DAULTREY & TAVENER
[2020] FCCA 399
•11 March 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| DAULTREY & TAVENER | [2020] FCCA 399 |
| Catchwords: FAMILY LAW – Property – application for interim orders for the sale of several jointly-owned properties – where Applicant does not want to retain the properties in question – where Respondent wants to retain the properties but has no income or capacity to retain in her sole name – where Applicant has already expended significant sum on joint and other assets – where the Respondent’s lack of supporting documentation means Applicant’s version of events and evidence is preferred – Orders made for sale of properties. |
| Legislation: Family Law Act 1975 (Cth) |
| Cases cited: Strahan v Strahan (interim property orders) (2009) 241 FLR 1; (2010) 42 Fam LR 203 |
| Applicant: | MR DAULTREY |
| Respondent: | MS TAVENER |
| File Number: | CAC 374 of 2018 |
| Judgment of: | Judge WJ Neville |
| Hearing date: | 15 October 2019 |
| Date of Last Submission: | 18 November 2019 |
| Delivered at: | Canberra |
| Delivered on: | 11 March 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr A Givney |
| Solicitors for the Applicant: | Walsh & Blair |
| Counsel for the Respondent: | Mr G Blank |
| Solicitors for the Respondent: | Self-represented |
ORDERS
The parties shall within 14 days do all things necessary to list the real property A Street, Town B being the whole of the land more particularly described in certificate of title folio identifier (the Property) and the real property Lot C, Town B being the whole of the land more particularly described in certificate of title folio identifier for sale by private treaty with Town B Real Estate (the agent).
The parties will list the Property and Lot C, Town B for sale at a price as agreed or failing agreement as determined by the agent.
The parties will each cooperate in every way with the agents including:
(a)making the key available to the agent;
(b)allowing inspection of the Property and Lot C, Town B at all reasonable times requested by the agent;
(c)doing or saying nothing to hinder or prevent a sale being effected;
(d)ensuring that the Property and Lot C, Town B including the grounds are in a neat and clean condition at the time of inspection by the agents and prospective purchasers; and
(e)signing all documents requested by the agents in relation to the listing for sale of the Property except a contract or agreement for sale which has not been authorised by the parties’ solicitors.
That City D Conveyancing & Law P/L have the primary conduct of the sale on behalf of both parties.
Neither party may confer on any agent without the consent of the other party any right to any sole or exclusive agency in respect of the Property or to any commission.
In the event that the Property and/or Lot C, Town B remain unsold for a period of 3 months from the date upon which it was first listed for sale, the parties will list the Property and/or Lot C, Town B for sale by public auction with a reserve price as agreed or failing agreement as determined by the agent.
In the event that the bidding at the auction does not reach the reserve price the parties may negotiate with the highest bidders or any other interested person and effect a sale of the Property at a price which is not more than 10% below the reserve price.
If the Property and/or Lot C, Town B remains unsold, the parties will do all acts and things and sign all documents necessary to immediately re-list the Property for sale by public auction again, on a date nominated by the agent and at such auction there will be no reserve price.
On settlement of the sale of the each property the proceeds of sale be paid in the following manner and priority:
(a)all costs and expenses of sale including legal costs and disbursements, agent’s commission, and auction expenses (including repayment of any such expenses as have been paid by either or both of the parties);
(b)the amounts required to discharge the mortgages relating to the Property and Lot C, Town B;
(c)the amounts required to pay all municipal and water rates outstanding with respect to the Property, with the Respondent to be solely responsible for such costs from her payment in (d) if such payments are in arrears;
(d)the balance then remaining to be divided:
(i)$200,000 to the Applicant;
(ii)$200,000 to the Respondent; and
(iii)the balance to held in trust pending further Order.
That pending completion of the sale the Respondent shall pay the mortgage and outgoings for Lot C, Town B and the Property.
Town F Units
The parties shall within 14 days do all things necessary to list the real properties known as E1 & E2 Street, Town F, Queensland folio identifiers for sale by private treaty with such agent and solicitor as is agreed or failing agreement within 14 days as nominated by the applicant.
That on sale of the properties any shortfall in payment of the mortgage be paid from monies held in trust pursuant to order 9(d)(iii).
In the event that a Unit remains unsold for a period of 3 months from the date upon which it was first listed for sale, the parties will list the Unit(s) for sale by public auction with a reserve price as agreed or failing agreement as determined by the agent.
In the event that the bidding at the auction does not reach the reserve price the parties may negotiate with the highest bidders or any other interested person and effect a sale of the Property at a price which is not more than 10% below the reserve price.
That within 48 hours the parties authorise City D Conveyancing & Law P/L to release the monies held in trust in payment of outstanding Town F Unit levies.
Default
That in the event that either party refuses or neglects within fourteen (14) days to comply with the provisions of these orders:
(a) the Registrar of the Federal Circuit Court at Canberra is hereby appointed to execute all deeds and documents in the name of the defaulting party and do all acts and things necessary to give validity and operation to the said order; and
(b)the party in default is ordered to pay all reasonable solicitor/client costs incurred by the non-defaulting party for the purpose of enforcing these orders, to be taxed if not agreed.
Within 21 days of the date of these Orders, being by 8 April 2020, the parties are to jointly advise Chambers via email to [email protected] as to an agreed procedural course for the matter going forwards.
IT IS NOTED that publication of this judgment under the pseudonym Daultrey & Tavener is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT CANBERRA |
CAC 374 of 2018
| MR DAULTREY |
Applicant
And
| MS TAVENER |
Respondent
REASONS FOR JUDGMENT
Introduction
Paraphrased, this matter is rather like the old Beatles’ song, “The Long and Winding Road”. Unhappily or not, that road has led to the Court door, albeit that it has taken some time to get here.
