Khalif & Khalif (No 3)
[2022] FedCFamC1F 900
Federal Circuit and Family Court of Australia
(DIVISION 1)
Khalif & Khalif (No 3) [2022] FedCFamC1F 900
File number(s): SYC 6144 of 2016 Judgment of: REES J Date of judgment: 16 November 2022 Catchwords: FAMILY LAW – INTERIM PROPERTY – Where the wife seeks an order that the second respondent pay the costs of the trustee for sale – Where the wife seeks an order for interim property settlement – Where the wife seeks the payment of arrears of child support from the husband – Where the second respondent did not agree to the proposed orders for the sale of property until the day of the hearing – Orders made for the costs of the trustee for sale be paid from the gross proceeds of the sale before apportioning the balance of funds to the husband and the second respondent – Orders for the wife to receive by way of interim property settlement 33.5 per cent of the husband’s share of the net proceeds of the sale – Orders for the second respondent to pay for the costs of this application Legislation: Family Law Act 1975 s 117(2A) Cases cited: Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589 Division: Division 1 First Instance Number of paragraphs: 34 Date of hearing: 14 November 2022 Place: Sydney Counsel for the Applicant: Mr Todd Solicitor for the Applicant: Jordan Djundja Lawyers First Respondent: Litigant in person Counsel for the Second Respondent: Mr Schonell Solicitor for the Second Respondent: KF Lawyers Australia Counsel for the Third Respondent: Mr Robertson Solicitor for the Third Respondent: Harris Carlson Lawyers ORDERS
SYC 6144 of 2016 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS KHALIF
Applicant
AND: MR KHALIF
First Respondent
MR B KHALIF
Second Respondent
OFFICIAL TRUSTEE IN BANKRUPTCY
Third Respondent
order made by:
REES J
DATE OF ORDER:
16 NOVEMBER 2022
THE COURT ORDERS:
1.That the response of the husband filed 10 November 2022 be dismissed and the husband removed as a respondent in the property settlement proceedings.
2.That the costs of the trustee for sale in the sum of $30,000 be paid from the gross proceeds of sale of the property at C Street, Suburb D before apportioning the balance of the funds to the husband and the second respondent.
3.That, from the proceeds of sale of the property at C Street, Suburb D the solicitors for the wife and the second respondent cause to be paid to the wife, by way of interim property settlement, a sum equivalent to 33.5 per cent of the sum referred to as “the First Respondent’s share” in Order 3(b) made on 14 November 2022.
4.That, from the proceeds of sale of the property at C Street, Suburb D the solicitors for the wife and the second respondent cause to be paid to the wife, from the sum referred to as “the Second Respondent’s share” in Order 3(a) made 14 November 2022, the sum of $25,600 being the costs of this application.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Khalif & Khalif has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
REES J:
There are substantive proceedings before the Court in relation to the division of the assets of the wife, Ms Khalif, and the husband, Mr Khalif.
On 31 January 2020, Watts J delivered judgment and made orders and declarations in relation to the beneficial ownership of a property at Suburb D of which the husband’s brother Mr B Khalif (the second respondent) was the registered proprietor. His Honour found that the husband was entitled to 61.5 percent of the Suburb D property.
The second respondent unsuccessfully appealed against those orders and was also unsuccessful in his application for special leave to appeal to the High Court.
The third respondent in these proceedings is the husband’s trustee in bankruptcy, the husband having been made bankrupt on 11 July 2017.
Before me, the wife sought orders for the appointment of a trustee for sale of the Suburb D property, an order that the second respondent pay the costs of the trustee of sale which are agreed to be $30,000 and an order for interim property settlement and the payment of arrears of child support in the sum of $173,662.17. The wife also seeks payment to her, from any funds due on the sale to the second respondent, of various amounts orders to be paid by him to her in respect of costs.
The husband filed a response to the wife’s application and an affidavit. The husband having no right of appearance in these proceedings, his response was dismissed and he has been removed as a respondent in the property proceedings.
In response to the wife’s application, the second respondent sought a suite of orders in which he:
·Opposed the wife’s proposal for the appointment of the selling agent and conveyancer and proposed different people for those roles.
·Sought the payment to him of $230,139 being interest he asserts was incurred prior to the discharge of a mortgage over Suburb D in May 2013.
·Sought payment to him of $383,393 being the costs he asserts he incurred in renovation, improvement and repairs to Suburb D in 2009, 2010 and 2018.
·Sought payment of capital gains tax liabilities asserted to become payable on the sale of Suburb D.
On behalf the wife, a Case Outline document and written submissions were prepared in opposition to the orders sought by the second respondent, contending that the second respondent was estopped from making the second and third of his claims in accordance with the principles in Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589 (“Anshun estoppel”).
On the morning of the hearing, the second respondent’s position changed. He consented to the appointment of the trustee for sale and agreed that the trustee for sale should nominate both the selling agent and the conveyancer. He withdrew the second and third claims which had attracted to arguments about Anshun estoppel.
Thus the Court was left to determine only the wife’s claims.
