ALAM & SAYID AND ANOR

[2018] FamCA 483

FAMILY COURT OF AUSTRALIA

ALAM & SAYID AND ANOR [2018] FamCA 483

FAMILY LAW – ENFORCEMENT – Where orders were made in July 2016 and again in May 2017 for the sale of the former matrimonial home – Where the husband continues to occupy the home without paying the mortgage – Where the mortgagee has pending proceedings in the Supreme Court – Where, on the husband’s case, the parties exchanged contracts with purchasers on 8 December 2017 – Where the  husband asserts the purchasers have breached a term of the contract but the wife disagrees – Where the husband has unilaterally purported to terminate the contract with the purchasers – Where the husband can assert loss in the property settlement proceeding and assert the wife should be responsible for it – Where it is an agreed fact that the husband had removed from Australia to Country A an amount of $3 million – Where the wife risks loss arising from the continuing non-payment of the mortgage, the mortgagees Supreme Court proceedings and the purchasers’ suing for breach of contract – Where the wife is appointed trustee for sale – Where an order is made for the husband to vacate the home

Family Law Act 1975 (Cth)

APPLICANT: Ms Alam

RESPONDENT: Mr Sayid

2^nd RESPONDENT: Commissioner of Taxation

FILE NUMBER: SYC 3215 of 2015

DATE DELIVERED: 28 June 2018

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 27 June 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Givney

SOLICITOR FOR THE APPLICANT:	Hills Legal Group
COUNSEL FOR THE RESPONDENT:	Ms Lawson

SOLICITOR FOR THE RESPONDENT: Cheryl Orr Family Law

COUNSEL FOR THE 2^ND RESPONDENT: Ms Glover

SOLICITOR FOR THE 2^ND RESPONDENT: Commissioner of Taxation

Orders

1. The applicant wife, Ms Alam, be appointed trustee for the sale of the property situated at G Street, Suburb H and being the whole of the land contained in Title reference …79 (“the Suburb H property”) with the ordinary power of a trustee to, amongst other things, execute all documents, instruments and contracts and do all acts and things to effect the completion of the sale to Mr V and Ms V.

2. Within a period of seven days from the date of these orders, the husband vacate the Suburb H property and remove all furniture and furnishings from the property.

3. The husband be restrained from lodging any dealings against the title of the Suburb H property or otherwise doing any act or thing that would delay the settlement of the sale of the Suburb H property to Mr V and Ms V.

4. In the event the husband fails to comply with the order that he vacate the Suburb H property, the wife is given liberty on 24 hours’ notice to apply to the court for an order for a warrant for possession against the husband.

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 Alam & Sayid and Anor 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 3215  of 2015

Ms Alam

Applicant

And

Mr Sayid

Respondent

And

Commissioner of Taxation

2^nd Respondent

REASONS FOR JUDGMENT

1. The parties are the registered proprietors as joint tenants of the property situated at G Street, Suburb H. Contracts for the sale of the property (“the contract”) were exchanged with purchasers initially on 25 November 2017. The de facto husband (“the husband”) had an issue with a particular clause in that contract (clause 52), claiming he had not agreed to it, but by 8 December 2017 had decided to proceed with the contract.

2. On 12 June 2018, the husband purported to unilaterally serve a “Notice of Termination” of the contract upon the purchasers.

3. The de facto wife (“the wife”), by way of Application in a Case filed 1 June 2018, seeks to be appointed as trustee for the sale of the Suburb H property (or in the alternative, the Registrar be appointed to execute all deeds and documents necessary to complete the sale of the Suburb H property); an order that the husband vacate the Suburb H property within seven days and remove all furniture and furnishings from the property and that a warrant for possession be issued but lie in court (or, alternatively, the wife be given liberty at short notice to apply for an issue of the warrant for possession in the event the husband fails to vacate the property).

4. On 28 April 2018, the wife received a Notice to Complete.

5. Since late 2015 the husband has been in occupancy of the Suburb H property apart from a short period of time at the beginning of 2017 when the husband put tenants in the property. The husband continues now to reside in the property. The husband makes no payments in respect of the mortgage on the property which is currently in an outstanding amount of approximately $3,300,000.

6. These enforcement proceedings are brought by the wife in the wider context of an application by the wife pursuant to s 90SM of the Family Law Act 1975 (Cth) (“the Act”) for a property settlement order.

7. On 18 July 2016, I made orders for the sale of the Suburb H property. My Reasons delivered on that day outline the history at that time which included an agreed fact that the husband had removed from Australia to Country A an amount of $3 million.

8. Whilst the ATO announced its appearance in these interim proceedings, it did not seek to be heard nor did it lead any evidence in relation to the wife’s application. 

