Ly & Bui
[2021] FedCFamC1F 241
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Ly & Bui [2021] FedCFamC1F 241
File number(s): SYC 7794 of 2018 Judgment of: HENDERSON J Date of judgment: 29 November 2021 Catchwords: FAMILY LAW – PROPERTY – Interim distribution – application sought by the wife for the husband to pay $330,000 by way of interim property settlement pursuant to Family Law Act 1975 (Cth), s79 – application granted.
FAMILY LAW – COST – Discretion – costs sought by the second respondent – discretion not exercised – application dismissed
FAMILY LAW – SPOUSAL MAINTENANCE – application by the husband to discharge current arrangement in circumstances where his income was significantly reduced due to COVID restrictions – order varied to reflect a reasonable level given his income earning capacity
Legislation: Family Law Act 1975 (Cth) s 79
Real Property Act 1900 (NSW) s57(2)(b)
Cases cited: Strahan v Strahan (Interim property orders) (2011) FLC 93-466; (2009) 42 Fam LR 203 Division: Division 1 First Instance Number of paragraphs: 81 Date of hearing: 19 August 2021 Place: Sydney Counsel for the Applicant: Mr Gould Solicitor for the Applicant: Panacea Lawyers Counsel for the First Respondent: Ms Murphy Solicitor for the First Respondent: Atkinson Vinden Counsel for the Second Respondent: Mr Young Solicitor for the Second Respondent: Bransgrove Lawyers Counsel for the Third Respondent: No appearance Solicitor for the Third Respondent: No appearance Counsel for the Fourth Respondent: Mr Sud Solicitor for the Fourth Respondent: Independent Legal ORDERS
SYC 7794 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS LY
Applicant
AND: MR BUI
First Respondent
MR BELSKY
Second Respondent
B PTY LTD ACN … (and others named in the Schedule)
Third Respondent
ORDER MADE BY:
HENDERSON J
DATE OF ORDER:
29 NOVEMBER 2021
THE COURT ORDERS THAT:
1.The spouse maintenance order made on the third of September 2019 be varied such that the husband pay to the wife the sum of $1000 per week by way of spousal maintenance.
2.The husband to cause the sum of $330,000 to be paid to the wife by way of interim property settlement within 21 days of today’s date.
3.Failing payment of that sum to the wife the husband is ordered to sell the property at Suburb D by placing that property on the market within 42 days from the date of these orders and from the net proceeds of sale to pay the wife the sum set out in order one herein.
4.The second respondent’s application for costs is dismissed.
5.The wife file an undertaking as to damages in relation to the restraints made against B Pty Ltd within 7 days of delivery of this judgment.
6.Orders 4, 5, 8, 9 and 13(d) of the wife’s application in a case filed 29 March 2021 are made in respect of B Pty Ltd, otherwise the wife’s application in a case is dismissed.
THE COURT NOTES THAT:
A.Orders set out in Order 6 are as follows:
a.That pending further order, B Pty Ltd be and is hereby restrained from encumbering, transferring, disposing of, assigning or adversely dealing with the Suburb G property.
b.That pending further order, B Pty Ltd pay the mortgage and outgoings in respect of the Suburb G property as and when they fall due and do all things to maintain the Suburb G property in good condition and keep it insured for value.
c.That funding further order, the wife as against the husband and B Pty Ltd and subject to Order (d), has exclusive use and occupation of the Suburb G property.
d.That the husband pay any and all amounts due under the Residential Tenancy Agreement between the husband and B Pty Ltd dated 4 February 2021 with respect to the Suburb G property.
e.That within 7 days B Pty Ltd provide by way of disclosure, any documents recording the application for a loan facility from C Pty Ltd to B Pty Ltd and statements from the date of the loan to current
B.The fourth respondent, C Pty Ltd, has complied with the terms of order 14 sought by the wife’s application in a case filed 29 March 2021.
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 the pseudonym Ly & Bui is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
This interim hearing concerns a matter of considerable complexity involving multiple parties, overseas transactions, applications to set aside transactions of real estate, together with a dispute between the husband and wife in relation to their property.
