FAMILY COURT OF AUSTRALIA
| KUAY-HOA & HOA AND ORS | [2011] FamCA 1093 |
| FAMILY LAW – PROPERTY – Final property orders pursuant to section 79 of the Family Law Act 1975 (Cth) – Where two real properties are owned by the second respondent company – Where, post separation, the husband divested his shares and control of the second respondent company to the third and fourth respondents and it was alleged that the second respondent company held the property on trust for the third respondent – Where the property owned by the second respondent company is property of the parties to the marriage. FAMILY LAW – PROPERTY – Transaction to defeat claims – Where, post separation, the husband divested his shares and control of the second respondent company to the third and fourth respondents through a series of transactions – Where the wife sought that those transactions be set aside pursuant to s 106B of the Family Law Act 1975 (Cth) – Where the Court set aside those transactions. FAMILY LAW – PROPERTY – Contributions – Where the husband was the primary breadwinner and the wife was the primary homemaker and carer of the two children – Where the wife alleged that the husband had subjected her to physical violence and abuse during the marriage and post separation – Where the wife sought an adjustment in her favour pursuant to Kennon & Kennon (1997) FLC 92-757 – Where the evidence did not establish that the wife had been subjected to a course of conduct which made her contributions significantly more arduous. FAMILY LAW – EVIDENCE – Rule in Jones v Dunkel (1959) 101 CLR 298 – Where the parties all failed to call a number of witnesses who would have reasonably been expected to have provided evidence favourable to their respective cases. FAMILY LAW – PRACTICE AND PROCEDURE – Where the third respondent did not take part in the proceedings. |
| Evidence Act 1995 (Cth) Family Law Act 1975 (Cth) Legal Aid Act 1978 (Vic) Property Law Act 1958 (Vic) Statutory Declarations Act 1959 (Cth) |
| ANZ Banking Group v Harper and Ors (1988) FLC 91-938 Chorn & Hopkins (2004) FLC 93-204 D’Cruz & Pierce [2008] FamCA 819 Denning & Denning [2011] FamCA 160 G & G [2006] FamCA 877 Giller v Procopets (2008) 24 VR 1 Heath and Heath (No. 2) (1984) FLC 91-517 In the marriage of HJ and Kellner (1992) FLC 92-287 In the Marriage of Clauson (1995) FLC 92-595 In the Marriage of Ferraro (1993) FLC 92-335 In the Marriage of Lee Steere and Lee Steere (1985) FLC 91-626 JMVB Enterprises Pty Ltd v Camoflag Pty Ltd [2005] FCA 1474 Jones v Dunkel (1959) 101 CLR 298 Kennon & Kennon (1997) FLC 92-757 Kildea & Kildea [2007] FamCA 1524 Mallet and Mallet (1984) 156 CLR 605 Milankov and Milankov (2002) FLC 93-095 O’Donnell v Reichard [1975] VR 916 Oscar & Traynor [2008] FamCAFC 158 Payne v Parker (1976) 1 NSWLR 191 Pierce & D’Cruz [2010] FamCAFC 99 Prince & Prince |
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- AGLC
- Kuay-Hoa & HOA [2011] FamCA 1093
- Case
- [2011] FamCA 1093
- Decision Date
CaseChat Overview and Summary
The court was required to determine whether the properties owned by the second respondent company constituted property of the parties to the marriage, and whether the post-separation transactions by which the husband divested his shares and control of the company should be set aside as transactions to defeat claims. Additionally, the court considered the wife's claim for an adjustment in her favour under the principles of *Kennon & Kennon* (1997) FLC 92-757, based on alleged violence and abuse during the marriage and post-separation, and the respective contributions of the parties. The court also had to consider the application of the rule in *Jones v Dunkel* (1959) 101 CLR 298, given the failure of the parties to call certain witnesses.
