Denning and Denning

[2010] FamCA 192

FAMILY COURT OF AUSTRALIA

DENNING & DENNING [2010] FamCA 192

FAMILY LAW – CASE MANAGEMENT – Interim property and financial issues – Sale of property – Caveat on title – Debts owing to mortgagee – Wife not to relocate on an interim basis pending resolution of all proceedings

APPLICANT: MR DENNING

RESPONDENT: MS DENNING

FILE NUMBER: MLC 463 of 2008

DATE DELIVERED: 5 MARCH 2010

PLACE DELIVERED: MELBOURNE

PLACE HEARD: MELBOURNE

JUDGMENT OF: YOUNG J

HEARING DATE: 5 MARCH 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT: MR BERKOVITCH

SOLICITOR FOR THE APPLICANT: F BUTERA & CO

COUNSEL FOR THE RESPONDENT: IN PERSON

SOLICITOR FOR THE RESPONDENT:

Orders

IT IS ORDERED:

1. THAT the previous orders pronounced on 21 December 2009 and 7 September 2009 as to the sale of the property at C in the State of Victoria (“C property”) be discharged.

2. THAT the husband and wife have the joint conduct of the sale of C property.

3. THAT pending the settlement of the sale of C property the wife have the exclusive and ongoing use and enjoyment of that property save that she must, at all times, maintain the property in a clean and tidy state and comply with all reasonable requests for property inspections by Mr S or his staff.

4. THAT Mr S be appointed as the licensed real estate agent to forthwith conduct the sale, by private treaty or public auction as he may determine in conjunction with the parties and C property is to be listed for sale within fourteen (14) days and be offered for sale on a settlement period of no more than 120 days.

5. THAT the husband and wife be and are each restrained from further encumbering C property or dealing with, transferring or disposing of or borrowing against its title and all fixtures and fittings now in that property are to be included within the sale (but the wife is permitted to remove all furniture, chattels, possessions and contents which are not fixtures and fittings therein).

6. THAT the wife’s solicitor is to act on the conveyance for C property.

7. THAT the parties forthwith notify the Bendigo / Adelaide Bank (“the Bank”) of these Orders and on settlement of the sale of C property the whole of their mortgage debt and any other proper liability thereon is to be discharged.

8. THAT all proper costs and expenses of sale, including real estate agents commission and other charges, outgoings and solicitor fees are properly to be paid on settlement of C property.

9. THAT as to the property at R1 (“R1 property”) each of the husband and wife be and are restrained from further encumbering or dealing with that property in any way whatsoever (it being recorded that the Bendigo / Adelaide Bank has now the effective ownership and control of this property), or from entering upon that property save with the permission of and in the company of an employee of the firm of real estate agents appointed by the Bank to act on its behalf in the sale.

10. THAT the wife retain in safe storage the fixtures and fittings removed from R1 property, and including curtains, blinds, mirrors and dishwasher, pending further order of the Court and within one (1) month she is to list and photograph all items so removed and provide copies thereof to the husband.

11. THAT upon settlement of the sale of R1 and/or C property any monies remaining to the benefit of the husband and/or wife are to be invested on their behalf by the wife’s solicitor in an interest bearing deposit pending further order of the Court.

12. THAT the husband forthwith provide to the wife’s solicitor any information, document or letter as to the monies paid or owing to ASK Funding as the litigation funder who has lodged a caveat upon the R1 property title and he is to keep him fully advised of any further financial demands or request made against him.

13. THAT the husband use his best endeavours to obtain and disclose all Commonwealth Bank financial statements or accounts as were identified by Schedule “A” to the Orders of 7 September 2009 and provide a cross reference document and full explanation of all such financial inflows and outflows from that account to the wife’s solicitors as soon as practicable, but within forty-five (45) days, and all such information to be provided as and from 1 July 2005.

14. THAT the husband provide written details of his use and acquisition of the motor vehicle which he now drives.

15. THAT the husband provide to the wife’s solicitors written and detailed particulars and documents of and related to any and all of his:

    (i)       full-time or part-time or other form of employment from 1 July 2005;

    (ii)superannuation payments or withdrawals or other dealings with such funds from 1 July 2005.

16. THAT the husband and wife have liberty, upon proper documentation filed and served to apply to the Court for any further order properly arising out of these Orders for the sale of C or R1 properties or any other issue of significance.

17. THAT otherwise the Application in a case filed 2 March 2010 and the orders sought in Response filed 4 March 2010 be dismissed.