The parties commenced co-habitation in early 2009, and separated in December 2016. There are parts of the relationship narrative that are factually complex, but that is really just a reflection of the parties’ financial relationship. A degree of disorder and financial complexity is especially evident, post-separation, particularly when looking at their various property and other dealings.
At another level, and by reference to the de facto Husband’s Application, which was filed quite some time ago in early 2018, the resolution of the matter is (and should be) relatively straight-forward. The parties have tried multiple times to resolve it without resort to litigation. Unfortunately, such attempts have not been successful. In my view, this is mainly because, even on the de facto Wife’s evidence, it is financially untenable for the parties to continue to keep the number of properties that are currently in their “portfolio.” Although the Husband has a not insignificant income, his liabilities are also not insignificant. The Wife’s financial position, on her own evidence, is not only weak; it borders on the parlous.
For the reasons that follow, especially in the light of the tenuous financial positions of each of the parties (in admittedly different ways), the Orders sought by the Husband should be made.
Orders sought by the Applicant
The Orders sought by the Applicant, contained in his Case Outline filed on 10th October 2019 were as follows:
Applicant’s Orders Sought
1. The parties shall within 14 days do all things necessary to list the real property A Street, Town B, NSW being the whole of the land more particularly described in certificate of title folio identifier (the Property) and the real property Lot C, Town B NSW being the whole of the land more particularly described in certificate of title folio identifier (Lot C) for sale by private treaty with Town B Real Estate (the agent).
2. The parties will list the Property and Lot C for sale at a price as agreed or failing agreement as determined by the agent.
3. The parties will each cooperate in every way with the agents including:
(a) making the key available to the agent;
(b) allowing inspection of the Property and Lot C at all reasonable times requested by the agent;
(c) doing or saying nothing to hinder or prevent a sale being effected;
(d) ensuring that the Property and Lot C including the grounds are in a neat and clean condition at the time of inspection by the agents and prospective purchasers; and
(e) signing all documents requested by the agents in relation to the listing for sale of the Property except a contract or agreement for sale which has not been authorised by the parties’ solicitors.
4. That City D Conveyancing & Law P/L have the primary conduct of the sale on behalf of both parties.
5. Neither party may confer on any agent without the consent of the other party any right to any sole or exclusive agency in respect of the Property or to any commission.
6. In the event that the Property and/or Lot C remain unsold for a period of 3 months from the date upon which it was first listed for sale, the parties will list the Property and/or Lot C for sale by public auction with a reserve price as agreed or failing agreement as determined by the agent.
7. In the event that the bidding at the auction does not reach the reserve price the parties may negotiate with the highest bidders or any other interested person and effect a sale of the Property at a price which is not more than 10% below the reserve price.
8. If the Property and/or Lot C remains unsold, the parties will do all acts and things and sign all documents necessary to immediately re-list the Property for sale by public auction again, on a date nominated by the agent and at such auction there will be no reserve price.
9. On settlement of the sale of the each property the proceeds of sale be paid in the following manner and priority:
(a) all costs and expenses of sale including legal costs and disbursements, agent’s commission, and auction expenses (including repayment of any such expenses as have been paid by either or both of the parties);
(b) the amounts required to discharge the mortgages relating to the Property and Lot C ;
(c) the amounts required to pay all municipal and water rates outstanding with respect to the Property, with the Respondent to be solely responsible for such costs from her payment in (d) if such payments are in arrears;
(d) the balance then remaining to be divided:
(i) $200,000 to the Applicant;
(ii) $200,000 to the Respondent;
(iii) the balance to held in trust pending further Order.
10. That pending completion of the sale the Respondent shall pay the mortgage and outgoings for Lot C and the Property.
Town F Units
11. The parties shall within 14 days do all things necessary to list the real properties known as E1 & E2 Street, Town F, Queensland folio identifiers for sale by private treaty with such agent and solicitor as is agreed or failing agreement within 14 days as nominated by the applicant.
12. That on sale of the properties any shortfall in payment of the mortgage be paid from monies held in trust pursuant to order 9(d)(iii).
13. In the event that a Unit remains unsold for a period of 3 months from the date upon which it was first listed for sale, the parties will list the Unit(s) for sale by public auction with a reserve price as agreed or failing agreement as determined by the agent.
14. In the event that the bidding at the auction does not reach the reserve price the parties may negotiate with the highest bidders or any other interested person and effect a sale of the Property at a price which is not more than 10% below the reserve price.
15. That within 48 hours the parties authorise City D Conveyancing & Law P/L to release the monies held in trust in payment of outstanding Town F Unit levies.
Default
16. That in the event that either party refuses or neglects within fourteen (14) days to comply with the provisions of these orders:-
(a) the Registrar of the Federal Circuit Court at Canberra is hereby appointed to execute all deeds and documents in the name of the defaulting party and do all acts and things necessary to give validity and operation to the said order; and
(b) the party in default is ordered to pay all reasonable solicitor/client costs incurred by the non-defaulting party for the purpose of enforcing these orders, to be taxed if not agreed.
Orders sought by the Respondent
No formal “Minute of Orders Sought” was filed by the Respondent de facto Wife. The only Orders sought by her that could be discovered amidst the documentation filed with the Court were as set out in her Response filed in 2018 (but which sought no interim Orders) and in her Case Outline submissions prepared by her [apparently pro bono] Counsel. Those submissions are set out later in these reasons.
The Applicant’s Evidence
Accepting that I cannot make specific findings in the absence of (i) cross-examination, and/or in (ii) relevant independent evidence, summarised I note the following from the Applicant’s evidence. What follows is taken primarily from his Affidavit, filed 10th October 2019, with some reference to the only Financial Statement filed by the Applicant on 28th February 2018. In the latter document, the Applicant deposed that his average weekly income was $3015.00 and his total weekly personal expenditure was $3316.00.
