Koury & Arian

Case [2021] FamCA 420

FAMILY COURT OF AUSTRALIA

Koury & Arian [2021] FamCA 420  

File number(s): SYC 562 of 2018
Judgment of: BERMAN J
Date of judgment: 25 June 2021
Catchwords:

FAMILY LAW – PROPERTY SETTLEMENT – Just and equitable – Contributions – Add backs – Gifts - Future needs – Where the relationship of the parties is of 30 years duration – Where the parties disagree as to their separate contributions – Where the parties disagree on the treatment of their legal fees and other liabilities – Where the parties disagree on their interest in the husband’s company – Where money from the husband’s company was used for the family during the relationship – Where the husband’s company is his alter ego – Where the husband has made significant financial contributions post-separation – Where monies provided by the wife’s parents were a gift to her alone – Consideration of purported loans between the husband and his brother – Where the husband has the ability to earn significantly more income than the wife – Where it is just and equitable for orders to be made.

FAMILY LAW – PROPERTY – Value of property – Expert evidence – Where the parties are in dispute as to the valuation of the former matrimonial home – Where there is no challenge to the methodology adopted by the valuer – Where the valuer did not give sufficient weight to a comparable property.   
Legislation: Family Law Act 1975 (Cth) ss 75(2), 79
Cases cited:

Bevan & Bevan (2013) FLC 93-545

Chorn & Hopkins (2004) FLC 93-204

Commonwealth v Milledge (1953) 90 CLR 157

Foda & Foda (1997) FLC 92-753

Lenehan & Lenehan (1987) FLC 91-814

Pellegrino & Pellegrino (1997) FLC 92-789

Stanford & Stanford (2012) 247 CLR 108

Number of paragraphs: 306
Date of hearing: 26 – 28 October 2020
Place: Adelaide
Counsel for the Applicant: Mr Campton SC
Solicitor for the Applicant: Mills Oakley Lawyers
Counsel for the Respondent: Mr Upton
Solicitor for the Respondent: PPCS Lawyers

ORDERS

SYC 562 of 2018
BETWEEN:

MS KOURY

Applicant
AND:

MR ARIAN

Respondent

ORDER MADE BY:

BERMAN J

DATE OF ORDER:

25 JUNE 2021

THE COURT ORDERS THAT:

1.That within four (4) calendar months of the date of these orders, the wife do pay to the husband the settlement sum of THREE HUNDRED AND FORTY SIX THOUSAND THREE HUNDRED AND EIGHTEEN DOLLARS ($346,318).

2.That contemporaneously with the payment by the wife to the husband of the settlement sum, the husband do transfer to the wife the whole of his right, title and interest in the property situate at and known as 2 B Street, Suburb C in the State of New South Wales being all of the land comprised in folio identifier … (“the Suburb C property”).

3.That the parties cause the mortgage to the National Australian Bank being mortgage number …40 secured against the Suburb C property to be removed and for the purpose of this order:

(a)The wife shall refinance the portion of the mortgage referable to the Suburb…

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AGLC
Koury & Arian [2021] FamCA 420
Case
[2021] FamCA 420
Decision Date

CaseChat Overview and Summary

In the matter of Koury & Arian, Berman J of the Family Court of Australia considered a property settlement dispute between the applicant wife and the respondent husband. The parties, who had been in a relationship for 30 years, disagreed on various aspects of their property division, including the valuation of assets, the treatment of legal fees and other liabilities, the extent of their respective contributions, and the impact of future earning capacities. Specific points of contention included the husband's company, which was described as his alter ego, the husband's significant financial contributions post-separation, and whether monies provided by the wife's parents were a gift solely to her. The court also had to determine the treatment of purported loans between the husband and his brother, and the valuation of the former matrimonial home, where expert evidence was presented.

