Agnarsson & Agnarsson (No 4)
[2024] FedCFamC1F 407
•17 June 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Agnarsson & Agnarsson (No 4) [2024] FedCFamC1F 407
File number: CAC 491 of 2023 Judgment of: AUSTIN J Date of judgment: 17 June 2024 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Review of decision – Property – Where the husband seeks review of a selection of interim orders made by a senior judicial registrar (“the registrar”) concerning the treatment of six properties pending trial – Where the husband sought to rely upon an Amended Application for Review circulated late on the last business day before the hearing – Where it would be procedurally unfair to expect the wife to meet the amended application – Where the husband was confined to his initial Application for Review – Where the wife opposed the husband’s review application and was content to abide by the registrar’s orders – Where the husband does not presently hold a proprietary interest in the six properties – Where the wife should not be compelled to complete the purchases of the six properties – Where the contract to purchase one of the properties has been rescinded – Where the wife will be the sole registered proprietor of the properties if the purchases are completed – Where the wife intends to sell the properties and seeks to retain responsibility for the sales – Where there is no need for an order appointing the wife as trustee for sale of properties when she will be the exclusive owner – Where the husband seeks appointment of professional trustees to manage the sale of the properties due to his distrust of the wife – Where appointment of professional trustees is not a sensible solution – Where the wife is free to use the net proceeds of sale to retire debt and place any residue in trust with her solicitors – Where certain orders by the registrar are set aside – Where the husband’s application to substitute proposed orders for some of those set aside is dismissed – Husband’s stay application consensually dismissed – Wife’s costs application dismissed. Legislation: Evidence Act 1995 (Cth) s 57
Family Law Act 1975 (Cth) Pt VIII, ss 79, 80 and 114
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) Pt 6.1, rr 6.02, 14.05 and 14.07
Cases cited: Agnarsson & Agnarsson (No 2) [2023] FedCFamC1F 1066
Bevan v Bevan (2013) 279 FLR 1; [2013] FamCAFC 116
Gabel v Yardley (2008) FLC 93-386; [2008] FamCAFC 162
Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143; [2003] FamCA 395
Lin & Ruan (2021) FLC 94-024; [2021] FamCAFC 90
Sarto & Sarto (2022) 65 Fam LR 605; [2022] FedCFamC1A 16
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466; [2009] FamCAFC 166
Division: Division 1 First Instance Number of paragraphs: 65 Date of hearing: 17 June 2024 Place: Newcastle (via Microsoft Teams) Counsel for the Applicant: Ms Gillies SC Solicitor for the Applicant: Dobinson Davey Clifford Simpson Solicitor for the Respondent: Elringtons Lawyers ORDERS
CAC 491 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR AGNARSSON
Applicant
AND: MS AGNARSSON
Respondent
ORDER MADE BY:
AUSTIN J
DATE OF ORDER:
17 JUNE 2024
THE COURT ORDERS THAT:
1.The applicant’s oral application to file and rely upon the Amended Application for Review dated 14 June 2024 is dismissed.
2.Orders 2, 3, 4 and 6 made by the senior judicial registrar on 13 May 2024 are set aside.
3.The Application for Review filed on 15 May 2024 is otherwise dismissed.
4.The Application in a Proceeding filed on 24 May 2024 is dismissed.
5.The respondent’s application for costs is dismissed.
NOTATION
A.The respondent does not require the publication of Reasons for Order 5.
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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 Agnarsson & Agnarsson (No 4) has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
EX TEMPORE
REASONS FOR JUDGMENTAUSTIN J:
The parties to these proceedings are in dispute over the division of their property interests in a financial cause brought under Pt VIII of the Family Law Act 1975 (Cth) (“the Act”).
Presently before the Court for determination is the husband’s application to review some orders made by the senior judicial registrar (“the registrar”) on 13 May 2024, which orders concern the treatment of six parcels of real property pending trial.