The relationship between the parties was approximately 7 years (2009 until December 2016). There are no children from the relationship. The Applicant is currently employed as a Professional. During the relationship he earnt approximately $165,000 per annum.
The Applicant said that the Respondent earnt approximately $10,000 per annum during the relationship. He said that the Respondent had failed to disclose/provide relevant tax returns, among other things. This meant that the Applicant did not know the Respondent’s current income, or information regarding her attempts to obtain work.
The Applicant said that he has four adult children from a previous relationship. He said that the Respondent has three children from an earlier relationship. He said that from time to time those children lived with and were supported by the Applicant. Those children now live with their Father in Queensland.
The property known as A Street, Town B, is a 12 acre property with improvements that include a large house and shed. These improvements cost $750,000; the land was purchased for $150,000. In April 2019, a jointly instructed valuer estimated the value of this property to be $650,000.
Lot C, Town B is adjacent to the 12 acre property. In April 2019 this property was valued at $190,000.
There are two properties in Town F. They were purchased by the parties in 2014 for $195,000 each. The properties are owned by a unit trust with the Respondent as the sole trustee. Both of these properties have a negative equity of approximately $10,000 each and are tenanted. The Applicant deposed that the weekly rent of $184 does not meet the cost of the repayments for each property.
As noted earlier, there are legal proceedings on foot against the Respondent in relation to unpaid body corporate fees, which total $8,162.89. A copy of the Statement of Claim filed in the Magistrates Court of Queensland on 8th May 2019 is Annexure A to the Applicant’s Affidavit, filed 10th October 2019. With costs and other charges, the amount sought in those proceedings is $14,937.91.
A summary of the parties’ respective financial positions at the commencement of their relationship in 2009 is Annexure B to the Applicant’s October 2019 Affidavit. Neither the provenance, nor the date of this document is immediately clear. It shows that at the start of the relationship, the Respondent had a net asset position of $472,016.24, and the Applicant a net position of $1,853,880.24. In percentage terms of the total asset pool as it was, this generally represents a position of 75% for the Applicant and 25% for the Respondent of the total net asset pool.
The Applicant noted in his Affidavit that his primary asset was in a business in City D. The balance sheets for this business (G Pty Ltd), together with the Applicant’s financial interest in it, are set out in Annexure C to his Affidavit earlier referred to.
The Applicant also annexed a copy of the Application by the Respondent for Consent Orders concerning her previous relationship. This document confirmed the Respondent’s financial position as at the date of that Application in May 2007.
In relation to contributions during the relationship, in addition to what has already been stated earlier in these reasons, the Applicant said that he paid $14,000 (or thereabouts) for the fit out of a shopfront in a shopping centre in City D from which the Respondent could run her business. He also said that he paid the Respondent’s legal fees of $17,000 arising from family law parenting proceedings with her former Husband.
Annexure E of the Applicant’s Affidavit is a chronology of transactions from the parties’ 20 or so bank accounts. The chronology sets out the purchase and sale of assets in designated accounts.
The Respondent and her former Husband purchased a unit in Brisbane (called H Property) in early 2005. Loans were taken out totalling $720,000. These loans were secured over a former marital residence of the Respondent, known as the J Street property. The Applicant said that the Respondent had financial difficulties regarding this unit and was served with a default notice by Macquarie Bank, which showed that the loan was approximately $9000 in arrears.
The Applicant offered to take over this apartment. The Applicant purchased this apartment, pursuant to him obtaining a loan from the ANZ Bank for $464,000. I need not go into other details of this purchase.
Ultimately, however, after the parties separated, the Applicant said that he could not afford to keep the H Property. He sold it in 2017 for $520,000, which resulted in a loss of $140,000.
A Street, Town B was purchased in November 2011 for $150,000. It was financed by a 100% loan from the National Australia Bank (“NAB”) to the Applicant’s company, K Pty Ltd. That company then lent those funds to the Applicant. The Applicant still owes K Pty Ltd the totality of that loan.
Lot C, Town B was purchased at the same time (2011) for $150,000 but the purchase price was paid under a deferred payment scheme that included interest-only payments for the first two years. In 2015, K Pty Ltd borrowed $145,000 from NAB. This sum was advanced to the Respondent but the Applicant paid the mortgage of $700 per month until December 2018. The loan from NAB remains outstanding.
Between 2009 and April 2011, the parties lived at the Respondent’s property at J Street. The Applicant says that he paid the mortgage of $3800 per month during this time.
In approximately April 2011, the Respondent moved to a rental property in Town B. The rent was $320 per week. The Applicant says that he paid this rent. He also stayed at this Town B property between October 2011 and February 2012.
Between October 2011 and the end of 2012, the J Street property was rented out for $500 per week. This rent did not fully cover the mortgage payments; the shortfall was paid by the Applicant. He said that after the Respondent was served with a default notice in relation to this property, the parties refinanced the relevant debt through NAB. Copies of the default notice and a Macquarie Bank statement are annexed to the Applicant’s Affidavit, at Annexures K and L respectively. From the time of the re-financing until the property was sold, the Applicant said that he made all loan repayments in relation to this property.
The J Street property was sold in January 2013 for $730,000. The mortgage of $660,742 was paid out and the balance of $44,692 was applied to the A Street, Town B mortgage. The J Street property had been used as security to borrow $130,000 to cover building costs on A Street, Town B. The total building costs on this property came to approximately $800,000 (I simply note that earlier information indicated that the building cost was somewhere around $750,000).
All loans taken out in relation to the construction on A Street, Town B have been paid out except for an outstanding balance of $155,678. The loans included a sum of $80,000 from the Applicant’s business, G Pty Ltd.
