Giannino and Giannino

[2016] FamCA 787

FAMILY COURT OF AUSTRALIA

GIANNINO & GIANNINO [2016] FamCA 787

FAMILY LAW – PROPERTY – INTERIM PROCEEDINGS – Where the wife seeks that the husband be restrained from selling a property for a price she contends is undervalue – Where the parties recently entered into consent orders permitting the husband to sell the property but did not specify the price – Where an adjustment can be made at final hearing should the Court find that the property was sold undervalue – Application dismissed – Where the husband sought variations to the consent orders for the wife meet shortfalls of income and pay various outgoings associated with the parties’ properties – Where the wife has no income and would have to resort to capital to meet such payments – Application dismissed.

Family Law Act 1975 (Cth)

Waugh & Waugh (2000) FLC 93-052

APPLICANT: Ms Giannino

RESPONDENT: Mr Giannino

FILE NUMBER: SYC 3095 of 2016

DATE DELIVERED: 19 September 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Stevenson J

HEARING DATE: 7 September 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Othen

SOLICITOR FOR THE APPLICANT: Super & Super Lawyers

COUNSEL FOR THE RESPONDENT: Mr Jackson

SOLICITOR FOR THE RESPONDENT: Kydon Segal Legal Lawyers

Orders

1. The wife’s Application in a Case filed on 6 July 2016 is dismissed.

2. Paragraphs 2, 3, 4, 5, 6 and 8 of the husband’s Response to an Application in a Case filed on 3 August 2016 are dismissed.

3. Pending further order, there is a variation of Order 8 made on 20 June 2016 so as to permit the husband to withdraw a maximum sum of $500 per week from NAB account … for the purpose of meeting his living expenses.

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 Giannino & Giannino 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 3095  of 2016

Ms Giannino

Applicant

And

Mr Giannino

Respondent

REASONS FOR JUDGMENT

The proceedings

1. Mr Giannino and Mr Giannino are parties to litigation concerning property settlement, which commenced with the wife’s Initiating Application filed on 19 May 2016.  As recently as 20 June 2016, the parties consented to interim orders which provided as follows:

   BY CONSENT IT IS ORDERED:

   1.That the husband shall pay to the wife by way of interim property settlement the sum of $500,000 by means of:

   1.1Payment of $300,000 forthwith from NAB Account …;

   1.2Payment of $200,000 forthwith and simultaneously upon completion of the sale of [1 B Street, C Town]

   Injunctions – Without admission and Without Prejudice

   2.Pending the hearing of the applications for a final property order, and subject to Order 3 hereof, the Respondent Husband be restrained from assigning, transferring, encumbering by mortgage or charge, causing or permitting any increase in any liability presently secured over or by reference to, or otherwise or in any way dealing with the following real property:

   2.1Lot 1… in Deposited Plan … at [C Town], Local Government Area [D Town] known as [1 B Street, C Town] NSW …;

   2.2Lot 2 in Deposited Plan … at [C Town], Local Government Area D Town known as [2 B Street, C Town] NSW …;

   2.3Lot … in Precinct Plan DP … At [E Town], Local Government Area [D Town] known as [F Street, E Town] NSW …;

   2.4Lot … in Deposited Plan … at [H Town], Local Government Area [I Town] known as [G Street, H Town] NSW …;

   2.5Lot … in Deposited Plan … at [K Town], Local Government Area [L Town] known as [J Street, K Town] NSW …;

   2.6Lot … in Strata Plan … at [N Town], Local Government Area [O Town] known as [M Street, N Town] NSW …;

   2.7Lot … in Strata Plan … at [Q Town], Local Government Area [L Town] known as [P Street], [Q Town] NSW …;

   2.8Lot …, Survey Plan …, Local Government Area [Region R] known as [S Street, Suburb T] Queensland.

