FAMILY COURT OF AUSTRALIA
Zubcic & Zubcic (No. 2) [2020] FamCA 1024
File number(s): SYC 6290 of 2013 Judgment of: REES J Date of judgment: 9 December 2020 Catchwords: FAMILY LAW – DISCHARGE OF TRUSTEES – Where trustees are permitted to retire once the funds under their control have been distributed – Where the assertion by the husband and the wife that the quantum of the trustees’ expenses and remuneration was too high does not constitute evidence capable of demonstrating that the charges are unreasonable – Where the Trustees would be justified in retaining fund under their control to be held as security for the costs of any proceedings brought – Where the Trustees may retain these funds for four months. Legislation: Family Law Act 1975 (Cth) s 79
Trustee Act 1925 (NSW) s 63
Cases cited: Adsett v Berlouis (1992) 109 ALR 100
Mullane & Mullane (1983) 158 CLR 436
Slapp & Slapp (1989) FLC 92-022
Number of paragraphs: 96 Date of last submissions: 25 November 2020 Date of hearing: 2 December 2020 Place: Sydney Counsel for the Applicants: Mr Golledge SC with Mr Parrish Solicitor for the Applicants: Roser Lawyers First Respondent: In Person Second Respondent: In Person Solicitor for the Third Respondent: Australian Government Solicitor Solicitor for the Fourth Respondent: John de Mestre & Co Pty Ltd ORDERS
SYC 6290 of 2013 BETWEEN: MR WILLIAMS
First Applicant
MR XAVIER
Second Applicant
AND: MS ZUBCIC
First Respondent
MR ZUBCIC
Second Respondent
COMMISSIONER OF TAXATION
Third Respondent
(and another named in the Schedule)
ORDER MADE BY:
REES J
DATE OF ORDER:
9 DECEMBER 2020
THE COURT ORDERS:
1.That upon distribution by the First and Second Applicants (“the Trustees”) of all of the funds under their control in accordance with the Orders made on 6 March 2018, as varied by the Full Court on 9 October 2019, the Trustees be discharged from office.
2.That pursuant to section 63 of the Trustee Act 1925 (NSW), the Trustees would be justified in retaining, from the funds under their control, the sum of $200,000 (“the Retained Amount”), to be held as security for the costs of any proceedings brought against them as referred to in Order 3 below.
3.That the Trustees be released from any and all claims whatsoever and howsoever arising from their appointment made pursuant to the Orders of 6 March 2018, unless such claim is instituted within four months of the distribution paid to the wife and the husband pursuant to Order 1, or within such longer period as the Court may on application made before the expiry of that period allow.
4.That if no proceedings as referred to in Order 3 above are commenced within the period allowed, the Retained Amount shall be distributed by the Trustees in accordance with the Orders made by the Full Court on 9 October 2019.
5.That there be no order as to costs as to the Application in a Case filed by the Trustees, or the Responses to the Application in a Case…
Continue reading Zubcic & Zubcic (No. 2)
Sign in free to access the full text
- AGLC
- Zubcic & Zubcic (No. 2) [2020] FamCA 1024
- Case
- [2020] FamCA 1024
- Decision Date
CaseChat Overview and Summary
The court was required to determine whether the trustees were justified in retaining funds as security for potential legal proceedings against them, and the conditions under which they would be discharged from their duties. A key issue was whether the husband and wife had provided sufficient evidence to demonstrate that the trustees' claimed expenses and remuneration were unreasonable, thereby justifying a challenge to their charges.
Rees J reasoned that the trustees are permitted to retire once the funds under their control have been distributed. The court found that the mere assertion by the husband and wife that the trustees' expenses and remuneration were too high did not constitute evidence capable of demonstrating that the charges were unreasonable. The trustees relied on an affidavit detailing their expenses and remuneration, supported by extensive documentation. The onus was on the husband and wife to rebut this evidence of reasonableness, which they failed to do by adducing expert evidence or pointing to specific unreasonable charges. Consequently, the court held that the trustees would be justified in retaining a portion of the funds as security for the costs of any proceedings brought against them.
The court ordered that upon distribution of all funds, the trustees be discharged from office. The trustees were authorised to retain $200,000 as security for costs, and would be released from all claims unless proceedings were instituted within four months of the distribution. If no proceedings were commenced within that period, the retained amount was to be distributed according to prior court orders. The responses filed by the wife and husband seeking different outcomes were dismissed. The court also made specific orders regarding payments to the husband's former solicitors and to the Commissioner for Taxation, as well as authorising payments to Mr B Zubcic and the wife.
Orders
Orders of the court
THE COURT ORDERS:
1. That upon distribution by the First and Second Applicants (“the Trustees”) of all of the funds under their control in accordance with the Orders made on 6 March 2018, as varied by the Full Court on 9 October 2019, the Trustees be discharged from office.
