | 15,000 | |
| 21 | W | Unpaid legal fees | 105,000 | ||
| Total | $252,000 | $177,000 | |||
| SUPERANNUATION | |||||
| Item Number | Member | Name of Fund | Type of Interest | Wife’s Value | Husband’s Value |
| 22 | H | Superannuation – at separation (update required) | 243,000 | 243,000 | |
| 23 | W | BT Super | Superannuation | 20,504 | 20,504 |
| Total | $263,504 | $263,504 | |||
[1] Wife notes “the ‘wife’s value’ is the previously agreed valuation figure from which the husband apparently seeks to resile.”
[2] Husband notes “Accounted for in item 2 or not a tangible asset.”
[3] Husband notes “Not assets of the husband and wife.”
[4] Husband notes “Not assets of the husband and wife.”
[5] Husband noted “Already accounted for in item 2 or not an asset of the husband and wife.”
[6] Wife notes “Neither party has previously sought to adjust for value of household or personal effects and none of these have been valued.”
[7] Wife notes “Neither party has previously sought to adjust for value of household or personal effects and none of these have been valued.”
[8] Wife notes “Neither party has previously sought to adjust for value of household or personal effects and none of these have been valued.”
[9] Wife notes “the ‘wife’s value’ is the previously agreed valuation figure from which the husband apparently seeks to resile.”
[10] Wife notes “the ‘wife’s value’ is the previously agreed valuation figure from which the husband apparently seeks to resile.”
The main matters which were in dispute are therefore the value of the husband’s interest in Nl Pty Ltd as the trustee for the KJDUT. I am satisfied that the figures provided by the single expert Mr H are correct. The figure is therefore $1,023,000.
It is also correct to include as an asset (not an addback) the amount due by N Pty Ltd to M Pty Ltd because this is a figure which was taken into account as a debt due in the Mr H valuation. There would therefore be an asset attributed to the husband (who wishes to maintain control of M Pty Ltd) of $374,524. This figure is included in the valuation of KJDUT as a debt owing by way of beneficiary entitlement. That $374,524 is due to M Pty Ltd of which the husband is the sole director and the wife is the sole shareholder. This is therefore an asset.
It is undisputed that the wife wishes to retain the residence at Town S valued at an agreed value of $1,050,000.
The wife seeks to bring in further assets of $22,902 being Kormann Nominees Pty Ltd as the trustee for the Kormann Family Trust, being an adjustment in the Mr H valuation and an addback of $137,012 being the dividend paid to P Pty Ltd by Kormann Nominees Pty Ltd. Taking into account the evidence and the inter-relationships between the various entities, I am not satisfied that it is appropriate to consider these as assets to be brought into account in the overall settlement.
The wife seeks to bring into account the loan account due by the KFT to M Pty Ltd at $963,187. This is an amount which is clearly in the evidence and confirmed by the exhibit. It is not part of the valuation of the N Pty Ltd carried out by Mr H. It is a separate amount due by M Pty Ltd to the Kormann Family Trust.
The husband maintains that this is not an asset of the husband and wife. Taking into account my findings in relation to s 106B transactions, I am satisfied that it is appropriate to bring this figure into account on the basis that the husband had control of the trust and the company.
The other items which are in dispute relate to the value to be attributed to the contents of the former matrimonial home and the personal effects of each of the parties. The husband seeks to bring the contents of the former matrimonial home into account at $60,000 and each of the parties’ personal effects at $20,000.
I accept the evidence on behalf of the wife that it was previously agreed that there would be no adjustment for household goods and personal effects. It is also correct that there is no reliable figure upon which to base a value of the contents of the former matrimonial home. There is only the husband maintaining his own assertion (and an unqualified opinion) that the contents are worth $60,000.
It is not disputed that the Mazda vehicle retained by the wife should be brought into account at $8,850, the Ford vehicle retained by the husband in at $10,000 and the Toyota 4-wheel drive retained by the husband at $15,000.
It is also agreed that the wife’s shares should be brought into account at $47,549. What is in dispute is whether the husband’s trailer boat should be brought in at $55,000 or $60,000. Again, this was a previously agreed figure, but the husband now seeks to reduce the value of his trailer boat without providing reliable opinion evidence.
Similarly, in relation to the BMW vehicle retained by the husband this was previously agreed at $55,000, but the husband seeks to maintain it at $45,000. I would therefore bring into account the assets as previously agreed by the parties as there is no reliable basis upon which to maintain the reduction.
The parties agree that there is a mortgage over the former matrimonial home of $147,000 which the wife seeks that the husband discharge.
