Anirmaliha and Anirmaliha (No 2)

[2010] FamCA 1134

FAMILY COURT OF AUSTRALIA

ANIRMALIHA & ANIRMALIHA (NO. 2) [2010] FamCA 1134

FAMILY LAW – PROPERTY – Interim application – Where final property orders have been handed down – Where the parties cannot agree on a price at which to sell property – Where the husband has failed to produce evidence that the property can fetch a higher price in the current market – Wife’s application acceded to – Husband to pay the wife’s costs

APPLICANT: Ms Anirmaliha

RESPONDENT: Mr Anirmaliha

FILE NUMBER: BRC 3233 of 2008

DATE DELIVERED: 13 December 2010

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Barry J

HEARING DATE: 13 December 2010

REPRESENTATION

SOLICTORS FOR THE APPLICANT: Mr Davies-Graham and Mr Senior, Solicitors of Corporate and Property Lawyers appearing for the Applicant Wife

COUNSEL FOR THE RESPONDENT: The Respondent Husband appearing in person

Orders

IT IS ORDERED THAT:

1. The property at N in the State of Queensland is to be sold for the price of $370,000.

2. The Husband is to sign the contract of sale and consequential transfer documentation by 4.00 pm on 14 December 2010.

3. In the event the Husband neglects or refuses to sign the contract of sale and transfer documentation a Registrar of this Honourable Court, Brisbane Registry, is appointed to execute any document in the Husband’s name forthwith and to give validity to any documentation required to carry out the Order of this Honourable Court dated 3 September 2010 for the sale of the property.

4. The Husband pay the Wife’s costs of and incidental to the Wife’s Application in Form 2 filed 9 December 2010on a scale basis as agreed or as assessed.

5. Of the monies payable to the Husband pursuant to the Order of this Honourable Court dated 3 September 2010, the amount of $2,500 is to be withheld pending agreement between the parties on the Wife’s costs incurred or production of an assessment of such costs.  In the event that the costs are assessed or agreed at less than $2,500 the Husband is to be paid the balance of the funds withheld.  In the event that the assessment or the agreement is greater than $2,500, that amount is to be deducted in payment of the costs and the Husband will remain liable for the additional costs so incurred.

IT IS NOTED that publication of this judgment under the pseudonym Anirmaliha & Anirmaliha is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 3233 of 2008

MS ANIRMALIHA

Applicant

and

MR ANIRMALIHA

Respondent

REASONS FOR JUDGMENT

1. On 3 September this year, for reasons given at the time, I made orders in relation to property settlement litigation between the parties.  The orders required the wife to pay the husband the sum of $68,289 within 60 days.  Paragraphs 9, 10 and 11 of the orders are relevant for present purposes.  Paragraph 9 provided:

   “9.That, in the event the wife is unable or unwilling to pay the husband the sum of $68,289 within 60 days of the date of these orders, the [N] property is to be sold in such manner as the parties may mutually agree or as may be further ordered by the Court. 

   10.The proceeds of sale of the property are to be disbursed as follows:

   a.in payment of costs of sale including agent’s commission, marketing costs and legal fees,

   b.and payment of the mortgage debt excluding business loans secured on the property,

   in payment of the business loans on the property to a maximum of $68,289 with any surplus to a maximum of $68,289 to be paid to the husband. 

   11.Paragraph 10, to the extent that the property, after deduction of selling costs, realises more than $390,000, the husband is to receive 37.5 per cent thereof.  Paragraph 11, to the extent the property, after deduction of selling costs, realises less than $390,000, there is to be a corresponding reduction in the amount payable to the husband or extinguishment of the business loans.”

2. On 9 December, the applicant wife filed an application in Form 2 seeking Court approval for the sale of the N property, in the names of the parties, at a price of $370,000.  She also sought an order in accordance with order 8 of the orders, a registrar of the Court sign the contract in the event the respondent, Mr Anirmaliha declines to do so.  The valuation, at trial, of this property was $390,000.  That valuation is annexure 2 to the affidavit of the solicitor Lewis Davies-Graham, filed with the application on 9 December 2010.  I hasten to add that the apportionment of 37.5 per cent also was a consent arrangement that the parties had arrived at.  The litigation largely centred on valuing the husband’s business.  I note that the valuation of $390,000 dated back to February 2010. 

3. For the purposes of the current sale, the parties have engaged two firms of real estate agents in the local area in a shared marketing arrangement.  LJ Hooker represents one firm and First National is another firm.  These firms were engaged in mid-October 2010.  LJ Hooker, as I understand it, signed up purchasers to an unconditional sale on 18 November this year at a price of $370,000.  There is evidence before me, which I accept, that the agents are firmly of the view that in the current slow state of the market, it is unlikely that a better price will be obtained.  There is concern that if this sale falls through, in such a slow market there will be further delay and the price to be obtained may reduce even further. There is further concern the mortgagee may seek a forced sale and the National Australia Bank is pressing for payment of arrears owing under the business loans taken out by the respondent.

