Lorine & Zenia
[2024] FedCFamC1F 196
•25 March 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Lorine & Zenia [2024] FedCFamC1F 196
File number: SYC 4225 of 2023 Judgment of: CHRISTIE J Date of judgment: 25 March 2024 Catchwords: FAMILY LAW – APPLICATION FOR REVIEW – Interim property orders – Where the applicant seeks to be relieved of the obligation to make mortgage repayments pursuant to an order and proposes that the mortgage arrears accrue pending the ordered sale of the property – Where the default interest is significant and the respondent asserts the applicant has alternate sources of capital to meet the mortgage payments – Where there is insufficient evidence that the order that the applicant be responsible for mortgage payments should be discharged – Amounts to be paid upon sale of the property – Where the applicant is unable to satisfy that the monies sought to be paid upon sale of the property are presently repayable – Where the respondent’s case for final relief claims that some of the liabilities may fall to be borne by the applicant alone – Where orders for the payment of those monies upon sale of the property may defeat the respondent’s claim for final relief. Legislation: Family Law Act 1975 (Cth) s 90SF and s 90SM Cases cited: Af Petersens & Af Petersens (1981) FLC 91-095
Biltoft & Biltoft (1995) FLC 92-614
Kowaliw & Kowaliw (1981) FLC 91-092
Division: Division 1 First Instance Number of paragraphs: 41 Date of hearing: 22 March 2024 Place: Sydney Counsel for the Applicant: Mr Havenstein Solicitor for the Applicant: Swaab Attorneys Counsel for the Respondent: Mr Roberts Solicitor for the Respondent: Dorter Family Lawyers And Mediators ORDERS
SYC 4225 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR LORINE
Applicant
AND: MS ZENIA
Respondent
ORDER MADE BY:
CHRISTIE J
DATE OF ORDER:
25 MARCH 2024
Order 7 amended 26.3.2024 pursuant to slip rule, Rule 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
THE COURT ORDERS BY CONSENT PENDING FURTHER ORDER THAT:
1.The Orders made by the Senior Judicial Registrar on 2 August 2023 be discharged.
2.Order 13 of the orders made on 23 February 2024 by the Senior Judicial Registrar is discharged.
3.Order 14 of the orders made on 23 February 2024 by the Senior Judicial Registrar is discharged.
4.Order 6(h) of the orders made on 23 February 2024 by the Senior Judicial Registrar be discharged and replaced as follows:
(a)6(h) – In payment of the balance to a Controlled Monies Account managed by Dorter Family Lawyers & Mediators.
5.Orders 12 to 14 inclusive of the Orders made on 23 February 2024 by the Senior Judicial
Registrar be discharged.
6.Order 17(e) of the Orders made on 23 February 2024 by the Senior Judicial Registrar be discharged and replaced as follows:
(a)17(e) – The parties shall cooperate in every way with the agent including (without limiting the generality of the foregoing):
(i)Making the key available to the agent;
(ii)Allowing inspection of the Suburb B Property at all reasonable times requested by the agent;
(iii)Doing or saying nothing to hinder or prevent a sale being effected;
(iv)Ensuring the Suburb B Property, including the grounds are in a neat and clean condition at the time of inspection by the agent and prospective purchasers;
(v)The parties shall undertake and/or arrange for such reasonable repairs, maintenance, styling to be undertaken to the Suburb B Property as recommended by the appointed agent prior to the sale of the Suburb B Property;
(vi)Signing all documents requested by the appointed agent in relation to the listing for sale of the Suburb B Property except a contract or agreement for sale which has not been authorised by the lawyer / conveyancer appointed by the parties to have carriage for the sale.
7.Upon the sale of the Suburb C property the parties shall do all acts and things and give instructions and sign all documents necessary to distribute the proceeds of sale in the following manner and priority:
(a)All costs and expenses of the sale including legal costs and disbursements, advertising and site styling costs, agent’s commission, auction expenses or such other expenses paid pursuant to these orders (including repayment of any such expenses as have been paid by either party provided that those expenses have been agreed by the parties in writing);
(b)In payment of the rates and levies owing on the Suburb C property;
(c)The amount required to discharge the Suburb C mortgage;
(d)The amount required to discharge the loan from D Pty Ltd and/or Investors being the loan obtained in compliance with Order 1 of the Orders dated 2 August 2023 or the refinancing of that loan.
