CHEETHAM & CHEETHAM

[2019] FamCA 510

FAMILY COURT OF AUSTRALIA

CHEETHAM & CHEETHAM [2019] FamCA 510

FAMILY LAW – PROPERTY – Application to vary orders – where wife has failed to comply with orders of the Court – whether wife should pay penalty interest – whether there are justifying circumstances for wife to pay the husband’s costs – default sale of former matrimonial home – indemnity costs.

Family Law Act 1975 (Cth) s 117(2A)

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Limousin & Limousin (Costs) (2007) 38 FamLR 478

APPLICANT: Mr Cheetham

RESPONDENT: Ms Cheetham

FILE NUMBER: MLC 1499 of 2016

DATE DELIVERED: 2 August 2019

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Hartnett J

HEARING DATE: 4 July 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Dellidis

SOLICITOR FOR THE APPLICANT: Conlan Cummings Lawyers

THE RESPONDENT: In Person

Orders

1. Within seven days of this date:-

   (a)the wife pay to the husband the sum of $11,331.37 by way of interest in relation to the payment due on 27 December 2018 pursuant to orders made 29 August 2018, in accordance with the penalty interest rate prescribed by the Family Law Act 1975 (Cth), calculated from 27 December 2018 to 27 June 2019;

   (b)the wife fulfil her obligations pursuant to order 3(b) of the orders made 29 August 2018 and refinance in her sole name the Commonwealth Bank of Australia mortgage encumbering the property situate at and known as C Street Suburb D in the State of Victoria (‘the real property’) and the Viridian line of credit also secured against the real property and contemporaneously with such refinance, the husband transfer his interest in the real property to the wife at her expense pursuant to order 3(a) of the orders made 29 August 2018; and

   (c)the wife pay to the husband the costs of and incidental to his initiating application filed 1 March 2019 on an indemnity basis, fixed in the sum of $31,946.17.

2. In default of the wife’s compliance with each and every of the provisions of order one herein there be forthwith a sale of the real property and to give effect to that sale the husband have the conduct of the sale and:-

   (a)the husband appoint B Company as selling real estate agent (‘selling agent’) to sell the real property on such terms and conditions as recommended by the selling agent with a reserve of $1,710,000 or such other reserve as agreed in writing between the parties;

   (b)the husband appoint a lawyer and/or conveyancer to handle the sale (‘conveyancer’); and

   (c)the husband liaise with the selling agent to arrange inspections of the real property by prospective purchasers.

3. For the purposes of the default sale the wife co-operate with all reasonable requests of the selling agent so as to facilitate the marketing of the real property for sale, including but not limited to:-

   (a)forthwith providing the selling agent with a key to the real property and allowing access to the selling agent and/or prospective purchasers upon 48 hours’ notice;

   (b)maintaining the property in a neat and suitable condition for inspection by prospective purchasers.

4. The wife is to do all acts and things and execute all such documents as are necessary to give effect to the sale of the real property and in default of the wife doing all acts and things and executing all such documents as are necessary to give effect to these orders within 72 hours of a request made of her to do any act or sign any document, a Registrar of the Family Court of Australia at Melbourne be appointed pursuant to s.106A of the Family Law Act 1975 (Cth) to execute all such documents in the name of the wife in default and to do all such acts and things necessary to give validity and operation to the said orders.

5. The husband have liberty to apply to have the matter re-listed at short notice, for the purpose of seeking further orders and directions in relation to the default sale and enforcement of these orders.

6. The proceeds of sale of the real property be distributed as follows:-

   (a)in payment of the agent’s commission, advertising and marketing expenses, and expenses associated with any hiring of furniture and chattels;

   (b)in payment of all monies due and owing in respect of the mortgage and any mortgage arrears secured against the real property;

   (c)in discharge of the Viridian line of credit secured against the real property;

   (d)in payment to the husband of any amount outstanding pursuant to order one herein;

   (e)to discharge all and any arrears payable towards the rates and other outgoings of the real property; and

   (f)the balance then remaining to the wife.

7. To the extent necessary orders three, four and five of the orders made 29 August 2018 are varied by these orders.

BY CONSENT

1. The husband be restrained from accessing or attending the real property.

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 Cheetham & Chetham 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 MELBOURNE

FILE NUMBER: MLC 1499 of 2016

Mr Cheetham

Applicant

And

Ms Cheetham

Respondent

REASONS FOR JUDGMENT

1. Before the Court is an application filed by the husband on 1 March 2019. In support of that application the husband filed an affidavit of evidence filed 1 March 2019 and a financial statement filed 6 March 2019. He relied on the evidence contained within those documents.