INTERIM PROPERTY SETTLEMENT and arrears of child support
The wife seeks, from the husband’s share of the proceeds of sale of Suburb D, payment to her of $550,000 by way of interim property settlement and payment to Services Australia of the arrears of child support in the sum of $173,662.17.
Both applications are opposed by the third respondent. On behalf of the third respondent, it was submitted that there is no certainty about the amount of funds that will be recovered for the husband’s bankrupt estate as a result of the sale of Suburb D. Further, it is submitted that there are further claims which have been foreshadowed against the bankrupt estate, in addition to claim of about $550,000 of which the third respondent is currently aware.
In relation to the arears of child support, the third respondent submitted that, as to the portion of the arears which have accrued after the husband became bankrupt, that debt is not provable in the bankruptcy. Services Australia have already lodged a proof of debt in relation to arrears of $29,590 which arose prior to the husband’s being made bankrupt. Counsel for the third respondent submitted that to make an order that the whole of the arrears be paid from the husband’s share of the proceeds of sale of Suburb D would be to give a preference to Services Australia.
It was further submitted, on behalf of the third respondent, that if I were minded to make an order in favour of the wife for interim property settlement, that to order should be expressed as a percentage of the amount received on behalf the husband’s bankrupt estate and not as a fixed sum.
The Suburb D property has been valued at $2,750,000 although whether it will fetch that amount on sale is not guaranteed.
The costs of sale, including the costs of the trustee for sale, are estimated to be about $86,000, leaving about $2,664,000 for distribution. The husband’s entitlement is 61.5 per cent or $1,638,360.
In the substantive hearing, there will be a determination of the wife’s entitlement to a share of the proceeds of sale of Suburb D. The balance, the husband’s entitlement, will be held by the third respondent and used to satisfy the creditors.
The sum which the wife currently seeks would be 33.5 per cent of the husband’s entitlement if the property sold for $2,750,000. It is difficult to envisage that her ultimate entitlement will not be significantly more than 33.5 per cent and I propose to order that she be paid, by way of interim property settlement, 33.5 per cent of the amount which is the husband’s share of the proceeds of sale.
I do not propose to make orders for the arrears of child support to be paid. By the time the matter comes to trial, it should be clear whether, after apportioning the available assets between the husband and the wife, the amount apportioned to the husband is sufficient to satisfy the claims of his creditors. If there is a surplus of funds which will be paid to the husband, the issue of preference does not arise. The arrears of child support will be dealt with in the substantive hearing.
paymentof the costs of the trustee for sale
The costs of the trustee for sale will be $30,000. The wife seeks an order that the second respondent pay those costs. He opposes that application.
On 2 May 2022, the High Court having refused the second respondent special leave to appeal, the wife’s solicitor wrote to the second respondent’s solicitor proposing the immediate sale of the Suburb D by public auction with the net proceeds to be retained in trust accounts pending the determination of the substantive proceedings, subject to the payment to the wife of the outstanding amounts ordered to be paid to her by way of costs.
On 4 May 2022, the second respondent’s solicitors replied, agreeing that the property must be sold but stating,
In saying that, I must confess that we are still in the process of trying to understand and workshop the rest of your proposal, which is not without its complexities given the issues.
On 10 May 2022, the wife’s solicitors sent a proposed Minute of Order to the second respondent’s solicitors. The form of the proposed Minute is similar in its terms to the application of the wife now before me.
The second respondent did not agree to the proposed orders for the sale of the Suburb D property until the hearing of the wife’s application before me. Whist that conduct may sound in costs in relation to the application before me, it does not warrant an order that the second respondent pay the costs of the trustee for sale.
The costs of the trustee for sale in the sum of $30,000 will be paid from the gross proceeds of the sale before apportioning the balance of funds to the husband and the second respondent.
costs of this application
The wife seeks an order that the second respondent pay the costs of this application.
This application falls to be determined according to the provisions of s 117(2A) of the Family Law Act 1975 (“The Act”).
The wife has filed a Financial Statement. She has a small excess of income over expenses but that income includes the amount she receives from Family Tax Benefit and the sum of $19 per week that she receives for each child by way of child support.
There is no evidence of the financial position of the second respondent. He will receive funds from the sale of the Suburb D property.
The wife relies on the conduct of the second respondent in failing to agree to the sale of the Suburb D property, that being the conduct which has necessitated the bringing of this application.
Further, on behalf of the wife, it is submitted that by bringing the applications referred to in paragraph 7 above, the second respondent caused the wife to incur legal fees in opposing those applications. The issues raised in the response of the second respondent are complex issues of both law and fact.
On the morning of the hearing, the second respondent indicated that he did not seek to proceed with the application, having the effect that all of the costs incurred by the wife in preparation to meet the response, were thrown away.
It is therefore appropriate that the second respondent pay the wife’s costs of this application.
The estimate of the costs of the wife’s solicitors is $25,600 being solicitors’ costs of $3,600 and counsel’s fees of $22,000. I accept that the estimate is reasonable and I propose to order that the second respondent pay the wife’s costs of $25,600, such costs to be paid from his share of the proceeds of the sale of Suburb D.
I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Rees. Associate:
Dated: 16 November 2022