Kalla and Kalla

[2020] FamCA 461

FAMILY COURT OF AUSTRALIA

KALLA & KALLA [2020] FamCA 461

FAMILY LAW – PROPERTY – Interim – Where the husband has disposed of multiple properties of the matrimonial pool - Where the wife seeks partial property settlement from a recent sale – Orders for wife to place a caveat on the property – Orders for the wife to receive $100,000 from the sale of the property – Where the wife seeks spousal maintenance – Where the husband has not made proper disclosure of financial information – Order for the husband to pay spousal maintenance.

Family Law Act 1975 (Cth) s117, 117(2A)

APPLICANT: Ms Kalla

RESPONDENT: Mr Kalla

FILE NUMBER: SYC 2434 of 2019

DATE DELIVERED: 9 April 2020

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 6 April 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Mahney

SOLICITOR FOR THE APPLICANT: Newnhams Solicitors

SOLICITOR FOR THE RESPONDENT: In person

Orders

IT IS ORDERED

1. That the wife be permitted to lodge a caveat on the title of the property known as B Street, Adelaide being the property contained in Folio Identifier …, (“the property”) notifying her interest in the said property as provided in these orders.

2. That the husband is restrained from dealing with the proceeds of the sale of the property other than in accordance with these orders.

3. That upon the settlement of the sale of the property, the proceeds of sale be paid in the following order and priority:

   (a)       In payment of any sum secured by mortgage.

   (b)       In payment of agents’ commission.

   (c)In payment to the wife of $100,000 by way of partial property settlement.

   (d)In payment of the whole of the balance of the proceeds of sale to the solicitors for the wife to be held by them in a controlled monies account on behalf of the husband and the wife until further order. 

4. That a copy of these orders be served upon the selling agent and the Commonwealth Bank as mortgagee of the property.

5. That the husband pay to the wife by way of spousal maintenance the sum of $720 per week, the first payment to be made one week after the date of these orders and thereafter weekly.

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

IT IS NOTED that publication of this judgment by this Court under the pseudonym Kalla & Kalla has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 2434 of 2019

Ms Kalla

Applicant

And

Mr Kalla

Respondent

REASONS FOR JUDGMENT

1. Mr Kalla (“the husband”) and Ms Kalla (“the wife”) separated in May 2015 after a marriage of 29 years in which they had three children, all now adults.

2. The substantive proceedings before the Court relate to the division of their property.

3. The wife, by an Application in a Case filed 12 February 2020, now seeks orders relating to the preservation of the proceeds of sale of a property in the name of the husband in Adelaide, the payment to her of the sum of $100,000 from those proceeds and interim spousal maintenance.

4. This application was listed before a registrar on 25 February 2020 and the registrar ordered the husband to file a response, a financial statement and an affidavit setting out the evidence upon which he sought to rely by 17 March 2020.

5. The husband filed no documents in accordance with that order.

6. The husband’s failure to file material as directed is consistent with his behaviour throughout the litigation which commenced by the filing of an application by the wife on 16 April 2019.

7. On 25 June 2019, the husband was ordered to provide substantial, specified financial disclosure including information in relation to the sale of a number of properties. At that time it was asserted that the husband had disposed of four properties but still held five properties.

8. Further orders for the husband to file documents were made on 17 September 2019.

9. On 20 November 2019, the Registrar directed compliance with the previous orders by 4 December 2019.

10. On 25 February 2020 the husband was ordered to comply with the previous orders in relation to disclosure by 17 March 2020. He did not do so.

11. In the proceedings before me, the wife relied on an affidavit sworn by her on 11 February 2020 and a Financial Statement sworn on 11 February 2020.

12. When the hearing commenced, it transpired that the husband sought to rely on material which he had forwarded to the Court by email but which had not been served on the wife’s solicitors. The matter was stood down while the material was emailed to the wife’s solicitors and they had the opportunity to consider it.

13. The husband sought to rely on the following documents:

    ·A Financial Statement sworn on 22 July 2019;

    ·An affidavit sworn by him on 6 September 2019;

    ·An email from his accountant dated 3 April 2020 in relation to the sale of the Adelaide property and the Capital Gains Tax (“CGT”) implications;

    ·An unsworn document entitled “Important Supplementary Statement by the Respondent…and a Plea to the Court”;

    ·A copy of his 2018 tax return and a 2019 PAYG summary;

    ·A letter addressed to my associate dated 6 April 2020.

14. In its simplest terms, the wife’s case is that, throughout the marriage, the husband bought and sold investment properties without reference to her and without her knowledge. She deposed that she became aware of the extent of the dealings after separation by conducting real property searches.

15. Annexed to the wife’s affidavit are transfer documents evidencing the following sales of properties by the husband, before the wife commenced these proceedings:

    ·     July 2015 sale of D Street, Suburb E for $595,000;

    ·     November 2015 sale of 1/2 F Street, Adelaide for $540,000;

    ·     November 2016 sale of G Street, H Town for $240,000.

