Chaves and Chaves - [2019] FamCA 1022

FAMILY COURT OF AUSTRALIA

CHAVES & CHAVES

[2019] FamCA 1022

FAMILY LAW – PROPERTY – Interim distribution – Where each party seeks orders in relation to the sale of two properties – Where the parties agree that both properties should be sold – Where the parties agree on the reserve prices – Where the wife seeks that she be appointed as trustee of the sales – Where the husband seeks that the sales be effected jointly – Where the nature of the parties’ relationship would make it difficult for them to effect the sales jointly – Where there is no practical risk of the wife acting adversely to the parties’ shared interests – Wife to be appointed as trustee of sale for each property – Orders made for the net proceeds of sale to be firstly applied to discharge the mortgages, pay agents’ fees and other costs associated with the sales – Remaining balance of the proceeds of sale of the first property to be divided equally between the parties by way of interim property settlement – Any balance of the proceeds of sale of the second property to be retained in a controlled monies account – Orders made for the husband to vacate both properties in anticipation of the sales.

Family Law Act 1975 (Cth) ss 79, 75, 114
APPLICANT:	Ms Chaves

RESPONDENT:

Mr Chaves

INDEPENDENT CHILDREN’S LAWYER:

Legal Aid NSW

FILE NUMBER:

SYC

925

2019

DATE DELIVERED:

6 December 2019

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Loughnan J

HEARING DATE:

6 December 2019

REPRESENTATION

APPLICANT APPEARED IN PERSON:

Ms Chaves

RESPONDENT APPEARED IN PERSON

Mr Chaves

SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER:

Ms Smith

Orders

The mother file and serve a Response to any application for interim parenting orders filed and served by the father, that Response and her affidavit/s in support be filed and served within seven days after the date of service of the father’s material.
The Court Notes that a hearing date will be allocated by the registry on the filing of any such application.
The Independent Children’s Lawyer is excused in relation to the balance of the hearing today.
Within six week’s from the date of these Orders or such other time as is agreed between the parties in writing the husband vacate the property known as G Street, Suburb H in the State of New South Wales (“Suburb H property”).
The wife be appointed the trustee for sale of the Suburb H property and that subject to these orders she is authorised to sell the property in any manner she deems fit including appointing a real estate agent and lawyer to act on the sale, to sign all documents required for the sale and to negotiate a sale price and accept offers from any potential purchasers.
The Suburb H property be listed for sale as soon as practicable and sold with a reserve price of $1.65 million or such other price as the parties agree upon in writing and that upon completion of the sale the wife authorise the disbursement of proceeds of sale in the following manner and priority:
6.1the amounts required to discharge the mortgage secured over the title of the Suburb H property (being both the mortgage account number …59 and …67);
6.2all costs and expenses of sale including legal costs and disbursements, advertising expenses (including the reimbursement of any such expenses as have been paid by either or both of the parties by private agreement between them);
6.3the amounts required to pay all municipal and water rates outstanding with respect to the Suburb H property as adjusted between vendor and purchaser;
6.4in payment to B Real Estate Agents of Suburb H, on account of their outstanding agent’s fees and commissions.
6.5The remaining balance of the net proceeds of sale shall be divided equally between the parties by way of interim property distribution.
That within six weeks from the date of these Orders or such other time as the parties might agree upon in writing, the husband vacate the property known as D Street, Suburb J in the State of New South Wales (“Suburb J property”).
The wife be appointed trustee for the sale of the Suburb J property and subject to these orders is authorised to sell the property in any manner she deems fit including appointing a real estate agent and lawyer to act on the sale, signing all documents required for the sale and negotiating the sale price and accepting offers from any potential purchasers.
The Suburb J property be listed for sale as soon as practicable and sold with a reserve price of $700,000 and that upon completion of the sale the wife authorise the disbursement of the net proceeds of sale in the following manner and priority:
9.1the amounts required to discharge the mortgage secured over the title of the Suburb J property;
9.2all costs and expenses of sale including legal costs and disbursements, advertising expenses, agent commissions, valuers fees (if applicable) and auction expenses;
9.3the amounts required to pay all municipal and water rates outstanding with respect to the Suburb J property as adjusted between vendor and purchaser;
9.4in payment of the balance remaining to a controlled monies account operated on behalf of the parties by the solicitors for the applicant, Swaab or such firm as nominated by the wife.
In relation to the sale of each of the Suburb H and Suburb J properties the wife provide to the husband as soon as practicable a copy of any agreement with a real estate agent for the sale of either property, a copy of any draft contract for sale and notice of all and any offers in respect of those properties together with immediate notice of the acceptance of an offer for sale, copies of the signed contracts, notice of the settlement dates and copies of the settlement sheet in relation to each such sale.
The wife respond in a timely way to any written request from the husband in respect of the progress of the sale of either property.
The husband be restrained until further order from dealing with drawing on, transferring or otherwise transacting in relation to any funds or liabilities associated with Commonwealth Bank Account No. …20 without the wife’s prior written consent.
As soon as practicable the wife provide to the husband the spare key in her possession for the Motor Vehicle 1 Registration No. ….
The parties attend a conciliation conference on 16 January 2020 at 2.00 pm.