9. Paragraphs 48 and 49 of my Reasons of 18 July 2016 recorded the following. The husband was advised in February 2015 that it was the Commissioner’s intention to audit the husband in relation to refunds of tax paid by him. On 6 March 2015, the husband started moving monies out of Australia valued at approximately $3 million. When the Commissioner became aware of this a freezing order was obtained against the husband.

10. Further at [59] of the Reasons of 18 July 2016 the following is recorded. The debt owing by the husband to the Commissioner under the initial notices of assessment for the income tax years ending June 2011 to 2014 was $6,198,330. The Commissioner filed an Originating Application and Statement of Claim on 8 September 2015. The husband did nothing to defend the claim and on 23 December 2015, an order was made by the Federal Court that the husband owed $10,757,407 (including penalties and general interest). The amount outstanding as at 8 July 2016 was in the sum of $11,194,357.

11. The husband denies that he owes this amount and asserts it is only in the order of $250,000.

A SHORT HISTORY OF THE REQUIREMENT FOR A SALE OF THE SUBURB H PROPERTY

1. As indicated on 8 July 2016, I made the following orders:

   22.    The husband and wife do all acts and things and sign all writings and documents necessary to forthwith list and cause the sale by public auction of the property at G Street, Suburb H (“the Suburb H property”) being the whole of the land in Folio Identifier … at a price to be agreed upon between the parties and failing agreement, at a price to be determined by the nominee of the President for the time being of the Australian Institute of Valuers on the following basis:

   22.1Pending completion of the sale of the property, the husband pay as and when they fall due:

   22.1.1All instalments of principal and interest in respect of the mortgage which the Commonwealth Bank of Australia holds in respect of the property;

   22.1.2All rates and taxes in relation to the property;

   22.1.3All premiums of insurance in relation to the property and contents therein.

   23.    The proceeds of the sale of the property be paid in the following manner and priority:

   23.1Agents commission, costs and disbursements of the agent and/or auctioneer acting on the sale of the property;

   23.2Costs and disbursements of the conveyancer/lawyer acting on the sale of the property;

   23.3Monies owing to the Commonwealth Bank of Australia in order to effect a discharge of the mortgage that the Commonwealth Bank hold in respect of the property;

   23.4Adjustment of municipal and water rates;

   23.5The balance to be held in a controlled monies account in the names of the solicitors for the parties to these proceedings until further order of the court.

   24.    The husband is to vacate the Suburb H property not later than two days prior to the date scheduled for the settlement of the sale of the Suburb H property.

   25.    The parties have liberty to apply on 14 days’ notice in relation to the implementation of the orders relating to the Suburb H property.

2. The husband’s evidence was that between July 2016 and May 2017 he engaged with a real estate agent with whom he had a disagreement in relation to an appropriate sale price. I have little other information as to why in that ten month period the sale was not progressed in accordance with the orders which I had made.

3. On 8 May 2017, the wife brought an Application in a Case seeking an order that she be appointed trustee for sale. Those proceedings were settled on 12 July 2017 where consent orders were made in the following terms:

   1.     ….

   2.     That the parties do all things and sign all documents to cause the property [G Street, Suburb H] NSW (the property) to be sold by public auction at a reserve of $5.3 million (the reserve price).

   3.     That the date of the auction provided in Order 2 to be a date determined by the selling agent subject to:

   (a)The auction occurring in the spring of 2017

   (b)No later than October 20^th 2017

   4.     That other than providing the authorities required by the selling agent pursuant to Orders 1 and 2 herein each of the parties are restrained from contacting the selling agent other than by joint written agreement.

   5.     In the event the property is not subject to an exchange of contracts pursuant to Orders 1, 2 and 3 then the property is to be submitted to successive auctions as determined by the selling agent at a reserve 2.5% less than the preceding reserve auction price.

   6.     That upon the sale of the property pursuant to these Orders then the Applicant and 1^st Respondent will do all things and make all necessary applications to seek the release of an amount of $150,000 to each of the Applicant and the 1^st Respondent, and this Order shall act as the consent of the Applicant and the 1^st Respondent to cause the release of an amount of $150,000 to each of them from the controlled monies account pursuant to Order 23.5 of Orders made on 18 July 2016.

   7.     That the Respondent pay [W] Real Estate Agents the outstanding agency fees incurred in prior auctions, and shall indemnify and keep indemnified the Applicant in respect of such fees.

   8.     That the Applicant be and is hereby restrained from approaching the property or entering the property other than for the purpose of attending the auction(s) pursuant to these Orders.

4. It appears the order in relation to there being an auction by 20 October 2017 was not implemented. On 25 November 2017, it appeared the parties exchanged contracts with third party purchasers, a Mr & Mrs V. The husband, however, asserted that a condition about the timing of the payment of the 10 per cent deposit had been placed in the contract without his consent. Clause 52 provided that $50,000 be paid on exchange and the balance of the 10 per cent deposit in the sum of $440,000 be paid by 13 December 2017.

