REDLEY & SCOVIL

[2020] FamCA 429

AMENDED PURSUANT TO RULE 17.02 OF THE FAMILY LAW RULES 2004

FAMILY COURT OF AUSTRALIA

REDLEY & SCOVIL [2020] FamCA 429

FAMILY LAW – INTERIM – Property – Where the wife removed substantial funds from parties’ offset account – Orders for the wife to return remaining funds – Order for the sale of real property – Order for spouse maintenance for twelve weeks.

Family Law Act 1975 (Cth) s 72.

APPLICANT: Mr Redley

RESPONDENT: Ms Scovil

FILE NUMBER: SYC 2179 of 2020

DATE DELIVERED: 29 May 2020
Corrigendum issued 3 July 2020

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 27 May 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Johnston

SOLICITOR FOR THE APPLICANT: Pigott Stinson Lawyers

COUNSEL FOR THE RESPONDENT: Mr Finch

Orders

Amended pursuant to Rule 17.02 03072020 Paragraph 1

IT IS ORDERED

1. That the wife forthwith cause to be paid to the Suburb E Offset Account with the ANZ Bank ending …74 (“the offset account”) the sum of $239,403 $293,403.

2. That the sum of $55,000 to be retained by the wife, from the money removed by her from the offset account, is characterised as a payment to her by way of partial property settlement.

3. That each of the husband and the wife be restrained from withdrawing any funds from the offset account except for the purpose of the following payments:

   (a)The payment of rates, water rates, electricity, gas, mortgage loan repayments, home insurance, pool and yard maintenance in relation to the Suburb E property.

   (b)Repairs and maintenance recommended by the selling agent for the purpose of preparing the Suburb E property for sale provided the cost of such repairs and maintenance does not exceed $8,000.

   (c)Styling the Suburb E property for sale.

   (d)Marketing and advertising costs in relation to the sale of the Suburb E property.

   (e)The costs of the single-expert valuer to be appointed to value the husband’s business and corporate entities.

4. That the husband pay to the wife spousal maintenance of $1,050 per week for 12 weeks, the first payment to be made seven days after the making of this order.

5. That within seven days the wife nominate a valuer from the list of three names submitted by the husband to be appointed single expert to value the husband’s business and corporate entities.

6. That upon the settlement of the sale of the property at B Street, Suburb C the proceeds of sale be paid in the following manner and priority:

   (a)To discharge the mortgage

   (b)To pay the costs of the sale including legal fees, agents’ commission, advertising and sale expenses.

   (c)To pay any sum remaining into a controlled monies account in the joint names of the parties to be opened by the husband’s solicitors.

7. That in relation to the sale of the property at D Street, Suburb E, the husband shall advise the wife of any offer which is received and shall not exchange contracts, or agree to a sale in the course of an auction, unless the wife consents.

8. That the net proceeds of the sale of the property at D Street, Suburb E, shall be paid in the following manner and priority:

   (a)To discharge the mortgage.

   (b)To pay the costs of the sale including legal fees, agents’ commission, advertising and sale expenses.

   (c)To pay any sum remaining into a controlled monies account in the joint names of the parties to be opened by the husband’s solicitors.

9. That the wife’s application to restrain the husband from dealing with his real and personal assets is dismissed.

10. That the husband’s costs of this application be reserved.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Redley & Scovil has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 2179 of 2020

Mr Redley

Applicant

And

Ms Scovil

Respondent

REASONS FOR JUDGMENT

1. Mr Redley, also known as Mr Redley (“the husband”) and Ms Scovil (“the wife”) married in … 2014 and separated in February 2020. They have no children.

2. The wife had no significant assets at the commencement of the marriage and did not contribute income other than that which she received by way of distribution from the income of the husband’s practice.

3. On 28 February 2020, the wife unilaterally removed $369,000 from the parties’ offset loan account. She returned $20,000 and has retained $349,000.

4. The husband, who is a health professional, deposed that the funds comprised the working capital of his business and money which had been borrowed following a refinancing in December 2019 with the intention of purchasing an investment property to house the business.

5. The husband owns two properties – the former matrimonial home at Suburb E and an investment property in Suburb C. He operates his business through a corporate vehicle, F Pty Limited (“the Company”). The husband is the trustee, appointor and designated beneficiary of the Redley Family Trust (“the Trust”). The wife is a secondary beneficiary. Throughout the marriage, the Company paid dividends to the Trust which then made distributions to the husband and the wife.

