BATRA & PALL

[2021] FamCA 177

FAMILY COURT OF AUSTRALIA

BATRA & PALL [2021] FamCA 177

FAMILY LAW – PROPERTY SETTLEMENT – Interim hearing – Where the husband and the wife are in default of their loans secured over two properties – Where the parties have previously agreed to sell one property – Where the husband wished to retain one property to live in following the final property settlement – Where the wife sought orders for the sale of the property where the mortgagee has already commenced proceedings in the Supreme Court of Victoria for recovery and possession of both properties – Where proceedings were previously adjourned to allow the husband an opportunity to have discussions with the mortgagee and confirm that they would not require the sale of the second property – Where the husband was not able to obtain evidence proving that this was the position – Where the evidence suggests that unless this Court made orders for the sale of both properties, the mortgagee intends to continue with their proceedings in the Supreme Court – Where it is found that in order to prevent a ‘fire sale’ of the property and so best preserve the value of the property pool of the parties, the interests of justice require the property to be sold – orders made for the sale of the second property.

Family Law Act 1975 (Cth) s79, s80(1)(h)

Gabel & Yardley (2008) FLC 93-376
Harris & Harris (1993) FLC 93-378
In the Marriage of Bearup (1993) FLC 92-412
In theMarriage of Zschokke (1996) FLC 92-693
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-446

APPLICANT: Mr Batra

RESPONDENT: Ms Pall

FILE NUMBER: MLC 14128 of 2019

DATE DELIVERED: 23 February 2021

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: McEvoy J

HEARING DATE: 23 February 2021

REPRESENTATION

COUNSEL FOR THE APPLICANT: Self-represented

SOLICITOR FOR THE APPLICANT: Self-represented

COUNSEL FOR THE RESPONDENT: Ms Bateman

SOLICITOR FOR THE RESPONDENT: nil

Orders

1. Forthwith the parties do all things and sign all documents to place the property described in Volume … Folio …, and more particularly known as B Street Suburb D in the State of Victoria (Suburb D property) on the market for sale with a selling agent as nominated in accordance with order 3 below on such terms as may be recommended by the selling agent and upon completion of the said sale, the proceeds be applied as follows:

   (a)first to pay all costs, commissions and expenses (including legal costs) of the respective sale;

   (b)       second, to pay the usual rates adjustments;

   (c)       third, to repay to C Pty Ltd the amount owing in relation to loan number …52 in the name of the parties and cause the discharge of mortgage registration number … (Suburb D loan) secured by mortgage against the Suburb D property; and

   (d)fourth, to pay any remaining funds into a controlled monies trust account opened in the name of the parties by the solicitors for the Wife until further order or written agreement between the parties.

2. Pending the sale of the Suburb D property:

   (a)the parties do all things and sign all documents necessary to cause the rental income received from the Suburb D property to be applied first to the Suburb D loan repayments, and thereafter to any expense in relation to the Suburb D property as and when they fall due including but not limited to rates, land tax and utilities expenses which are not otherwise paid by the tenants of the Suburb D property;

   (b)both parties be and are hereby restrained from further encumbering the Suburb D property without the written consent of the other party;

   (c)for the purposes of this order:

   (i)the parties are to do all things and sign all documents necessary to direct the agent who manages the rental for the Suburb D property to apply the rental income for the property as outlined in order 2(a) hereof; and

   (ii)the Wife be at liberty to provide a copy of these orders to the agent for the Suburb D property.

3. For the purposes of appointing a selling agent for the sale of the Suburb D property, unless otherwise agreed between the parties in writing:

   (a)within 14 days of the date of these orders the Wife (via her solicitors) provide the Husband with the names of three real estate agents whom she proposes to act as the selling agent for the purposes of the sales; and

   (b)within a further 7 days the Husband nominates one of those three selling agents, and thereafter the parties do all things necessary and sign all documents necessary to appoint that agent as the selling agent for the sale of the Suburb D property (selling agent).

