MITZOU & ROUBANIS

[2017] FamCA 302

FAMILY COURT OF AUSTRALIA

MITZOU & ROUBANIS [2017] FamCA 302

FAMILY LAW – PROPERTY – Final Orders – undefended hearings – where wife is bankrupt – where leave was granted for the wife to participate in these proceedings – where wife failed to participate in the proceedings – where no responding trial documents filed by the wife – where the Court ordered for the matter to proceed on an undefended basis.

FAMILY LAW – PROPERTY – Final Orders – just and equitable – where parties’ liabilities substantially exceed parties’ assets – where husband willing to accept business liabilities of the parties – where husband seeks that the wife transfer all her shares in the business to him – where just and equitable for husband to retain control of the business.

Family Law Act 1975 (Cth) ss 75(2), 79(2), 79(4)

Bevan & Bevan [2014] FamCAFC 19
Stanford v Stanford (2012) 247 CLR 108

APPLICANT: Mr Mitzou

RESPONDENT: Ms Roubanis

FILE NUMBER: ADC 1988 of 2014

DATE DELIVERED: 15 May 2017

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide

JUDGMENT OF: Berman J

HEARING DATE: 28 April 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Richards

SOLICITOR FOR THE APPLICANT: CG Family Law

SOLICITOR FOR THE RESPONDENT: Self- Represented

Orders

That by way of settlement of property or alteration of interests in property:-

1. That the wife sign all such documents and do all things necessary for her to be removed from any position as trustee or appointor of the Mitzou-Roubanis Family Trust.

2. That any interest of the wife in the Mitzou-Roubanis Family Trust, including any beneficiary entitlement, is otherwise vested in the husband.

3. That the wife’s non-beneficial interest in both the L Unit Trust and the K Unit Trust as trustee for the Mitzou-Roubanis Family Trust vest in the husband as the sole trustee for the said trusts.

4. That the non-beneficial interest of the wife in the C Pty Ltd as trustee of the L Unit Trust vest in the husband as the sole trustee.

5. That the non-beneficial interest of the wife in B Pty Ltd as trustee of the K Unit Trust vest in the husband.

6. That the husband do indemnify the wife and keep her forever indemnified in respect to:-

   (a)       All debts and liabilities of the husband;

   (b)       All debts and liabilities of:

   ·Mitzou-Roubanis Family Trust

   ·L Unit Trust

   ·K Unit Trust

   ·C Pty Ltd

   ·B Pty Ltd

7. That the parties are each to retain such legal or equitable interest in any personalty or realty as currently remain in their separate possession and control free from any claim by the other.

8. That a Registrar of this Honourable Court shall have power pursuant to section 106A of the Family Law Act 1975 (Cth) to sign all such documents as may be required to give effect to these orders in circumstances where upon proof by affidavit a party has refused or neglected to sign such documents as may be presented to him or her and that such refusal or neglect has continued for a period but longer than seven (7) days after the said document or documents were presented.

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 Mitzou & Roubanis 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 ADELAIDE

FILE NUMBER: ADC 1988  of 2014

Mr Mitzou

Applicant

And

Ms Roubanis

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. These proceedings concern an Amended Initiating Application for alternation of property interest filed on 10 March 2017 by MR MITZOU (“the husband”) in which he seeks orders in effect that he retain control of various entities representing the “Mitzou-Roubanis Group”.

2. On 13 October 2016 MS ROUBANIS (“the wife”) signed a Debtor’s Petition and was declared bankrupt.  A trustee in bankruptcy was appointed at this time.  I made orders on 2 March 2017 requiring the wife to file trial documents in order to participate in these proceedings.  In the event that the wife failed to file trial documents, the wife’s ability to participate in these proceedings would be limited to a right to be heard but not to present evidence.

3. The wife filed an Application in a Case on 10 February 2017 however chose to take no part in the proceedings and filed no responding documents.  Accordingly, on 28 April 2017 I made orders for the matter to proceed on an undefended basis.

4. The husband seeks orders with respect to the Mitzou-Roubanis Group entities.  A summary of those orders is as follows:-

   (1)That the wife be removed from any position as trustee or appointor of the Mitzou-Roubanis Family Trust (“the family trust”);

   (2)That any interest of the wife in the family trust, including any beneficiary entitlement, is otherwise vested in the husband;

   (3)That the wife’s non-beneficial interest in both the L Unit Trust (“the unit trust”) and the K Unit Trust (“KUT”) as trustee for the family trust vest in the husband as the sole trustee for the trusts.

   (4)That the non-beneficial interest of the wife in the C Pty Ltd as trustee of the unit trust vest in the husband;

   (5)That the non-beneficial interest of the wife in B Pty Ltd as trustee of the KUT vest in the husband.

5. According to the husband there are limited assets remaining as part of the matrimonial pool comprising of:-

   (1)Sale proceeds of I Street, Suburb E          $28,769

   (2)The “D” business  $nil

   (3)The husband’s Japanese motor vehicle  $5,000

   (4)Cash at separation retained by wife  $100,000

   (5)Gold jewellery of parties retained by wife  $120,000

   (6)Furniture, go karts and other chattels  $30,000

6. There are substantial liabilities of the parties which total some $582,733 including mortgages, business loans and credit card debts.

