Choate and Guss

[2019] FCCA 3233

FEDERAL CIRCUIT COURT OF AUSTRALIA

CHOATE & GUSS [2019] FCCA 3233

Catchwords:
FAMILY LAW – Property – sale of property – where property market in Darwin is weak and continues to be weak – where reasonable offer to purchase by the applicant’s mother was rejected by the respondent – where prospects of more generous offer by third parties unlikely – where prospect of sale by auction also unlikely – where taking possession by bank imminent – property ordered to be sold to applicant’s mother.

Legislation:

Family Law Act 1975 (Cth)

Applicant: MS CHOATE

Respondent: MR GUSS

File Number: DNC 453 of 2018

Judgment of: Judge Young

Hearing date: 24 October 2019

Date of Last Submission: 24 October 2019

Delivered at: Adelaide

Delivered on: 24 October 2019

REPRESENTATION

Counsel for the Applicant: Ms Cooper

Solicitors for the Applicant: Maleys Barristers & Solicitors

Counsel for the Respondent: No appearance

Solicitors for the Respondent: No appearance

ORDERS

J Street, Suburb A Property

1. That the property at Volume: … Folio: …, otherwise known as J Street, Suburb A (“J Street, Suburb A”) shall be sold to Ms B for the sum of $255,000.

2. That the Registrar of the Darwin Registry of the Federal Circuit Court is hereby appointed under Section 106A of the Family Law Act 1975 to sign or execute all documents to affect the sale of the J Street, Suburb A property to Ms B, including to sign all documents to affect the discharge of the mortgage to C Bank, loan ….

3. That in the event Ms B is no longer willing or able to purchase the J Street, Suburb A property, the J Street, Suburb A property shall remain listed for sale by private treaty.

4. That the Applicant and the Respondent shall do all acts and things and sign all necessary documents to affect the sale of the J Street, Suburb A Property, and for that purpose the following shall apply:

   (4.1)The J Street, Suburb A Property shall remain listed for sale by private treaty with D Realty or in the event D Realty are not willing or able to sell the property or the Applicant no longer seeks to engage D Realty, the J Street, Suburb A property shall be listed with such real estate agent as nominated by the Applicant.

   (4.2)The list price and the sale price of the J Street, Suburb A Property shall be such amount as nominated by the Applicant.

   (4.3)The parties are to co-operate in every way with the real estate agent in relation to the marketing of the J Street, Suburb A Property for sale including making access readily available, allowing inspection of the J Street, Suburb A Property at all times reasonably requested by the agent and ensuring that the J Street, Suburb A Property is clean, neat and in good order at the time of inspection by any prospective buyer.

   (4.4)That the parties shall execute the contract of sale and all other documents necessary to complete the sale of the property including all transfer documentation forthwith upon its submission to them by the agent or their solicitor.

   (4.5)The contract of sale shall provide for completion within 30 days after the date of the contract.

   (4.6)The proceeds of sale of the property shall be paid in the following manner and priority

   (a)Payment of the agent’s commission and advertising or other expenses, if any, payable on the sale;

   (b)To pay the C Bank … and pay any arrears; and

   (c)Any proceeds or outstanding debt to be divided equally between the parties

   (4.7)That the parties shall execute the Discharge of Mortgage and any other documents required to affect the sale of the J Street, Suburb A property, the transfer of the J Street, Suburb A property to the purchaser and the discharge of the mortgage to C Bank.

5. That each party shall do all acts and things reasonably required by the other including the signing or execution of all necessary documents to give effect to the provisions of Order 4 within 7 days of being requested to do so.

6. If either party refuses or neglects to sign or execute and return a document within 7 days of a written request to do so then the Registrar of the Darwin Registry of the Federal Circuit Court is hereby appointed under Section 106A of the Family Law Act 1975 to sign or execute such document on behalf of that party upon lodgement of such document and the filing of an affidavit of a solicitor on behalf of the requesting party as to the said neglect or refusal.

E Street, Suburb F Property

1. That the Registrar of the Darwin Registry of the Federal Circuit Court is hereby appointed under Section 106A of the Family Law Act 1975 to sign or execute all documents as are necessary to:

   (a)transfer to the Applicant at the expense of the Applicant all of the Respondent’s right, title and interest in the property situate at E Street, Suburb F, in the Northern Territory and more particularly described as E Street, Suburb F Volume: … Folio … (“the E Street, Suburb F property”).

