Rahal & Rahal (No 3)
[2023] FedCFamC1F 991
•20 November 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Rahal & Rahal (No 3) [2023] FedCFamC1F 991
File number: SYC 7908 of 2020 Judgment of: HENDERSON J Date of judgment: 20 November 2023 Catchwords: FAMILY LAW – INJUNCTIONS – Where the wife sought injunctions against the husband in relation to dealing with assets in his name or has an interest in – Where the husband has made unilateral decisions regarding matrimonial assets – Injunctions made as sought by the wife.
FAMILY LAW – PROPERTY – Interim distribution – Where the wife seeks the remainder of funds from the sale and encumbrance of recreational vehicles – Where the husband submits the funds be used towards a mortgage – Where the husband submits he cannot afford to make all payments he is currently liable for – Where the husband’s lifestyle has continued to a high level – Orders as sought by the wife.
Legislation: Evidence Act 1995 (Cth) s 50.
Family Law Act 1975 (Cth) s 79.
Cases cited: Rahal & Rahal (No 2) [2023] FedCFamC1F 646.
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466; [2009] FamCAFC 166.
Division: Division 1 First Instance Number of paragraphs: 31 Date of hearing: 15 November 2023 Place: Sydney Counsel for the Applicant: Mr Brickwood Solicitor for the Applicant: Barkus Doolan Winning Counsel for the Respondent: Mr Dickson KC Solicitor for the Respondent: Broun Abrahams Burreket ORDERS
SYC 7908 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS RAHAL
Applicant
AND: MR RAHAL
Respondent
ORDER MADE BY:
HENDERSON J
DATE OF ORDER:
20 NOVEMBER 2023
THE COURT ORDERS THAT:
1.Within 7 days from the date of these orders, the husband will pay the proceeds of the sale of the recreational vehicle and encumbering the lien remaining in his bank account of no less than $69,000 received to the Barkus Doolan Winning Trust Account on account of the wife’s legal fees associated with these proceedings.
2.Pending further order, the husband be restrained by way of injunction from further encumbering, transferring, or alienating any assets held in his name or in which he has an interest (either directly or indirectly) without first obtaining the wife’s written consent to do so. This order does not prevent the husband from accessing his bank or financial institution accounts or any company accounts after he has complied with this order.
3.An account held by the husband’s company with C Bank ending in …09 is excluded from any injunction.
4.The husband may remove no more than $1,000 from any bank or financial institution account pending compliance with Order 2.
5.Each party’s costs are reserved.
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 Rahal & Rahal has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
HENDERSON J:
INTRODUCTION
This was an urgent application by the wife for orders that:
(1)Firstly, the husband pay her monies received by him in respect of an insurance claim for damage to the former matrimonial home where she and the two children live to the exclusion of the husband;
(2)Secondly, that he pays her a further sum representing the net proceeds of sale of a recreational vehicle and the mortgaging or encumbering of a recreational vehicle, originally some $315,000 was sought, but ultimately only $70,000 was left in his bank account from those transactions as at the date of this hearing; and
(3)Thirdly, a further injunction restraining the husband from selling or transferring or encumbering any asset in his name or control or possession without obtaining her consent, save for his personal and company banking and financial accounts.
THE HEARING AND DOCUMENTS RELIED UPON
Mr Brickwood of counsel acted for the wife and Mr Dickson of King’s Counsel acted for the husband.
The material read was as set out in the parties’ respective Case Outlines:
(1)For the wife:
(a)Application in a Proceeding and affidavit filed 23 October 2023;
(b)Financial Statement filed 1 December 2022;
(c)Reasons for Judgment of McGuire J of 4 August 2023;[1] and
(d)An extensive tender bundle.
(2)For the husband:
(a)His Response to an Application in a Proceeding and affidavit filed 10 November 2023; and
(b)Financial Statement filed 14 November 2023.
[1] Rahal & Rahal (No 2) [2023] FedCFamC1F 646 (McGuire J).
I also heard submissions from both parties.
DISCUSSION
The matter has been ongoing since 2020 when both parties, and by consent, agreed the wife would stay in the former matrimonial home with the two children to the exclusion of the husband, that he would pay all outgoings on the former matrimonial home including the mortgage, children’s school fees, other outgoings, and $1,000 per week in spousal maintenance to the wife. There is no doubt financial times have significantly changed from 2020, if for no other reason, than 13 interest rate rises, have significantly increased ongoing costs for anyone with a mortgage debt.
The mortgage is some $3.2 million. The home is valued at no less than $11 million. The mortgage payment is some $25,000 per month currently. The girls now attend EE School, and school costs and outgoings for the children have risen.
The husband says he cannot afford the upkeep of the family as was contemplated in the 2020 orders, agrees he has been selling and encumbering and otherwise dealing with matrimonial assets, he says to keep up with the outgoings and obligations created by the orders he is bound by, and that his income is insufficient to pay the mortgage repayments. He accepts, therefore, he has used matrimonial assets unilaterally, he says to maintain the wife and children. He says the former matrimonial home must be sold and that is a matter that will be agitated shortly, perhaps before McGuire J.