Bennett J found that the transactions by which the husband divested his shares and control of the second respondent company should be set aside pursuant to s 106B of the *Family Law Act 1975* (Cth). The court reasoned that these transactions were undertaken to defeat the wife's claims. The court also determined that the property owned by the second respondent company was property of the parties to the marriage. While the wife alleged a course of conduct involving violence and abuse, the evidence did not establish that her contributions were made significantly more arduous, thus the *Kennon* adjustment was not granted on that basis. However, considering the wife's role as primary carer of the two young children and her limited capacity for employment in Australia due to her lack of English language skills, the court made an adjustment of 8% in her favour, increasing her entitlement to 48% of the divisible assets.
The court made detailed orders for the setting aside of the relevant transactions, the transfer and sale of the two properties, and the distribution of the net proceeds. The wife was to have sole conduct of the sale of both properties. The proceeds were to be applied towards sale costs, outstanding taxes and rates, a sum of $401,000 for potential capital gains tax on one property, and the wife's Centrelink debt. The remaining net proceeds were to be divided 52% to the husband and 48% to the wife, with provisions for the allocation of any excess or shortfall in capital gains tax. Registrars were authorised to sign documents if any party failed to do so.
Orders
Orders of the court
Setting aside of transactions
(1) Pursuant to s 106B of the Family Law Act 1975 (Cth), the transaction on 20 November 2006 lodged with ASIC on 13 December 2006 (whereby the husband transferred 100 shares in the Second Respondent, B Pty Ltd (“the Company”), to Mr C as recorded in ASIC Form …) be set aside.
(2) Pursuant to s 106B of the Family Law Act 1975 (Cth), the transaction on 22 September 2008 lodged with ASIC on 20 November 2008, whereby 16,250 new shares in the Company were created and issued to Ms D as recorded in ASIC Form 484, be set aside.
(3) Pursuant to s 106B of the Family Law Act 1975 (Cth), the Declaration of Trust document dated 21 May 2007 (annexure “PAX-2” of the affidavit of Ms D filed 4 May 2009) be set aside.
(4) Pursuant to s 106B of the Family Law Act 1975 (Cth), the Declaration of Trust document dated 30 January 2008 (annexure “PAX-3” of the affidavit of Ms D filed 4 May 2009) be set aside.
B Pty Ltd International Developments
(5) (a) The Respondents be restrained from issuing any further shares in the Company until compliance with these orders is complete.
(b) Subject to paragraph 9 of this Order, Ms D forthwith deliver to the husband all documents and things which she has in her possession, custody or control, in relation to the Company.
Wife’s Centrelink debt
(6) That the wife do all acts and things necessary to ascertain, in writing, the exact value of her Centrelink debt as at the first of either the date of settlement of:-
(a) F Street, Suburb K; or
(b) E Street, Suburb H –
and provide the husband and the solicitor who is to receive the proceeds of sale of the properties with any documentation that the wife receives which states this amount.
F Street, Suburb K
(7) The Respondents be and are hereby restrained from causing suffering or permitting any dealing with F Street, Suburb K otherwise than is contemplated by this Order.
(8) The husband forthwith do all acts and things necessary in his personal capacity and/or in his capacity as a director or officeholder or shareholder of the Company to transfer to the wife, on trust for sale, the property at F Street, Suburb K.
(9) Ms D forthwith deliver or cause to be delivered to the Court, the original Duplicate Certificate of Title Vol … Folio …, being the title of the property at F Street, Suburb K for collection by the wife’s solicitors, or such other solicitors as the husband and wife may agree act on the conveyance.
(10) The wife have sole conduct of the sale of the property at F Street, Suburb K and, absent a prior written agreement between the husband and wife, the solicitors for the wife be responsible for the conveyance.
(11) The wife forthwith sell the property at F Street, Suburb K, and apply the proceeds of sale as follows:-
(a) To pay the costs of advertising and sale, including the solicitor’s costs of acting in the trust transfer and sale of F Street, Suburb K;
(b) To pay any outstanding land tax and rates in relation to F Street, Suburb K;
(c) The sum of $401,000 to be paid to the solicitor with responsibility for the conveyancing, to be applied to any capital gains tax assessed against the Company, such sum to be paid as soon as practicable after provision of a notice of assessment, and in the meantime, to be invested in an interest bearing deposit on terms of not more than one month duration;
(d) If settlement of F Street, Suburb K, takes place before the settlement of E Street, Suburb H, the sum which is equal to the value of the wife’s Centrelink debt, as ascertained pursuant to paragraph 6 herewith, be paid to the solicitor with responsibility for the conveyancing and be paid as soon as practicable in satisfaction of the wife’s Centrelink debt so that ;
(e) To pay the balance into an interest bearing trust deposit to be disbursed in accordance with paragraph 17 herewith.
