SCHENCK & SCHENCK

[2016] FamCA 868

FAMILY COURT OF AUSTRALIA

SCHENCK & SCHENCK [2016] FamCA 868

FAMILY LAW – CHILDREN – Interim Orders by Consent – Orders and directions made to file orders in chambers by a fixed date for the making of interim orders in chamber in respect of children

FAMILY LAW – PROPERTY –Application by wife for orders in respect of the former matrimonial home - Orders by consent  

FAMILY LAW – PROPERTY -Application by wife for appointment of single experts – Orders by Consent 

FAMILY LAW – PROPERTY – Application by wife for discovery – Orders by consent

FAMILY LAW – PROPERTY – Application by wife for injunctive orders – Orders by consent

FAMILY LAW – SPOUSAL MAINTENANCE – Application by wife for periodic spousal maintenance – Application dismissed

FAMILY LAW – CHILD SUPPORT – Application by wife for periodic child support – Application dismissed

Family Law Act 1975 (Cth)

APPLICANT: Ms Schenck

RESPONDENT: Mr Schenck

FILE NUMBER: SYC 3141 of 2016

DATE DELIVERED: 16 August 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Benjamin J

HEARING DATE: 16 August 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Kearney SC

SOLICITOR FOR THE APPLICANT: Quinn Legal Advisory

COUNSEL FOR THE RESPONDENT: Mr White

SOLICITOR FOR THE RESPONDENT: Michael Conley Lawyers

Orders

1. Leave be given for the parties to file electronically a minute of order in PDF format and word format, to my associate, on or before 8 September 2016 for the court to consider making such orders in chambers.

2. BY CONSENT within seven (7) days of the date of this order, the husband provide to the wife a written list of all of:-

   (a)the artwork listed for sale by him during the course of the period commencing
   1 May 2014 to the date of this order;

   (b)details of any sales identifying the broker engaged in the sale;

   (c)the identity of the purchaser;

   (d)the amount paid; and

   (e)the location of accounts in which the proceeds of sale were paid.

3. BY CONSENT the husband provide to the wife within seven (7) days of the date of this order, a complete inventory of all artworks, paintings and objects of art owned by him or jointly with any other persons, specifying the location of such artwork at the present time.

4. In relation to the sale of the property at J Street, Suburb V upon completion of the sale the proceeds be disbursed as follows:-

   (a)payment of agent’s commission;

   (b)solicitors’ fees on the sale;

   (c)the amount required to discharge the mortgage to the Westpac Banking Corporation of approximately $1,180,000;

   (d)a debt due to Company G; and

   (e)as to the net balance as to seventy five (75) per cent to the wife’s solicitors and as to twenty five (25) per cent to the husband noting that this is the parties’ beneficial interest.

5. The wife is restrained from authorising the payment of $3.5 million dollars from the trust funds to the wife except for the purpose of acquisition of real estate in the Sydney Metropolitan area, subject to:-

   (a)any purchase of real estate if by negotiation the wife notifies the husband, at least seven (7) days in advance, of her intention to purchase such property and if it is to be purchased by auction to notify the husband, at least seven (7) days in advance of her intention to bid at such auction and the extent to which she proposes to bid;

6. Leave be given to the parties to have the matter listed before me on the giving of forty eight (48) hours notice to my associate and to a registrar of the Family Court of Australia.

7. BY CONSENT the husband continues to meet the lease payments, insurance and registration costs of the wife’s Skoda motor vehicle for her exclusive use.

8. BY CONSENT the husband continues to pay health insurance premiums at the current level for the wife and children and to meet any reasonable gap on medical treatment.

9. BY CONSENT within seven (7) days of the date hereof, the wife provide to the husband the names of three (3) forensic accountants, one of which is to be engaged by the parties as a joint expert for the purpose of determining the value of the husband’s interests in the corporations and entities identified by the husband at paragraph 64 of his affidavit sworn 4 August 2016.

10. BY CONSENT within seven (7) days of receipt of such notification provided by the wife as identified in order 9 above, the husband respond in writing to the wife’s solicitors identifying the valuer chosen by him whereupon each of the parties shall cause a letter of instruction to be dispatched to that valuer for the purpose of having that valuer complete his or her report to the Court.

11. BY CONSENT the husband forthwith do all things and acts as are necessary to cause all of the entities in which he has an interest as identified in paragraph 64 of his affidavit of 4 August 2016 to have completed the balance sheets and profit and loss statements for the three (3) years ending 30 June 2014, 2015 and 2016.

12. BY CONSENT the parties forthwith agree to a valuer, instruct and engage such valuer to prepare a valuation of the artwork currently in the possession of the husband or located elsewhere and as identified by him as being the only artwork belonging to him solely or jointly with the wife, including the wife’s personal artwork, and that the parties do all things and acts to give proper instructions to that valuer.