2. The husband amended the final orders sought by him at trial and they were as contained in the ‘Minute of Orders Sought’ handed up to the Court on 4 July 2019. It is those orders which the Court substantially makes this day.

3. The wife filed a response to initiating application on 10 May 2019. She subsequently amended the final orders as sought by her as contained in the ‘Case Outline’ document filed by her on 3 July 2019 and as further amended during the running of the trial. The orders sought by her were as follows:-

   1. The wife continues to occupy and retain exclusive possession of the former matrimonial home until such time as the former matrimonial home is sold and settled and is to maintain the property is [sic] neat and tidy condition.

   2. The wife be granted 30 days to provide evidence to the husband of unconditional finance for the purchase of the former matrimonial home.

   3. The wife be granted 60 days to effect settlement of the former matrimonial home.

   4. The husband doing [sic] all things and sign all documents necessary to effect transfer of title, right, and interest to the former matrimonial home where unconditional approval is obtained and settlement effected.

   5. The Husband be restrained from accessing or attending the former matrimonial home.

   6. The Husband be restrained from committing family violence against the Wife.

   Default sale provision

   7.  In the event of default of settlement within 60 days, within 7 days the wife to appoint an estate agent of her choice for sale of the former matrimonial home by public auction within 90 days.

   8. That the proceeds of sale be distributed as follows:

   a. Payment of the agent’s commission and advertising expenses and legal expenses of the sale;

   b. Payment of all monies due and owing in respect of the home loan secured by mortgage against the property and all rates and levies;

   c. Payment of all monies to discharge the Viridian line of credit secured against the property.

   d. The wife retain the proceeds of the sale to the exclusion of the husband.

   9. That each party bear their own costs of and incidental to this Application.

4. Order five of the orders sought by the wife is an order the husband consented to and thus the Court makes such order by consent of the parties.  There was on the evidence no particular need for the making of such order given the Court accepts the husband has not accessed the property since September 2015, and has no desire to do so hereafter.

5. The wife relied upon an affidavit of evidence filed by her on 10 May 2019. The wife deposed to being “employed as a [Administrative Officer]”.[1] The wife did not disclose in her affidavit evidence her income receipt. There was however tendered in evidence as “Exhibit H1” a copy of the wife’s application to change the husband’s child support assessment in relation to the parties’ son, E born in 2002. E is now 17 years and five months of age. The wife, in that change of assessment application, estimated that her income would not reach or exceed the income earned by her in the previous financial year of $113,588.

   [1] Affidavit of Ms Cheetham sworn 9 May 2019, [4]

6. The husband is employed as a professional with K Ltd. He is in receipt of income of $3,688 gross each week (a total of $191,776 per annum gross). As part of his weekly expenditure he incurs $425 in rental payments; $302 in child support payments; and an estimated $402 in additional “miscellaneous expenses and child support” in respect of the parties’ son E and the wife.

7. The real property the subject of the relevant earlier orders as hereafter described is the former matrimonial home situate at C Street Suburb D in the State of Victoria (‘the former matrimonial home’). The wife and parties’ son have continued in occupation of the home since the parties’ separation in mid-2015 at which time the husband vacated the former matrimonial home.  The wife has made, in the intervening years, interest only repayments in respect of the mortgage encumbering the real property. The husband has made payments of rent.

Relevant History

1. Following a trial hearing on 14 and 15 August 2017, final property orders were made by her Honour Justice Cleary on 15 March 2018. Those orders were as follows:-

   (1) That within 42 days of the date of these orders both parties take all necessary steps and execute all necessary documents to appoint B Company Real Estate, J Street, Suburb D to cause the property situated at C Street, Suburb D, in the State of Victoria  (“the former matrimonial home”) and being the whole of the land in title reference Volume … Folio … to be sold by auction at the earliest possible date at a reserve price of $1,660,000 or as otherwise agreed between the parties and that the proceeds of the said sale be disbursed as follows:

   (a) Payment of agent’s commission and advertising expenses and legal expenses of the sale;

   (b)  Payment of any money due and owing to the mortgagee, rates, levies and any other encumbrance;

   (c)  The net balance to be divided between the parties as follows:

   (i)  53.5 per cent to the applicant wife; and

   (ii)  46.5 per cent to the respondent husband.