5. The full deposit of $490,000 was paid by 8 December 2017. Counsel for the husband conceded that on 8 December 2017 the husband formed the view that after full payment of the deposit the contract should proceed. So, whatever the views of the wife (the other joint owner) and the purchasers may have been in relation to the exchange of contracts which took place on 25 November 2017, by 8 December 2017 the husband was also content to proceed with that contract.

CLAUSES IN THE CONTRACT WHICH ARE RELEVANT TO THE HUSBAND’S PURPORTED TERMINATION OF THE CONTRACT

1. As indicated, on 12 June 2018, the husband purported to unilaterally terminate the contract.

2. The following clauses in the contract are relevant:

   18.1.Clause 51:

   10% DEPOSIT TO BE RELEASED TO THE CBA SUBJECT TO THE APPROVAL OF THE PURCHASER’S [sic] BANK WHICH IS ALSO THE CBA

   18.2.Clause 2.5:

   If any of the deposit is not paid on time or a cheque for any of the deposit is not honoured on presentation, the vendor can terminate. This right to terminate is lost as soon as the deposit is paid in full.

   18.3.Clause 40:

   No failure, delay, relaxation or indulgency [sic] on the part of a party in exercising any power or right conferred upon such party pursuant to this Contract shall operate as a waiver of such power or right, nor shall any single or partial exercise of any such power or right preclude any other or future exercise thereof, or the exercise of any other power or right pursuant to this Contract

3. The husband’s Notice of Termination is in the following terms:

   Notice of Termination

   (addressed to the purchasers solicitors)

   Vendor:  [the name of the husband and wife]

   Purchaser: [the names of the purchasers]

   Property: [the address and title reference of the [Suburb H] property]

   The vendor gives you notice as follows:

   1.    The Contract for the sale and purchase of land between the Vendor and the Purchaser for the Property dated 25 November 2017 (the Contract) is terminated for the Purchasers’ failure to comply with clauses 2.5 and 40 of the Contract.

   2.    The deposit paid by the Purchaser under the Contract will be refunded to the Vendor

   Dated 7 June 2018

   [Signed by the husband but not signed by the wife]

4. It is unclear why the Notice of Termination does not refer to clause 51 of the contract which, on the husband’s evidence, is the basis upon which he is seeking to terminate the contract.

5. On 14 December 2017, X Lawyers wrote to the solicitors for the purchasers, inter alia, in the following terms:

   Pursuant to Clause 51 of the Contract, the “10% Deposit is to be released to the CBA subject to the approval of the purchasers’ bank which is also the CBA”.

   In accordance with Clause 2.3 this is an essential term of the Contract. 

   Please provide by close of business Friday, 15 December 2017, written confirmation that CBA has released the 10% Deposit and if not, the basis for them refusing to do same.

6. Clause 2.3 states:

   If this contract requires the purchaser to pay any of the deposit by a later time, that time is also essential

7. On 15 December 2017, the solicitors for the purchasers wrote to the Commonwealth Bank advising the bank that they acted for the purchasers and going on to say:

   We advise that the contract for the sale of land of the abovementioned property provides for the release of the deposit to the vendors caveator. The release of the deposit is, however, subject to the purchasers’ bank providing its approval to the said release. In this regard we note that there are a number of encumbrances and notations on the title of the property which indicate there are a number of entities who lay claim to the vendor for moneys outstanding. We attach a copy of the relevant title search.

   We formally request your approval for the purchasers’ request for the release of the sum of $490,000 representing the deposit currently held in the agent’s trust account.

8. The husband gives evidence that on 28 December 2017 a solicitor acting for the Commonwealth Bank wrote an email in the following terms:

   To be clear, our client denies any assertion that our client (as Mortgagee) has refused to release the deposit as noted above, it is not a matter which is appropriate for our client as mortgagee to be part of.

9. The husband asserts that the purchasers breached a term of the contract which gave the vendors the right to terminate the contract. It is the wife’s case that clause 51 when read in its plain language, does not have any operation until the CBA gives approval for the release of the deposit and the bank  made it clear it was not appropriate to give that approval.

10. Counsel for the husband was not able, one way or the other, to indicate whether or not it was her client’s case that the unilateral Notice of Termination by one joint owner was effective as against the purchasers.

11. The husband’s case is that he should be allowed to remarket the property and to defend any proceedings brought against him and the wife by the purchasers in the Supreme Court.

12. The husband describes his potential loss in the following way in [33] of his affidavit:

    33.  At all times I have lost the opportunity to sell the property for a greater price and in accordance with the Family Court orders. I have lost 6 months from advertising the property on the market. I have incurred $20,000 in legal fees, I have incurred further interest and penalties attached to the loan facility for [the Suburb H property] and lost interest on sale proceeds had the property been promptly sold in December 2017.