The husband sought to bring into account the Westpac credit card of $15,000 and the loan due to his father of either $15,000 or $45,000, however the evidence concerning the same did not reliably establish that these debts were debts which should be brought into account as “matrimonial” debts.
The wife sought to bring into account unpaid legal fees of $105,000. Whilst this is a debt which can be taken into account in considering the financial circumstances of the parties, I do not propose to bring it in as a liability to be included in the assets and liabilities for the purposes of considering the net assets and liabilities to be divided.
In the calculations by the husband’s counsel at the completion of the trial (copies provided by email of 21 May 2013) the only debt sought to be brought into account was the Westpac mortgage of $147,000.
I therefore bring into account as liabilities the Westpac mortgage over the former matrimonial home of $147,000.
The parties were agreed that the superannuation to be brought into account was the husband’s superannuation at $240,529 and the wife’s superannuation at $20,524.
As a result of the above findings, the table below represents my findings as to the current legal and equitable interests of the parties that comprise the “matrimonial asset pool”.
| ASSETS | ||
| Description | Ownership | Value |
| 1 – Residence at Town S | W | $1,050,000 |
| 2 – Ne Pty Ltd ATF KJDUT | H | $1,023,000 |
| 3 – M Pty LtdLoan Account in N Pty Ltd | H | $374,524 |
| 4 – M Pty Ltd Loan Account in KFT (to be transferred to H) | W | $963,187 |
| 5 – Mazda vehicle “Red book” | W | $8,850 |
| 6 – Toyota 2004 - 4 wheel drive | H | $15,000 |
| 7 – Trailer Boat | H | $60,000 |
| 8 – Ford vehicle | H | $10,000 |
| 9 – BMW vehicle | H | $55,000 |
| 10 – Shares owned by W | W | $47,549 |
| Total Assets | $3,607,110 | |
| LIABILITIES | ||
| 11 – Westpac Mortgage over former matrimonial home | H | $147,000 |
| Total Liabilities | $147,000 | |
| SUMMARY | ||
| Gross assets | $3,607,110 | |
| Liabilities | -$147,000 | |
| Net assets | $3,460,110 | |
| SUPERANNUATION | ||
| Name of Fund and Type of Interest | Ownership | Value |
| Kormann Family Super Fund | H | $240,529 |
| BT Super | W | $20,504 |
| Total Superannuation | $261,033 | |
Taking these figures into account therefore if the superannuation is brought into account at its present values (rather than separated for superannuation splitting orders) total assets $3,607,110, minus mortgage $147,000, plus superannuation $261,033, therefore the total net assets are $3,721,143.
If the superannuation were considered separately, to be the subject of a superannuation splitting order, then the net assets and liabilities would be $3,607,110, minus mortgage $147,000 the total net assets would be $3,460,110.
Subsection 79(2) – is it just and equitable to make a property settlement order
The High Court in Stanford v Stanford (Supra) at [39] confirmed that the decision does not begin with “the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4).”
The joint judgment notes at [42] the following:
In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).
As noted by Bryant CJ and Thackray J in Bevan & Bevan (Supra) at [82], “in many cases the preliminary question is effectively answered in the affirmative by the way the parties present their cases.” That is the case in this matter. Both the husband and the wife seek orders adjusting the parties’ existing legal interests in the property of the marriage. Clearly, “the common assumptions upon which property was acquired and used during the currency of the parties’ relationship and which is represented now by the property of the parties or either of them [has] been brought to an end by” the dissolution of the marriage (per Murphy J in Marello & Marello [2013] FamCA 254 at [15]).
I therefore find that it is just and equitable within the meaning of s 79(2) of the Act to alter the existing legal and equitable interest in property held by each of the parties to the marriage given the circumstances of this marriage. The exact alteration that will be made is dependent upon the considerations in s 79(4) and s 75(2) of the Act.
Subsections 79(4)(a) to (c) - Contributions
The contributions made by the husband in acquiring significant assets with the assistance and the involvement of his family, various family companies and entities, was significant.
The husband’s parents were paid significant sums over many years from the corporate entities.
The wife made and continued to make a significant contribution through a lengthy marriage as homemaker and parent. I accept the wife’s evidence concerning the husband’s absence from home. She also conceded that the husband participated in parenting the children.
Taking into account the length of the marriage, the individual financial contributions and the significant other contributions, the contributions pursuant to s 79(4) (a), (b) and (c) are considered to be equal.
