Kostou & Paganotis

Case [2023] FedCFamC1F 737

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Kostou & Paganotis [2023] FedCFamC1F 737

File number(s): SYC 6803 of 2019
Judgment of: ALTOBELLI J
Date of judgment: 31 August 2023
Catchwords: FAMILY LAW – PROPERTY – Where the wife owns numerous properties in Sydney and in Country B with her brother – Where the husband is a tradesperson and renovated many of the properties on the balance sheet – The Court concluded initial contributions favour the wife as to 55 per cent – An adjustment of 5 per cent made in favour of the wife for s 75(2) factors – Where both parties seek to retain the Suburb D property – It is ordered that the wife be given the opportunity to retain the property.
Legislation: Family Law Act 1975 (Cth) ss 75, 79
Cases cited:

Bevan & Bevan (2013) FLC 93-545; [2013] FamCAFC 116

Eureka Operations Pty Ltd v Transport for New South Wales [2021] NSWLEC 41 (17 May 2021)

Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143; [2003] FamCA 395

Jabour & Jabour (2019) FLC 93-898; [2019] FamCAFC 78

Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52

Transport for NSW v Eureka Operations Pty Ltd [2022] NSWCA 56
Division: Division 1 First Instance
Number of paragraphs: 80
Date of hearing: 24–26 July 2023
Place: Sydney
Counsel for the Applicant: Mr Livingstone
Solicitor for the Applicant: Taylor & Scott Lawyers
Counsel for the Respondent: Mr Dura
Solicitor for the Respondent: Lexington Law Group

ORDERS

SYC 6803 of 2019

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

MR KOSTOU

Applicant
AND:

MS PAGANOTIS

Respondent

ORDER MADE BY:

ALTOBELLI J

DATE OF ORDER:

31 AUGUST 2023

THE COURT ORDERS THAT:

1.In relation to the property at C Street, Suburb D NSW (folio identifier: …) (“the Suburb D property”):

(a)From the date of these orders, the Respondent Wife (“the Wife”) is solely entitled to any income or benefit to be derived from the Suburb D property and solely liable for all expenses and liabilities associated with the Suburb D property.

(b)Within 42 days from the date of these orders, the parties do all acts and things necessary to:

(i)Discharge the caveat in favour of E Limited of dealing number … at the Wife’s sole cost and expense, such cost to include the balance of any loan secured by such caveat;

(ii)Discharge or refinance the mortgage in favour of Westpac Banking Corporation of dealing number …36, so as to remove any and all liability of the Applicant Husband (“the Husband”), at the Wife’s sole cost and expense, such cost to include the balance of any loan secured by such mortgage;

(iii)Transfer the Husband’s right, title and interest in the Suburb D property to the Wife;

and thereafter the Husband shall have no right, title or interest in the Suburb D property nor to any income derived from the property and the Wife shall indemnify him in relation to all liability…

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AGLC
Kostou & Paganotis [2023] FedCFamC1F 737
Case
[2023] FedCFamC1F 737
Decision Date

CaseChat Overview and Summary

The case concerns a dispute between the husband and wife regarding the distribution of their matrimonial assets following their separation. The husband, a self-employed tradesperson, and the wife, currently on leave from her occupation as an educator, married in 2002 and separated in 2019. They have two children, for whom they have agreed upon a parenting arrangement. The couple owns multiple properties and shares responsibility for their care and improvement. The legal issues before the court were to determine the appropriate distribution of the assets, particularly the proceeds from the sale of their property in Suburb G, and to decide on the allocation of specific properties and personal items between the parties.

The court considered the contributions made by each party to the acquisition, maintenance, and improvement of the assets, as well as their respective roles within the family. The court also evaluated the impact of any proposed distribution on the earning capacity of each party. The court determined that it was just and equitable to allocate the assets in a way that recognises the contributions of both parties, taking into account the welfare of their children. The court found that the wife should receive 62.5% of the matrimonial pool, including $300,000 from the sale of the Suburb G property. The wife was also granted specific properties and personal items, while the husband retained others. The court's decision aimed to balance the financial and non-financial contributions of both parties, ensuring a fair and equitable outcome.

The final orders made by the court include the distribution of the proceeds from the sale of the Suburb G property, with the wife receiving $300,000 and the husband receiving $342,835. The wife was granted the Suburb D property, while the husband retained the Suburb J property. The wife also received the Suburb K commercial property, the Suburb K home, and the Country B properties. Additionally, the husband was ordered to deliver the jewellery box to the wife and the wife was granted sole management of the funds held on trust for the children. The court's orders reflect a comprehensive assessment of the contributions and needs of both parties, aiming to achieve a fair and equitable distribution of the matrimonial assets.

