Dunstan and Dunstan

[2016] FamCA 94

FAMILY COURT OF AUSTRALIA

DUNSTAN & DUNSTAN [2016] FamCA 94

FAMILY LAW – PROPERTY – Injunctions – application by the wife for sale of real and personal property owned by the parties and/or their entities – where the wife alleges that the husband has ceased paying the mortgage encumbering a real property in her name and seeks to sell a property owned by the husband – where there are deficiencies in the husband’s material and the instructions given to his counsel – where there is a conciliation conference listed in approximately two months –  no evidence to suggest that the bank is presently seeking to take possession of the property the subject of the mortgage – interim orders made for the release of funds held on trust to the wife and the sale of personal property of the parties

Family Law Act 1975 (Cth)

APPLICANT: Ms Dunstan

RESPONDENT: Mr Dunstan

FILE NUMBER: MLC 9019 of 2015

DATE DELIVERED: 2 February 2016

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: 2 February 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Robinson

SOLICITOR FOR THE APPLICANT: Westminster Lawyers

COUNSEL FOR THE RESPONDENT: Mr Scriva

SOLICITOR FOR THE RESPONDENT: Altius Partners Lawyers

Orders

IT IS ORDERED THAT

1. The husband and the wife forthwith do all acts and things and sign all necessary documents to authorise the release of the balance of the proceeds of sale of the real property at B Street, Suburb C in the State of Victoria held on trust by the wife’s solicitors  to the wife to be applied as follows:

   (a)to reimburse the wife for all necessary expenditure incurred in the preparation of and for the marketing of the property known as and situate at D Street, E Town in the State of Victoria (“the E Town property”); and

   (b)the balance to be paid to the wife with the characterisation of that payment  to be reserved for determination at trial.

2. The husband forthwith do all acts and things and sign all necessary documents to sell the military vehicle, the proceeds of sale to be applied to the repayment of the loan to the National Australia Bank secured over the E Town property.

3. The husband, his agents and/or servants be and are hereby restrained from any further dealing with the prestige motor vehicle, registration number MINDER including but not limited to entering into any lease agreement with respect to the said vehicle pending further order of this Court or written agreement of the parties.

4. The wife have liberty to apply on short notice:

   (a)to relist paragraph 3(a) of the interim orders sought in her Initiating Application filed 24 September 2015;

   (b)to relist paragraph 4 of the interim orders sought in her Initiating Application filed 24 September 2015 in the event that the E Town property cannot be sold or in the event that the National Australia Bank gives notice of its intention to take possession of the E Town property for the purposes of a mortgagee sale. 

5. The husband forthwith provide to the wife’s solicitors discovery of all documents relating to these proceedings including but not limited to:

   (a)copies of statements of all bank accounts held or operated by him personally or jointly with any other person for the last five years;

   (b)copies of statements of all credit cards held or operated by him personally or jointly with any other person for the last five years;

   (c)financial statements for the last five years (including Balance Sheets and Profit and Loss Statements) for any and all companies of which he is or was a director in the last five years or for any trust of which he is or was the appointor, trustee or director of the trustee company in the last five years;

   (d)copies of any application made in the last five years for finance made by him or by any company of which he is a director or shareholder or for which he was provided any guarantee in the last five years;

   (e)all documents and correspondence relating to his removal as guarantor of debts owing to the National Australia Bank by the wife, F Pty Ltd and G Pty Ltd; and

   (f)an itemised list of the military collection.

6. All extant applications be otherwise adjourned to the Conciliation Conference on 26 April 2016 at 2.15 pm. 

IT IS NOTED that publication of this judgment by this Court under the pseudonym Dunstan & Dunstan has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 9019  of 2015

Ms Dunstan

Applicant

And

Mr Dunstan

Respondent

REASONS FOR JUDGMENT

1. The wife’s Initiating Application filed on 24 September 2015 was listed for hearing before me in the Judicial Duty List on 2 February 2016. Both the husband and the wife were represented by counsel and the matter proceeded by way of oral submissions made by counsel based upon the evidence in the affidavits filed by each party and their respective financial statements. That evidence was not tested by cross-examination.  Although the wife was present in Court the husband did not attend either the hearing before Registrar Lethbridge on 14 December 2015 or the hearing before me in the Judicial Duty List on 2 February 2016. At the commencement of the hearing I was informed by counsel for the husband that he had not conferred directly with his client and that the husband’s instructions had been relayed to him by his instructing solicitor. In my view there were deficiencies in both the husband’s material and the instructions given to his counsel.  I will refer in more detail to these issues later in my reasons.

