Falk and Falk

[2020] FamCA 707

FAMILY COURT OF AUSTRALIA

FALK & FALK [2020] FamCA 707

FAMILY LAW – INTERIM PROPERTY – Exclusive occupation – Partial property distribution – Where the wife is using joint funds for her living expenses and rent – Where on the balance of convenience, the husband should have exclusive occupation of the property – Where the husband requires funds for ongoing legal costs – Where the interim property distribution is 2.5 per cent of the net assets for the purpose of this application.

APPLICANT: Ms Falk

RESPONDENT: Mr Falk

FILE NUMBER: SYC 4653 of 2019

DATE DELIVERED: 27 August 2020

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 24 August 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr O'Ryan QC

SOLICITOR FOR THE APPLICANT: Dorter Family Lawyers and Mediators

COUNSEL FOR THE RESPONDENT: Mr Cummings SC

SOLICITOR FOR THE RESPONDENT: The Norton Law Group

Orders

IT IS ORDERED PENDING FURTHER ORDER

1. That the husband be entitled to the sole use and occupation of the property at B Street, Suburb C.

IT IS ORDERED

1. That the wife forthwith cause to be paid to the husband from the funds held by her in banking institutions, the sum of $200,000 by way of interim property settlement.

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 Falk & Falk 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 SYDNEY

FILE NUMBER: SYC 4653 of 2019

Ms Falk

Applicant

And

Mr Falk

Respondent

REASONS FOR JUDGMENT

1. Ms Falk (“the wife”) and Mr Falk (“the husband”) lived together from late 2008, married in late 2010 and separated on 10 April 2019.

2. The proceedings before the Court are competing interim applications in relation to two discreet issues.

3. The wife seeks an order that the husband vacate a property at Suburb C. The husband wishes to remain there.

4. The husband seeks payment of a lump sum by way of interim property settlement. The wife opposes that application.

5. In order to place the competing applications in context, it is necessary to understand some of the background matter and the nature of the issues in dispute in the substantive proceedings.

6. Relevantly, at the commencement of the relationship, the husband owned a property in Suburb D and a property in Suburb E. The wife owned a property in Suburb C where she was living when they met.

7. For most of their relationship, the parties lived overseas, in the UK, Europe and Asia.

8. In 2017, the wife agreed that the husband’s son and his partner could live in her property in Suburb C. The husband and the wife were then living in Country F.

9. The husband and the wife returned to Australia in March 2019. The husband’s son was still in occupation of the Suburb C property. In April 2019, the husband returned to Country F.

10. The wife moved into rented premises.

11. In May 2019, the wife withdrew from bank accounts in joint names $3,500,000 (Country F) and $A400,000 and deposited those funds in accounts in her sole name. She estimates that those funds totalled about one million dollars Australian.

12. The wife contends that there then remained in the joint accounts some $3,070,000 (Country F) and $A25,000 which the husband retained. She deposed this was roughly $600,000 Australian. In addition the husband had other funds in bank accounts and in shares.

13. On 24 May 2019, the wife gave an undertaking that she would preserve $3,500,000 (Country F) pending the determination of the substantive proceedings. At a later time, the parties agreed that the amount to be retained was $2,500,000 (Country F).

14. The wife filed an application for property settlement on 17 July 2019.

15. On 16 August 2019, the wife’s solicitors wrote to the husband’s son requesting vacant possession of the Suburb C property. No rent was being paid to the wife.

16. On 5 November 2019, the wife filed in the Supreme Court of New South Wales an application seeking vacant possession of the Suburb C property. The husband’s then solicitors acted for the husband’s son in relation to those proceedings and it can be inferred that the husband was aware those proceeding had commenced.

17. On 17 January 2020 the husband was admitted to hospital suffering from a serious disease.

18. On 6 February 2020 the husband’s sister was appointed as his guardian in proceedings in the Supreme Court.  On 24 February 2020, orders were made by consent in the Family Court appointing the husband’s sister as his litigation guardian. The litigation guardian terminated the retainer of the husband’s solicitors who by that time had charged him about $500,000. New solicitors were instructed on behalf of the husband.

19. The husband was discharged from hospital on 2 April 2020.

20. Proceedings were commenced in the Supreme Court by the husband against his former solicitors.

21. On 24 April 2020, when there was a mention in the Supreme Court in relation to the proceedings for possession of the Suburb C property, the wife first learned that the husband’s son had moved out of the property and the husband had moved in.

22. On 30 April 2020, the tenant left the husband’s Suburb D property. The property was leased to new tenants on 3 June 2020.

23. On 6 March 2020 the tenant of the Suburb E property left. That property was leased to new tenants on 22 June 2020.

24. On 1 June 2020, the litigation guardian in the Family Court proceedings was discharged.

25. On 6 July 2020 the wife’s solicitors wrote to the husband’s solicitors advising that she sought possession of the Suburb C property and that she wanted to move in.