The subject real properties are:
(a)F Street, Suburb G, NSW (“the first property”);
(b)H Street, Suburb J, NSW (“the second property”);
(c)1 K Street, Suburb L, NSW (“the third property”);
(d)2 K Street, Suburb L, NSW (“the fourth property”);
(e)3 K Street, Suburb L, NSW (“the fifth property”); and
(f)M Street, Suburb N, NSW (“the sixth property”).
The interlocutory dispute
Proceedings for financial relief were commenced by the husband in March 2023, following the parties’ separation in late 2022.
The registrar heard the parties’ latest interim applications on 10 May 2024.
At that time, the wife relied upon a Minute of Orders (Exhibit C in that hearing), which she pressed in substitution for the Amended Application in a Proceeding which she filed only a week before on 3 May 2024. In essence, the wife sought:
(a)the husband’s payment to her of spousal maintenance in the sum of $2,000 per week (Order 1);
(b)her appointment as trustee for the sale of a seventh parcel of real property and the use of the net sale proceeds to retire debt (Orders 2–5);
(c)her appointment as trustee for the sale of an eighth parcel of real property and the use of the net sale proceeds to retire debt (Orders 6–11);
(d)her appointment as trustee for the sale of a ninth parcel of real property and the use of the net sale proceeds to retire debt, unless the husband was willing to take over sole responsibility for meeting debt and expenses in relation to its retention (Orders 12–15);
(e)the discharge of orders made in March 2023 in respect of the first, second, third, fourth, fifth and sixth parcels of real property and a complicated set of alternative orders concerning the acquisition, retention, transfer or sale of those six properties (Orders 16‑23, 28 and 31);
(f)the discharge of some orders made in October 2023 (Orders 25 and 27);
(g)multiple consequential orders (Orders 26, 29 and 30); and
(h)costs against the husband (Order 24).
The husband relied upon a Minute of Orders (Exhibit D in that hearing), which he pressed in substitution for the Amended Response to an Application in a Proceeding he filed only a day before on 9 May 2024. In essence, the husband sought:
(a)the discharge of some orders made in October 2023 (Orders 1 and 12);
(b)the appointment of independent trustees for the sale of the seventh, eighth, ninth and tenth parcels of real property (Orders 2–4);
(c)an order compelling the parties to obtain finance and complete the purchase of the first, second, third, fourth and fifth parcels of real property and, once completed, a suite of orders dictating ownership and possession of those properties (Orders 5–8);
(d)an order appointing the trustees for sale to “seek to negotiate” with the Commissioner of Taxation over the extent of the parties’ personal income tax liabilities (Order 9);
(e)the sale of jewellery by the trustees for sale (Order 10);
(f)the trustees’ use of net proceeds realised on the sale of the parcels of property and the jewellery to retire debt (Order 11);
(g)the trustees’ authorisation to rescind the contract of sale in relation to the sixth parcel of real property (Order 13);
(h)the trustees’ instruction to “prepare a report” in respect of the solvency of two corporations (Order 14);
(i)an order specifying the ambit of the trustees’ powers (Orders 15–17); and
(j)orders governing the parties’ interim liability for the payment of certain expenses and their entitlement to rental income (Orders 18–20).
As can be seen from their respective proposals, the parties held quite disparate views about the management of their complicated financial affairs pending the final trial of their financial cause.
In a previous review hearing determined between the parties (Agnarsson & Agnarsson (No 2) [2023] FedCFamC1F 1066), this observation was made:
30.The Court has no business meddling in the parties’ complicated financial affairs in a piecemeal and arbitrary way in advance of the trial, which is when their financial circumstances can be addressed comprehensively. If they are in a mess, it is by reason of their own conduct. It is not for the Court to extricate them when the posited interlocutory solutions are hotly contested.
The renewed conflict over their interim financial affairs clearly indicates the parties’ casual disregard of that warning.