6. The husband deposed that the Trust has no assets other than the initial settled sum of $10.

7. It would appear that both parties seek the sale of both properties but they disagree on the process.

8. In the substantive proceedings, the husband seeks the sale of the Suburb E and Suburb C properties and the payment of the net proceeds to him and the transfer to him of the wife’s shares in the corporate entities through which he operates his business and her interest in the family trust. On the husband’s application, the wife would retain her superannuation, her chattels including her bank accounts and an interim distribution of $60,000.

9. The wife seeks a division of the net assets as to 55 per cent to her and 45 per cent to the husband.

10. By an Application in a Case filed 22 April 2020, the husband seeks orders in relation to the following matters:

    ·    The return of $289,000 of the funds removed by the wife.

    ·    The retention by the wife of $60,000 “to be characterised upon final adjustment”.

    ·    An order permitting the wife, upon return of the funds, to draw $1,000 per fortnight from the offset account “such capitalised sum to be characterised upon final adjustment”.

    ·    An order permitting the husband to draw from the offset account to pay the outgoings relating to Suburb E, the conveyancing costs for the sale of the properties, and the costs of valuation of the Husband’s shareholdings in his company and business.

    ·    The sale of Suburb E, payment of $50,000 to each party “in payment of their respective legal fees” and the balance to be retained in a controlled monies account.

    ·    The sale of Suburb C and payment of the net proceeds into a controlled monies account.

    ·    Appointment of a single expert to value the practice.

11. By her response to initiating application filed 11 May 2020 the wife seeks the following interim orders:

    ·    That she be appointed trustee for sale of Suburb E and Suburb C.

    ·    In the alternate the sale of the properties on specified terms.

    ·    Specified chattels from Suburb E.

    ·    A “forensic audit” of the company, the trust and the practice.

    ·    A “forensic valuation” of the company, the trust and the practice.

    ·    Engagement of an expert to calculate the capital gains tax on the sale of Suburb C.

    ·    Spousal maintenance of $1,250 per week.

    ·    Orders restraining the husband from further encumbering the properties at Suburb E and Suburb C and the companies.

    ·    Orders requiring the husband to continue to pay the outgoings on the properties at Suburb E and Suburb C.

    ·    Orders requiring the husband to continue to pay the outgoings of the business.

    ·    Orders restraining the husband from disposing of or encumbering the assets of any company or trust in which he has an interest.

    ·    Disclosure

12. The wife’s response appears to be predicated on the assumption that she will keep the $349,000 that she removed from the joint accounts. In submissions, her counsel confirmed that was the case.

13. For the purpose of the hearing of the interim applications, the issues were dealt with in the following categories:

    ·    The husband’s application for the return of the funds and the wife’s application to retain the money.

    ·    The wife’s application for spousal maintenance.

    ·    The sale of the properties at Suburb E and Suburb C.

    ·    Valuation issues.

    ·    The wife’s application for restraining orders.

The husband’s application for the return of the funds and the wife’s application to

retain the money.

1. The husband proposes that the wife retain, from the sum of $369,000 which she removed, an amount of $60,000 “to be categorised” and $50,000 in payment of legal fees.

2. The wife proposes that she should retain the whole amount.

3. The wife relies on a Financial Statement sworn on 7 May 2020. In that statement she deposes that she holds two amounts of money in accounts with the Commonwealth Bank. I infer that the deposit of $294,403 in an account number ending …97 is the remainder of the money she removed from the offset account.

4. As to the whereabouts of the balance of $54,597, the wife’s affidavit is completely silent.

5. The wife offers no undertaking to preserve the funds, and thus far she has not caused them to be preserved.

6. She does not propose that the funds be placed in a controlled monies account.

7. It was conceded that the removal of the funds has the effect of increasing the payments the husband is required to make on the mortgage secured over the Suburb E property but the wife makes no proposal to ameliorate that burden.

8. There is no evidence that the repayment of the funds, or such of them as remain, to the off-set account, would result in their being dissipated.

