Kaplan & Hankel (No 2)

Case [2025] FedCFamC1F 210

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Kaplan & Hankel (No 2) [2025] FedCFamC1F 210 

File number: SYC 9434 of 2021
Judgment of: SCHONELL J
Date of judgment: 4 April 2025
Catchwords:

FAMILY LAW – PRACTICE AND PROCEDURE – STAY – Where the wife sought a stay of orders that are the subject of appeal – Where the husband opposed the stay application – Where the Court is not satisfied that the wife has discharged the onus that there is a proper basis to stay the orders – Application dismissed.

FAMILY LAW – PRACTICE AND PROCEDURE – COSTS – Where the husband sought an order for costs on the basis that the wife failed to comply with orders and sold and disposed of assets without notice such that he incurred costs in excess of $80,000 – Where the wife opposed the costs application – Consideration of factors under s 117(2A) of the Family Law Act 1975 (Cth) – Where the Court is not satisfied the circumstances justify the making of a costs order – No order for costs – Application dismissed.

Legislation:

Family Law Act 1975 (Cth) Pt VIII ss 117(2), 117(2A)

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 13.12(2)

Cases cited:

Alexander v Cambridge Credit Corporation Ltd (Receivers appointed) (1985) 2 NSWLR 685

Aldridge & Keaton (Stay Appeal) [2009] FamCAFC 106

Bant & Clayton (Costs) (2016) 56 Fam LR 31

House v The King (1936) 55 CLR 499

Kelly and Kelly (1981) FLC 91-007

Nada v Nettle (Costs) (2014) FLC 93-612

Penfold v Penfold (1980) 144 CLR 311

PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 Fam LR 123

Samaras & Allen [2021] FedCFamC1F 20

Kaplan & Hankel [2025] FedCFamC1F 41

Division: Division 1 First Instance
Number of paragraphs: 48
Date of hearing: 28 March 2025
Place: Sydney
The Applicant: Litigant in person
The First Respondent: Litigant in person
The Second Respondent: Did not appear

ORDERS

SYC 9434 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MS HANKEL

Applicant
AND:

MR KAPLAN

First Respondent

MS BRILEY

Second Respondent

ORDER MADE BY:

SCHONELL J

DATE OF ORDER:

4 APRIL 2025

THE COURT ORDERS THAT:

1.The applicant’s Application in a Proceeding seeking a stay of orders made 30 January 2025 is dismissed.

2.The respondent’s application for costs is dismissed.

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

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

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,…

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AGLC
Kaplan & Hankel (No 2) [2025] FedCFamC1F 210
Case
[2025] FedCFamC1F 210
Decision Date

CaseChat Overview and Summary

In the matter of Hankel v Kaplan, the wife, Ms Hankel, sought a stay of certain orders made by the Court on 30 January 2025, while the husband, Mr Kaplan, opposed the stay application. Additionally, Mr Kaplan sought an order for costs against Ms Hankel, arguing that she had failed to comply with orders and had sold and disposed of assets without notice, resulting in costs exceeding $80,000. Both parties appeared unrepresented in court, leading to submissions that often strayed from the relevant issues. The primary legal issues were whether there was a proper basis to stay the orders and whether the circumstances justified making a costs order against Ms Hankel. The Court found that Ms Hankel had not discharged the onus of demonstrating a proper basis to stay the orders, and thus, the stay application was dismissed. Regarding the costs application, the Court considered the factors under section 117(2A) of the Family Law Act 1975 (Cth) but was not satisfied that the circumstances justified the making of a costs order. Consequently, Mr Kaplan’s application for costs was also dismissed.

The Court provided detailed reasoning in its judgment, focusing on the wife's contention that a company holding two properties in New Zealand was not an asset of the parties. The wife argued that the shares in the company were either always beneficially held for her parents or were transferred to her mother in repayment of a loan. However, the Court found that the wife was the legal and beneficial owner of the shares and that she transferred them to her mother to reduce the pool of assets available for division. The Court reached this conclusion based on various findings, including the lack of evidence for a trust, the wife's personal guarantees for the company's borrowings, and the intermingling of the parties' funds with those of the company. Additionally, the Court noted inconsistencies and implausibility in the wife's and her mother's evidence regarding the creation of the company and the repayment of a loan. Given these findings, the Court concluded that there was no legally enforceable obligation to repay the wife's parents and that the wife had acted to reduce the asset pool by transferring the shares.