The interim applications before me were the application for costs of the second respondent Mr Belsky; the wife’s application for interim costs seeking the sum of $330,000 to prosecute her claim against her husband and the three other parties she has joined to the litigation, together with a multitude of orders against all respondents she has joined to the proceedings including the husband; the making of undefended orders against B Pty Ltd, the third respondent to the application, who did not appear at the hearing and an application by the husband to discharge an interim spousal maintenance order made on 3 September 2019.
The material read was voluminous and as follows.
For the wife:
(a)Application in a case filed 29 March 2021, supported by affidavits filed on 5 December 2018, 23 August 2019, 20 May 2020, 29 March 2021, 20 May, 13 July 2021, consisting of 1200 pages of annexures;
(b)Financial statement filed 6 August 2021 and;
(c)Counsel’s case outline filed 17 August 2021.
The wife was represented by Mr Gould of counsel.
For the husband:
(a)Response filed on 7 June 2021;
(b)Amended Response to Final Orders filed 18 June 2021;
(c)Financial statement filed 7 Jun 2021 and balance sheet;
(d)Affidavits filed 18 April 2019 and 7 June 2021;
(e)Supreme Court Affidavit of Mr E filed 16 February 2021;
(f)Supreme Court Affidavit of Ms Ly filed 15 February 2021;
(g)Tender Bundle and;
(h)Counsel’s amended case outline filed 16 August 2021.
The husband was represented by Ms Murphy of counsel.
For the second respondent, Mr Belsky:
(a)Response filed 7 June 2021;
(b)Affidavits filed 8 June 2021 and 21 July 2021;
(c)Tender bundle and exhibits and;
(d)Counsel’s case outline.
The second respondent was represented by Mr Young of counsel, and the fourth respondent, C Pty Ltd, was represented by Mr Sud of counsel.
There was no appearance by the third respondent, B Pty Ltd.
The wife’s material was contained in a court book comprising two volumes of over 1200 pages.
The short relevant chronology is as follows.
The parties were married in 2006.
The wife asserts separation on 2018.
The husband contends separation was in 2013.
Their son Y was born in 2010. He has some special needs and has always lived with his mother.
The husband is a health professional and owned 10 separate properties prior to the marriage.
Post the marriage the husband and wife acquired properties at Suburb D, Suburb H, Suburb J, Suburb G and Suburb F, from where he conducts his professional work.
In 2011/2012 the husband and Mr Belsky enter into commercial transactions to purchase a natural produce from Country Q to sell in Country R, which sale does not proceed due to the produce not being able to be shipped due to ice.
Despite this failure the husband and Mr Belsky entered into a second similar commercial arrangement in 2013 to purchase and sell produce, and entered a borrowing arrangement with a Country P bank for USD$40 million to carry this venture out and pay off the debt from the first failed venture.
This venture failed due to the produce not being of sufficient quality for its intended market in 2015.
The wife was oblivious to these events and the consequence of these failed business ventures.
The husband begins selling off properties to reduce his asserted debt to Mr Belsky of USD$20 million.
On April 2017 the husband purchases the former matrimonial home at Suburb G for AUD$3.85 million, having just sold premises in Suburb D for AUD$8,949,684 on the husband’s case.
An all monies mortgage is entered into between the husband and Mr Belsky over all the husbands’ properties including Suburb G, over which there is a specific mortgage for AUD$4.5 million, to secure the monies Mr Belsky asserts the husband owes him in September 2017.
The parties separate on the wife’s chronology and she commences proceedings in the Court on 5 December 2018.
On 18 April 2019 Mr Belsky advanced to the Country P bank sufficient monies to discharge their indebtedness to that organisation which was somewhere in the range of USD$40 million.
Mr Belsky asserts the husband defaulted under the mortgage agreement between them.
On 23 May 2019 orders are made restraining the husband from dealing with the home at Suburb G in any way.
In late 2019 Mr Belsky issues 57(2)(b) Notice against the husband, pursuant to the Real Property Act 1900 (NSW), calling in his debt and exercises his power of sale as the mortgagee on or around 31 Dec 2020, by selling the property to B Pty Ltd, who purchased the property with funds advanced by way of a mortgage from C Pty Ltd.