Other Section 79(4) factors
(d)the effect of any proposed order upon the earing capacity of either party to the marriage;
This is not a relevant factor in these circumstances. The husband has continued to work in the business, notwithstanding his health issues. The orders proposed do not affect the earning capacity of either party.
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage;
and
(g)any child support and the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage;
The parties each have shared care for the infant child of the marriage and there are no relevant factors to be taken into account in relation to child support assessment payments.
Section 75(2)
There therefore remains the consideration of the s 75(2) factors so far as they are relevant to these proceedings.
(a) The age and state of health of each of the parties;
The parties are of similar age. I accept the wife’s evidence in relation to her health difficulties and the impact that has had upon her capacity to earn an income and is likely to have in the future. I accept the evidence of the wife’s psychiatrist who gave evidence, about her capacity to return to work after years of absence and with her health difficulties.
I also accept the uncontested evidence concerning the husband’s health. Notwithstanding this and his significant past health difficulties, he has continued to share the care of the child and continues his involvement in the extensive family business.
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
As stated above the husband has maintained a greater capacity to engage in gainful employment. It is possible that in the future, with the finalisation of proceedings and ongoing assistance of psychiatrists and counsellors, the wife may be in a position to return to work. This however is not a significant factor. Otherwise, the income, property and financial resources of the parties are set out in the previous discussion concerning the assets.
(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
The parties share the care of the infant child of the marriage on a week about basis.
(d)commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain;
The evidence indicates that this should be considered similar for each of the parties.
(e)the responsibilities of either party to support any other person;
There was no evidence to suggest there was any responsibility of either party to support any other person other than the children of the parties.
Subsection (f) not relevant.
(g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;
This is not a significant factor.
Subsections (h), (ha), (j), (k), (l), (m), (n), (naa), (na), (p) and (q) are not relevant.
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
In this regard the background to the transactions which resulted in the involvement of the second and third respondent and the s 106B proceedings needs to be considered.
In determining these proceedings it is also necessary to take into account the possible rights or claims of the second and third respondents and in particular, give consideration to the provisions of s 106B ss(3) which requires “the court must have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser or other person interested”. In this case I do not consider either of the second and third respondents to be a “bona fide purchaser”. They do fall within the description of “other person interested”. The Court must have regard to their interest when exercising any discretion to set aside the instrument or disposition made.
The current greater income earning capacity of the husband is offset by his health issues.
Whilst the wife’s health issues are also to be considered the overall assessment is that no further adjustment is appropriate. The overall adjustment is therefore on an equal (50 / 50) basis.
Justice and equity of the proposed orders
If the superannuation is considered together with the net assets and liabilities, the total asset pool will be $3,721,143. Fifty per cent of this is $1,860,571. The wife wishes to retain the former matrimonial home, car and shares, together with her superannuation: Total $1,126,903. This would leave the sum of $733,668 payable by the husband to the wife.
The husband would retain the interest of the husband and wife in N Pty Ltd as trustee for the KJDUT in the sum of $1,023,000 and $374,524. (The wife’s interest in M Pty Ltd would be transferred to the husband which would allow him to retain the debt of $374,524).
Similarly, the husband would retain the amount due to M Pty Ltd in the KFT of $963,187.
Both parties would retain their personal effects. The wife would continue to retain the contents of the former matrimonial home and her shares and motor vehicle. The husband would retain the other motor vehicles.
Both parties would retain their future superannuation entitlement.
Both parties would need to meet any unpaid legal fees from the amounts retained by them subject to any costs order which might be made in due course.
Taking into account the past income and financial circumstances of the parties since the order of Justice Fowler in May 2012 the sum of $40,000 should be considered interim maintenance.
The orders sought by the wife pursuant to s 106B of the Act may not have been necessary if the husband had a clear capacity to comply with the orders for the discharge of the mortgage and payment of the judgment sum to the wife. The wife’s capacity to enforce the necessary payments does require that the s 106B orders are made.
Costs
This cannot be determined without further submissions. However, the parties may agree the same.
Conclusion as to property settlement
Taking into account all of the factors, including the involvement of the second and third respondents in these proceedings, I am satisfied that it is just and equitable to make the orders commencing on page 2 of the judgment.
I certify that the preceding one hundred and forty five (145) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dawe delivered on 20 December 2013.
Associate:
Date: 20 December 2013
Key Legal Topics
Areas of Law
-
Family Law
-
Equity & Trusts
Legal Concepts
-
Remedies
-
Statutory Construction
-
Res Judicata
-
Costs
-
Injunction
5
5
1