   (b)effect the Respondent’s release as a borrower in relation to C Bank, loans … and ….

2. In the event, a discharge of the mortgage over the E Street, Suburb F property is required in order to release the Respondent as a borrower in relation to C Bank, loans … and …, the Registrar of the Darwin Registry of the Federal Circuit Court is hereby appointed under Section 106A of the Family Law Act 1975 to sign or execute all documents as are necessary to effect a discharge of the mortgage, with the Applicant to pay the costs of discharging and refinancing the mortgage into the Applicant’s sole name, including but not limited to any mortgage application fees on any new loan.

3. That in the event the Applicant is unable to comply with orders 7 and 8 herein the Registrar of the Darwin Registry of the Federal Circuit Court is hereby appointed under Section 106A of the Family Law Act 1975 to sign or execute all documents as are necessary to affect the sale of the E Street, Suburb F property and for that purpose the following shall apply:

   (8.1)The E Street, Suburb F Property shall be listed for sale by private treaty with such real estate agent as nominated by the Applicant.

   (8.2)The list price and the sale price of the E Street, Suburb F Property shall be such amount as nominated by the Applicant.

   (8.3)The parties are to co-operate in every way with the real estate agent in relation to the marketing of the E Street, Suburb F Property for sale including making access readily available, allowing inspection of the E Street, Suburb F Property at all times reasonably requested by the agent and ensuring that the E Street, Suburb F Property is clean, neat and in good order at the time of inspection by any prospective buyer.

   (8.4)The contract of sale shall provide for completion within 30 days after the date of the contract.

   (8.5)The proceeds of sale of the property shall be paid in the following manner and priority:

   (a)To discharge mortgage to C Bank, loans … and 3567401 and pay any arrears;

   (b)Payment of the agent’s commission and advertising or other expenses, if any, payable on the sale; and

   (c)The remainder to the Applicant.

G Street, Suburb H Property

1. That the Respondent shall relinquish all his rights in relation to Lot … Town of K Volume: … Folio: …, otherwise known as G Street, Suburb H, (“the G Street, Suburb H property”) to the Applicant.

2. That the Registrar of the Darwin Registry of the Federal Circuit Court is hereby appointed under Section 106A of the Family Law Act 1975 to sign or execute all documents as are necessary to affect the Respondent’s release as a borrower in relation to C Bank ….

3. That in the event, a discharge of the mortgage over the G Street, Suburb H property is required in order to release the Respondent as a borrower in relation to C Bank …, the Registrar of the Darwin Registry of the Federal Circuit Court is hereby appointed under Section 106A of the Family Law Act 1975 to sign or execute all documents as are necessary to effect a discharge of the mortgage with the Applicant to pay the costs of discharging and refinancing the mortgage into the Applicant’s sole name, including but not limited to any mortgage application fees on any new loan.

4. That the applicant arrange for a copy of the order made today to be served on the respondent by email as soon as reasonably practicable.

5. That all outstanding applications be dismissed.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT ADELAIDE

DNC 453 of 2018

MS CHOATE

Applicant

And

MR GUSS

Respondent

REASONS FOR JUDGMENT

Ex-Tempore

1. These reasons for judgment were delivered orally. They have been corrected from the transcript. Grammatical errors have been corrected and an attempt has been made to render the orally delivered reasons amenable to being read.

2. This is an application in the case by the applicant wife seeking in part to give effect to consent orders made on 29 January 2019 for the sale of a property at J Street, Suburb A (“the J Street, Suburb A property”) and for the transfer of two other properties, the “E Street, Suburb F property” and the “E Street, Suburb F property”, to the wife. The E Street, Suburb F and G Street, Suburb H properties have minimal or no equity and the wife was apparently prepared to take the properties, hope for the best and sit out the market downturn in Darwin.

3. The J Street, Suburb A property has, I am told, some equity in it and was apparently listed for sale soon after the orders made on 29 January. The affidavit of the wife dated 17 October deposes to the difficulties in selling the J Street, Suburb A property. It says that it has been listed for sale since about January with an agent initially for $350,000 but now it is presently listed for anything over $290,000. The wife’s mother has offered to buy the property for $255,000. This is in circumstances where there are arrears of $50,000 on the mortgage and the bank has threatened to take possession and sell the property, a threat that would appear to be a real one given the amount of arrears.