The Applicant said that he paid all mortgages until November 2017. Thereafter, he said that the Respondent paid them. It was not detailed how the Respondent made these payments.
In April 2013, the parties purchased an investment property at M Street, Town B for $245,000. This was financed through NAB. The property was purchased solely in the name of the Respondent. The Applicant paid the stamp duty on the purchase and the legal costs for it. The Respondent’s sister lived in this property and paid nominal rent of $200 per week. This rental income was kept by the Respondent. The Applicant paid the mortgage on this property of $250 per week for 5 years.
In November 2018, the M Street, Town B property was sold for $290,000. The net proceeds of $7,700 are currently held in a trust account.
In September 2013, the Applicant’s business, G Pty Ltd, was sold for $3,300,000. K Pty Ltd received net proceeds of $775,717. Annexure O to the Applicant’s Affidavit sets out a schedule of the expenditure of these funds. G Pty Ltd retained the premises at N Street. Through his company K Pty Ltd, the Applicant retains a 25% holding in G Pty Ltd, which is now known as N Street Properties Pty Ltd.
Funds from K Pty Ltd were advanced to the parties in relation to the A Street, Town B properties. Accordingly, both parties have loan accounts in the records of that company. Those records are Annexure P to the Applicant’s Affidavit. According to the Applicant, there are some tax issues that remain outstanding in relation to these loans. Annexure Q to the Affidavit is a letter from the Applicant’s accountant that outlines these tax liabilities, which have yet to crystallise.
In October 2015, the Applicant sold his property at O Street, Suburb P for $605,000. The net proceeds of sale totalled $99,879. $30,000 of these funds remain in a term deposit, and the balance has been used for living expenses.
The Applicant said that at the end of the relationship, the combined asset pool totalled $1.85 million. At the time of the hearing, he said that the combined asset pool was $1.57 million. A statement of assets and liabilities is Annexure R to his Affidavit.
Finally, the Applicant noted that:
(a)He has substantial liabilities;
(b)The parties have been separated for nearly 3 years;
(c)There is a combined mortgage over the A Street, Town B properties which, in the Applicant’s view, the Respondent has no capacity to refinance (a copy of the most recent home loan statement is Annexure S); and
(d)The Respondent makes cash deposits to cover the mortgage; the source of these funds is not known.
The Respondent’s Evidence
In the Respondent’s first Affidavit, filed 9th October 2019, the Respondent confirmed that the A Street, Town B properties were purchased in November 2011.[1] She said that there is a mortgage over the A Street, Town B property (on which the large residence was constructed) of $157,000. The monthly repayment of $914 is paid by her. The source of these funds was not identified.
[1] The Respondent has filed three Affidavits: one each on 23rd May 2018, 9th October 2019, and 14th November 2019. While not disregarding the first Affidavit, the Court’s main attention is to the two most recent Affidavits of Ms Tavener. In her first Affidavit, at par.4, the Respondent deposed that she was not presently working and was “reliant up[on] sickness benefits.” She confirmed that she had not been able to work since an accident in 2016.
The Respondent said that Lot C, Town B, a vacant block, was purchased by her and that she borrowed the funds in this regard. She said that, because she has no superannuation, this block, in effect, represents some form of “superannuation” for her.
The Respondent said that in February 2016, NAB lent the Applicant $145,000 for his personal use. This loan was secured over both of the Town B properties.
The Respondent confirmed that the Applicant made the mortgage payments over the Town B properties until November 2018. She said that she has made the mortgage payments ever since but again did not say where those funds came from. She said that the current mortgage balance is $145,000.
The Respondent said that although there is a valuation of the vacant block of land at $190,000, in her view a more realistic valuation would be in the range of $150,000 – 170,000.
The Respondent confirmed (par.10) that she cannot afford to continue to keep making the mortgage payments over the two Town B properties. She seeks an Order that the Applicant make the mortgage payments in the interim or, so it would seem, indefinitely.
Paragraphs 11 – 17 of the Respondent’s October 2019 Affidavit sets out what she contends to be the Applicant’s financial position. Apart from a copy of a pay-slip of the Applicant from May 2019, there are no documents to support the Respondent’s contentions regarding the Applicant’s financial situation. I do not say this critically. However, while there is some correspondence between the accounts given by the parties in this regard, the Applicant provided significantly more documentation to support his narrative of the financial history and status of the parties.
The Respondent (at pars.18 – 20) set out why she sought an Order restraining the Applicant from dealing with his interest in the N Street property. She actually refers to the “properties”.
In relation to the M Street, Town B property, purchased for the benefit of her sister, the Respondent confirmed that it was sold in November 2018. There remains in trust $7,500. The Respondent seeks an Order for these funds to be released to her so that she can pay off a credit card loan and repay funds lent to her by her Father. No details were provided by the Respondent in relation to these latter matters.
Paragraphs 24 – 30 refer to the purchase of the two Town F properties. The Respondent confirmed that the loan for each property is “approximately $208,000”, which is higher than their likely sale value. She said that she had been paying the mortgages until September 2019 when “the bank agreed to place repayments on temporary hold.” Unfortunately, there are no documents provided that explain when, and how this arrangement came to be, nor for how long this “arrangement” might be in place.
The Respondent referred again to the Applicant’s financial position by noting his claims for tax deductions, how much he had received in refunds from the Australian Tax Office (noting that not all of each refund was referrable to the Town F properties), and that he had claimed a national rental offset in the years 2016 – 2018. All of which, she said, led to the Applicant securing $49,285. Regrettably again, documents to confirm and or explain these matters were not provided.
