Downie & Lopes
[2021] FamCA 30
•4 February 2021
FAMILY COURT OF AUSTRALIA
Downie & Lopes [2021] FamCA 30
File number(s): MLC6868 of 2019 Judgment of: WILLIAMS J Date of judgment: 4 February 2021 Catchwords: FAMILY LAW – PROPERTY – Interlocutory proceeding – application for sale of the former matrimonial home Legislation: Family Law Act 1975 (Cth) ss 79, 114(3) Cases cited: Bearup & Bearup (1993) 16 Fam LR 797
Furtado & Furtado [2011] FamCA 1018
Harris & Harris (1993) 16 Fam LR 579Strahan & Strahan (Interim Property Orders) [2009] FamCAFC 166
Number of paragraphs: 50 Date of hearing: 21 January 2021 Place: Melbourne Counsel for the Applicant: Mr Matta Solicitor for the Applicant: Mitchell Family Law Counsel for the Respondent: The Respondent appeared in person ORDERS
MLC6868 of 2019 IN THE MATTER BETWEEN: MR DOWNIE
Applicant
AND: MS LOPES
Respondent
ORDER MADE BY:
WILLIAMS J
DATE OF ORDER:
4 FEBRUARY 2021
THE COURT ORDERS THAT:
1.By consent, and pursuant to s.79A(1A) of the Family Law Act 1975 (Cth), the Final Orders made 19 July 2019 be set aside.
2.Within seven days of these Orders, the husband pay to the wife the sum of $15,000 with such funds to be characterised as an interim property settlement;
3.Within 28 days of these Orders, the wife vacate the real property located at B Street, Suburb C, Victoria, being the property described in Certificate of Title Volume …, Folio … (“Suburb C Property”) at her expense;
(a)the wife shall leave the Suburb C Property in good condition, fair wear and tear excepted; and
(b)the wife shall remove all of her possessions from the Suburb C Property.
4.Pending the wife’s compliance with Order 3, the wife will pay all electricity, gas, water, telephone, and internet bills relating to the Suburb C Property as and when they fall due;
5.Upon the wife vacating the Suburb C Property, the following outgoings shall be paid from the proceeds of sale, with both parties at liberty to bring into account at trial the ultimate responsibility for payment of:
(a)all electricity, gas, water, telephone, and internet bills;
(b)the home loan repayments;
(c)rates and insurances.
6.The parties will do all such things as are required to list the Suburb C Property for sale and the following Orders will apply:
(a)the husband will forthwith provide to the wife a list of three proposed selling agents, and the wife will nominate an agent within 7 days. In the event she fails to do so, the husband shall nominate the selling agent;
(b)upon nomination of the selling agent, each party do all acts and things and sign all documents as may be required to appoint the selling agent and to instruct the agent to list the Suburb C Property for sale as soon as practicable;
(c)the husband will forthwith provide to the wife a list of three proposed conveyancing solicitors to act on behalf of the parties to effect the sale, and the wife will nominate a conveyancing solicitor within 7 days. In the event she fails to do so, the husband shall nominate the conveyancing solicitor;
(d)the mode of sale, listing and reserve price shall be as agreed between the parties in writing, and failing agreement as recommended by the agent appointed pursuant to Order 6(a) hereof;
(e)subsequent to the wife’s vacating the Suburb C Property, the property shall be advertised for sale as soon as practicable by the agent;
(f)the parties will accept any unconditional written offer to purchase the Suburb C Property that exceeds the reserve price, unless:
(i)otherwise agreed between the parties in writing to reject the offer;
(ii)the offer provides for settlement on terms longer than 60 (sixty) days;
(iii)the offer is conditional, and the solicitor recommends rejecting the offer based on the conditions.
(g)the parties are to co-operate in every way with all reasonable directions of the agent in relation to the marketing of the Suburb C Property for sale including but not limited to:
(i)making the keys readily available;
(ii)allowing inspection of the Suburb C Property at all times reasonably requested by the agent;
(iii)ensuring that the Suburb C Property is clean, neat and in good order at the time of inspection by any prospective buyer; and
(iv)authorise any cleaning, styling, and preparation of the Suburb C Property for sale as recommended by the agent, to a maximum cost of $20,000.
