Krusaroski and Krusaroski & Anor (No 2)
[2012] FamCA 668
FAMILY COURT OF AUSTRALIA
| KRUSAROSKI & KRUSAROSKI AND ANOR (NO. 2) | [2012] FamCA 668 |
| FAMILY LAW – PROPERTY – interim – whether it is appropriate and in the interests of justice to make an interim property order – where the husband has not provided full and frank disclosure of his financial position – where the second respondent seeks a sale of the former matrimonial home FAMILY LAW – SPOUSAL MAINTENANCE - interim |
| Family Law Act 1975 (Cth) |
| Brown & Brown [2005] FamCA 1165 (5 December 2005) Baumgartner v Baumgartner (1987) 164 CLR 137 |
| APPLICANT: | Mr Krusaroski |
| RESPONDENT: | Ms Krusaroski |
| 2nd RESPONDENT: | Mr M Krusaroski |
| FILE NUMBER: | SYC | 626 | of | 2012 |
| DATE DELIVERED: | 13 August 2012 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Watts J |
| HEARING DATE: | 25 June 2012 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Connor |
| SOLICITOR FOR THE APPLICANT: | Argyle Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Campton |
| SOLICITOR FOR THE RESPONDENT: | Coleman & Greig |
| COUNSEL FOR THE 2ND RESPONDENT: | Mr Jamieson |
Orders
Within 28 days the husband pay to the wife by way of partial property settlement the sum of $100,000.00 to be paid into the trust account of Coleman and Greig Lawyers.
Pending further order, the husband, by way of spousal maintenance:-
2.1.Pay the mortgage, rates and insurances and all other outgoings in respect of the property at … B Street, Suburb N (“the former matrimonial home”) as they fall due (including any arrears);
2.2.Pay all health insurance premiums in respect of the wife and the children J born … November 2009 and E born … November 2009 on a periodic basis;
2.3.Pay all car insurance premiums and registration fees in respect of the [wife’s] motor vehicle registration number … on a periodic basis; and
2.4.Pay to the wife the sum of $450 per week into a bank account nominated by the wife, the first payment within 7 days.
The application by the second respondent for an interim order that the former matrimonial home be sold, be dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Krusaroski & Krusaroski has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 626 of 2012
| Mr Krusaroski |
Applicant
And
| Ms Krusaroski |
Respondent
And
| Mr M Krusaroski |
2nd Respondent
REASONS FOR JUDGMENT
INTRODUCTION
I need to first consider the wife’s application that the husband pay to her by way of partial property settlement, the sum of $100,000 to be paid into the trust account of her lawyers Coleman & Greig Lawyers.
Next the wife seeks spousal maintenance orders which includes:
2.1.The payment of mortgage and outgoings in respect of the property in which the wife lives (that order is not opposed);
2.2.Payment of health insurance and insurance and registration of the wife’s motor vehicle;
2.3.Payment to the wife of the sum of $450 per week into a bank account nominated by the wife;
2.4.Payment to the wife of a lump sum of $25,000, such sum to be deposited into a bank account nominated by the wife.
The final issue relates to the wife’s continued use and occupation of the matrimonial home. On 14 March 2012, Rees J, inter alia, made orders that pending further order, the wife shall have sole use and occupation of the property at … B Street, Suburb N (“the former matrimonial home”). This property is the former matrimonial home and is registered in the name of the husband and his brother (the second respondent). The husband’s brother was unrepresented on the day that order was made and her Honour at paragraph 26 of her Reasons, indicated that the exclusive occupation order could be revisited if the second respondent was so advised when the matter came before me on 25 June 2012.
By way of a response filed by the second respondent, the second respondent seeks by way of both interim and final orders, an order that the former matrimonial home be sold and the proceeds be paid towards the National Australia Bank mortgage and line of credit, subject to any order that part of the proceeds be retained in trust pending further order of the court. A further order is sought that all other properties jointly owned by the parties and/or H Pty Limited and C Pty Limited be preserved pending further order (that order was not meant to apply to any property that was exclusively owned by the applicant and/or the second respondent individually).
APPLICATION FOR INTERIM PROPERTY ORDER
The wife seeks an order that the husband pay $100,000 by way of interim property order.
I am required to consider whether or not it is appropriate and in the interests of justice to make such an order. Any order needs to be made within the parameters of the extant s 79 application and on a conservative basis.
It is the husband’s contention that the wife should not receive any order for property settlement in her favour. The husband alleges, and the wife denies, that the wife took $150,000 cash from a safe. The wife says, if there was money in the safe, the husband has possession of it. The wife has no other assets apart from a small amount of superannuation.
