CARNEY & CARNEY
[2019] FCCA 72
•17 January 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CARNEY & CARNEY | [2019] FCCA 72 |
| Catchwords: FAMILY LAW – Appointment of Trustee – where respondent non-compliant with certain orders – where applicant seeks orders appointing him trustee for sale. |
| Legislation: Family Law Act 1975 (Cth), s.80 Federal Circuit Court Rules 2001, Division 25B |
| Cases cited: Stanford v Stanford [2012] HCA 52 Midhurst (Deceased) & Midhurst [2008] FamCA 393 |
| Applicant: | MS CARNEY BY HER LITIGATION GUARDIAN MR BAKER |
| Respondent: | ESTATE OF THE LATE MR CARNEY BY HIS EXECUTORS MS HOWARD AND MS NORMAN |
| File Number: | NCC 774 of 2018 |
| Judgment of: | Judge Costigan |
| Hearing date: | 20 December 2018 |
| Date of Last Submission: | 20 December 2018 |
| Delivered at: | Newcastle |
| Delivered on: | 17 January 2019 |
REPRESENTATION
| Counsel for the Applicant: | Ms Carty |
| Solicitors for the Applicant: | Berryman Partners Pty Limited |
| Counsel for the Respondent: | Mr Bates |
| Solicitors for the Respondent: | Lea Smith Solicitors |
ORDERS
That unless the former matrimonial home situate and known as Street A, Suburb B (‘the property’) has been sold at auction or a contract has been executed by both purchaser and vendor for the its sale prior to 15 March 2019 the property shall thereupon vest in Mr Baker as Trustee for Sale of that property upon the following terms:
(a)The selling agent shall be Real Estate Agent C located at Street D, Suburb E;
(b)The reserve price shall be $730,000 or such other sum as may be agreed in writing between the parties;
(c)The solicitors for the Wife shall act for the vendor on the sale;
(d)The sale be by public auction and the contract be prepared on an unconditional cash settlement basis; and
(e)Such other terms or conditions as are agreed in writing between the parties.
That upon the sale of the property monies shall be distributed as follows:
(a)Firstly, to pay the costs and commissions and all other necessary and proper expenses of the sale and in the adjustment of rates, taxes and other outgoings properly payable; and
(b)Secondly, to pay the balance to the Wife’s solicitors to be held in trust for the parties pending further agreement in writing between the parties or order of the Court.
Liberty to apply both as to the terms and conditions of the sale and the division of the sale proceeds, is reserved to both parties upon proper documents being filed and served.
The Wife's costs of the Application in a Case are reserved to the final hearing of the matter.
The matter is adjourned for mention to 29 March 2019 at 9.30 am for directions hearing.
IT IS NOTED that publication of this judgment under the pseudonym Carney & Carney is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT NEWCASTLE |
NCC 774 of 2018
| MS CARNEY BY HER LITIGATION GUARDIAN MR BAKER |
Applicant
And
| ESTATE OF THE LATE MR CARNEY BY HIS EXECUTORS MS HOWARD AND MS NORMAN |
Respondent
REASONS FOR JUDGMENT
Introduction
These are property proceedings the facts of which are redolent of the Full Court decision of Stanford & Stanford[1] in that
‘a marriage [was] still intact but where a physical separation has been forced upon the parties by reasons of one of the parties’ ill-health.’
[1] Stanford & Stanford [2012] FamCAFC 1 at [2]
The application before me for determination is made by the Litigation Guardian for the Wife to vary orders made by consent for the sale of the former matrimonial home in Street A, Suburb B for reasons of alleged non-compliance and non-cooperation with the sale of that property by the legal representatives of the Estate of the Husband.
Background
The Wife Ms Carney is 93 years old. The Husband Mr Carney was 92 years old when he passed away on … 2018.
The parties were married on … 1989 for twenty-nine (29) years. It was the second marriage for both of them.
The Wife’s son-in-law Mr Baker is her Litigation Guardian and the applicant in these proceedings.
The Husband’s adult daughters Ms Howard and Ms Norman are the Executors of his Estate and the respondents in these proceedings.
During their marriage the parties lived in the former matrimonial home at Street A, Suburb B (‘the former matrimonial home’) which was registered in the Husband’s sole name.