(e)The sum of $135,925.37 to be paid in the following manner and priority:
(i)The sum of $18,550.37 to E Finance for advertising costs for the Suburb C property;
(e)The sum of $18,550.37 to E Finance for advertising costs for the Suburb C property;
(f)The sum of $200,000 to the Trust Account of Dorter Family Lawyer and Mediators on behalf of the Respondent as partial property settlement to the Respondent;
(g)The sum of $200,000 to the Trust Account of Swaab on behalf of the Applicant as a partial property settlement to the Applicant;
(h)The remainder to be paid to the Controlled Monies Account.
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 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Lorine & Zenia has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CHRISTIE J:
This is a Review of the decision of a Senior Judicial Registrar.
In the proceedings the de facto husband is the applicant and the de facto wife is the respondent. I will refer to them as “applicant” and “respondent” in these reasons for clarity.
I am hearing the matter de novo. The parties narrowed the issues between them such that I was being asked to make some consent orders and determine the following disputes:
(1)Whether the Court should make orders that amounts be paid from the proceeds of sale of the property located at F Street, Suburb C including two car spots (“the Suburb C property”) in the following manner and priority:
(a)The sum of $71,250 to the applicant’s mother, Ms H in repayment of the Suburb C mortgage payments made by her;
(b)The sum of $10,500 to G Pty Ltd being repayment of the sum paid by that company to extend the D Pty Ltd loan; and
(c)The sum of $35,625 to be paid to G Pty Ltd in repayment of the amount borrowed from that company to pay the Suburb C mortgage.
(2)Whether I should discharge the order which was made which required the applicant to pay the mortgage secured over the Suburb C property pending settlement of the sale of that property.
In order to make those determinations it is necessary for me to understand:
(1)The approximate value of the net pool available for adjustment;
(2)The respective applications of the parties;
(3)Some preliminary assessment of their entitlements having regard to the considerations in ss 90SM and 90SF of the Family Law Act 1975 (Cth) (“the Act”);
(4)The circumstances in which the original orders for mortgage payments were made; and
(5)Any relevant change of circumstances since that time.
NET POOL
The respondent attaches to her affidavit a balance sheet – marked “without prejudice for mediation”. Counsel for the respondent confirmed that that marking remaining on the document was unintended, and that the balance sheet accurately reflects the respondent’s contentions. It contends as follows:
Ownership Description Value ASSETS Real Estate 1 H F Street, Suburb C, including:
2 F Street, Suburb C (car spot)
J Street, Suburb C (car spot) ("Suburb C property")$7,500,000 2 W K Street, Suburb B QLD $3,950,000 3 W L Street, Town M $1,900,000 4 W N Street, Suburb P $475,000 5 W Q Street, Suburb R $500,000 Bank Accounts 6 H Westpac account #...14 NK 7 H ANZ account #...84 NK 8 H CBA account #...92 $3,865 9 W CBA account #...17 $7 10 W Westpac account #...72 $854 11 W CBA account #...13 $18 12 W CBA account #...48 $9 13 W CBA account #...65 (account held with ex partner
Mr S - 50% share)$36 14 W CBA account #...66 (account held with ex partner