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 Chaves & Chaves 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 925 of 2019

Ms Chaves

Applicant

And

Mr Chaves

Respondent

REASONS FOR JUDGMENT

These proceedings were heard by me this morning. The substantive proceedings before the Court are proceedings for the settlement of property and parenting orders between Ms Chaves (“the wife”), whom I will call the applicant, and Mr Chaves (“the husband”). In the context of those proceedings, the matter was listed for hearing today in respect of various interlocutory issues. In particular, as I referred to earlier today, the matter was listed as a result of an order being made for a Chapter 15 expert report from Dr E, for the purposes of the parties being able to consider the report.
As I also said earlier today, the report was only released a day or so ago, and although the husband has seen it, the wife has not. The husband anticipates making an application for interim orders in part, at least, based on that report. Those will be issues for another day.
Otherwise, the wife seeks orders including orders that the husband vacate a property at G Street, Suburb H, within seven days and that she be appointed trustee for its sale; that she sell the property, and from the net proceeds pay $200,000 to herself and place the rest in a controlled monies account.
She also seeks orders in relation to a sale of a property at D Street, Suburb J. In the event that an earlier proposed sale had not been completed, that the property be sold by herself as trustee for sale, with a particular reserve price, and with the net proceeds of sale to be held in a controlled monies account. The husband opposes those orders. I will go through in more detail the particular orders sought by the parties.