   3.The Respondent Husband be permitted to conclude settlement of the sale of Lot … in Deposited Plan … at [C Town], Local Government Area [D Town] (also known as [1 B Street, C Town] in the State of New South Wales)

   4.The husband in his capacity as the owner of [1 B Street, C Town] do all acts and things and sign all documents necessary to cause the proceeds of sale for [1 B Street, C Town] to be paid in the following order and priority:

   4.1      in payment of the agents commission;

   4.2      in payment of the conveyancing costs and disbursements;

   4.3in payment of the amount to discharge National Australia Bank mortgage ... (estimate $1.2 million);

   4.4in payment of any statutory charges and outstanding Council and Water Rates required to effect settlement of the sale;

   4.5in repayment of the overdraft facility under National Australia Bank account …;

   4.6      in payment to the wife in accordance with Order 1.2;

   4.7in payment of the balance into an interest-bearing controlled monies account in the joint names of the solicitors for the Applicant Wife and the Respondent Husband (estimate $2.4 million).

   5.Pending the hearing of the applications for a final property order, each of the Applicant Wife and the Respondent Husband be restrained from assigning, transferring, encumbering by mortgage or charge or otherwise or in any way dealing with the amount in the controlled monies account referred to in Order 4.7 hereof other than to make the payment(s) to the Applicant Wife required under Order 1 hereof.

   6.Pending the hearing of the applications for a final property order, the Respondent Husband be restrained from using, drawing on, causing or permitting any increase in any liability or otherwise or in any way dealing with the overdraft facility under National Australia Bank account ....

   Payment of Mortgage and other expenses for the properties

   7.Pending further order, the Respondent Husband is to pay and continue to pay all National Australia Bank mortgage … instalments, land tax, Council rates, water rates, building and home and contents insurance in respect of the property at Lot … in precinct plan DP … at [E Town], Local Government Area [D Town] (also known as [F Street, E Town] in the State of New South Wales) together with all scheduled mortgage repayments, statutory rates and charges and insurances in respect of each of the properties identified in Order 2, which expenses may be met from each of the NAB account in Order 8 and the account in order 7A.

   7A.Pending further order the husband shall cause all rental income in respect of each property detailed in Order 2 to be paid into an interest bearing a controlled monies account (being that referred to in Order 4.7) which may be used to meet the expenses in Order 7.

   8.That pending further order the husband be and hereby is restrained from dealing in any way with the funds held in NAB account … (presently in the approximate amount of $923,000) save for:

   8.1Compliance with Orders 1.1 and 7 herein;

   8.2payment as and when same fall due of any Notice of Assessment issued to the husband by the Deputy Commissioner of Taxation, provided the husband has provided to the wife a copy of each such Notice and no less than 14 days notice in writing of any such intended payment; and

   8.3as otherwise agreed in writing.

   9.That the husband shall do all things and sign all documents necessary to transfer to:

   9.1The wife, all title and interest in [motor vehicle 1] registration number …;

   9.2[Mr U], all title and interest in [motor vehicle 2] presently used by [Mr U];

   9.3[Ms Y], all title and interest in [motor vehicle 3] registration number ….

   10.That notwithstanding any other order herein, provided that the husband has provided not less than 28 days prior notice in writing to the solicitors for the wife of his intention to do so, the husband shall be permitted to transfer to [Mr U] up to 50% of his interest in the property at [S Street, Suburb T] (QLD).

   11.That the wife's application for spouse maintenance is withdrawn and dismissed save to the extent provided herein.

   12.That the wife be at liberty to serve a copy of these Orders on the National Australia Bank.

   13.      Reserve all costs.

   Disclosure by Husband

   14.That the Respondent Husband provide the Applicant Wife within 21 days of the date of this Order the following documents by way of disclosure:

   14.1A copy of the husband's three most recent taxation returns and assessments;

   14.2A copy of the bank statements for the past 36 months in respect of any bank account the husband or any entity in which he has an interest or has had an interest in the past 36 months (this includes but is not limited to credit, loan and debit accounts both in Australia and overseas);

   14.3The husband's three most recent payslips if he has received any wage or salary in the past 12 months;

   14.4The husband's business activity statements for any business he has owned or controlled in the past 12 months;

   14.5Documents about any superannuation interest the husband holds including:

   14.5.1a completed superannuation information form for the superannuation interest;

   14.5.2a copy of the trust deed and the three most recent financial statements if the husband is a member of a self managed fund; and

   14.6In relation to any corporation to which the husband has a duty of disclosure under rule 13.04:

   14.6.1a copy of the financial statements for the three most recent financial years including balance sheets, profit and loss accounts, depreciation schedules and taxation returns;

   14.6.2a copy of the corporation's most recent annual return, the list the directors and shareholders; and

   14.6.3A copy of the corporation's constitutions and any amendments.