Mr S - 50% share)$92 15 W NAB account #...90 $3 16 W NAB account #...10 $- 17 W Nab Account #...61 $503 18 W T Bank account #...01 $5,751 19 W CBA account #...71 (held in the name of U Pty Ltd) $- 20 W CBA Trust account #...00 (held in the name of U Pty Ltd - account holds $9,391 however this is not the Wife's property) $- 21 W T Bank account #...83 $- 22 JT Controlled Monies Account with DFLM $6,200.34 23 W DFM Trust $2,824.99 Vehicles 24 W Sale proceeds of Recreational Vehicle 1 held in Trust Account of V Lawyers (Subject to claim by liquidators of W Group) $205,061.01 25 H Motor Vehicle 1 $90,000 26 H Motor Vehicle 2 $80,000 27 H Recreational Vehicle 2 (Cost $62,500) $46,000 28 H Motor Vehicle 3 $60,000 29 W Motor Vehicle 4 $65,000 30 H Motor Vehicle 5 $25,000 Entities & Trusts 31 JT X Holdings Pty Ltd ATF X Trust including:
W1 Pty Ltd (in Liquidation)
W2 Pty Ltd (in Liquidation)
Y1 Pty Ltd (in Liquidation)
X Pty Ltd (in Liquidation)
Y2 Pty Ltd (in Liquidation)
50% interest in Z Pty Ltd
50% interest in AA Pty LtdNK 32 H Y3 Pty Ltd NK 33 H Y4 Pty Ltd NK 34 H Lorine Family Trust NK 35 H Lorine Property Trust NK 36 H BB Pty Ltd NK 37 H CC Pty Ltd NK 38 H DD Pty Ltd NK 39 H G Pty Ltd NK 40 W U Pty Ltd including:
Motor Vehicle 6 (subject to finance) – Neg$- Other 41 H Art $435,000 42 W Shares $5,224 43 H Interest in financial asset $12,000 44 JT Household Contents $300,000 45 W Dog $- 46 H Dog in Mr Lorine’s possession $- 47 H Other Artwork $154,000 48 H Fittings in Mr Lorine’s possession, custody and control from Town M property $50,000 Total $15,872,448.34 ADDBACKS 49 H Funds lost to gambling - 16/03/2016-31/07/2023 $1,648,563 50 H Funds lost to gambling - 01/08/2023-31/10/2023 $69,982 51 H Further Funds lost to gambling 1/11/2023 to 31/01/2024 $108,999 52 H Decline in value of W1 Pty Ltd and Y Company TBC 53 H Legal costs paid Mr Lorine $122,860 54 W Legal costs paid by Ms Zenia $252,732 55 H EE Company Debt - judgment debt $579,610 56 H EE Company Debt – Costs $145,000 57 H EE Company Debt - Solicitors fees NK 58 H Funds paid to Mr and Ms H (estimated) $300,000 Total $3,227,746 LIABILITIES 59 H Suburb C Property mortgage – FF Finance $4,500,000 60 H Loan D Pty Ltd secured against Suburb C $280,000 61 W Suburb B Mortgage - NAB #...74 $537,059.99 62 W Suburb B Mortgage - NAB #...35 $1,564,263.08 63 W Town M Mortgage - NAB #...35 $1,205,800.12 64 W Suburb R Mortgage - CBA #...64 $59,295.85 65 W Suburb R Mortgage - CBA #...80 $418,258.47 66 H Debt to Husband's Parents $- 67 W AMEX Debt (W1 Pty Ltd) $- 68 W NAB Credit Card #...96 $- 69 W GG Finance (W1 Pty Ltd personal guarantee - in Liquidation) $220,433 70 W HH Company (W1 Pty Ltd personal guarantee - in Liquidation) $36,448 71 W JJ Company (W1 Pty Ltd personal guarantee - in Liquidation - estimated) NK 72 W KK Company (W1 Pty Ltd personal guarantee - in Liquidation - estimated) NK 73 W LL Company (W1 Pty Ltd personal guarantee - in Liquidation - estimated) NK 74 W Commercial leases (W1 Pty Ltd personal guarantee - in Liquidation - estimated) NK 75 W Vehicle finance (W1 Pty Ltd personal guarantee - in Liquidation) $30,274 76 W MM Finance (W1 Pty Ltd personal guarantee - in Liquidation) $13,132 77 W Vehicle finance (W1 Pty Ltd personal guarantee - in Liquidation) $13,152 78 W Vehicle finance (W1 Pty Ltd personal guarantee - in Liquidation) (estimated) $45,000 79 W Centrelink debt – estimated $6,000 80 JT Claim by Liquidators of W Group $1,450,000 81 W Capital Gains Tax $40,491 82 W Town M Selling Costs (estimated) $40,000 83 H Suburb C selling costs (estimated) $170,000 84 W Suburb B Selling Costs (estimated) $100,000 85 W Suburb B Capital Gains Tax (estimated) $350,000 