(12) The husband in his capacity as a director and/or shareholder and/or in his personal capacity forthwith do all acts and things necessary to cause an assessment for calculation of capital gains tax liability in respect of the property at F Street, Suburb K to issue and then forward same to the solicitor with responsibility for the conveyancing. In the event that the Company and/or husband desires to appeal or review the assessment, he provide the solicitor and the wife with copies of all documentation submitted by him for the purpose of the appeal, review or application for re-assessment, as the case may be.
(13) There be liberty to all parties to apply on short notice, specifically in relation to capital gains tax and the assessment and payment thereof.
E Street, Suburb H
(14) The husband forthwith do all things and sign all documents necessary to transfer to the wife on trust for sale the property at E Street, Suburb H.
(15) The wife have sole conduct of the sale of E Street, Suburb H and absent a prior written agreement between the husband and wife, the lawyers for the wife be responsible for the conveyance.
(16) The wife forthwith sell the property at E Street, Suburb H and apply the proceeds of sale as follows:-
(a) To pay the costs of advertising and sale, including the solicitor’s costs of acting in the trust transfer and sale of E Street, Suburb H;
(b) To pay any outstanding land tax and rates in relation to E Street, Suburb H;
(c) If settlement of E Street, Suburb H, takes place before the settlement of F Street, Suburb K, the sum which is equal to the value of the wife’s Centrelink debt, as ascertained pursuant to paragraph 6 herewith, be paid to the solicitor with responsibility for the conveyancing, and be paid as soon as practicable in satisfaction of the wife’s Centrelink debt forthwith, such payment to be made directly to Centrelink;
(d) To pay the balance into an interest bearing trust deposit, to be disbursed in accordance with paragraph 17 herewith, or any subsequent order.
Distribution of net proceeds of property sales
(17) The parties do all acts and things necessary to ensure that the net proceeds of the real property sales, held on trust in accordance with paragraph 11(e) hereof and paragraph 16(d) hereof, be paid out to the husband and the wife pursuant to the following formulas:
(a) The husband receive T x 0.52 – H
(b) The wife receive T x 0.48 – W
(c) Where:
T =
the total property pool
= P + H + W
P =
the net proceeds of the property sales deposited into an interest bearing trust deposit in accordance with paragraph 11(e) and paragraph 16(d) herewith
H =
the value of the H Street office ($135,000) and the relevant addbacks attributable to the husband ($353,658)
= $488,658
W =
the relevant addbacks attributable to the wife
= $142,700
(18) That in the event the capital gains tax on the disposition of F Street, Suburb K is greater than the estimated capital gains tax ($401,000), the husband and wife be and are hereby responsible for and must pay any capital gains tax in excess of that amount, in the following proportions:
(a) 52 percent thereof by the husband;
(b) 48 percent thereof by the wife –
and the husband and wife pay those amounts to the solicitors responsible for the conveyancing for payment by those solicitors to the Australian Taxation Office on behalf of the Company.
(19) That in the event the capital gains tax on the disposition of F Street, Suburb K is less than the estimated capital gains tax ($401,000), the husband and wife be entitled to share the balance of funds in excess of $401,000, in the following proportions:
(a) 52 percent thereof to the husband;
(b) 48 percent thereof to the wife –
and the solicitors responsible for the conveyancing disburse the funds accordingly, subject to any further order of the Court.