18. THAT the extempore reasons for judgment be transcribed, be placed upon the Court file and be made available to the parties.

IT IS CERTIFIED

1. THAT pursuant to Rule 19.50 of the Family Law Rules this matter reasonably required the attendance of Counsel for the wife.

IT IS NOTED

A.THAT the matter is listed for further case management and directions before Young J on 4 May 2010 (subject to any part-heard matter then listed) and otherwise for a four (4) day defended hearing commencing Tuesday 20 July 2010.

B.THAT the wife admits removing an oven from R1 property which, through her Counsel, she maintained was wholly in a state of disrepair and has been given away as scrap metal.  The husband disputes both the condition of the oven and the wife’s actions and maintains that it has a value.

C.THAT if the wife is unable to reasonably maintain the outside and perimeter of C property then she may engage a trades person at a cost that will become a charge to the parties and be paid on settlement of its sale.

D.THAT in respect to the final child and parenting orders made 21 December 2009 and as the wife no longer lives in the R1 home any collection or return of the child by the husband during school holidays and when she is not in attendance at school is to take place at the wife’s residence from time to time, currently at her mother’s home at T.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 463 of 2008

MR DENNING

Applicant

And

MS DENNING

Respondent

REASONS FOR JUDGMENT

1. In the matter of Denning, the parties are before me on an application in a case filed by the husband on 2 March 2010.  That application was supported by a substantial affidavit which I have read.  In response the wife filed on 4 March 2010 various orders that she now seeks, and that were supported by her substantial affidavit filed contemporaneously with that response. Mr Berkovitch of counsel appears for the wife this day, and the wife and instructing solicitor have been in court throughout the proceedings.  The husband appears in person.

2. On 21 December of last year the final orders were made in respect of the child of the marriage, born in March 2000.  There was a typographical error on the second page of those orders, which has this day been corrected, as to that date only, and the parties have each been provided with a re-engrossment of that order.

3. As to property the last orders of the court were made 21 December 2009 and the issues of compliance or enforcement of those orders are before the court this day.  There were earlier orders made 7 September 2009 by consent as to property and financial matters and all of those orders form a background to the subsequent December orders and to the matters in issue before me today.  Included within those September orders was a document identified as "Schedule A" which highlighted various documents sought from the husband as to past financial transactions and disclosure and I will further touch upon those issues in these brief ex tempore reasons for judgment.

4. By the December orders of last year the earlier orders of September were varied to provide for the property at C, to be sold by the wife (alone) at the best available price and to a non-related third party.  That property has not been sold and on the evidence before me there has been a limited endeavour by the wife to sell the property.  A real estate agent was not engaged. 

5. The other property before the court is at R1.  That property is registered in the husband's sole name.  The Adelaide/Bendigo Bank has now taken possession of that property.  The parties have vacated and an estate agent, Mr L, has been appointed by that bank to sell the property.  There is a dispute as to likely value, but seemingly in the range of $750,000 to perhaps up to $1 million is the hoped for range of the gross sale price.

6. The property is encumbered by a mortgage of approximately $550,000 in favour of that bank.  What has become a significant issue in the submissions today is that there are two caveats on title.  One lodged by the wife to secure her interest in that property as it is registered in the husband's sole name, and the other provided by a first of litigation funders, a group called ASK Funding who it is said have provided approximately $120,000 or thereabouts to the husband's former solicitors to secure his legal representation in the proceedings.

7. That money is, no doubt, advanced or has been paid at a significant interest rate, and interest is continuing to accrue upon the debt.  That caveat may well cause proceedings in another court to be instituted by the bank, but I make no further comment upon, or any direction, in that regard.  The existence of that debt has been again brought to the attention of the court at the conclusion of the proceedings and it may well have a significant impact upon any ability to settle the sale of the R1 property or otherwise to deal with the balance of the sale proceeds beyond paying out the first mortgage and costs and expenses of an related to that sale.

8. The property at C has a value approximately of between $400,000 and $550,000.  It is encumbered by a mortgage debt to the Adelaide/Bendigo Bank of $350,000 or thereabouts.  It is submitted to the court that the mortgages are not cross-related and they are individual and secure debts owed by each of the parties who are the respective registered owners of those properties to that bank.  Again, that may or may not be correct and I make no further observation upon the structure or relationship of those mortgage debts.