4. Annexure 5 to the wife’s solicitor’s affidavit of 9 December 2010 is a report of the steps taken to market the property.  As I understand the evidence, there have been at least nine inspections carried out in the available time.  There are a series of emails annexed to the solicitor’s affidavit of 9 December 2010.  It is Annexure 4.  The comment is made there:

   “This property has been on the market for a considerable time and the best offer that has been submitted is this contract.” 

5. I inquired as to why the mortgage should suddenly be in arrears.  It appears that the wife changed jobs in about July of this year.  She had previously been earning about $447 a week as a cab driver (paragraph 42 of my judgment).  She is now working on a casual basis, $500 a week.  I am informed the reason why the mortgage is in arrears is that she does not get paid during school holidays.  Her take home pay is less than what it previously was.  The reality is the mortgage is in arrears and there is a concern if the property is not sold, the mortgagee will exercise power of sale and it is notorious fact that mortgagee sales generally depress the price to be received for a given property.

6. I am prepared to take Judicial notice of the fact that the real estate market, in South East Queensland – but in the N area in particular – is weak.  This is evident in so many articles in the press and in reports generally.  Mr Senior wrote to, the respondent on 19 November 2010 – where he noted:

   “Your email of 18 November stated that you have clients “on Sunday.”  My reply at 4.17 pm, later that day, asked you to identify the name of any purchaser, the purchase price and the terms of sale.  You have not responded to my request.  But you sent a reply saying, “Prefer to try more clients and sell at a reasonable price”.”

7. On 22 November 2010 the respondent wrote to Mr Senior:

   “I am sure we can get a buyer in the future as the house is beautiful, with a pool.”

   On 29 November 2010, he wrote and said:

   “I am sure we can get $390,000 for the house.  I can wait for another two months before I put the price down.”

8. The difficulty with the delay of two months as proposed by the respondent is the wife has large indebtedness to her current solicitors, the bank is owed money under the mortgage and the wife is concerned the husband may default on the repayment of the business loan and the property could be sold in the event of that default.

9. A further affidavit was read on today’s date, and that is the affidavit of the solicitor, Mr Davies-Graham to which he annexes a report from LJ Hooker of 10 December 2010.  Paragraph three of that report says:

   “In the opinion of my sales staff who obtained the buyer’s signature at the price of $365,000 and negotiated them up $370,000 – $370,000 – this was a great offer which represents fair market value in today’s market conditions.”

10. Paragraph 6:

    “In the current market, which is depressed, there is a real possibility that prices could fall further.  And thus any offer in the future may be less than the negotiated price of $370,000.”

11. In the affidavit of the applicant filed on today’s date, paragraphs 8 and 9, she says:

    “The property is subject to a mortgage to the National Australia Bank which I have serviced until recently with payments of $315 a week.  With my income from [the school] only returning $500 a week I have recently ceased making payments to the bank, particularly as I believe that with a contract at $370,000 the bank would allow a lapse in the payments to continue up to settlement.”

12. At paragraph 9:

    “In November I received a default notice addressed to Nanda and me relating to the arrears on the business loan secured against the property.  I spoke to the small business manager of the bank and was informed that unless the default was remedied the bank could exercise its power of sale under the security.  Annexure 3 is a copy of the bank’s letter of demand.  I do not have the ability to remedy the default but believe that the sale of the property should proceed.”

13. I note that on today’s date the husband has filed an affidavit, and annexure I to that affidavit is a further letter from the bank of December 2010 under the heading, Short Term Repayment Plan Accepted, it is noted:

    “A repayment arrangement of $250 per fortnight to commence on 13 December 2010 has been accepted for the above business access credit cards.  This repayment arrangement is subject to review from time to time.”

14. Under the heading, Consequences if Repayment Plan Breaks:

    “If the above arrangement breaks for any reason recovery action will continue.  This may include assigning the account to an external agent and listing you with a credit reporting agency.”

15. The current arrears on the business credit card loan is $5315.  The total loan is $36,000.

16. I have considered the affidavit material of the husband.  He annexes to his affidavit, as annexure C, a document prepared by First National Real Estate.  All that document informs the Court is that the median sale price of houses in the local area is $410,000. 

17. I take into account that for the purposes of the litigation in September 2010, a valuation by a registered valuer was relied on.  That valuation was in February this year.  It valued the property at $390,000. 

18. Ten months have elapsed since then and it is a slow market, a depressed market.  I am not assisted by the appending of the particular document from First National Real Estate.  It does not convince me that the property is worth anything like the figure given. 

