Konda and Konda & Ors - [2016] FamCA 1060

FAMILY COURT OF AUSTRALIA

KONDA & KONDA AND ORS

[2016] FamCA 1060

FAMILY LAW – PROPERTY SETTLEMENT – Transactions to defeat orders – Where the husband’s disposition of assets would defeat the wife’s anticipated relief under Part VIII of the Family Law Act – Where the husband transferred property to his brother – Where the brother was joined as the second respondent – Where the husband transferred funds to family members in India – Application of Halabi v Artillaga (1994) FLC 92-470 – Where other property is transferred through arm’s length transactions – Where the wife receives relief under s 106B – Decided wife entitled to property settlement amounting to 85 percent of the parties’ ascertained assets

FAMILY LAW – PRACTICE AND PROCEDURE – Where the 3^rd respondent does not appear at trial – Where the 3^rd respondent has not filed any documents – Where no final orders will bind the 3^rd respondent – Decided the question of procedural fairness is moot

Family Law Act 1975 (Cth), ss 75, 79, 106B

Atco Controls Pty Ltd (in liq.) v Newtronics Pty Ltd (recs and mgrs appt) [2009] VSCA 238
Balfour v Balfour [1919] 2 KB 571
Bevan & Bevan (2013) 49 Fam LR 387
Burke v LFOT Pty Ltd (2002) 209 CLR 282
Chorn v Hopkins (2004) FLC 93-204
Cohen v Cohen (1929) 42 CLR 91
Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95
Halabi v Artillaga (1994) FLC 92-470
Henderson v Miles [2005] NSWSC 710
Jones v Padavatton [1969] 2 All ER 616
Lester & Lester [2014] FamCAFC 209
Magill v Magill (2006) 231 ALR 277
Marriage of Clauson (1995) 18 Fam LR 693
Marriage of Kennon (1997) 22 Fam LR 1
Marriage of Phillips (2002) 29 Fam LR 128
Stanford v Stanford (2012) 247 CLR 108

Vetter v Lake Macquarie City Council (2001) 202 CLR 439

APPLICANT:

Ms Konda

1st RESPONDENT:

Mr Konda

2nd RESPONDENT:

Mr Vohra

3rd RESPONDENT:

Mr Saiva

FILE NUMBER:

NCC

2028

2013

DATE DELIVERED:

9 December 2016

PLACE DELIVERED:

Newcastle

PLACE HEARD:

Newcastle

JUDGMENT OF:

Austin J

HEARING DATE:

21, 22 & 23 November 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Graham

SOLICITOR FOR THE APPLICANT:

Nash Allen Williams & Wotton

COUNSEL FOR THE 1ST RESPONDENT:

Ms Conte-Mills

SOLICITOR FOR THE 1ST RESPONDENT:

Cambridge Law Solicitors

COUNSEL FOR THE 2ND RESPONDENT:

Not Applicable

SOLICITOR FOR THE 2ND RESPONDENT:

Mr Haricharan, Hunter Family Law Centre

COUNSEL FOR THE 3RD RESPONDENT:

Not Applicable

SOLICITOR FOR THE 3RD RESPONDENT:

Not Applicable

Orders

Pursuant to s 106B of the Family Law Act:
(a)The disposition by the first respondent to the second respondent of the real property comprising Folio Identifier …, described as B Street, Suburb C, NSW (“the Suburb C property”), by transfer (by registered dealing number …) in or about August 2012 is hereby set aside and the first and second respondents shall forthwith do all such things necessary to convey the first respondent’s former interest in the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2016] FamCA 1060
Decision Date: 9 December 2016

CaseChat Overview and Summary

In *Konda and Konda & Ors*, Austin J of the Family Court of Australia considered an application by the wife for property settlement, where the husband had allegedly disposed of assets to defeat her anticipated relief. The second respondent, the husband's brother, was joined to the proceedings due to his involvement in the transfer of certain properties. The wife sought orders under section 106B of the *Family Law Act 1975* (Cth) to set aside dispositions of property made by the husband.

The primary legal issues before the court were whether the husband's dispositions of property, including a property and shareholding transferred to his brother, and funds transferred to family members in India, were made to defeat the wife's claim for property settlement. The court also considered the application of the principles established in *Halabi v Artillaga* (1994) FLC 92-470 regarding such dispositions, and whether the wife was entitled to relief under section 106B of the Act. The court also addressed the procedural fairness of the proceedings concerning a third respondent who did not appear.

Austin J found that the husband's disposition of the Suburb C property and his shareholding in D Pty Ltd to his brother were indeed made to defeat the wife's anticipated relief and ordered these transactions to be set aside pursuant to section 106B of the *Family Law Act*. The court reasoned that these transfers were not arm's length transactions and were designed to remove assets from the pool available for property settlement. The court also determined that the question of procedural fairness in relation to the third respondent was moot as no final orders would bind that party.