   (2) That pending the sale of the former matrimonial home the applicant may continue to occupy the home and shall maintain the property in a neat and tidy condition and facilitate inspections as arranged by the agent for sale.

   (3) That within 28 days of the date of these orders each party shall take all necessary steps and execute all documents to sell all shares held in the joint names of the parties including the H Bank Shares shares and apply the proceeds of sale as follows:

   (a)  To meet all costs of sale and retention for tax (including provision for CGT);

   (b)  To discharge the Commonwealth Bank of Australia investment loan;

   (c)  The net balance, if any, to be divided equally.

   (4)  That each party retain the superannuation interest in the name of that party.

   (5)  That each party otherwise retains those items of personalty currently in his and her possession.

   (6)  In the event that any party refuses or neglects to comply with any provision of these orders:

   (a) A Registrar of the Family Court of Australia is hereby appointed pursuant to section 106A of the Family Law Act 1975 to execute all deeds and documents in the name of the party in default and do all things and acts necessary to give validity and operation to these orders;

   (b)  The defaulting party pay all reasonable costs incurred by the other party for the purpose of exercising this order.

2. The wife has always sought to retain her ownership of the former matrimonial home and to secure a transfer of the husband’s ownership to her. Accordingly, the wife filed a Notice of Appeal on 12 April 2018 against the orders of Cleary J and sought a stay with respect to the operation of such orders. On 15 June 2018, the Court ordered as follows:-

Stay Application:

1. That the application for a stay of operation of orders made on 15 March 2018 (“the March 2018 Orders”) is granted on the following condition:

1.1 That the wife pay to the husband the sum of $145,000.00 within 21 days of the date of these Orders.

Costs Application:

2. That the wife pay to the husband, costs on an indemnity basis of $4,572.00 in respect of the hearing and its precedents on 26 April 2018.

3. No order as to costs in respect of the hearing on 17 May 2018.

4. Any application in respect of costs arising from the hearing of 7 June 2018 is to be made within 28 days of the date of these Orders.

5.  Costs arising from the trial in August 2017 are to be stood over to a date to be fixed after the hearing and determination of the pending Appeal.

(emphasis in original)

1. The wife’s evidence in these proceedings as to her attempts to obtain further borrowings in order to comply with order 1.1 of the orders made on 15 June 2018 is relevantly as follows:-

   I obtained loan approval form [sic] both CBA and Bank of Melbourne on 22 April 18 and 23 April 18 for $1,105,000 and $1,100,000 respectively. The loan approval could not be fianalised [sic] earlier due to the pending payout of the CBA joint viridian loan for $180,000 on 10 April 2018. This joint facility was restricting my full borrowing capacity to refinance the loan. Once the CBA Viridian loan was paid out with the proceeds from the joint H Bank investment… I was able to complete my loan application for the required settlement amount. Complete documents and statements were provided to both CBA and Bank of Melbourne for assessment by the banks’ lending teams. All required information had been submitted to the banks to finalise the loan approval. Both CBA and BOM provided loan approval around 23 April 2018 and valid for 6 months. Loan approvals were conditional upon the property valuation, approval of mortgage insurance (if required) and no significant change in financial position. [2]

   [2] Affidavit of Ms Cheetham sworn 9 May 2019, [11]

2. The Court notes in respect of the above evidence that on 26 April 2018, in a telephone hearing of the stay application, Cleary J was advised by the wife’s Counsel that he was in possession of a letter from the Commonwealth Bank of Australia approving the wife borrowing an amount of $1,105,000. On that basis the stay application hearing was adjourned to 7 June 2018. In fact what the wife had obtained, was conditional approval only. That conditional approval was in respect of a 30 year loan at a then interest rate of 4.52% with repayments of principal and interest of $5,615 per month (a total of $67,380 per annum).

3. The wife did not complete the part-property payment of $145,000 to the husband (as set out in the orders in paragraph 9 above) until 10 July 2018, some few days late.

4. On the hearing of the wife’s appeal on 29 August 2018, orders were made by consent by his Honour Justice Kent as follows:-

   1. That Orders 1, 2 and 5 of the Honourable Justice Cleary made on 15 March 2018 be set aside.

   2. That the wife pay the husband the sum of $303,000 (“the Payment”) within 120 days from the date of orders being made (“the Date”).