The Respondent confirmed that certain funds are owed in relation to corporate levies and outstanding utilities on the Town F properties. The Respondent said that she annexed (par.28) copies of SMS messages with the Applicant, which are said to contain confirmation from him that he would pay the outstanding sums. Unfortunately, these messages were not annexed as claimed. The Respondent seeks to have the Applicant continue to pay the mortgages on the Town F properties.
Paragraphs 31 – 37 outline the Respondent’s claim for spousal maintenance of $300 per week. Formally, there is no such Application before the Court. The Respondent’s claim essentially set out her lack of income following her accident earlier referred to. I note that there is no medical evidence before the Court in this regard. She confirmed that she is in receipt of a Newstart allowance of $504.
In the alternative to spousal maintenance, the Respondent sought an Order that the Applicant meet the repayments on Lot C, Town B, and for both of the Town F properties, as well as to meet the arrears owing in relation to the latter properties.
Following the hearing, the Court requested further information from the Respondent regarding the nature and extent of the financial assistance provide to her from her Father. For example, whether it was a gift or a loan. The Respondent’s Affidavit, filed 14th November 2019, responded to these matters, thus.
I have earlier recorded the Respondent’s evidence regarding the modest income from the Airbnb enterprise notably that the income thus far (of $3,274.20) is less than the unspecified costs of setting up this business. Not for the first time, the lack of supporting documentation from the Respondent hampers the Court’s assessment of the various claims made by her.
The Respondent confirmed that she had earlier advised the Court that she was content for the Town F properties to be sold, subject to how the shortfall(s) regarding body corporate fees and mortgage payments might be resolved.
The Respondent said in her last Affidavit that advice she had received from Mr Q of R Real Estate (apparently acting on behalf of the body corporate) is that there are “break costs” and an “annual fee” should the properties be sold now.
The Respondent confirmed that she received $25,000 from her Father as a personal loan. That sum was provided by way of a series of smaller advances over a period of time that is set out in the Respondent’s Affidavit (pars.7 – 13). She said that she knows from conversations with her Father that he will continue to support her financially.
As noted in the Applicant’s submissions, the Respondent’s Father has not provided any Affidavit in the proceeding.
The Applicant’s Written Submissions (including Supplementary Submissions)
The Applicant’s written submissions were contained in his Case Outline filed on 10th October 2019 and were as follows:
Short Submissions
1. The parties were in a relationship for approximately 7 years between 2009 and 2016. They had no children. The Respondent’s 3 children lived with the parties from time to time.
2. In 2009 the Applicant had net assets ($1.18M) and superannuation ($200,000) total $1,380,000 and the Respondent had net assets ($450,000) and superannuation ($20,000) total $470,000 being a combined total of $1,850,000. This represents a 75/25 contribution of the parties’ initial capital in favour of the Applicant.
3. The combined asset pool is now $1,440,000 being net assets $1,080,000 and superannuation $360,000.
4. During the relationship the Applicant earnt on average $165,000.00 per year being earnings of over $1,000,000 compared to the Respondent who the Applicant estimates earned approximately $100,000 over the same period.
5. In mid-2010 the Respondent defaulted on the loan for her H Property in Brisbane and the bank issued a section 75(2)(b) notice. To assist the Respondent the Applicant refinanced the loan and the property into his sole name. The property was later sold by the Applicant for a loss of over $140,000.
6. From September 2011 to December 2011 the Respondent defaulted on the payments of her home loan and another section 75(2)(b) notice was issued by the bank. Again, to assist the Respondent, the Applicant refinanced the loan, this time in joint names, to avoid the bank foreclosing.
7. In November 2011 the parties entered into 2 contracts to purchase adjoining 12 acre blocks at A Street, Town B for $150,000 each, funded by loans taken out by the Applicant’s company, K Pty Ltd.
8. The parties built a large 5 bedroom house at a cost of approximately $800,000. This was funded by a number of loans predominantly paid by the Applicant. A mortgage of only $155,000 remains over the house block (Lot T, Town B).
9. A Street, Town B is valued at $650,000. The adjoining 12 acre block, Lot C is valued at $190,000.
10. In 2013 the Applicant sold his interest in his business known as G Pty Ltd and received $775,717. The Applicant applied monies towards paying out loans. The Applicant retained his interest in the business premises now worth approximately $800,000 with $300,000 finance owing.
11. The Applicant paid for the Respondent to attend numerous overseas trips, courses, business equipment and lifestyle and living expenses for the Respondent and her children.
12. The parties separated in December 2016. The Applicant has sought mediation and resolution with the Respondent since May 2017. The Respondent refused to participate which led to the commencement of the proceedings in February 2018. The Respondent has sought interim orders for the sale of the property since proceedings were commenced.
13. In Strahan & Strahan [2011] FamCAFC 126 the Full Court said at 85,645:
[132] In relation to the first stage, in our view, when considering whether to exercise the power under s 79 and s 80(1)(h) of the Act to make an interim property order the "overarching consideration" is the interests of justice. It is not necessary to establish compelling circumstances. All that is required is that in the circumstances it is appropriate to exercise the power. In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.”
[139] We also emphasise that in order to establish an appropriate case for an interim property settlement order more is required than the mere fact that upon a final hearing the applicant would receive the property being sought (or an amount in excess of the funds being sought) from the other party.
14. In Osferatu & Osferatu [2012] FamCA 408 (31 May 2012) his Honour Watts J said:
34. As explained by the Full Court, s 80(1)(h) FLA is a wide enabling provision for interim property decisions, and there is no reason to limit it, by requiring a finding of ‘compelling circumstances’. All that is required before the power to make an interim property order is exercised, is an assessment of whether it would be “appropriate” to make an interim order, with the “over arching consideration” being the interests of justice. There may need to be evidence of the likely cost of litigation, but only if that is the reason or part of the reason that is propounded as to why it is appropriate that the order be made.
