BURGE & BURGE

[2019] FCCA 712

FEDERAL CIRCUIT COURT OF AUSTRALIA

BURGE & BURGE [2019] FCCA 712

Catchwords:
FAMILY LAW – Property – whether the court has the power to compel the wife to litigate a dispute with an insurance company regarding repairs to a jointly owned property within the meaning of section 79 – whether property should be sold pending the conclusion of the dispute between husband and insurance company – whether the court should exercise its discretion to grant an injunction in the terms sought by the husband.

Legislation:

Family Law Act 1975 (Cth), ss.4, 79, 81, 114

Applicant: MR BURGE

Respondent: MS BURGE

File Number: MLC 73 of 2018

Judgment of: Judge Mercuri

Hearing date: 22 October 2018

Date of Last Submission: 22 October 2019

Delivered at: Melbourne

Delivered on: 22 March 2019

REPRESENTATION

Counsel for the applicant: In person

Solicitors for the applicant: None

Counsel for the respondent: Ms Brookes

Solicitors for the respondent: Chris Woods and Associates

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 73 of 2018

MR BURGE

Applicant

And

MS BURGE

Respondent

REASONS FOR JUDGMENT

1. By her amended application in a case filed 17 October 2018, the respondent wife seeks orders for the sale of a property owned by the parties at A Street, Suburb B, A Street, Suburb B(“the A Street, Suburb B property”).  

2. The applicant husband opposes that application and seeks orders that the A Street, Suburb B property not be sold pending the conclusion of an outstanding insurance dispute that he has with Insurer in respect of works done at that property (“insurance dispute”). 

3. The applicant husband seeks further orders that:

   a)the parties do all things necessary to facilitate the recommencement of the review of the insurance dispute by the Financial Ombudsman Service (“FOS”); and

   b)upon the FOS recommencing its review of the insurance dispute, the applicant husband be the sole representative on that matter until its conclusion.

Background

1. The applicant initiated proceedings in this court on 17 January 2018 seeking parenting orders in respect of the children, [X] born … 2004 and [Y] born … 2008. 

2. On 8 March 2018, the respondent filed a response in which she sought both parenting and property orders.  In that application, the respondent sought interim orders which, among other things included orders in the following terms:

   -That both parties do all such acts and things an sign all such documents as may be required to accept the settlement offer from Insurer detailed in their letter to the parties of 8 August 2017 in relation to the… (A Street, Suburb B property)… and that any such funds received be deposited in to the trust account of the mother’s solicitor.

   -That the parties do all such acts and things and sign all documents as may be required to immediately place the (A Street, Suburb B property) … upon the market for sale.

3. On the basis of the affidavit material filed by each of the parties, it appears to be common ground that the parties commenced living together in late 1999 or early 2000, married in 2004 and separated in October 2016.

4. It is also common ground that post separation, the husband has been living in the former matrimonial home. 

Insurance dispute

1. It is also common ground that the parties have made a claim on their insurance policy with Insurer regarding some damage to the A Street, Suburb B property and works conducted by the Insurer’s authorised repairers between 2012 and 2014.

2. Annexed at B-4 to the wife’s affidavit sworn 8 March 2018 is a copy of correspondence from the Insurer which sets out the background to the building dispute and the Insurer’s proposal to resolve that dispute.  In essence, in that correspondence, the Insurer offered to resolve the building dispute by making a cash payment in the sum of $15,000, without any admission of liability. 

3. In September 2017, the Insurer increased this offer to $15,500.[1]

   [1] Annexure B-28 to the husband’s affidavit affirmed 25 May 2018.