4. The wife be at liberty to provide a copy of these orders to C Pty Ltd.

5. In the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to these orders, a Registrar of the Family Court of Australia be appointed pursuant to Section 106A of the Family Law Act 1975 (Cth) to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.

6. The costs of both parties to this application, including the appearances in the Judicial Duty List on 15 February 2021 and of today, be reserved.

7. The wife’s application in a case filed 20 December 2020 is otherwise dismissed.

THE COURT NOTES THAT:

A.The wife reserves her position in relation to the provision by the husband of full particulars of rental income received by him from E Real Estate and F Company in respect of the Suburb D property and the Suburb G property respectively, including particulars as to how any such funds have been applied by him.

B.The wife also reserves her position in relation to the provision of full particulars of the account referred to in paragraph 8 of the minute of orders sought in her amended case outline dated 15 February 2021.

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 Batra & Pall 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 MELBOURNE

FILE NUMBER: MLC 14128 of 2019

Mr Batra

Applicant

And

Ms Pall

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. Before the Court is the wife’s application in a case dated 23 December 2020.  The wife’s application was heard in the Judicial Duty List on 15 February 2021 and orders were made by consent providing for the sale of what has been referred to as the Suburb G property.

2. The wife relies on her application in a case filed 23 December 2020 and her affidavit filed 23 December 2020 and re-filed with annexures included on 11 February 2021 and an email from C Pty Ltd dated 12 February 2021, a copy of which is attached to the wife’s submissions.

3. In argument before me today, the parties have also brought to my attention correspondence from H Lawyers, the solicitors for C Pty Ltd dated 18 February 2021 and a further letter from H Lawyers, solicitors for C Pty Ltd dated 19 February 2021. The husband relies on his affidavit filed 10 February 2021 together with his balance sheet filed on 10 February 2021 and certain other supporting documents.

4. At the hearing on 15 February 2021, the husband resisted the sale of what has been referred to as the Suburb D property. His position was that this property should not be sold because he wishes, once final property orders have been made, to reside in this property.

5. The difficulty, however, is that the company financing the mortgage of the Suburb D property, C Pty Ltd, has made a claim against the husband and the wife in the Supreme Court of Victoria for recovery of and possession of both the Suburb G and the Suburb D properties. C Pty Ltd asserts that under the terms of its agreements with the parties it is now entitled to possession of both properties.

6. At the hearing on 15 February 2021, Mr Batra maintained that he had had discussions with C Pty Ltd, the effect of which was that they may be satisfied if only the Suburb G property was sold, and that they may not require the sale of the Suburb D property.  The matter was adjourned to enable the position with C Pty Ltd to be ascertained by the husband.

7. On 18 February 2021, the solicitors for C Pty Ltd in the Supreme Court of Victoria proceeding wrote to the parties.  This letter is in evidence before me today, as I have said.  It provides, relevantly, as follows:

   Without regard to any listing price or auction reserve and noting the existence of caveats placed on title of the Suburb G property by J Lawyers and Mr K Batra and Ms L Batra, our client is not in a position to know whether the proceeds of any sale of the Suburb G property by Mr Batra and Ms Pall will be sufficient to repay the home loan secured by the mortgage over the Suburb G property.  Nor if the registered proprietors will be in a position to give clear title to any purchaser as a result of the caveats.

   The letter goes on to say that:

   If the proceeds of sale of the Suburb G property are insufficient to discharge the loan secured by the mortgage over the Suburb G property, it [by which is meant C Pty Ltd] is not required to provide a discharge of that mortgage (and noting that our client is not bound by the orders).

   So that our client can consider its position, please urgently provide the real estate agent’s estimated selling range for the Suburb G property and any other valuation evidence by no later than 26 February 2021.

   In the event that an order is made in the Family Court proceeding to the effect that the Suburb D property be sold, we will seek further instructions in respect of our client’s enforcement action as it pertains to the Suburb D property.

   Finally, in the event that there is no such order, we are instructed that our client will take all steps available to it to obtain possession of the Suburb D property and effect a sale of it as mortgagee in possession.