15. Her Honour Ryan J sitting as the Full Court in Elei & Dodt [2018] FamCAFC 92 (17 May 2018) recently affirmed Strahan in relation to orders for partial property settlement in de facto matters.
16. The Respondent is unemployed. She has no realistic prospects of buying out the Applicant of the Town B properties or retaining the Town F Properties. The sale of the properties are inevitable. The Respondent lives on her own in the large 5 bedroom house at A Street, Town B, predominantly paid for by the Applicant whereas the Applicant rents. The parties have been separated for nearly 3 years. It is the interests of justice and appropriate to make an interim order that the properties be sold now.
17. Notwithstanding the reduction in the net asset pool and the Applicant’s overwhelming financial contributions, the Applicant concedes that the Respondent would be entitled to 25% of the net asset pool excluding superannuation. Exact selling costs and full tax effects are not yet known. The Town F units are likely to realise a loss of $20,000 plus $30,000 strata levies remain unpaid. 25% of the net asset pool is $270,000. If Lot C and A Street, Town B attain a sale price as valued the net proceeds are likely to be in the order of $640,000. The Applicant proposes an initial distribution to each party of $200,000 from the sale proceeds.
The Applicant’s supplementary submissions, filed 15th November 2019, were as follows:
APPLICANT’S SUPPLEMENTARY SUBMISSIONS
1. Pursuant to a direction by the Court made in chambers on 21 October 2019 the Respondent was directed to file an Affidavit relating to two issues being:-
1.1. Her father’s financial assistance; and
1.2. Financial aspects of the Airbnb rental.
2. On 1 November 2019 the Respondent swore and filed an Affidavit. With respect to the Court’s directions the Applicant respectfully submits that:
2.1. paragraphs 2, 14 and 15 are not relevant to the issue and are objected to;
2.2. paragraph 8 from the third sentence onwards, that is commencing at “Dad requested it to go…” to the end of the paragraph is hearsay, not in proper form and is objected to.
3. Whilst accepting that the Affidavit was filed at the direction of the Court the question of weight to be given to the Affidavit is questionable. The problem being that the Respondent’s father is not on Affidavit which makes the “asserted conversations” between the Respondent and her father hearsay and further the Court is left in the dark as to the Respondent’s father’s capacity to fund the significant shortfall between income and expenditure contained in the Respondent’s Affidavit.
4. The income from the Airbnb does not in any way put a “dent” in the shortfall [$1,000.00 per week] contained in the Respondent’s Financial Statement.
5. Further, the Affidavit sworn 1 November 2019 does not provide evidence that the Respondent’s father will meet a shortfall of $1,000.00 per week.
6. The Respondent in her Written Submissions asserts that she will repay her father $25,000.00 which she at the present time has no capacity to do so. The inference from the Affidavit is that she will be supported by her father which leaves the question how would she possibly repay her father for further “advances” over the next two years.
7. In her Written Submissions the Respondent asserts that she has a capacity to meet the repayments on the mortgage. It is submitted that on the basis of her Financial Statement and her Affidavit of 1 November 2019 this is simply impossible.
The Respondent’s Written Submissions
The Respondent’s written submission were contained in her outline of submissions filed 8th October 2019. They provided as follows:
Outline of submissions by Respondent
Sale of Lot C, Town B and Lot T, Town B
1.The applicant has indicated his intention to proceed on his application dated 18 April 2018 for the sale of Lot C and 8, Town B . No affidavit evidence has been filed by the applicant.
2.The respondent opposes the sale of either lot. Lot T is the land on which a home was built in which the Respondent lives. She has no alternative accommodation. She is paying the mortgage on that property.
3.Lot C was purchased for $150,000 in 2013. The Applicant took out a loan for his own purposes for $145,000 secured by lots C and T. In late 2018 the Applicant ceased making payments on the loan, putting the security at risk. The Respondent has had to meet the mortgage payments to protect the property. The sole benefit of selling Lot C would be that the Applicant’s loan would be discharged.
Respondent’s application
Town F Properties
4.The applicant seeks that the outstanding body corporate levies, rates and now legal costs with respect to units purchased in Town F should be paid by the Applicant. The Respondent has paid the mortgage loans in relation to both units, notwithstanding the Applicant has claimed tax deductions in his personal returns for those properties. He has also applied the national share rental offset to his own benefit.
5.By text message in November last year he agreed he would pay those amounts. He did not do so and interest and legal fees have accrued.
6.It is submitted that in circumstances where he has obtained the direct financial benefit of those units and has promised to pay, the court should order him to do so, and to keep the levies and rates up to date pending final hearing or an agreed sale by the parties.
Release of funds
7.The Respondent purchased a property in 2013 for her daughter. It was sold in November 2018. The loan was in both parties’ names. The agent has retained a part of the deposit in their trust account. The Respondent seeks that those funds ($7500) be repaid to her to cover the costs that were incurred in preparing the property for sale.
Spouse maintenance
8.The Respondent seeks an order that the Applicant pay her spousal maintenance. It is submitted that leave should be granted for such orders to be made. The Respondent did not seek maintenance orders in the 2 years after the relationship broke down in December 2016. Until the end of that 2 year period the Applicant had been paying the mortgage on Lot C, Town B.
9.The Respondent is unable to provide sufficient self support because she is required to meet mortgage payments for assets for which the Applicant derives a benefit and she does not.
10.The Respondent is unfit for work and receives a Newstart allowance (which does not require her to look for work).
11.It is submitted the Applicant has the capacity to pay and has taken significant sums for his own benefit which remain unaccounted for. He is presently employed, earning in excess of $115,000 per annum.
