Zubcic and Zubcic and Anor

[2017] FamCA 277

FAMILY COURT OF AUSTRALIA

ZUBCIC & ZUBCIC AND ANOR [2017] FamCA 277

FAMILY LAW – PROPERTY – INTERIM ORDERS – Application by the husband for interim property settlement of $500,000 – Where $250,000 has already been disbursed to the husband from the asset pool of the husband and wife – Where the husband has not provided evidence of his living expenses – Where the husband requires funds to pay his legal fees and costs of the upcoming trial – Where orders are made for the husband to receive $300,000 by way of interim property settlement, with no less than $270,000 to be retained by the husband’s lawyers for the preparation of the matter for hearing.

Strahan & Strahan (2011) FLC 93-466

APPLICANT: Mr Zubcic

RESPONDENT: Ms Zubcic

INTERVENOR: Commissioner of Taxation

FILE NUMBER: SYC 6290 of 2013

DATE DELIVERED: 3 May 2017

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 26 April 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Sansom SC

SOLICITOR FOR THE APPLICANT: Watts McCray Lawyers

COUNSEL FOR THE RESPONDENT: Mr Connor

COUNSEL FOR THE 5^TH RESPONDENT: Mr Cosgrove

SOLICITOR FOR THE 5^TH RESPONDENT: Commissioner of Taxation

Orders

IT IS ORDERED

1. That the husband and the wife do all things necessary to effect the payment, by way of interim property settlement to the husband, from the controlled monies account held by Abrams Turner Whelan, Solicitors, of the sum of $300,000, to the trust account of the husband’s solicitors, Watts McCray.

2. That of the sum of $300,000, not less than $270,000 be retained by Watts McCray and applied to the costs of the preparation of the matter for trial.

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 Zubcic & Zubcic 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

FILE NUMBER:

Mr Zubcic

Applicant

And

Ms Zubcic

Respondent

REASONS FOR JUDGMENT

1. The application before the Court is a second application by the husband, Mr Zubcic, for interim property settlement. The application is opposed by the wife, Ms Zubcic.

2. The husband seeks the sum of $500,000.

3. The husband’s claim has been couched in the alternate. He seeks to have the payment categorised at trial either as interim property settlement or as spousal maintenance.

4. In order to determine the claim, it is necessary to know what principles are to be applied.

5. Because, as is explained later, there is no evidence before the Court of the husband’s reasonable needs, it is not possible to determine any application for a payment of spousal maintenance. Accordingly, I will proceed on the basis that the husband’s claim is for interim property settlement.

6. The Commissioner for Taxation, who is a party to the proceedings, does not oppose or support the application.

7. The husband’s first application for interim property settlement was determined by judgment delivered on 24 August 2016. By orders made that day, the sum of $200,000 was paid to the husband from a controlled monies account which holds the share of the husband and the wife in the proceeds of sale of a property at Suburb C. This sum was in addition to an earlier distribution of $50,000 to each the husband and the wife.

8. Thus, the wife argues that the husband, having received and spent $250,000, has spent the whole of any likely entitlement to property settlement and any further allocation of funds to the husband will not be able to be recouped as it will have been spent.

9. For the purpose of this application, a draft balance sheet was tendered in the wife’s case. It is the wife’s case that the net asset pool is some $3,382,723.

10. I propose to ignore, for the purpose of this application, the proceeds of sale of a property at Suburb L which is the subject of a claim by Mr B Zubcic, the husband’s father, and the property at Suburb R which has been purchased by the wife’s parents on trust for her. I will also ignore chattels.

11. The husband and the wife therefore have the following assets and liabilities:

    B Street property  $4,000,000

    Controlled monies account  $3,611,478

    Total assets  $7,611,478

12. They have a tax liability which I estimate at $1,850,000.

13. In addition, the wife asserts that they have other debts. Specifically the wife asserts that she owes her parents $775,200 which she has borrowed for legal costs. In accordance with established principle, that debt is not a joint debt of the husband and the wife and would not be included as a liability for present purposes. The wife asserts that the husband and the wife have a joint liability for Capital Gains Tax arising from the sale of the Suburb C property. She estimates that the amount owed is $1,100,000 but there is no evidence to support that estimate which must be called into question when it is agreed that the Suburb C property was the husband’s home for six or seven years.

14. The husband has various creditors, including a debt for legal fees, but there is no evidence that those debts are debts referable to the marriage and they would not be included as liabilities for the purpose of calculating the asset pool in the final determination.

15. Accepting, for the purpose of this application, that the wife’s estimate of the net asset pool is correct, it is her assertion that she will receive the whole amount.