26. On 30 July 2020, the wife served notice upon the husband of the orders she sought when the matter was listed on 3 August 2020 before the Senior Registrar. Those orders included, inter alia, an order that she have the sole occupation of the Suburb C property.

27. The matter was listed for hearing of the outstanding interim applications on 24 August 2020.

28. For the purpose of these applications, the parties have the following assets and liabilities:

    WIFE

    Suburb C  $1,000,000

    Commonwealth Bank  $984

    $2,500,000 (Country F)  $450,000

    G Bank  $14,000

    H Bank  $185,810

    Vehicle  $21,000

    Contents  $25,000

    Superannuation  $95,062

    Legal fees paid  $269,120

    Total     $2,060,976

    HUSBAND

    Suburb D  $4,200,000

    Suburb E  $800,000

    Bank accounts  $77,608

    Loan to Mr K  $320,000

    Luxury vehicle in The UK  $250,000

    Contents  $20,000

    Artworks  $100,000

    Superannuation  $1,280,700

    Paid legal fees  $501,000

    Total     7,549,308

    Less liabilities

    Funds borrowed to lend to Mr K               $320,971

    Mortgage over Suburb D  $1,194,294

    Loan from Mr K  $4,500

    Loan from Mr J  $42,000

    Total liabilities  $1,561,765

    Total net  $5,987,543

    (Credit card debts have not been included as liabilities)

29. Thus the parties’ net assets, for the purpose of these applications, are $8,048,519.

30. The wife seeks an equal division of the net assets such that each would receive, on current values, $4,024,260. She wishes to retain Suburb C.

31. The husband seeks a division in his favour of 80 per cent such that he would receive $6,438,815.

32. It was not contended before me that either party was likely to obtain paid employment.

OCCUPATION OF SUBURB C

1. The wife is currently living in rented accommodation. She pays $650 per week rent. She has also been paying the strata fees and outgoings on the Suburb C property.

2. The wife deposed that her lease is due for renewal at the end of August and that she does not wish to renew. She wants to return to live at Suburb C which, she says, has “significant sentimental value” to her. She does not depose that she is unable to renew her lease or remain in her present accommodation.

3. The husband does not have any alternate accommodation available.

4. I do not accept the submission made on behalf of the wife that the husband was on notice, by her commencing proceedings for vacant possession of the Suburb C property, that she wanted to live there.

5. I was not made aware of any correspondence directed to the husband, advising him that the wife wanted to live in Suburb C, before 6 July 2020.

6. By that time, not having been put on notice of the wife’s intentions, the husband had leased out the two properties which had hitherto been available to him.

7. There appears to be no doubt that the husband has spent large amounts of money since the parties separated. The wife contends that the amount he has spent exceeds $1 million. However, there also appears to be no doubt that none of those funds are immediately available to him. More will be said about those funds in connection with the husband’s application for interim property settlement.

8. The husband deposed that the reasonable rental value of the Suburb C property is $725 per week. On behalf of the wife, it was submitted that he has a net income from rent of $1,200 per week and therefore could afford to rent commercially.

9. If the husband were to pay the same rent as the wife, he would have $550  per  week to live from. He estimates his reasonable expenses, excluding rent, to be $1,485 per week. The wife estimates her reasonable needs to be $2,000  per week including rent or $1,350 excluding rent. It could not therefore be argued that the husband’s estimate of his reasonable living expenses is unreasonable.

10. It is to be remembered that the wife is paying her expenses from joint savings, not from income.

11. The husband does not have sufficient income to rent accommodation and maintain a reasonable standard of living until the substantive hearing has been completed.

12. The balance of convenience favours the husband’s remaining in the Suburb C property.

13. In the event that, at trial, an adjustment is made to compensate the wife for the fact that she has paid rent and he has not, there is ample property from which that adjustment can be made.

INTERIM PROPERTY SETTLEMENT

1. The wife contends that the husband has not made a proper full and frank disclosure of the funds which he has spent. She is correct. However, the proceedings are still at an interim stage and that matter may be rectified.

2. The wife claims that the husband has wasted assets.  That is a matter which will be determined at trial.

3. If the wife is correct, some $1 million will be taken into account as having been received and spent by the husband from joint funds. Presumably, that has been factored in to the wife’s present position that she should receive half of what remains of the joint property.

4. The husband does not have sufficient funds to pay his ongoing legal costs which are estimated to be in the range of $145,000 to $255,000.

5. I note that the estimate provided by the wife of her future legal costs exceeds that sum and that she intends to pay her costs from the joint funds which she has retained.

6. I accept that the husband has established a basis for making an interim property order.

7. I propose to order that the husband be paid $200,000 from the funds held by the wife. This represents 2.5 per cent of the net assets for the purpose of these applications.

8. In the event that the wife’s position is adopted at trial, there is ample property from which her entitlements can be satisfied.

I certify that the preceding fifty-three (53) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 27 August 2020.

Associate: 

Date:  27/08/2020