Sorge and Oliva

[2016] FamCA 652

FAMILY COURT OF AUSTRALIA

SORGE & OLIVA [2016] FamCA 652

FAMILY LAW – PROPERTY – INTERIM PROCEEDINGS – Where the husband seeks an order restraining the wife from drawing upon her loan account with a family trust– Where the wife has no other source of income to meet the shortfall between her income and expenses – Application dismissed.

Family Law Act 1975 (Cth)

Waugh & Waugh (2000) FLC 93-052

APPLICANT: Mr Sorge

RESPONDENT: Ms Oliva

FILE NUMBER: MLC 3192 of 2015

DATE DELIVERED: 11 August 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Melbourne

JUDGMENT OF: Stevenson J

HEARING DATE: 3 August 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Weil

SOLICITOR FOR THE APPLICANT: Adrian Abrahams Family Lawyers

COUNSEL FOR THE RESPONDENT: Mr Strum QC with
Ms Renwick

SOLICITOR FOR THE RESPONDENT: Kliger Partners

Orders

1. Paragraph 1 of the husband’s Application in a Case filed on 23 June 2016 is dismissed.

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 Sorge & Oliva 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: MLC 3192 of 2015

Mr Sorge

Applicant

And

Ms Oliva

Respondent

REASONS FOR JUDGMENT

The proceedings

1. By an Application in a Case filed on 23 June 2016 the husband,

   
   

   Mr Sorge, sought the following orders:

   1.That the Wife be forthwith restrained from further withdrawing from or otherwise eroding or reducing the value and amount of the funds held by way of a loan account on her behalf in the
   [Oliva & Ors Family Trust] per account statement attached herewith and marked “A” otherwise referred to as the [Oliva Trust Account].

   2.That the Wife provide to the Husband’s lawyer the following:

   a.Monthly ledger statements of her loan account with the [Oliva & Ors Family Trust] account commencing January 2016; and

   b.The monthly accounts statements of her NAB bank account no … from January 2016 and monthly thereafter.

   3.That Wife [sic] provide a full accounting (including but not limited to date received, amount, disposition of the funds received) of all amounts withdrawn by her or on her behalf of the funds loaned by her to the [Oliva & Ors Family Trust] of $737,000 (being proceeds of sale of the matrimonial property of the parties herein).

   4.That the Wife provide to the Husband’s lawyer a monthly accounting (including but not limited to date received, amount, disposition of the funds received) of interest received by her from the [Oliva & Ors Family Trust] for the periods from 1 September 2012 to date.

   5.That the Wife pay the Husband’s indemnity costs of and incidental to this Application.

   6.That all necessary times be abridged.

   7.That there be such further and other orders as this Honourable Court deems appropriate.

2. By a Response filed on 1 August 2016 the wife, Ms Oliva, sought a dismissal of the husband’s Application in a Case.  She sought further that the husband pay her costs of his Application in a Case.

3. The husband commenced the substantive proceedings by way of an Initiating Application filed on 16 April 2015.  He sought the following final orders in relation to financial issues:

   1.That there be such alteration of property interests and spousal maintenance pursuant to the Family Law Act, 1975 (as amended) as this Honourable Court deems appropriate.

   2.That the Husband be excused from particularising the orders sought by him for a matrimonial property settlement pending the giving of discovery and the filing of a financial statement by the Wife.

   To date the husband has not particularised the orders which he seeks by way of alteration of property interests.

4. In a Response to Initiating Application filed on 15 May 2015 the wife sought the following orders in relation to financial issues:

   9.That the husband’s application for alteration of interests in property pursuant to section 79(1) of the Family Law Act 1975 (“the Act”) be dismissed on the grounds that it is not just and equitable to make such an order as required by section 79(2) of the Act.

   10.That the husband pay the wife’s costs of and incidental to these proceedings.

   11.That the husband’s Initiating Application (Family Law) filed on 16 April 2015 be and is hereby dismissed.

5. On 3 August 2016 paragraph 1 of the husband’s Application in a Case came before me in a duty list.  That issue proceeded to hearing and I reserved my judgment.

Background

1. The husband and the wife, who are aged 50 and 49 respectively, began to live together in January 2002 and married in 2002.  They separated on 25 July 2014, when the husband vacated the former matrimonial home at B Street, Suburb A.

2. The parties have three children, C born in 2004 and twins, D and E who were born in 2005.  Upon the parties’ separation, the children remained in the former matrimonial home with the wife.  Currently they spend four nights per fortnight, school holiday periods and special occasions with the husband.

