Zubcic and Zubcic & Ors

[2016] FamCA 761

FAMILY COURT OF AUSTRALIA

ZUBCIC & ZUBCIC AND ORS [2016] FamCA 761

FAMILY LAW – PROPERTY – INTERIM ORDERS – Application by husband for interim property orders – Where the Suburb C property owned by the husband, the wife, and the wife’s parents is under contract for sale – Where husband seeks an interim settlement of one quarter of the deposit paid for the Suburb C property by the purchasers as well as $350,000 from the proceeds of sale – Where the deposit of the purchase price has been paid into the Supreme Court and the purchasers agree to release some funds to the husband, the wife, and the wife’s parents –Where the wife opposes the interim orders sought by the husband – Determination of the possible entitlements of the parties at final hearing – Where it is within the interests of justice to release funds to the husband to pursue his case – Orders made for the husband to receive $200,000 from the proceeds of sale of the Suburb C property.

FAMILY LAW – PROPERTY – INTERIM PROCEEDINGS – Where the wife’s parents have been added to the substantive proceedings as 3^rd and 4^th respondents – Where the 3^rd and 4^th respondents claim that they have a beneficial interest to half of the proceeds of sale of the Suburb C property – Where orders were made distributing some of the proceeds of sale to the husband – Where the application as to beneficial ownership will be determined at a further hearing.

Family Law Act 1975 (Cth), s 75(2)

Kennon & Kennon (1997) FLC 92-757

APPLICANT: Ms Zubcic

RESPONDENT:	Mr Zubcic
2nd RESPONDENT:	Mr B Zubcic
3rd and 4th RESPONDENTS:	Mr and Ms Gomes
5th RESPONDENT:	Commissioner Of Taxation

FILE NUMBER: SYC 6290 of 2013

DATE DELIVERED: 24 August 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 24 August 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Connor

SOLICITOR FOR THE APPLICANT: Argyle Lawyers

COUNSEL FOR THE FIRST RESPONDENT: Mr Sansom

SOLICITOR FOR THE FIRST RESPONDENT:	Watts McCray Lawyers
THE SECOND RESPONDENT:	In Person
COUNSEL FOR THE THIRD AND FOURTH RESPONDENTS:	Mr Schonell

SOLICITOR FOR THE THIRD AND FOURTH RESPONDENTS:	Abrams Turner Whelan Family Lawyers
FIFTH RESPONDENT:	No Appearance

Orders

IT IS ORDERED

1. That within 28 days the husband file and serve a Statement of Claim setting out his claim against Mr and Ms Gomes (“the 3^rd and 4^th respondents”), and any evidence upon which he seeks to rely in relation to that claim.

2. That by 4pm on 12 October 2016, the wife file and serve all affidavit material upon which she seeks to rely in relation to the claim of the 3^rd and 4^th respondents.

3. That the issue of the beneficial interest of the respective parties in the proceeds of sale of the property at H Street, Suburb C be listed for hearing for two days commencing 26 October 2016.

4. That by 4pm on 6 November 2016 Mr B Zubcic (the 2^nd respondent”), file and serve an Application in a Case setting out the orders he seeks and any affidavit evidence upon which he seeks to rely.

5. That the husband, wife and 3^rd and 4^th respondents forthwith and within 48 hours direct the purchasers of the property at H Street, Suburb C in the State of New South Wales to pay the balance of the purchase price as follows:

   (a)To N Lawyers being such sum of money as is necessary to meet the cost of the purchasers pursuant to order 4 made 10 September 2015 and order 3 made 15 June 2016 by Young AJA in the Supreme Court of New South Wales proceedings no … NSW … (“the orders”);

   (b)To State Debt Recovery in discharge of Charge No … registered over the Suburb C property;

   (c)       In payment of any necessary adjustments on settlement; and

   (d)The balance of the proceeds of the purchase price be paid into the Supreme Court of New South Wales.

6. That upon the settlement of the sale of the Suburb C property and subject to the discharge of the charge arising by the orders of the husband, wife and 3^rd and 4^th respondents cause the funds held by the Supreme Court of New South Wales to be paid as follows:

   (a)As to the husband in the sum of $200,000 by way of interim property settlement; and

   (b)As to the balance into a controlled monies account to be operated by the solicitors for the 3^rd and 4^th respondents.

