Kaplan & Hankel

Case [2025] FedCFamC1F 41

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Kaplan & Hankel [2025] FedCFamC1F 41

File number: SYC 9434 of 2021
Judgment of: SCHONELL J
Date of judgment: 30 January 2025
Catchwords:

FAMILY LAW – PROPERTY – Final Orders – Where a company controlled by the wife purchased and sold several properties over the duration of the relationship of the parties – Where the wife contends that the shares in a company were held on trust for her parents – Where the husband contends that he and the wife used the company for the benefit of the parties jointly and the properties purchased by the company should be part of the matrimonial pool – Where the second respondent contends that the company is the property of herself and her husband –  Where the wife after separation transferred all of the shares in the company to the second respondent – The Court finds that there was not a legally enforceable obligation to repay the second respondent and that the wife was at all times the legal and beneficial owner of the shares in the company – The Court finds that the wife sought to reduce the pool of assets in these proceedings for division between her and the husband by transferring the shares to the second respondent.

FAMILY LAW – PROPERTY – Final Orders – Where both parties seek an adjustment of property interests pursuant to s 79 – Where husband conceded contributions favoured wife as to 65 percent – – Where the wife contends family violence occurred throughout the relationship – Where the husband denied all incidents of family violence – Where the Court finds that the husband perpetrated family violence such that the wife’s contributions have been made more arduous – The Court finds that a just and equitable outcome was found to be a 70/30 percentage division of the parties’ property in favour of the wife.

FAMILY LAW – PROPERTY – Final Orders – s 75(2) – Where the wife sought an adjustment in her favour of 10 percent by reason of her future ongoing care of the parties’ children –Where the wife has sole parental responsibility and the children are in her primary care – Where the wife receives Child Support payments from the husband – Where the wife’s income greatly exceeds the husband’s income – Where the husband sought an adjustment in his favour of 10 percent – Where the husband did not articulate a clear submission as to why there should be an adjustment in his favour – The Court find that there is no call for a further adjustment in favour of either party.

FAMILY LAW – PRACTICE AND PROCEDURE – s 95 – Overarching purpose – Statutory obligation for efficient use of judicial resources, effective disposal of cases, timely and proportionate resolution of disputes – Where matter was transferred from Division 2 to Division 1 for final hearing – Where it is unclear to the Court why the matter was transferred from Division…

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Kaplan & Hankel [2025] FedCFamC1F 41
Case
[2025] FedCFamC1F 41
Decision Date

CaseChat Overview and Summary

In the case of Kaplan & Hankel, the Federal Circuit and Family Court of Australia (Division 1) addressed a complex financial dispute between the parties, focusing on the ownership and division of assets accumulated during their de facto relationship. The central issue was the ownership of shares in a company controlled by the wife and whether these shares were held on trust for her parents. The court found that there was no legally enforceable obligation to repay the second respondent, Ms Briley, and that the wife was the legal and beneficial owner of the shares throughout the relationship. The court also determined that the wife transferred the shares to Ms Briley to reduce the pool of assets available for division between her and the husband.

The legal issues involved interpreting the nature of the wife’s ownership of the company shares, the existence of any trust arrangement with her parents, and the implications of these findings on the division of matrimonial assets. The court examined the evidence presented by both parties, including affidavits, documents, and witness testimonies, to assess the credibility and consistency of the claims. The court concluded that the wife's transfer of shares to Ms Briley was an attempt to diminish the matrimonial pool, and thus, the shares were to be notionally added back for division.

The court found that the husband had perpetrated family violence, which made the wife’s contributions to the relationship more arduous, warranting an adjustment in her favour. The court also considered the contributions of both parties, finding that the wife’s contributions favoured her by 65 percent. Ultimately, the court ordered a 70/30 percentage division of the parties’ property in favour of the wife. The court further determined that there was no need for additional adjustments based on future care of the children or other factors.

The final orders included the wife paying the husband a specified sum within three months, discharging certain mortgages, and transferring property interests. In the event of non-compliance, the court mandated a sale of specified properties through successive auctions. Both parties were restrained from further encumbering the properties without consent. The form of the order was subject to entry in the court's records, and any application for costs was to be made within 28 days of the order.

