Kusno and Kusno

[2018] FamCA 63

FAMILY COURT OF AUSTRALIA

KUSNO & KUSNO [2018] FamCA 63

FAMILY LAW – PROPERTY – Interim Application – Consideration of applicable principles – Consideration of contribution issues – Where insufficient evidence has been adduced by the parties for an assessment of the parties’ assets and liabilities and contributions to be made – Where there is a conflict in the evidence that is not capable of resolution at interim hearing – The wife’s Application in a Case and the husband’s Response dismissed - Where it is not appropriate to make an order for costs.

Family Law Act 1975 (Cth) ss 75(2), 79
Family Law Rules 2004 (Cth) r 15.06

Harris & Harris (1993) FLC 92-378
Strahan & Strahan [2009] FamCAFC 166

APPLICANT: Ms Kusno

RESPONDENT: Mr Kusno

FILE NUMBER: PAC 5051 of 2016

DATE DELIVERED: 9 February 2018

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Foster J

HEARING DATE: 11 December 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Dura

SOLICITOR FOR THE APPLICANT: David Legal

SOLICITOR FOR THE RESPONDENT: Mr Bryett of A R Walmsley & Co

Orders

1. The Applicant Wife’s Application in a Case filed 28 July 2017 is dismissed.

2. The Respondent Husband’s Response to an Application in a Case filed 9 August 2017 is dismissed.

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 Kusno & Kusno 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 5051  of 2016

Ms Kusno

Applicant

And

Mr Kusno

Respondent

REASONS FOR JUDGMENT

1. The current matter for determination arises from the wife’s Application in a Case filed 28 July 2017 seeking interim orders as to property settlement pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”).

2. For the purposes of her application the wife relied upon the following documents:

   (1)her Application a Case filed 28 July 2017;

   (2)the affidavit of Fred David, solicitor filed 28 July 2017;

   (3)the further affidavit of Fred David, solicitor filed 23 November 2017;

   (4)the affidavit of Mr B, solicitor filed 8 December 2017.

3. The husband filed his Response to the wife’s Application in a Case on 9 August 2017 and relied upon the following documents:

   (1)his Response to the Application in a Case filed 9 August 2017;

   (2)his affidavit filed 9 August 2017;

   (3)his further affidavit filed 8 December 2017.

4. Both parties made reference to affidavits filed in earlier completed interim proceedings. Rule 15.06 of the Family Law Rules 2004 (Cth) (“the Rules”) states that “an affidavit filed with an application may be relied on in evidence only for the purpose of the application for which it was filed” and in effect precludes the reliance by parties on affidavits filed as evidence in earlier applications. No leave was sought to dispense with the Rule so as to allow reliance on such affidavits.

Interim Property

1. The principles as to applications for interim property provision are well settled, (Strahan & Strahan [2009] FamCAFC 166) and require a two-step process.

2. 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.

3. 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.

4. Secondly, the Court is to have regard to relevant matters in s 79 of the Act.

5. It needs to be kept in mind that the final outcome of property settlement should not be compromised by an interim property order. In Harris & Harris (1993) FLC 92-378 the Full Court stated that 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. (Emphasis added)

6. It is important to have regard to an overall caution. In Harris (supra), the Full Court said:

   As a generality, the interests of the parties and the Court are better served by there being one final hearing of s 79 proceedings.

7. 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.

8. 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.

9. 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.

10. 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.

11. Both parties in this matter in any event seek that the Court make final adjustive orders.

Context

1. The primary proceedings were commenced by the applicant wife in October 2016.

2. The proceedings were listed before a Registrar on 7 February 2017 and on that day, by consent the husband was restrained “from disposing of or encumbering any asset in his ownership or control without first providing 14 days written notice to the wife and/or her solicitors”.

3. On 10 April 2017 interim financial issues were before Hannam J in the judicial duty list. On that day orders were made by consent as follows:

   (1)That the husband provide full disclosure. 

   (2)That the motor vehicle registration number … be retained by the wife and costs of the vehicle be paid by the husband.

   (3)That the Husband pay the Wife the sum of $200.00 per week by way of spousal maintenance.