13. The husband provides no corroborative evidence in relation to his loss of $20,000 in legal fees. The husband provides no quantification of what interest and penalties may have been saved had the $490,000 been placed against the mortgage on the Suburb H property as from 8 December 2017. The husband gives no evidence to support his contention that the property currently could be sold at a higher price than $4.9 million.

14. If the orders which the wife seeks are made she will be able to settle the contract with the purchasers and any remedy against them would be lost. The husband has the ability in a final hearing between himself and the wife for property settlement orders to attempt to establish:

    30.1.He and the wife had the right to terminate;

    30.2.He had a right to termination; and

    30.3.The quantity of any loss that he asserts the parties suffered as a result of completing the contract.

15. The wife on her part has indicated through her counsel that she acknowledges that the husband has the right to run that case at the final hearing and that if that case was successful, those monies, which would have been lost from the joint matrimonial assets, would be a responsibility she would bear in the adjustment of property between the husband and wife.

16. On the other hand, however, the wife is also exposed to significant risks if the orders she seeks are not made which include:

    32.1.The purchasers suing both her and the husband in the Supreme Court relying on their rights under the contract. The purchasers served a Notice to Complete on 28 April 2018;

    32.2.The Commonwealth Bank taking the property and either settling with the purchasers or otherwise selling the property in a mortgagee sale. In that regard, this interim hearing was listed as a matter of urgency because of a pending date in the Supreme Court in respect of the Commonwealth Bank’s application in relation to the Suburb H property. That matter is listed in the Supreme Court for further directions on 6 July 2018; and

    32.3.The husband continues to reside in the Suburb H property. No mortgage payments are being made. The mortgage continues to accumulate against both parties. In that regard, I note that in the Statement of Claim by the Commonwealth Bank of Australia, there is an assertion that judgment was entered against the husband and wife on 21 June 2017 in the amount of $3,062,687.82. In an email from the solicitor for the Commonwealth Bank dated 25 June 2018 (Exhibit 11), the amount the Commonwealth Bank asserts is currently outstanding is $3,303,086.64.

17. The applications that the wife makes are applications for enforcement pursuant to s 105 of the Act. Whether or not an order is made for enforcement is a matter of weighing discretionary considerations.

1. The husband asserts that he has a right to wait for the purchasers to sue the parties in the Supreme Court and then defend those proceedings. In support of his assertion of his right to have a controversy determined in the Supreme Court, the husband points to the fact that the purchasers have provided the wife with some litigation funding to make this application. The submission is that the purchasers are backing the wife in a way that circumvents the proper forum for hearing the dispute in relation to the contract. I do not accept that submission. What is before me is a dispute between the husband and wife. Neither party has sought to join the purchasers to this application.

2. Weighing all the considerations, the risks to the wife in not completing the contract outweigh any benefits that the husband asserts might exist in not completing the contract. In any event, the husband is not prejudiced between him and the wife given that he will be able to ventilate any grievance he says he has against the purchasers in the final property hearing, and if he is successful in that ventilation, the wife will bear the responsibility for any losses incurred.

SHOULD THE WIFE BE APPOINTED TRUSTEE AND AN ORDER RESTRAINING THE HUSBAND BE MADE?

1. The husband submitted that if orders were to be made placing control of the sale out of his hands, then the wife should not be appointed trustee but rather, the Registrar of the court appointed pursuant to s 106A of the Act. The ability of the Registrar to sign documents under s 106A is more constrained than the freedom that would be given to the wife to complete the transaction should she be appointed trustee. I find it is more appropriate to make an order appointing the wife as trustee and giving her power to sign documents.

2. The wife also applied for an order that the husband be restrained from lodging any dealings against the title of the Suburb H property or otherwise doing any act or thing that would delay the settlement of the sale of the property. Given the history and the delay in effecting a sale of the property that is an appropriate order to make.

SHOULD THE HUSBAND GIVE VACANT POSSESSION?

1. Initially, the wife sought an order that the husband within 24 hours of the orders being made vacate the Suburb H property.

2. In an email dated 26 June 2018, the lawyers who were apparently acting for the purchasers on the sale indicated that once they have a transfer in hand they expect that all matters that are outstanding in order to complete the settlement of the conveyancing transaction could be dealt with in a period of approximately two weeks.

3. Once the orders are made there would be nothing preventing the wife from executing a transfer forthwith.

4. Accordingly, it would be appropriate to make an order that the husband vacate the Suburb H property within a period of ten days.

5. Counsel for the husband has indicated that if an order for the husband to vacate was made he would comply with that order without the need for any further order.

6. In the event there is any difficulty in the husband complying with the order to vacate then I grant the wife liberty on 24 hours’ notice for orders to be made for a warrant of possession against the husband.

I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 28 June 2018

Associate: 

Date:  28.6.18