7.Upon agreement being reached for sale of the Suburb C Property, the parties execute the contract of sale and all other documents necessary to complete the sale of Suburb C including all transfer documentation forthwith without delay upon its submission to the parties by the agent or their solicitor.
(a)the contract of sale shall provide for completion within sixty (60) days after the date of the contract, unless otherwise agreed between the parties in writing;
(b)upon settlement of the sale, the proceeds of sale of the Suburb C Property shall be paid in the following manner and priority:
(i)firstly, to meet all costs, charges, commissions, and expenses of the sale;
(ii)secondly, to discharge the Suburb C Mortgage;
(iii)thirdly, pay the outgoings referred to in paragraph 5 hereof;
(iv)the balance to be held on trust pending further Order with the appointed Conveyancing Solicitors pursuant to Order 6 hereof, in an interest-bearing controlled monies account.
8.The husband be permitted to:
(a)negotiate on behalf of the parties with the mortgagee of the Suburb C property to obtain a moratorium or deferment of monthly mortgage payments pending the settlement of the sale of the property; and
(b)provide a copy of these orders to the mortgagee.
9.In the event either party fails to comply with the obligations pursuant to these orders, or sign any documents required to effect a moratorium or deferral of monthly mortgage payments pending settlement, pursuant to section 106A of the Family Law Act 1975, a Registrar be appointed to sign any such documents.
10.All extant interim applications are otherwise dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Downie & Lopes has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
Williams J
On 19 July 2019, final property orders were made by consent between the parties.
On 6 January 2020, the husband filed an Initiating Application seeking that the final property orders be discharged. On 7 April 2020, the wife filed a Response to the husband’s Initiating Application. On 4 August 2020, the wife filed an Amended Response which sought that the final property orders be set aside. On 12 August 2020, the husband filed an Amended Initiating Application seeking that the final property orders be discharged pursuant to s.79A(1A) of the Family Law Act 1975 (Cth).
The applications were initially listed before me in the Judicial Duty List on 20 July 2020 and on 28 August 2020. Orders were made on 28 August 2020 adjourning the matter to a Judicial Settlement Conference before the Senior Registrar on 25 September 2020. Those orders included a notation that both parties have agreed that the consent orders made on 19 July 2019 be set aside pursuant to s.79A of the Family Law Act 1975 (Cth).
Unfortunately, the parties were unable to reach agreement on 25 September 2020 and the matter was again listed before me on 6 November 2020. On that day, the wife had recently been discharged from hospital and was unable to effectively participate in the proceedings. The matter was eventually listed for interim determination on 21 January 2021.
At the commencement of the hearing, orders were made by consent setting aside the final property orders made on 19 July 2019.
Interim Issues
At the commencement of the hearing, the following interim issues were in dispute:
a)should the parties’ property situated at Suburb C be sold, pending resolution of the dispute between;
b)if the property is to be sold, the following issues are relevant;
(i)should the wife be permitted to remain in the property until sale or should she be required to vacate the property;
(ii)if she is required to vacate the property, how long should she be entitled to remain in the property;
(iii)payment of $15,000 to the wife as partial property settlement;
(iv)payment of the mortgage and outgoings referable to the property pending settlement of sale;
(v)choice of selling agent and solicitor to act on behalf of the parties for the sale of the property.
BACKGROUND
The husband is aged 37 years old and the wife is aged 37 years old. The parties commenced cohabitation in November 2011. In November 2018, the parties purchased the property situated at B Street, Suburb C for the sum of $1,755,000. The property was financed with a mortgage of $1,250,000 and the balance of the purchase price was paid by the parties.
On 13 May 2019, the parties separated and on 19 July 2019, final property orders were made by consent. The final property orders required the wife to vacate the Suburb C property on 17 October 2019. The wife did not vacate the Suburb C property in October 2019 and as at the date of this hearing, remained living in the property.
The husband asserts that between June 2019 and March 2020, he met the mortgage repayments of approximately $5,665 per month, from funds which he borrowed from his mother. Subsequent to March 2020 the mortgage payments have been deducted from a redraw facility, which will be depleted after the next month’s mortgage payment.