9. The husband proposes that there be a restraint on the purposes for which the off-set account be used.

10. The husband concedes that the wife should receive a total of $110,000 less the $54,597 she has already spent.

11. Since the wife gives no evidence about how the funds were spent, I am not in a position to determine how they should be categorised.

12. However, in relation to the remaining sum of $55,403, which I will round to $55,000, it is necessary to determine the head of power under which that order is to be made. The order could be made by way of a partial property settlement or according to the provisions of s 117(2A). Neither party addressed any submissions to this issue.

13. It is clearly not an order for spousal maintenance as the wife, separately, seeks periodic maintenance and her counsel specifically confirmed that she did not seek to retain any part of the removed funds by way of maintenance.

14. The husband himself proposes that the wife should receive $60,000 by way of final property settlement.

15. It is preferable, where possible, that an interim payment of such a nature should be couched as an interim property settlement so that each party is aware that he or she is spending his or her own funds.

16. Accordingly, the orders will provide for the wife to return to the off-set account $239,403.

17. The husband seeks orders permitting him to use the offset account to pay specified expenses for the maintenance and sale of the Suburb E property and the orders will permit him to use the offset account to pay specified expenses.

The wife’s application for spousal maintenance.

1. The wife seeks payment of spousal maintenance in the sum of $1,250 per week.

2. In support of that application, she relies on her Financial Statement sworn 7  May  2020 and her affidavit sworn 11 May 2020.

3. It was conceded by counsel for the wife that there is no evidence that the wife has made any applications for any job or any attempt to find employment. On behalf of the wife, counsel submitted that the wife would prefer to work as a health professional and has not sought employment in any other capacity.

4. The wife has a qualification in healthcare. She is required to pass an English language proficiency test in order to work. She has sat for the test and is waiting for the result.

5. However, the terms of section 72 of the Family Law Act 1975 (Cth) (“the Act”) are clear.

   (1)A party to a marriage is liable to maintain the other party, to the extent that the first‑mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:

   (a)by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;

   (b)by reason of age or physical or mental incapacity for appropriate gainful employment; or

   (c)for any other adequate reason;

   having regard to any relevant matter referred to in subsection 75(2).

6. Nothing in section 72 suggests that the wife can decline to seek employment because no employment is available in her chosen field.

7. However, I accept that the wife is not presently employed and that she needs to be supported until such time as she is able to find employment and I propose to make an order that the husband pay spousal maintenance of a period of twelve  weeks.

8. The wife in her Financial Statement claims fixed expenses of $305 (including a payment of $25 per week to Centrelink) and discretionary, Part N, expenses of $1,042. The wife lives with her brother.

9. The husband challenges the reasonableness of many of the wife’s claims and she provides no evidence to substantiate them.

10. On behalf of the husband, counsel submitted that the wife’s banking records, provided by her by way of disclosure, do not substantiate her claim to pay rent, ongoing medical expenses, or education expenses.

11. Counsel for the wife conceded that the claims made by the wife were in relation to house repairs and cleaning related to the Suburb E property and were not now incurred. Similarly, the wife’s course of training has been completed and the claimed education expenses are not recurring.

12. There is no evidence in relation to the claimed repayment to Centrelink of $25 per week.

13. I do not accept the submission on behalf of the husband that the wife’s claim for rent should be disallowed. The wife’s brother has no legal obligation to provide her with free housing.

14. I find that the wife’s reasonable fixed expenses are $380 per week and her discretionary expenses are $662, a total of $1,042 which I will round up to $1,050.

15. The husband will be ordered to pay spousal maintenance in the sum of $1,050 per week for a closed period of three months.

16. I do not propose to allow the husband to make those payments from the offset account.

17. He deposes to an income of $2,929 per week. He will no longer have to pay the mortgage payments or outgoings relating to the Suburb E property and the Suburb C property has been sold, contracts being exchanged on the day of hearing.

18. The financial statements of the business for the year ended 30 June 2019 show a profit after tax of $222,325.

Valuation issues.

1. It was ultimately conceded by counsel for the wife that there was no demonstrated need for the appointment of an auditor and that any matters of concern to the wife about the way the accounts were cast could be addressed by the single-expert valuer.

2. It was also conceded that the husband had nominated three appropriately qualified accountants and that the wife would nominate one to be appointed single-expert.