Orders

Orders of the court

SYC 9434 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MR KAPLAN

Applicant

AND:

MS HANKEL

First Respondent

MS BRILEY

Second Respondent

ORDER MADE BY:

SCHONELL J

DATE OF ORDER:

30 JANUARY 2025

THE COURT ORDERS THAT:

1. The wife shall pay the husband within three months of the date of the making of these Orders the sum of $1,164,648.

2. Simultaneously with the payment pursuant to Order 1, the wife is to cause the mortgage secured over the properties at B Street, Suburb D (the Suburb D Property) and C Street, Suburb E (the Suburb E Property) to be discharged such that the husband is removed as a borrower, mortgagor and/or guarantor.

3. Simultaneously with the wife’s compliance with Orders 1 and 2, the husband shall do all acts and things and sign all documents necessary to transfer to the wife all of his right title and interest in the Suburb E Property.

4. In the event that the wife fails to comply with Orders 1 and/or 2 then the husband and wife shall forthwith do all acts and things and sign all documents necessary to effect a sale of the Suburb E and Suburb D Properties on such terms as they agree and failing agreement, within 4 weeks of default of compliance with Orders 1 and/or 2 the husband shall nominate to the wife a solicitor and real estate agent to act upon the sale and the parties shall forthwith do all acts and things to list the property for sale with that real estate agent and solicitor with such sale to take place by way of auction within five months of the making of these Orders with the properties to be sold at a reserve price as agreed upon between the parties and failing agreement within 2 weeks of the listing with the real estate agent the reserve price shall be as nominated by the real estate agent.

5. In the event that the properties or either of them fail to sell at the first public auction they shall be submitted for sale to successive public auctions 6 weeks apart until sold, with the reserve price at each successive auction to be as nominated by the real estate agent.

6. The proceeds of sale of the Suburb E Property shall be applied in discharge of the mortgage and costs of sale and thereafter paid to the husband.

7. The proceeds of sale of the Suburb D Property shall be applied in discharge of the mortgage and costs of sale and thereafter shall be paid as to 67.5 percent to the husband less any amount paid pursuant to Order 6 and the balance to the wife.

8. Pending the payment to the husband pursuant to these orders both parties are restrained from further encumbering the properties or dealing in any way with the properties other than in accordance with these orders or with the consent of the other in writing.

9. In default of a party doing any act and/or thing and/or executing any document as is necessary to give effect to these orders, a registrar of this court is appointed pursuant to section 106A of the Family Law Act 1975 (Cth) to execute all such documents in the name of the party in default and to do all such acts and things as are necessary to give effect to these orders.

10. In the event that either party wishes to make an application for costs they are to contact my Associate within 28 days of the making of these Orders.

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

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

As is evident from the directions made by the Case Management Judge, an efficient use of court directions and efficient trial management saw the financial dispute between the parties comfortably disposed of in less than two days. BACKGROUND The wife was born in 1981 in Country G and is 43 years of age. The husband was born in 1985 in New Zealand and is 39 years of age. The wife moved to New Zealand in 2002 to study. The wife contends that her parents lent money to her for her study and living costs in New Zealand, and that the loan was interest free and was required to be paid back when the wife graduated and started earning money. The parties are in dispute as to the date of commencement of cohabitation. The husband contends in his affidavit that he and the wife commenced cohabitation in or around 2007 in a de facto relationship. During cross-examination, he said that they commenced cohabitation in late 2008/ early 2009. The wife contends that the parties met in 2008, lived in the same lodgings as a ‘share house’ in separate rooms with an informal tenancy agreement, and thereafter cohabitation commenced in September 2011, when she deposes that the “parties commence a serious relationship”. The parties were married in 2011 in City H. There are two children of the relationship, X born 2012 and Y born 2015. The parties are in dispute as to the ownership of the Company and in particular as to the beneficial ownership of the shares. The wife’s affidavit states: 26.In or around end of 2008, my mother and I had ongoing conversation about setting up the company and investing in the house. I recall we had a conversation in [Country G language] to the following effect:Mum:‘I don’t know anything about the company setup.’[Ms Hankel]: ‘Do not worry about it, I know how to do it myself, a friend of mine […] who is a lecturer at University […] showed me how to do it the other time, I can just register a company on the internet. So just leave this part to me.’Mum:‘ok, sounds good.’[Ms Hankel]: ‘How much deposit do you have for the house?’Mum:‘How much do you need?’[Ms Hankel]: ‘I think I need about $40,000 at least.’Mum:‘I have some money will mature soon, it is in term deposit, I will transfer when it matures. When do you need the money.’[Ms Hankel]: ‘not yet, I will let you know. More realistically next year.’Mum:‘ok just let me know.’… 35.[In] or around early […]2009, I recall having a conversation with my mum over the phone in [Country G language] to the following effect:[Ms Hankel]: ‘I have registered the company using the makeup name [F Pty Ltd]. And I will start looking/or properties to buy soon, but the properties are around NZD $200,000 to 250,000, we will need at least $40,000. How much money do you have, and when can you send them to me?’Mum:‘I have just over 200,000.00 [Country G currency] matured in term deposit and I can send them to your account’.[Ms Hankel]: ‘Ok, I do not need all of that and only 100,000.00 [Country G currency] for now. If I need more I will let you know’(Emphasis omitted)