The parties were in a relationship for eight years and separated in January 2012. The wife currently resides in the former matrimonial home with the two children of the marriage who are twins aged two and a half years.
The wife who is aged 34 works three days a week at Business L and pays for child minding on those three days.
The husband who is 33 years of age works as a tradesman in partnership with his brother, both in their own personal capacities and by way of the corporate structures H Pty Limited and C Pty Limited.
The husband concedes that the likely pool of assets is at least two million dollars.
The husband’s brother has filed an affidavit in which he estimates that the net worth of H Pty Limited is $980,000; the net worth of C Pty Limited is $263,000 and the property holdings that the husband and his brother have in partnership with one another is a net figure of $1,254,000. Consequently, the brothers between them (excluding anything in their individual names), on the husband’s brother’s evidence, are worth two and a half million dollars, the husband’s share of that being $1,250,000 net (after bank liabilities are taken into account).
The parties had been directed by Court order to confer and complete a joint balance sheet. I am satisfied that the wife has been frustrated in her ability to comply with that order by the lack of response from the husband in relation to requests for information and the lack of fulfilment by the husband in his duties both under the Family Court Rules, specific orders of the Court, and his general duty of financial disclosure.
The husband has criticised the way in which the wife has put together a balance sheet with limited information. The criticism is that a number of the assets, being parcels of real estate, are owned by companies and there is no valuation of the overall companies. Whilst that is true, on the face of the draft balance sheet prepared by the wife, however, the value of most of the properties on the balance sheet are said to reflect what is contained in recent market appraisals for those properties. On an interim basis the Court is entitled to approach the matter with a broader brush than that which would be used at a final hearing.
Doing the best she can, the wife in Annexure G to her affidavit sworn on 22 June 2012 has a stab at preparing a balance sheet. There are 15 parcels of real estate referred to on that balance sheet. Item 4 on the balance sheet is the former matrimonial home. Item 5 is the property at Property T, Suburb N, which is the subject currently of negotiations for sale with Defence Service Homes. Item 9 on the balance sheet, a property which has an estimated value of $1.1 million, is occupied by the second respondent (Property G, Suburb K). In addition to the properties held by the husband with his brother or in corporate structures, the wife lists 6 properties in the husband’s sole name with an estimated value of about $2,400,000.
Further to the admission as to value by the second respondent referred to in paragraph 12 above, the wife has led other evidence that there might be other properties that are not on the balance sheet in respect of which the husband and his brother have an interest through the corporate entities or their partnership. The operation of the brothers is not a small one. There are properties in various locations. H Pty Limited also has substantial funds at banks as at 23 May 2012 ($280,000 and $93,000). The husband has a Holden motor vehicle which the wife estimates has a value of $80,000. She also gives evidence that the husband has access to other corporate motor vehicles including a Toyota that he drives.
In the event that it is found that the wife received $150,000 from a safe it is difficult to see that that could form the entirety of adjustment of property in her favour in the circumstances in this case. The overall assets on the balance sheet that has been prepared by the wife is $5.858 million. It is asserted that the items on the balance sheet, so far as they relate to real estate, are based on market appraisals which the wife has obtained as recently as March 2012.
The husband asserts that he needed more time to properly put before the Court details in relation to the financial position in respect of the two companies, his partnership and his own personal positions.
The difficultly that the husband faces in respect of that submission is the fact that orders of this Court were made at a time when counsel for the husband who represents the husband today was present before a Registrar when the Registrar ordered that the husband provide statutory accounts including but not limited to the profit and loss and balance sheets and loan account ledgers for the period ending 30 June 2011 and in respect of each of the companies, any management accounts for the period ending 31 December 2011. It is common ground that no such information has been provided by the husband to the wife, in accordance with that order.
Order 6 of the Minute of Order made by the Court on 8 March 2012 (made at a time when the husband was represented by counsel) is in the following terms:-
That on or before 4pm 13/3/12 the husband serve upon the solicitor’s [sic] for the wife the draft Balance Sheet as contended by him, such balance sheet to include by way of footnote the foundations of contended quantums or values and the husband when serving the draft balance sheet shall serve upon the wife [sic] solicitors any documents supporting and verifying those foundations.
It is common ground that the husband did not and has not complied with that order.
I am satisfied that given the likely future extent of this litigation that it is appropriate and in the interests of justice to make an interim property order in the wife’s favour. I am comfortable that an order giving the wife $100,000 by way of interim property order is a conservative approach and is not likely to be an amount that will in any way jeopardise the ability of a trial judge to make a just and equitable order at a final hearing.