The husbands’ asserted debt to Mr Belsky has now been reduced to some $14,910,000 in respect of the Country P debt but it is asserted by Mr Belsky that the husband also owed him $5,446,516 in respect of other borrowings. These events occurred without the wife’ knowledge.
The wife brought proceedings in the Supreme Court in late 2019 seeking to set the sale aside. The matter was resolved by consent in February 2021 and the sale proceeded.
The husbands’ assets are as follows.
Given the husbands conduct vis-à-vis the wife in this matter, it was an imperative that his sworn material be as accurate as is possible and be supported by evidence.
He asserts he earns an income of some $6,000 a week and owns two properties at Suburb H, a property at K Street Suburb J, the property from which he conducts his professional work at Suburb F, two properties at Suburb L, two properties at Suburb M, two properties at Suburb N, and the property at Suburb D which the wife seeks he sell if he cannot pay her interim costs application.
The husband says the Suburb D property is worth between $1.14 and $1.05 million and the total value of property in the husband’s name he says is $9 million and asserted debts are $25 million. His real estate may now be more valuable.
The husband has shares in NAB bank amounting to $260,000, he owns an expensive motor vehicle and has over $1 million in superannuation. Whether the debt he asserts he owes Mr Belsky is correct is yet to be determined as he has been paying down the debt on a regular basis and there has not yet been a reconciliation. The wife does not accept this debt in its entirety.
DEALING NOW WITH THE SPOUSAL MAINTENANCE APPLICATION AND THE DISCHARGE SOUGHT BY THE HUSBAND.
The parties have been married in excess of 12 years having commenced cohabitation in November 2006 and separated in 2018 on the wife’s version, or 2013 on husband’s version.
They have a child aged 10 who has some intellectual disabilities and requires a better than average parenting by his mother and his mother has been his full-time parent and is his most closely attached parent.
The mother does exercise a limited work capacity, earning some $520 per week an educator, together with a spousal maintenance of $1674 a week paid by the husband, giving her a gross income of $2200 a week.
From a reading of her most recent financial statement she has a surplus of income over necessary expenses of $700 per week as the husband pays for the rent of the property she lives in and all the child’s school expenses. The husband has agreed and will continue to maintain her living in the home, pay all the child’s school fees and education costs.
I accept the wife is at this present time maximising her earning capacity. I accept the husband had a difficult time during COVID maintaining his income but private health services are now open and he will continue to earn the income he has always earned.
The wife cannot support herself and pay her necessary expenses with her modest income and I will not discharge the current spousal maintenance of order of $1634 per week but will reduce it by $700 to $934 rounded up to $1000 a week, being the amount she requires to provide for her necessary expenses. With rent of $2000 being paid per week and maintenance of $1000 per week the husband is supporting the wife to a reasonable level given his income earning capacity.
THE WIFE’S’ CLAIM FOR AN INTERIM PROPERTY SETTLEMENT
Going to the wife’s claim for $330,000 to prosecute her claim.
There is a property at Suburb D in the husband’s name which he can sell to provide the sum sought by the wife if I so order he pay and he is unable so to do.
Mr Belsky who asserts the husband owes him AUD$23,500,000 in respect of a two failed commercial enterprises and other loans, has no objection to that property being sold by the husband, the wife being paid monies and he will take action against the husband for the balance of what he asserts is a legitimate debt.
The husband objects to this course on the basis that the debt he owes to Mr Belsky is more than the combined value of his significant portfolio of real estate in Australia and elsewhere and that to pay the wife this sum will significantly prejudice him in his commercial dispute with Mr Belsky.
The fact is the wife disputes the veracity of the transactions and is highly suspicious that in some way Mr Belsky and the husband are conspiring to defeat her claim for property in relation to the significant commercial debt of the husband with Mr Belsky and the sale of the former matrimonial home in which the wife lives by Mr Belsky as a mortgagee in late 2019 for $4.5 million in part satisfaction of the debt he asserts is owed to him. All these transactions were carried out without the wife’s knowledge.
Mr Belsky in exercising his mortgagee power of sale sold the property to B Pty Ltd in 2019 and this group obtained a mortgage from C Pty Ltd to fund their purchase. It is with this Company that the husband has an agreement to pay rent to maintain the wife and child in the home.