2. In the wife’s Initiating Application, she sought inter alia interim orders for a lump sum payment of $50,000, spousal maintenance of $1,000 per week and that the husband pay mortgage payments and outgoings with respect to the real properties at Suburb C and E Town and both the registration and insurance for the German motor vehicle in her possession. The wife further sought that the husband deliver the prestige motor vehicle and two motor bikes in the husband’s possession to her for sale, the sale of the Suburb H property, the release of funds to her from the sale of a property at Suburb C, injunctions restraining the husband from disposing of or diminishing the value of property either owned by the parties or entities in which they have an interest and various orders by way of discovery.

3. The matter was listed for a Case Assessment Conference at 9.15 am on 14 December 2015. On that date orders were made by Registrar Lethbridge which provided inter alia that the husband file and serve a response to the wife’s Initiating Application, a financial statement and any relevant affidavit by 15 January 2016 and that the matter be adjourned for hearing in the Judicial Duty List on 2 February 2016 and listed for a conciliation conference at 2.15 pm on 26 April 2016. Orders were also made by consent for the release of $50,000 of the proceeds of sale of the Suburb C property to the wife and the payment of outstanding private school fees and injunctive relief in the terms sought by the wife. Orders were also made for discovery both in relation to particular transactions and in general terms. The orders for discovery required the parties to exchange, if not already exchanged, a copy of all the documents referred to in r 12.02 of the Family Law Rules 2004 (Cth) and specifically that they exchange copies of documents supporting the information contained in their respective financial statements and the documents sought by the wife in her Initiating Application. Counsel for the wife submitted that although the husband has annexed some documentation to his Affidavit sworn 29 January 2016 he has not otherwise complied with the orders or met his obligation to provide full and frank disclosure.

Background

1. The parties commenced cohabitation in February 1993 and were married in 2003. The wife deposes that she and the husband initially separated in August 2012 resuming cohabitation approximately one month later and separating finally in August 2013.

2. There are four children of their marriage three of whom are over 18 and Samuel, the youngest of the four children, who is 16 years of age and is in Year 11.  The wife deposes that although following separation Samuel spent time with the husband on alternate weekends the husband has not spent any time with or contacted Samuel since April 2015.

3. The wife is and was engaged during the marriage in home duties. She is 42 years of age. The husband is 47 years of age and operated his own business I Pty Ltd. The wife deposes that she has been informed by the husband that I Pty Ltd is no longer operating. It is her case that the husband has a business enterprise in Queensland where it is conceded he is now living.

4. The wife’s evidence which is not disputed by the husband is that during the marriage they acquired a number of real properties which, except for the Suburb H property, were registered in her name or in the name of entities which she owned or controlled. This is notwithstanding that the wife did not work and does not have, and has never had, the capacity to meet the mortgages with respect to the various properties.  

5. The wife deposes that following separation the husband continued to pay the mortgages on the various properties they had acquired during the marriage either in their own names or the names of the entities owned and controlled by them, utilities for the former matrimonial home in Suburb J, spousal maintenance and child support of $650 per week, and school fees but that in December 2014 the husband withdrew all financial support. This does not appear to be the subject of dispute. The wife currently receives the rental income of $500 per week from the Suburb C property and is in receipt of Centrelink payments. This is similarly not disputed by the husband.

6. The wife says that as a result of the husband withdrawing financial support the former matrimonial home in Suburb J, where the wife lived with the children of the marriage, and the property registered in the wife’s name in Suburb C have had to be sold. The wife further deposed  that the National Australia Bank (“NAB”) who hold a mortgage over the property at E Town near K Town which is registered in the name of the wife, had given her until the end of 2015 to sell that property. According to the wife the mortgage payments on E Town are $7,858.39 per month. Although the husband disputes the wife’s evidence and annexed a number of NAB statements to his Affidavit marked VLD-4 showing monthly payments of less than $4,000 per month, it is also clear from those statements that what he is referring to are interest only payments. I am in any event satisfied that the equity in the property is being eroded by the non-payment of the mortgage payments whether or not those payments are interest only or the parties are required to pay both capital and interest in circumstances where the wife, who is the registered owner of the property, does not and has never had any capacity to meet those repayments.

7. Although the E Town property has been on the market for some time and notwithstanding that the wife has significantly reduced the asking price, in fact to a price the husband deposes is well below its market value, it has not been sold. Although it is now past the deadline there was no evidence before me of the NAB actively taking steps for possession of the property.

