BREZA & TANENBAUM

[2019] FamCA 573

FAMILY COURT OF AUSTRALIA

BREZA & TANENBAUM [2019] FamCA 573

FAMILY LAW – PROPERTY – Where previous orders had been made – Where these orders prevented the Respondent from completing a sale of the property without notice to the Applicant – Where the Respondent proceeded to sell the property without requisite notice – Where the second respondent subsequently lodged a caveat over the property – Orders made for the second respondent to remove the caveat – Orders made for one million dollars from the proceeds of sale to be placed in a controlled monies account – Orders made for the balance of proceeds of sale to be distributed between the respondent and second respondent, or in a controlled monies account pending further order.

Family Law Act 1975 (Cth) ss 90UD, 117(2A)

Lenova & Lenova (Costs) [2011] FamCAFC 141

APPLICANT: Ms Breza

RESPONDENT: Mr Tanenbaum

SECOND RESPONDENT: Mr B Tanenbaum

FILE NUMBER: SYC 8103 of 2018

DATE DELIVERED: 21 August 2019

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 20 August 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Crossland

SOLICITOR FOR THE APPLICANT: Foulsham & Geddes

COUNSEL FOR THE RESPONDENT: Ms Kennedy

SOLICITOR FOR THE RESPONDENT: Cheryl Singer & Associates

COUNSEL FOR THE SECOND RESPONDENT: Ms Bridger

SOLICITOR FOR THE SECOND RESPONDENT: Jo-Anna F S Moy Solicitor

Orders

IT IS ORDERED

1. That the second respondent do all acts required to enable the settlement of the sale of the property at C Street, Suburb D, including removing the caveat … over the said property.

2. That the respondent cause the proceeds of sale of the property at C Street, Suburb D, after payment of the mortgage to the ANZ Bank, the agents’ commission on sale and the solicitor’s costs of the sale only, to be disbursed in the following manner and priority:

   (a)in payment of the sum of one million dollars into a controlled monies account in the names of the solicitors for the applicant and the respondent, to be held in that account pending further order of the Court;

   (b)as to the balance remaining, as agreed between the respondent and the second respondent or, in the absence of agreement, in a controlled monies account in the names of the solicitors for the respondent and the second respondent, pending further order of the Court.

3. That the respondent pay the applicant’s costs of this application in the sum of $5,485.

4. That the application for costs of the second respondent be dismissed.

IT IS NOTED

1. The Court NOTES the applicant’s undertaking as to damages given in accordance with the Family Law Rules.

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 Breza & Tanenbaum 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 8103 of 2018

Ms Breza

Applicant

And

Mr Tanenbaum

Respondent

And

Mr B Tanenbaum

Second Respondent

REASONS FOR JUDGMENT

1. Ms Breza (“the applicant”) and Mr Tanenbaum (“the respondent”) entered into a Binding Financial Agreement (“BFA”) pursuant to s 90UD of the Family Law Act 1975 (Cth) (“the Act”) on 31 May 2011.

2. The BFA provided, inter alia, that the respondent would transfer a property at Suburb E to the applicant and that within four years, he would discharge the mortgage over the property. Until the mortgage was discharged, the respondent was to pay the outgoings including the repayments of principal and interest pursuant to the mortgage and the strata levies.

3. The respondent has not discharged the mortgage and he has not paid the outgoings.

4. The applicant asserts that, in addition to the respondent’s obligations to her pursuant to the BFA, he owes her further sums, now quantified at $458,000 which she says were lent to the respondent by her after the BFA had been entered into. Those transactions, which commenced in September 2015 were documented by loan agreements which provided for the payment of interest monthly.

5. The respondent is the registered proprietor of a property at C Street, Suburb D (“Suburb D”).

6. On 18 December 2018, the applicant commenced proceedings in the Family Court of Australia, seeking to enforce the respondent’s obligations for payment, both pursuant to the BFA and to the loan agreements, against the respondent’s interest in Suburb D. The applicant also sought interim orders to preserve the respondent’s interest in Suburb D.

7. The interim application came before me on 7 February 2019 and orders were made by consent. Orders 1 and 2 provided:

   1.That within 24 hours of the making of these Orders the Respondent shall provide to the Solicitors for the Applicant a copy of the front page of the Contract for Sale of the property known as and situate  C Street, Suburb D (“the property”).

   2.That the Respondent shall not exchange Contracts for the Sale of the property without first providing the Solicitors for the Applicant with not less than 4 days prior written notice of his intention to do so.

8. The respondent proceeded to sell Suburb D without giving notice to the applicant as he was required to do by the Orders. She found out about the sale and also discovered that the respondent’s daughter had lodged a caveat over Suburb D claiming $1.3 million from the proceeds of sale. The applicant brought an application in a case to secure such of the proceeds as would satisfy her claim.