3. In 1999 the wife sold a property in F Street, Suburb G, which she had owned for several years.  Her father, Mr H Oliva, had paid the deposit and the balance of the purchase money came from a mortgage advance.  The wife leased this property and also contributed to mortgage repayments from income which she received from employment.  The wife’s father provided all funds necessary to discharge the mortgage prior to the sale of this property.

4. The wife’s father held the proceeds of sale, prior to the purchase of a property at I Street, Suburb J in February 2001.  The E Street property was purchased in the name of H Oliva Pty Ltd, for a price of $379,000.  The purchase money came from the proceeds of sale of the F Street property and additional funds provided by the wife’s father.

5. On 15 April 2003 the E Street property was transferred to the wife.  The property was tenanted and the wife received the rental income until its sale in June 2012.  These funds were deposited into an account in the wife’s name and used by her to meet various living expenses of the family.

6. The wife sold the E Street property in June 2012 for $820,000, generating net proceeds of $734,000.  She loaned this money to the Oliva & Ors Family Trust (“the Trust”) and drew down on these funds to meet various expenses of the family from time to time.  The wife receives interest in an average amount of $1,400 per month from the Trust in respect of the loan funds.

7. At the date of separation in July 2014 the balance of the wife’s loan with the Trust was $715,904.  As at 1 August 2016, the balance was $435,904, which means that the wife withdrew approximately $280,000 from the loan funds during the two-year period between July 2014 and July 2016.

8. The husband purchased the former matrimonial home B Street, Suburb A for $387,500 in March 2001.  He obtained borrowings of $327,500 and, presumably, he had available cash of approximately $60,000 from an unidentified source to fund the purchase of this property.

9. In November 2002 the B Street property was transferred to the wife’s name and the mortgage refinanced in a sum of $335,000.  In December 2007 the wife’s father discharged this mortgage, by way of a payment of approximately $430,208.

10. In a letter dated 12 April 2016 (Exhibit C to the husband’s affidavit sworn on 21 June 2016), the wife’s solicitor set out her major items of expenditure from the loan funds as follows:

    12 April 2016

    Adrian Abrahams Family Lawyers
    DX …
    …

    Email:
    …

    Dear Mr Abrahams,

    [Oliva / Sorge] – Family Law

    I refer to your letter of 3 March 2016.

    Please find attached updated General Ledger Statement of [Oliva & Ors Family Trust] for the period 14 January 2015 to 13 January 2016.  My client will endeavour to obtain monthly ledger statements although she typically receives them at various intervals.  She is expecting an updated Statement on or around 21 April 2016.

    In relation to your query regarding the interest payments received by my client from the [Oliva & Ors Family Trust], please refer to the attached NAB Classic Banking statements (xxxx-…) for the period 1 July 2014 to 29 February 2016.  You will note that the interest is paid into this account monthly and the amount has varied depending on the balance of the loan.  My client’s withdrawals from the loan are also deposited into this account.

    In relation to your query regarding the withdrawals made by my client, I am instructed by my client to advise as follows:

    1.Some of the major expenses to which the funds have been applied include:

    a.Payment of the Capital Gains Tax following the sale of the [E Street] property in 2014, approximately $70,000;

    b.Legal fees, $110,736 to date;

    c.Purchase of a motor vehicle in February 2015, $39,000;

    d.Children’s school fees in October 2015, $7,500;

    e.Various house repairs between 2014 and 2016, approximately $13,200;

    f.Expenses for [C’s] [religious ceremony] in December 2015, $14,390.75;

    g.Purchase of [C’s] school device in January 2016, $1,499;

    h.Tax payable to the Australian Taxation Office in 2014 and 2015, $1,412;

    i.Purchase of the shelves for the study in September 2014, $1,999;

    j.Body Corporate fees between 2014 and 2016, approximately $2,900;

    k.Children’s extra-curricular activities between 2014 and 2016, approximately $10,900;

    l.Payments to [J Clinic] for the children between 2014 and 2015, approximately $1,650;

    m.Insurance payments to RACV between 2014 and 2016, approximately $3,500;

    n.Fees for dental work in November 2015, $2,000; and

    o.Holidays between 2014 and 2016, approximately $7,000.

    2.The funds have also been applied to meet the day to day expenses for my client and the children including utilities, rates, medical expenses, and children’s school related expenses.