Discussion

Suburb H property

1. Although the wife sought the sale of the prestige motor vehicle, the military vehicle, the husband’s motor bikes and the release of the balance of the proceeds of sale of the Suburb C property, the primary focus of her case was the sale of the Suburb H property which she submits needs to be sold in order to preserve the parties’ overall asset position by applying the proceeds of sale to reduce the E Town mortgage. The wife also sought reimbursement of those amounts she has spent preparing E Town for sale and in relation to the proposed sale such as aerial photographs.  The wife did not adduce evidence as to the actual amount she had spent.

2. The Suburb H property is registered in the name of Suburb H Developments Pty Ltd (“Suburb H Developments”). The husband is the sole director and shareholder of Suburb H Developments and the registered office of the company is the Suburb H property. It is the wife’s case that the property, which she believes is worth between $1.3 and $1.6 million, should be sold and the proceeds of sale applied to reduce the mortgage over the E Town property. Although it is the husband’s case that the value of the Suburb H property is only $750,000, they both agree that there is a mortgage to Latrobe Finance of on the wife’s case approximately$416,000 and on the husband’s case $420,000. It is the husband’s evidence that he has been meeting the mortgage payments to Latrobe Finance.  

3. It was submitted on behalf of the husband that he wishes to retain the Suburb H property as part of his property entitlements, that he occupies two rooms at the rear of the property and that the rental income provides him with income as well as servicing the mortgage. It was his case that rather than selling the Suburb H property which on his case would realise approximately $330,000, the wife should be required to sell the Suburb C property which has a current value of between $750,000 and $775,000 and is unencumbered and which would provide for a greater reduction in the NAB loan than would be achieved by the sale of the Suburb H property.

4. Although the husband deposes in some detail to what he says are the wife’s failures with respect to the orderly or efficient disposal of assets and he has attached a number of documents to his Affidavit, he neither filed his documents by the date provided by the orders made by Registrar Lethbridge on 14 December 2015 nor does it appear that he has met his obligations with respect to full and frank disclosure or complied with the Registrar’s orders with respect to discovery. Counsel for the husband essentially conceded that this was the case but was unable to offer any explanation as to why the husband had not done so.

5. Whilst the husband has filed a detailed Affidavit, he has in my view failed to address the relevant issues. There are also a number of aspects of the husband’s evidence which appear to be at best incomplete or at worst deliberately misleading. It is the wife’s case that the husband is living and running a business in Queensland. I was advised by counsel for the husband by way of response to that assertion that it was his understanding, which I accept was based upon his instructions, that the husband was in Queensland because he was depressed and was taking some “time out”. However, it became clear during the course of the hearing that the husband has in fact been living in Queensland for at least six months. This is notwithstanding that the husband in both his Affidavit sworn 29 January 2016 and his Financial Statement sworn 25 January 2016 not only gives his address as L Street, Suburb H, the address of the Suburb H property, but also deposes to occupying two rooms of that property. Counsel for the husband in my view appropriately conceded that he had no instructions and there is no evidence with respect to where the husband is living in Queensland. The fact that the husband was not  present and was not providing instructions directly to his counsel meant that it was not possible for counsel for the husband to provide any clarification with respect to the husband’s evidence.  

6. Although the only income disclosed by the husband in his Financial Statement is rental income, I am left with significant uncertainty and reservations about his evidence. The husband in his Financial Statement deposes to receiving rent from M Marketing, N Pty Ltd and O Pty Ltd of $1,650 per week. He does not provide any breakdown of the amounts he says he receives from each of those named or what the amounts paid relate to in circumstances where counsel for the husband submitted that the prestige motor vehicle could not be sold because it is subject to a lease agreement and that some part of the rental income disclosed by the husband is from the lease of the prestige motor vehicle. I note that although counsel for the husband produced what he said was a copy of the lease agreement with respect to the prestige motor vehicle, counsel for the wife submitted that it had not been previously discovered by the husband. Counsel for the husband did not seek to tender that document. Although the husband’s Financial Statement in relation to the rental income refers to Annexure B, one would assume by way of further explanation of that income, Annexure B relates to “contingent assets” and does not assist. The husband in his Financial Statement also deposes to mortgage payments to Latrobe Finance of $650 per week (which is approximately $2,816 per month) and rates and levies of $150 per week. Although there was similarly no breakdown of this figure, as the husband and/or his associated entities appear to only own one property it is reasonable to infer on that basis that the rates and levies are attributable to the Suburb H property.

