Liang and Meng

[2016] FamCA 306

FAMILY COURT OF AUSTRALIA

LIANG & MENG [2016] FamCA 306

FAMILY LAW – PROPERTY – INTERIM PROCEEDINGS – Where the husband seeks the sale of four properties owned by the parties – Where the wife proposes that the husband utilise income generated from the parties’ business to service the mortgages on the four properties – Where there are currently significant arrears owed in respect of the mortgages – Where the Court finds merit in the husband’s proposal to sell two of the properties, which are presently tenanted – Orders made for the sale of the two tenanted properties – Orders made for the parties to share equally the mortgage repayments of the two remaining properties.  

Family Law Act 1975 (Cth)

APPLICANT: Mr Liang

RESPONDENT: Ms Meng

FILE NUMBER: MLC 11680 of 2015

DATE DELIVERED: 6 May 2016

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Stevenson J

HEARING DATE: 4 May 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Devries

SOLICITOR FOR THE APPLICANT: Mark M Morgan Barrister & Solicitor

FOR THE RESPONDENT: Ms Meng in person

Orders

PENDING FURTHER ORDER:

1. The parties will do all things and execute all documents required to affect the sale, for the best price reasonably obtainable, of the properties situate at and known as:

   (a)       B Street, Suburb C;

   (b)       D Street, Suburb E

   (“the properties”) and to distribute the proceeds of such sale as follows:

   1.1      in discharge of the mortgages on the titles to the properties;

   1.2      in payment of outstanding rates and levies;

   1.3in payment of the balance into a controlled monies account held by the solicitor for the husband.

2. Pending settlement of such sales, the husband will pay all mortgage instalments and other outgoings in respect of the properties, provided that the husband will receive the rental income generated by these properties.

3. Following the settlement of the sale of the properties, the parties will each pay one half of the mortgage instalments in respect of the properties situate at and known as:

   (a)      F Street, Suburb G;

   (b)      H Street, Suburb I.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Liang & Meng 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 MELBOURNE

FILE NUMBER: MLC 11680 of 2015

Mr Liang

Applicant

And

Ms Meng

Respondent

REASONS FOR JUDGMENT

Proceedings

1. By an Application filed on 11 December 2015 the husband, Mr Liang, sought the following interim orders:

   1.That all properties held in the name of both the Applicant and Respondent be placed on the market for sale by way of public auction

   a)The properties:

   i)[F Street, Suburb G]

   ii)[H Street, Suburb I]

   iii)[B Street, Suburb C]

   iv)[D Street, Suburb E]

   2.After the payment of the mortgages, real estate agent fees, auction fees, legal fees, council rates, utilities, State land tax, Federal capital gains tax, the monies remaining from the settlement of the properties be placed into trust pending the settlement or determination by this Honourable Court.

   3.The K business 50 per cent owned by the Applicant and situate at the [Suburb G] Town Centre be valued by an expert valuer.

   4.The costs associated with the business valuation be borne equally between the Applicant and Respondent.

   5.The Applicant is to maintain the payment of all the mortgages in relation to all properties held in the name of the Applicant and Respondent until one or all of the said properties are sold or as otherwise ordered by this Honourable Court.

   6.The Applicant is to pay all outgoings relating to utilities for the properties held in the name of the Applicant and Respondent until one or all of the said properties are sold.

   7.That the parties and the child [J] attend upon a family consultant for an interview or series of interviews for the purpose of a family report to be prepared and filed with this Honourable Court.

   8.That the Respondent Mother, her servants or agents be and are hereby restrained from removing or attempting to remove or causing or permitting the removal of J from the Commonwealth of Australia and it is requested that the Australian Federal Police give effect to this Order by placing the name of the said [J] on the watch list in force at all points of arrival and departure by air and or sea in the Commonwealth of Australia and maintain [J’s] name on the watch list until the Court orders its removal.

   9.For the purposes of servicing the mortgages on the said properties the Applicant will apply the rental income from the [B Street Suburb C] and upon it being leased, [D Street, Suburb E] to the reduction of the mortgage debts.

2. I was taken to no evidence in relation to the parties’ child J and no submissions were put in relation to parenting issues.  Accordingly, I will not make orders as sought by the husband in paragraphs 7 and 8 of his application.

3. The wife, Ms Meng, sought the following interim orders in her Response filed on 7 March 2016:

   7.That all dividend payment derived from the [K Business] be paid into the parties’ joint account in order to pay for the outgoings and to service the mortgages of the parties’ existing properties.

   8.That if the dividend payment derived from the [K Business] is insufficient to pay for the outgoings and to service the mortgages of the existing properties, then any shortfall shall be shared equally between the parties by transferring such amount to the joint offset account.

4. During her submissions the wife appeared to seek orders for payment by the husband into the parties’ joint account of specified amounts from the takings of the parties’ business.  She also appeared to seek orders for the sale of the parties’ mobile telephone business known as L Pty Ltd.  Further, the wife seemed to seek an order for the transfer of a 4WD motor vehicle to her.  There was no application for such orders before the Court and I will thus not deal with these proposals. 