16. After the filing of the wife’s application, the husband sold the following properties:

    ·     June 2019 1/10 J Street, Adelaide for $140,000;

    ·     June 2019 2/10 J Street for $140,000;

    ·     August 2019 K Street, Adelaide for $620,000;

    ·     October 2019 3/2 F Street Adelaide for no consideration;

    ·     November 2019 5/2 F Street, Adelaide for $500,000.

17. The total of the gross amounts received by the husband for those sales is $2,775,000. Since the husband has not provided information in relation to the encumbrances or the costs of sales, it is not possible to know what the net amount received by the husband was.

18. The only information provided by the husband is that contained in his Financial Statement sworn 22 July 2019 where he deposed to receiving $1,800 per week in rent from three investment properties and paying mortgage payments of $2,161. He deposed that the three properties had a combined estimated value of $1,425,000 and were encumbered by mortgages totalling $1,248,625. 

19. The only property which is currently retained by the husband is a property at B Street, Adelaide (“the Adelaide property”) in relation to which contracts have been exchanged at a sale price of $1,005,000.

INJUNCTIVE RELIEF

1. The wife seeks to preserve the net proceeds of sale of the Adelaide property, subject to the payment of an amount to her from the proceeds of the sale.

2. The wife has issued a subpoena to the listing agent but has been unable to find out which solicitors act for the purchasers.

3. The husband did not tell the wife that the property had been sold and he did not tell her what the sale price was.

4. The only evidence of the sale price is contained in a letter from the husband’s accountant in relation to estimated CGT referring to a sale price of $1,005,000.

5. The husband has not filed a response to the wife’s application and his position is to be found in his Supplementary Statement. In that document, he does not specifically oppose the order sought by the wife in relation to the preservation of the proceeds of sale although he makes reference to a mortgage, bank charges and CGT.

6. Having regard to the husband’s previous sales of investment assets and his failure to provide adequate disclosure in relation to those transactions, he cannot be relied on to properly account for the proceeds of sale of the Adelaide property and it is appropriate to make orders as sought by the wife to ensure that the proceeds are preserved.

7. Since the wife has been unable to find the solicitors acting for the purchasers, she will have no option other than to lodge a caveat on the title of the Adelaide property in order to ensure that such funds as are available from the sale are held in a controlled monies account pending the determination of these proceedings.

8. For more abundant caution, the orders should be served on the mortgagee and the selling agent and, when the identity of the buyers’ solicitors is known, upon them.

PAYMENT TO THE WIFE OF $100,000

1. The wife seeks the payment to her of $100,000 from the proceeds of sale of the Adelaide property, so that she can pay legal costs.

2. In submissions, counsel for the wife relied on s117(2) of the Family Law Act 1975 (Cth) as the appropriate head of power, but conceded that the payment could also be made by way of partial property settlement.

3. An order could be made pursuant to the provisions of s 117(2) which provides:

   If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A), (5) and (6) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.

4. No submissions were directed to the provisions in s117(2A). Sub-sections (4), (4A), (5) and (6) have no relevance here.

5. I am not required to determine which head of power is more appropriate but in circumstances where, as here, there is a substantial property pool, it is, in my view, preferable to deal with the application as an application for partial property settlement.

6. The husband has not filed an up to date Financial Statement and there is no joint  balance sheet.

7. The husband, in his affidavit sworn 6 September 2019, estimated that the parties had gross assets of some $4,430,000 and total liabilities of about $1,707,000, leading to net assets of about $2,723,000.

8. Included in the asset pool for which the husband contends are a property left to the wife by her father and a mail order business he asserts is owned and run by the wife. He values those assets at $1,700,000. The wife denies the existence of both.

9. The wife’s estimates, contained in the balance sheet filed on her behalf, are more modest but still significant.

10. She contends that the parties’ gross real estate assets are valued at $1,855,000 and those assets are encumbered by secured debts of $869,579, a net value of a little less than $1,000,000.

11. The wife also contends that the husband has already received or appropriated to himself a total of some $2,775,000 being the proceeds of sale of eight properties, a termination payment of $329,637 and $656,326 from superannuation. She contends that those amounts should be added back. For the purpose of this determination, those amounts have not been included as property.

12. On either evaluation, if the wife were to receive a partial property settlement of $100,000, it can easily be accounted for in the final apportioning of their property, particularly having regard to the fact that the wife has, in addition to the real property assets referred to above, superannuation entitlements of some $566,000.

13. The wife will be paid a partial property settlement of $100,000 from the proceeds of sale of the Adelaide property.

SPOUSAL MAINTENANCE

1. The wife seeks a payment of $2,321 per week by way of spousal maintenance.

2. The husband opposes the application and contends that he has no ability to pay maintenance. 

3. The wife works as a professional and earns $1,990 per week. It is not contended that she has a greater capacity to earn from employment.

4. The husband contends that the wife runs a substantial mail order business from home. However, other than the bare assertion, he provides no evidence to support that contention and I propose to disregard it.