7. Although it appears that the husband has not discharged his obligation to provide full and frank disclosure or complied with the orders for discovery made by Registrar Lethbridge on 14 December 2015 to produce documents supporting the information in his Financial Statement, he did annex to his Affidavit marked VLD-8 a copy of a lease agreement for the Suburb H property between he and O Pty Ltd, albeit that it appears that he did so to demonstrate that he had taken the German motor vehicle as a down payment on the rent not, it would appear, to support his evidence about the rental income he receives. That lease, which is dated January 2014 and has a commencement date of 1 March 2014, provides for a monthly rental of $2,500 for the first two years followed by $3,000 per month for the third and fourth year and $3,500 per month for the fifth year. That is the only evidence in support of the information contained in the husband’s Financial Statement with respect to his income. Although the husband may be receiving rental income from other tenants he has, notwithstanding the orders made on 14 December 2015, not produced any evidence to back up the information contained in his Financial Statement.

8. The parties in this case acquired significant assets during the marriage starting on the husband’s case with net assets of $250,000 all of which he said he had prior to the commencement of cohabitation. There does not appear to be any dispute that the husband was the breadwinner. The evidence on that basis points to the husband having been a successful businessman. Yet in the face of the wife’s assertion that the husband is operating a business in Queensland and the submission made by the husband’s counsel that it was his understanding that the husband was depressed and was in Queensland taking “time out”, there is no evidence at all which would suggest what attempts the husband has made to obtain employment or, if he has not done so, why that is the case.  

9. On the other hand there is also no dispute that the wife has been engaged in home duties throughout the marriage and that she and the youngest child of the marriage are now largely dependent upon the income she receives from the Suburb C property and Centrelink benefits. I also note that the husband makes no proposal for the support of the wife or their son other than suggesting that they might live on capital from the sale of the Suburb C property.

10. In light of the deficiencies in the husband’s evidence, his failure to provide full and frank disclosure and comply with the orders made 14 December 2015, the absence of any proposals with respect to the support of the wife and the youngest child of the marriage and in circumstances where I am satisfied that the husband is not presently living in the Suburb H property, my initial view was that I should accede to the wife’s application for the sale of that property. The sale of the Suburb H property would not only reduce the mortgage liability with respect to the E Town property but arguably might satisfy the NAB to the extent that it would allow the parties more time to effect a sale of the property rather than face the uncertainty of a mortgagee auction of the property.

1. However in circumstances where there is sufficient equity in the remaining properties to make an adjustment in the wife’s favour in the event of further erosion of the value of the parties’ interests in property as a result of the husband’s desire to retain Suburb H and where the parties will be attending a conciliation conference on 26 April 2016, I propose to give the parties the opportunity to resolve the matter and the husband the opportunity to retain the property as part of any settlement. There is also the possibility that the E Town property might be sold. I do not propose to dismiss the wife’s application for a sale and if the matter does not settle or the E Town property has not been sold and the husband makes no proposals as to how the further erosion of their equity in the E Town property might be stemmed, the wife will be free to renew her application.

2. It is clearly in the interests of both the husband and the wife to conduct the sale of the property and achieve the best possible price rather than have that sale controlled by the NAB. On that basis I also propose to reserve liberty to the wife to apply to relist her application on short notice in the event that it becomes clear that the NAB proposes to take possession of the property for the purposes of a mortgagee auction and that such mortgagee auction might be avoided by the parties taking steps to reduce the mortgage over the property.  It is my view on the evidence as it presently stands that it would be more appropriate to sell the Suburb H property rather than leave the wife without the income she receives from the Suburb C property.

3. Having expressed the preliminary view that I was inclined to accede to the wife’s application for the sale of Suburb H  the matter was relisted for mention before me to advise the parties that I was not proposing to order the immediate sale of Suburb H and to allow counsel for the wife the opportunity to make further submissions with respect to his application for the sale. Although counsel for the wife did not press further with respect to the sale of Suburb H counsel for the husband indicated to the Court that in any event   “there is an option to purchase Suburb H by the tenant”  This was not a matter previously deposed to by the husband, nor was there any mention of the existence of any option to purchase during the hearing of the matter before me and it is my understanding that this was not known to the wife. Although the husband was present in Court his counsel’s submissions add to not allay my concerns as to the reliability of his evidence and the manner in which he has conducted the proceedings to date. 

The Prestige Motor Vehicle

1. The wife also sought the immediate sale of the prestige motor vehicle. Although the vehicle seems like an obvious asset to sell in order to reduce the mortgage, in circumstances where it appears the vehicle may be subject to a lease agreement, which arguably could affect its saleability, I do not propose to order the sale at this time. I say may be subject to a lease agreement as the wife’s legal practitioners were not provided with a copy of the alleged lease agreement for the vehicle until shortly before the hearing before me commenced.