Evidence

Evidence Before The Court

Each party sought the tender of documents, some of which became exhibits in the proceeding. ISSUES AND EVIDENCE Counsel for the wife identified the factual issues for determination to be as follows:(1)Composition of the balance sheet (Exhibit 1)(2)The duration of the relationship, more particularly when the parties commenced cohabitation and the final date of separation.(3)Whether the shares in the Company were held by the wife on trust for her mother. (4)Whether the transfer of the shares in the Company by the wife to her mother was pursuant to such a trust or intended to defeat or frustrate an order of the court or a disposition that should be added back.(5)Whether the trust was established to repay a loan advanced by the wife’s parents. (6)The wife’s “Kennon” claim. I will first deal with factual issues 2 to 5. A resolution of 3, 4 and 5 will inform in part the answer to 1. I have read all of the evidence relied upon in the proceedings including the Exhibits but do not propose to repeat all of it in these reasons. As the High Court reminds in Whisprun Pty Ltd v Dixon (2003) 200 ALR 447:62. … A judge’s reasons are not required to mention every fact or argument relied on by the losing party as relevant to an issue. Judgments of trial judges would soon become longer than they already are if a judge’s failure to mention such facts and arguments would be evidence that he or she had not properly considered the losing party’s case. Some of the evidence in the affidavit of the wife and her mother was of limited assistance where it amounted to broad ranging criticisms of the husband, sweeping conclusions without foundation, self-serving statements unsubstantiated by the foundational facts, contradictory assertions or deficiency by the failure to include relevant evidence known to the deponent which contradicted the absoluteness of aspects of their written evidence. In that respect, three instances for present purposes will suffice. The wife conceded for the first time in cross-examination that the husband had provided personal guarantees for the mortgages obtained to purchase four of the five parcels of real estate by the Company despite giving evidence that he had made no contribution to the acquisition of at least three of those properties and failed to make any reference to the fact that he had signed guarantees, albeit knowing he had. The evidence of the wife and her mother as to the circumstances of alleged repayment of an alleged loan was so inconsistent and consequently irreconcilable as to render implausible their differing accounts. In relation to the Suburb D property, the wife’s evidence was as follows: 177.[Mr Kaplan] made no initial and ongoing contributions to the purchase and maintenance of the [Suburb D] property with his only contribution being assisting me to obtain the loan and being the guarantor of the loan. In cross-examination she conceded, inconsistent with her sworn evidence, that the $250,000 provided by the Company to the purchase price was in fact sourced from the proceeds of sale of the parties jointly owned property. The husband had thus made a direct financial contribution with the wife of at least $250,000 to the purchase of the Suburb D property.