7. That it be noted that one of the issues in the proceedings to be determined by the Trial Judge is which of the husband, wife and / or 3^rd and 4^th respondents is to be held responsible for the liability arising pursuant to order 5(a) hereof.

8. That order 6 hereof is stayed for a period of 14 days from the date of settlement subject to the purchasers and N Lawyers being given an opportunity to be heard.

9. That the 3^rd and 4^th respondents forthwith serve a copy of these orders on N Lawyers and the purchaser.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Zubcic & Zubcic and Ors 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 6290 of 2013

Ms Zubcic

Applicant

And

Mr Zubcic

Respondent

And

Mr B Zubcic

2^nd Respondent

And

Mr And Ms Gomes

3^rd and 4^th Respondents

And

Commissioner Of Taxation

5^th Respondent

REASONS FOR JUDGMENT

1. Proceedings for property settlement between Mr Zubcic (“the husband”), and Ms Zubcic (“the wife”), are being prepared for hearing. 

2. In broad terms, they own property at B Street, Suburb C, (“B Street”) which has an agreed value of $4 million for the purpose of this application. B Street is occupied at present by the wife who is the trustee for sale of that property pursuant to orders. No contracts have yet been exchanged. 

3. In addition, they have an interest as registered owners of one half share in a property at H Street, Suburb C, to which I will refer as “Suburb C”, which has been sold for $10 million. The wife’s parents, Mr and Ms Gomes, are registered proprietors of one half share of Suburb C. The sale is awaiting completion on 11 September 2016. The deposit paid by the purchasers has been paid into court in proceedings in the Supreme Court of New South Wales.

4. Orders have been made in the Supreme Court of New South Wales, those orders being exhibits 1 and 2 in these proceedings, for the balance of the purchase money to be paid into court.

5. The costs of the purchasers, in relation to the Supreme Court proceedings, will be paid by some or all of the parties to these proceedings. How those costs are apportioned may have to be determined in the proceedings before me. The wife and Mr and Ms Gomes will submit that the husband should pay the whole of those costs.

6. In addition to the husband and the wife, three other parties have filed applications and have been joined in the proceedings. 

7. The second respondent is Mr B Zubcic, the father of the husband.  He is unrepresented and does not speak English. His claim was articulated, with the assistance of an interpreter, for the first time in court on 18 August 2016. Broadly, he claims that when the husband and the wife purchased Suburb C, he advanced $150,000 to them which was applied towards the purchase.  The $150,000 came from the sale of a property in Suburb O owned by Mr B Zubcic, his wife, and the husband. Mr B Zubcic claims that there was an agreement between himself and the husband and the wife that, in consequence of the advance, he would become entitled to three acres of Suburb C.

8. Mr B Zubcic claims that he negotiated to sell his three acres to the husband, or the husband and the wife, for $300,000, which money was used to buy a house at Suburb L where he then lived. Suburb L has been sold and the money is held pending determination of these proceedings. Mr B Zubcic will be required to file and serve an application setting out the orders he seeks and his evidence, including supporting documents, by 4 pm on 6 November 2016. 

9. In relation to the claim of Mr B Zubcic, the wife denies that $150,000 was advanced by him towards the purchase of Suburb C. She asserts that the husband was a part owner of the property at Suburb O and any money received by him from the sale of that property was his money. She asserts that Suburb L was purchased by the husband, using a line of credit for the whole of the purchase price, and that the proceeds of the sale of Suburb L are the property of the husband and the wife.

10. In relation to the claim of Mr B Zubcic, the husband agrees that there was an advance from Mr B Zubcic of $150,000, but I have not been told what his attitude is to the balance of the claim. 

11. Mr and Ms Gomes claim to be entitled to one half of the proceeds of sale of Suburb C. They assert that they provided the whole of the purchase price, lending half of the purchase price to the husband and the wife, who subsequently repaid them. They have filed an affidavit, annexing the relevant documents in support of their case. 

12. The wife agrees that Mr and Ms Gomes are entitled to half of the purchase price of Suburb C. The husband asserts that Mr and Ms Gomes have no entitlement to Suburb C and that Suburb C is beneficially owned by the husband and the wife.