The wife seeks to set aside both transactions ultimately.
The behaviour of the husband has understandably caused the wife to mistrust everything he now says or does and she is highly suspicious of the alleged commercial loans to Mr Belsky that the husband pleads.
I am unable to determine at this time whether the wife’s application to set aside these two sales will be successful and whether the husbands’ case will be made out regarding the validity of the commercial and other loans to Mr Belsky. This is matter which will require cross examination of the relevant parties before any findings can be made on these issues.
The wife has attached a costs agreement to her material. There is no doubt the litigation she intends to undertake at this stage is expensive as it requires tracing exercises, the issuing of subpoenas, discovery of voluminous documents, significant time spent by her legal team examining documents in order to understand and verify or not the claims made by the husband about the business debt he alleges he owes Mr Belsky and which is repeated by Mr Belsky as legitimate, is indeed legitimate.
Mr Belsky has no objection to the property at Suburb D being sold, it is available to be sold, the wife is unable to provide sufficient funds to meet her necessary legal fees to fund this litigation, the husband is in sole control of the wealth of the parties and his conduct has brought about this protracted litigation and thus I find consistent with the principles in Strahan v Strahan (Interim property orders) (2011) FLC 93-466; (2009) 42 Fam LR 203 that it is just and otherwise proper to make and order for payment to the wife under section 79 of the Family Law Act 1975 (Cth) in the amount of $330,000 from the sale of the husband’s Suburb D property.
The husband will be ordered to pay the wife $330,000 within 21 days and in default to place the Suburb D property on the market for sale to satisfy this order.
MR BELSKY COSTS APPLICATION
Mr Belsky has sought his costs of having to appear in this application which was effectively, he says between the wife and the husband.
The wife’s application in a case seeks the following orders against Mr Belsky.
The wife maintained that Mr Belsky was to be restrained from encumbering the property at Suburb G when that property had already been on sold to B Pty Ltd. That was apparent from the last time the matter was before the court and the wife should not have sought that order against Mr Belsky.
The wife sought an order that Mr Belsky place a sum of $4,500,000 into an account being the consideration recorded on the transfer document on the disposal of the Suburb G property by Mr Belsky to B Pty Ltd and is an application without merit. Mr Belsky is clearly a man of wealth and means and is not a party to the marriage. He is now intimately involved in this litigation given the conduct of the husband in not taking any steps when he exercised his mortgagee power of sale and sold the property to B Pty Ltd.
There is insufficient evidence today to order a 3rd party to a marriage to place monies into trust for an application which the wife is yet to pursue despite my entreaty to her to consider dealing with the 106B application as a stand-alone issue and to minimise 3rd parties involvement. The wife’s 106B application may not succeed and her claim may be satisfied with a monetary adjustment.
There is no right per se for the wife to live in a particular home, rather a right to a just and equitable division of the matrimonial pool which may include the value of that home at the time of the hearing rather than its value at the sale by Mr Belsky, this being an application the wife is making. Given Mr Belsky’s wealth he can make good any monetary sum to be paid to the wife should he be ordered so do.
The wife sought significant disclosure from Mr Belsky. Mr Belsky has no obligation to disclose to the wife what he did with monies he received when he sold the Suburb G property as a mortgagee. What he did with this money is not a relevant factor in the dispute. It is relevant what he paid for the home and what he sold the home for and those figures are known.
To his credit Mr Belsky admits he received funds from the sale of the property and he gave a reasonable explanation of the expenditure of the funds in his affidavit in any event.
Mr Belsky’s application for costs has merit in that there were no orders made against him and the wife’s application against him today was doomed to failure. However I must be satisfied should I exercise my discretion to make a costs order in his favour against the wife and in this matter I am not, for the following.
The genesis of this dispute and the involvement of 3rd parties, is due to the husbands’ failure to disclose to the wife that he was subject to a section 57B notice issued to the husband by Mr Belsky as mortgagee and that the house was to be sold. The husband failed to disclose he had significant commercial debts with Mr Belsky, together with other long standing debts, and this has understandably caused the wife great distress and any trust she may have had in the husband has evaporated. Thus it is the conduct of the husband that is the root cause of this failed application and I will not exercise my discretion to order costs be paid by the wife in those circumstances.