Short History

As to the short history, the wife is 31 years of age, and her husband is 44. They started living together in May 2004 and were married in 2004. They separated for the last time on 8 February 2019.
They have three children; X, who was born in 2009 and is 10 years of age; Y, who was born in 2011, and is eight years of age; and Z, who was born in 2015, who is nearly four years of age. Parenting arrangements after separation had the children spending something like equal time with each of the parents.
There was an interim hearing conducted by me on 13 June 2019, and after that hearing, I ordered that the children live with the mother, and that they spend time with the father each alternate weekend, from the conclusion of school on Friday to the commencement of school on Monday, for one half of the short school term holidays, from the completion of school on Friday to 12 noon on the middle Saturday of the holidays. Orders were also made for the parties to complete drug testing, and for a report by Dr E, as I indicated.
In December 2019, the Commonwealth Bank, which holds mortgages secured on the Suburb H property, charged a late fee in relation to a mortgage instalment, and on 2 December 2019, it contacted the parties to advise them of the failure of a mortgage payment. In the course of the hearing this morning, the wife indicated to me that the parties have not received a notice from the bank indicating that the bank intends to take action under the mortgage. I take it that although the bank might be entitled to enter as a result of a failure of a mortgage instalment, the parties have not been given notice that it has decided to do that.
The wife seeks orders in relation to her having the carriage of sale of matrimonial property, and certain orders associated with those sales. They are in the nature of mandatory injunctions, and insofar as she seeks a distribution to herself, and indeed, each of the parties seeks a distribution to themselves of funds from a sale, the nature of the jurisdiction is - property settlement.
Injunctions are made under s 114 of the Family Law Act 1975 (Cth) (“the Act”). Section 114(3) of the Act reads:
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.
The reference to the proceedings, other than proceedings to which subsection 1 applies, refers to proceedings arising under the definition paragraph (e) of matrimonial cause in s 4 of the Act. And that, in effect, refers to proceedings for the purposes of injunctions only. I am satisfied that s 114(3) is the relevant provision, and the requirement of the Court is to grant an injunction in any case in which it appears to the Court to be just or convenient to do so. In effect, the orders sought by the wife are in the nature of Mareva injunctions, in that she is seeking to crystallise and preserve the equity of the parties in two properties.
The wife is concerned, quite rightly, that mortgage instalments are not being paid, that other outgoings are not being paid, and the spectre arises of a mortgagee sale, and through that, the possibility of a sale under value. Mareva injunctions are injunctions granted by a court to preserve the subject matter of proceedings. As to the aspect of interim property settlement, the wife seeks $200,000 for herself from the net sale proceeds of Suburb H, and she seeks that payment to address her own outgoings, to restore her legal representation and to meet the shortfall in her weekly budget. She seeks no such provision for the husband, because she asserts that he has borrowed, without her agreement, an additional $250,000 secured over the Suburb J and Suburb H properties.
The legal position in relation to interim property settlement is that the Court needs a reason to make an order for property settlement in advance of, or separate from, a final property settlement order, but it need not be a compelling reason. The power would be exercised under s 79. That is to say, the rigours of s 79(2) apply as to whether it would be just and equitable that there be any property settlement, and if so, that a just and equitable settlement be identified by reference to s 79(4). Section 79(4) requires the identification of the assets of the parties and their liabilities and financial resources, an assessment of the contributions made in various ways, and a consideration of whether there should be an adjustment to the outcome based on contributions alone, by reference to the matters which include the matters referred to in s 79(4)(e), which adopts s 75(2).
Ultimately, any orders for property settlement have to be, themselves, just and equitable. Because property settlement is being considered at an early stage, and because the Court could be later required, or the parties could later be required to identify a final settlement of their property in just and equitable terms, and because the matter is being dealt with on an interim basis, the Court is required to make a conservative application of s 79. That is to say, to ensure as best as it can that any order that is made is comfortably within the range of orders that would be capable of being made on a final basis. And secondly, to ensure that there could be a subsequent adjustment for an order inappropriately or incorrectly made on an interim basis.