4. Relevantly, also in that letter, the Insurer provided the parties with the following information:

   If you do not wish to accept the Insurer’s offer of a without admission cash settlement, you may refer your dispute to the financial Ombudsman Service (FOS).  FOS provides a free and independent dispute resolution service for consumers who have general insurance disputes that are covered by its Terms of Reference.  If you wish your dispute to be reviewed by FOS you must refer it within two years of the date of the IDR decision…

5. In the husband’s affidavit affirmed 27 April 2018, he gave the following evidence in relation to the building dispute:

   This property has sustained water damage from two major instances.  One within the Bathroom and one within the Kitchen.  Our insurer accepted both claims to repair the bathroom and the kitchen.  Since the repairs, mould has been detected both within the house and under the sub-floor which I am arguing was required to be identified and remediated during the repairs.  the Insurer has not conceded that there is mould at the said property.  I therefore contracted Company D to conduct a Mould and Moisture Assessment at the sad property …

   …

   As a result of this report, the Insurer emailed me on 5 February 2018 advising that they were willing offer (sic) a sum of $17,326 to resolve the matter …[2]

   …

   A date has been set for conciliation… on Wednesday April 11 2018... between myself, FOS and the Insurer. 

   [2] This figure represented the offer of $15,500 plus the cost of the report from Company D obtained by the husband – see annexure B-30 to the husband’s affidavit affirmed 25 May 2018.

   …

   On 11 April 2018 FOS facilitated mediation with the Insurer and myself.  No outcome was reached.  FOS are currently preparing their preliminary findings….

6. At paragraph 8 of the husband’s affidavit affirmed 25 May 2018, the husband also deposed that in addition to seeking remediation of the damage to the property which he says resulted from the faulty repairs undertaken by the Insurer, he is also seeking reimbursement of unpaid rent from 11 July 2016 at the weekly rate of $260, which as at the date of swearing his affidavit amounted to some $25,000. 

7. The husband further stated that although the current median value of the A Street, Suburb B property is $330,000, “if we were ordered to sell the property at A Street, Suburb B… in its current condition, then we would almost certainly sell it for a price well below our mortgage for this property of $249,000.”[3]

   [3] Paragraph 10 of the husband’s affidavit affirmed 25 May 2018.

8. When the conciliation conference arranged by FOS did not resolve the dispute with the Insurer, FOS wrote to the husband and explained that the dispute would proceed to the next step in their process.[4]  In correspondence from FOS dated 20 April 2018 to the husband, which is annexed to his May affidavit, FOS explains that the next step in the process is for FOS to provide a preliminary view. 

   [4] Annexure B-37 to the husband’s affidavit affirmed 25 May 2018.

9. That letter relevantly states:

   As the dispute is not resolved, I will now review all the information provided by you and the Insurer and provide my preliminary view of the dispute…

   The preliminary view will explain:

   ·The issues we will decide

   ·Our approach to the issues

   ·The likely outcome of the dispute

   ·What information was relied on to form the view.

   If the preliminary view is not accepted we may proceed to issue a determination.  A determination is the final stage of our process and is binding on the Insurer if you accept it. (emphasis added)

10. It is common ground that the wife’s solicitors sent the FOS a letter dated 27 April 2018 which, among other things, said:

    (The husband) does not have (the wife’s) authority or permission to deal with the claim on her behalf.  …

    We therefore insist that any and all action in relation to the claim itself and the proceedings with the Ombudsman, must occur with (the wife’s) express knowledge, involvement and consent.

    …

    (The wife) does not wish to have any aspect of the parties’ claim with the Insurer dealt with by the Ombudsman.  Instead, as is proper in the circumstances, all of the parties’ relevant property matters should be dealt with as part of the Federal Circuit Court proceedings.[5]

    [5] Annexure B-38 to the husband’s affidavit affirmed 25 May 2018.

11. The property matter was mentioned before me on 2 July 2018 after the parties were unable to resolve the issues in dispute at a conciliation conference.  On that day, the matter was adjourned to an interim defended hearing on 22 October 2018.  In addition various consent orders were made and the following notation was recorded;

    The wife intends to obtain a formal valuation of the A Street, Suburb B property over the adjournment period and she hopes that upon the husband receiving legal advice later this week, he will agree to obtain a joint valuation with the costs to be equally shared between the parties.

12. In her affidavit filed 17 October 2018, the wife states at paragraph 4 that the parties agreed to engage a joint valuer to value the A Street, Suburb B property addressing ‘it’s current market value, repairs that need to be made to the property (if any) and the costs of such repairs.’ 