7. By her Application, the wife also seeks to retain her superannuation entitlements.  It is difficult to see how the orders sought by the wife are supported in her affidavit, nevertheless the sum of that entitlement was not a matter of contention and counsel for the husband provided assurance that the husband chose not to pursue the wife for any superannuation entitlement she may have.

8. In her Application, the wife also sought orders for the ongoing payment of $300 arising from a previous order.  On 27 June 2014 I made orders permitting the parties to draw funds from the “D Business” account; $800 per week for the husband and $300 per week for the wife.  It was not an order to pay the wife spousal maintenance and did not provide the wife with an ongoing entitlement to share in the business income.  Further, any entitlement whether periodic payment or arrears may now vest in the trustee in bankruptcy.

BACKGROUND

1. The parties met in 2004 and commenced co-habitation in 2007.  The parties were married in 2008 and separated on 18 April 2014. 

2. The wife has four children from a previous relationship and, at the time of cohabitation, three of those children resided with the parties.  The husband also has two children from a previous marriage, one of whom resided with the parties at the time of cohabitation.

3. The parties relocated from Suburb N to Suburb O in 2010 and finally settled in a rental property at Suburb G in 2012.  The wife received rental income from her property at I Street, Suburb E (“Suburb E property”).

4. Throughout the relationship, the husband engaged in buying and selling businesses.  The only business endeavour remaining is the “D Business” which was purchased jointly by the parties.

5. The D Business is a master franchise that was purchased in late 2012 for the sum of $650,000 plus costs.  The business is operated by the unit trust, of which B Pty Ltd is the corporate trustee, and the KUT, where the C Pty Ltd is the corporate trustee.

6. Both parties were also employees of D and their weekly income was deposited into a joint savings account.  From that joint account various expenses were paid including the Suburb E property mortgage, the D business loan and business rent.

7. The parties separated acrimoniously in April 2014.  There was an incident at separation which involved the wife’s child phoning the police and a subsequent Intervention Order being placed on the husband, listing the wife as a protected person.  The parties remain deeply mistrustful of each other.

8. Pursuant to the orders made on 13 June 2014, the wife executed a Deed of Settlement for the D business to resolve outstanding litigation.  The monies payable to B Pty Ltd and C Pty Ltd pursuant to the settlement were placed in the P Legal Trust Account in the sum of $210,000.  I also made orders requiring the wife to sign all such documents to enable the continued operation of the D Business and allowing for the husband to conduct the business in the ordinary course.  Those funds were exhausted with the consent of both parties over the next two years.

9. Subsequent to separation, consent orders were made by me on 16 March 2016 which provided for the sale of the Suburb E property.  I am informed that this property has since been sold and the associated mortgage has been discharged.

THE HUSBAND’S CASE

1. The husband asserts that throughout the relationship he was the primary provider for the parties and both parties’ children from previous marriages.  This included providing for the parties day-to-day living expenses, the children’s school and extra-curricular expenses and for the parties to undertake various overseas holidays.

2. He was the primary operator of the D Business.  He would conduct regular on-site visits with franchisees and pursue the legal interests of the business where a franchisee continued to operate but failed to pay the franchise fee. 

3. In support of the orders sought, counsel for the husband submits that across all personal and trust holdings there is a deficiency in the account balances. 

4. The husband tendered evidence of an affidavit sworn by Mr Q, at the joint instruction of the parties, which confirms each trading entity had a nil value as at 2 December 2015 (“Exhibit 1”). 

5. The husband tendered further evidence of the 2016 financial position of the unit trust which represented an approximate $70,000 deficit (“Exhibit 2”).

6. The husband refers to his Financial Statement sworn 24 February 2017 and states there is an outstanding Australian Tax Office (“ATO”) liability of approximately $18,000 with respect to the D Business, various credit card liabilities and another ATO liability with respect to R Business which counsel submitted is payable but no action has been taken by the ATO.

7. The husband does not challenge the wife’s position to retain her superannuation entitlements. 

8. The husband is not pursuing a usual order that both parties retain assets in their possession.  He says the wife took assets gold jewellery and cash to a value exceeding $200,000 at separation.  It is the husband’s position that he reserve the right to pursue this matter if such items are located at a future point in time.  Counsel sought an order specifically permitting the husband to do so.

THE RELEVANT LAW – ALTERNATION OF PROPERTY INTERESTS

1. Before I am able to consider any alteration or adjustment to the interests of the parties to their separate property, I must be satisfied by regard to s 75(2) of the Family Law Act 1975 (Cth) (“the Act”) that it would be just and equitable to embark upon such an exercise.

2. In Stanford v Stanford (2012) 247 CLR 108 the majority held:-

   [35]It will be recalled that s 79(2) provides that “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.

   Section 79(4) describes matters that must be taken into account in considering what order (if any) should be made under the Section. The requirement of the two sub-sections are not to be conflated. In every case in which a property settlement order under Section 79 is sought, it is necessary to satisfy the Court, that in all the circumstances, it is just and equitable to make the order.