The registrar pronounced judgment (in part) several days after the hearing. In summary, the registrar’s orders provided for:
(a)the discharge of Order 6 made on 26 October 2023 (Order 1);
(b)the wife’s appointment as the trustee to complete the purchase of and then sell the first, second, third, fourth and fifth parcels of real property (Orders 2 and 6);
(c)the wife’s direction to rescind the contract to purchase the sixth parcel of real property (Order 3);
(d)the wife’s direction to use net proceeds from the sales of the first, second, third, fourth and fifth properties and any refunded deposit on the sixth property to retire debt and to deposit any residue money in a solicitors’ trust account (Order 4); and
(e)the grant of permission to the wife to obtain bridging finance to complete the purchase of the first, second, third, fourth and fifth properties (Order 5).
By an Application for Review filed on 15 May 2024, the husband reviews Orders 2, 3, 4 and 6 made on 13 May 2024.
This review hearing is conducted as an original hearing of the parties’ underlying applications (r 14.07(1) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”)). However, both parties again altered their positions.
Proposed amendment of the review application
The registrar made more orders on 17 May 2024 to fully determine the balance of the parties’ respective interlocutory applications.
At the hearing of the husband’s review application, he sought leave to rely upon an Amended Application for Review dated 14 June 2024, which was unfiled but nevertheless circulated late on the afternoon of the last business day before the hearing. The proposed amended application sought to expand the review hearing in two different ways.
First, it sought to include the review of Order 5 made on 13 May 2024, but the time limitation period for review of the orders made on 13 May 2024 expired on 3 June 2024.
Secondly, it sought to expand the review to include selected orders made on 17 May 2024. The husband had not even filed an original Application for Review in respect of those orders, but the intended review of those orders is also outside the limitation period.
The husband relied upon his affidavit sworn on 14 June 2024 (but unfiled) in support of his application for leave to rely upon the Amended Application for Review, but the evidence therein does not afford a satisfactory explanation for his delay. In essence, he changed solicitors and they then engaged the wife’s lawyers in unproductive negotiations, so the parties remain at odds over their financial affairs and the orders made by the registrar. Such evidence does no more than explain how nothing has changed. He had no trouble filing the application to review the orders made on 13 May 2024 within two days of them being pronounced and no trouble filing another application shortly afterwards to stay the orders made on 13 May 2024 pending the review of them, making his failure to apply to review the orders made on 17 May 2024 within the 21 days’ time period (r 14.05) all the more poignant. The husband’s new solicitors came onto the Court record on 24 May 2024 – three weeks ago. It must follow that, with their assistance, the husband had ample time to review the registrar’s orders within the designated time limit.
The wife did not come to Court today to meet an amended review application – in either of the two ways in which the husband wanted to change his position. It would be procedurally unfair to expect her to adapt on the run. The Court must conduct its business in an orderly, efficient and impartial way. Leave to either file or rely upon the Amended Application for Review was refused. Consequently, it is unnecessary to discuss the nature of the additional orders made by the registrar on 17 May 2024.
The husband was confined to his Application for Review filed on 15 May 2024.
Current proposals
Upon review of the selected orders made by the registrar on 13 May 2024, the husband now seeks different orders in his Application for Review from those he proposed in his Minute of Orders (former Exhibit D).
In lieu of Order 2, he wants orders compelling the wife to complete the purchase of the first, second, third, fourth and fifth properties, but authorising him to do so if the wife defaults (proposed Orders 1 and 4). However, upon completion of the purchases, he wants independent trustees appointed to sell the second, third, fourth and fifth properties (proposed Order 2), but for the first property to be retained, subject to his capacity to meet its retention costs, but otherwise sold (proposed Order 3).
The husband proposes no order to replace Order 3.
In lieu of Order 4, the husband wants the sale proceeds realised by the trustees on the sales of the second, third, fourth and fifth properties used to discharge certain debt, with the balance retained by the trustees upon trust (proposed Order 6).