There is, as I see the evidence today, unfortunately for the wife, a practical reality to such a course, which as I see it, would protect the value of the most valuable asset currently on the balance sheet, which is the former matrimonial home.
The wife resists the sale and always has. She is of the view she should retain it and will be able to retain the former matrimonial home in a property settlement. The wife is without income or resources, on my reading of the evidence, has a legal bill, which for the finalisation of this matter, is approaching $1 million. She says the husband has interests in a multitude of companies, entities and organisations, many of which may be his father’s or related to his father’s business, with who he is employed in industry. That the husband has not disclosed his interests in these multitude of entities and businesses and that she will, by joining multiple parties to the matter, prove the vast wealth of the husband, and thus be able to retain the former matrimonial home.
The joinder of these parties is a matter that will be before McGuire J on 7 December 2023. As I read the evidence today, to retain the former matrimonial home and discharge the current mortgage, as the wife has no income to pay a mortgage, she is looking at receiving some $15 million.
As I see the evidence read today and from prior interim hearings, the husband’s application that he has used matrimonial funds received post-separation to only maintain his family is, in some respects, fanciful, given what is his clear and apparent extraordinary, unilateral expenditure of joint matrimonial assets post-separation. For example, $1.8 million, or perhaps a bit more, the parties had in a bank account at separation, which was not only their asset, but also reduced any interest payments on the mortgage. Another example is his gross income of some $240,000 per annum over three years, amounting to some $720,000, perhaps net $500,000. The repayment to him or a company of his – but in his control – of a loan with one of his father’s companies, of some $450,000 post-separation. Finally, the $245,000 of the monies remaining from the recreational vehicle dealings referred to previously. This is a total of no less than $3 million in three years or $1 million a year spent by him of monies in his unilateral control.
I accept the husband has paid the mortgage, which has increased to an extraordinary level now, the children’s school fees, maintenance for the wife, other outgoings, but even accepting his evidence at its highest and as comprehensively dealt with in the wife’s Case Outline and affidavit, there is a shortfall of over $900,000 of expenditure unaccounted for, on his own evidence. The wife will also dispute some of his expenditure at a contested hearing, and has accepted it for the purpose of this exercise only.
It is not hard to see where some of this money has gone in three years when one sees his credit card and bank account records, contained in the wife’s tender bundle from the summary prepared by the wife pursuant to section 50 of the Evidence Act 1995 (Cth), being from pages 60 to 172 of her tender bundle.
There were many cash withdrawals, mostly of $2,000 each, for the period 6 January 2022 to 5 April 2023, totalling some $114,000. The husband had a holiday in Region O of some $12,000 in February 2022. He spent $1,200 at V Store in July 2022, $1,458 at W Store in July 2022, $2,300 at Z Venue in August 2022, $329 at BB Venue in January 2023, and on the same day, $510 at CC Store, and $303 at DD Venue in March 2023.
Thus, whilst I accept the husband has paid the upkeep of the former matrimonial home and for his family from his income and joint assets, his lifestyle continues at a high level, unabated since separation. There seems to have been little impact up on his lifestyle post-separation. I have just read out some of the entries, and no doubt, a thorough reading would reveal more. This expenditure is at a time when the mortgage and outgoings for his children going to private schools was increasing, yet this did not seem to change his expenditure from the records before me.
However, and similarly, the wife’s contention that she remains in the former matrimonial home, that the husband has capacity to continue to pay the mortgage at $25,000 per month, $4,000 spousal maintenance per month for her, and the children’s school fees, approaching perhaps $30,000 a year, on his income of $240,000, without further selling or encumbering matrimonial assets, is also somewhat fanciful.
Whether the husband should or should not have spent so extravagantly is not the issue before me. That is a very important and highly relevant factor in the section 79 application, and if this is extraordinary expenditure and if that be the finding a Judge makes upon testing and hearing the evidence, it will sound in his entitlement to their property ultimately. However, for the wife to now say she has to remain in the former matrimonial home and it cannot be sold and he is to continue to pay all costs, is not feasible on all the evidence I have read.
Although I accept the wife by her injunction sought and submission made is open to selling or encumbering further matrimonial assets to enable the husband to maintain these outgoings, when I look at the balance sheet, other than the recreational vehicle, which now, after having been mortgaged, might have equity of some $250,000 remaining, I cannot see what other matrimonial assets there are other than the former matrimonial home to sell.
The husband’s income is some $240,000 gross per annum. His expenditure post-separation was funded by his unilateral expenditure of their joint matrimonial assets of over $1.8 million in the bank at separation, the sale or encumbering of joint assets, being recreational vehicles, and receipt of a repayment of a loan to him from his father’s company. I accept on the evidence that now he cannot continue to pay $25,000 per month in mortgage payments, let alone other outgoings, and unfortunately the wife may have to face this reality and its consequences.