   [36]The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations.  It does not admit of exhaustive definition.  It is not possible to chart its metes and bounds.

3. Importantly, the Court found:-

   Whether it is just and equitable to make the order is not to be answered by assuming the parties rights to all interest in marital property are or should be different from those that then exist.

4. In Bevan & Bevan [2014] FamCAFC 19 the majority of the Full Court said (in relation to the previously quoted paragraph in Stanford):-

   [70]In our experience the circumstances as described in the paragraph above encapsulates the vast majority of cases. Hence the reminder in Stanford of the pivotal role of Section 79(2) is unlikely to have any impact in most cases although it will serve as a reminder to trial judges that the precondition to making any order is a finding that it is just and equitable to do so.

5. Accordingly, there are three steps to be considered:-

   (1)The Court needs to consider the existing property interests of the parties and to identify those interests;

   (2)The direction must be exercised in accordance with legal principles and not in respect of any assumption that the parties interests should be different from those as determined by common law equity; and

   (3)Section 79(2) cannot be conflated by reference only to matters of contribution in Section 79(4).

LEGAL AND EQUITABLE INTERESTS OF THE PARTIES

1. I am inclined to accept the assets and liabilities of the parties as outlined in the husband’s Trial Affidavit save for the husband’s values attributed to assets he alleges the wife took at separation:-

ASSETS
Sale proceeds from Suburb E property	$28,769
The D Business	$Nil
Husband’s Japanese motor vehicle	$Nil
Wife’s German motor vehicle	$Nil
Cash at settlement retained by wife	$unknown
Jewellery at settlement retained by wife	$unknown
Furniture, go karts and other chattels	$30,000
TOTAL	$58,769
LIABILITIES
D Business (ATO – BAS liability)	$18,000
S Business	$5,711
R Business	$73,711
T Pty Ltd (GST with respect to sale of business)	$50,000
U Pty Ltd (franchise shop)	$7,500
V Pty Ltd (franchise)	$5,000
Bank SA credit card	$16,577
Commonwealth Bank credit card	$27,327
NAB Visa card	$5,530
Bank of Melbourne credit card	$3,382
ANZ Bank Mastercard 1	$9,234
ANZ Bank Mastercard 2	$6,876
W Lawyers (business legal costs)	$80,000
X Lawyers (business legal costs)	$80,000
M Accountants (business expense)	$15,000
Mr Y (architect)	$25,900
Loan to estate of Ms Z	$103,463
Loan to Ms AA (Suburb BB Unit)	$50,000
TOTAL	$583,211
NET TOTAL	-$524,442

1. The only asset capable of holding significant value is the D Business.  On 27 June 2014, I ordered that the parties jointly engage an accounting firm to assess the financial viability of the D Business and consider whether B Pty Ltd and C Pty Ltd were currently solvent.

2. That report was prepared by Mr CC and annexed to his affidavit sworn 20 October 2014.  I refer to that report for the purposes of understanding the effect of the orders sought by the husband.  Paragraph 2 of the Report identifies the D Business structure; Appendix 2 is a corporate structure diagram of the Mitzou-Roubanis Group. 

3. The corporate structure diagram identify that the asset holdings in the unit trust and the KUTs revert in ownership to the husband and wife in their capacity as trustees of the family trust.  Accordingly, in circumstances where there is no substantive transfer of assets in the orders sought, there is a vesting of shares in each of the unit trusts, held by the parties on trust via the family trust.  I accept that this would simply require the wife to transfer her trustee interest in the unit trust and the KUT to the husband.

4. In regards to the wife taking assets at separation, I note that the husband raises no evidence that would help me understand the parameters of the dispute, including classifications and valuations of such assets. 

5. The purpose of any property orders made by me is to determine any claims the parties may have against one another on a final basis.  For these reasons, I am not inclined to leave the door open for the husband to bring any further action against the wife in respect to assets taken at separation.  I note that such assets would have been taken in 2014 and, throughout these proceedings, there has been no evidence brought to my attention that would warrant me finding; the valuation of such assets, the existence of such assets and that such assets are in the wife’s possession.

CONCLUSION

1. I find it is significant to me that the husband’s evidence is unchallenged.  It seems to me appropriate to make the orders sought by the husband when considering the parties’ liabilities far outweigh the assets. 

2. I find and accept the husband’s account with respect to the background of the relationship as to employment and contributions.

3. I am satisfied that the husband was the primary operator of the D Business. 

4. Given the substantial liabilities of the parties, I am not much concerned with the assets brought into the relationship by either party but do accept that the husband made a greater contribution to growth of the parties’ wealth throughout the relationship.  The wife made a significant contribution as a homemaker.

   With respect to the wife’s request to retain her superannuation entitlements, whilst I am not satisfied that the wife has supported her case, I do accept the representations of the husband’s counsel that the husband will not pursue this matter.

5. I have already dealt with and dismissed the wife’s application for ongoing payment of $300 per week.

I certify that the preceding forty one (41) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 15 May 2017.

Associate: 

Date:  12 May 2017