   (4)That valuation of all real estate holdings of the parties be undertaken.

   (5)That the Suburb C property be sold and pending sale the husband make all mortgage and other payments in relation to the property and on sale the proceeds be distributed as follows:  

   (a)In payment of agent's commission, advertising expenses, conveyancing adjustments and legal expenses of the sale;

   (b)In discharging two NAB loans;

   (c)In payment to the bank to secure other properties owned by the parties and related entities;

   (d)In payment to the Husband of the sum of 50 per cent of the costs he has spent to that date on real estate valuations pursuant to these orders;

   (e)In payment to David Legal in the amount of $300,000.00 to be paid into a controlled monies account and held in trust on behalf of the parties;

   (f)The balance be divided equally between the parties.

(6)That the Husband as shareholder and director of any company which he holds a legal and beneficial interest be restrained from appointing further directors for, dealing with any shareholdings of, divesting any real property of, issuing any dividends from or permitting loans to be obtained from those companies without written notice to the wife.

(7)Leave to relist.

(8)Parties’ costs reserved.

1. It is noted that the property at Suburb C was to be sold forthwith and the proceeds of sale distributed in accordance with the Orders set out above.

2. Subsequently, before a Registrar on 30 May 2017, the wife was ordered to administer a request for further and better particulars to the husband as to the sum of $200,000.00 retained by him from the sale of one of the parties’ jointly owned properties with the husband to provide a reply to that request for particulars by no later than 26 June 2017.

3. On 28 July 2017 the wife filed the present application.

4. On 30 November 2017 final parenting orders were made in relation to the parties’ child D, aged 12. In summary, the final parenting orders provide for the parties to have equal shared parental responsibility for the child and implement a substantially shared care arrangement for the child.

5. The present interim property proceedings were listed for hearing on 11 December 2017 and subsequent to the filing of supplementary written submissions judgment was reserved on 14 December 2017.

6. At the commencement of the interim hearing the wife relied upon a document (Exh “A”) setting out the amended orders sought by her. In summary, the orders sought by the wife provide as follows:

   (1)that the time for the husband’s compliance with order 1 (disclosure and discovery) made 10 April 2017 be extended for a period of seven days; and

   (2)that the husband’s compliance with orders made 30 May 2017 (particulars as to the disposition of $200,000.00) be extended for a period of seven days;

   (3)that the husband in his capacity as director of E Pty Ltd, the trustee of the Kusno Family Trust do all things necessary to cause the sale of five real estate properties at Suburb F, Suburb G, Suburb H, Suburb I and Suburb J and for the purposes of such sale Mr B, solicitor be appointed as trustee for sale of the said properties; and

   (4)that the proceeds of sale of the properties be applied as follows:

   i)to discharge mortgages;

   ii)payment of selling expenses and legal costs;

   iii)payment of outstanding utilities in rates;

   iv)payment of $100,000.00 to the wife by way of interim costs;

   v)payment of $15,000.00 to the husband by way of interim costs;

   vi)payment to the wife of the sum of $50,000.00 for the purposes of maintenance and repair to prepare the Suburb C property (that remains unsold) for sale;

   vii)payment to the wife of $46,654.00 representing the unpaid distribution to her from the Kusno Family Trust for the 2016 financial year;

   viii)the balance then remaining to be held in an interest-bearing controlled monies account in the name of the solicitors for the wife pending further order;

   (5)that the distribution of funds from the proceeds of sale of the properties to the parties be appropriately reflected in the parties’ respective loan accounts in the Kusno Family Trust;

   (6)that the husband upon receipt by him of funds from the proceeds of sale of the said properties pay the wife’s costs of these proceedings and proceedings on 10 April 2017 and 30 May 2017 (It is noted that there was no application for costs as to the two specified dates within the time prescribed by the Rules and accordingly the wife’s application for costs can only relate to the present application.);

   (7)that in the event that one of the properties referred to above sells prior to the sale of the Suburb C property then the husband shall vacate the Suburb C property within seven days of the settlement of such sale and that Mr B, solicitor be appointed as trustee for sale of the Suburb C property for the purposes of implementing orders as to sale made on 10 April 2017;

   (8)that the husband pay the wife’s costs of this interim application;

   (9)that the husband pay the wife’s costs of and incidental to proceedings on 10 April 2017 and 30 May 2017 (It is noted that any application for costs in relation to such dates is now out of time and there is no application for leave to make such application out of time).