   14.7In relation to any trust to which the husband has a duty of disclosure under rule 13.04:

   14.7.1.A copy of the financial statements for the three most recent financial years, including balance sheets, profit and loss accounts, depreciation schedules and taxation returns; and

   14.7.2A copy of the trust deed, including any amendments.

   14.8In relation to a partnership to which the husband has a duty of disclosure under rule 13.04:

   14.8.1A copy of the financial statements for the three most recent financial years, including balance sheets, profit and loss accounts, depreciation schedules and taxation returns; and

   14.8.2A copy of the partnership agreement, including any amendments.

   14.9Business activity statements for the past 12 months in relation to the husband and each of the above-mentioned entities.

   Husband's Tax Returns

   15.Within 14 days of the date of these orders, the Respondent Husband is to lodge all his outstanding individual tax returns up to and including 30 June 2015 if he has not already done so.

   s106A

   16.In default of the parties or either of them doing all acts and things and executing all such documents as are necessary to give effect to these Orders, a Registrar of the Family Court of Australia at Sydney be appointed pursuant to section 106A of the Family Law Act 1975 (Cth) to execute all such documents in the name of the party in default and to do all such acts and things necessary to give validity and operation to the said orders.

   17.Noted that these Orders are not to affect any liability pursuant to any administrative assessment of Child Support.

2. On 6 July 2016, only sixteen days after these orders were made by consent, the wife filed an Application in a Case by which she sought the following orders:

   1.This application be heard urgently and on an ex parte basis pursuant to the Family Law Rules.

   2.The Respondent Husband be restrained from assigning, transferring, exchanging, selling or otherwise disposing of the property known as [1 B Street, C Town] NSW at a price lower than $3.6 million.

   NOTATION

   The above order is to be read in addition to the orders made on the 20^th June 2016.

3. On 3 August 2016 the husband filed a Response to Application in a Case, by which he sought the following orders:

   1.That the orders sought by the Wife in her Application in a Case filed on 6^th July 2016 be dismissed.

   2.That in event [sic] that the Court makes the injunction Orders as sought by the Wife in her Application in a Case filed on 6^th July 2016, by way of a condition of the Court making the injunction order, the Wife is to provide the Court with an undertaken [sic] as to damages.

   3.That Order 7 of the Order made on 20^th June 2016 be discharged.

   4.That in the event of a shortfall of monies received from the rental income as set out in Order 7A of the Orders made on 20^th June 2016, the Wife thereafter be responsible to pay and continue to pay:

   5.All National Australia Bank mortgage … instalments, land tax, Council rates, water rates building and home and contents insurance in respect to the [E Town] property as identified at Order 7 of the Orders made on 20^th June 2016.

   6.All mortgages repayments, land tax, Council rates, water rates building and home contents insurance in respect to the properties as identified at Order 2 of the Orders made on 20^th June 2016.

   7.That by way of a variation of Order 8 of the Orders made on 20^th June 2016, the Husband be permitted withdrawn [sic] an amount of no more than $500 per week from the NAB account … in order to cover living expenses.

   8.That the Wife do all things necessary to ensure that the property located at [M Street, N Town] is subject to rent paying tenants.

Background

1. The husband and wife, who are aged 45 and 43 respectively, began to live together in mid-1998 and married in 2000.  They separated under one roof in July/August 2015 and the wife left the former matrimonial home on 15 January 2016.

2. The wife and the parties’ three children moved into a property F Street, E Town, which was purchased in the name of the husband in late 2015.  The purchase price was $1.15 million, all of which the husband borrowed from the National Australia Bank.  The husband pays the mortgage instalments in respect of this property.

3. The parties have three children:

   ·V born in 2000 (15);

   ·W born in 2002 (14); and

   ·X born in 2006 (10).

   The wife has two children from a previous relationship, namely Mr U and Ms Y who were born in 1995 and in 1997 respectively.  Mr U and Ms Y lived in the parties’ household from a time when they were aged two years and eight months respectively.

4. Late in 2015 a neighbour, Mr Z, purchased from the husband a property 2 B Street, C Town for $3.6 million.  According to the husband, at the same time he and Mr Z entered into a verbal agreement that he would lease the adjoining holding at 1 B Street, C Town (“the B Street property”) for approximately one year and then purchase this property.  The husband deposed that he and Mr Z agreed on a sale price of $3.5 million in late 2015.