16. The wife was given the opportunity to indicate to the Court what evidence she relied upon in making that assertion. She relied upon an affidavit sworn by her on 17 August 2016 wherein she deposed that the husband, during the period from 14 September 2009 and 14 July 2015, received $759,178. For most of that period, the husband and the wife were living together. They separated, according to the wife, on 1 August 2013. The onus will be upon the wife to establish that the husband received those funds and that he spent the whole of the funds on purposes unconnected with the marriage, in circumstances where the business was operated, the wife asserts, solely by the husband, and was the major source of financial support for the family.

17. She also relied on specified paragraphs of an affidavit sworn by her on 21 July 2016, where she deposed that she has borne the burden of negotiating with creditors of the business formerly run by the husband and that she does not accept that the husband has made full disclosure.

18. The respective merits of the claims of the husband and the wife were dealt with in the Reasons for Judgment published on 24 August 2016. For the reasons stated there, I do not accept that, even if the wife establishes her claim in relation to the $759,178, she will receive the whole of the net assets.

19. In August 2016, senior counsel for the husband conceded that the wife’s claim, at its highest, may be for 70 per cent of the net assets. Nothing in the material upon which the wife relied in these proceedings suggests that the wife is likely to have a greater entitlement. Of the asset pool contended by the wife, 30 per cent is a little more than $1,100,000.

20. The husband relied upon an affidavit sworn by him on 24 February 2017, a Financial Statement and an affidavit of an accountant whom he seeks to engage to represent him in respect of issues with the Australian Taxation Office, in particular the assessment of tax owed. The costs of the accountant are estimated to be $50,000 and he requires payment to be held in the trust account of the husband’s solicitor.

21. The husband deposed that he has spent the whole of the funds paid to him in August, but only $80,000 of that amount was used to pay his lawyers. He deposed that he is unable to secure a rental property in Australia and that he has been offered accommodation in the Asia where he will live until these proceedings are finalised. The husband gave no evidence about his costs of living or necessary expenses for his support.

22. The matter is listed for final hearing in November 2017.

23. The husband’s evidence as to his medical condition and need for treatment is challenged by the wife. It is not possible to determine that dispute. In any event, I am conscious that part of the earlier interim property settlement was used by the husband to pay for medical treatment in Asia of the nature he now proposes to undergo in Australia. I do not accept, on the evidence available, that it is necessary for the husband to spend almost $64,000 on dental treatment.

24. There is also a significant dispute about the husband’s asserted use of the money he received in 2016. The wife challenges his assertion that $15,000 of the funds in cash was stolen from him. She disputes various payments asserted to have been made by him and queries why monies said to have been a “Security Lodgement” of $25,000 were not returned to the husband. Those also are matters that cannot be resolved here.

25. The principles to be applied in determining this application are set out in the decision of the Full Court in Strahan & Strahan (2011) FLC 93-466 (“Strahan”). The overarching consideration is the interests of justice and it is not necessary to demonstrate that there are compelling circumstances before the Court exercises its power to make an order for interim property settlement.

26. As in Strahan, this is a matter where the interests of justice, particularly the interests of the Court in having the husband’s case properly presented, are significant. This is a complex matter, involving third parties and a dispute about how marital assets have been used and how responsibility for paying substantial liabilities should be allocated.

27. In the present case, the property of the marriage is found in the controlled monies account and in the jointly owned property at B Street. The wife, who has been appointed trustee for sale of the property, has not sold it. She does not consent to the husband having the use of any money to fund his legal fees.

28. The wife, on the other hand, has spent almost $700,000 on legal fees, most of that amount borrowed from her parents. In addition, the wife’s parents have purchased a property which they hold on trust for the wife for $1,300,000.

29. I propose to make an order that the husband receive $300,000 by way of interim property settlement, to be paid into his solicitors’ trust account. Of this sum, not less than $270,000 will be retained by the husband’s lawyers for the preparation of the matter for hearing.

30. The husband’s lawyers may choose to retain the accountant to assist in that preparation. However, the tax debt has been quantified for the purpose of the substantive proceedings. The purpose of retaining the accountant would seem to be to attempt to reduce the debt. That attempt may or may not be successful. It may be that, regardless of the intervention of the accountant, the Commissioner for Taxation will, as his representatives have given notice, use extra-curial means to enforce the liability by garnishee directed to the controlled monies account.   

31. I consider this to be a cautious outcome, directed to ensuring that the husband has legal representation at trial and the Court’s resources are not wasted by his being unrepresented.

I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 3 May 2017.

Associate: 

Date:  03/05/2017