7. In his Response filed 9 August 2017 the husband sought orders in summary as follows:

   (1)that the husband be permitted to increase the NAB line of credit (..86) to the sum of $150,000.00;

   (2)that the wife sign all such documents as may be required to facilitate such increase in the line of credit;

   (3)that otherwise the wife’s Application in a Case be dismissed.

The wife’s case

1. The wife, for reasons not immediately clear, relied upon two affidavits of her solicitor Mr Fred David. The wife, herself, provided no evidence in support of her application for interim financial relief and thus the Court has no evidence from her as to the background and history of the relationship, the respective alleged contributions by each of the parties to the matrimonial assets nor any evidence as to what factors under s 75(2) of the Act may be relevant in making a preliminary assessment of the entitlements of each of the parties to the property pool.

2. Otherwise, the wife provides no evidence as to the nature and extent of the property pool, no evidence as to the value, no evidence as to liabilities and encumbrances such as would assist by providing the Court, at least in a general way, with an overview of the matrimonial asset pool in terms of assets owned by the parties jointly, either of them or any entities controlled by either of them.

3. The wife’s solicitor deposes as to an exchange of correspondence whereby the husband sought the wife’s cooperation in refinancing the Suburb C property and whereby the wife sought that the husband cease directly communicating with her. In his subsequent affidavits the solicitor deposes to further correspondence with the husband’s solicitors but provides no evidence that would assist the Court in its present deliberations.

4. Exhibit “E” comprises the financial statements for the year ended 30 June 2016 for the Kusno Family Trust. The financial statements, the provenance of which was not established, reveal that the Trust has as at 30 June 2016 assets (including current assets) of about $3,225,000.00 and liabilities of about $3,200,000.00. The methodology for the valuation of the trust assets is not known.

5. The profit and loss accounts for the Trust for the year ended 30 June 2016 reveal total income of about $250,000.00 with such income comprising rental receipts and a capital gain of about $186,000.00, presumably from the sale of a property in that financial year. After payment of expenses the net profit of the trust for the said financial year was about $141,000.00. That profit the financial statements asserts was distributed to the husband as to $47,624.00 and as to the wife $93,308.00. Neither party has provided personal income tax returns reflecting such distributions.

The husband’s case

1. The husband relied upon his affidavits as referred to above together with his financial statement sworn and filed on 7 April 2017.

2. The husband, much the same as the wife’s solicitor deposes as to various correspondence passing between his solicitors and the wife’s solicitors.

3. He deposes as to his requests to the wife to increase the line of credit secured over the matrimonial home in circumstances where “his income stream is not sufficient to pay the loans and upkeep of the properties”. He asserts that any increase in the line of credit will be used to meet mortgage payments it appears for the properties that are owned by the trust and substantially encumbered.

4. In correspondence dated 8 June 2017 the husband asserts that he is not working and has relied upon drawings from the line of credit to keep all the properties afloat. He also deposes to the receipt of a land tax assessment in the sum of $48,322.00 that requires payment. He asserts that he is liable for 50 per cent of the land tax assessment with his business partner liable for the other 50 per cent notwithstanding that the assessment is addressed to the corporate trustee of a Trust, the K Trust. In such circumstances the husband has no personal liability for the land tax assessment but the assessment as a liability is to be met by the corporate trustee on behalf of the trust.

5. Otherwise, the husband also deposes to receiving a land tax assessment addressed to the corporate trustee of the Kusno Family Trust in the sum of $71,220.00. Again the husband has no personal liability for the land tax assessment but the assessment is a liability to be met by the corporate trustee on behalf of the trust. The liability of land tax remains secured against the subject properties and if not paid will be discharged on any sale of the subject properties.

6. The husband, otherwise, deposes as to difficulties in procuring a sale of the Suburb C property notwithstanding some renovations and improvements to the property undertaken by him. The husband remains in occupation of the property.