9. The applicant estimates that the amount would be:

   Discharge of the mortgage over Suburb E  $450,000

   Repayment of the loans  $458,000

   Arrears of mortgage payments and strata levies  $20,000

   Provision for mortgage payments and levies pending

   hearing  $70,000

   Total  $998,000

10. The application in a case came before me on 20 August 2019 in circumstances where the sale was scheduled to settle on 2 September 2019. The applicant offered an undertaking as to damages.

11. On 20 August 2019, the respondent’s daughter (“the second respondent”) filed a response to the application in a case and an affidavit. She asked the Court to dismiss the application.

12. In her supporting affidavit, the second respondent asserted:

    ·    That when she was a child, she was given more than $500,000 by her grandfather. As she was a minor, the respondent was the trustee of those funds on her behalf.

    ·    That the respondent invested $506,865 of her funds in the purchase of Suburb D.

    ·    That in 2004 she sold a property owned by her and lent the respondent about $800,000 from the proceeds of sale.

    ·    That she and the respondent entered into a Deed of Loan on 1 June 2012 whereby the respondent acknowledged that he owed her $1,500,000 to be repaid to her within 90 days of receipt of a written demand.

    ·    That she claimed $1.3 million from the sale of Suburb D.

13. The proceedings raise a number of issues. It may be that, once the matter has been fully pleaded and all of the evidence has been filed, the issues will be expanded, and other issues will be apparent. On the information available to me, the following issues arise:

    ·    The respondent asserts that the applicant cannot claim repayment of the sums lent by her to him because her claims against him are limited to the provisions of the BFA.

    ·    The applicant asserts that the loan transactions were entered after the BFA had been executed and are independent of the terms of the BFA.

    ·    What is the nature of the interest of the second respondent, if any, in Suburb D, having regard to the assertion in the Deed of Loan that the advances from the second respondent to the respondent are a loan?

    ·    Is the asserted loan of $800,000 by the second respondent to the respondent statute barred?

14. The sale price of Suburb D is $4 million. The mortgage registered over Suburb D to the ANZ has a discharge figure of $2,375,526.

15. I propose to order that $1 million be retained in a controlled monies account. The balance of $624,447 can be used to pay the agent’s commission and costs of sale of $116,800 and the balance disbursed as agreed between the respondent and the second respondent, or absent agreement, also preserved in a controlled monies account.

COSTS

1. The applicant seeks an order that the respondent pay her costs.

2. The second respondent seeks an order that either the applicant or the respondent pay her costs.

3. In relation to each application, the provisions of s117(2A) of the Act apply. The matters to be taken into account are:

   (2A) In considering what order (if any) should be made under subsection (2), the court shall have regard to:

   (a)the financial circumstances of each of the parties to the proceedings;

   (b) whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;

   (c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;

   (d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;

   (e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;

   (f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and

   (g)such other matters as the court considers relevant.

Applicant’s costs

1. The applicant relies upon the respondent’s conduct in entering into a contract to sell Suburb D without telling her.

2. The respondent was in breach of the Order made on 7 February 2019.

3. The applicant contends that, in those circumstances, she had no choice but to bring the current application.

4. The applicant’s costs are estimated to be $5,485 including $1,979 for Counsel’s fees. There is no challenge to the reasonableness of that sum.

5. On behalf of the respondent, it is submitted that he is impecunious and unable to pay.

6. He relies on a Financial Statement sworn on 2 April 2019 where he deposes to receiving no income and having expenses of $8,054 per week. He deposes to property valued at $6,257,350 and debts of $6,452,000. Those assertions have not been tested.

7. I note that, according to his Financial Statement he had $4,300 in his bank account which is somewhat at odds with his asserted financial position.

8. The Full Court in Lenova & Lenova (Costs) [2011] FamCAFC 141 held that limited financial capacity to meet an order cannot be determinative. In that case, their Honours were dealing with the refusal of an offer of settlement and stated:

   But, a limited financial capacity to meet an order cannot be determinative; if it were, a party would always be able to plead impecuniosity as a means of avoiding a costs order in circumstances where pursuit of the litigation has continued in the face of a reasonable offer to cease that litigation and the incurring of its attendant costs.

9. The same logic must apply to circumstances where the respondent has breached an order of the Court. Limited funds could not be used as a means of avoiding costs where the respondent has, as in this case, breached an order and his breach has occasioned the proceedings.

10. It is appropriate that the respondent pay the costs of the applicant.

Second respondent’s costs

1. The second respondent seeks costs against either the applicant or the respondent.

2. She deposes to having limited means.

3. The basis of her application for costs is that she was brought to the Court on short notice.

4. Whether the second respondent had ample time to respond to the application or a little time, she was required either to oppose the application or consent to it.

5. If she chose to oppose it, she necessarily incurred costs.

6. Since her opposition was unsuccessful, there is no basis on which her costs should be paid by the applicant.

7. Her application will be dismissed.

I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 21 August 2019

Associate:

Date: 21 August 2019