12.In 2019 the Applicant and Respondent have participated in two attempts at mediation and conciliation, unfortunately without success.
13.Alternatively to a specific maintenance order, she seeks orders that the Applicant cover the mortgage on Lot C, Town B (being a loan that was for his own benefit) and on the Town F properties (which he claims in his tax returns for his personal benefit).
Sale of N Street Properties
14.The Respondent seeks injunctive relief to prevent any sale proceeds from being dissipated pending a final hearing. The Respondent’s affidavit refers to significant sums that have been taken or received over time by the Applicant or his company (of which he is the sole controlling mind and the company should be treated as his alter ego), and it is submitted there is a real risk that were a sale to occur, the Respondent would not be made aware of the sale and the funds would not be accounted for in the property proceedings.
The Respondent’s further written submissions were attached to the Respondent’s Affidavit, affirmed and filed on 1st November 2019. They were as follows:
Further Submissions by Ms Tavener
These further submissions are made pursuant to the direction by Neville J by email from his Associate.
Contribution by my father
My father has provided me with a total of $25,000 particularised at paragraphs 9-11 of my affidavit
I consider myself to have a moral obligation to pay him back when I can but he has not specifically asked for the amount to be repaid.
In my submission this amount should be characterised as a contribution on my behalf made by my father.
My father is willing and able to assist me with meeting the mortgage repayments should this prove necessary.
AirBNB
I have received limited income from this source ($3274.20 to date) but it is money that is available to me to assist with meeting the repayments on the mortgage.
Conclusion
I am able to continue to make the mortgage payments as and when they fall due from a combination of my income, the airBNB income and the financial assistance from my father.
I do not want to have to call on my father for assistance if I can help it. I am able to meet the repayments for Lot T but not Lot C as well. For this reason I am seeking spousal maintenance from the Applicant to make the payments associated with the mortgage on Lot C.
Procedural Issues
I seeks leave to adduce fresh evidence in relation to the following matter which has arisen since the hearing. I am willing and able to file an Application in a Case seeking the leave to adduce this additional evidence if the Court requires me to do so.
The evidence relates to the cost of sale and related costs of the Town F properties. That evidence is at paragraphs 14 to 16 of my affidavit.
The relevance of this evidence is that it impacts upon the likely sale proceeds if the Town F properties were to be sold immediately. If there were orders that the shortfall were to be met from the sale of Lot T, the effect of this would be to reduce further the net sale proceeds available for future distribution. Given the principles in Strahan v Strahan (2011) FLC 93-433 at [136] that an interim order should not be made if it could result in final orders being prejudiced, the smaller the equity pool available the greater the risk when there are significant sums alleged to be taken by Mr Daultrey which would need to be adjusted for on Final Orders. The risk would be that the power would be exhausted by the interim order and that just and equitable orders could not be made on a final basis [sic] The parties would be prejudiced by the Order being made at this time.
I have provided evidence of my capacity to continue to meet the repayments in relation to Lot T, in my submission there is no urgency for the sale to occur at this time.
I submit that if the court does not make orders that Mr Daultrey meet the shortfall in relation to the sale of the Town F properties, which payment can be reconciled at final hearing, in light of this further information, the better alternative is for orders that he pay the relatively small difference in mortgage payments and body corporate fees per year (plus the arrears) until this matter can be finally resolved at court, even if that were to take a further 2 years.
Outline of principle
The current Application before the Court is for (a) the properties of the parties to be sold, (b) there be a partial distribution from the net proceeds of sale, and (c) [ultimately, there be a division of the net property pool 75/25% in the Applicant’s favour.
The Respondent de facto Wife resists this Application. Instead, she seeks alternative Orders that, at least according to her Response filed 24th May 2018, include her retaining at least one of the properties (A Street, Town B), and that she be paid a lump sum by way of spousal maintenance. Again I note that, formally, there is no spousal Application before the Court. More recently, the Respondent has stated that she seeks primarily, among other things, to retain the property at Lot C, Town B. To put it generally, by observation only, there was a singular lack of precision and clarity regarding what Orders the Respondent sought.
The primary Application, in my view, falls to be determined in accordance with the principles set out by the Full Court in Strahan.[2]
[2] Strahan v Strahan (interim property orders) (2009) 241 FLR 1; (2010) 42 Fam LR 203.
Firstly, at [132], the Full Court said:
In relation to the first stage, in our view, when considering whether to exercise the power under s.79 and s.80(1)(h) of the Act to make an interim property order the “overarching consideration” is the interests of justice. It is not necessary to establish compelling circumstances. All that is required is that in the circumstances it is appropriate to exercise the power. In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s.79 is a once and for all order made after a final hearing.
Secondly, in the same case at [135] – [137], the Full Court said:
[135] … as the jurisdiction under s.79 of the Act is being exercised the provisions of that section must be considered and applied but with limitations given that it is not the final hearing. There is also no requirement of compelling circumstances in relation to the substantive step.
[136] As to the third matter identified at 79,930 by the Full Court in Harris, in discussion before us it was described as the “adjustment issue” or “claw-back issue”. It was submitted by senior counsel for the Wife that it is relevant to consider whether an order would give the applicant “more than they would be indubitably entitled to on a final hearing” or alternatively “would it give them so much that it could not be adjusted on a final hearing?” As we have observed the Full Court in Zschokke at 83,220-221 stressed the importance of consideration of the “adjustment issue” if the power in s.80(1)(h) of the Act is being exercised. We accept the submission and observe that this matter is relevant because the discretion conferred by the power in s.79 is to make such order as the Court considers appropriate provided it is just and equitable to make the order in circumstances where the power will not be exhausted by the interim order. As Bryant CJ and Coleman J observed in Gabel v Yardley at [69] and [72] the interim order must be capable of variation or reversal without resort to s.79A of the Act or appeal. As Finn J said at [126] the interim order must be “capable of alteration at any time prior to, or as part of, the final exercise of the s.79 power”.
[137] Once a court proceeds to exercise the power in s.79 of the Act, being in the substantive phase, a court is required to undertake consideration of the matters in s.79(4) including by reference to s.79(4)(e) the matters in s.75(2) so far as they are relevant. However consideration of such matters may be brief and if it is established that “it seems likely to the Court that ... the applicant ... will be likely receive by way of property settlement a sum sufficient to cover the advance, that would seem to be sufficient to enable the order sought to be made”: Zschokke; Polletti and Polletti per Nygh J and Wenz v Archer. As senior counsel for the Wife submitted, “provided scope can be found within the assets of the parties for an order of the size sought ... then that should be the end of the matter”. In other words, in such circumstances the applicant would only be receiving what he or she was entitled to receive when the power was exhausted.
Thirdly, at [139], the Full Court stated:
We also emphasise that in order to establish an appropriate case for an interim property settlement order more is required than the mere fact that upon a final hearing the applicant would receive the property being sought (or an amount in excess of the funds being sought) from the other party.
The Court went on to note, at [141] that there should be at least an “arguable case” for substantive relief that deserves to be heard. In my view, such a consideration has readily been met, especially given the very difficult financial position of the Respondent, as well as the potentially adverse flow-on financial effects for the Applicant.
Consideration and disposition
In the light of the evidence, and having regard to the principles in Strahan, I note the following.
First, the Respondent has confirmed that she is unemployed and that she relies upon a Newstart allowance and the beneficence of her Father. She no longer runs a business, “U”, which apparently closed in 2016 following the de facto Wife suffering an accident.[3] She seems not to have been in regular, paid employment since that accident.
[3] See the de facto Wife’s Affidavit, filed 9th October 2019, par.31.
Secondly, in very basic terms, according to her most recent Financial Statement, filed 9th October 2019, the Respondent’s average weekly income is $812.00, while her total expenditure is $1,826.50. In her most recent Affidavit, filed 14th November 2019, the Respondent confirmed (par.5) that the cost of setting up the Airbnb that she runs (at one of the properties that the de facto Husband seeks to have sold, and without stating or providing evidence of what those set-up costs were, how they were paid, and by whom) “was more than the gross income.” She deposed that the gross income from this venture totalled $3,274.20, which equates to $81.85 per week, based on 39 nights of occupation out of 40 weeks (i.e. 280 nights). She said that she had bookings for the Airbnb until May 2020.
Thirdly, the Respondent further deposed (see the Affidavit affirmed 1st November 2019, par.6) that her “income/expenses for 2018-2019 financial year was under the tax free threshold.”
Fourthly, also in her Financial Statement, the Respondent declared that she is indebted to her Father for $25,000, and that she has outstanding legal fees of approximately $36,000. Between these sums alone the Respondent has debt of $61,000, and has no obvious funds from which she can or could pay these debts, let alone any of her other liabilities.
Apart from general descriptions of the various smaller amounts of money given by her Father for specific items, there is no other detail about the “loan” from her Father. Unfortunately, her Father is not on Affidavit.
Somewhat curiously, in her most recent Affidavit, filed 14th November 2019, the Respondent deposed (par.13) that her Father had been contributing to payment at least of, presumably some, Counsel fees (but presumably not towards her outstanding fees owed to her former solicitor), and that Counsel was [now] acting on a pro bono basis.
Fifthly, the Respondent confirmed that there are outstanding amounts owing in relation to corporate “rates” and utilities regarding two properties in Town F, Queensland. In this regard, she noted that she had recently been served with a statement of claim seeking recovery of $14,937.91. A similar amount is owed in relation to the second of these properties.[4] The Respondent has joined the Applicant to these proceedings in Queensland.
[4] See Ms Tavener’s Affidavit, filed 9th October 2019, pars.24 – 30.
In short, in my view, on the evidence of both parties, it borders on the irresponsible to let this matter continue to run in the way that it has. In my view it is imperative that there be some appropriate cauterising of the significant, and on-going, financial wound the parties (to varying and various degrees) have inflicted upon themselves, in the circumstances summarised above. On the Respondent’s own evidence, (a) she is unemployed, (b) she has no discernible appreciable income (other than the modest income from the Airbnb and some funds from her Father, which she said she treats as a loan of some undefined kind), (c) she has significant past and ongoing debts, such as in relation to mortgage payments owing over the two Town F properties, (d) she faces litigation in relation to those properties for unpaid body corporate fees and outstanding utilities, and (e) her weekly outgoings far exceed her “income”.
The Respondent’s primary response to almost all the financial woes is that the Applicant should be responsible for the vast majority of the liabilities of the parties, in circumstances where (a) it was a relatively short relationship, and (b) there is significant evidence that the Applicant has already expended very large, and ongoing, funds on a range of joint and other assets.
In all of the circumstances, the Orders sought by the Applicant should be made.
Once the principles in Strahan as outlined above are applied to the facts of the present matter, and the properties sold, there will be a significant partial property distribution to both parties. Once that occurs, whatever might be said about the Respondent’s Application for spousal maintenance, in my view, the need for such an Application will immediately dissipate, if not become totally moot. In short, the sooner the properties are sold, all debt cleared, and there is a partial but significant distribution of funds, the better off both parties will be.
Within twenty-one days of the date of these Orders, the parties are to advise what next procedural course the Court should adopt. This could include a further conciliation conference or otherwise.
I certify that the preceding eighty-one (81) paragraphs are a true copy of the reasons for judgment of Judge WJ Neville
Date: 12 March 2020
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