Turning then to the orders sought by the wife. They are set out in a case outline document on the second page of the document. The wife recently has lost her legal representation, but her orders are set out at paragraph (b) of the document. In summary, the wife seeks that, within seven days, the husband vacate the Suburb H property, that she be appointed trustee for sale and that she takes any necessary steps to cause the sale, including appointing real estate agents and lawyers, and that she sign all relevant documents for the purposes of the sale and negotiate and accept offers from potential purchasers.
She seeks that the property be offered for sale with a reserve of $1.65 million and that the net proceeds of sale be applied to discharging the mortgage, to meeting the costs of sale, including the reimbursement of any expenses that have already been paid by the parties of which they agree should be paid by meeting any costs associated with the adjustment of rates and other outgoings, in payment of the fees of B Real Estate Agents, associated with work done on a previous attempt to sell the property, payment of $200,000 to the wife by way of interim property distribution and payment of the balance into a controlled monies account operated by the wife’s former solicitors or such other firm as is nominated by the wife.
The wife seeks, within seven days, that the husband vacate the Suburb J property. She seeks that she be appointed trustee for the sale of that property and that she do all associated things for that purpose. She seeks that Suburb J be listed for sale forthwith and sold with a reserve of $700,000 and that, on completion of the sale, the mortgage be paid, sale costs be paid, there be an adjustment for rates and that the balance be paid into a controlled monies account in the name of the wife’s former solicitors.
The wife seeks that, pending the sale of Suburb H, that the husband meet the outgoings on that property, including all outgoings, including the mortgage, council rates, water rates, electricity, gas and insurances. She seeks that the husband be restrained by way of injunction from completing the purchase of the Suburb J property to the second respondent or, in the event that it has been sold to the second respondent, that the second respondent be restrained from selling the property. She seeks that the husband be restrained from transferring, selling or any way dealing with his interest in Suburb J without the prior agreement of the wife. She seeks orders to reverse or set aside any sale of the Suburb J property to the husband’s partner. She seeks that the husband be restrained from dealing with any funds in the Commonwealth Bank in account number …20 other than for the purpose of discharging the mortgage secured over the Suburb J property. She also seeks her costs.
The husband filed an Amended Response on 4 December 2019. Unfortunately, he has completed the Response as to final orders only. It is nevertheless apparent that some of the orders he seeks are on an interim basis only. He wants an order that he and the wife jointly sell the Suburb H property and that they assign a different realtor to the one that was previously engaged, as well as a different conveyancer. He too seeks that the property be listed for sale with a reserve of $1.65 million and that the net proceeds be discharged to meet two particular mortgages, the costs of this impending sale, legal costs and physical costs as well as rate adjustments and so on. He seeks that he be required to vacate the property at Suburb H after the sale but prior to settlement. He seeks a payment from the net proceeds in the sum of $9,075, which he says was agreed in June 2019. He seeks an order for the payment to him of the monies he paid Dr E and Mr F for expert witness services, being monies he paid on behalf of the wife. He seeks that the remainder of the net proceeds of Suburb H be divided equally between the parties.
As to the Suburb J property, again he seeks that it jointly be listed for sale and sold at the best price reasonably available. He seeks an order that either of the parties or their agent be permitted to bid at auction to purchase the property. He seeks the net proceeds of sale be applied to discharge any balance on the mortgage, costs of sale, make the adjustments of rates and utilities and that the balance be split evenly between the parties. He seeks an order that, pending the sale of the properties, that he and the wife meet the outgoings equally. He seeks an order the second respondent be removed from these proceedings as the sale of Suburb J to her has been rescinded. I think that is by way of a notation. The wife said she has not received any evidence of that but, hopefully, that is true.
The husband also seeks an order that the wife return to him items taken from his home, he says, on 3 October 2019, which were reported to the New South Wales Police by the husband, being USB drives containing privileged information between the husband and his lawyers. As I understand the wife’s evidence, she has a USB drive and perhaps two portable hard drives. The husband also seeks the return of his personal and work laptop computers. The wife says that there are no such items in her possession.
There are a number of agreements. The parties agree that the two properties should be sold. They agree about the reserve prices. The immediate question is who should have carriage of the sale of the Suburb H and Suburb J properties. The wife contends that the earlier sales were frustrated by the husband and that it would be too difficult for the parties to share in the carriage of the sales. The husband says that the record, to which I was not taken, will show that he cooperated in the earlier campaign for the Suburb H sale, including presenting the property appropriately for inspection.