2. However as in the case of the Suburb H property I do not propose to dismiss the wife’s application for the sale of the vehicle. This will give the wife’s legal representatives the opportunity to investigate the alleged lease and what impact it might have upon the saleability or price of the vehicle. If the agreement is not legitimate or even if it is and the wife ascertains that it will not impact upon the saleability or sale price of the vehicle, it will be open to her to renew her application for its sale.

3. In the meantime notwithstanding the injunctive relief already provided for in the orders made by consent on 14 December 2015, I propose to restrain the husband from any further dealing with the vehicle pending further order. This will prevent him entering into any further agreement that might impact upon the saleability or sale price of the vehicle.

The Military Vehicle

1. Both parties agree that the military vehicle should be sold albeit it is the wife’s case that it is the husband who has the interest in military memorabilia and the necessary knowledge and contacts to arrange for its sale. I am satisfied that it is in the interests of both parties to achieve the best possible price for all of the assets that are to be sold and in those circumstances  I propose to order that the husband do all acts and things necessary to sell the military vehicle and to apply the net proceeds of sale to the reduction of the E Town mortgage.

The Trucks

1. Although neither party wishes to retain the trucks it appears that there is likely to be a dispute as to their ownership. The husband asserts that F Pty Ltd, a company of which the wife is the sole director and shareholder, owned the trucks but has now sold that interest to a business associate who had previously leased the trucks from the company. The wife’s case is that the company still owns the trucks and that although the lessee paid out the loan obtained by the company for the purchase of the trucks that was a pre-payment of the lease payments. Whichever is the case there is no doubt that the lessor would need to be on notice in relation to any orders sought by the wife.

2. There is no evidence that the third party has been given notice of the orders sought by the wife and on that basis I do not propose to make any orders with respect to the trucks.

Livestock

1. The husband also sought the sale of livestock located on the E Town property. It is the wife’s case that those livestock were used as payment by the husband for the concreting of the driveway at the property. Although the wife says she is agreeable to the sale of any livestock on the property I see little purpose in making an order to that effect in circumstances where she has deposed that there are none there. Whilst the husband says the livestock are still there, he has on his own case been in Queensland for six months and there is no evidence to suggest that he has attended at the E Town property during that period.

Proceeds of Sale of Suburb C

1. Finally the wife sought orders authorising her solicitors to pay the balance of the proceeds of sale of the Suburb C property to her reserving the characterisation of that payment until the trial. According to counsel for the husband the amount presently in trust is approximately $33,000. As I have not, at least pending the conciliation conference, acceded to the wife’s application for the sale of Suburb H I am satisfied that she should be reimbursed for her expenditure with respect to the preparation for and the sale of the E Town property. I am also satisfied that in circumstances where the wife, whose only income is the $500 per week she receives from the Suburb C property, is responsible not only for her support but also that of the youngest child of the marriage and has the three adult children living with her, any amount remaining after reimbursement of the expenses associated with the preparation for and sale of E Town should be paid to the wife. I propose to reserve the question of the characterisation of those payments to the trial of the matter unless otherwise agreed by the parties.

2. Although counsel for the husband submitted that the proceeds of sale should be applied to the payment of liabilities identified as urgent by the husband I do not consider that it would be appropriate to do so in circumstances where there are significant deficiencies in the husband’s evidence and his disclosure.

The Motorbikes

1. Finally I do not propose at least at this time to order a sale of the husband’s motorbikes. Although their sale at this point of time would be unlikely to resolve the financial difficulties the parties are facing, that is not to say that they will not have to be sold at some later date.

Conclusion

1. In all of the circumstances I propose to make orders for the sale of the military vehicle by the husband, the release to the wife of the proceeds of sale of the Suburb C property and a restraint on the husband from further dealing with the prestige motor vehicle. I will also make the orders for discovery sought by the wife in paragraph 6 of the interim orders sought in her Initiating Application, those orders not being opposed by counsel for the husband. As stated, in the event that the E Town property cannot be sold or the NAB seeks to take possession of that property for the purposes of a mortgagee sale, the wife will have liberty to apply on short notice to relist her application for the sale of Suburb H. Similarly, I propose to give the wife liberty to apply on short notice  to relist her application for the sale of the prestige motor vehicle in the event that the lease agreement produced in respect of that motor vehicle is not genuine or, if it genuine, the wife ascertains that the lease will not impact upon the saleability or sale price of the vehicle.

I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 23 February 2016.

Associate:

Date:  23 February 2016