The court ordered the setting aside of the transfers of the Suburb C property and the shareholding in D Pty Ltd, requiring their reconveyance to the first respondent. The Suburb C property and the E Street property were to be sold by public auction, with the applicant appointed as trustee for sale. The net proceeds of these sales were to be disbursed, with a specific sum paid to the wife, followed by 85 percent of the remaining balance to the wife, and the residue to the husband. The court also declared the husband the sole owner of his shareholding in D Pty Ltd following compliance with the orders.

Orders

Orders of the court

Pursuant to s 106B of the Family Law Act:

(a) The disposition by the first respondent to the second respondent of the real property comprising Folio Identifier …, described as B Street, Suburb C, NSW (“the Suburb C property”), by transfer (by registered dealing number …) in or about August 2012 is hereby set aside and the first and second respondents shall forthwith do all such things necessary to convey the first respondent’s former interest in the Suburb C property back to the first respondent; and

(b) The disposition by the first respondent to the second respondent of his shareholding in D Pty Ltd by transfer (by registered ASIC document number … or 1…) in or about July/August 2013 is hereby set aside and the first and second respondents shall forthwith do all such things necessary to convey the first respondent’s former interest in the corporation back to the first respondent.

Following compliance with Order 1(b) hereof, the first respondent is declared the sole legal and beneficial owner (as between the parties) of his shareholding in D Pty Ltd.

Following compliance with Order 1(a) hereof, the applicant and first respondent shall forthwith do all such acts and things and sign all such documents as may be necessary to list the Suburb C property for sale by public auction.

For the purposes of implementation of Order 3 hereof:

(a) The applicant shall be the trustee for sale;

(b) The solicitors chosen by the applicant shall act for the parties on the sale;

(d) The auctioneer, in the event of disagreement between the applicant and first respondent, shall be the auctioneer chosen by ballot from their respective choices;

(e) The reserve price shall be as agreed between the applicant and first respondent and, in the event of disagreement between them, the reserve price nominated by the auctioneer;

(f) In the event the property is not sold by auction, or private negotiation within a further 7 days, then the property shall be submitted to successive auctions within further 6 weeks periods until sold, otherwise on the same terms and conditions as applied to the first auction;

(g) The parties are restrained from charging, mortgaging, or otherwise encumbering the property; and

(h) The applicant and first respondent shall cause the net proceeds of sale (after payment of all costs, commissions, and expenses of the sale, including any outstanding Council and water rates) to be held in trust by the solicitors pending compliance with Orders 5 and 6 hereof.

The applicant and first respondent shall forthwith do all such acts and things and sign all such documents as may be necessary to list for sale by public auction the real property comprising Folio Identifier …, described as E Street, Suburb F, NSW (“the Suburb F property”).

For the purposes of implementation of Order 5 hereof:

(a) The applicant shall be the trustee for sale;

(b) The solicitors chosen by the applicant shall act for the parties on the sale;

(d) The auctioneer, in the event of disagreement between the applicant and first respondent, shall be the auctioneer chosen by ballot from their respective choices;

(e) The reserve price shall be as agreed between the applicant and first respondent and, in the event of disagreement between them, the reserve price nominated by the auctioneer;

(g) The parties are restrained from charging, mortgaging, or otherwise encumbering the property;

(i) The husband may occupy the property pending its sale pursuant to these orders, provided he meets all expenses incurred in respect of the property as and when those expenses fall due (including loan repayments, Council rates, water rates, and insurances), maintains the property in a reasonable state of repair, and facilitates inspection of the property by prospective purchasers.

Upon completion of the sales pursuant to Orders 3-6 hereof, the applicant and first respondent shall cause the solicitors to disburse the proceeds of the sales as follows:

(a) First, to pay the sum of $181,089 to the wife or at her direction;

(b) Secondly, to pay 85 per cent of the balance then remaining to the wife or at her direction; and

Unless otherwise provided:

(a) Each party shall be the sole legal and beneficial owner (as between the parties) of all other assets in their respective possession as at the date of these orders, and for that purpose bank accounts are deemed to be in the possession of the person named as the account holder and superannuation entitlements are deemed in the possession of the superannuant.

(b) Each party shall be solely liable for and shall indemnify the others against any and all debts attaching or relating to the property in their respective possession, and any debts in their respective sole names, including any individual liability for capital gains tax arising out of the sale by the parties of property pursuant to these orders.

In the event of any party refusing or neglecting to sign within 7 days of a written request to do so any document necessary to implement the terms of these orders the Registrar of the Family Court of Australia at Newcastle is empowered to execute such documents on behalf of the parties pursuant to s 106A of the Family Law Act.

10.

Costs are reserved for 28 days.

11.

All outstanding applications are dismissed.

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

Background

Background to the litigation

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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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