I am inclined to adopt the wife’s proposal. Although these proceedings have only been on foot since February, the parties have made extraordinarily heavy weather of the proceedings and have had difficulty dealing with each other. For example, the Court previously made orders for the sale of the properties, and they were not sold. Next, the parties are now without legal representation and therefore there is no intermediary between them who could act as an honest broker in dealings with the relevant agent and the solicitor or conveyancer.
I should say that, although he sought a different order, the husband conceded to me that he did not have any objection to the wife retaining the agent to whom she refers in her application who did some work on an earlier sale. That being agreed will likely save the parties some money, because the wife told me that there is something of the order of 26 or 28 thousand dollars already owing to those agents in respect of the Suburb H property. One could imagine great difficulties for the agent and for the solicitors or conveyancer if they are required to negotiate with both parties.
There have been and continue to be very serious allegations of abuse made by one parent against the other. Again, today, the wife expressed some concern about her safety. She made an arrangement with the registry for a level of security in the courtroom for her. One could imagine great difficulties for the professionals trying to sell the properties if they are required to keep in touch with and negotiate with both of the parties.
For those reasons, I intend to order that the wife have carriage of the sales. Importantly, as I think the husband conceded this morning, there is no practical risk that the wife has any interest in selling either property for less than the best price obtainable for it. The same cannot be said for the husband. The wife is concerned because the husband tried to buy the Suburb H property in an earlier sale and, secondly, when the Suburb J property was passed in at an auction, he set about trying to sell the property to his current partner – at a price that the property was passed in at. That price was some hundreds of thousands of dollars less than value put on the property by the single expert and a further $200,000 less than the cost that the parties paid for the property and its renovation.
It will be necessary for the wife to keep the husband informed so that, if he is aggrieved about some significant aspect and it is practicable, he would be able to raise that with the wife and perhaps bring the matter back to court. Otherwise, enough is enough. Even though the proceedings are only recent, there have already been several hearings. There has already been an order for sale. Something has to change.
The next issue is when the husband should vacate the properties. It is not necessary that he vacate within seven days. Given the time of year, any campaign initiated by the wife, even though she wants the properties sold quickly, could not be reasonably underway, until well into January. By the same token, I do not think the husband’s view is practicable. He suggests that he remain in the Suburb H property until after exchange. I think that is just asking for trouble. In circumstances where the parties, have not only been litigating in this court but in the State courts, and where there are ongoing allegations of the most serious physical violence, it seems to me that the husband needs to be out reasonably quickly. I am going to order that he be out within six weeks from today’s date or such other time as the parties can agree on in writing.
The next issue is outgoings. As I said to the wife during submissions this morning, this is a case of me making orders about liabilities that the parties are already legally obliged to meet and where they have failed to do so. On the face of their documents, they are each running at a loss. They each say they have outgoings that exceed their weekly income. It would be not unusual for the immediate outgoings of a property occupied by a party to be met by that party, but I gather that has not been happening. The properties are now going to be sold. The effect of the orders sought by the wife will mean that the burden will fall in the proportions that the net proceeds are ultimately distributed. These are interim orders. Adjustments can be made later. I do not propose to make any orders about outgoings. As I say, the parties are already obliged to make these payments.
The wife wants an order that she be able to make all the decisions about agents and so on. As I said, the husband has belatedly agreed that the wife could retain the original agents for the Suburb H property. That is what the wife intends to do, so I do not need to say any more about that.
I will make an order, as I indicated, that the wife provide timely notice to the husband and copies of relevant documents so that he is kept up to date with the progress of the sales program and so on.
The next issue is what happens to the net proceeds of sale. The question of the fees – previously-incurred fees of the agents will hopefully be addressed by the fact that the agents in question are now going to be used on the sale of the Suburb H property. I do not need to say any more about that. If it is controversial, my intention would be that the fees of those agents in relation to the Suburb H property should be paid in the normal priority out of the net proceeds of sale. The parties asked for orders about sale. The original orders gave the wife carriage of the sale of the Suburb H property. She instructed these agents. They should have their fees paid, and if there are additional fees owing as a result of what has happened in the past, they should also be met from the net proceeds of sale.
The next issue is what should happen with the remaining net proceeds. We do not know what that will be. The husband asked me to make it plain in the orders what should happen if the property sells for less than the reserve, and my orders will not depend of the reserve being achieved. The wife wants $200,000 off the top and the rest put into a controlled monies account. The husband says whatever there is should be equally divided. At a sale price of $1.65 million and with the mortgage at about $1.1 million – the net proceeds might be of the order of half a million dollars. If the net proceeds are less than $400,000, then there will not be $200,000 to give to each of the parties.