Selling an asset is often the best way to protect its value for a spouse in the wife’s position, and she may have to face this reality ultimately, and sooner rather than later, as her case of there being millions in the husband’s control or ownership, or that he is able to access millions in related companies available to him or from assets not yet even determined or in any way assessed, is only an assertion. There is, at this stage, little real evidence as these parties have not been joined, despite three years of litigation and a legal bill, which for a final hearing, will approach $1 million.
On the other hand, the husband’s conduct is coercive and controlling. He and he alone has used their money as he saw fit. Even after the wife put forward an alternate proposition to selling the recreational vehicle, he simply ignored her and did what he wanted to do and sold it, as he has always done. He spent their $1.8 million and thus the wife’s contribution to their asset pool post-separation is significant. His behaviour bespeaks of the wife’s evidence of control and coercion during the marriage, and he has little regard or respect for her views in relation to their assets. The husband would not give the wife the insurance money of some $51,000 when he received it, to rectify the former matrimonial home because he said she wanted to do something more than fix the damaged roof. That behaviour is unacceptable and again supports the wife’s position that he is and will continue to be coercive and controlling of her.
He ultimately agreed at Court to provide the insurance monies to the wife, but as I see the evidence, he would not have done so unless the wife brought this application. It was alright for the husband to spend their $1.8 million, and I accept some of it went to the wife to pay her legal costs, but not for the wife to receive $51,000 to repair the former matrimonial home, which she and the children have exclusive use. It was alright for him to receive $245,000 from the sale of and encumbrance of the recreational vehicles earlier this year and spend some of it at hospitality venues and high-end retail stores, but not proper or just and equitable for the wife to have what is left of that money, some $70,000 because, using the submission put forward to me by Mr Dickson KC, the wife would only use it to pay her legal fees, whereas he would use it to make mortgage payments for the next few months.
The argument that such an order, that is, me providing the wife with that $70,000, would not be just and equitable or otherwise proper, is not accepted by me.
It was alright for the husband to receive the repayment of a loan to his father of some $450,000 and spend it on a holiday, in part, to Region O in the sum of $12,000, but not for the wife to receive that $70,000. Although I accept the wife has the benefit of living in the former matrimonial home and spousal maintenance and has had some benefit from some of the joint matrimonial assets, the husband has simply ignored her position when it comes to the expenditure of this money and his lifestyle continues unabated, on the evidence.
Interim property settlement
Looking at Strahan & Strahan (Interim Property Orders),[2] all I have to find is that it was an appropriate case to make an interim costs order for property settlement where the wife required funds to defray costs and expenses pending proceedings. That is precisely what the wife is doing here and it is the application she has made.
[2] (2011) FLC 93-466 (Boland, Thackray and O’Ryan JJ).
This is clearly a matter where the husband has used the parties’ assets and his income to pay his legal costs, the wife has had some of that money as well to pay her costs. The wife is now indebted to her lawyers for over $200,000, including disbursements, with more to be paid, and the sum of $70,000 sought by her is an appropriate sum to assist to pay those legal costs and defray them. It is clearly an appropriate case to make the orders sought in relation to the funds that are left, and I will so order.
If the husband is unable to meet the future mortgage payments, he and the wife will have to face that harsh reality, which may be the sale of the former matrimonial home, in order to protect the assets they have. Both the husband and wife stand to lose significant money if there is not an orderly sale of the former matrimonial home if it comes to that.
Injunction
Coming now to the injunction sought by the wife. The husband has had effective carte blanche of the parties’ assets post-separation and the financial decisions made. He and the wife need to make the next set of decisions together and not via litigation before a Judge. The wife’s injunctive order sought is appropriate and she has given an undertaking in writing. The wife has sought to have input into decisions made in the past; the expenditure of the $1.8 million, the sale of the recreational vehicle, the mortgage of the recreational vehicle, and what happened to the funds from the repayment of the loan from his father’s company to no avail.
The injunction sought by the wife provides her with input and provides for the husband and wife to be able, if agreed, to continue to sell matrimonial assets, should they so choose. The husband will now need to listen to his former wife.
CONCLUSION
The matter is before McGuire J on 7 December 2023 where his Honour will finalise his part‑heard review, hear the subpoena review, and determine the status of the wife’s joinder application, and perhaps determine the future of the husband’s further application for sale of the former matrimonial home. I have made orders and directions in that regard, not in relation to the sale of the former matrimonial home, but for the other three matters.
Therefore, on the facts as I have found them as best I can, this being an interim decision and it being difficult to make findings on contested issues, I will make the orders sought by the wife as they are appropriate in all the circumstances.
I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of the Honourable Justice Henderson delivered on 20 November 2023. Associate:
Dated: 23 November 2023
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