Botsis and Botsis

[2016] FamCA 249

FAMILY COURT OF AUSTRALIA

BOTSIS & BOTSIS [2016] FamCA 249

FAMILY LAW – PROPERTY – Sale of property – interim application by the wife for the sale of property – where the husband has previously failed to service the mortgage on the property in accordance with court orders – where the wife alleges that the husband has drawn down on his superannuation to service the mortgage and seeks to preserve the asset pool – where the husband currently resides in the property – where the husband seeks to retain the property – where the husband deposes that his income will increase in the next year – where the mortgage is currently not in arrears – where the wife has not particularised the final property orders sought by her – interim orders made dismissing the wife’s application for sale of property

Family Law Act 1975 (Cth)

Strahan &Strahan (interim property orders) [2009] FamCAFC 166; (2011) FLC 93-446

APPLICANT: Ms Botsis

RESPONDENT: Mr Botsis

FILE NUMBER: MLC 2266 of 2015

DATE DELIVERED: 11 April 2016

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Johns J

HEARING DATE: 2 December 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Pandeli

SOLICITOR FOR THE APPLICANT: Barbayannis Solicitors

THE RESPONDENT: In person

Orders

1. That paragraphs 1 to 6 inclusive of the wife’s interim orders sought in her Amended Initiating Application filed 3 September 2015 be dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Botsis & Botsis has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 2266  of 2015

Ms Botsis

Applicant

And

Mr Botsis

Respondent

REASONS FOR JUDGMENT

Introduction

1. This matter came before me in the Judicial Duty List upon the application of the wife seeking the sale of a property at B Street, Suburb C (“B Street”). That property is registered in the husband’s sole name.

2. It is the wife’s case that B Street should be sold in order to preserve the assets of the parties.   Although orders have previously been made in this matter for the husband to pay the minimum mortgage repayments in respect of the loan secured against B Street, the wife says that the husband is failing to meet those mortgage repayments and has been drawing down on his superannuation entitlements to meet part of the costs of those repayments.

3. The husband opposes the sale of B Street.  Since separation the husband has lived at B Street and he seeks to retain that property as part of his final property settlement; an order for the sale of the property would defeat that application.  Further, whilst the husband concedes that the mortgage payments are in arrears, it was his submission that receipt of anticipated commissions in February 2016 will enable him to service the mortgage debt.

The Parties

1. The wife is the applicant in the proceedings.  She is aged 43 years and is engaged in home duties.

2. The husband is the respondent in the proceedings.  He is aged 48 years and is a mortgage broker.

3. The parties married in 1998.  They separated on 26 December 2012 and their divorce was finalised on 6 June 2015.

4. The parties have two children, D and E, who are three year old twins.  D has been diagnosed with a chromosomal abnormality and development delay.  The wife and the children currently live with her parents.

5. Pursuant to interim orders made by consent on 18 September 2015, the children live with the wife and spend time with the husband each Wednesday from 9.00 am until 6.00 pm and each alternate weekend from 4.00 pm Friday until 6.00 pm Sunday.

Material relied upon by the parties

1. In support of her application for the sale of B Street, the wife relied upon the following documents:-

   ·Amended Initiating Application filed 3 September 2015;

   ·Affidavit of the wife filed 24 June 2015;

   ·Affidavit of the wife filed 3 September 2015;

   ·Affidavit of the wife filed 24 November 2015; and

   ·Financial Statement of the wife filed 24 June 2015.

2. Counsel for the wife also relied upon a document Exhibit A, a Westpac Account Activity Statement in respect of the Rocket Repay Home Loan for period 15 April 2015 to 24 November 2015 inclusive, which she tendered during the course of submissions.

3. The material relied upon by the husband in support of the orders sought in his response was as follows:-

   ·Response filed 31 July 2015;

   ·Affidavit of the husband filed 31 July 2015;

   ·Affidavit of the husband filed 7 August 2015;

   ·Affidavit of the husband filed 2 December 2015; and

   ·Financial Statement filed 31 July 2015.

Orders Sought

1. The wife sought orders in terms of paragraphs 1 to 6 of her Amended Initiating Application filed 3 September 2015 as follows:-

   1.The property situate and known as [B Street, Suburb C] be forthwith sold by way of public auction.

   2.The Husband sign all documents and do acts and things required to place [B Street, Suburb C] on the market for sale within 7 days.

   3.In the event the Husband and Wife cannot agree on the real estate agent appointed to sell the property at [B Street, Suburb C], then the President of the Real Estate Institute of Victoria be authorised to nominate an agent.