INTERIM SPOUSAL MAINTENANCE
The wife seeks an order for periodic maintenance in the sum of $450 per week. The wife also seeks an order that the husband pay all mortgage repayments, rates, insurances and all other outgoings on a periodic basis in respect of the former matrimonial home. That order is not opposed and that order will be made.
The wife also seeks orders in relation to payment of health insurance premiums (that order is opposed by the husband). The wife seeks an order that the husband pay all car insurance premiums and registration in relation to her motor vehicle.
The wife also seeks a lump sum spousal maintenance order of $25,000. In doing so, counsel for the wife indicated that she relied upon the decision of Brown & Brown [2005] FamCA 1165 (5 December 2005) where she asserted O’Ryan J allowed a lump sum payment of spousal maintenance for “vicissitudes” of life.
THE WIFE’S NEED
In her financial statement filed on 22 February 2012 the wife indicated that she received by way of weekly remuneration from her employment with Business L the sum of $1,044 per week.
Her expenses are estimated by the wife to be in the sum of $902 per week. The financial statement also details expenditure for income tax, health insurance, third party insurance, registration for her motor vehicle being a further $293 per week. In paragraph 14 of the wife’s affidavit sworn on 22 June 2012 the wife updates some of the figures in her February 2012 financial statement. There is an increased extra amount now claimed of $112 per week that needs to be taken into account (health insurance increased $2; motor vehicle, petrol increased $5; chemist/pharmaceutical increased $20; gardening increased $35; storage fees increased $50). The husband, in his affidavit, gave evidence about the standard of living that he provided the wife during the time that they were together. I accept the wife’s claimed expenses are reasonable and do not contain any excessive discretionary spending.
Also on the financial statement is the payment that the wife makes for child minding three days per week of $290 per week. Although that is claimed by the wife in the column relating to expenses in respect of the children I am comfortably satisfied that expenditure by the wife can be appropriately described as an expense of the wife which enables her to go to work for three days per week and earn an income of $1,044. It is accordingly an appropriate expense to take into account in the context of this spousal maintenance application.
The wife seeks payment of the health insurance premiums and the payment of car insurance premiums and registration in relation to her motor vehicle. These amounts are $65, $24 and $15 respectively ($104).
Overall, the wife’s expenses are $1,493 ($902 + $293 + $112 + $290 - $104).
Counsel for the husband suggested that moneys the wife transferred to her parents at the commencement of the marriage should be taken into account in the context of this interim application. In 2003, the wife’s parents transferred their interest in a property at Suburb Y, free of encumbrances. The wife says there was an agreement that she “would gradually repay to [her] parents the value of the property” without interest. Around one month after the parties were married, the wife sold the property at Suburb Y for approximately $800,000. She had not made any repayments to her parents. In her affidavit, she says “the entire net proceeds of sale were paid to my parents.”
The husband says the Suburb Y property was transferred into the wife’s name so that the wife’s father could avoid paying capital gains tax. He says that the wife was a first home buyer and the transfer was exempt from stamp duty. The husband agrees the proceeds of sale were given to the wife’s father. In the context of this interim application, I do not take that property into account as an asset of the wife or a financial resource of the wife.
The shortfall between the wife’s income and the wife’s expenditure (when rounded) is equivalent to the wife’s interim claim $450 per week for periodic spousal support ($1,493 - $1,044 = $449). Accordingly the wife has established a need to receive at least periodic spousal maintenance of a level that she has sought.
In relation to the husband’s capacity to pay, it is almost impossible for me to assess, on an interim basis, what is the husband’s earning capacity. In his most recent financial statement, the husband deposes to the fact that his income by way of salary and rental income is $3,078 per week. He has, however, indicated in the financial statement that he received no benefit from employment/business or other income. It will remain to be seen as to whether that sworn statement turns out to be true. What is plainly obvious, however, is that the husband and his brother are involved in significant commercial endeavours as property developers and builders and that the husband has significant net assets in his hands.
It was previously indicated that I am comfortably satisfied that at this point of the litigation the husband has failed to make a full and frank disclosure in his financial position and in those circumstances I do not need to be careful about making a finding that the husband has the capacity to pay the wife’s demonstrated need.
I take into account when considering the periodic order the fact that the wife will be receiving the amount of $100,000 by way of interim property adjustment. It is the wife’s case that she will need those funds to properly engage the husband what is shaping up to be contentious and complicated property litigation.