5. The wife maintained that the sale price for the B Street property was to be $3.6 million.  She annexed to her affidavit of 6 July 2016 a letter dated 5 July 2016 from her lawyer to the husband’s solicitor which read in part:

   We note for completeness that when your client’s former solicitor wrote to us on 11 February 2016, he stated at paragraph 7(e):

   “[1 B Street C Town] which is under an option to be sold for $3.6 million.  [Mr Giannino] bought this property eight years ago.  It is due to settle in August 2016.”

6. In relation to the purported sale price of $3.6 million the wife also relied on the contents of orders 4.3 and 4.7 made on 20 June 2016.  These orders provided as follows:

   4.The husband in his capacity as the owner of [1 B Street, C Town] do all acts and things and sign all documents necessary to cause the proceeds of sale for [1 B Street, C Town] to be paid in the following order and priority:

   …

   4.3in payment of the amount to discharge National Australia Bank mortgage … (estimate $1.2 million);

   …

   4.7in payment of the balance into an interest-bearing controlled monies account in the joint names of the solicitors for the Applicant Wife and the Respondent Husband (estimate $2.4 million).

7. In his Financial Statement of 16 June 2016 the husband included an amount of $3,000,000 as the value of the B Street property.  In his affidavit of 5 September 2016 the husband set out an alleged history of problems with contamination in relation to this property and of involvement by the Environmental Protection Agency since the mid-2000s.  The husband deposed that he advised Mr Z of the contamination problem in late 2015.

8. The husband deposed that he and Mr Z renegotiated a purchase price of $3,000,000, on the basis that they would share the cost of the remediation work.  He annexed to his affidavit of 4 August 2016 a copy of a letter from a firm known as Company AA, which set out an estimate of costs of the remediation work at $1,198,600.

9. In his affidavit of 5 September 2016 the husband deposed that he failed to take into account a number of expenses associated with his business when he consented to the orders of 20 June 2016.  The husband started this business early in 2016, after he sold his farming enterprise.  The husband set out these allegedly overlooked expenses as follows:

   10.I say that this document did not refer to the following weekly expenses associated with my business:

   (a)Maintenance of [equipment], estimated to be about $600 per week;

   (b)Income from my subcontractor, Mr BB, estimated to range from $1,500 to $2,000 per week;

   (c)Fuel for [equipment] related to the business, outside my own personal fuel costs as set out in my Financial Statement of 16 June, 2016, estimated to be between $1,500 to $2,000 per week.

   (d)Bank interest and charges associated with a $1.2 million overdraft.

   The “document” to which the husband referred was his Financial Statement of 16 June 2016.

10. The husband maintained that he has encountered serious cash flow problems, resulting in the following arrears on loan facilities with the National Australia Bank:

    24.The following loan facilities are currently in arrears and in the total sum of $67,747.32:

    (a)Flexi Choice account … (“Flexi Choice account”) in the sum of $33,032.46;

    (b)Base Variable loan account … in the sum of $5,710.79;

    (c)Farm account … (“the Farm Account”) in the sum of $25,754.47;

    (d)Base Variable account … in the sum of $3,249.60.

11. The husband deposed that he has a number of current debts which relate to the E Town home occupied by the wife and the parties’ children and also properties at N Town, Region R, K Town and Q Town.  He also maintained that he has credit card debts totalling $32,778.

12. The husband annexed to his affidavit of 5 September 2016 an email from a National Australia Bank officer, which set out the bank’s proposal to rationalise his financial situation.  The husband explained the effect of this proposal as follows:

    29.Exhibited to this affidavit at page 19 of DG1 is a copy of an email from [Mr CC] at the NAB to my solicitor in relation to the arrears on the numerous facilities and the bank’s proposal to release funds from the NAB Term Deposit in order to undertake the following:

    (a)Discharge the loan on Choice Package account number … in the sum of $284,368 in relation to the property located at [M Street N Town], which is currently not tenanted and therefore deriving no income;

    (b)Place the sum of $130,000 into the Flexi Choice Account by way of offset to provide cash flow for me to be able to pay off the arrears per paragraph 24 of this affidavit, the credit card debts per paragraph 25 of this affidavit and to pay current outstanding council rates and utilities, with any surplus to be applied to any future interest payments; and

    (c)The balance of $205,000 to be retained by the NAB as security for the numerous loans.