The primary legal issues before the court were to determine the just and equitable distribution of the parties' property, considering their respective contributions, financial resources, and future needs. This involved assessing the value of various assets, including the husband's company and the matrimonial home, and deciding how to treat certain liabilities and financial transfers. The court was required to consider the wife's argument that monies from her parents were a gift to her alone, and to evaluate the nature of purported loans to the husband's brother. Furthermore, the court needed to address the disparity in the parties' future earning capacities, with the husband possessing a significantly higher ability to earn income than the wife.

Berman J applied the principles of property settlement under the *Family Law Act 1975* (Cth), focusing on identifying the net value of the matrimonial pool and making appropriate adjustments based on contributions and future needs. The court found that an adjustment of 6 per cent in favour of the wife was warranted, acknowledging her contributions and future circumstances. The total pool of assets, including superannuation, was valued at $2,846,180. After considering the wife's entitlement and liabilities, the court ordered that the wife pay the husband a settlement sum of $346,318 and transfer to him her interest in F Company shares and a loan to F Company. In return, the husband was to transfer his interest in the Suburb C property to the wife. The orders also detailed the refinancing of mortgages on the Suburb C and D Street properties, with provisions for their sale by private treaty or auction in the event of default.

Orders

Orders of the court

SYC 562 of 2018

BETWEEN:

MS KOURY

Applicant

AND:

MR ARIAN

Respondent

ORDER MADE BY:

BERMAN J

DATE OF ORDER:

25 JUNE 2021

THE COURT ORDERS THAT:

1. That within four (4) calendar months of the date of these orders, the wife do pay to the husband the settlement sum of THREE HUNDRED AND FORTY SIX THOUSAND THREE HUNDRED AND EIGHTEEN DOLLARS ($346,318).

2. That contemporaneously with the payment by the wife to the husband of the settlement sum, the husband do transfer to the wife the whole of his right, title and interest in the property situate at and known as 2 B Street, Suburb C in the State of New South Wales being all of the land comprised in folio identifier … (“the Suburb C property”).

3. That the parties cause the mortgage to the National Australian Bank being mortgage number …40 secured against the Suburb C property to be removed and for the purpose of this order:

(a) The wife shall refinance the portion of the mortgage referable to the Suburb C property being the National Australia Bank portfolio loan sub-account ending …04 into her sole name and the parties shall assign to the wife the National Australia Bank offset account ending …87; and

(b) The husband shall refinance the portion of the mortgage referable to the property and the car space of D Street, Suburb E in the State of New South Wales being all of the land comprised in folio identifiers … and … (“the D Street property”), being the National Australia Bank portfolio loan sub-account ending …24 into his sole name and the parties shall assign to the husband the National Australia Bank offset account ending …05.

4. That pending compliance with orders 1, 2 and 3 hereof:

(a) The wife shall be solely liable for all mortgage repayments (for the portion of the mortgage referable to the Suburb C property being the National Australia Bank portfolio loan sub-account ending …04), rates and outgoings in respect of the Suburb C property and shall indemnify the husband against any and all such liabilities.

(b) The husband shall be solely liable for all mortgage repayments (for the portion of the mortgage referable to the D Street property being the National Australia Bank portfolio loan sub-account ending …24), rates and outgoings in respect of the D Street property and shall indemnify the wife against any and all such liabilities.

5. That in the event the husband fails or neglects to comply with orders requiring the refinance of the portion of the National Australia Bank loan referable to the D Street property within four (4) months of the date of these orders, the husband and the wife shall do all things necessary to list the D Street property for sale by private treaty with a real estate agent agreed and failing agreement with a real estate agent nominated by the President for the time being of the New South Wales division of the Australian Property Institute or his/her nominee on the application of either party and to sell the D Street property for the best price reasonably obtainable as soon as practicable and to distribute the proceeds of such sale as follows:

(a) In payment of real estate agent’s commission and expenses on the sale;

(b) In payment of proper legal costs and disbursements of each of the parties of and incidental to the sale;

(c) In discharge of the portion of the mortgage referable to the D Street property;

(d) In adjustment of rates, levies and taxes on the D Street property; and

(e) In payment of the balance then remaining to the husband.