Section 106A
(20) In the event that any party fails or neglects to sign documents to give effect to this Order, pursuant to s 106A of the Family Law Act 1975 (Cth), Registrar Riddiford and/or Registrar Sikiotis be and are hereby authorised to sign all documents necessary to facilitate the transfers and sale of properties pursuant to this Order. An affidavit by the wife’s solicitor, which states that the husband and/or Ms D and/or the wife have failed or neglected for a period of not less than seven (7) days to execute documents which are contemplated by this Order and which are required to be executed, shall be sufficient proof of default and may be accepted by the Registrar as the circumstance in which his/her authority to execute documents pursuant to this Order can be exercised.
Costs
(21) Any application for costs be filed and served within 21 days and be supported by a written submission of not more than 7 pages (13 point font and 1.5 spacing) and have annexed to it a copy of any account for costs and disbursements which has been rendered to the application for costs and such other memorandum or estimate of costs upon which that party will rely for the purpose of estimating what (if any) funds ought to be withheld from other parties in anticipation of a costs order being made against the order parties (or any of them).
(22) Any respondent to an application for costs file and serve any written submissions upon which he/she seeks to rely not more than 21 days after service upon them of the application and such submissions be of not more than 7 pages (13 point font and 1.5 spacing) and specify whether he/she wishes to make oral submissions in addition to written submissions and have annexed to it a copy of any account for costs and disbursements which has been rendered to the application for costs and such other memorandum or estimate of costs upon which that party will rely for the purpose of estimating what (if any) funds ought to be withheld from other parties in anticipation of a costs order being made against the order parties (or any of them).
(23) Any applicant for costs upon whom a response is served, file and serve any reply in writing, such reply to be of not more than 4 pages (13 point font and 1.5 spacing) and specify whether he/she wishes to make oral submissions in addition to written submissions and be filed within 14 days of receipt by him/her of the response.
(24) This matter be adjourned to 16 November 2011 at 9.00 am for a determination of what funds (if any) should be withheld from any of the parties pending a determination of any costs application against him/her.
Procedural
(25) All exhibits tendered in these proceedings be returned (to the party on whose behalf the exhibit was tendered) at the expiration of any appeal period or the determination of any appeal which is filed within time (whichever is the later).
(26) The Subpoenaed Documents Clerk of this Registry return any documents produced on subpoena to the person producing same within 14 days.
(27) There be liberty to apply in relation to implementation of this Order and any consequential orders.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
As I have already indicated, the wife has little prospect of obtaining a job in Australia. She has undertaken an English language course for a number of years, but is making little progress. However, the wife does not have proposal to apply money that she may receive in these proceedings to improve her capacity to undertake work in Australia. j)The extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;k)The duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; The husband and wife married in 1994. At that time the wife was 31 years old. The parties separated in December 2002. Since separation the wife has not worked in paid employment for any more than a couple of weeks. I am satisfied that this is partly due to the marriage and her responsibilities as the primary homemaker and parent, however it is also due to her lack of English language skills.l)The need to protect a party who wishes to continue that party’s role as a parent; The wife wishes to continue her role as primary carer of the two children. The consent Orders that were made in relation to the children’s proceedings indicates that the husband is also amenable to the mother continuing in this role. The youngest child is only 9 years old. This factor justifies an adjustment in favour of the wife.m) If either party is cohabiting with another person – the financial circumstances relating to the cohabitation; The evidence of both parties is that neither of them are cohabiting with another person, nor is it likely in the foreseeable future that this situation will change.na) 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; It appears that the husband is paying some $100 or so per week. It is a small sum having regard to the cost of raising two children.o) Any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; I was not addressed as to this factor. There are no other orders made under the Family Law Act 1975 which affect a party or the child which needs to be taken into account, save for the parenting orders which will be made in this matter and which will result in the child continuing to live with the wife. These provisions have been considered in relation to section 75(2)(na) above. Taking the above matters into account, and in particular the fact that the wife will be the primary carer of the two children and has a very limited capacity for employment in Australia, it is my view that it is appropriate that an adjustment must be made in favour of the wife. It is just and equitable that the wife receive by way of adjustment in her favour eight percent of the divisible assets. That increases her entitlement to 48 percent of the assets and reduces the husband’s entitlement to 52 percent.