At the time of the commencement of their relationship the Wife owned a property in the same street, Street A1, Suburb B. In or around 1991 the Wife sold her Street A1, Suburb B property to her son Mr F for $110,000. The Wife says that the proceeds of sale were used by her and the Husband during the course of their marriage for general household expenses.
In or about 2009 the Wife says that she received $30,000 from her brother Mr G. On Mr G’s death she received a further sum of $208,081 in … 2013 as a beneficiary under his Will. From those monies she placed $142,500 into a term deposit.
In 2014/2015 the Wife deposes that she paid for the renovation of the bathroom at the former matrimonial home, the costs of which were approximately $8,000 to $10,000.
On 17 July 2015 the Husband signed a Will appointing his daughters Ms Howard and Ms Norman as joint executrices and trustees and providing for the Wife to have a life tenancy in the former matrimonial home, and upon sale for the proceeds to be divided equally between his children. Clause 5 of the Will further provided:
‘At the written request of my Wife my Trustee shall sell the house and buy a retirement residence to which the same provisions of those expressed in the last clause shall apply.’
On 24 August 2015 the Husband signed an Enduring Power of Attorney (EPA) appointing his son, Mr H and his daughters Ms Howard and Ms Norman, jointly and separately to be his attorneys. The Wife deposes that she was not aware of the contents of the Will or the EPA.
The Wife deposes that in 2016 the Husband gifted two (2) blocks of land that he owned at Town J to his grandson Mr K.
In … 2017 the Husband was admitted to the Suburb B Nursing Home
‘as he had been suffering from dementia for several years.’[2]
[2] Wife’s affidavit filed 12 March 2018 at [6]
The Wife says that she first became aware that the Husband’s children wished to sell the former matrimonial home when she saw a real estate agent at the property taking photographs. The respondents deny there were any plans to sell prior to the commencement of these proceedings.
On 8 November 2017 the Wife registered a caveat on the title of the former matrimonial home.
On 12 March 2018 the Wife filed an initiating application seeking final orders that the Husband transfer to the Wife 50% of the former matrimonial home or the equivalent proceeds of sale and otherwise the parties be declared the sole beneficial owners of all items in their possession, as well as the payment by the Husband to the Wife of the costs of the proceedings.
On 13 April 2018 a response was filed to that application by the husband’s grandson Mr K, who sought appointment as the legal personal representative for the Husband. It was necessary that such an appointment occur Mr K deposed because the Husband had been admitted to an aged care facility,
‘was frail and bedridden and unable to administer his affairs’.
The final orders sought by the Husband were simply that the Wife’s application be dismissed on the basis that, though physically separated that the parties were still in a marital relationship. In his supporting affidavit Mr K deposed that for the purposes of Centrelink the Husband was recorded as being partnered and that:
‘..Ms Carney continues to visit Pop on a regular basis and I have heard her say to the nursing staff ‘he is my Husband and I love him.’[3]
[3] Affidavit of Mr K file 13 April 2018 at [8]
On 16 April 2018 the matter came before Registrar Clarke who made orders by consent for the appointment of Mr K as the Litigation Guardian for the Husband having been satisfied as to the matters required by Division 11.2 of the Federal Circuit Court Rules 2001.
Orders were also made by consent for the Wife to have sole use and occupation of the former matrimonial home whilst ever the Husband remained a resident in an aged care facility and for, inter alia:
·A restraint on the Husband and his agents from entering the property, dealing with the property or removing items from the property without the consent of the Wife;
·The Husband to provide his consent for the Wife to lodge a caveat on the title of the former matrimonial home;
·Appointment of a single expert to value the property; and
·A restraint on the Wife from removing the Husband’s personalty or chattels from the former matrimonial home.
The Registrar made orders for the parties to attend a conciliation conference to take place on 18 June 2018.
These orders also carried the following notation:
‘The Respondent Husband contends that it is not just and equitable to make an order under s.79 in this matter and his consent to the following Interim Orders s made on the basis that he makes no concession that the Wife is entitled to alteration of property interests.’