86 W Suburb R Capital Gains Tax (estimated) $19,500 87 W Suburb P Selling Costs (estimated) $15,000 88 W Suburb P Capital Gains Tax (estimated) $70,000 89 W Legal Fees Outstanding - DFLM $80,142 90 W Legal Fees Outstanding - H+A Legal $39,387.55 91 W Accounting fees outstanding NK 92 W Loan from Mr NN $25,000 93 H Loan from Husband's mother to pay Suburb C $- Total $11,328,637.06 SUPERANNUATION Member Name of fund Value 94 W Superannuation Fund 1 as at 30.06.2023 $190,692 95 H Superannuation Fund 2 $228,866 Total $419,558 SUMMARY Total property $15,872,448.34 Total addbacks $3,227,746 Total liabilities $11,328,637.06 Total superannuation $419,558 TOTAL $8,191,115.28
I accept that the above table is, at best, the contentions of one of the parties as to value and ownership and has not been the subject of testing.
If the notional property is excluded the pool is about $4,543,811 and $419,558 of superannuation. This will be affected by findings about monies said by the applicant to be owing to his parents and also by the sale price of the various properties the parties have agreed to sell.
FINAL RELIEF
It would appear that the parties should amend their respective applications for final relief since they no longer seek to retain items of real property. However, the applications as presently framed likely reflect the overall division of assets that each party would contend is appropriate.
The applicant seeks orders on a final basis:
1.That within 60 days of the date of these Orders the Respondent shall do all acts and things and sign all documents necessary to transfer to the Applicant her right title and interest in the [Suburb B] property.
2.That simultaneously with the compliance by the Respondent with Order 1, the Applicant shall do all acts and things and sign all documents necessary to discharge the mortgage secured over that property and thereafter indemnify in keep indemnified the Respondent with respect to that mortgage.
3.That the Respondent shall do all acts and things and sign all documents necessary to transfer to the Applicant the following motor vehicles:
(a) [Motor Vehicle 7]; and
(b) [Motor Vehicle 8]
4.That the Applicant shall be declared the sole legal and equitable owner of his interests in the Applicant's companies.
5.That within 14 days of the date of these Orders, the Respondent shall transfer to the Applicant the dog […] registered in her name.
6.That any sum held in the Controlled Monies Account be distributed as follows:
(a) 60% to the Applicant;
(b) 40% to the Respondent.
7.That the parties distribute any dividends received by either party for [X Holdings Pty Ltd] as trustee for the [X Trust] from entities in liquidation as follows:
(a) 60% to the applicant:
(b) 40% to the respondent.
8.That the Applicant otherwise receive and/or retain as his absolute property to the exclusion of the Respondent. all other property in his name and/or possession at the time of these Orders including but not limited to:
(a) Applicant's bank accounts:
(b) Applicants motor vehicles;
(c) Applicant's superannuation:
(d) The Applicant's interest in the Applicant's companies:
(e) The household contents and personal effects in his possession or control:
(f) All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in his sole name respectively:
(g)The household contents. furniture, furnishings and artwork contained at the [Suburb B] property;
(h) [Various artworks]
(i) [Mr Lorine] personal belongings
(j) [Other] personal belongings
(k) Crockery and cutlery and appliances in […] Kitchen.