   3. That contemporaneously with the Payment:

   a. The husband transfer his interest in the property at C Street, Suburb D (“the former matrimonial home”) to the wife at her expense; and

   b. The wife shall refinance in her sole name the Commonwealth Bank mortgage encumbering the former matrimonial home and the Viridian Line of Credit also secured against the former matrimonial home.

   4. In default of the Payment, the parties must within 42 days of the default take all necessary steps and execute all necessary documents to appoint B Company Real Estate, J Street, Suburb D, to cause the former matrimonial home to be sold by auction at the earliest possible date at the reserve price of $1,740,000 or as otherwise agreed between the parties and that the proceeds of sale be distributed as follows:

   a) Payment of the agent’s commission and advertising expenses and legal expenses of the sale;

   b) Payment of all monies due and owing in respect of the home loan secured by mortgage against the property and all rates and levies;

   c) Payment of all monies to discharge the Viridian line of credit secured against the property;

   d) The net balance to be divided between the parties as follows:

   i.  46.5% of the sale proceeds calculated after all payments made pursuant to 4(a) and 4(b) above the to the Respondent Husband, less $145,000 which shall be paid to the wife having already paid that sum to the Husband; and

   ii.  The balance to the wife, plus $145,000 from the husband’s share of the sale proceeds as referred to in 4(d)(i);

   e) That the Applicant Wife shall pay to the Respondent Husband interest on the Payment pursuant to the penalty interest rate prescribed by the Family Law Act 1975 from the Date until settlement of the sale.

   5.  That pending the sale of the former matrimonial home the Applicant Wife may continue to occupy the home and shall maintain the home in a neat and tidy condition and shall facilitate inspections as arranged by the agent for sale.

   6. That unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these orders:

   (a) each party be solely entitled to the exclusion of the other to all other property (including choses in action) in the possession of such party as at the date of these orders;

   (b) each party retain their respective bank accounts, trust interests, share portfolios (if any) to the exclusion of the other;

   (c) all funds held in any joint bank account are to be retained by the Husband and the parties shall do all acts and sign documents necessary to close the account within 30 days from the date of these orders.

   (d) insurance policies remain the sole property of the owner(s) named thereon;

   (e) each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and

   (f) any joint tenancy of the parties in any real or personal estate is hereby expressly severed.

   7. That each party bear their own costs of and incidental to the Appeal.

5. The wife failed to comply with the orders of 29 August 2018 in that she failed to make the required payment of $303,000 to the husband by the due date being 27 December 2018. Further the wife refused to sign documents necessary to appoint B Company as selling agents on 7 February 2019 and to proceed with the default sale as provided for in order four of the orders made 29 August 2018.

6. On 27 June 2019, being six months after the Court ordered date for payment and some almost four months after the filing of the husband’s application in these proceedings, the wife made the payment to the husband in the sum of $303,000 being the quantum provided for in order two of the orders made 29 August 2018.

7. The wife has failed and continues to fail to discharge and refinance the joint liabilities of the parties secured against the former matrimonial home. The wife failed to pay penalty interest as ordered on 29 August 2018 (order 4(e)) from 27 December 2018 to 27 June 2019. Compliance with that order remains outstanding.

8. The wife’s evidence as to her breach of the 29 August 2018 orders made by Justice Kent is:-

   Due to being made redundant by my former employer XYZ Pty Ltd on DDMMYY, I was unable to refinance the existing mortgage on the property at C Street Suburb D (the Matrimonial Home). I consequentially breached the 29 August 2019 [sic] Orders as I was unable to make the required payment of $303,000 and refinance the exisisting [sic] mortgage by 27 December 2019 [sic].

   [Mr Cheetham] refused a short extention [sic] to the end of January 2019, therefore I now seek to clarify and vary the Orders pertaining to the default sale (orders 4 and 5) and to protect E from direct or indirect family violence during the sale period. [3]

   [3] Affidavit of Ms Cheetham sworn 9 May 2019, [7].

Consideration

1. The matters to be determined by the Court are as follows:-

   a)whether the wife should pay six months’ penalty interest to the husband from 27 December 2018 until the payment of $303,000 was made by her on 27 June 2019;

   b)whether there are justifying circumstances for the wife to pay the husband’s costs associated with the filing of his initiating application and if so, whether that ought be on an indemnity basis;

   c)whether there ought be an immediate default sale of the property or whether there is any basis to further delay the husband being released from the parties joint liabilities;

   d)whether there ought be a change to the terms of the second orders regarding the default sale; and

   e)whether there is any evidentiary basis for any injunctions being made against the husband save that the husband has consented to. In this regard, this matter is readily dealt with. There is no basis at all for the making of such an order as sought by the wife and she provided no relevant evidence in that regard. 