Mr Belsky may have a claim against the husband.
B PTY LTD
I will make orders four and five sought by the wife in her interim application against B Pty Ltd, the current owners of the Suburb G property.
B Pty Ltd did not appear although they were notified of today’s proceedings. The orders are restraints from encumbering, disposing of or transferring the Suburb G property, or varying the lease with the husband for the wife’s occupation of the home. Given that the husband has agreed to maintain the wife and child in that property and has lease with the current mortgagee, I see no difficulty with those injunctions being made against B Pty Ltd in their absence.
B Pty Ltd may apply to the court to have them set aside on any occasion they see fit.
The wife must file an undertaking as to damages within seven days of this order being published
It has been agreed by all parties appearing before me today that the wife will have exclusive occupation of the Suburb G property on the basis that the husband continues to pay the rent on that property. The husband has agreed to maintain the rent pursuant to a residential tenancy agreement he has entered into.
I will not make an order about B Pty Ltd not interfering with her occupation of the property there has never been any suggestion that has occurred or will occur.
If the wife seeks to have the property at Suburb G valued as at 31 December 2020, the date when the property was sold, that is a matter for her. The wife will soon have funds to do this.
I will not make order 13 that B Pty Ltd provide documents about their financial affairs from 30 June 2017 to date that is not a relevant factor.
I will make orders that B Pty Ltd provide all details in relation to the mortgage entered into with C Pty Ltd in respect of the ownership and purchase of the property at Suburb G and note that C Pty Ltd has complied with the terms of order 14 sought by the wife.
The reality is the wife’s claim against Mr Belsky regarding the restraints on the Suburb G property in her interim application have become otiose. Mr Belsky’s role in this matter is now in relation to the commercial debt between himself and the husband which is not the subject of the interim orders sought by the wife and a 106B application against him.
He no longer owns the property at Suburb G, it having been on sold, and the wife could not succeed in her application that he be so restrained from doing that which he had done. Further she was not successful in her application that he place money in a trust account or provide minute details on the use of funds he received when he sold the property to B Pty Ltd.
This is a dispute between the husband and wife and although Mr Belsky is involved in these proceedings at the end of the day, at this interim stage the wife’s application against him was misguided.
Although the wife is perfectly justified to be suspicious of the husband and his business dealings this does not mean that the husband’s case is without merit or that he and Mr Belsky are not telling the truth about the cost of their failed business venture, which if it had succeeded would have reaped many millions of dollars in profit. I am concerned that the wife’s pursuit in seeking to set aside two transactions in respect of the sale of Suburb G and any ability to perhaps see a possibility of the validity of the commercial transactions her husband entered into without her knowledge may result in there being no matrimonial funds to be dispersed other than the interim costs order I have made.
As I have stated to Miss Murphy who acts on behalf the husband and on numerous occasions, the real problem in this matter has been the failure by the husband to disclose to his wife the reality of his financial position. There is no doubt the wife believed the parties were comfortable; the husband was a man of wealth having ownership of in excess of 10 properties in Australia, a flourishing private health service and was completely unaware that he had incurred a debt of some $20 million to his business partner Mr Belsky in respect of two commercial transactions and had other long standing debts to him as well.
The wife only became aware of these concerning events when the home in which she and the child of the marriage, X were living was sold without her knowledge and without warning, to B Pty Ltd. This is in circumstances where the parties had enjoyed a luxurious lifestyle, the wife has been well maintained by the husband, the child who attends a private school has some special needs and the wife had been privileged to be able to be his full-time parent. These events caused the wife extreme alarm and she simply does not accept anything that her former husband says unless it is proven. There is much force in her anxiety and concern as to the husband’s veracity however the case that was put to this court by the wife was based upon her suspicions that the husband and Mr Belsky who have known each other in excess of 20 years and have engaged in commercial transactions previously have since 2013 have set out in a course of conduct to defeat her claim. That belief is a cause for concern and her suspicions may not be found correct.
I certify that the preceding eighty-one (81) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Henderson. Associate:
Dated: 29 November 2021
SCHEDULE OF PARTIES
SYC 7794 of 2018 Respondents
Fourth Respondent:
C PTY LTD ACN …
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