As previously detailed, the husband has failed to comply with his obligations for full and frank disclosure and has failed to comply with specific orders in relation to the provision of financial information.
Although the husband also had failed to comply with the Family Law Rules 2004 (Cth) in relation to costs disclosure for this interim hearing, counsel for the husband from the bar table indicated that the husband had paid by way of legal fees and disbursements the sum of $57,000, which some had been borrowed from H Pty Limited.
Needless to say, the husband has not provided the Court with any information about a debt owed to H Pty Limited, nor the current state of his loan accounts with either of the two companies or the partnership with his brother.
Accordingly, I will make an order that the husband pay the sum of $450 per week into a bank account nominated by the wife.
Counsel for the mother in support of the application for $25,000 lump sum spousal maintenance referred to the decision of Brown to support a proposition that this lump sum should be given to the wife as a buttress against the vicissitudes of life. This is not an unusual case and the normal principles apply as to when a lump sum spousal maintenance order would be appropriate. The wife has not demonstrated that the husband has consistently failed to meet an order for periodic spousal maintenance. I shall not make an order for the payment of lump sum spousal maintenance.
ORDERS SOUGHT BY THE SECOND RESPONDENT
The second respondent seeks an interim order for the sale of the property in which the wife and children reside. The husband supports his brother in that application.
Although it was not always clear during the hearing, it seems that the second respondent made his application pursuant to the accrued jurisdiction and s 66G Conveyancing Act 1919 (NSW) or in the alternative, pursuant to s 90AE or s 90AF Family Law Act 1975 (Cth) (“FLA”) or further in the alternative, by way of a order under s 80 FLA relying upon his brother’s s 79 FLA application.
On 14 March 2012, Rees J made the following comments in relation to the second respondent’s interest in the subject property:
25. The extent to which the second respondent is affected must be taken in the context of the way in which all three parties have conducted their lives. The second respondent allowed the [wife] and the [husband] to build a house, which was to be their matrimonial home, on land of which he was a half owner. He acquiesced to the [husband] and the [wife] living in that property since 2008. He has never himself lived in the property, and he does not seek to do so. He is content for his brother to live in the future in the house alone, but says that he would not extend the same consideration to his sister-in-law, niece and nephew.
The wife lives in the property with the two children of the marriage, twins aged two and a half years.
There is a wider context also in which to view the interests of the second respondent in Property T, Suburb N. The broad picture is the husband and his brother are engaged in significant commercial enterprises together. There are a large number of parcels of real estate involved. The husband and his brother have selected only one parcel for sale. It just happens to be the property in which the wife and the two and a half year old twins currently reside. There is no evidence that the bank is pressing for any reduction in any loan facilities.
Counsel for the second respondent sought to rely upon a decision of Brereton J in McKay & Anor v McKay [2008] NSWSC 177. That case discusses and applies the well known principles in Muschinski v Dodds (1985) 160 CLR 583 and Baumgartner v Baumgartner (1987) 164 CLR 137.
Counsel for the second respondent seems to argue that that the result in this case will inevitably be a sale of the property in which the wife currently resides and therefore an order for sale should be made on some expedited basis.
To found that argument, counsel for the second respondent relies upon his client’s evidence at paragraph 15 of his affidavit sworn 25 June 2012 which is in the following terms:
“15. In relation to [the former matrimonial home], I say that I organised the purchase of that property and the construction of the dwelling upon it with my brother and it was always intended that we would sell the property as it was an investment property even though my brother and his wife resided in it.”
The second respondent argues that the remedy that the husband and the wife have against the second respondent lies in damages, not in any equitable right that either of them might have in the property as against the brother.
Relevant to this argument is the fact that the brother himself lives in a far more valuable property (described in paragraph 9 of the second respondent’s affidavit as “[Property G, Suburb K]”) in which the husband has a half interest, without the payment of any occupation fee.
The second respondent asserts that the sale is necessary to reduce the mortgage without any evidence to provide a foundation of that assertion.
As the discussion by Brereton J in McKay makes clear, whether or not an order is ultimately made for this particular property to be sold will turn very much on a determination at a final hearing, after a testing of all the evidence, as to what the actual agreement between the parties was in respect of the relevant properties. It is not in my view an inevitable result that an order for sale of the former matrimonial home will be made.
The second respondent has not demonstrated why this particular property should be subject of an order for sale at this time. Accordingly his interim application for sale will be dismissed.
I certify that the preceding fifty-four (54) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 13 August 2012.
Associate:
Date: 13 August 2012
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