1. The husband deposed that he is currently at risk of notification to the Credit Reference Agency of Australia.  He maintained that such a referral would have the following consequences:

   27.The Flexi Choice Account is the central account from which all other mortgage repayments are made across the loan facilities.  This facility has been in arrears for more than fifty days.  I have been advised by the NAB that if the arrears on this account are not rectified immediately then the account will default and the matter will be escalated to the Credit Reference Agency of Australia, which will impact significantly on my ability to borrow funds for the next seven years.

2. In his Outline of Case document the husband set out his version of the parties’ assets and liabilities as follows:

Assets:
Item	Ownership	Value
[2 B Street, C Town]	H	$2,200,000
[1 B Street, C Town]	H	$3,000,000
[G Street H Town]	H	$600,000
[J Street, K Town]	H	$750,000
[E Town]	H	$1,200,000
[DD Street, EE Town]	H	$625,000
Duplexes Queensland	H	$730,000
[FF Street, Q Town]	H	$750,000
M Street, N Town	H	$450,000
National Australia Bank	H	$1,000,000
Machinery	H	$200,000
Cattle 60 head	H	$50,000
Sheep 20 head	H	$1,500
Vintage cars	H	$50,000
TOTAL	$11,606,500
Liabilities:
Item	Ownership	Value
Mortgage [1 B Street]	H	$1,250,000
Mortgage [G Street]	H	$100,000
Mortgage [J Street]	H	$200,000
Mortgage [E Town]	H	$1,150,000
Mortgage [DD Street]	H	$625,000
Mortgage Duplexes Queensland	H	$730,000
Mortgage [FF Street]	H	$750,000
Mortgage [M Street]	H	$280,000
NAB Line of Credit	H	$240,000
TOTAL	$5,325,000
NET TOTAL	$6,281,000

There was no submission on behalf of the wife to the effect that this balance sheet was other than a reasonably reliable representation of the parties’ financial position.

1. During May 2016 the wife withdrew a total of $25,000 from the Flexi Choice account.  She has also received the sum of $300,000, for which provision was made in the consent orders of 20 June 2016.

2. Against this purported background the husband sought access to a sum of $500 per week from a NAB account to cover his living expenses.  He also sought to proceed with the sale of the B Street property at a price of $3,000,000.  The wife sought to restrain the husband from proceeding with the sale to Mr Z for any price less than $3.6 million.

3. When the interim hearing commenced on 7 September 2016, there was no undertaking as to damages from the wife.  Such an undertaking was forthcoming only when I raised this issue, although the wife was on notice of this requirement as a result of paragraph 2 of the husband’s Response to Application in a Case.

The wife’s application for injunctive orders

1. The wife relied upon a valuation of the B Street property by Mr GG of HH Valuers.  Mr GG valued the property at $3.6 million, on the basis of an external inspection.  Mr GG stated in his report:

   10.2I have made an on-line search of the NSW EPA list of NSW Contaminated Sites, which did not reveal any record of the subject site having been notified to the EPA.

   10.3For the purposes of this Valuation and having regard to my letter of instruction, my Valuation is contingent upon there being no adverse environmental factors impacting subject site, or should there be any environmental issues and the cost of remediating same is minimal and in this regard I have assumed a remediation cost not in excess of $10,000.

   10.4If a soil test is undertaken at some time in the future to assess any contamination of the site and this is found to be positive, I reserve the right to review my Valuation assessed herein, should I deem this necessary.

   10.5No responsibility is assumed as to potential contamination of the site and the recipient of this Report is advised that the Valuer is not qualified to detect such substances or estimate the remedial cost.

2. It is thus apparent that contamination of this property and the cost of the remedial work are live issues in the proceedings.  I accept the submission on behalf of the husband, to the effect that these issues can properly be determined only at trial.

3. With respect to Mr GG, it seems to me that his report and valuation are based on a number of assumptions which are placed in issue by the husband.  He assumed that the property has no contamination problem.  He allowed a maximum sum of $10,000 for any hypothetical remediation work.  In any event, in my view it is unnecessary that further consideration be given to these issues for present purposes.