(I) All interest in life insurance policies and superannuation funds standing in the sole name respectively;
9.That the Respondent shall otherwise receive and/or retain as her absolute property to the exclusion of the applicant, all property in her name and/or possession at the time of these Orders, including but not limited to:
(a) [Suburb P] property;
(b) [Suburb R] property;
(c) Any other real property held in her sole name;
(d) [U Pty Ltd];
(e) Respondent’s bank accounts
(f) Respondent's motor vehicles;
(g) Respondent’s shareholdings;
(h) Respondent's superannuation;
(i) The household contents and personal effects in her possession or control;
(j) All shares debentures, units in unit trusts. bank. building society or credit union accounts standing in her sole name; and
(k) All interest in life assurance policies and superannuation funds standing in her sole name
10. That in the event that after the distribution of assets referred to in orders 1 to 9 above the division of assets does not result in the Applicant receiving 60% of the nett asset pool then the Respondent shall, within 60 days of those Orders, pay to the Applicant such cash amount as is required to ensure that he receives 60% of the nett asset pool.
11. That in the event that after the distribution of assets and liabilities referred to in Orders 1 to 9 above. the division of assets does not result in the Respondent receiving 40% of the nett asset pool then the Applicant shall, within 60 days of these Orders. pay to the Respondent such cash amount as is required to ensure that she receives 40% of the nett asset pool.
12. That the Applicant and Respondent shall be equally responsible for any debt which may arise of whatsoever nature and kind as a result of the entities in liquidation with such debt to include and shall not be limited to the following:
(a) Any amount required to be paid by the Applicant as a result of any judgement or Order with respect to Supreme Court case number […];
(b) Any taxation or penalty;
(c) Any other amount sought to be recovered by the liquidator from either party.
13.That the parties shall otherwise be responsible for all debts held in their sole name and shall indemnify and keep indemnified the other with respect to those debts.
14.That the parties shall do all acts and things and sign all documents necessary to give effect to these Orders.
15.That, in the event either party refuses or neglects to sign any deed or instrument to give effect to these orders within seven days of being requested to do so. the Registrar of the Court be appointed pursuant to section 106A of the Family Law Act to sign such document on behalf of such party to give effect to the operation of the deed or instrument.
16.That the Respondent pay the Applicant’s costs of and incidental to these proceedings.
The respondent seeks orders on a final basis:
1.That a sum be distributed to the wife from the Controlled Monies Account as follows:-
(a)to the Respondent, an amount equal to 60% of the net pool, including superannuation;
(b)to the Applicant, an amount equal to 40% of the net pool, including superannuation.
2.That the parties distribute any dividend received by either party or [X Holdings Pty Ltd] as trustee for the [X Trust] from the Entities in Liquidation as follows:-
(a) 60% to the Respondent;
(b) 40% to the Applicant.
3. That [the] Respondent do all acts and things, vote in favour of all resolutions and sign all documents necessary to:
(a) Resign from all officeholding in [X Holdings Pty Ltd];
(b) Transfer any credit/debit loan account in [X Holdings Pty Ltd] to the Applicant;
(c) Transfer her interest in any shares in [X Holdings Pty Ltd] to the Applicant;
(d) Resign as principal of [X Trust];
(e) Relinquish all rights as to capital and income of the [X Trust];
(f) Transfer an credit/debit loan account in [X Trust] to the Applicant.
4. That the Respondent do all acts and things and sign all documents necessary to transfer to the Respondent [but perhaps intended to read Applicant], the following motor vehicles:-
(a) [Motor Vehicle 7]; and
(b) [Motor Vehicle 8].
Other Property
5. That the Respondent otherwise receive and/or retain as her absolute property to the exclusion of the Applicant, all other property in her name and/or possession at the time of these Orders, including but not limited to:
(a) [Suburb P] property;
(b) [Suburb R] property;
(c) [Suburb QQ] property;
(d) [U Pty Ltd];
(e) Respondent's bank accounts;
(f) Respondent's motor vehicles;
(g) Respondent's shareholdings;
(h) Respondent's superannuation;
(i) The household contents and personal effects in her possession or control;
(j) All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in her sole name respectively; and
(k) All interests in life insurance policies and superannuation funds standing in her sole name respectively.