6. That if the parties are unable to agree as to the listing price or sale price of the D Street property then they shall appoint a valuer nominated by the President for the time being of the New South Wales division of the Australian Property Institute or his/her nominee on the application of either party to determine the value of the D Street property and:

(a) In the case of the listing price of the D Street property shall list the D Street property for sale at a price not more than 10 per cent higher than the value so determined; and

(b) In the case of the sale price shall accept any offer to purchase the D Street property at that price or higher.

7. That in the event a valuer is appointed by the parties pursuant to the preceding orders then the parties shall pay the costs thereby incurred in equal shares.

8. That in the event that contracts for the sale of the D Street property by private treaty have not been exchanged within three (3) months of the D Street property being listed for sale, then the husband and the wife shall thereupon do all things as may be necessary to list the D Street property for sale by auction with a real estate agent agreed and failing agreement with a real estate agent nominated by the President for the time being of the New South Wales Division of the Australian Property Institute or his/her nominee on the application of either party upon the following terms and conditions:

(a) The auction shall take place within six (6) weeks or as soon as practicable, whichever is the later;

(b) The reserve price shall be as agreed between the parties and failing agreement as determined by the auctioneer;

(c) Both parties shall attend at the auction and in the event that the D Street property is passed in they shall negotiate with the highest bidder and shall accept any offer to purchase the D Street property at not less than 90 per cent of the reserve price;

(d) That in the event the D Street property does not sell at auction or does not sell by private treaty within two (2) weeks after the date of the auction then the parties shall relist the D Street property for sale by auction at intervals of no more than six (6) weeks upon the same terms and conditions as set out herein until the D Street property is sold; and

(e) That upon the D Street property being sold at auction the parties shall distribute the proceeds of such sale as follows:

(i) In payment of real estate agent’s commission and expenses on the sale;

(ii) In payment of proper legal costs and disbursements of each of the parties of and incidental to the sale;

(iii) In discharge of the portion of the mortgage referable to the D Street property being the National Australia Bank portfolio loan sub-account ending …24;

(iv) In adjustment of rates, levies and taxes on the D Street property; and

(v) In payment of the balance then remaining to the husband.

9. That in the event that the wife fails or neglects to pay the husband the said settlement sum or is not able to refinance the portion of the National Australia Bank Loan referable to the Suburb C property within four (4) months of the date of these orders then the husband and wife shall forthwith do all things to list the Suburb C property for sale by private treaty with a real estate agent agreed and failing agreement with a real estate agent nominated by the President for the time being of the New South Wales division of the Australian Property Institute or his/her nominee on the application of either party and to sell the Suburb C property for the best price reasonably obtainable as soon as practicable and to distribute the proceeds of such sale as follows:

(a) In payment of the real estate agent’s commission and expenses on the sale;

(b) In payment of proper legal costs and disbursements of each of the parties of and incidental to the sale;

(c) In discharge of the portion of the mortgage referable to the Suburb C property, being the National Australia Bank portfolio loan sub-account ending …04;

(d) In adjustment of rates, levies and taxes on the Suburb C property;

(e) In payment to the husband of the outstanding settlement sum together with default interest to be determined by reference to the Family Law Rules 2004 (Cth) and Regulations to be calculated as and from the expiration of four (4) calendar months from the date of these orders; and

(f) In payment of the balance then remaining to the wife.

10. That if the parties are unable to agree as to the listing price or sale price of the Suburb C property then they shall appoint a valuer nominated by the President for the time being of the New South Wales division of the Australian Property Institute or his/her nominee on the application of either party to determine the value of the Suburb C property and:

(a) In the case of the listing of the Suburb C property shall list the property for sale at a price not more than 10 per cent higher than the value so determined; and

(b) In the case of the sale price shall accept any offer to purchase the Suburb C property at that price or higher.