7. The husband exhibits to his affidavit the Deed of Settlement of the Kusno Family Trust dated 25 August 2002. The Appointors for the purposes of the trust are the husband and wife. The trust could be described as a general discretionary trust in respect to which the husband and wife fall within the various classes of eligible beneficiaries. The ultimate distribution date for the trust is defined by the deed to mean the vesting date (25 August 2072) or such earlier date as the trustee may determine. On final distribution the trustee may determine a distribution in its absolute discretion to any of the eligible beneficiaries.

8. The husband’s updating affidavit filed 8 December 2017 deposes as to the provision of particulars in relation to the sum of $200,000.00 received by him and as to ongoing property settlement negotiations.

9. He, otherwise, asserts that he has made application to a finance broker presumably to assist him in making some offer as to final property settlement.

10. In his financial statement filed 7 December 2017 he deposes that his one half share of the property at Suburb C has a value of $1 million and that the property is presently subject to a mortgage with his one half share being $385,000.00. It must be inferred that the husband asserts that the property has an overall value of $2 million and is subject to a mortgage liability of about $770,000.00, at least as at April 2017. The amount to which the property may be subject to some collateral security for the parties’ other borrowings is not known and not one shred of evidence has been adduced on the question.

Background

1. The case outline of the applicant wife (Exhibit “A”) and the case outline of the respondent husband (Exhibit “B”) provide assertions as to relevant chronology. What follows is as best can be determined agreed aspects of those chronologies.

2. The wife is aged 45 and the husband aged 44.

3. The parties commenced cohabitation in 1997 and married in 2003.

4. There is one child of the parties’ relationship D born in 2005.

5. The present matrimonial home at Suburb C was purchased by the parties in 2010.

1. The parties separated in November 2014.

Discussion

1. The approach to interim property determination is set out above.

2. The wife has adduced no evidence such as would support even a general finding as to the overall assets and liabilities of the parties. She has, otherwise, adduced no relevant evidence as to value. Nor is there any admissible evidence such as would support the “blunderbuss” order sought by the wife seeking to liquidate all of the family trust properties.

3. Further, there is a glaring lack of evidence in relation to the financial history of this relationship such as would facilitate the Court making, at least in general terms, some estimate of their respective contribution entitlement. There is no evidence as to any relevant s 75(2) factors that may impact upon any general contribution assessment, save for the fact of the final parenting orders as to the arrangements for the child of the marriage.

4. In such circumstances it is simply impossible for the Court to make a rational determination as to the general entitlement of each of the parties to the matrimonial property.

5. Accordingly, it is appropriate that the wife’s application for further interim property/costs provision be dismissed. An order will be made accordingly.

6. Otherwise, the wife seeks the appointment of Mr B as trustee for sale of the Suburb C property only in the constrained circumstances referred to above.

7. The Court is not satisfied that the husband has failed to provide particulars as previously ordered and, in any event such issue can be ventilated if still relevant at a final trial. There remains a conflict in the evidence between the parties that cannot be resolved at an interim hearing. Nor was more fulsome correspondence tendered at the hearing to assist the determination of what clearly on the affidavits was a conflict on the issue.

8. In all of the circumstances it is appropriate that the wife’s Application in a Case be dismissed.

9. Otherwise, in relation to the orders sought by the husband in his Response as to the proposed “refinance” of the Suburb C property there is no evidence that given the current financial circumstances of these parties any such refinance is available.

10. Otherwise, in circumstances where there is an order for sale of the Suburb C property that has been in place now since May 2017, with that sale having not taken place, it is inappropriate to further encumber the property and thus further diminish what appears to be the limited net capital pool of the parties.

11. It is appropriate that the husband’s Response also be dismissed.

12. It may well be that on proper advice a further application will be made to take the sale of the Suburb C property out of the hands of the parties and into the hands of an appropriately qualified independent trustee for sale at the best price reasonably obtainable. There is no such application presently before the Court.

13. In circumstances where the orders sought by both parties have been refused, there will be no order for costs.

14. Orders will be made accordingly.

I certify that the preceding sixty (60) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 9 February 2018.

Associate: 

Date:  9 February 2018