VIDA & VIDA

[2020] FamCA 435

FAMILY COURT OF AUSTRALIA

VIDA & VIDA [2020] FamCA 435

FAMILY LAW – PROPERTY – Enforcement –Where the husband sought to enforce Orders – Where the wife had withdrew funds from the mortgage – Where the funds withdrawn were additional funds contributed to the mortgage by the wife – Where the wife had not breached the Orders – Application dismissed.

Family Law Act 1975 (Cth)

Strahan v Strahan (2009) FLC 94-414

APPLICANT: Mr Vida

FIRST RESPONDENT: Ms Vida

SECOND RESPONDENT: Ms B Vida

FILE NUMBER: SYC 1533 of 2019

DATE DELIVERED: 25 May 2020

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Stevenson J

HEARING DATE: 8 May 2020

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Ms Ralston

SOLICITORS FOR THE APPLICANT: Coleman Greig Lawyers

SOLICITOR FOR THE FIRST RESPONDENT:
Mr Reeve

SOLICITORS FOR THE FIRST RESPONDENT:
Marsdens Law Group

SOLICITOR FOR THE SECOND RESPONDENT:
Mr Thompson

SOLICITORS FOR THE SECOND RESPONDENT:
Newnhams Solicitors.

Orders

1. The Application in a Case filed by the husband on 22 April 2020 is dismissed.

2. The wife is permitted to utilise the redraw facility in respect of the C Bank Home Loan (BSB … Account Number …88) for the purpose of meeting her living expenses and legal costs in these proceedings.

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 Vida & Vida 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 1533 of 2019

Mr Vida

Applicant

And

Ms Vida

First Respondent

And

Ms B Vida

Second Respondent

REASONS FOR JUDGMENT

The proceedings

1. Mr Vida and Ms Vida are parties to litigation arising from the breakdown of their 18 year relationship.  The wife commenced the proceedings by way of an Initiating Application filed on 13 March 2019.  The husband's mother, Ms B Vida, has been joined as second respondent to the proceedings.

2. On 22 April 2020 the husband filed an Application in a Case, by which he sought the following orders:

   1.        That this Application be listed at short notice.

   2.That the Wife do all acts and things to ensure the payment of all monies to cause the mortgage secured with C Bank over the property located at and known as D Street, Suburb E in the state of New South Wales, being all of the land contained within folio identifier … ("the Suburb E property"), being home loan account number …8-8, to have a debit balance of not greater than $45,874.00 within 14 days of the date of these Orders.

   3.That the Wife be further restrained and injuncted in her individual capacity and on her behalf from causing C Bank loan account number …8-8 to have a debit balance greater than $45,874.00.

   4.That the Wife pay as and when they fall due all periodic mortgage repayments, being principal and interest, to the C Bank loan account number …8-8.

   5.That the Wife pay the Husband's costs of and incidental to this Application in a Case on an indemnity basis.

3. By a Response to an Application in a Case filed on 6 May 2020, the wife sought the following orders:

   1.That the Application in a Case filed by 22 April 2020 [sic] be dismissed.

   2.That in the alternative, the Wife be permitted to use the redraw facility in respect of the C Bank Home Loan (BSB: … Account Number: …88) for the purpose of meeting her living expenses and her legal costs of these proceedings.

4. The solicitor for the second respondent appeared at the interim hearing on 8 May 2020 as a matter of courtesy.  He indicated that the issues raised by the Application in a Case filed on 22 April 2020 did not concern his client.

Background

1. The husband and the wife, who are aged 54 and 51 respectively, commenced cohabitation in 2000 and married on … 2002.  They separated in July 2018 and an order for divorce was made on … 2019.

2. The parties have two children, X and Y, who are aged 17 and 15 respectively.  The children live with the wife and the husband pays child support as assessed from time to time.  As appears below, the husband's child support payments have reduced considerably since the parties' separation and he is currently in arrears.

3. The wife is the sole registered proprietor of the property D Street, Suburb E, which is subject to a C Bank mortgage.  The wife lives in this property with the children of the parties.