Background

1. The husband and the wife, who are both aged 32, married in Asia in 2008 and separated on approximately 10 July 2015.  They have one child, J, who was born in 2009 and is currently 7 years of age.  The child J lives with the wife.

2. In 2009 the parties purchased vacant land at H Street, Suburb I for $340 000.  They also purchased vacant land at F Street, Suburb G for $220 000.  According to the husband, his parents loaned the parties a sum of $205 000 and the balance of the purchase money came from a mortgage advance, together with the proceeds of sale of a property at M Street, Suburb G. 

3. The parties purchased an investment property at M Street, Suburb G for $460 000 in 2008.  The husband claimed that his parents loaned a sum of $400 000, on the basis that they would be repaid this sum on the sale of the property and that the profit would be divided between the parties.  This property was sold for $543 000 in 2010. 

4. The parties purchased a property at B Street, Suburb G in July 2010 for a sum of $563 500.  They obtained a mortgage loan to fund this purchase and, according to the husband, his parents made available a sum of $100 000 at this time.  They also borrowed amounts of $240 00 and $202 400 for construction of houses on the H Street and F Street parcels of vacant land. 

5. In 2010 or 2011 the parties purchased a K franchise at Suburb G through a family trust known as the Meng Family Trust.  The husband and the wife are each directors of the trustee company known as N Pty Limited.  The husband worked in this business and there was an issue as to the extent of the wife’s involvement in the franchise. 

6. Subsequent to the purchase of the K franchise, the parties acquired a property at D Street, Suburb E for a consideration of $695 000.  According to the husband, at this time his parents advanced a sum of $47 000 and they refinanced the F Street property in an amount of $512 000. 

7. In 2012 the parties acquired a K business at Suburb O with a partner, Mr P.  They also established a gift shop business with the same partner.  They sold the gift shop in 2014 and the parties’ share of the sale proceeds was deposited into their joint account. 

8. Mr Q acquired a 50 percent interest in the business L Pty Ltd for a purchase price of $65 000.  The husband and wife respectively estimated the value of their interest in this business at $100 000 and $75 000 in their financial statements.

9. The wife and the parties’ daughter live at the F Street property and the husband occupies the premises at H Street.  The B Street and D Street properties are tenanted and generate a rental income of about $1100 per week. 

10. The weekly mortgage repayments in respect of the four properties were as follows, according to the wife’s Financial Statement:

    1.F Street          $463

    2.H Street  $260

    3.B Street  $357

    4.D Street  $487

    ^______

    $1567

11. The wife estimated that the rates and levies in respect of the four properties amounted to $210 per week.

12. Lease payments in respect of a 4WD motor vehicle, which is used by the wife, amount to $1080 per month or about $249 per week. 

Consideration

1. The wife alleged that apart from a sum of $2800, the husband has failed to deposit the takings from the business franchise into the parties’ joint account since the date of separation.  The husband maintained that rental for the business premises has increased by some 50 percent and that additional expenses have been incurred since the parties’ separation.  These issues cannot be determined in the context of an interim hearing.

2. The husband deposed to a gross income of $800 per week from the business in his Financial Statement of 11 December 2015.  There was no evidence to the contrary, thus I will treat this figure as the husband’s gross weekly income.  He deposed to income tax payments of $100 per week, leaving a net weekly income of about $700. 

3. In her Financial Statement the wife deposed to a gross weekly income of $1205 from her employment as a finance manager, upon which she pays tax of $217.  The wife thus receives a net weekly income from her employment of about $988. 

4. I was informed during submissions that the mortgage repayments are currently in arrears in an amount of approximately $10 000.  This fact suggests that the parties are unable to service all four mortgages and that some action should be taken to alleviate their financial situation.  I appreciate that they would obtain a financial benefit by way of negative gearing but it seems to me that there is real merit in the husband’s proposal for the sale of the two leased properties.  It seems to me that there is a real risk of erosion of the parties’ equity in their assets.

5. The husband proposed that the parties effect the sale of the B Street and D Street properties.  They would then be relieved of the mortgage repayments and rates and unit levies which would reduce their weekly outgoings by $974.  They would also forfeit gross weekly rental income of about $1100 but, as noted above, the parties’ mortgages are currently in arrears in an amount of some $10 000.  The current arrangements do not appear to be functioning to the parties’ financial benefit.

6. The husband proposed further that the parties share equally in the total mortgage repayments in respect of the F Street and Suburb I properties, noting that the amount for the wife’s residence is approximately double that of the husband.  I see fairness in that approach and will make orders accordingly.

7. Neither party sought an order in relation to lease payments in respect of the 4WD motor vehicle driven by the wife.  Accordingly, I do not propose to make any order in relation to that liability.

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 6 May 2016.

Associate:     

Date:              6 May 2016