Crowley and Pappas and Anor - [2014] FamCA 241

FAMILY COURT OF AUSTRALIA

CROWLEY & PAPPAS AND ANOR

[2014] FamCA 241

FAMILY LAW – PROPERTY SETTLEMENT – Application by applicant pursuant to s 106B to set aside loan agreement made 17 March 2011 between the first respondent and his mother and to set aside mortgage executed and registered in relation to that loan agreement and consequential orders.

FAMILY LAW – PROPERTY SETTLEMENT - Adjustment of property between de facto partners which essentially determines whether the outstanding debts of the parties are carried by either the mother of the first respondent or the parents of the applicant – the first respondent is a bankrupt however there were issues of property in relation to splitting of superannuation funds.

Family Law Act 1975 (Cth)

Biltoff and Biltoff (1995) FLC 93-614
Gould and Gould; Swire Investments Ltd (1993) FLC 92-434
Halabi and Artillaga & Ors (1994) FLC 92-470
Trustee of the property of G Lemnos, a bankrupt and Lemnos and Lemnos (2009) FLC 93-394

APPLICANT:

Mr Crowley

FIRST RESPONDENT:

Mr Pappas

SECOND RESPONDENT:

Mrs Pappas

FILE NUMBER:

TVC

1044

2011

DATE DELIVERED:

15 April 2014

PLACE DELIVERED:

Hobart

PLACE HEARD:

Townsville

JUDGMENT OF:

Benjamin J

HEARING DATE:

17, 18 & 19 March 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Ms Keegan

SOLICITOR FOR THE APPLICANT:

Ross Lawyers

COUNSEL FOR THE 1ST RESPONDENT:

In person

SOLICITOR FOR THE 1ST RESPONDENT:

In person

COUNSEL FOR THE 2ND RESPONDENT:

Mr Hibble

SOLICITOR FOR THE 2ND RESPONDENT:

Kevin O’Kane & Co

Orders

Pursuant to s 106B(1) of the Family Law Act 1975 (Cth) (‘the Act’) the loan agreement executed on or about 17 March 2011 (“the loan agreement”) between Mrs Pappas (“the second respondent”) and Mr Pappas (“the first respondent”) relating to an alleged loan of three hundred and eight six thousand dollars ($386,000) be set aside.
Consequential orders following Order 1:-
a.The mortgage between first respondent as mortgagor and the second respondent as mortgagee dated 17 March 2011 and 4 April 2011 (“the mortgage”) secured over the property 2 P Street (Lot … on RP… in the county of … Parish of … title reference …) (“P Street”) be set aside.
b.Within twenty one (21) days from the date of this order the first respondent (and/or the Trustee of his Bankrupt Estate) and the second respondent sign all documents and all authorities necessary to cause the mortgage to be discharged.
By way of property settlement it is declared and ordered that the first respondent and Mr Crowley (“the Applicant”) are the owners of P Street in equal shares as tenants in common (subject to the first mortgage to the Westpac Banking Corporation).
Consequential orders following Order 3:-
a.In the event that the Westpac Banking Corporation continue exercising its power of sale as first mortgagee in possession to sell P Street; the applicant and first respondent (and/or the Trustee of his Bankrupt Estate) shall within twenty one (21) days of the date of this order sign all documents and all authorities to cause the net proceeds…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Keep reading for free

Create a free CaseChat account to read Crowley and Pappas and Anor and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2014] FamCA 241
Decision Date

CaseChat Overview and Summary

The Family Court of Australia considered an application by Mr Crowley against Mr Pappas and his mother, Mrs Pappas. Mr Crowley sought property adjustment orders following the breakdown of his de facto relationship with Mr Pappas. A key element of the dispute involved Mr Crowley's application under s 106B of the Family Law Act 1975 (Cth) to set aside a loan agreement and a registered mortgage executed between Mr Pappas and his mother, Mrs Pappas, shortly after the parties' separation. Mr Pappas had also been declared bankrupt during the proceedings, and his Trustee in Bankruptcy chose not to participate.

The court was required to determine several legal issues. Firstly, it needed to ascertain whether the loan agreement and mortgage between Mr Pappas and Mrs Pappas should be set aside. Secondly, the court had to determine the legal and equitable interests in the parties' property, including superannuation, available for adjustment, particularly in light of Mr Pappas's bankruptcy. Finally, the court had to consider whether to order a split of Mr Pappas's superannuation entitlements and how to address the outstanding business debts secured by personal guarantees from Mr Crowley and Mr Pappas's parents.

In its reasoning, the court found that while a de facto relationship existed between Mr Crowley and Mr Pappas, the advances made by Mrs Pappas to Mr Pappas from December 2010 onwards were loans, but they were unsecured. The court did not accept that earlier alleged advances, including those for medical expenses and unspecified amounts over many years, constituted loans for which Mr Pappas was liable, treating them instead as financial assistance or contributions. The court also considered the contributions of both parties to various properties and the business debts, noting that Mr Crowley sought to prioritise these debts to protect his parents who had provided guarantees.

The court made orders setting aside the loan agreement and mortgage between Mr Pappas and Mrs Pappas. It declared that Mr Crowley and Mr Pappas were equal tenants in common of the property at 2 P Street, subject to a first mortgage to Westpac Banking Corporation. In the event of a sale of P Street by the mortgagee, the net proceeds were to be divided equally between Mr Crowley and the Trustee in Bankruptcy of Mr Pappas. Mr Crowley was then directed to apply his share towards specific business debts. The court also declared that Mr Crowley and Mr Pappas were equal tenants in common of Telstra shares, with Mr Crowley appointed trustee for their sale, and ordered the net proceeds to be divided equally. Finally, the court made orders regarding the division of household contents and superannuation entitlements between Mr Crowley and Mr Pappas.

Orders