4. On 15 April 2019 the parties consented to interim orders.  Relevantly for present purposes, these orders provided as follows:

   7.That the wife be restrained from selling, transferring, mortgaging or in any way encumbering or otherwise dealing with the property located and situated at D Street, Suburb E in the State of New South Wales being the whole of the land contained in folio identifier ….

5. According to a joint Balance Sheet filed by the parties on 25 June 2019, the husband is the sole registered proprietor of the properties F Street, Suburb G, H Street, Suburb J and K Street, Suburb L.  There was no reference in this Balance Sheet to a mortgage encumbrance in relation to any of these properties.  The interim orders of 15 April 2019 restrained the husband "from selling, transferring, mortgaging or in any way encumbering or otherwise dealing" with these three properties.

6. The husband is the appointor of the Vida Family Trust ("the trust"), of which he and the wife and their two children are beneficiaries.  The trustee is a company known as M Pty Limited, of which the husband is the sole director and shareholder.  On 12 April 2019 the husband deposed that the assets of this trust consisted of money in bank accounts, a parcel of real property and a 66.66% interest in a company known as N Pty Limited.

7. On 22 November 2018 the husband caused the corpus of the trust to be transferred to the second respondent.  A sum of $1,309,248 was paid to Mrs B Vida without notice to the wife or her legal representatives.  A number of interim orders were made on 15 April 2019 which placed restrained the husband from altering the trustee and causing the company M Pty Ltd from distributing the capital of the trust.

8. The husband alleged that this transfer took place because the second respondent advanced approximately $1,425,000 to him over a period which was not revealed by the evidence presented at the interim hearing.  It was clear that the wife disputes this allegation strongly.

9. The husband deposed that in 2018 the company M Pty Ltd distributed retained earnings from previous years and issued to him a "paper" dividend of $804,000.  The husband deposed further that this distribution resulted in a tax liability of approximately $179,873.  As the husband is the sole director and shareholder of the company M Pty Ltd, these actions can have occurred only at his behest.

10. On 12 April 2019 the husband deposed "I estimate the asset pool available for division is approximately $3,619,549."  The Balance Sheet filed on 25 June 2019 read as follows:

ASSETS
Ownership		Description	Husband's estimated value	Wife's estimated value
Real Properties
1	Wife	D Street, Suburb E, NSW F.I: …	800,000	800,000
2	Husband	F Street, Suburb G, NSW F.I: …	550,000	550,000
3	Husband	H Street, Suburb J, NSW F.I: …	980,000	NK
4	Husband	K Street, Suburb L, NSW …	650,000	550,000
Bank Accounts
5	Husband	Westpac Account No. …46	11,589
6	Husband	ANZ Account No. …96	2,436	NK
7	Wife	Westpac Account No. …94	1	1
8	Wife	P Bank Account No. …44	Nominal	1
9	Wife	P Bank Account No. …80	1	1
10	Wife	C Bank Account No. …6-2	167	200
11	Wife	C Bank Account No. …8-5	45,081	32,890
12	Wife	C Bank Account No. …76	1	1505
13	Wife	Z Bank Account No. … …00	0	0
14	Wife	Q Bank Account No. …82	107,608	103,356
15	Wife	ANZ Access Select Cheque Account No. …66	2	4
16	Wife	C Bank savings Account No. …4-2 (X)	1	1
17	Wife	C Bank savings Account No. …2-6 (Y)	40,507	40,668
18	Wife	C Bank Account No. …61-8 (Y)	1	1
Shares in publicly listed companies
19	Husband	204 R Limited shares	1,664	3,664
20	Husband	1,117 S Limited shares	4,278	1,542
21	Wife	1,459 R Limited shares	11,950	10,988
22	Wife	1,258 T Limited shares	2,591	729
Shares in privately listed companies
23	Husband	M Pty Limited ACN … ·   H sole director & secretary ·   H sole shareholder (1 ordinary share) (see item 33)	NK
24	Husband	N Pty Limited ·   H and Ms B Vida (Husband's mother) directors ·   H owns 10,100 beneficially owned shares ·   M Pty Ltd owns 20,200 beneficially owned shares ·   Registered owner of 2 U Street, Suburb E NSW F.I: …	272,176	NK
25	Husband	Vida Family Trust	613,632
26	Wife	Beneficiary Account in Vida Family Trust	121,430
27	Husband	Beneficiary Account in Vida Family Trust	429,497
Motor vehicles, furniture, furnishings and effects
28	Husband	Motor Vehicle 1	16,400
29	Husband	Motor Vehicle 2	85,000
30	Wife	Motor Vehicle 3	35,000	40,000
Total			$3,616,454	$3,303,110