13. BY CONSENT within seven (7) days of the date hereof, the wife provide to the husband the name of three (3) real estate valuers to be engaged by the parties as a joint expert for the purpose of determining the value of the husband’s interests or the interests of corporations and entities in which he has an interest as identified in paragraph 64 of his affidavit sworn 4 August 2016.

14. BY CONSENT within seven (7) days of the receipt of such notification provided by the wife as identified in order 13 above, the husband respond in writing to the wife’s solicitors identifying the valuer chosen by him whereupon each of the parties shall cause a letter of instruction to be despatched to that valuer for the purpose of having that valuer complete his or her report to the Court that if and only if the wife receives upon completion of the sale.

15. Leave be given to the parties to apply to a Registrar for appointment of a single expert for that purpose.

16. The application for child maintenance and/or child support is dismissed.

17. All other interlocutory applications are dismissed except the application for parenting orders which are adjourned to chambers.

18. The question of costs be reserved.

19. Leave be given to the wife’s solicitor to invest the money in a controlled monies account provided always that the wife will be responsible for the payment of tax in respect of those sums.

20. Leave be given to the parties to apply to Benjamin J on the giving of twenty four (24) hours notice, such leave to operate for a period of twelve (12) months from the date of this order.

IT IS DIRECTED

1. A copy of the reasons for these orders be taken out and placed on the court file.

IT IS CERTIFIED

1. Pursuant to Rule 19.50 of the Family Law Rules 2004 it was reasonable to engage senior counsel and counsel to attend.

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

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 Schenck & Schenck 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 3141 of 2016

Ms Schenck

Applicant

And

Mr Schenck

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. On 20 May this year, Ms Schenck (‘the wife’) commenced proceedings in this Court seeking final orders in relation to property and in relation to parenting.  Mr Schenck (‘the husband’) has filed a response seeking parenting orders and property orders different to that of the wife.  Each of the parties seeks interim and/or interlocutory orders.  To the credit of the parties, they have resolved, or appear to have resolved, on an interim basis, arrangements with respect to the children.  I will give leave to the parties’ solicitors to forward to my administrative associate by 8 September 2016 a minute of order, and I will consider making that order in the light of the material that has been filed in Chambers rather than put the parties to the expense of a further appearance before the Court.

2. Accordingly, I give leave for the parties to file electronically a minute of order in PDF format and Word format on or before 8 September 2016 for the Court to consider making those orders in Chambers.  What is then left on an interlocutory or interim basis are the financial questions as set out in each of the parties’ case outlines, which are Exhibits 1 and 2 in these proceedings. 

3. It is of value to reflect on the relative positions asserted by each of the parties.  The wife says that the parties have property well in excess of $10 million and perhaps up to $20 million or more.  She says she does not know the full extent of that property because the husband has failed to make full and frank disclosure or adequate disclosure.  A series of documents were tendered to give support to that contention. 

4. The husband, on the other hand, submits that the property pool is much smaller than that envisaged by the wife.  He asserts that it has a value of some $8.5 million.  The parties are the owners of a property at Suburb V, which has recently been sold for just under $8.7 million.  It appears that the parties are the beneficiaries of a rather buoyant Sydney property market at the present time.

5. That property is owned as to seventy-five one-hundredths by the wife and twenty-five one-hundredths by the husband.  The wife’s principal submission is that, given the pool of property, that she should be entitled to her 75 per cent, which will total about $5.625 million, on her calculation, taking into account some debts which she said ought not to be repaid at this stage as there may be some doubt about them.  This would leave the husband with $1.875 million.  That being the case, the wife says that she would not be pressing any orders for spousal maintenance, funds for litigation or the like.

6. It is her contention in that aspect that she would just not press those aspects of the case.  The husband’s position is that his contributions through the marriage, particularly financial contributions, have far exceeded those of the wife and that if he is successful in his case at the end of the day, that is, that the pool of assets has a value of some $8.5 million and the wife is only entitled to 30 per cent of that amount, the wife would be entitled to approximately $3 million, if my arithmetic is correct.  I invite counsel, if they think my arithmetic is too far out, to let me know,  Counsel for the husband submits that If I were to adopt the approach suggested by the wife it may cause the husband some prejudice. 

7. The husband is aged 61 and is a businessman.  The wife is aged 46 and undertakes home duties and the care of their children.  However, it appears that both parties, at least on their respective cases, assert that they are significantly involved in the day-to-day care and maintenance of the children.  As to any final determination in that regard, that will have to await either agreement between the parties or determination by a Court. 

8. The parties commenced co-habitation in 1997.  They married in 1999.  They have two children:  C aged 14, and D, aged 10.  The parties separated in January 2016 and these proceedings were commenced in May 2016. 