6.That the Applicant otherwise receive and/or retain as his absolute property to the exclusion of the Respondent, all other property in his name and/or possession at the time of these Orders, including but not limited to:
(a) Applicant’s bank accounts;
(b) Applicant's motor vehicles;
(c) Applicant's superannuation;
(d) The Applicant's interest in the Applicant's Companies;
(e) [X Trust] (subject to Order 2);
(f) The household contents and personal effects in his possession or control;
(g) All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in his sole name respectively; and
(h) All interests in life insurance policies and superannuation funds standing in his sole name respectively.
Indemnities
7. Save as otherwise stated in these Orders and from the date of these Orders, the Respondent do all acts and things necessary to indemnify, and keep indemnified, the Applicant from and against all liabilities of the Respondent (and/or arising from one to the other) including, but not limited to:
(a) all liabilities including claims, actions, suits or demands of whatsoever nature arising out of, or in connection with, the Husband's interest in any business entity, Trust or real property;
(b) taxation (including CGT); and (c) duties (including stamp duty),
whether past, present or future.
8. Save as otherwise stated in these Orders and from the date of these Orders, the Applicant do all acts and things necessary to indemnify, and keep indemnified, the Respondent from and against all liabilities of the Applicant (and/ or arising from one to the other) including, but not limited to:
(a) all liabilities including claims, actions, suits or demands of whatsoever nature arising out of, or in connection with, the Wife's interest in any business entity, Trust or real property;
(b) taxation (including CGT); and (c) duties (including stamp duty),
whether past, present or future.
Implementation
9. That the parties do all acts and things and sign all documents necessary to give effect to these Orders.
Section 106A Order
10.That in the event either party refuses or neglects to sign any deed or instrument to give effect to these Orders, within 7 days of being requested to do so, the Registrar of the Court be appointed pursuant to section 106A of the Family Law Act to sign such document on behalf of such party to give effect to the operation of the deed or instrument.
Costs
11. That the Applicant pay the Respondent's costs of and incidental to these proceedings.
PRELIMINARY ASSESSMENT OF PARTIES’ RESPECTIVE APPLICATIONS
The parties do not agree about their respective contributions (either initial contributions or contributions during the relationship). The respondent raises an issue about whether or not the Court will in due course find that the applicant’s gambling losses during the relationship and after separation meet the definition of reckless, negligent or wanton conduct: Kowaliw & Kowaliw (1981) FLC 91-092.
The respondent contends that various amounts should be included as notional property of the applicant and also that various debts which he claims are liabilities to which the court should have regard are either not liabilities or in the alternative should be borne by him alone.
There is also a significant issue in this case about the capacity of one or other of the parties to meet the ongoing expenses associated with maintenance of the asset pool from their own resources.
The applicant deposes to income of $4,861 per week and expenses of $16,144.
The respondent deposes to income of $1,129 per week and expenses of $9,786.
In due course it may be that one or other of the parties will establish that the income is greater than as set out above but if not then it is remarkable that the parties have expended:
(a)In the applicant’s case, $363,859 in legal costs to date (with a further $335,400 of estimated costs to final hearing); and
(b)In the respondent’s case, $324,955.27 in legal costs to date (with a further $279,084 of estimated costs to final hearing).
The apparent shortfall of income over expenses supports the appropriateness of the orders which have been made to realise assets and apply the proceeds to debts.
Each party has made significant financial contributions in this case. The real issue will be about the composition of the asset pool, inclusion (or otherwise) of notional property and whether there has been “waste” and who should bear responsibility for liabilities. Until those factual issues are resolved, a cautious approach with a focus on asset preservation is indicated.
Suburb C mortgage
When orders were made on 2 August 2023 by consent, they provided for the respondent to remain in occupation of the Suburb C property pending sale, the property to be listed for sale and the mortgage to be met in the sum of $35,624 from borrowings of $280,000 from D Pty Ltd for a period of not in excess of three months.
The orders of 23 February 2024 confirmed the sale of the Suburb C property. Order 5(a) of those orders provided: “The Applicant make payment of the [Suburb C] mortgage repayments as and when they fall due”.