ADDBACKS
Ownership		Description	Husband's value	Wife's value
31
Total		$0	$0

LIABILITIES
Ownership		Description	Husband's value	Wife's value
32	Wife	C Bank Home Loan Account No. …8-8 (Mortgage encumbering the Suburb E property)	45,885	41,232
33	Wife	ANZ Rewards Visa Account No. …33	227	2,500
34	Wife	Westpac No Annual Fee Master Card	6
35	Wife	Westpac Employee Benefit Visa Card	160
36	Husband	ANZ Visa Account No. …84	30	NK
37	Husband	Loan from Husband's mother	1,085,000	0
38	Husband	Loan from Husband's mother	50,000
39	Husband	Income Tax liability for the year ended 30 June 2018	188,600
40	Husband	Interest in M Pty Ltd	1,762
Total		$1,371,504	$43,898

SUPERANNUATION
Member		Name of Fund	Type of interest	Husband's value	Wife's value
41	Husband	The Trustee for Super Fund 1 ABN: … Owns: ·   4 U Street, Suburb E NSW F.I: … ·   6 U Street, Suburb E NSW F.I: … ·   V Street, Suburb W NSW F.I: ... (balance as at 30 June 2017)	SMSF	1,092,627
42	Wife	Super Fund 2	Accumulation	250,877	235,296
43	Husband	Super Fund 1	Accumulation	1,092,627
Total		$1,343,504	$1,327,923

FINANCIAL RESOURCES
Ownership		Description	Husband's value	Wife's value
44	Husband	Vida Family Trust	10
45	Wife	Unpaid entitlements from Vida Family Trust (see item 26)	121,430
Total		$121,440	$0

NETT TOTAL ASSETS (including Superannuation)
$3,709,894
$4,587,135

1. The husband deposed that the balance of the C Bank mortgage secured by the Suburb E property was $45,874 as at 13 March 2019.  He deposed further that the wife made six drawdowns in a total amount of $18,622 between 26 September 2019 and 29 October 2019.

2. The wife deposed that the balance of the C Bank mortgage account was $44,136 as at 15 April 2019 and $67,118 on 5 May 2020.  The C Bank home loan contract dated 10 June 2008 (husband's Tender Bundle 2 at pages 2-7) provides that the credit limit of this facility is $210,000.

3. The Application in a Case filed by the husband on 22 April 2020 sought that the wife redress the increase in the mortgage account balance of approximately $33,086 on the basis of drawdowns identified in the Case Outline filed on his behalf.  This Outline of Case document identified drawdowns totalling $18,622 between 26 September 2019 and 3 December 2019; $10,964 between 4 December 2019 and 3 March 2020 and $3,500 in the period 2 March 2020 to 27 April 2020.

4. The sum of $33,086 equates to approximately 0.91% of the value of the net pool as estimated by the husband on his oath on 12 April 2019.  The full mortgage limit of $210,000 equates to some 5.8% of the husband's estimate of the net value of the pool.

5. The wife deposed that the husband's Child Support Assessment reduced from $3,385 on 1 August 2019 to $2,311 on 16 August 2019 and then to $703 per month on 12 March 2020.  The wife deposed further that the husband is in arrears of Child Support in an amount of $23,379 as at 5 May 2020.  She exhibited to her affidavit of 5 May 2020 documents which supported these figures.