4. When the wife approached the husband on 24 September with this proposal his answer was as follows as appears at page 53 of 53 of the annexures of the affidavit of the wife:

   Hi there. I’ve spoken to my partner. We have both agreed that we want J Street, Suburb A (sic) [that is, the J Street, Suburb A property] to go ahead for auction. The bank can take the cost of auction from the money they get for the unit. I’m not accepting the offer from Ms Choate’s mother for $250,000. You cannot sign on behalf of me to accept that offer.

5. It goes on:

   Once the unit has been sold the bank can then take the E Street, Suburb F property [that is, the E Street, Suburb F property but I am told all the properties are cross-secured for the bank debts]. The bank can take the E Street, Suburb F property as I will not be signing property over to Ms Choate, as it will be in my name for a while longer. If the bank doesn’t take E Street, Suburb F I will be going bankrupt, and myself and Ms Choate will then go bankrupt, and the E Street, Suburb F house will be sold to pay off all the debts.

   That is the husband’s response.

6. I should also mention that there was an email from the wife’s solicitor on the previous day, outlining the offer of $255,000.

7. On 8 August, early in the morning, the husband emailed the real estate agent handling the sale and said:

   Hi, is there a way that we can wait and see what other offers come about, as I don’t agree to the first offer. I think I’ll wait now and see what three offers they can get [and something is obscured, and]… it takes that little bit longer. I’ve been talking to family and friends and a few people in the real estate business, and they’ve all said I should wait till we get at least three offers, so I won’t be signing anything. Sorry.

8. The real estate agent replied two hours later, at 6.57 am:

   Hi Mr Guss. There are a number of units on the market in Suburb A. A number of these have been on for in excess of 1000 days. So I would like to meet with you to discuss your concerns, as I’m not sure you have the flexibility, nor ability, to wait for “three” offers to be received. We are not in a hot sales market and [a word is left out there] highly unlikely to ever occur. After nearly six months on the market we have had two viewings. I understand that there is pending legal action and a court order detailing what must occur. I can say from experience, if they take possession, the bank will sell for whatever they can get. I have three currently, and it is not a great place to be for the sellers, as the bank will continue to chase you and your credit rating is gone. If this is forced to auction this will cost $5000, minimum, as you are aware. And we have only had this on the market for six months, and had two people view based on market activity. They are likely to set a reserve of 180,000k and that is if they even get any bidders, so costs a large amount for no outcome. When you currently have an approved person willing to buy.

9. The email then goes on to list sales of apparently comparable units in Suburb A. The husband was served with this application on 18 October and on 22 October and according to Ms Cooper, she received an acknowledgement by email of its receipt. On 23 October Mr Guss, or someone on his behalf, sent an email to Ms Cooper saying “the court can call Mr Guss on …”. My associate called that number twice this morning before I came down to the bench and she told me the call went through to message bank. I asked her to call again while I was in court and she confirmed again that the call went through to message bank.

10. I am satisfied that there is no real likelihood of any offer being received for this property over $290,000. Mr Guss’ attitude is simply sticking his head in the sand and failing to constructively negotiate with the wife in order to solve what is a difficult situation caused by a depressed housing market in Darwin. I am satisfied, given his uncooperative and obstinate refusal to try to find an effective compromise, that I am really left with two options.

11. That is, leaving things as they are, and I am satisfied on the material in front of me that if things are left as they are the bank is likely to take possession of the property and likely to force a sale of the property and experience, as pointed out by the real estate agent, suggests in those circumstances usually a very poor sale price is achieved. In all the circumstances I think that the fairest outcome for the parties is the one proposed by the wife, which will see her mother purchase the property for $255,000. Presumably there may not be any agent’s fees in that circumstance, depending on the nature of the sales contract but I do not have to concern myself with that.

12. I am also satisfied that some figure in the region of $5,000 would be incurred in auction fees even if the property were to be unsold. So I consider that the outcome is probably a reasonable one.

13. I make the orders that the applicant seeks.

I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of Judge Young

Date:  8 November 2019