The applicant seeks to be relieved of the obligation created by Order 5 of the orders of 23 February 2024 and proposes that the mortgage arrears accrue and be paid from the proceeds of sale of the Suburb C property.
The respondent resists this.
As outlined above – if I accepted that the parties’ income was as deposed in their respective financial statements then I would have little doubt that neither party had the capacity to meet the mortgage from income.
The respondent says the situation is more complicated. The respondent contends that the applicant has had access to capital over and above that which is listed as income in his financial statements as follows:
(a)Funds of G Pty Ltd, a company which lists Mr RR as director but which the respondent asserts is controlled by the applicant;
(b)Funds advanced by the applicant’s mother; and
(c)Perhaps funds from other entities registered in the names of third parties but which the respondent says are effectively controlled by the applicant.
The Suburb C mortgage is a mortgage in favour of FF Finance. The mortgage dated 11 April 2023 secured an advance of $4.5million. The amount payable under the mortgage is $35,625 per month.
If the mortgage payments are not made as and when they fall due then they incur default interest. The rate of interest if payments are made in accordance with the loan agreement is 9.5 per cent. In the case of default, the payments are at 18 per cent.
The applicant’s mother made the mortgage payments to FF Finance which were due and payable in November and December 2023.
The respondent says that since there is no question that the mortgage payments are due and payable and the interest payable under the default rate is so significant, the parties ought not pay the interest at the default rate if other options are available. The respondent points to the availability of the following potential sources of funds:
(1)The applicant’s mother, Ms H who swore an affidavit in the applicant’s case on 1 February 2024. At that time, she said that she had available the sum of $652,500 to lend her son to apply to the settlement the parties reached with the Liquidator of W1 Pty Ltd. The applicant’s mother indicated she was prepared to pay loan repayments on her son’s behalf by way of interest free loan if he was residing in the premises – no updating affidavit indicating her current view was before me;
(2)The applicant’s Financial Statement lists at Item 41(ii) 100% ownership of “[G Pty Ltd]” – that entity has already advanced funds to the husband. On 30 January 2024 G Pty Ltd entered into a Loan Facility Agreement (“the agreement”) with the applicant. The agreement was drafted by the applicant’s lawyers (as opposed to any person acting on behalf of the lender). The agreement refers to a facility in the sum of $700,000. It says that an initial advance (ahead of the signing of the agreement) in the sum of $245,245 had already been provided. The agreement acknowledges that as at 30 January 2024 $454,755 remained to be drawn down. The interest rate is set as “the Reserve Bank of Australia’s cash rate or such rate that the Lender and Borrower agree in writing from [sic] to time”. There is no evidence of an agreement as to rate. The agreement refers to advances for an “approved purpose”. There is no evidence of what are or are not approved purposes. On the applicant’s own evidence, he has previously borrowed from G Pty Ltd to pay the Suburb C mortgage. The applicant describes himself as a consultant for G Pty Ltd. His financial statement says he owes G Pty Ltd $245,118. This is a similar but not identical figure to the amount described as the initial advance.
(3)The respondent says that the applicant has been able to apply funds from an undisclosed source to gambling and gives as an example the sum of $235,418.78 which was deposited to a personal gambling account of the applicant in the period 1 December 2023 to 31 December 2023. In his affidavit he declines to provide details as to the source of these funds and says he “will respond at length in my trial affidavit” for final hearing. During that month the applicant incurred net gambling losses of $95,968.82.
Finally, in January 2024 the applicant was proposing to borrow $5.5million. He says this was in a context where he would live in the Suburb C property obviating the need to pay rent elsewhere and would seek a contribution of $6,000 per month from a proposed co-occupant. That said the mortgage payments were to be about $49,000 per month. The court did not make orders that the applicant occupy the property. The fact remains a loan to a third party remains due and payable. It would appear that in February and March 2024 the default rate of interest has been payable in respect of the Suburb C mortgage. Given a default notice has issued the lender is also entitled to charge legal expenses under the loan agreement.