As I indicated in relation to interim property settlement, there is to be an examination of s 79. This has been a marriage of some substance, some duration. Each of the parties point in their documents to the bones of a property settlement case. I asked the wife what she thought the husband might get and she said something like she thought she would be seeking a division that had him with 35 to 40 per cent of the property of the parties. I asked her, if the property sold for $1.65 million and there was $500,000 net in proceeds, whether it be in excess of his property claim that he receive $250,000 now (half of the proceeds), and she thought not. I asked her why I should not make that order and she said, with commendable candour, she thought that that might put him in funds to fight the case and that he might be less inclined to settle appropriately. Suffice it to say, they are not principled reasons for rejecting the compromise position sought by the husband.
The wife’s second argument is that the husband has already had $250,000 of joint funds. The evidence is confusing on this issue, but it looks like the husband raised $250,000 on a facility secured on the Suburb J property and that was through a particular account. He has deposed that the balance of that account is $129,515, but he told me that it now stands at about $159,000. If the husband borrowed $250,000, he has only really had the benefit $159,000.
It seems to me that it would represent a conservative exercise of power to make the order. I discussed briefly with the wife the potential for there being an adjustment out of superannuation if the advance that the husband is proposing was inappropriately made. In her case outline document, there is a balance sheet which asserts that the wife has $244,000 odd and the husband has $348,000 in superannuation. The wife’s response, was, “Well, yes, but the cash is important to me, so getting an adjustment out of superannuation isn’t of much benefit.”
That said, firstly, we do not know that there will need to be an adjustment. The wife seemed to concede that as much as $250,000 would be conservatively within the husband’s entitlement. Also, as things stand, more of the husband’s assets are held in superannuation, compared to the situation for the wife, so the circumstances already favour the wife to some extent on that argument. That is to say, more of the husband’s property settlement currently is tied up in superannuation than that of the wife, absent a splitting order. The wife will be free to make an argument about that later.
I think the best course is that the parties divide the net proceeds of Suburb H. It might put them in funds to get legal advice and that might have a beneficial effect on bringing the proceedings to an appropriate conclusion. The parties need to have a conciliation conference, and they need to get ready for that. I believe that legal representation would be of particular assistance given the security concerns that are apparent, which will require separate interviews and so on.
I understood there to be a concession that up to $250,000 would be a conservative property settlement for the husband. It will apparently address all of the wife’s interim concerns is she receives $200,000. There is more to come in terms, hopefully, of the proceeds of the Suburb J property and superannuation that could adjust any imbalance caused as a result of this order being overly generous.
Of course, if the net proceeds of Suburb H are more than $500,000, then the overall pool is greater and it will be easier to make any necessary adjustments.
The wife wants an injunction in relation to the line of credit drawn on by the husband. The husband told me there is already an injunction in place. Just for more abundant caution, I will make that order again. No harm is done to the husband to confirm that situation and it preserves the assets.
I have said I am not going to make orders about the outgoings. The parties already have obligations and they will correct themselves to some extent.
The husband seeks an order that the wife return the spare key to the Motor Vehicle 1 that he is using. The wife has indicated that she thinks she has that key. She just has to look for it in her house and she is willing to return it to the husband. I will make an order consistent with those concessions.
The husband wants the return of a USB stick. The wife says there are two hard drives. The husband wants the return of two laptops, a work laptop and another one. The wife says she knows of no such pieces of equipment. So I will make no order about the laptops. I will make no order about the USB stick and the hard drives. The problem there is that the USB stick apparently contains the key, the husband says, to Bitcoins which he values at $35,000. Associated with a settlement conference the parties had, the wife was provided with the digital key so that she could access the USB stick and confirm for herself the situation about the Bitcoins. The wife says that she and her lawyers were not able to access the information on that USB stick. For his part, the husband says that he suspects that the wife and her lawyers have accessed the USB stick and have repatriated the funds, or that somehow the funds have been lost. I cannot resolve that dispute. If the parties have lawyers there would be a way of sorting something out with the lawyers’ involvement. Given the security concerns reported between the parties, it is not practicable for me to design an interim process for resolving those issues. In any event, that is not my role. On the husband’s case, no further harm is done if the USB device is left where it is for the time being.

I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Loughnan delivered on 6 December 2019.

Associate:

Date: 9 January 2020