Decision

Reasons for decision

The Company retains $460,280 of the parties’ funds and the parties provide guarantees to the bank to enable the company to purchase S Street.CONCLUSION To accept the case advanced by the respondents requires the court to be satisfied that their case has been established to the requisite standard of proof. The Court “must feel an actual persuasion” of the case advanced by the party bearing the onus of proof. The concept of actual persuasion was elucidated by Emmett J in Warner v Hung (No 2) (2011) 297 ALR 56 as follows:48.Under s 140(2) of the Evidence Act 1995 (Cth) (the Evidence Act), the Court must, in deciding whether it is satisfied that a case has been proved to the requisite standard, take into account:•the nature of the cause of action or defence;•the nature of the subject matter of the proceeding; and•the gravity of the matters alleged.When proof of any fact is required, the court must feel an actual persuasion of the occurrence or existence of that fact before it can be found. Mere mechanical comparison of probabilities, independent of any belief in reality, cannot justify the finding of a fact. Actual persuasion is achieved where the affirmative of an allegation is made out to the reasonable satisfaction of the court. However, reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequences of the fact to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, and the gravity of the consequences flowing from a particular finding are considerations that must affect whether the fact has been proved to the reasonable satisfaction of the court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony or indirect inferences: see Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-2; [1938] ALR 334 at 342. I am not so persuaded and am not satisfied that there existed a trust between the wife and her parents of the shares in the Company or that the wife at the time of incorporation or at any time thereafter until after separation regarded the Company as other than her own property. Nor am I satisfied that there was a loan to be repaid or repayment of a loan to her parents at any time by the transfer of shares. I am satisfied that the wife transferred the shares in the Company to her mother so as to reduce the pool of assets available for distribution as between her and the husband. Her conduct in doing so is entirety consistent with the unchallenged evidence of the husband as to what occurred in late 2022. I propose to notionally add back the real estate owned by the Company to the pool of assets as a premature distribution (Townsend and Townsend (1995) FLC 92-569). While I am satisfied that the wife’s parents provided monies to enable the wife to study in New Zealand. I am not satisfied that the advance by the parents could meet the description of a loan or an enforceable obligation to repay. Agreements between family members not always but rarely are intended to have legal consequences being an essential agreement to a binding obligation to pay. In cases between family members, the party seeking to establish or enforce an agreement bears the onus of proving that the parties intended to create legal relations (Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95). In determining whether there was an intention to create legal relations, the Court undertakes an objective assessment of the evidence which looks at all of the factors that point to whether the parties would have intended that their promises be enforceable.

Ratio Decidendi

Legal Principle Established

These observations are apposite to the resolution of the inconsistencies raised by the evidence of the wife and her mother and its conflict with documentary evidence and the non-contentious facts.Duration of the Relationship The parties are at issue as to when a de-facto relationship commenced and the date of separation. In that respect, the husband contended in his affidavit that the parties commenced cohabitation in or around 2007, contending they entered into a de facto relationship at that stage. When asked questions about when the relationship commenced the husband changed his evidence and contended that the parties commenced living together in a de facto relationship in late 2008/2009. The husband contended that the parties separated on a final basis in April 2019. The wife for her part contended that the parties first met in early 2008 at a public venue in City L. The husband agreed with the wife’s contention. The wife says that in or around late 2009/early 2010 the husband moved into an apartment she was occupying as a tenant. She contends that they were not in a committed relationship, and they were not making any life plans together. The wife says it was not until late 2011 that she and the husband began a serious relationship. She points to a conversation between her and the husband in late 2011 where there was a discussion of marriage and that shortly thereafter the parties were married in late 2011 (wife’s affidavit filed 13 November 2024, paragraph 95). The husband denied such a conversation took place. The wife’s contention that they were not in a committed relationship and that it was not serious prior to late 2011 is inconsistent with the husband’s evidence and other objective facts. The evidence reveals that the parties opened a joint bank account in late 2009 (Exhibit 3). In mid‑2010 the Company completed the purchase of J Street. To complete the purchase, the Company provided 96 percent of the purchase price by way of loan from a bank secured in part by a guarantee given by the husband. In late 2010 the parties incorporated another company with each of them as shareholders. I do not accept the wife’s evidence. I am satisfied consistent with the husband’s oral evidence, and the objective evidence established by way of the joint bank account, the creation of a Company and the husband giving a personal guarantee for borrowings by the Company, that the parties were in a serious relationship that had all the hallmarks of a de-facto relationship by late 2008 or early 2009. The wife contends that the parties separated under the one roof in September 2017 with the husband finally vacating the home in April 2019. The wife’s evidence is that in November 2017 she said to the husband that she wished to separate. She says the husband did not move out and the parties continued living together albeit she says that she would sleep in the living room. She says that there was some back and forth in the relationship and that the husband did not finally leave until April 2019. The husband contends that the date of separation is April 2019, consequent upon his moving out of the home.