The husband now seeks the sale of the property and the wife seeks that she be entitled to remain in the property for a period of five years, prior to paying the husband his share of the property.
At the commencement of the interim hearing, an order was made by consent between the parties setting aside the final property orders of July 2019.
Applications and Documents relied upon by the parties
The Husband
The husband relied on the following documents:
(a)Amended Initiating Application filed 12 August 2020;
(b)Affidavit of the husband filed 9 October 2020;
(c)Financial Statement of the Husband filed 9 October 2020;
(d)Minute of Proposed Orders dated 21 January 2021.
The Wife
The wife relied on the following documents:
(a)Amended Response filed 4 August 2020;
(b)Affidavit of the wife filed 13 December 2020;
(c)Financial Statements filed 13 July 2020 and 31 July 2020.
Firstly, I will address the proposed sale of the Suburb C property.
Sale of the Suburb C Property
The court’s power to order an interim sale of property is found in s.114(3) of the Family Law Act 1975.
The husband seeks orders providing for the immediate sale of the Suburb C property for the following reasons:
(a)neither he nor the wife is able to meet the monthly mortgage payments of $5,665;
(b)the redraw facility, from which the mortgage payments had been met since March 2020 will expire after the mortgage payment of February 2021;
(c)the wife is currently unemployed and has been since 25 September 2020 and has no capacity to contribute to the ongoing mortgage payments;
(d)the husband is unable to meet the mortgage payments from his current income as since 28 September 2020 his employment has been reduced to 3 days per week;
(e)as stated at paragraph 24 of his affidavit, his weekly income is $1,984 and his weekly expenses are $2,247, which includes repayments of the loan obtained from his mother to pay the mortgage;
(f)he is simply unable to pay half of his income for the next five years to enable the wife to reside in the property;
(g)as the parties have already been separated for two years, the wife’s proposal would result in the husband not receiving his entitlement to a property settlement until seven years post separation;
(h)in the event the mortgage payments are not made then the mortgagee has advised that they will take proceedings to obtain possession of the property and conduct a mortgagee sale;
(i)the husband is prepared to borrow further funds from his mother of $15,000 to pay to the wife as a partial property settlement to enable her to re-accommodate herself pending sale of the property and a possible application by her for further distribution of the proceeds of sale;
(j)even if she were in employment commensurate with her previous employment, the wife has no capacity to meet future mortgage payments which would enable her to retain the property long-term;
(k)the sale of the property is an inevitable outcome which the wife refuses to acknowledge;
(l)a mortgagee sale would result in less funds being available for distribution between the parties, in circumstances where the asset pool is relatively modest.
The wife opposes the sale of the Suburb C property on the following basis:
(a)subsequent to separation, she has remained in the property;
(b)she seeks an opportunity to remain in the property for a period of five years from the date of final orders, in circumstances where the parties separated in May 2019, to enable the equity in the property to increase so that her financial future will be more secure;
(c)the dispute between the parties is not an even playing field;
(d)she has had to relocate her whole life to Australia and did not have any family or sense of support from anyone, other than remaining in the home;
(e)being required to vacate would adversely affect her mental health;
(f)since separation, the husband has not provided adequate support to her;
(g)she has been able to negotiate a lower interest rate with the bank which would lower the monthly mortgage commitments;
(h)she has made a great non-financial contribution to the marriage having relocated from Country D and the court should afford her an opportunity to purchase the property at the expiration of five years;
(i)the husband has manipulated his reduced employment, as his employer is a small company within a very close knit set of employees, which would enable him to do so;
(j)the husband lives in a household with a $200,000 gross annual income;
(k)his financial statement filed in July 2020 is incorrect as it includes payments of mortgage repayments which at that time were being met from the redraw facility;
(l)his lifestyle is more lavish than the frugal lifestyle the parties led during the relationship.
Whilst I have sympathy for the wife’s position and her desire to retain the property, it is inevitable that if the mortgage payments are not made in a timely fashion, then action will sooner or later be taken by the mortgagee to regain possession of the property and conduct a mortgagee sale. That would be a catastrophic outcome for the parties and contrary to their interests. The asset pool is relatively modest and a private and orderly sale of the property by the parties would maximise the net proceeds of sale available for distribution between the parties.