   4.In the event that the Husband and the Wife cannot agree on the reserve price for the sale of the property at [B Street, Suburb C], then the agent nominated to sell the property be permitted to set the reserve price. 

   5.Pursuant to Section 106A of the Family Law Act 1975 (Cth), in the event that either party fails or refuses to sign documents to give effect to these Orders, the Registrar of the Family Court of Australia be empowered to sign the document on behalf of the defaulting party.

   6.The proceeds of sale of the property at [F Street, Suburb G] and the property at [B Street, Suburb C] be held by Barbayannis Lawyers in a joint interest bearing account on behalf of both parties pending a final property settlement.  

2. The husband opposed the orders sought by the wife. 

The Hearing

1. The hearing was conducted on the papers.  Each party relied upon the material referred to above and submissions made. 

2. The wife was represented by counsel.  At the commencement of the day the husband had the assistance of counsel appearing as amicus curiae.  However, the husband represented himself during the hearing.

3. Given the nature of the hearing, contentious facts cannot be determined without evidence being properly tested.  Accordingly, in determining the matter, I have relied upon those facts which are agreed or not in issue.

Procedural History

1. The wife commenced proceedings in this Court by way of an Initiating Application filed on 24 June 2015.  In that application the wife sought orders for final property division between the parties and that she be excused from particularising her claim pending disclosure by the husband.  The wife also sought various interim orders in relation, inter alia, to the sale of B Street.

2. The husband filed a Response on 31 July 2015 seeking both final property and parenting orders.  He also sought interim property orders inter alia that he have sole possession of B Street and interim parenting orders.

3. This matter came before me on 4 August 2015 in a Judicial Duty List. On that day I made orders by consent, including that:-

   1.By no later than 15 August 2015 the Husband pay the full arrears owing to Westpac in respect of the loan secured against the property at [B Street, Suburb C] (“the [B Street] property”).

   2.The Husband pay the minimum mortgage repayments for the loan secured against the [B Street] property as and when they fall due.

   3.        The Husband provide to the Wife’s lawyers the following:

   (a)A bank statement and documents evidencing the payment of the arrears owing to Westpac in respect of the [B Street] mortgage by no later than 4:00 p.m. 16 August 2015; and

   (b)A bank statement on the 28th day of each month evidencing the Husband’s compliance with Order 2 herein.

   4.The Wife have liberty to apply on short notice in the event the Husband does not comply with Orders 1 and 2 herein.

   5.The Husband and Wife engage Property Probe to undertake a sworn valuation of the property at [B Street, Suburb C] within 7 days, with the Husband to pay the cost of the valuation at first instance and the Wife to reimburse the Husband her half share at the time of a final property settlement.

   …

   9.Within 28 days the Wife file an Amended Application and Affidavit in Support in respect of parenting matters.

4. Pursuant to the orders made on 4 August 2015, the wife filed her Amended Initiating Application on 3 September 2015, that application being listed in the Judicial Duty List on 18 September 2015.  On that day, the interim applications were adjourned to the Judicial Duty List before me on 2 December 2015.

Background

1. Throughout the marriage the husband was employed as a sales manager. That employment ceased in May 2013 at which time the husband took up a position as general manager for H Pty Ltd.  The husband ceased working in early 2014.  The husband deposes that he suffered a breakdown and depressive illness at this time which prevented him from working.  Between early 2014 and July 2015 the husband’s only source of income was a New Start allowance.

2. The husband is now self-employed in the financial sector.   In his affidavit filed 31 July 2015 the husband deposes that he commenced operating his business in February 2015 and that he commenced receiving an income from that business in July 2015.  In his affidavit filed 31 July 2015 the husband deposes that he has reported to the Child Support Agency that his income is $49,046 per annum.

3. The wife says that her commitment to caring for the parties’ two young children and in particular D’s special needs prevent her from obtaining employment.

4. At the time of separation the parties had interests in two properties, the former matrimonial home at F Street and B Street.  From the date of separation in December 2012 until March 2014 the husband paid to the Westpac Bank (“the mortgagee”) the minimum amounts due under the mortgages in relation to F Street and B Street.

5. Upon ceasing employment with H Pty Ltd in early 2014, the husband stopped making mortgage repayments with respect to both properties.  As a result of the husband’s continued failure to service the mortgages, the parties’ equity in both properties decreased.

6. F Street was used as security by the parties to purchase B Street. F Street was sold on 30 May 2015 for $970,000 and settlement occurred in September 2015. The net proceeds from the sale were approximately $435,000 and pursuant to orders made by me on 4 August 2015 are presently held on trust by the wife’s solicitors.