13. The valuation obtained as a result estimates that the A Street, Suburb B is worth $320,000 ‘as is’ and ‘that at the highest range $20,000 could be spent to remediate it for a growth in value to $340,000.’

14. The wife further states at paragraph 6 of her affidavit filed 17 October 2018, that she and the husband, on advice, also engaged ‘Mr C of Building Inspector to perform a building inspection and given an estimate of any costs for applicable and necessary repairs.’

15. At Annexure 4 of the wife’s affidavit filed 17 November 2018, is a copy of the email from Mr C in which he sets out the estimated pricing for rectification works.  In that email, Mr C states:

    I would state that all of the defects identified (other than the mould to the sub floor) would not require rectification in the ‘real’ world.

    …

    Mould Treatment via sealing $500 or Removal and replacement of affected materials $3,000

    Shower frame Damp.  Worst case requires new wall cladding both sides, damaged frame replacement, waterproofing, tiling etc $5,000.

16. The wife maintains that the court does not have power to make orders sought by the husband, namely that:

    a)the parties do all things necessary to facilitate the recommencement of the review of the insurance dispute by the Financial Ombudsman Service; and

    b)upon the FOS recommencing its review of the insurance dispute, the applicant husband be the sole representative on that matter until its conclusion.

17. The wife asked that this matter be dealt with as a preliminary issue.  As stated above, ultimately, the wife seeks an order for the sale of the A Street, Suburb B property. 

18. It is common ground that the husband wishes to keep the former matrimonial home and the wife is happy for him to do so.  The husband has indicated that he will be able to borrow some funds to pay the wife out but he maintains that it is in the parties’ collective interests for the Insurer dispute to be resolved as this will in his view, maximise the return to both parties. 

19. The husband has not placed before the court any evidence as to what power FOS has to make a binding determination.  It appears on the basis of the material before the court that if FOS were to make a final determination, it would only be binding on the Insurer if the husband and wife agreed to it.  Therefore, leaving aside the question of whether the husband and wife could agree as between themselves, there is a possibility that if the husband does not agree with the final determination by FOS, he would seek to continue to agitate his dispute with the Insurer. 

20. The husband is representing himself and therefore, not surprisingly and without in any way being critical of him, he has not made any legal submissions as to the court’s power to make the orders that he seeks.

21. The wife was legally represented.  Counsel for the wife indicated that she did not have any detailed submissions to make as her primary position was there was no power to make the orders that the husband sought and therefore she could not point the court to any particular provision in the Family Law Act1975 (Cth) which dealt with the issue.

22. The Family Law Act1975 (Cth) confers jurisdiction on this court to make orders which relate to property of the parties to a marriage.

23. Section 79(1) relevantly provides:

    In property settlement proceedings, the court may make such order as it considers appropriate:

    (a)in the case of proceedings with respect to the property of the parties to the marriage or either of them – altering the interests of the parties to the marriage in the property; or

    (b)…

    including

    (c)an order for a settlement of property in substitution for any interest in the property; and

    (d)an order requiring:

    (i)either or both of the parties to the marriage; or

    (ii)…

    to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines appropriate.

24. ‘Property settlement proceedings’ are defined in section 4 to mean:

    (a)in relation to the parties to a marriage – proceedings with respect of:

    (i)the property of the parties or either of them; or

    (ii)…

25. In turn ‘property’ is defined, also in section 4 to mean:

    (a)In relation to the parties to a marriage or either of them – means property to which those parties are or that party is, as the case may be, entitled whether in possession or reversion…

26. It is not clear to me that any of these provisions provide a proper basis for the making of an order in the terms sought by the husband.  To the extent that the husband seeks orders relating to the Insurer dispute, the orders sought are not in respect of the property of the parties or either of them.  Rather an order is being sought in the nature of an injunction compelling the wife to continue to litigate a dispute with the Insurer against her wishes, advice and better judgement.

27. Section 114 of the Family Law Act1975 (Cth) provides that the court can grant injunctions in certain circumstances. That section relevantly provides:

    (1)In proceedings of the kind referred to in paragraph (e) of the definition of matrimonial cause in subsection 4(1), the court may make such order or grant such injunction as it considers proper with respect to the matter to which the proceeding relates including:

    (a)…

    (b)…

    (c)…

    (d)…

    (e)An injunction in relation to the property of a party to the marriage;

    (f)An injunction relating to the use or occupancy of the matrimonial home.