13. The Commissioner for Taxation (“the Commissioner”) has been joined as a party. As at 18 August 2016, counsel for the Commissioner estimated that the husband and the wife owe $1.78 million in unpaid tax, penalties and interest. That liability arises in broad terms from the operation of a business which the Commissioner contends was operated in partnership by the husband and the wife.

14. The wife denies that she was a partner in the business and it is her case that, insofar as the tax liability relates to the business, the tax is the responsibility of the husband. 

15. Against that factual framework, the interlocutory applications before the Court are:

    ·    The husband’s application for interim property settlement.

    ·    The wife’s application for particulars in relation to the husband’s claim that he and she are beneficially entitled to the whole of the proceeds of sale of Suburb C, and in relation to the provision of funds for the purchase of Suburb L. 

    ·    The application of Mr and Ms Gomes for the issue of the beneficial ownership of Suburb C to be heard as a discrete issue.

    ·    The application made by senior counsel for Mr and Ms Gomes by leave today, in relation to the net proceeds of sale of Suburb C, to which reference is made later in these reasons.

The applications of Mr and Ms Gomes

1. On previous occasions, counsel then appearing for the husband has told the Court that no claim is made by the husband against the interests of Mr and Ms Gomes in Suburb C. That position has now changed. Senior counsel for Mr and Ms Gomes told the Court that the affidavit which has been filed on their behalf annexes all the documents relevant to their claim to be beneficially entitled to their interest in Suburb C. The basis of the husband’s claim that they are not so entitled has never been fully enunciated.

2. Mr B Zubcic raises no claim against the interests of Mr and Ms Gomes in Suburb C. The determination of that issue does not affect him.

3. The Commissioner does not wish to be heard in relation to this claim. It is a discrete issue and can be resolved as between the husband, the wife, and Mr and Ms Gomes.

4. It is agreed that it is appropriate that the claim be heard discretely and the matter will be allocated dates for hearing in October. The husband will be required to file and serve a Statement of Claim setting out the basis of his claim, together with supporting documents within 28 days.

5. Senior counsel for Mr and Ms Gomes was granted leave to make an application for orders which would provide for the balance of the proceeds of the sale of Suburb C, after an amount was set aside for the payment of the costs of the purchaser, to be held in a controlled moneys account pending determination of the substantive issues, including a determination as to who would bear the costs of the Supreme Court proceedings. 

6. It is abundantly clear that the balance of the proceeds of the sale of Suburb C, after payment of the costs of the purchaser, will have to be held pending my determination of their beneficial ownership, and I propose to make orders as sought by senior counsel for Mr and Ms Gomes.

The wife’s application for particulars

1. The filing by the husband of the Statement of Claim referred to above will answer most of the wife’s application. In addition, the husband will be required to provide particulars in relation to the source of funds used for the purchase of Suburb L. 

The husband’s application for interim property settlement

1. The husband asks the Court to make an order for the payment to him of one quarter of the deposit for the purchase of Suburb C, and further sum of $350,000 from the balance of the proceeds of sale. 

2. He asserts that he cannot afford to move out of Suburb C and give vacant possession on settlement unless he is put in funds. It is agreed that it is in the interests of all of the parties for the settlement of the sale of Suburb C to occur.

3. The Commissioner does not wish to be heard in relation to the claim for interim property settlement. The interests of Mr B Zubcic are not affected by the claim. 

4. It is immediately apparent that there is an impediment to the making of the first order sought by the husband. The deposit money has been paid into the Supreme Court. There is no obligation upon the purchaser to agree to release out any part of the deposit prior to settlement, which is to occur on 11 September 2016.

5. In the course of the day when the matter was listed before me on 18 August 2016, the solicitors for the purchaser indicated that they would not consent to the release of funds, as sought by the husband, from the deposit. After the luncheon adjournment on 18 August 2016, senior counsel for the husband applied for adjournment of his application to allow negotiations. The solicitors for the purchaser indicated that they would seek instructions for the release of a modest sum to permit the husband to rent other premises and pay moving costs. The matter was then stood over to 24 August 2016 and the costs of the wife and Mr and Ms Gomes were reserved.