7. Those orders also required the husband to discharge by 15 August 2015 the arrears owing to Westpac in respect of the loan secured against B Street and thereafter he was ordered to pay the minimum mortgage repayments in respect of that loan as and when they fall due.

8. The amount borrowed by the parties to purchase B Street was $775,000.  In her affidavit filed 3 September 2015 the wife deposed that the balance then outstanding on the loan was approximately $827,000;[1] the arrears in respect of the loan were approximately $52,000 as at that date.  The statements for the loan (Annexure B to the wife’s September affidavit) confirm that the husband made no payments in respect of the loan between 18 March 2014 and 16 July 2015.  Further those statements confirm that the parties were charged interest and default interest on the loan for that period.

   [1] Paragraph 54(b) of the wife’s affidavit filed 3 September 2015.

9. In her affidavit filed 24 November 2015, the wife deposes at paragraph 7 that the husband did not pay the arrears of $58,232.81 until 16 September 2015, notwithstanding the fact that he was required to make that payment by 15 August 2015 pursuant to the orders of 4 August 2015.  

10. The husband drew down on his entitlements in MTAA superannuation fund in order to discharge those arrears.  Annexure C of the wife’s November affidavit discloses that the husband transferred $118,810.89 from his MTAA Superannuation Fund to his self- managed superannuation fund on 28 August 2015.   From those funds $58,232.81 was applied to the discharge of arrears on the B Street mortgage.  The wife alleges that the husband has failed to account as to how he has applied the balance of the superannuation funds.  Further, the wife alleges that she has been provided with no explanation as to the basis upon which the husband was permitted to access his superannuation entitlements.

11. The wife also alleges that the husband has failed to meet the minimum mortgage payments as required by the orders of 4 August 2015.  Indeed Annexure B to her November affidavit discloses that following the discharge of arrears in September 2015, the husband drew down $5,000 on the loan in October 2015 and made a payment of $7,000 that month.  The interest on the loan for October 2015 was $2,975.11.  Hence, there was a shortfall of some $975 for the month immediately following the discharge of the arrears.

12. It was submitted on behalf of the wife that the husband cannot afford to meet the mortgage liability on B Street in circumstances where he deposes to an income of $50,000 per annum in his affidavit filed on 7 August 2015 and is required to meet mortgage payments of approximately $2,975 per month ($35,700 per annum), monthly repayments in respect of his Westpac Flexi Loan of $1,842 ($22,104 per annum) and credit card debts totalling $28,567 as at 31 July 2015.  In circumstances where the husband’s mortgage and loan commitments exceed his income, without any allowance for his living expenses, it was submitted that B Street be sold so as to avoid a mortgagee sale of the property and prevent a further dissipation of the parties’ assets.

13. The husband responded to those allegations in his affidavit filed 2 December 2015.  He deposed that the loan secured over B Street has a re-draw facility of up to $40,000 and it was those funds he drew to pay rates, arrears on credit card and Flexi-loan.

14. The husband deposed at paragraph 10(a) of that affidavit that his previous estimate of his income of $50,000 was as at August 2015.  The husband estimates that his business is growing and that he anticipates that his income will increase to $100,000 per annum within the next 12 months.  Further the husband deposed that he has support from family and friends who have agreed to provide him with ongoing financial assistance to enable him to retain B Street.

15. In addition to that evidence, the husband submitted that he expects to receive commissions of approximately $30,000 in February/March 2016.  When pressed, the husband said that he would receive payment of those commissions by 20 February 2016.

16. There is no evidence before me to support that assertion and counsel for the wife made strong submissions against giving the husband another opportunity to service the mortgage payments given the husband’s continued failure to meet those payments and in circumstances where the wife has sought the sale of B Street since March 2015 (Annexure A of the wife’s affidavit filed 24 June 2015, Letter from Barbayannis Lawyers to Mr I dated 18 March 2015).

17. It was submitted that the husband has dissipated the parties’ assets by drawing upon his superannuation entitlements in order to discharge arrears under the mortgage; the orders sought by the wife will ensure that the remaining assets are preserved pending a final determination of their property applications.