On … 2018 the Wife was admitted to Town L Private Hospital. She was discharged on … 2018 to reside at the Town L Serviced Apartments. The Wife secured that accommodation by using the monies that she received from her late brother’s estate. It is unlikely that she will ever be able to return to reside in the former matrimonial home.
The conciliation conference before Registrar Clarke on 18 June 2018 was vacated on the joint application of the parties in view of the Wife’s recent changed circumstances. However, interim orders were made by consent that provided for:
·Discharge of interim orders 2 to 7 inclusive made by consent on 16 April 2018;
·The Husband to maintain his consent to the registration of the Wife’s caveat over the former matrimonial home until sale;
·Within 14 days the Wife to attend and remove her goods and chattels listed in annexure A to the orders; and
·For the former matrimonial home to be listed for sale and sold by way of auction with a reserve price of $730,000.
On 24 August 2018 the Wife filed an amended initiating application seeking the appointment of her daughter Ms M as her Litigation Guardian. Ms M, her sister Ms N and brother Mr F had been appointed as attorneys under the Wife’s Power of Attorney. A medical certificate dated 31 August 2018 from the Wife’s general practitioner Dr O states:
‘..She [the Wife] suffers from Congestive cardia failure and Atrial Fibrillation which causes breathlessness and fluid retention. Her mobility is greatly impaired. She also has Peripheral vascular disease. She visits me at least fortnightly with her medical problems. I have found that she has declined rapidly over the last few months’ possibly due [sic] stress of her recent displacement. Ms Carney is in no physical or emotional state to attend court in person.’[4]
[4] Wife’s affidavit filed 21 September 2018, annexure A
The amended initiating application came before Registrar Clarke on 28 August 2018. The Registrar transferred the matter to the docket Judge as the Wife’s application for appointment of a Litigation Guardian was opposed by the respondent.
On 25 September 2018 the matter came before the Court for the first time in a duty list. Orders were made by consent for the appointment of Mr Baker as Litigation Guardian for the Wife (‘applicant’) and a further conciliation conference date allocated.
On 16 October 2018 the Wife by her Litigation Guardian filed an application in a case seeking orders for his appointment as Trustee for Sale of the former matrimonial home.
On 29 October 2018 the Husband passed away.
On the joint application of the parties the Conciliation Conference scheduled for 7 November 2018 was vacated by order of Judge Middleton on 6 November 2018.
On 20 November 2018 the matter was listed before the Court for directions and orders were made by consent for the appointment of Ms Howard and Ms Norman (‘respondents’) as the respondents in these proceedings noting that the death certificate and Will of the Husband were not yet available. The matter was also listed for final hearing on 8 April 2019 with a time estimate of two (2) days.
On 20 December 2018 the matter was listed for directions and hearing of the applicant’s outstanding application in a case filed on 16 October 2018.
The applicant was represented by Ms Carty of Counsel and the respondents by Mr Bates of Counsel. The matter proceeded by way of submissions and I reserved my decision
Evidence
At the interim hearing, the applicant relied on the following documents:
·Application in a Case filed 16 October 2018;
·Affidavits of Mr Baker filed 16 October 2018 and 19 December 2018;
·Further Amended Amended Financial Statement filed 19 December 2018;
·Minute of Order Sought by the Applicant dated 20 November 2018;
·Bundle of photographs of the former matrimonial home taken on 2 July 2018 by Ms N (Exhibit A); and
·Valuation of the former matrimonial home prepared by Valuers and dated 8 June 2018 (Exhibit B).
The respondent relied on the following documents:
·Affidavit of Ms Norman filed 19 December 2018;
·Affidavit of Ms Howard filed 19 December 2018;
·Bundle of photographs of the former matrimonial home taken in 2018 by Ms Norman (Exhibit C); and
·Draft Contract for Sale in relation to the former matrimonial home (Exhibit D).
Proposals
The applicant sought orders in accordance with Orders 2 – 7 of the Minute of Order dated 20 November 2018 as follows:
‘2. Orders 5 of the Orders made 18 June 2018 be discharged.
3.THAT the Applicant Wife by her Litigation Guardian Mr Baker be hereby appointed Trustee for sale of the real property situate and known as Street A, Suburb B upon the following terms:
(a)the selling agent shall be Real Estate Agent C located at Street D, Suburb E.