    (3) A court exercising jurisdiction under this Act in proceedings other than proceedings to which subsection (1) applies may grant an injunction, by interlocutory order or otherwise (including an injunction in aid of the enforcement of a decree), in any case in which it appears to the court to be just or convenient to do so and either unconditionally or upon such terms and conditions as the court considers appropriate.

28. The term ‘matrimonial cause’ is relevantly defined in section 4 to mean:

    (a)…

    ...

    (ca)proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them, being proceedings:

    (i)Arising out of the marital relationship;

    (ii)…

    (iii)…

    (e)proceedings between the parties to a marriage for an order or injunction in circumstances arising out of the marital relationship (other than proceedings under a law of a State or Territory prescribed for the purposes of section 114AB)

29. When one considers the statutory framework discussed above, it is clear that whilst the court can make orders in relation to the A Street, Suburb B property, including whether and if so, how it should be sold and the part that either or both parties can play in the sale of the property, it is not clear upon what basis an order could be made effectively compelling the wife to continue litigating a dispute that the husband has with the parties’ insurer.  Indeed, it is further complicated by the fact that the evidence before the court is that the wife does not dispute the Insurer’s position and in fact is prepared to settle with the Insurer on the current offer made by it.

30. Moreover, there is no evidence before this court, nor any legal submissions made, that if the A Street, Suburb B property were sold that the husband could not continue in his claim against the Insurer for damages arising from what he claims to be a failure on the Insurer’s part to properly complete the remediation works.

31. Indeed, the only evidence before this court is that further remediation works to the A Street, Suburb B property would cost in the order of $20,000 and that therefore the value of the property ought to be discounted by this amount.  The A Street, Suburb B property has therefore been valued at $320,000 which includes a reduction of $20,000 for the remediation works.

32. The husband has given evidence in his affidavit material that he believes that the remediation works will cost significantly more than $20,000 and moreover that he should be able to recover the unpaid rent for the period from 11 July 2016 to date.  In circumstances where a qualified valuer jointly appointed by the parties has provided a valuation of the property ‘as is’, that is the best evidence before the court as to the current valuation of the A Street, Suburb B.

33. For each of these reasons, I am not satisfied that the court has the power to make the orders sought by the husband in this instance.

34. For completeness, I note that in any event, even if the court did have power to grant an order in the terms sought, it is an order in the nature of an injunction and the husband would need to satisfy me that it is appropriate for the court to exercise its discretion in granting such relief.  In this case, both parties agree that the A Street, Suburb B property needs to be sold.  There is both a valuation and evidence of the cost of repairs to the A Street, Suburb B property. 

35. These proceedings arise in the context of an application to adjust the property interests of the parties following the breakdown of their relationship.   The court is required in proceedings of this nature to ‘as far as practicable, make such orders as will finally determine the financial relationships between the parties to the marriage and avoid further proceedings between them.’ (section 81)

36. In making this application, whilst the husband has led evidence which he says supports a finding that the problems with the A Street, Suburb B property are more significant than is suggested by the costing provided by MouldLab for the remediation works, he has not led any evidence as to what he says the remediation works involve and what they might cost.

37. Moreover, he has not led any evidence or made any submissions to support the argument that even if the parties were to sell the A Street, Suburb B property he could not continue his dispute with the Insurer and seek to recover any loss that may flow.

38. For each of these reasons, even if the court did have the power to grant an order in the terms sought, I would not exercise my discretion to grant those orders in the present circumstances. Any loss which the husband can demonstrate arises from the sale of the A Street, Suburb B property would either be recoverable from the Insurer or alternatively could be the subject of submissions as to any final adjustment that ought to be made between the parties pursuant to section 79.

1. Having come to this view, I direct the parties to consider what orders they each now seek in relation to future progress of this matter.

I certify that the preceding forty-six (46) paragraphs are a true copy of the reasons for judgment of Judge Mercuri

Date: 22 March 2019