11. That in the event that a valuer is appointed by the parties pursuant to the preceding order then the parties shall pay the costs thereby incurred in equal shares.

12. That in the event that the contract for sale of the Suburb C property by private treaty have not been exchanged within three (3) months of the Suburb C property being listed for sale, then the husband and the wife shall thereupon do all such things as may be necessary to list the Suburb C property for sale by auction with a real estate agent agreed and failing agreement with a real estate agent nominated by the President for the time being of the New South Wales division of the Australian Property Institute or his/her nominee on the application of either party upon the following terms and conditions:

(a) The auction shall take place within six (6) weeks or as soon as practicable, whichever is the later;

(b) The reserve price shall be as agreed between the parties and failing agreement as determined by the auctioneer;

(c) Both parties shall attend at the auction and in the event that the Suburb C property is passed in they shall negotiate with the highest bidder and shall accept any offer to purchase the Suburb C property at no less than 90 per cent of the reserve price;

(d) That in the event that the Suburb C property does not sell at auction or does not sell by private treaty within two (2) weeks after the date of the auction then the parties shall relist the Suburb C property for sale by auction at intervals of no more than six (6) weeks upon the same terms and conditions as set out herein until the Suburb C property is sold; and

(e) That upon the Suburb C property being sold at auction the parties shall distribute the proceeds of such sale as follows:

(i) In payment of real estate agent’s commission and expenses on the sale;

(ii) In payment of proper legal costs and disbursements of each of the parties and incidental to the sale;

(iii) In discharge of the portion of the mortgage referable to the Suburb C property, being the National Australia Bank portfolio loan sub-account ending …04;

(iv) In payment to the husband of the outstanding settlement sum together with default interest to be determined by reference to the Family Law Rules 2004 (Cth) and Regulations to be calculated from the expiration of four (4) calendar months from the date of these orders;

(v) In payment of rates, levies and taxes on the Suburb C property; and

(vi) In payment of the balance then remaining to the wife.

13. That in respect of the entity F Pty Ltd ACN … (“F Company”) forthwith and in any event within seven (7) days of the date of these orders:

(a) The wife shall do all things and sign all such documents as prepared by the husband as may be necessary to transfer to the husband her ten (10) A Class shares in F Company;

(b) The wife shall assign to the husband any contended loan due by the parties, or either of the parties, to F Company; and

(c) The husband shall be responsible for and pay any taxation or revenue impost arising from the wife being a shareholder or otherwise receiving the benefit of funds either directly or indirectly from F Company, and the husband shall indemnify the wife and keep her indemnified against all such other liabilities.

14. That within seven (7) days of these orders the husband shall do all acts and things and sign all documents necessary so as to cause the joint National Australia Bank account number …81 to be transferred into the wife’s sole name and the wife shall retain the balance of the said account.

15. That the husband shall retain all right, title and interest to the exclusion of the wife in the D Street property and the husband shall thereafter indemnify the wife of all liabilities in respect of the said property now and in the future.

16. That as between the husband and the wife and subject to the within orders, the husband and wife shall each respectively retain all interest in and entitlement to:

(a) All personal property now in his/her respective possession or control;

(b) All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in his/her sole name respectively; and

(c) All interests in life insurance policies and superannuation funds standing in his/her sole name respectively.

17. That each party shall be solely liable as between each of them to all liabilities in their separate name including but not limited to their separate credit card liabilities, the wife’s personal loan to the National Australia Bank and G Finance and the husband’s contended liability to H Pty Ltd.

18. That each party shall do all acts and things and sign all documents necessary to give effect to these orders.

19. That in the event that either party fails to execute any deed, document or instrument necessary to give effect to these orders, then a Registrar of the Family Court of Australia be appointed pursuant to section 106A of the Family Law Act 1975 (Cth) to execute such deed, document or instrument in the name of the said party and to do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such failure by way of affidavit.