The husband proposes no order to replace Order 6.
The wife opposed the review application. She was content to abide the registrar’s orders and abandon her application for the orders within her Minute of Orders (former Exhibit C).
Comparing the positions adopted by the parties in respect of the reviewed orders, they agreed the five issues which arise are these:
(a)should the parties, or either of them, be compelled or authorised to settle the purchases of the first, second, third, fourth and fifth properties?
(b)if so, given the parties agree the second, third, fourth and fifth properties should then be sold immediately upon the completion of their purchases, should those sales be handled by the wife (as she proposes) or by independent trustees (as the husband proposes)?
(c)what should become of the first property, as the wife wants it sold but the husband does not want the property sold unless he is unable to meet the retention costs?
(d)should any proceeds realised on the sales of the properties be held in trust by the solicitors proposed by the wife or by the trustees proposed by the husband?
(e)what should become of the sixth property, if Order 3 is set aside as the husband wants?
Evidence
The husband relied upon his:
(a)affidavit filed on 26 April 2024 (selected paragraphs);
(b)affidavit filed on 9 May 2024 (selected paragraphs);
(c)financial statement filed on 1 May 2024; and
(d)numerous tendered documents (Exhibit A).
Initially, Exhibit A was only received provisionally (s 57 of the Evidence Act 1995 (Cth)), but the contents proved to be relevant to the husband’s application and helped demonstrate why his application should be dismissed, so its tender was later confirmed over the wife’s objection.
The husband tendered some 30 pages of correspondence between the parties’ solicitors, but the tender was rejected. It was only likely to expose how the parties gave their lawyers quite different instructions about how the litigation was being conducted and how it should be properly conducted, in which event it would not likely be probative, even if relevant to a fact in issue.
The wife relied upon her:
(a)affidavit filed on 4 April 2024 (selected paragraphs);
(b)affidavit filed on 3 May 2024 (selected paragraphs);
(c)affidavit filed on 8 May 2024; and
(d)financial statement filed on 13 June 2024.
First issue
The wife contracted to purchase the first, second, third, fourth, fifth and sixth properties “off the plan” in early 2020, before the parties separated in late 2022.
The purchases are due for completion on dates later this year or in early 2025.
The wife has so far paid deposits and contract variations approximating $2 million. According to the evidence, about another $15 million is payable upon completion of the contracts for the balance of the purchase prices and the payment of stamp duty.
The wife deposed to presently owning property worth just over $6 million in aggregation, but having liabilities totalling just over $5 million. Given the limited amount of her net equity, her completion of the contracts to purchase the first, second, third, fourth, fifth and sixth properties is entirely dependent upon her ability to procure loans to do so, which loans would presumably be secured against those properties and any other property she has. Her solicitor stated she needs to obtain bridging finance of about $10 million, which she expects to be able to do.
The husband could not explain how, by the application of well-established legal principles concerning interim property settlement orders and injunctions, the wife should be compelled to extend her personal liabilities by some $10–15 million dollars just to acquire legal ownership of the properties. The wife wishes to do so, to avoid forfeiture of the $2 million she has so far invested, but she should not be compelled to do so. There is no point making an order “permitting” her to do so, because she is already seized of that legal right.
When asked to identify the source of power upon which the husband relied for an order compelling the wife to complete the purchases of the properties, his senior counsel expressly resorted to s 114(1)(e) of the Act for a mandatory injunction.
Before an injunction under s 114(1) of the Act can be made, by its legislative terms, the Court must be satisfied it would be “proper” to make the injunction in the matter to which the proceedings relate. The husband did not try and explain how it would be “proper” for the Court to compel the wife to incur another $10–15 million in debt to avoid losing $2 million already paid, if she is unable or becomes unwilling to do so. Her ability to secure the necessary financial accommodation depends upon decisions made by a financier and are beyond her control. Conversely, if the wife chooses to voluntarily incur the extra debt and complete the purchases, there is no need for an injunction forcing her to do so.