5. What then are the wife’s necessary expenses?

6. There was no challenge by the husband to the reasonableness of the wife’s expenses but that does not mean that they should be allowed where, on their face, the claims are not reasonable.

7. In her Part N expenses, the wife claims $435 per week for the support of their adult daughter who lives independently and ears $55,000 per annum. The wife has no legal obligation to provide this support. I will disregard this expense. The wife’s Part N expenses for herself will be allowed as claimed at $1,190.

8. I will allow the wife’s claim for fixed expenses at items 19 to 27 of her Financial  Statement at $1,241.

9. I will allow the repayments on two Personal Loans from Westpac Bank totalling $279 per week which the wife is contractually obliged to pay.

10. The wife claims a payment of $250 per week for a timeshare interest which the husband in his balance sheet says has a debt of $28,128. The wife does not include the timeshare as an asset in her Financial Statement and it is not included as an asset on the draft balance sheet which was provided on her behalf. I do not accept that the maintenance of the time share is a commitment necessary to enable the wife to support herself and it will be disregarded.

11. Lastly, the wife claims credit card repayments of $776 per week. That sum exceeds the minimum payments required which are $335 per week.

12. There is no evidence of the expenses for which those credit card debts have been incurred. If the credit cards were used to pay expenses which have already been taken into account, then to allow the repayments would be a “double dip”. Similarly, if the credit cards have funded the assistance which the wife has given to her adult child then the expense would not be allowed.

13. The evidence does not allow me to conclude that the claimed credit card repayments, even at the minimum level, should be allowed and they will be disregarded.

14. I therefore assess the wife’s necessary expenses to be $2,710. She has therefore established a need for spousal maintenance of $720 per week.

15. What is the capacity of the husband to pay spousal maintenance?

16. I am mindful of the fact that the husband has not complied with the direction to file a Financial Statement. In his Supplementary Statement he makes no assertions as to his current income.

17. The husband relied on his last filed tax return which asserted that, in the year ended 30 June 2018, he had a taxable income of $799,909 by way of salary from L Pty Ltd. In addition, he received gross rents of $153,407 and claimed deductions in relation to his rental properties leading to a deductable net loss of $39,337.

18. In addition, the husband disclosed his share trading activity in relation to which he asserted a net loss of $836,370. It would appear from the tax return that in the year ended 30 June 2018, the husband bought shares to the value of $2,002,262 and sold shares for $1,092,899. He gave no evidence to explain these transactions and it cannot be assumed that he received no net benefit and retained none of the proceeds of sale. At 30 June 2018 he declared that he was holding shares to the value of $105,405. There is no evidence about the disposition of those shares. 

19. The husband relied on a PAYG Summary to assert that his income in the year ended 30 June 2019 was $5,460. The source of that income was L Pty Ltd. Whether the husband earned income from any other source is not known.

20. L Pty Ltd was deregistered in August 2019.

21. In his document dated 5 April 2020, the husband conceded that he has had casual employment in the year ended 30 June 2020 but gives no detail of the amount he has earned. In his Financial Statement sworn 22 July 2019, he deposed that he was employed by M Group earning $3,500 per week.

22. At 30 June 2017 the husband had a balance of $719,360 in Super Fund 1. He declares no interest in that fund in his Financial Statement sworn 22 July 2019 where he discloses no interest in Super Fund 1. In his document dated 5 April 2020, the husband stated, “I was forced to draw-down my Superfund earlier…That resulted in a further tax penalty of more than $200K for early draw-down of super.”

23. The withdrawal of superannuation is not referred to in the tax return for the year ended 30 June 2018 and therefore I assume that the withdrawal was made in the year ended 30 June 2019 or later.

24. The husband’s income tax account printout is in evidence. There is no reference to the payment of $200,000 or any similar amount referable to the withdrawal of the superannuation. I therefore infer that the husband has retained the entirety of the amount he withdrew from Super Fund 1.

25. Further, between June and November or 2019, the husband sold properties with a gross value of $1,400,000. There is no evidence of the amount he retained from those sales or how those funds were dealt with.

26. The husband in his affidavit sworn 6 September 2019, declined to disclose money held in joint accounts with his former partner on a mistaken claim of privilege. No such privilege exists.

27. It appears that the husband has re-partnered and that his present partner has family in Asia. The wife tendered photographs from the partner’s Facebook pages showing a substantial two storey house under construction.

28. The husband in his Supplementary Statement referred to his having recently travelled to Asia. Clearly, he had funds available to fund that travel.

29. There has been no disclosure of the financial circumstances of the cohabitation of the husband and his present partner.

30. The wife has established, on a prima facie level that the husband has the ability to pay spousal maintenance, at least out of capital.

31. The husband has not brought evidence to establish that he cannot pay.

32. The husband will be ordered to pay spousal maintenance of $720 per week.

I certify that the preceding seventy-two (72) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 9 April 2020.

Associate: 

Date:  09/04/2020