3. If the parties disagree about the instructions to the single-expert, they can each nominate areas of investigation which they want the valuer to address, on the basis that if, ultimately, it appears that the single-expert’s time has been wasted, an application can be made for the responsible party to pay that portion of the single-expert’s costs.

The sale of the property at Suburb C.

1. The wife’s application for an order appointing her trustee for sale of the property at Suburb C was abandoned.

2. The husband has secured a buyer for the property for $669,000 and the buyer is in a position to exchange.

3. The wife disputed that the price was the best obtainable and wrote to the agent on 21 May 2020 instructing the agent not to proceed further with the sale.

4. In her affidavit sworn 11 May 2020, the wife deposed to having been given market appraisals in relation to the Suburb C property for a sum greater than $669,000.

5. However, none of those agents had access to the interior of the property.

6. There is no guarantee offered by any of the agents giving the appraisals that they can obtain the price for which they contend.

7. When it was put to the wife that, if she wanted the Court to restrain the husband from exchanging contracts at a price of $669,000 she would be required to give an undertaking as to damages, she demurred and, through counsel, said she would agree to the exchange proceedings provided she was given a copy of the Contract for Sale.

8. Counsel for the husband told the Court that a copy of the Contract would be provided to the wife today. I do not consider it necessary to make an order to that effect.

9. The orders will provide for the net proceeds of the sale of Suburb C to be placed in a controlled monies account pending determination of the substantive proceedings.

The sale of the property at Suburb E.

1. The wife seeks an order that she be appointed trustee for sale of the Suburb E property.

2. There is no evidence that the husband has done, or intends to do, any anything other than to sell the property for the best price available.

3. The husband has listed the property for sale with an agent and negotiated a favourable rate of commission.

4. The wife deposed to having received market appraisals for Suburb E between $2,500,000 and $2,700,000.

5. Ultimately, the submissions by counsel for the wife, directed to this issue, were that the husband may sell Suburb E at an under value because he is in a better financial position than the wife to recoup any losses.

6. There is no evidence to support such a submission.

7. The husband’s application is that he retain the whole of the proceeds of the sale.

8. Even if, ultimately, the husband is not successful and he is required to pay the wife part of the sale proceeds, it remains in his interest to maximise the sale price.

9. The wife is entitled to be kept informed of the progress of the sale and the orders will require the husband to advise the wife of any offers received and that he not exchange contracts without her approval.

10. The net proceeds of sale will be held in a controlled moneys account pending the resolution of the substantive proceedings. The husband also seeks that he be reimbursed for the money he has spent and will spend on preparing the property for sale but the orders have already provided for those costs to be reimbursed from the offset account.

11. The husband seeks an order that the wife not contact the selling agent.

12. Having regard to the wife’s letter instructing the agent not to proceed with the sale of the Suburb C property, it is appropriate to make such an order. The agent cannot be expected to sell the property while receiving conflicting instructions.

The wife’s application for restraining orders.

1. The wife seeks an order in the following terms:

   That the husband be restrained by injunction from selling, mortgaging, assigning, alienating or further encumbering any shares, business, or real property in which he has a legal or beneficial interest including the application for any loans, over drafts or credit cards, including but not limited to the [sic] D Street Suburb E and B Street, Suburb C, F Pty Limited (ACN …) and G Pty Limited (ACN …).

2. She persists with that application even though she has agreed that the properties at Suburb E and Suburb C are to be sold.

3. The husband opposes that application.

1. The wife relies on the husband’s having borrowed money in November 2019, secured against the Suburb E property. The wife asserts the borrowing was made without notice to her. The husband asserts that he told the wife that he wanted to buy premises from which to operate the business. That issue cannot be resolved here.

2. However, it does not appear to be in dispute that the amount borrowed by the husband was placed in the offset account and was part of the money that the wife removed in December 2019.

3. The wife further relies on the fact that, after she removed $369,000 from the offset account, the husband caused the business to borrow $240,000. It does not appear to be disputed that those funds were placed in the business accounts.

4. The evidence does not point to its being necessary to make such an order to preserve the assets of the marriage.

5. The application will be dismissed.

Costs

1. The husband seeks to have his costs of this application reserved.

2. Nothing in the submission made on behalf of the wife suggests that such a course is inappropriate.

I certify that the preceding eighty-two (82) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 29 May 2020.

Associate: 

Date:  29 May 2020