(b)the reserve price shall be $730,000 or such other sum as may be agreed in writing between the parties;
(c)the solicitors for the Wife act for the vendor on the sale;
(d)the sale be by public auction and the contract be prepared on an unconditional cash settlement basis; and
(e)such other terms or conditions as are agreed in writing between the parties.
4.THAT the proceeds of the Sale be applied as follows:
(a)first, to pay the costs and commissions and all other necessary and property expenses of the sale and in the adjustment of rates, taxes and other outgoings properly payable;
(b)secondly, to pay the balance to the Wife’s solicitors to be held on trust for the parties pending further agreement in writing between the parties or order of the Court;
5.THAT there be liberty to apply, both as to the terms and conditions of the sale and the decision of the sale proceeds reserved to both parties upon proper document being filed and served.
6.THAT the Respondent pay the costs of the Applicant.
Mr Bates on behalf of the respondents sought an adjournment of the applicant’s application in a case until February 2019 on the basis that the former matrimonial home had been listed for sale and the marketing campaign would shortly commence; a buyer may have been found by the adjourned date and the matter could not be progressed during the period of the Christmas shutdown.
Discussion
It is clear that the orders of 18 June 2018 specifically address the expectation of sale dealing, as they do, with how the proceeds of the sale are to be held. A mechanism was put in place for the appointment of an agent and both parties were required do all things necessary to list and prepare the property for sale and the Husband’s solicitor was appointed to act on the sale. At the date of hearing the property remains unsold and there is no timetable for the marketing campaign because the listing agreement was only signed a week before the hearing.
There is some utility in reviewing the events since the Wife vacated the former matrimonial home and timetable provided by the Orders of 18 June 2018:
Date
Event
18 May 2018
Wife vacates former matrimonial home.
14 June 2018
Date of valuation report prepared by Real Estate Agent C. Property valued at $730,000.
18 June 2018
Orders made by consent by Registrar Clarke in the Federal Circuit Court for the sale of the former matrimonial home.
2 July 2018
Date by which the Wife was permitted to attend the former matrimonial and remove the goods and chattels listed in annexure A pursuant to Order 3.
3 July 2018
The Husband has access to the former matrimonial home but could not do so because the locks had been changed. A locksmith is called and they have access later that same day.
7 July 2018
The Husband receives the Wife’s set of keys to the former matrimonial home.
16 July 2018
Date by which the Husband was to submit to the Wife ‘documents from 3 separate real estate agents which set out the marketing strategy for the sale by auction of the real property’ pursuant to Order 4.1.
30 July 2018
Date by which the Wife was to select from the 3 proposed marketing strategies, the real estate agent who will have conduct of the sale pursuant to Order 4.2.
29 Oct 2018
The Husband passes away. Counsel for the Husband informs the Court that instructions have been provided to the estate solicitor to apply for a grant of Probate.
13 Dec 2018
The respondents sign a listing agreement with Real Estate Agent C.
Ms Carty who appears for the applicant urges the Court to make an order that the property be vested in the Litigation Guardian for the Wife as Trustee for Sale. She submits that the respondents have been obstructive in relation to the sale of the former matrimonial home. That obstruction has taken the form of:
·A delay in nominating the three (3) real estate agents;
·An extraordinary and unjustifiable delay in preparing the former matrimonial house for sale; and
·Delaying the listing of the former matrimonial home with a real estate agent; and
·Then listing the former matrimonial home for sale by way of private treaty instead of auction as provided by the orders and at a highly inflated price.
Ms Carty points out that the Wife vacated the former matrimonial home on 18 May 2018 and the order for sale was made one (1) month later on 18 June 2018. Yet, it was not until 13 December 2018, the week prior to the interim hearing, that the respondents signed the listing agreement.
Ms Carty tendered the valuation for the property at $730,000 and pointed to the sale price range in the listing agreement of between $1.2 million and $1.3 million. She submits that the Wife cannot wait for someone to pay $1.2 million and that the property should be sold quickly at auction and the market allowed to determine the price.
She argues that the respondents’ lack of action in respect of the former matrimonial home means that they are non-compliant with their obligations regarding sale in accordance with the orders.