2. The husband has experienced severe hardship as a result of the wife’s failure to comply with orders of the Court. That failure has resulted in significant delay being occasioned to the husband in his receipt of monies necessary to re-establish himself. The wife has remained living in the former matrimonial home since the parties separated on 22 May 2015. The husband has been living in rental accommodation since May 2015 – a period of over four years. The husband has lost opportunities to enter into the property market as a result of waiting as he did to obtain a cash payment or proceeds of sale. He has lost bank interest due to an inability to invest the funds due to him. The husband has incurred significant legal costs in the wife’s appeal, stay application and her breach of the 29 August 2018 orders. In respect of these enforcement proceedings the husband has entered into a Costs Agreement with his solicitors pursuant to which he, by trial, had incurred a liability of $31,946.17.

3. The parties agree that in the instance of a default sale, the reserve price should be $1,710,000. The wife agrees that she will, in those circumstances provide access to the selling agent within 48 hours.

4. The wife’s evidence was that she has continued to seek to obtain a loan for the re-financing and transfer of the former matrimonial home into her sole name. She engaged a broker from L Pty Ltd to obtain such loan and gave evidence that an application was being made to M Pty Ltd and that by 1 August 2019 formal approval with respect to such loan would be obtained. There was no independent evidence from M Pty Ltd to support the wife’s claims. The wife provides no proof of unconditional finance approval. She has been attempting to refinance the parties’ joint liabilities since April 2018. The wife has now had that further period before delivery of these reasons and the making of these orders.

5. The wife’s liabilities which are required to be refinanced, as secured over the former matrimonial home, are in the sum of $1,131,000. There are mortgage arrears of $15,886 and rate payment arrears in respect of the real property of $7,538. There is to be also considered, her liabilities after the making of these orders.

6. The Court concludes that a default sale of the former matrimonial home must be immediately proceeded with. The evidence of non-compliance with Court orders by the wife is such that the husband must have control of the sale. The Court has no confidence that the wife would undertake that process. The giving to the wife a further seven days before sale is not an indication, as the wife would have it, that there is no default sale triggering payment of penalty interest. A default sale has been ordered well prior to now, by virtue of the terms of the orders of 29 August 2018, and precluded by the wife’s conduct. The wife’s conduct has caused prejudice to the husband over a lengthy period.

7. Penalty interest has been provided for in orders of the Court and is payable. The wife had the benefit of not incurring further borrowings which needed repayment and the husband suffered the opportunity costs of having funds available to him as determined by the Court.

8. Costs are a discretionary matter and the Court is to look to those matters as set out in s.117(2A) of the Family Law Act 1975 (Cth). The matters which the Court should consider include the conduct of the parties to the proceedings and whether the proceedings were necessitated by the failure of a party to the proceedings to comply with the previous orders of the Court.[4] The authorities are clear. For the usual rule of costs being calculated on a party/party basis to be departed from, exceptional circumstances must exist.[5] The circumstances in these proceedings plainly justify an order for indemnity costs being made.

   [4]Family Law Act 1975 (Cth), ss 117(2A)(c) and (d).

   [5] Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; Limousin & Limousin (Costs) (2007) 38 FamLR 478.

9. These proceedings have been necessitated by the wife’s failure to comply with orders of the Court. Without the proceedings, the husband has been unable to achieve that which it was reasonable for him to expect – a compliance by the other party to litigation with Court orders. A costs order should follow for that reason if none other.

10. Further, there has been inordinate delay on the wife’s part resulting in a frustrating inability for the husband to move forward in his life with the necessary means to do so. Cleary J ordered a sale of the former matrimonial home by orders of 15 March 2018. Five and a half months later the husband agreed to provide the wife with an opportunity to purchase his interest subject to releasing him from the parties’ joint liabilities. The wife has never had the capacity to do so. The husband’s apportionment of the net proceeds of sale of the former matrimonial home was 46.5 per cent as provided by the orders of Cleary J and 46.5 per cent as provided by the orders of Kent J in the event of a default sale. The husband should not have the monies received by him further depleted by any payment of his legal costs to enforce compliance. An indemnity costs order is sought and shall be payable.

I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hartnett delivered on 2 August 2019.

Associate:

Date:  2 August 2019