    In circumstances where my client relies on these funds to supplement day to day expenses for herself and the children, she is not in receipt of spousal maintenance from your client, and she does not work, my client will not be providing the assurance sought.

    Yours faithfully

    Rebecca Goldman

    KLIGER PARTNERS

Consideration

1. The wife left the paid workforce in December 2003, when she commenced maternity leave prior to the birth of C in January 2004.  She assisted with administrative duties in the husband’s business between 2005 and 2012.  In 2014 the wife worked for a few hours per week on a sporadic basis.

2. The wife receives a total income of $1,084 per week from interest paid by the Trust, family tax benefits and the husband’s child support payments.  In her Financial Statement of 1 August 2016 the wife deposed to total weekly expenditure of $1,855 for herself and the children.  Accordingly, on the wife’s evidence she has a weekly shortfall of $801.  The only source of funds from which the wife can meet this shortfall is drawings on the loan funds.

3. The husband is employed as a health professional and earns a gross weekly income of $5,458.  In his Financial Statement of 27 July 2016 he deposed to a total weekly expenditure of $6,347, which includes child support as assessed at $619.

4. In an Outline of Case Document the wife identified the parties’ assets, superannuation, liabilities and financial resources as follows:

Non-superannuation assets
Personal assets	Ownership	Value
B Street	The Wife	E$1,000,000
Oliva & Ors Trust	The Wife	$436,000
The Wife’s car	The Wife	E$36,000
The Husband’s car	The Husband	E$16,000
The Husband’s salary packaging	The Husband	Unknown
Telsta [sic] Shares	The Husband	E$3,000
Husband’s Bank account	The Husband	E$4,630
Liabilities	Responsibility	Value
Credit card debt (discovered)	The Husband	$9,900
Total net assets (not including super)	E$1,485,730
Superannuation	Ownership	Value
Various	The Wife	E$18,000
Various	The Husband	E$325,697
Total superannuation	E$343,697
Total net assets	E$1,829,427

No submission was put on behalf of the husband to the effect that this draft balance sheet was inaccurate in any significant sense.

1. During submissions, the husband’s counsel indicated that he “seeks 40% of the pool”.  Adopting the wife’s draft balance sheet for present purposes, the husband thus could be seen to seek orders which would vest in him net property and/or superannuation to a value in the vicinity of $732,000.  That amount could easily be satisfied from the husband’s car, Telstra shares, bank account, superannuation and part of the proceeds of sale of the former matrimonial home.  That scenario leaves aside any prospect of a lump sum payment by the wife to the husband from a non-commercial source.

2. In my view, it is thus unnecessary that the wife be restrained from making further drawings on the loan funds in order to protect a potential claim for alteration of property interests by the husband.  I consider that it is unnecessary, for present purposes, that there be any assessment of the validity of the wife’s contention that it is not just and equitable that there be any order for alteration of property interests in favour of the husband.  That matter should await determination at trial.

3. On behalf of the husband, it was contended that it is necessary that the wife be restrained from further drawing on the loan funds because he wishes to avoid a sale of the former matrimonial home and consequent relocation of the parties’ children.  His counsel said words to the effect “the husband will be prejudiced if he has to take less to ensure that the children do not have to be relocated”.  In my view, that argument falls well short of a proper basis for depriving the wife completely of access to the loan funds.

4. The wife has no other source of funds from which she can meet the shortfall between her income and weekly expenditure.  On behalf of the husband, it was submitted that it is open to the wife to make an application for spouse maintenance if she is restrained from drawing further upon the loan funds.  No explanation was proffered on behalf of the husband as to how he proposed to pay spouse maintenance, given that he deposed in his Financial Statement to a weekly shortfall of income over expenditure of $889.

5. The evidence indicated that the wife’s intention is to continue to draw upon the loan funds for the support of herself and the children and to finance her litigation.  She has drawn on the loan funds since 2012 to meet expenses for the family prior to the separation of the parties and for herself and the children thereafter.  In my view, nothing in the evidence indicated any intention on the part of the wife to “defeat any judgment which the [husband] might obtain in the substantive proceedings ...”:  Waugh & Waugh (2000) FLC 93-052.

6. For all of these reasons, I conclude that the husband established no proper basis for an injunction to restrain the wife from making further drawings on the loan funds.  Accordingly, I will dismiss paragraph 1 of his Application in a Case filed on 23 June 2016.

I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on

11 August 2016.

Associate: 

Date:  11 August 2016