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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

Background

Background to the litigation

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Evidence

Evidence Before The Court

In particular, the parties are not agreed as to the following:(a)The value of the Suburb C property;(b)The value of the parties' interest in F Company with a challenge to the following matters arising from the single expert report from FF Accountants dated 16 October 2020:(i)The extent of any underlying goodwill;(ii)The extent to which the current liability to the Australian Taxation office ("ATO") should be brought to account; and(iii)The treatment of the husband's debit loan account.(c)Treatment of the legal fees paid by the parties;(d)The extent to which loan funds purportedly borrowed from H Pty Ltd are liabilities that should be brought to account;(e)The extent to which the Court should have regard to the sum of $204,000 purportedly loaned by the parties to the husband's brother;(f)The weight to be given to the separate contributions of the parties;(g)The extent of any adjustment in favour of either of the parties, having regard to their future income, earning capacity and financial circumstances.EVIDENCEThe wife The wife was asked to reconsider the extent to which she made a financial contribution to the purchase of the M Town property. The wife's contention is that she and the husband each contributed 25 per cent of the purchase price and costs. There was no mortgage. Her share was funded from her savings. The husband does not accept that the wife made any financial contribution towards the purchase of M Town. The wife conceded that her income was low given her employment in the hospitality industry. Whilst acknowledging the limitations of her income, she received significant additional money by reason of tips. She contrasts her superior income in hospitality to her first year of professional employment. The wife accepts that at the time, the husband was working in Sydney and then ZZ Town, his income was likely to be higher than hers. The wife did not accept the proposition that she did not receive any portion of the net proceeds of the sale of M Town in 1991 because she did not contribute to its purchase. The wife considered the purchase of the Suburb O property. Both parties were present at the auction and upon their successful bid, a ten per cent deposit was required. The wife does not recollect who paid the deposit but agreed that the husband presented a bank cheque. The wife was certain that she paid the mortgage repayments which appears to be supported by a copy of the wife's KK Bank passbook showing mortgage repayments. The wife could not remember when she stopped making payments. It is uncontroversial that the husband purchased the Suburb N property prior to marriage, although the wife considers that there was little equity given that it was subject to a mortgage. Following the marriage, the parties lived with the husband's mother for about 18 months. The wife became pregnant during this period. The wife contends that the parties paid a total of $75,000 for various expenses for and on behalf of the husband's mother however there are no documents that support the purported expenditure.

Decision

Reasons for decision

An adjustment of 6 per cent in favour of the wife is appropriate. In doing so I am mindful that a percentage adjustment must be underpinned by a dollar value that is meaningful. CONCLUSION The total of the pool including superannuation is $2,846,180. The wife’s entitlement is 58 per cent which equates the sum of $1,650,784. The wife seeks to retain the following:·Suburb C property $1,965,000·GG Company shares $113·GG Company shares $3,646·HH Company shares $1,120TOTAL $1,969,879·Superannuation $242,690TOTAL PROPERTY/SUPERANNUATION $2,212,569 The wife will maintain the following liabilities:·Mortgage on the Suburb C property $196,096·G Finance loan $15,314·Income tax $4,057TOTAL LIABILITIES $215,467NET PROPERTY RETAINED $1,997,102LESS WIFE’S ENTITLEMENT $1,650,784WIFE TO PAY $346,318 Given the financial circumstances of the parties and the potential complexity of separating the liability arising from the D Street property secured over the Suburb C property, it is likely that a timely settlement may be difficult. I propose to give the wife four calendar months to make arrangements for the payment of the settlement sum and the refinancing of the existing liability secured over the Suburb C property. The parties are generally in agreement as to the method and manner by which the Suburb C and the D Street properties are to be sold in default of each of the parties' ability to refinance. I make orders as appear at the commencement of these reasons.

Ratio Decidendi

Legal Principle Established

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