Consideration

1. I have set out above the precise wording of Order 7 made on 15 April 2019.  On 10 April 2019 an order was made by consent that "the applicant is restrained from selling, transferring, mortgaging or in any way encumbering or dealing with the property located and situated at D Street, Suburb E."

2. On 12 April 2019 the husband deposed that:

   33.In the 10 April Orders, Ms Vida also consented to not sell transfer mortgage or further encumber her property at D Street, Suburb E folio identifier 218/1021064 registered in Ms Vida's sole name."

   That proposition clearly is incorrect, on the face of the wording of the order of 10 April 2019.  The words "further encumber" do not appear in this order or the subsequent version of 15 April 2019.

3. The husband contended that the wife "breached" the Orders of 15 April 2019 by making drawdowns on the C Bank mortgage account.  The wife contended that she has not breached this Order, in that the Suburb E property was subject to a mortgage encumbrance with a limit of a sum of $210,000 as at 15 April 2019.

4. The wife deposed that she was "ahead" of her required mortgage repayments by approximately $117,500 on 15 April 2019 and $97,339 as at 5 May 2020.  Accordingly, the funds which the wife withdrew from the C Bank account consisted of additional payments made at her election and which were available to her for withdrawal on and at all times since 15 April 2019.

5. The solicitor for the wife drew attention to the definition of "mortgage" in section 3 of the Real Property Act 1900 (NSW). The term "mortgage" is there defined as "any charge on land (other than a covenant charge) created merely for securing the payment of a debt." In my view, this legislative definition reinforces the submission that the wife did not "mortgage" the Suburb E property in breach of Order 7 of 15 April 2019. The mortgage encumbrance existed at the time of the Orders of 15 April 2019 and the wife was not restrained from dealing with redraw funds. The wife has created no new "mortgage" in respect of the Suburb E property since the Orders of 15 April 2019.

6. For these reasons, I am satisfied that the wife did not "breach" Order 7 of 15 April 2019.  For reasons which I now set out, I am not prepared to make orders which restrain the wife from access to the redraw funds in the future.

7. As noted above, the limit of $210,000 secured by the C Bank mortgage is a miniscule percentage of the husband's estimate of the net pool as at 12 April 2019.  It is correct, as submitted on behalf of the husband, that the extent of the net pool is unknown at this time because the trust and the company N Pty Ltd are yet to be valued by an expert.

8. The fact remains, however, that the wife owns the Suburb E property and the husband is the sole proprietor of three additional unencumbered parcels of real estate.  In the Balance Sheet of 25 June 2019, the parties estimated the total values of these real properties at $2,980,000.  The Suburb E property is subject to the C Bank mortgage and the Orders of 15 April 2019 prevent the husband from encumbering the three parcels of real estate in his name.

9. In the Balance Sheet of 25 June 2019 the husband listed total liabilities of $1,371,504, which included an alleged debt to the second respondent in a sum of $1,085,000.  This alleged liability is strongly disputed by the wife.  Even taking into account this disputed liability, there is more than adequate scope for a "clawback" allowance in the sum of $21,000 or any part therefore.  I use the term "clawback" in the sense of authorities on interim or partial property settlement eg. Strahan v Strahan (2009) FLC 94-414.

10. The wife set out in her affidavit her use of the redraw funds.  In my view none of this expenditure could be regarded as inappropriate or extravagant, particularly in circumstances where the husband's Child Support payments have been reduced by approximately 80% in less than twelve months and he has accrued arrears of some $23,000.

11. The evidence available at the interim hearing would suggest that it is the wife who shoulders the bulk of financial responsibility for the support of the children of the parties.  I am not prepared in these circumstances to deprive her of access to the redraw funds.

12. I will not make an order which requires the wife to make repayments in respect of the C Bank mortgage.  There was no evidence whatsoever that she has failed to make such payments.  Mandatory injunctive orders are made only on the basis of appropriate supporting evidence.

I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 25 May 2020.

Associate: 

Date:  25 May 2020