9. There is, now, further agreement to sell the C property.  I will appoint a local estate agent, Mr S to sell the property, initially by private treaty or thereafter public auction as, in his professional capacity, he may so advise the parties.  I intend to appoint the husband and wife as having the joint conduct of the sale but the conveyance of the sale will be performed by the wife's solicitor.

10. The sale must be on an unconditional basis with a settlement period within 120 days, or preferably earlier.  What is required of the parties is that all documents of and related to the appointment of Mr S are to be completed within 14 days of this day and Mr S is to be given no more than a 90 day exclusive period to sell the property.  It is common ground that the property be sold for the best obtainable price and clearly, on sale, the bank mortgage debts and all costs and expenses of and related thereto will need to be paid in full to the Adelaide/Bendigo Bank.

11. All reasonable and proper costs of and incidental to the sale and other outgoings, if any, by way of arrears of rates or other financial obligations of the vendor, must be discharged.  Any balance of moneys should be invested in an interest bearing joint deposit in the names of the husband and wife, but that may depend on other considerations of the bank and those matters may require to be reconsidered by this court at a future date.

12. Depending settlement of the sale of C property, neither the husband nor wife nor their servants and agents are to borrow any other moneys on its title, to offer that property as security in any manner and likewise, are not to remove any fixtures or fittings from the C property.  As to the R1 property, the wife has removed certain items from that property.  I have been able to ascertain the removal of curtains, wooden venetian blinds, mirrors from the bathroom, the oven and dishwasher.  All of these items are said to be in private storage in Melbourne or Gippsland. 

13. I provided the opportunity for her counsel to ring the appointed estate agent, Mr L, and from what the court has been told, albeit not on affidavit and by way of agreed comment from the bar table, the return of these items will not necessarily add any value to the property and will not disrupt its intended mortgage sale.  Otherwise, there is an agreed position between the husband and wife that the property is clean and well presented for sale.

14. What I intend is that the wife must keep safe these items, make a detailed list of what she has removed from the property and provide that to the husband and the value or disposal or ownership of these items will be an issue in this court and in these proceedings.  In saying that, I am not trying to elevate a chattel dispute to any matter of significance as their value may be limited, particularly if I were to accept the evidence of the wife in her affidavit and as described by her counsel today.

15. I carefully make no comment on those matters but warn the parties of expending excessive costs on issues that are not central to the real financial matters in dispute.  Likewise, the husband has suggested that he left that R1 home with no, or very few, assets.  All chattels were left in the home and there is otherwise a dispute as to the ownership of all of the furniture, chattels and contents of the home and additional personal items that the husband alleges the wife either has or should have in her possession.

16. These matters, again, remain in dispute to another day but will only further inflame the attitude of both parties in this case and make any resolution more difficult.   Again, proper thought and attention must be given to establishing the identity of all such personal chattels and items and any value thereof.  The R1 property will be sold by mortgagee sale public auction.  The bank most certainly will have their first mortgage paid off and all costs and expenses of an incidental to the sale process and other property charges and outgoings.

17. There does remain, then, the very real question of that caveat lodged by the litigation funder, and what quantum is properly owing there under and whether settlement can occur with that caveat issue unresolved.  They are matters that I am not asked to deal with today and rightly affect parties to the sale process which are not before me in court this day and may not fall within the jurisdiction of this court.

18. That caveat should not prevent the immediate sale process for R1 property, but it may well place on hold the settlement of that sale, and that in itself should, or could cause issues to any prospective purchaser and lead to other potential legal action and costs to the parties ultimately, which should be reflected upon immediately by the husband and wife and those advising them. The outline of discussion before me today was for the mortgages and costs of sale to be paid and any surplus funds to be held in a joint interests bearing account in the joint names of the parties pending further order of the court.

19. That would of course require the parties to provide their tax file numbers and that investment would be organised by the wife's solicitor.  That regime, however, may become somewhat uncertain in the context of the caveat and any settlement issue.  I will understand that liberty to apply may need to be reserved in this matter, pending any further proper applications, but most likely those matters will be in another court.

20. But ultimately, the financial concern of the parties is that any costs of and incidental to those transactions or any adverse financial outcomes may impact upon each of them.  There are various other orders sought by the husband in his application.  I do not intend to discharge previous orders of the court in relation to sale but will vary orders previously made.  I will endeavour to deal with the issue of chattels and items removed from the home by orders today and I most certainly will not dismiss the caveats lodged against the title to R1 property as sought by the husband in paragraph 5 of his application now before the court.