4. In Waugh & Waugh (2000) FLC 93-052 at 87,810 the Full Court said:

   In particular, we are unable to perceive, from anything said by His Honour in his reasons for judgment delivered on 9 September 1999, or from anything which he said in the course of the hearing on 22 and 25 June 1999, that he considered whether the injunctions which he ultimately granted were necessary, and went no further than necessary, to prevent the abuse or frustration of the court’s process in relation to the matter within its jurisdiction, particularly having regard to the nature of the wife’s claim in the property proceedings.

   Their Honours said also:

   While His Honour certainly seems to have considered issues of balance of convenience and hardship between the parties, it seems to us, with respect, that he did not give consideration to the fundamental question whether there was any evidence of any intention by the husband to dispose of any assets pursuant to any scheme to defeat any judgment which the wife might obtain in the substantive proceedings …

5. Counsel for the wife placed considerable reliance on submissions to the effect that the costs estimate for the remediation work provided by Company AA may have “no sound basis”.  In support of this contention, a judgment of Environment Protection Authority v …  was tendered in the case for the wife (Exhibit 3).  This decision concerned penalties which were imposed following pleas of guilty to charges of providing false information by Company AA Pty Ltd, Mr II and Mr JJ.  Mr II signed a report dated 11 September 2013 in relation to the two B Street properties (pp 136 to 174 of the annexures to the husband’s affidavit of 5 September 2016).

6. Counsel for the wife also placed considerable weight on alleged deficiencies and inconsistencies within the Company AA report.  Again, I do not consider that there is any necessity for an analysis of these submissions for present purposes.  In order to determine the wife’s application for injunctive orders, I will assume there is a prospect that she will be able to establish at trial that the husband, Mr Z and Company AA Pty Ltd caused a sale of the B Street property at a price below its true market value.

7. A sale of the property at a price of $3,000,000 rather than $3.6 million would, on the wife’s case, reduce the value of the net asset pool by some $600,000.  The draft balance sheet submitted on behalf of the husband asserted that the net asset pool has a value of $6,281,000.  Accordingly, an adjustment in favour of the wife could be made at trial to reflect any sale of the B Street property at an undervalue.

8. Further, I am conscious that the orders of 20 June 2016 provide for the discharge of a mortgage in the sum of $1.2 million and an overdraft upon the completion of the sale of this property.  An email from a National Australia Bank officer dated 29 August 2016 to the husband (p 19 of the annexures to the husband’s affidavit of 5 September 2016), stated that the overdraft debit balance on that date was $283,032, against a limit of $250,000.  Execution of order 4 made on 20 June 2016 would thus reduce the level of the husband’s debt by approximately $1.483 million.

9. In a letter dated 5 July 2016, the wife’s solicitor wrote to the husband’s lawyers that the proposed sale by him at a price of $3,000,000 “is in clear breach of orders and any further steps your client takes will place him in clear contempt of orders.”  The wife’s solicitor wrote also to two firms of conveyancers who were involved in the proposed sale and asserted that any transaction below of price of $3.6 million “would place [the husband] in breach of the orders and in contempt”.  The solicitors for the wife also wrote to each of the conveyancing firms, inter alia:

   In circumstances where we have now made your firm aware of the situation, we place [your firm] on notice that should it exchange, sell, transfer or otherwise facilitate the disposal of [1 B Street] at less than $3.6 million we have instructions to take steps against your firm to recover such losses as are suffered by our client (which may include joining your firm in the current proceedings).

10. I do not understand the allegations of the wife’s solicitor, to the effect that the husband breached any order or engaged in any behaviour which could constitute “contempt”.  There was no order which bound the husband to sell the property only at a minimum price of $3.6 million.

11. It seems to me that the injunctive order sought by the wife goes further than is necessary to protect her interests.  As noted the net assets are of sufficient value to accommodate an adjustment in her favour on a final basis, if she can establish a sale at an undervalue by the husband.

12. Additionally, the husband is cooperating with his bankers to rationalise his debt position.  The parties consented to orders which would have the effect of alleviating the husband’s indebtedness on 20 June 2016.  An order as sought by the wife would obstruct that process.