It is not tenable nor desirable to defer the husband’s eventual property settlement for a period of seven or so years post separation. The wife has not demonstrated that she would be able to meet the current mortgage payments, even if she obtained a reduced interest-rate or indeed obtained employment. She did not provide any proof of any discussions with the bank as to reduced interest payments nor the rate of monthly commitments in the future. Nor did she provide any evidence as to how she intended to obtain employment in the future, or what that employment might be or the income she would be likely to receive.
The wife does not propose that she would be able to meet the mortgage payments without any assistance from the husband and did not provide any compelling submissions nor evidence as to why the husband should be obliged to pay a mortgage on a property for a further five years, when there was almost no likelihood of the wife be ever being in a position to retain the property.
In the circumstances, I am persuaded by the arguments put forward by Counsel for the husband and intend to make an order that the property be sold. Such an order will ensure the preservation of the equity in the property, rather than an inevitable mortgagee sale, which may well substantially deplete the modest equity available for distribution between the parties.
Having determined that the Suburb C property should be sold, I will now address the remaining issues in dispute.
Should the wife be required to vacate the property pending sale
The husband proposes that the wife should be required to vacate the Suburb C property pending sale for the following reasons:
(a)he has ongoing concerns that the wife would actually vacate the property, given that she failed to vacate the property in October 2019;
(b)he is also concerned about the state of the property and the wife’s ability to follow directions of a real estate agent appointed to sell the property;
(c)annexure D-4 to the husband’s affidavit of 9 October 2020 are photographs of the property as at 22 December 2019;
(d)the photographs demonstrate a house which is not in a suitable state for sale and certainly not to maximise the sale price;
(e)the husband has no confidence about the wife’s capacity to maintain the property during the sale process;
(f)he is prepared to offer the wife $15,000, which he would borrow from his mother, as a partial property settlement to enable her to meet relocation expenses pending a further application for distribution of the sale proceeds;
(g)the sum of $15,000 has been calculated on the basis of rentals for appropriate properties, payment of a bond and removalist expenses, which is referred to in paragraph 21 of the husband’s affidavit.
The wife opposes an order that she vacate the property pending sale on the following basis:
(a)she disputes the submission that she has not been able to maintain the property since separation;
(b)she admits to having stuck the Post-it note on the cupboard of cleaning products, as demonstrated in annexure D-4, but submits that she did not know how to use those particular products;
(c)she has cleaned and maintained the property regularly sometimes with the assistance of her neighbour;
(d)she has purchased a ladder from a store and garden equipment to enable her to maintain the property;
(e)she has purchased a trellis to extend the front fence to provide additional privacy to the property;
(f)she is able to follow agent’s instructions and maintain the property.
Despite the submissions of the wife, I have grave reservations that she would be in a position to present the property in such a manner to maximise the price. The photographs at D-4, although taken in December 2019, demonstrate many boxes, piles of possessions and a generally disordered and chaotic state of the property. The wife did not provide any current photographs as to the current state of the property to substantiate her claims that during her occupation she has maintained and appropriately cared for the property. I acknowledge that the wife will be deeply disappointed that she vacate the property prior to sale however I intend to afford her sufficient time to obtain alternative accommodation.
The husband proposed that the wife be required to vacate the property within seven days, as that would fit into a timetable for an orderly sale of the property being completed within 3 to 4 months.
The wife proposed that she be given a period of 3 ½ months to vacate the property should I make such an order.
In the circumstances I consider that the wife should be afforded 28 days from the date of these orders to vacate the property, which will enable her to secure alternative accommodation. I also intend to make an order that the husband forthwith pay to the wife the sum of $15,000, as proposed by him, to enable the wife to secure alternative accommodation, including payment of a bond and removalist expenses.
Payment of $15,000 to enable the wife to vacate the property
The husband proposes that he pay the wife the sum of $15,000, which he will borrow from his mother, to assist the wife with relocation expenses, and that sum be by way of partial property settlement.
The wife did not make any specific submissions about how the payment should be categorised. She did express her disdain at receiving funds from the husband’s mother.
Neither party made submissions about the court’s power to make such an order.
The principles applicable to the court’s power to make partial property settlement orders and the principles to be applied in such an application are well settled.