9. The wife relies upon the documents referred to in her case outline on page 7, itemised 1 to 6, and also tendered a number of documents during the course of submissions. 

10. The husband relied upon the documents set out in his case outline, and I had read all of those documents with the exception of an affidavit of a Mr E[1], which was filed and I read during the course of submissions.  It was a short affidavit, and Mr White was kind enough to provide me with a pretty good outline of it.  Mr E is a commercial mortgage broker who gave some insight into a business in which the husband has some interest in F Town.  I do not know what weight to give that material for a number of factors, including those raised by senior counsel for the wife, and that there may be a conflict on Mr E’s part given that he owes the husband some $104,000, as I understand it. 

    [1] Filed 16 August 2016.

11. That may or not be a matter at final hearing, but I am not sure what to make of it at the present time.  I am not going to conclude that the husband at this time has not made full and frank disclosure, nor am I going to conclude that he has made full and frank disclosure.  These proceedings have just been commenced, and, on any reading of the affidavits, the parties do not trust each other.  The parties’ home has been sold, and that settlement will take place in about two weeks from today. 

12. There is agreement between the parties that the proceeds of sale of the home should pay the normal costs and expenses of the sale;  the mortgage secured on the property should be paid, not that the parties have any meaningful say in that respect, which totals about $1.18 million; and a debt to Company G of some $19,500. 

13. The husband seeks further debts to be paid.  He seeks to pay the wife’s credit card of some $17,080.  The husband also seeks the payment of debts due to Mr H of some $220,000 and Mr I Schenck, the husband’s brother, of some $80,000.  The total amount of these debts is $300,000.  The wife at this stage is not prepared to concede those amounts, and it is clear that those amounts are not secured against the property.  According to the mathematics of senior counsel for the wife, if those are not paid, there will be approximately $7.5 million to be distributed to the parties, of which in the ordinary course some $5.625 million would be distributed to the wife and $1.875 million would be distributed to the husband.

14. The husband’s claim is based on an adjustment of property under Part VIII of the Family Law Act 1975 (Cth) (‘the Act”), which would increase his interest in that property by some percentage, bearing in mind there is another, on his figures, $1 million in assets in various places. The wife’s position is that the husband has not made out a case to deprive her of the beneficial interest that she has in that sum.

15. The wife is currently in rental accommodation paying some $2,000 a week, which will total approximately $130,000 per year.  The parties have an art collection which has a value of somewhere between $750,000 and $3 million.  It is clearly the wife’s intent to purchase another property out of her share of the proceeds of the sale of the property, although it’s clear that she has no property in mind at the present time.

16. If I adopt the course submitted on behalf of the wife, there is a risk, presumably, to the husband in a number of areas.  Firstly, that, if the husband is unaware of how and when the money is applied that $5.5 million may disappear over the course of the next two or three years.  Alternatively, that the city property market may slump or fail, that the wife will incur expenses going into property and coming out of property.

17. I am not so much concerned with the latter aspects of that, because the cost of going in and going out could be easily adjusted by a judge on a final hearing in an appropriate way, given the provisions of s 79 and, in particular, s 75(2)(o), of the Act. Nor am I concerned about the machinations of the Sydney property market. There is no evidence that it is going to continue to rise or it is going to fall. The property market will do what the property market wants to do and most Australians have significant amounts of their assets contained in real estate.

18. I accept the submissions of Mr White that the husband has had limited time to provide full details of his complex and difficult financial circumstances.  He is endeavouring to get those particulars up to date.  I do not know, and  I cannot make either adverse or positive comments in relation to that.  It is unclear what income the husband earns.  It will take months, if not longer, for that to be properly determined with the assistance of, no doubt, a forensic accountant to ascertain the real meaning to those complex financial circumstances.

19. It is clear, and the wife through her senior counsel concedes, that the husband’s interest in the F Town business may be somewhat less, given the liabilities that were not taken into account.

20. It seems to me that if I accept and adopt the underlying submissions of senior counsel for the wife and put in place some protection in relation to the dispersal of a significant amount of those funds by way of notice, that little harm is done to the husband, that neither party are then looking to the other to support them and the parties can spend what they reasonably seek to spend in terms of legal costs.

21. An injunction restraining the wife from dispersing a significant part of her funds, except for the purpose of purchasing real estate and giving notice, can do no harm to the wife.  It will enable her to rehouse herself, if she chooses, and then property will then be available at the end of this process if needed.  I am not satisfied that there is beyond that a need to interfere with that process.

22. I intend to make orders accordingly.

I certify that the preceding twenty two (22) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin delivered on 16 August 2016.

Associate:     

Date:              10 October 2016