21. As to the orders sought by the wife in her response, I will not permit her to relocate to C with the daughter of the marriage.  That would wholly disrupt the periods on an alternate weekend basis and holiday basis which the husband has now in the order for his daughter to live with him.  As unsatisfactory as it may be the wife and child will need to remain living within the Melbourne metropolitan area, pending further order of the court, to facilitate that agreed child/parenting situation.  In any even, I will order that C property be sold and that it would be inappropriate for the wife to relocate herself and her daughter to C property on an interim basis. 

22. As to the orders sought in paragraphs 3, 4, 5, 6, and 7 of her response, I will make further orders today for the husband to provide particulars, either as to ownership or possession of the motor vehicle he now drives, and otherwise to provide whatever background, financial or document related information as to his employment, superannuation and the moneys that were paid into and withdrawn from the Commonwealth Bank account identified in paragraph 3 of that order sought.

23. It clearly is a substantial and wholly unresolved issue of the moneys that had flowed through that Commonwealth Bank account, at least from 1 July 2005.  The husband has helpfully indicated to the court that he can provide or download those Commonwealth Bank statements and documents and cross reference them to give information to the wife and her legal advisers as to the inflow and outflow of funds, even to a more helpful extent that that which he said he has already provided to the court in earlier affidavits.

24. Without that further information, all matters of and related to this substantial issue, given the quantum allegedly involved (approximately $834,000) will be made more difficult to both explain and substantiate.  I will therefore require the husband to do that, which he says he can and will do, to try and move this litigation forward.  I will require no further borrowings to be made against C or R1 properties and the properties are not to be pledged as financial security or deal with in any manner by either of the husband and/or wife, contrary to the orders made today.

25. The intent of the court must be crystal clear, and that is for both parties to be sold - for both properties to be sold in an efficient and professional manner by duly appointed real estate agents and thereafter for proper liabilities and mortgages to be paid in an endeavour to ascertain what available equity remains to the husband and wife and therefore to be included within any section 79 proceedings before the court.

26. These brief reasons which summarise the lengthy submissions will be drafted in the form of orders forthwith and I take this opportunity to bluntly and boldly emphasise to the parties that compliance must be immediate and complete.  Clearly, there are past matters in this file where there has been some level of either interpretation or incomplete compliance with the court orders or what was intended, and there should be no mistake by either party that common sense, commercial reality must now dawn on each of them.

1. Assets must be realised, subject to the unknown issue of that significant caveat debt which, again, was brought to the court's attention only at the very conclusion of submissions.  It may be that proper notice need be given to that caveator who provided funding and in that context it seems that the husband does not challenge the legal bill, or the quantum of moneys, paid to his former solicitors.

2. What is not known to the court at the moment is the quantum that the wife has paid to her solicitors, or likewise, how much she is out of pocket for her expenses.  At some stage there will be a consideration of the parties being each responsible for their own legal fees, but I do not further develop any of those issues without further accurate financial information before the court.  Clearly it would be helpful if the wife provided a letter to the court pursuant to Rule 19.04, updating all of her legal expenses and outgoings.

3. With that brief ex tempore overview of current facts and with indicating the outcome of required orders this day, and trying to move this forward in an appropriate manner and applying some level of commercial common sense to this matter, I will not ask the parties to consider and draw orders, because that will not bring about any likely meaningful orders and I will proceed now to dictate orders that will be announced and will operate to deal with the current contested issues before the court.

4. I do so, on the basis that this matter is in my docket, is listed for case management before me on 4 May 2010 and has a final defended property hearing set for four days commencing 20 July 2010.  This matter must be ready to proceed on that July date, otherwise I have no idea if it will be re-listed this calendar year.   I am confident there is a significant level of failure to cooperate between the parties and there are various agendas and those matters can, if and whenever relevant, be otherwise explored or will be explained to the court hereafter.

5. For those brief reasons and strictly on an ongoing interim basis and acting with some level of urgency, I will have these ex tempore reasons for judgment transcribed, placed upon the court file and made available to the parties.  I emphasise that the parties must act in accordance with what is detailed within these reasons, and the orders that I now dictate will endeavour to encapsulate those intended order in accordance with the reasons.

6. I will reserve liberty to the parties to apply to me or to another judge of this registry on any proper and necessary basis, but I caution the parties that they should endeavour to resolve procedural and interim issues themselves without again resorting to court proceedings.

I certify that the preceding paragraphs are
a true copy of the reasons for judgment herein
of The Honourable Justice Young

………………………………………………………..
Associate: