KOSTAS & KOSTAS
[2017] FamCA 479
•16 June 2017
FAMILY COURT OF AUSTRALIA
| KOSTAS & KOSTAS | [2017] FamCA 479 |
| FAMILY LAW - PROPERTY – Interim proceedings – Whether it is appropriate to make interim orders – Where the asset pool reasonably well identified – Where no identifiable cash pool from which provision could be made – Where discussion of general principles – Where appropriate to make order for interim distribution of property. |
| Family Law Act 1975 (Cth) ss 75(2), 79, 79(4) |
| Harris & Harris (1993) FLC 92-378 Osferatu (No 3) [2013] FamCA 1035 Strahan & Strahan [2009] FamCAFC 166 |
| APPLICANT: | Ms Kostas |
| RESPONDENT: | Mr Kostas |
| FILE NUMBER: | PAC | 971 | of | 2015 |
| DATE DELIVERED: | 16 June 2017 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 5 May 2017 |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | Ms Satkunanathan of Michael Vassili Barristers & Solicitors |
| COUNSEL FOR THE RESPONDENT: | Ms Murphy |
| SOLICITOR FOR THE RESPONDENT: | K R Lawyers & Consultants |
Orders
That within seven days from this date the parties agree in writing on the appointment of an appropriately qualified solicitor to act as Trustee for Sale of the property at B Street, Suburb C being Lot … in Deposited Plan … and in default of agreement as provided the wife appoint a Trustee in writing within a further seven days.
That upon appointment the said property vest in the said Trustee for Sale and be sold by the trustee for sale at the best price reasonably obtainable by public auction within three months from this date.
That the husband pay as they fall due and payable all outgoings on the said property including council and water rates and insurances.
That the husband pending sale maintain the property in good order and condition having regard to the condition of the property when inspected by the selling agent appointed by the Trustee for Sale.
That upon sale of the property the proceeds of sale be paid in the following order and priority:
(a)In payment of agent’s commission and selling costs;
(b)In payment of legal costs of sale;
(c)In payment of any contract adjustments;
(d)In payment of $150,000.00 to the wife or as she may otherwise direct the Trustee in writing;
(e)In payment of the balance to an interest bearing account in the name of the Trustee as Trustee for both parties pending further order.
That the Trustee have liberty to apply on short notice for directions or further or other orders.
That any application for costs of the application be made by way of written submissions within 28 days from this date with any submissions in reply within a further 14 days.
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 Kostas & Kostas 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 PARRAMATTA |
FILE NUMBER: PAC 971 of 2015
| Ms Ku |
Applicant
And
| Mr Kostas |
Respondent
REASONS FOR JUDGMENT
An Application seeking final property orders was filed by the applicant wife on 5 March 2015. In summary in that application the wife sought final orders as to property that provided for:
a)the husband to transfer to her his interest in the property at B Street, Suburb C and give vacant possession of that property to the wife. She no longer seeks to retain the property;
b)the wife transfer to the husband her interest in two properties situated in Country D;
c)the husband pay to the wife the sum of $250,000.00.
Proceedings have been unduly protracted by reason of various interim issues between the parties, in particular, as to disclosure and the appointment of an appropriate single expert to value the parties’ interests in various Country D properties referred to below and the undertaking of those valuations.
On 13 March 2017 the wife filed an Interim Application seeking orders in summary as follows:
a)that the wife be appointed trustee for sale of the property at B Street, Suburb C;
b)that upon sale of the property after payment of sale expenses the sum of $250,000.00 be paid to the wife by way of interim property adjustment with the balance to remain in a controlled monies account on behalf of the husband and wife;
c)that within 28 days the husband vacate the said property and give vacant possession to the wife;
d)that pending sale the husband continued to pay as they fall due and payable all outgoings in relation to the property.
The wife relied upon the following documents:
a)the affidavit filed 16 March 2017;
b)her affidavit filed 11 May 2016;
c)her financial statement filed 1 May 2017;
d)the affidavit of Mr E filed 26 April 2017.
The husband filed a Response to the wife’s Application in a Case on 3 May 2017. In effect he sought a dismissal of the wife’s interim application and orders that provided for him to remain in occupation of the home and to maintain that property and pay all outgoings pending final hearing.
The husband relied upon the following documents:
a)his affidavit filed 12 July 2016;
b)his affidavit filed 3 May 2017;
c)his financial statement filed to May 2017.
In the context of final property adjustment the husband in his Amended Response to the wife’s Initiating Application seeks orders that would provide for:
a)the sale of the property at B Street, Suburb C with the net proceeds of sale being paid as to 40 per cent to the wife and as to 60 per cent to the husband;
b)that he retain certain items of personalty from the home with the balance of the contents remaining with the wife;
c)that there be a superannuation splitting order in his favour as to 50 per cent of the wife’s entitlement in the AMP Superannuation Fund;
d)that otherwise the parties retain other property in their respective names including property in Country D.
Context
The wife is presently aged 56 and the husband 61.
The parties married in Country D in 1989. There are two adult children of their relationship now aged nearly 26 and 24.
The parties separated in December 2013 although they remained living under the one roof together for about 12 months until December 2014 at which time the wife left the matrimonial home.
At the commencement of cohabitation the wife asserts that she had some $40,000.00 in savings and about $5,500.00 in superannuation. The wife acknowledges that the husband had some savings at cohabitation.
Subsequent to marriage, the wife returned to Australia in November 1989 to return to work. She was joined by the husband in Australia in August 1990.
In February 1990 the parties purchased a property in City F, Country D. The wife says that she contributed $20,000.00 to the purchase of that property with the remainder of her savings being applied to the parties’ wedding and other expenses. The purchase price she says was about $65,000.00 with the balance of purchase price being provided by the husband.
The parties later purchased the present former matrimonial home at B Street, Suburb C.
There is a significant issue between the parties as to their respective financial contributions during the cohabitation with the wife asserting that she was in employment throughout cohabitation save for short periods at the time of the birth of each of the children. She says that she has been in full-time employment since 1995. Otherwise, the wife asserts that the husband travelled back to Country D regularly leaving her and the children in financial difficulty. For periods he was on workers compensation payments and unable to work. The husband asserts that the wife was a gambler and unduly dissipated her income.
In 1997 the parties purchased the home at Suburb C for $130,000.00 with funds from savings of about $40,000.00 and the balance borrowed by way of mortgage. The wife asserts that she alone made mortgage payments until 2002 and thereafter mortgage payments were paid equally. The property at Suburb C has been unencumbered by mortgage since December 2014.
The wife complains that subsequent to final separation after she left the home the husband has refused to maintain insurances over the matrimonial home and she has met those payments herself.
Otherwise the wife contends there has been family violence perpetrated on her by the husband at times during the relationship and prior to separation. A determination of that issue awaits a final hearing.
Subsequent to separation the wife has withdrawn some $24,000.00 from her superannuation entitlements to fund surgery relating to her overall health circumstances.
The wife after separation was able to return to the home at Suburb C from March 2015 to May 2015 whilst the husband was absent in Country D. She is presently in rental accommodation paying $230.00 per week.
The wife expresses concerns as to the funds that have been deposited to and withdrawn from the husband’s ANZ bank account (..46), in particular, the following entries:
10 July 2014 deposit by transfer $ 108,349.13
10 July 2014 withdrawal $ 108,035.00
14 November 2014 deposit overseas remittance $ 107,975.00
14 November 2014 withdrawal $ 110,000.00
It was in 2014 that the husband asserts that he received net $130,000.00 by way of compensation for personal injury. He asserts that the transactions above are the deposit, withdrawal and redeposit of most of those funds. The husband contends that the funds have paid in relation to remedial work at the City F apartments.
The wife asserts that to date she has incurred legal expenses of about $186,000.00 in relation to these proceedings. She has paid $1,792.00 with the balance remaining outstanding.
Assets in Country D
The wife asserts that in about 2001 the husband inherited from his father a stone house in Country D, although she asserts that the land on which the house stands was inherited by the husband’s two sisters. There are outstanding issues as to disclosure and valuation in relation to this inheritance as it prospectively represents a financial resource to the husband.
In 2008 the parties entered into an arrangement with property developers in City F in relation to their City F property. The property was developed into a complex of five apartments. The complex was completed in 2010 with the parties retaining two of the apartments. The development was completed in 2010 and the apartments retained by the parties have been rented since that time. The wife asserts that the husband has in effect managed the apartments, received the rent and attended to payment of outgoings.