The Full Court in Strahan & Strahan (Interim Property Orders) [2009] FamCAFC 166 stated at [132]:
[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.
The considered and accepted two-step approach adopted in Strahan, at paragraph [137] is as follows:
[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…
As to the authority relevant to the requirement that any interim order must be capable of variation or reversal at any time prior to, or as part of, the final exercise of the s.79 power, the Full Court said in Strahan at paragraph [136] as follows:
[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".
Bearup & Bearup (1993) 16 Fam LR 797, Harris & Harris (1993) 16 Fam LR 579 and the decision of Murphy J in Furtado & Furtado [2011] FamCA 1018 at [10] and [11] refer to the context of restraint and caution which should be exercised by a trial judge in making interim orders.
I also intend to make an order that the husband forthwith pay to the wife the sum of $15,000, as proposed by him, to enable the wife to secure alternative accommodation, including payment of a bond and removalist expenses and that be a partial property settlement. I am satisfied that the requirements to make an order for partial property as referred to in the preceding authorities has been met.
It may well be that once the wife vacates the property, she will pursue a future spousal maintenance application against the husband, depending on her then circumstances.
Payment of the mortgage and outgoings referable to the property pending settlement of sale
In his Minute of Proposed Orders, the husband proposed that the wife pay all rates and insurances, utilities, and all mortgage instalments relating to the property until she vacated the property. Upon her vacating the property he proposed that the parties equally pay utilities, rates insurances and mortgage instalments.
The wife did not make any specific submissions about this issue.
I raised with Counsel for the husband how it was that the husband proposed that the wife should pay mortgage payments prior to her vacating the property in circumstances when he was well aware that she was unemployed and had no capacity to do so. Appropriately, it was conceded by the husband that there should not be any order for payment of mortgage payments and that an order should be made permitting him to contact the bank to seek a moratorium on monthly mortgage payments pending the finalisation of the sale of the property. Both parties would then be at liberty to make submissions about who would bear the ultimate responsibility of the mortgage payments.
I consider it appropriate that the wife pay for her utility bills during her occupation of the property. Thereafter, the utility bills pending settlement of a sale would not be significant and could be paid from the settlement funds. I do not intend to make an order about the payment of the utility bills following the wife’s vacating the property and this should be able to be resolved between the parties on an interim basis once the property has sold, or if not either party may seek to bring into account any such payments made by them.
Choice of real estate agent and solicitor to act on behalf of the parties in the sale of the property
The husband initially proposed a firm of estate agents to be engaged to sell the property. The wife disagreed with that choice of agent and initially proposed that she conduct a private sale of the property.
I advised the wife that I was unlikely to make an order that she conduct a private sale of the property and that in my view the appropriate order would be for the husband to provide to the wife a list of three proposed estate agents and she could choose from that list within seven days. Counsel for the husband submitted that in the event the wife failed to nominate a selling agent within the requisite period then the husband should be permitted to do so. That is a sensible resolution of the issue of choice of selling agent.
The husband also initially proposed a firm of solicitors to conduct the sale on behalf of the parties. The wife opposed the firm and suggested that the parties engage the conveyancers who had acted on their behalf when they purchased the property.
Whilst that may be viewed as a sensible solution, as the wife is unrepresented, the parties will require a solicitor with an audited trust account to act on their behalf in the sale of the property, to ensure that the net proceeds of sale are invested in a controlled monies account on their behalf.
It was proposed that the same methodology apply to choice of solicitor as to choice of estate agent, and I agree that would be the appropriate way to proceed.
I intend to make orders that the husband provide to the wife within seven days a list of three estate agents and three solicitors to be engaged on their behalf, and that the wife be afforded a further seven days to nominate the agent and solicitor, and if she fails to do so the husband be entitled to nominate the selling agent and solicitor.
The final issue raised by Counsel for the husband was that the proposed 106A order, as set out in paragraph 8 of the proposed minute, extend to any documents required to be signed to affect a moratorium on the mortgage. The wife submitted that she would sign any documents required to defer monthly mortgage payments.
I consider it appropriate to extend the s.106A order to include documents required to effect a moratorium or deferment of the mortgage and will make the appropriate order.
I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Williams. Associate:
Dated: 4 February 2021
0