13. For these reasons, I will dismiss the wife’s Application in a Case filed on 6 July 2016.

The husband’s application to vary the orders of 20 June 2016

1. It might well be said that the husband should have exercised more diligence when he entered into the consent orders of 20 June 2016.  In my view, however, the reality of his current financial situation and the potential ramifications for the parties’ net asset pool must be addressed in a realistic manner.  Further, I accept the submission on behalf of the husband to the effect that had he a relatively short period of time to prepare his first affidavit and Financial Statement.  I accept that he had, in effect, insufficient time to analyse properly his financial situation.

2. I see no reason to doubt that the husband’s financial position is deteriorating and that, potentially, he faces action by the Credit Reference Agency of Australia.  As noted, the husband has engaged with his bankers and a plan has been formulated to address his financial situation.  In these circumstances, it seems to me that the husband is taking reasonable steps to address his financial problems.

3. The husband now seeks that the wife meet any shortfall between the total rental income generated by the eight properties listed in order 2 of 20 June 2016 and all outgoings, including mortgage repayments, in respect thereof.  The husband seeks further that he be permitted to withdraw a maximum of $500 per week from a specified NAB account to meet his living expenses.

4. The properties listed in Order 2 of 20 June 2016 are as follows:

   1.        1 B Street, C Town;

   2.        2 B Street, C Town;

   3.        F Street, E Town;

   4.        G Street, H Town;

   5.        J Street, K Town;

   6.        M Street, N Town;

   7.        P Street, Q Town; and

   8.        S Street, Suburb T.

5. The husband’s uncontradicted evidence was that the tenant of the

   
   

   1 B Street property, being Mr Z, owes rental arrears of $63,400 after having paid $15,000 on 2 September 2016.  It was common ground that the N Town property is presently vacant and generates no income.  The E Town property is occupied by the wife and the parties’ children and also produces no rental income.

6. In his Financial Statement of 28 July 2016 the husband deposed that he receives gross weekly rental of $3,835 as set out in “Annexure A”.  There was no such annexure to this Financial Statement.  This annexure was attached to the husband’s Financial Statement of 16 June 2016 and set out the weekly rental income as follows:

   [J Street, K Town]  $775
   [FF Street, Q Town]  $700
   [B Street, C Town]  $2,000
   [DD Street, EE Town]  $380
   [G Street, H Town]       NIL
   Total  $3,835

7. The husband sought an order which would require the wife to assume responsibility for leasing of the N Town property.  As the husband is the sole registered proprietor, I see little or no utility in such an order.  The husband is at liberty to make arrangements for the leasing of the N Town property at any time of his choice.

8. I am not prepared to make orders which would require the wife to meet the shortfall between the total rental income and mortgage repayments and all other outgoings in respect of the above-listed properties.  According to her Financial Statement of 2 June 2016 the wife has no source of income and, presumably, she meets her living expenses from a sum of $300,000 which she received by way of interim property settlement.

9. The only funds which would be available to the wife to meet the shortfall between rental and outgoings would be the funds which she received by way of interim property settlement.  Following the discharge of the mortgage encumbrances on the property 1 B Street, the husband’s weekly expenditure will reduce by $2,055 (Annexure B to the husband’s Financial Statement of 16 June 2016).  Accordingly, at that time the total rental income will be of the order of $3,835 and the mortgage repayments approximately $3,431 per week.  The total rent will increase if the H Town and N Town properties are leased and generate income.

10. The husband has access to income generated by his business, whereas the wife has resort only to capital.  In these circumstances, I will not make orders which would require the wife to meet the shortfall.  Once the sale of the B Street property is completed, there should be minimal shortfall between the rental income and outgoings in respect of the properties.

11. Accordingly, I will not vary the orders of 20 June 2016 as sought by the husband in paragraphs 3, 4, 5, 6 and 8 of his Response to an Application in a Case.

12. I will make orders which permit the husband to withdraw a maximum of $500 per week from the specified NAB account to meet his living expenses.  It seems to me that the husband is doing what he can to improve his financial position and that he should have access to part of the liquid funds to meet his living expenses.  If appropriate, an adjustment in favour of the wife to take into account the husband’s expenditure of these funds can be made at a later time.

I certify that the preceding forty-five (45) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 19 September 2016.

Associate: 

Date:  19 September 2016