Orders

Orders of the court

SYC 9434 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS HANKEL

Applicant

AND:

MR KAPLAN

First Respondent

MS BRILEY

Second Respondent

ORDER MADE BY:

SCHONELL J

DATE OF ORDER:

4 APRIL 2025

THE COURT ORDERS THAT:

1. The applicant’s Application in a Proceeding seeking a stay of orders made 30 January 2025 is dismissed.

2. The respondent’s application for costs is dismissed.

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

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

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

Both parties appeared unrepresented. As a consequence, particularly in relation to the stay but more generally apposite to both applications, the focus of the submissions was on matters not germane to the issue with frequent resort to irrelevancies, such as the best interests of the children.BACKGROUND The husband commenced proceedings pursuant to Part VIII of the Family Law Act 1975 (Cth) (“the Act”) on 17 December 2021. The final hearing took place over two days in early January 2025. A significant issue at the hearing was whether a company which held two properties in New Zealand had been or was an asset of the parties. The shares in the company on incorporation had been issued to the wife and held by her until she transferred them to her mother following separation. The wife contended that the shares had been held by her beneficially for her parents at all times since incorporation or alternatively were transferred to her mother in repayment of a loan. The wife’s mother was joined to the proceedings as the second respondent on 3 October 2024. The husband contended that the wife was at all times the legal and beneficial owner of the shares and they were transferred to her mother to reduce the pool of assets for division. While there was no valuation of the company, the matter proceeded on the basis that the value to be ascribed to the company was the agreed value of the properties less the corresponding mortgage debt. At hearing the wife sought the parties’ assets (excluding any value for the company) be divided as to 95 per cent to her and 5 per cent to the husband. The husband for his part contended that the parties’ assets (including a value for the company) should be divided 55 per cent to the wife and 45 per cent to him. As to the wife’s contention that the company should be excluded from the pool of assets for division on the basis that the shares in the company were either always beneficially held for the wife’s parents or transferred in repayment of a loan, the Court in the reasons for judgment recorded as Kaplan & Hankel [2025] FedCFamC1F 41 (“the Reasons”) made the following findings:113I 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.114I 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 on 1 November 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).…118I reach the conclusions referred to above in relation to these matters based on the following:(a)There is no evidence of the creation of any declaration of trust in relation to the shares nor is there any document that indicates that the wife was at any time other than the beneficial owner of the shares.(b)The Company acquired five pieces of real estate in New Zealand during the course of the parties’ relationship. The Company remains the owner of two pieces of real estate. In relation to the purchase of every piece of real estate, the wife, not her parents, provided a personal guarantee for borrowings by the Company. In respect of four of the pieces of real estate the husband provided personal guarantees for the purchase of the real estate. There is no evidence of the wife’s parents being a borrower, mortgagor or guarantor for the acquisition of any real estate. I find providing such a guarantee is inconsistent with the existence of a trust.(c)It is the wife’s evidence that she met the shortfall if any in relation to any loans and/or expenses from her income. The evidence of the husband is that he contributed to the deposits and expenses by contributing his income to the wife’s bank accounts. I accept his evidence. There is no evidence that the wife’s parents or either of them made any payment towards any outgoings or shortfall. I find making such payments by the wife and indirectly the husband inconsistent with the existence of a trust.(d)The wife declared in her income tax returns as a deduction the losses incurred by the Company on the rental income. I find the claiming of such a deduction inconsistent with the existence of a trust.(e)During the course of the husband’s cross-examination, counsel for the wife put to the husband the proposition that the wife used the Company to buy property for herself. Such question being put to the husband, presumably upon instructions, is entirely inconsistent with the case now sought to be advanced by the wife.(f)The wife agreed during cross-examination that of the $460,280 of the parties’ funds paid to the Company from the sale of the [S Street] property $275,000 was remitted to Australia and applied to the purchase of the [Suburb D] property. When asked as to what happened to the balance of the funds the wife said that they remained in the Company. It is but further evidence of the intermingling of the parties funds with those of the Company and is inconsistent with the notion that the wife was nothing other than a bare trustee of the shares in the Company. I find depositing the parties funds into the Company account and then using part of them to fund a purchase in the wife’s name and leaving the balance in the Company inconsistent with the existence of a trust.(g)The only financial contribution made by the wife’s parents to any of the property acquired by the Company was $26,304 contributed to the purchase of the first property.(h)At times when the wife clearly had funds available to repay her parents the alleged loan it is not repaid.(i)The alleged conversations between the wife and her mother as to the repayment of the loan are inconsistent and irreconcilable. Their evidence is implausible and unconvincing, and I am not persuaded by it.(j)The transfer of shares to the wife’s mother alone is inconsistent with a trust said to exist for both parents.(k)The evidence that the husband provided guarantees for the purchase of real estate in the knowledge that the Company was owned by the wife’s parents not the wife is inconsistent with his evidence and inherently implausible and illogical. I do not accept the wife’s evidence that she told the husband the Company was her parents as irreconcilable with his financial contributions to a Company he believed was the wife’s.(l)The husband and the wife prepared a separation agreement in 2013. The terms of that separation agreement record in part that the wife will retain as part of her property the Company and all of its property. One of the recitals to the agreement records that the parties have disclosed to each other all of their property a summary of which is in the Schedule. The Schedule refers to the Company and its property. The creation of such an agreement by the parties is inconsistent and irreconcilable with the wife’s case that she told the husband that the Company was her parents and is irreconcilable with the existence of a trust.(m)I find the evidence of the wife and her mother as to the reasons for creation of the Company and repayment of the alleged loan as irreconcilable with the subsequent conduct of the wife and the husband, inconsistent internally and implausible.119I am satisfied on the basis of the matters referred to above and given the little weight I place on the evidence of the wife and her mother, that there was not a legally enforceable obligation to repay her parents and that the wife was at all times the legal and beneficial owner of the shares in the Company and 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 her mother.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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