The husband’s idea that the wife should be compelled by mandatory injunction to complete the purchase of at least the first property, using finance obtained by him, if she is unable to procure her own finance, seems to be a fantasy. The finance facility he has explored for that purpose is only an “indicative offer”, addressed to the spouses jointly, even though the wife has had no involvement in the enquiry (Exhibit A). Inferentially, the husband expects the wife should take up the finance offer. He could not personally do so because he will not be the owner of the first property and could not grant a mortgage over it as security for the loan.
The finance offer is subject to numerous terms and conditions, which include the lender’s satisfaction with the projected value of the property, the borrower’s financial capacity to meet the repayments, the borrower’s grant of security to the lender over the first property, and the cross-collateralisation of at least one other property owned by the wife (Exhibit A). The wife does not necessarily want to avail of the facility she has had no part in arranging and, by inference, she is disinclined to grant security over the other property which the lender proposes be also caught by the encumbrance. Even if the husband envisages meeting the holding costs on the first property once purchased by her, he does not appear to have the financial capacity to meet the loan conditions given the content of his financial statement. He deposed to spending more than he earns and to having debts which exceed his assets by about $500,000.
Although the husband did not resort to s 79 and s 80 as the source of power for the orders he proposed, they can also be rejected as an alternate option. No property adjustment order under Pt VIII of the Act – either final or interim – should be made unless the Court is satisfied it is just and equitable to make the order and, in that enquiry, it must not be assumed the parties’ rights to or interests in property are or should be different from those that exist (Stanford v Stanford (2012) 247 CLR 108 at [22], [35], [38] and [50]).
There can only be one exercise of power under Pt VIII to adjust the parties’ property interests (Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at [40]–[48]; Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 at [105]–[113]). The power may be exercised partially or on an interim basis until it is entirely spent or exhausted (Gabel v Yardley (2008) FLC 93-386 at [66]-[67]; Strahan at [114]), though it is preferential for there to be only a singular exercise of the power (Strahan at [115]–[118] and [225]–[228]).
There must be a principled reason for fragmenting the process (Stanford v Stanford at [41] and [43]), which reason would ordinarily be the need to cause one party to furnish the other with sufficient funds for legal costs to enable the financial proceedings to be contested on a level litigious field (Strahan at [224]), but that rationale has no application here. The parties are both wealthy individuals competing on a level playing field. The competing interim orders they propose have nothing to do with furnishing them with financial capacity to properly conduct the litigation.
Although the husband may wish to acquire the first property as an integral part of his ultimate share of the parties’ property interests, assuming the wife does complete the contract for its purchase, his mere desire to eventually own the property does not now engage the Court’s power under s 79 of the Act to make an order compelling the wife (once she is the owner) to transfer it to him in isolation from all other considerations.
Nor could the Court order the novation of the contract struck between the wife and the third party vendor in respect of the first property and then compel the vendor to complete the sale to a person with whom the vendor did not contract (the husband), for the price and on conditions the vendor agreed with only the wife. Even if the vendor was joined to the proceedings as a party and was thereby afforded the procedural fairness of a chance to be heard in rebuttal of the husband’s application, it is highly doubtful the Court could or would make such an order.
The husband’s application seems to spring from a mistaken assumption that he has some form of inchoate proprietary interest in the six properties which he is presently entitled to protect. He does not. Upon completion of the contracts to purchase the properties, the wife will be the exclusive owner of them. Unless and until the husband secures an interest in one or more of the properties pursuant to an adjustment order made in an exercise of discretion under s 79 of the Act, they remain the wife’s exclusive property (Sarto & Sarto (2022) 65 Fam LR 605 at [19]; Lin & Ruan (2021) FLC 94-024 at [41], [48] and [49]; Bevan v Bevan (2013) 279 FLR 1 at [80]).