18. The parties’ interests comprise of the following:-

    ASSETS

    ·the proceeds of sale of F Street  E$435,000

    ·B Street  $1,240,000

    Less mortgage  E$788,000[2]              E$452,000

    [2]  Exhibit A – Rocket Account Activity Statement for account no. … as at 24 November 2015

    ·the wife’s superannuation  E$85,000

    ·the balance of the husband’s superannuation (which may be negligible taking into account the husband’s withdrawals)

    ·the wife’s motor vehicle  E$10,000-12,000

    E$982,000-985,000

    LIABILITIES

    ·Westpac personal loan (husband)  E$47,000

    ·Husband’s credit card liabilities  E$27,567

    ·Macquarie loan   E$9,000

    E$83,567

    NET ASSETS  E$898,433-901,433

1. The wife in her Amended Initiating Application filed 3 September 2015 does not state with precision the final orders sought by her with respect to property matters.  Hence I am unable to assess whether her claim is able to be satisfied from the assets remaining in the pool after the husband’s reduction of his superannuation entitlements. 

2. In his Response filed 31 July 2015 the husband seeks final orders that the proceeds of sale of the former matrimonial home be divided equally between the parties and that otherwise there be an equitable division of the property of the parties. 

Legal Principles

1. The Court has wide powers to grant injunctions pending the determination of the proceedings. Section 114 of the Family Law Act1975 (Cth) (“the Act”) enables the Court to make such orders as it considers proper for the protection of property. The orders sought by the wife are orders for the protection of the parties’ property.

2. Further, the Court has powers to make interim property orders pursuant to s 79 of the Act. In Strahan &Strahan (interim property orders) [2009] FamCAFC 166; (2011) FLC 93-446 (“Strahan”) it was recognised by the Full Court that there may be circumstances which justify the exercise of the power pursuant to ss 79 and 80(1)(h) prior to the final hearing. Boland and O’Ryan JJ note at paragraph 118 of their judgment that the approach to be taken to the hearing of an application for an interim property order is as follows:-

   … There are two stages to the hearing of such an application where the power is to be exercised pursuant to s 80(1)(h) of the Act. This is recognised by the fact that although the power under s 79 should ordinarily be exercised on a once-only basis, “circumstances may arise before there can be a final hearing” where the power is exercised. Thus the first step is to resolve whether to exercise the power before a final hearing and if it is resolved to do so then the second step involves the exercise of that power.

3. The circumstances in which the Court might exercise its power to make orders for partial property settlement was considered by the Full Court at paragraph 132; whilst acknowledging that it is preferable that there be one final hearing in s 79 proceedings the Court concluded:-

   … in our view, when considering whether to exercise the power under s 79 and s 80(1)(h) of the Act to make interim property orders the “overarching consideration” is the interests of justice. It is not necessary to establish compelling circumstances. All that is required is that in the circumstances it is appropriate to exercise the power. In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s 79 is a once-and-for-all order made after a final hearing.

Should the power be exercised prior to the final hearing?

1. The wife submits that the orders for sale of B Street are necessary in order to protect and preserve the parties’ interests pending the final hearing.  She submits that the husband has failed to meet the existing mortgage liability since orders were made requiring him to do so in August 2015.  Further, she relies upon the fact that the husband has diminished the parties’ asset pool by drawing upon his superannuation entitlements in order to discharge arrears under the mortgage.  Those matters are not in issue. 

1. The parties’ equity in B Street represents almost one half of their assets.  The husband seeks an equal division of the parties’ assets and to retain that property.  It is his sworn evidence that he may call upon family or friends to assist him in retaining the property.  It is also the husband’s evidence that his income will increase over the next 12 months thus enabling him to continue to service the debt on B Street.  Whilst I have serious reservations with respect to that evidence, at this time the evidence is untested.  Further, I am mindful of the fact that the husband is a self-represented litigant.  An order for the sale of B Street at an interim hearing would effectively defeat the husband’s claim to retain the property. 

2. In circumstances where the wife has not articulated the adjustment sought by her by way of final property settlement and where the husband seeks orders for an equal division of the property I am satisfied that it would be contrary to the interests of justice to make an order for the sale of the property at this time. 

3. Whilst the wife is critical of the husband for not servicing the debt in accordance with Court orders, at the time of the hearing the loan was not in arrears. 

4. That the husband has utilised his superannuation entitlements to discharge the arrears is a matter that may be raised by the wife at the final hearing and likely she may seek an adjustment taking into account that matter at that time.  However, in my view it would be premature to order a sale of the property in circumstances where the husband seeks to retain the property as part of his final property settlement.  That said, should the loan again fall into arrears, it may well be that any further application for sale may meet a different outcome.  Accordingly, the orders I make are as follows:-

   (1)That paragraphs 1 to 6 inclusive of the wife’s interim orders sought in her Amended Initiating Application filed 3 September 2015 be dismissed.

I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Johns delivered on 11 April 2016.

Associate: 

Date:  11 April 2016