Subsequent to separation the wife signed a revocation of the original power of attorney that provided for the husband to manage the apartments in Country D. Notwithstanding her requests the husband has refused to return the original power of attorney to the wife. He continues to rent out the apartments and does not account to the wife for the rental income.
In October 2015 the husband commenced “proceedings” in Country D relating to the apartments in City F. The wife has incurred expense in engaging in those proceedings. In the Country D proceedings the husband asserts co-ownership between him and the wife in relation to the City F apartments and seeks a division of those jointly owned assets as the Court should deem appropriate. The husband seeks 80 per cent of those properties.
In his Financial Statement the husband asserts that the Country D apartments have a total value of about 320,000 Euro or about $480,000.00. The property is unencumbered. The husband makes no reference to rental received by him for the properties but has about $8,800.00 at bank.
The Country D proceedings were listed for hearing on 7 February 2017. It appears that the wife failed to file any documents in response to the husband’s claim. The hearing proceeded on 7 February 2017 and subject to the Court requiring evidence that the properties are unencumbered judgment has been reserved and not yet delivered.
As yet there is no completed agreed valuation in relation to the Country D properties. Although subject to the valuation being completed it would appear to be a logical course for the wife to transfer to the husband her interest in the apartments with otherwise the parties’ property entitlements being adjusted from assets here in Australia.
The pool
As best can be ascertained the present primary asset pool comprises:
The Country D apartments $ 480,000.00E
The Suburb C home $ 530,000.00E
Husband: Funds at bank $ 8,800.00
Husband: Superannuation $ 6,000.00
Husband: Compensation Verdict $ 130,000.00
Wife: Superannuation $ 60,000.00
The wife is working earning about $50,000.00 per annum. The husband asserts that ill health prevents him from working but he fails to account for rental income from the City F apartments.
At present he is in possession or control of the vast majority of the matrimonial assets. He has failed to explain the application or expenditure of his compensation funds.
Interim Property
The principles as to applications for interim property provision are well settled, (Strahan & Strahan [2009] FamCAFC 166) and require a two-step process.
Firstly, there must be circumstances enlivening the power to make an interim order. The test is not limited to “compelling circumstances” but whether it would be “appropriate” to make an interim order, with the “overarching consideration” being the interests of justice.
In Strahan (supra), the Full Court said:
132.In relation to the first stage, in our view, when considering whether to exercise the power under s 79 and s 80(1) (h) of the Act to make an interim property order the “overarching consideration” is the interests of justice. It is not necessary to establish compelling circumstances. All that is required is that in the circumstances it is appropriate to exercise the power. In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.
Secondly, the Court is to have regard to relevant matters in s 79 of the Family Law Act 1975 (Cth).
It needs to be kept in mind that the final outcome of property settlement should not be compromised by an interim property order. Either the remaining property needs to be adequate to meet the legitimate expectations of both parties at the final hearing or the order that is contemplated needs to be capable of being reversed or adjusted if it is subsequently considered necessary to do so.
It is important to have regard to an overall caution. In Harris & Harris (1993) FLC 92-378, the Full Court said (at 79929-79930):
As a generality, the interests of the parties and the Court are better served by there being one final hearing of s 79 proceedings.
In Osferatu (No 3) [2013] FamCA 1035 Le Poer Trench J considered authorities touching upon one aspect of the question of as to whether it would be “appropriate” to make an order:
35.The notion of a “level playing field” is one which almost axiomatically is in the interests of justice and an important matter to consider when deciding whether it would be appropriate to make an interim property order.
36.In In the Marriage of J U & T Poletti [1990] FamCA 79; (1990) 15 FamLR 794, Ellis, Strauss and Butler JJ quoted Ngyh J with approval at [796]:
...It is rather, as it certainly was in Wilson and Wilson [(1989) 13 Fam LR 205], a situation where one party to the marriage controls almost exclusively what might be described as the patrimony of the parties and has control of the bulk of the assets and funds of the parties, where an order may be made to ensure that the other party, who does not have the fortune of controlling those funds, at least has an equal or near equal opportunity to present his or her case...
37.One method sometimes adopted is to provide a disadvantaged spouse with a “dollar for dollar” order. That is, an order that the advantaged spouse has to pay the disadvantaged spouse one dollar for each dollar the advantaged spouse pays his or her own lawyer.
38.The implementation of such an order is not as clean cut as the interim property order sought in this case and there is more ambiguity about which power is being exercised and what evidence is needed. There has been previous discussion in cases as to whether or not an application of this nature relies upon s 79 and s 80(1)(h) or s 74 or s 117 FLA.