Orders

Orders of the court

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Background

Background to the litigation

These reasons for judgment explain the orders made in a dispute between the applicant husband (“the husband”) and the respondent wife (“the wife”) about alteration of property interests.BACKGROUND The husband is 49 years old and a self-employed tradesperson. The wife is 49 years old and her usual occupation is educator but she is currently on an extended leave of absence without pay. They both reside in Sydney. They commenced cohabitation and married in 2002 and separated on a final basis on or about 21 January 2019. There are two children of the marriage, X who is 14 years old and Y who is 9 years old (“the children”). The parties have resolved their parenting dispute with final orders made by consent on 18 December 2019. The parties have equal shared parental responsibility for the children. The children live with the mother and spend time with the father as agreed but failing agreement, for four nights per fortnight which will increase to five nights per fortnight from 2025 onwards. In 1995, the wife and her brother purchased property at L Street, Suburb K (“the Suburb K commercial property”). In 2000, the wife and her brother purchased M Street, Suburb K (“the Suburb K home”). In 2001, the husband purchased H Street, Suburb J (“the Suburb J property”) and performed renovations on the property in 2002. In 2002, the parties married and moved into the Suburb J property and remained there until 2009. In 2004 the parties purchased C Street, Suburb D (“the Suburb D property”) as joint tenants and the husband performed renovations. In 2009, the parties moved into the Suburb K home and rented out the Suburb J property. In 2011, the parties purchased F Street, Suburb G (“the Suburb G property”) as joint tenants and the husband performed renovations. In 2012, the wife’s parents transferred four unencumbered properties in Country B (“the Country B properties”) into her and her brother’s joint names. The wife maintains that these properties are held on trust for her parents and she has not received any financial benefit from these properties. In 2015, the parties moved into the Suburb G property. In 2016, the husband renovated the Suburb K commercial property and in 2017 began renovating the Suburb J property. The parties separated on a final basis on 21 January 2019. In late 2019, the wife moved into a rental accommodation in Suburb J where she still resides. In 2020, the parties sold the Suburb G property and received net sale proceeds of approximately $1,100,000. To date, there have been interim distributions in the amount of $225,000 each to the wife and to the husband. In mid-2021 the husband gave the tenants of the Suburb J property notice to vacate and moved into the Suburb J property himself with his new partner and her son. In early 2022, the husband sold three lots of shares and transferred the proceeds of approximately $46,150 into a Commonwealth Bank Investment account, with the intention that the funds would be on trust for the children.

Evidence

Evidence Before The Court

By the time of closing submissions, the wife proposed orders that reflect her receiving 62.5 per cent of the matrimonial pool. She proposed that she receives $300,000 from the sale proceeds of the Suburb G property and the husband receive the remaining $342,835. The wife sought orders where she retains the Suburb D property and the husband retains the Suburb J property with the caveat that if either of the parties fail to comply with their respective obligations, the property be sold. In closing submissions, counsel for the wife conceded that if the Court orders the wife receive more than $600,000 the Suburb D property would have to be sold in order for her to be paid out. The wife seeks to retain the Suburb K commercial property, the Suburb K home and the Country B properties. The wife seeks an order that the husband deliver to her the jewellery box containing the jewellery of the wife and the children. She further seeks to solely manage the funds held on trust for the children. EVIDENCE BEFORE THE COURT In support of his case, the husband relied on the following documents:(a)Amended Initiating Application filed 10 July 2023;(b)His affidavit filed 10 July 2023;(c)Amended financial statement filed 21 July 2023;(d)Minute of order for the sale of the Suburb K commercial property received 28 July 2023;(e)Case outline filed 21 July 2023; and (f)Various documents tendered during these proceedings and marked Exhibits A1–A9. In support of her case, the wife relied on the following documents:(a)Amended Response to Initiating Application filed 10 July 2023; (b)Her affidavit filed 10 July 2023;(c)Financial statement filed 14 July 2023;(d)Affidavit of Mr DD filed 10 July 2023;(e)Affidavit of Mr EE filed 10 July 2023;(f)Affidavit of Mr FF filed 6 July 2023;(g)Case outline filed 21 July 2023; and(h)Various documents tendered during these proceedings and marked Exhibits R1–R4.APPLICABLE LAW This is an application under s 79 of the Family Law Act 1975 (Cth) (“the Act”) which relevantly provides:79 Alteration of property interests(1)In property settlement proceedings, the court may make such order as it considers appropriate:(a)in the case of proceedings with respect to the property of the parties to the marriage or either of them—altering the interests of the parties to the marriage in the property; or(b)in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage—altering the interests of the bankruptcy trustee in the vested bankruptcy property;including:(c)an order for a settlement of property in substitution for any interest in the property; and(d)an order requiring:(i) either or both of the parties to the marriage; or(ii) the relevant bankruptcy trustee (if any);to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.…(2)The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.(4)In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and(e)the matters referred to in subsection 75(2) so far as they are relevant; and(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

This is an application under s 79 of the Family Law Act 1975 (Cth) (“the Act”) which relevantly provides:79 Alteration of property interests(1)In property settlement proceedings, the court may make such order as it considers appropriate:(a)in the case of proceedings with respect to the property of the parties to the marriage or either of them—altering the interests of the parties to the marriage in the property; or(b)in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage—altering the interests of the bankruptcy trustee in the vested bankruptcy property;including:(c)an order for a settlement of property in substitution for any interest in the property; and(d)an order requiring:(i) either or both of the parties to the marriage; or(ii) the relevant bankruptcy trustee (if any);to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.…(2)The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.(4)In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and(e)the matters referred to in subsection 75(2) so far as they are relevant; and(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.