6. When the matter resumed on 24 August 2016, senior counsel for the husband told the Court that an agreement had been reached with the solicitors for the purchasers of Suburb C for the release of $50,000 from the deposit held in the Supreme Court of New South Wales to each of the husband, the wife and Mr and Ms Gomes.

7. The husband wished to proceed with his application for interim property settlement by way of the payment of $350,000 to him from the proceeds of sale of Suburb C.

8. The wife opposed the application for interim property settlement. Put simply, it is her case that when this matter is finally determined, she will receive the totality of the property of the parties and the husband will receive nothing. Since any funds paid to the husband by way of interim property settlement will have been dissipated by him on relocation costs and legal costs, the sums will not be recoverable and therefore, in accordance with well-established principles, no order should be made.

9. A draft balance sheet was tendered. For the purpose of argument, senior counsel for the husband dealt with the proceeds of sale of Suburb C on the assumption that Mr and Ms Gomes are entitled to half. Senior counsel for the husband submitted that the assets and liabilities of the marriage for the purpose of this application were as follows: 

   ASSETS

   B Street, valued at   $4,000,000

   Suburb C, valued at   $5,065,000 

   Total Assets  $9,065,000.

   LIABILITIES

   Tax   $1,780,000

   Mortgage   $1,000,000

   Capital gains on Suburb C                $1,100,000

   Sundry liabilities   $1,370,000 

   Total Liabilities  $5,250,000.

10. The claimed sundry liabilities, which have for the purpose of this application been included, include $673,200 borrowed by the wife from her parents for legal fees and living expenses, the sum of $141,151 for sundry legal fees, and the sum of $63,000 for various credit cards and other similar debts.

11. On a final determination, some or all of those liabilities may be disregarded or taken into account pursuant to section 75(2). They are included for the purpose of this application.

12. I have excluded the claim of Mr B Zubcic, and the proceeds of sale of Suburb L to which it is confined. If Mr B Zubcic is unsuccessful, the proceeds of sale of Suburb L will also be the assets of the husband and the wife. Thus, for the purpose of this application, I am asked to assume that the parties have net assets of approximately $3,815,000.

13. The husband conceded, again for the purpose of this application, that the wife’s claim, taken at its highest, might result in her being awarded 70 per cent of the net assets. That would leave 30 per cent of the net assets, or approximately $1,144,500, available to the husband.

14. I accept that it is necessary to be conservative in any assessment of the husband’s entitlement but it is difficult to accept, on the wife’s case as enunciated by counsel, that she will receive 100 per cent of the assets.

15. The wife agitates a claim for an adjustment of contribution pursuant to Kennon & Kennon (1997) FLC 92-757. That claim is disputed. She has the care of the 17 year old child of the marriage, who is disabled by autism. She claims that the husband has sold the business but not disclosed the purchase price or the amount received, and that he has disposed of their share portfolio and not accounted for the proceeds of the shares.

16. The husband also made contributions during their 22-year marriage. Their share of Suburb C, which was purchased for $600,000, has now sold for $5 million. The increase in the value of that property cannot be attributed solely to the wife. The husband was employed as a public servant for the first years of the marriage until 1994. From 1994 until 2014, a business was operated (the wife asserts by the husband alone) and generated income, and a number of properties were bought and sold.

17. The husband asserts that he has a significant health problem which prevents him from working. That assertion is disputed by the wife and no finding can be made on the evidence available here. I note, however, that annexed to the husband’s affidavit are a number of medical certificates and reports from treating doctors attesting to the need for treatment. The husband is in receipt of a Centrelink benefit. 

18. Taking all of those matters into account, it is unlikely that the husband would not receive at least 10 per cent of the net assets and I propose to make orders for interim property settlement that would be less than that amount.

19. I am conscious of the fact that Mr and Ms Gomes and the purchasers of Suburb C will agitate claims for costs and most likely indemnity costs. However, the interests of justice require that the husband have some funds with which to pursue his case and to put appropriate evidence before the Court. 

20. The orders will provide for the husband to receive the sum of $200,000 from the proceeds of sale of Suburb C. He will then have received $250,000 which I consider to be within the likely final determination of his entitlements.

I certify that the preceding forty-two (42) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 24 August 2016.

Associate: 

Date:  24/8/2016