Mr Bates, on behalf of the respondents, submits that the terms of the order made on 18 June 2018 have been followed and that the former matrimonial home is now listed with Real Estate Agent C and the parties’ may receive an offer in the very near future.
He says that the respondents do not understand why the Contract for Sale[5] provides for a standard listing because they are well aware of the orders and it is their intention for the former matrimonial home to go to auction.
[5] Exhibit D
Mr Bates submits that the photos taken by the applicant are selective and that the former matrimonial home was in a very poor state of repair and required extensive work. The property smelt strongly of urine and all of the carpets had to be removed and replaced. The garage had to be cleared and painted, the exterior of the house pressure cleaned, the overgrown garden attended to, interior walls, ceilings and doors repaired and repainted and rubbish removed. In her affidavit Ms Howard deposes to all the work carried out at the former matrimonial home by the Husband’s extended family which the Court agrees was extensive.
It is surprising that the extent of the work was not known to the respondents at the time the orders were made on 18 June 2018. At paragraph 5 of Mr K’s affidavit filed 13 April 2018 suggests that the property had been well-maintained by the family deposing:
’11. …..my late Father and I and other family members have continued to maintain the residence.
12. I am a tradesman by occupation and with my employees we carry out the trimming of the trees, bushes and shrubs when required. My uncle does the regular mowing and maintenance of the gardens with assistance from my Mother.
Nevertheless, Mr Bates submits that as a consequence of the works carried out by the Husband’s family a much higher sale price could be released. The work had to be carried out by the Husband’s family because there were no liquid funds available to his Estate to pay third parties.
Mr Bates explains that the former matrimonial home is situated on an unusually large block of land which is capable of redevelopment and sub-division, thereby appealing to a broader range of prospective purchasers.
Mr Bates submits that there was an initial delay because of the enormous amount of personal chattels that the Wife had left behind and which her family did not remove. I reject that assertion. It was quite clear from the orders that the Wife was only to remove the items listed in annexure A.
However, the Wife’s health and the extent to which her surroundings and treatment might benefit her is a significant issue in this case. The evidence is that since moving into the Town L Serviced Apartments the Wife’s health has declined and she requires transitioning into a more expensive facility providing a higher level of care`.
The Wife’s sole source of income is the aged pension that she receives at a rate of $452 per week. Her rent at Town L Serviced Apartments is $395 which leaves her $57 per week for other expenses including medical. She has savings of $78,863. When she moves to the aged care facility she will be required to pay a refundable accommodation deposit of up to $450,000 (depending on the room type). She will be entitled to a fee rebate of around $143,000 from the $210,000 initially paid, giving a balance payable of $307,000. Taking her current level of savings into account, that leaves a shortfall of around $229,000.
It was clearly the intention of the Husband that the Wife be properly provided for in the event that he predeceased her. She has suffered the recent loss of her Husband who she dearly loved. She has been forced by ill-health to leave the home that they shared together for almost thirty (30) years and into supported accommodation. Her health is in decline and she now requires a higher level of care. Her accommodation needs must be settled as a matter of urgency. She deserves nothing less.
In my view the sale of the former matrimonial home needs to proceed expeditiously.
I accept that a property that has been occupied for so long by an elderly couple who have not prioritised home maintenance may require considerable repair work and modernisation. I am not satisfied, however, that the explanation offered by the respondents adequately explains the inordinate six (6) month delay in listing the property for sale nor their non-compliance with Court orders.
I am satisfied that it is appropriate to appoint the applicant as the Trustee for Sale but that the appointment should, however, be deferred to allow for any offers received over the Christmas period to be considered by the parties. If a contract is executed or the auction fixed on a date prior to the adjourned date, the need for the appointment of a trustee will be avoided, or at least deferred.
I therefore make orders for the former matrimonial home to be vested in Mr Baker for sale on 15 March 2019 if an auction has not taken place or a contract for sale acceptable to the parties has not been executed by both vendor and purchaser prior to that date or the auction date has not been set. To facilitate the sale the orders of 18 June 2018 will varied in accordance with the applicant’s proposed minute.
I certify that the preceding fifty seven (57) paragraphs are a true copy of the reasons for judgment of Judge Costigan
Date: 17 January 2019
0