39.In Farnell and Farnell (1996) FLC 92-681, Kay J said:
In the Marriage of Gould, (Appeal EA 37 of 1994, judgment of 29 June 1994), the Full Court coram Fogarty, Kay and Graham JJ1, overturned an order of the trial Judge wherein her Honour had ordered that pending trial, for every dollar that the husband had spent on his lawyers, he should provide the wife with a similar amount for costs. The trial Judge had ought to make that order to create what she saw as ''a level playing field''. The Full Court disallowed the orders on the basis that the wife had adequate finances to provide for her own costs by reason of a substantial recent inheritance. In the course of my reasons for judgment I said this:
“I wish to make comment on ... the general philosophical views expressed by her Honour about endeavouring to achieve a level playing field by providing the wife with a dollar for dollar basis for costs. Whilst I agree with his Honour's [Fogarty J's] observations that this may not be an appropriate approach to these cases, I would also like to make reference to an article from the Chicago Daily Law Bulletin of 20 April 1992 which indicated that wives in these circumstances often have to spend much more than dollar for dollar to achieve a level playing field, particularly, and I quote - this is in reference to a survey of the American Bar Association Family Law Section:
‘Most of the lawyers agree that women will face higher legal bills in a divorce. Accordingly to 91 per cent of those surveyed women splitting from their husbands will have to pay more for discovery. Husbands traditionally have had full control over the family finances and economic information. This means the wife's attorney must often engage in discovery to gain equal knowledge about assets and income. The lawyer has an obligation to undertake discovery to find out if there are assets in just the husband's name, or if the wife has no knowledge of them.’
40.Putting the sexist language to one side, nearly twenty years later the position of a former spouse, now in highly conflicted litigation, who has not played a significant role in controlling the finances of the parties, has not much changed.
In this matter it is to be noted that the husband resides in the home to the exclusion of the wife and has substantially done so now for more than two years. He controls the City F apartments and does not account to the wife for what must be seen as matrimonial income. The wife lives in rented accommodation and has no funds readily available to her
In Strahan (supra), the Full Court said at [132]:
… regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.
It is now well settled that in property cases the Court must identify the existing legal and equitable interests of the parties in the property, the liabilities and financial resources of the parties at the time of the hearing and then whether it is just and equitable to make a property settlement order.
Such a consideration should not be guided by an assumption that the parties’ rights to, or interests in, property are, or should be, different from those that then exist. The question is whether those rights and interests should be altered.
There is no presumption that one or other party has the right to have the property of the parties divided between them or a right to an interest in marital property that is fixed by reference to the various matters in s 79(4). The Court needs to conclude that it would be unjust or unfair to leave property rights intact.
In many cases this requirement is readily satisfied where the parties are no longer in a marital or de facto relationship and, thus, for example, the common ownership or use of property by husband and wife will no longer be possible or the express or implicit assumptions that underpinned existing property arrangements such as the accumulation of assets or financial resources by one for the benefit of both have been brought to an end with the relationship.
Such is the case in this matter where both parties seek that the Court makes final adjustive orders. The husband seeks to retain the home (where he resides with the two adult children who earn in total about $200,000.00 per annum) but adduces no evidence as to any prospect of him being able to finance a purchase of the wife’s interest.
Overall, there is little to distinguish the parties’ contributions in all respects save for an issue as to the components of the husband’s personal injury claim.
There will be issues as to any adjustment by reason of s 75(2) of the Act primarily it appears as to the husband’s health.
In the circumstances discussed above, it is appropriate that there be an order for the sale of the home. Clearly, the husband and the adult children will need to rehouse themselves and have the capacity to do so.
Overall, there is about $1 million in real estate available for adjustment. It appears that the husband has treated the City F apartment with little regard for the wife’s interest in same. She seeks appropriately that he retains them.
The husband acknowledges the wife’s interest in the Suburb C home, asserting that she has a 40 per cent interest. That equates to about $212,000.00.
It would be appropriate that the home be sold and on sale the wife receive a lesser sum of $150,000.00 with the balance of the proceeds of sale to be retained pending final determination of property rights.
Orders will be made accordingly.
I certify that the preceding fifty four (54) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 16 June 2017.
Associate:
Date: 15 June 2017
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