Second issue
As circumstances presently stand, the wife will most probably choose to complete the purchases of the six properties to avoid the forfeiture of about $2 million already paid.
Assuming she completes the purchases, she will be the sole registered proprietor of the six properties. She then wants to immediately sell them to take advantage of any capital gains and to discharge the enormous loans which will then encumber them.
The wife wants to retain responsibility for the sales, which is understandable when she will be the exclusive owner of the properties. Conversely, the husband wants independent persons appointed as the trustees for sale, who will presumably charge for their services.
The husband’s solitary reason for vesting such power in professional trustees is his distrust of the wife. He asserts there has so far been an “absence of transparency”, but transparency in the parties’ use of their income and assets after separation can be ensured by the parties’ adherence to Pt 6.1 of the Rules. Each can ask the other to file an undertaking affirming their compliance with disclosure obligations (r 6.02). Whether they have actually done so will be a factual issue explored at trial, but removing the wife’s control of her own assets and forcing the parties to pay for the privilege of having professional trustees manage her property is not the sensible solution to cure the husband’s distrust in the wife.
Third issue
Upon completion of the contract to purchase the first property, the wife will be the sole registered proprietor of it. Presently, the husband has no legal or equitable interest in the property.
The husband wants an order made in respect of the first property in these terms:
3) That with respect to [the first property], the husband either:
a) Within 6 months of settlement by with Wife pursuant to Order 1a; or
b)Within 5 days of the Wife failing to complete pursuant to Order 1a of any Notice to Complete issued;
is at liberty to settle on [the first property].
(As per the original)
The proposed order is unintelligible in its current form, but the husband’s senior counsel clarified it was intended to mean the wife should be restrained from selling the first property if he is able to cover the retention costs. It is only if he cannot afford to retain the property that the wife should be free to sell it. He is therefore asking the Court to make an order based on facts he is presently unable to establish.
The husband did not deign to explain how such an order could or should be made.
The husband gives no re-assuring evidence about: how he could meet his lender’s terms and conditions; why the wife should submit to another of her properties being cross-collateralised under the mortgage to the husband’s lender; or why the wife should be restrained from selling her own property as and when she wishes.
Fourth issue
Given the anterior decision that the wife is at liberty to sell her properties as and when she sees fit, thereby making the appointment of professional trustees unnecessary, it inexorably follows that she should be free to choose to place any net proceeds realised on the sales of the properties into her solicitors’ trust account.
Fifth issue
The contract for the wife’s purchase of the sixth property was due for completion in early 2025.
Order 3 made by the registrar directed the wife to rescind the contract.
It is common ground the wife has already rescinded the contract. Although apparently unknown to the husband, the wife’s solicitor announced the 10 per cent deposit under the contract, amounting to $370,000, will be refunded and not forfeited.
Disposition
Order 2 made by the registrar should be set aside. It appointed the wife as trustee for sale of the properties of which she will be the exclusive owner, once she completes the purchases of them. There is no need for a trustee order.
Order 3 made by the registrar should be set aside. It is otiose. The contract to purchase the sixth property has already been rescinded.
Order 4 made by the registrar should be set aside. Once the wife sells the properties of which she is the exclusive owner, she is free to use the net proceeds of sale to retire debt as she sees fit. She is entitled to place any residue in trust with her solicitors.
Order 6 made by the registrar is set aside. The wife can do as she pleases with her own properties once she has completed the purchase of them. She does not need permission from the Court.
The husband’s application to substitute his proposed orders for some of those now set aside is dismissed.
The parties agreed the husband’s stay application (filed 24 May 2024) should be consensually dismissed, once orders were made to determine the review application.
I certify that the preceding sixty-five (65) numbered paragraphs are a true copy of the Ex Tempore Reasons for Judgment of the Honourable Justice Austin. Associate:
Dated: 25 June 2024
4
6
3