19. The husband is concerned that the wife has refused a further inspection by a prospective purchaser in relatively recent times.  As I understand the evidence before the Court this did take place but it was after the current purchasers signed the current contract.  My understanding is that it is standard practice that once you have a sale under contract further inspections do not take place in case the purchaser withdraws before the vendors have signed.  That is the reason given and I am satisfied as to the legitimacy of that explanation. 

20. In my view, where the respondent refuses to sign a contract at $370,000 the onus is on him to demonstrate that he has a purchaser who is prepared to sign a contract on an unconditional basis at a higher figure.  He has not done that.  Alternatively, he could produce evidence from a registered valuer that the price, at $370,000, allowing for the current market, is undervalued.  He has failed to do that.  He has even failed to produce evidence from other real estate agents to say, given more time, they believe they could fetch a higher price.

21. I was somewhat cynical that at the commencement of the proceedings this morning the husband requested that the Court stand down for another hour and a half or two hours, so that he could finalise his documentation.  The husband was not seeking an adjournment to obtain legal representation.  He wanted to complete his affidavit material.  Effectively, he has had three days.  He was served, either at 11.15 am or 12.15 pm on Friday, and it is now 25 past 12 on Monday. 

22. I accept from exhibit 1 that he has been working an average of six and a half or seven hours a day, but that would still have left him a considerable period of time to complete his documentation.  However, I allowed the matter to stand down.  He has produced his affidavit.  As I said, there is nothing in that affidavit which would convince me that the property is capable of fetching a higher price in the current market. 

23. I have revisited the reasons for judgment and I note that from paragraph 49 onwards I made a series of adverse observations on the husband’s credibility. But one example was in paragraphs 70 and 71, where the husband had made claims denying that the wife’s mother had a life interest in the Paris apartment.  There was clear evidence in the wife’s material that her mother did have a life interest, and counsel for the husband sensibly abandoned that assertion by the husband. 

24. Another aspect where I was expressing suspicions as to the husband’s credibility as to his financial position was that I had been informed he had paid a good deal of his legal fees.  I accepted without hesitation the information from the lawyers as to how much they had been paid, but the explanation given was that he had originally borrowed this money from relatives in India.  It turned out that that was not the case and that he had been paying the money from ongoing earnings from his business or paying on his credit cards.

25. The situation is that this application has been brought on ample notice and warning to the husband.  I note that if proceedings are taken by the bank it could impact on the credit ratings of both parties, which is a situation to be avoided at all costs.  The mortgage is in arrears, the business loan is in arrears, the parties should have their financial affairs brought to a conclusion as expeditiously as possible.

26. I am satisfied from the material before the Court that because of the slowness of the real estate market, $370,000 is the best price on an unconditional contract that can be obtained for this property.  There is no point in delaying the sale in expectation that a higher price might be obtained for the subject property. 

27. It is a possibility that could not be ruled out that someone may come along and offer more but it is not a realistic expectation and not a sound basis for rejecting an unconditional sale where the evidence indicates is the sale price at the present time is the best on offer.

28. I am perfectly aware that real estate agents have a vested interest in saying that it represents fair value, but there is an obligation on the husband to produce evidence to counter that evidence, from other real estate agents, registered valuers or by any other means.  He has not done so.  I will accede to the application.

29. The husband is to sign the contract of sale and consequential transfer documents by 4.00 pm Tuesday, 14 December 2010.  In the event of the husband neglecting or refusing to sign the contract of sale and the transfer documents, then a registrar of this Court at the Brisbane registry is appointed to execute any document in the husband’s name forthwith and to do all things necessary to give validity to any documents required to execute the orders made on 3 September 2010 for the sale of the property.

30. It may have been the case that I would have given more time from when the application was actually filed to a return date, but I am starting leave this week in the middle of the week and if I did not fit the matter in today I would not be able to hear it for some time.

Costs

1. I have had regard to the terms of section 117(2)(a) and am of the view that the husband has been wholly unsuccessful in contesting this application.  The husband makes allegations but does not bring any evidence to support those allegations.   He was on notice that an order would be sought against him.

2. I make it clear that I did give consideration to this and it is inherent in my interpretation of the terms of paragraph 9 that interest does not accumulate on the moneys owing to the husband, particularly in circumstances where the wife had 60 days to pay him, but I understand if it is not paid within 60 days then the house has to be sold.   By paragraph 9C, the maximum liability was to be $68,289, and that was not subject to any interest component.

3. It would appear to me that $36,000 approximately will be paid to the National Australia Bank and the balance will be payable to the husband with the balance to be calculated, being the reduction in the price of $20,000 and the apportionment thereof of 37 and a half per cent.   I will leave the lawyers to work out that, but if there is any further queries as to how to calculate, but also the two and a half thousand dollars is to be brought into account.

I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Barry delivered on 13 December 2010.

Associate: 

Date:  13 December 2010