2. That pursuant to section 63 of the Trustee Act 1925 (NSW), the Trustees would be justified in retaining, from the funds under their control, the sum of $200,000 (“the Retained Amount”), to be held as security for the costs of any proceedings brought against them as referred to in Order 3 below.
3. That the Trustees be released from any and all claims whatsoever and howsoever arising from their appointment made pursuant to the Orders of 6 March 2018, unless such claim is instituted within four months of the distribution paid to the wife and the husband pursuant to Order 1, or within such longer period as the Court may on application made before the expiry of that period allow.
4. That if no proceedings as referred to in Order 3 above are commenced within the period allowed, the Retained Amount shall be distributed by the Trustees in accordance with the Orders made by the Full Court on 9 October 2019.
5. That there be no order as to costs as to the Application in a Case filed by the Trustees, or the Responses to the Application in a Case filed by the First and Second Respondents, but the Trustees’ reasonable legal costs of these proceedings shall form part of the Trustees’ costs pursuant to paragraph 9.1 of the Orders made on 6 March 2018 and varied by the Full Court on 9 October 2019.
6. That the response of the wife filed 7 August 2020 is dismissed.
7. That the response of the husband filed 14 October 2020 is dismissed.
8. That from the amount otherwise payable to the husband pursuant to Order 1, the Trustees shall pay to the trust account of John de Mestre & Co Pty Limited the sum of $426,090.79 to be held pending the determination of the quantum of the fees outstanding to the husband’s former solicitors (“the Fourth Respondent”).
THE COURT NOTES:
9. That the Trustees will pay to the Commissioner for Taxation such sums as have been assessed against the wife and the husband by way of Capital Gains Tax together with any interest and charges attaching to such assessment, noting that the assessment of the tax liability of the wife is $25,944.20 and the assessment of the tax liability of the husband is $170,866.40.
10. That the Trustees are authorised to make the following payments:
i. the sum of $83,936.25 to Mr B Zubcic pursuant to the Orders dated 13 March 2020, such sum to be paid from the amount otherwise payable to the wife pursuant to Order 1; and
ii. the sum of $16,948.33 to the wife pursuant to the Orders dated 25 September 2018, such sum to be paid from the amount otherwise payable to the husband pursuant to Order 1.
Note: The form of the order is subject to the entry in the Court’s records.
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 17.02 Family Law Rules 2004 (Cth).
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).
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
The orders will provide for the trustees to retain the sum of $200,000 and to be released if no claim is filed within four months of the date of these orders.The trustees’ remuneration Both the wife and the husband challenge the trustees’ remuneration. Each asserts that the charges are excessive. Senior counsel for the trustees submitted:The Regime specifically authorised the Trustees to be paid their costs in priority to all other distributions although it did not specify how those costs were to be calculated. In the absence of some different formula, the Trustees’ position is that they are entitled to be paid a reasonable amount for work done and are entitled to be reimbursed for expenses reasonably incurred.(footnotes omitted) That proposition arises from a long line of authority summarised in the decision of the Full Court of the Federal Court in Adsett v Berlouis (1992) 109 ALR 100. Neither the wife nor the husband, in either their written or oral submissions, sought to distinguish between the expenses charged by the trustees and their remuneration. In relation to the expenses incurred by the trustees, the wife, in her oral submissions, referred to two instances of the trustees’ claimed expenses where she asserted that the solicitors instructed by the trustees had charged excessively. In one instance, in relation to their response to a letter from a third party and in the other in their having charged for the preparation of invoices. The husband did not refer to any other specific instance which, he asserted, constituted an unreasonable charge. Neither the husband nor the wife pointed to any item of remuneration claimed by the trustees as being unreasonable. Neither the wife nor the husband adduced any evidence from any expert in the area of trustees’ remuneration to suggest that the expenses of the trustees or the remuneration of the trustees was not reasonable. The trustees relied on an affidavit of Mr Williams sworn on 3 November 2020 in which, at paragraph 93 to 107, he set out the evidence upon which they relied in support of their contention that their expenses and their remuneration were reasonably incurred. Annexed to that affidavit were some 216 pages of documents related to their expenses and their remuneration. Once the wife and the husband disputed the reasonableness of the trustees’ charges, the onus was upon them to rebut the evidence of reasonableness upon which the trustees relied. The mere assertion that the quantum of the trustees’ expenses and remuneration is too high does not constitute evidence capable of demonstrating that the charges are unreasonable. Order 3 of the wife’s response filed 7 August 2020 and Orders 3, 5 and 8 of the husband’s response filed 15 October 2020 will be dismissed.The wife’s response In so far as, in Order 2 of the wife’s response, she seeks an interim distribution, that application is otiose since the trustees are now in a position to distribute the whole of the funds.The husband’s response