The applicant says his mother’s offer was conditional and the conditions have not been met. He does not however file any updated evidence from her.
The applicant did not make a proposal for how the mortgage was to be paid if he were relieved of the obligation created by the orders. By inference he was suggesting that the amounts would be deducted by the mortgagee from the proceeds. He says this is significant since there is no guarantee the Suburb C property will sell at auction in early. This is true. But the submission cuts both ways since default interest will continue to run if the payments are not made.
In circumstances where the applicant has declined to indicate the source of funds applied to his gambling account, declined to give evidence as to whether his mother is prepared to loan him money on the same terms (interest free) which would have the effect of preventing him from incurring penalty interest and has not addressed why he has not applied funds from the advance from G Pty Ltd, he has not persuaded me that the order that he be responsible for the mortgage payments should be discharged.
Amounts to be paid upon sale of the Suburb C property
A secondary issue related to payments which the applicant sought be made before monies were distributed to the parties.
At this stage it is not clear what the proceeds of sale of the various properties will total. Nor is it apparent what approach a trial judge will take to the conclusion (or otherwise) of notional property or “addbacks”. Accordingly, I must be careful to ensure that neither parties’ ultimate relief is prejudiced by the payment of amounts at this stage of the litigation which may not ultimately be payable (or may not be payable by the parties jointly) in due course.
The applicant sought payments be made to his mother and G Pty Ltd. I will deal with the payments which he seeks to his mother first.
I accept the funds were advanced by the applicant’s mother. I accept she characterises them as a loan without interest. The only evidence before me about repayability of those amounts is that they are to be “repaid on request”. There is no evidence of a request. This is not surprising given the applicant otherwise deposes to additional borrowings from his parents in the sum of $578,520 and his mother has given evidence of her preparedness to lend further funds. All funds being lent in her words “because of my love for [Mr Lorine] […]”. The evidence does not satisfy me that the monies are presently repayable.
The next two amounts which the applicant sought were an order for repayment of $10,500 and $35,625 to G Pty Ltd from the proceeds of sale of the Suburb C property. The respondent’s counsel submitted that the respondent will in due course allege that the applicant (and not Mr RR) is actually the effective Director and beneficial owner of the shareholding in G Pty Ltd. This is not a matter I can resolve at this interlocutory stage. However, the history of the parties’ registration and management of various companies during their relationship does not allow me to dismiss that submission out of hand.
I accept G Pty Ltd transferred $10,500 to Mr PP on 15 November 2023. I accept Mr PP appears to be a person listed in correspondence from SS Lawyers addressed to the applicant relating to a mortgage to the applicant secured over Lot … of SP… (which appears to be the Suburb C property). I accept that G Pty Ltd appears to have advanced $35,625 to the credit of the FF Finance mortgage on 11 January 2024.
Given the timing of these last mentioned payments from G Pty Ltd – they both predate the Loan facility Agreement – then they must be assumed to be part of the $245,245 which had been advanced prior to the agreement. Given the repayment date in the agreement, the evidence does not establish that those monies are immediately repayable such that they should be deducted from the Suburb C proceeds and I propose to decline the applicant’s application in that regard.
In so doing I have to consider that the respondent appears to be running a case which invokes the dicta in Biltoft & Biltoft (1995) FLC 92-614 and Af Petersens & Af Petersens (1981) FLC 91-095 such that some of the liabilities may – if her case is accepted – fall to be borne by the applicant alone. If orders are made for payments of those liabilities now, I could not be confident at this stage of the proceedings that there will be sufficient funds to meet her final relief.
The parties otherwise agreed to a set of consent orders which were identified by them in court at the commencement of the hearing and I propose to make those orders. They include an order for payment to the applicant of funds by way of partial property settlement. Those funds will enable the applicant to comply with orders of the court. Once he has complied with the orders, I accept that he has outstanding legal fees and had indicated an intention to apply funds to that liability (albeit the orders were not explicitly drafted so as to provide the funds directly to his lawyers).
I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Christie. Associate:
Dated: 25 March 2024
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