8. It is apparent, therefore, that unless orders are made in this Court for the sale of the Suburb D property, C Pty Ltd will press ahead with its application for possession of both properties in the Supreme Court of Victoria.

9. By letter dated 19 February 2021, H Lawyers has again communicated with the wife’s solicitor or former solicitor noting that further to their letter of 18 February 2021 they had today - that is to say 19 February - received from Mr Batra a market appraisal for the Suburb G property prepared by M Pty Ltd.  H Lawyers say on behalf of C Pty Ltd that:

   Taking this into account, our client today sent a letter by email to Ms Pall which contains an offer of time to sell both the Suburb G property and the Suburb D property providing that certain milestones are met within certain timeframes.

10. In these circumstances, the question arises as to whether it would be appropriate for the Court to make interim orders for partial property settlement pursuant to s 79 of the Act.

11. Section 80(1)(h) of the Family Law Act (Cth) (“the Act”) empowers the Court to make interim orders for partial property settlement pursuant to s 79 of the Act. Although it is generally preferable for there to be one final hearing in s 79 proceedings, the Court’s power can “properly be exercised by a succession of orders until the power to make orders with respect to property is exhausted”: Gabel & Yardley (2008) FLC 93-376 at 82,957 (paragraph 57) per Bryant CJ and Coleman J.

12. Regarding the circumstances in which the Court may make an order for a partial property settlement pursuant to s 79, the Full Court In theMarriage of Zschokke (1996) FLC 92-693 at 83,216, Baker, Finn and Hannon JJ said as follows:

    If the order is to be made under section 80(1)(h), it would seem that regard should be had to the requirements in section 79 that the orders be just and equitable and this would require the Court to undertake at least some brief consideration of the matters in section 79(4) including those referred to in 75(2). If on a brief consideration of those matters it seems likely to the Court that the party who is the applicant for the interim order for an advance of funds from the other party will be likely to receive by way of property settlement a sum sufficient to cover the advance, that would seem to be sufficient to enable the order sought to be made.

13. In Strahan & Strahan (Interim Property Orders) (2011) FLC 93-446, the Full Court described the consideration of an application for interim property distribution as requiring a two-step process. First, there must be circumstances enlivening the power to make the order. In agreeing with the Full Court in Zschokke, Boland and O’Ryan JJ said at 132 that:

    In order to make an interim property order, it is not necessary to establish compelling circumstances and that all that is required is that, in the circumstances, it is appropriate to exercise the power, the overarching obligation being the interests of justice.

14. Their Honours added at paragraph 137 that:

    Provided scope can be found within the assets of the parties for an order of the size sought, then that should be the end of the matter.  In other words, in such circumstances, the applicant would only be receiving what he or she was entitled to receive when the power was exhausted.

15. Notwithstanding the broad discretion the Court has to make an interim distribution of property, the Full Court has held that an interim property order should not compromise the final outcome of any property settlement and either the remaining property needs to be adequate to meet legitimate expectations of the parties upon the final exercise of power or the interim orders must be capable of being reversed or adjusted.  In this respect, see Harris & Harris (1993) FLC 93-378 at 79,929 to 79,930 (Nicholson CJ, Fogarty and Moore JJ).

16. Accordingly, caution must be exercised in respect of the interim realisation of assets, particularly real property:  see In the Marriage of Bearup (1993) FLC 92-412 at 80,218 regarding the care to be taken when contemplating orders for the interim sale of the former matrimonial home.

17. In the circumstances of this case I am satisfied that absent orders for the sale of the Suburb D property as well, C Pty Ltd will proceed with its Supreme Court of Victoria application for possession of the Suburb D property, the effect of which will be to provide a “fire sale” of both properties to the ultimate disadvantage of both parties to the marriage. Accordingly, having regard to the principles set out above, I am satisfied that the interests of justice require orders to be made selling the Suburb D property as well as the Suburb G property.

18. I will make the orders as set out at the commencement of these reasons.

I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of the Honourable Justice McEvoy delivered on 23 February 2021.

Associate:     

Date:              31 March 2021