FARMER & PANSHIN - [2012] FMCAfam 691

FEDERAL MAGISTRATES COURT OF AUSTRALIA

FARMER & PANSHIN

[2012] FMCAfam 691

FAMILY LAW – Property – application for exclusive occupancy and for sale of home pending final order.

Family Law Act 1975, ss.79, 80, 114

Davis & Davis (1976) FLC 90-062
O’Dea and O’Dea (1980) FLC 90-896
Strahan (2011) FLC 93-466

Applicant:

MS FARMER

Respondent:

MS PANSHIN

File Number:

SYC 2252 of 2011

Judgment of:

Altobelli FM

Hearing dates:

5 and 6 July 2012

Date of Last Submission:

10 July 2012

Delivered at:

Sydney

Delivered on:

10 July 2012

REPRESENTATION

Counsel for the Applicant:

Mr B.A. Batey

Solicitors for the Applicant:

Ms J. Stidwill

Counsel for the Respondent:

Mr L. Ang

ORDERS

The Applicant in these proceedings, namely MS FARMER, be declared to have the sole and exclusive use and occupation of the premises known as and situated at [address omitted] in the State of New South Wales ("the property").
The Applicant and Respondent ("the parties") do all acts and things necessary and sign all such documents an papers as may reasonably be required to sell the property for the best price reasonably obtainable in the following manner:
(a)The parties will, within seven (7) days of the making of these Orders, list the property for sale by public auction with Mr H of [omitted] Real Estate Agents or such other agent as the Applicant decides;
(b)The reserve price at which the property shall be listed shall be such sum as may be mutually agreed by the parties in writing within seven (7) days of the appointment of the agent and in the absence of agreement shall be $925,000;
(c)The firm of [omitted] Property Conveyancing, Licensed Conveyancers, will have carriage of the conveyance of the sale of the property.
(d)The parties will co-operate in every way with the agent, including, without limiting the generality of this Clause:
(i)making the key available to the agent at all times;
(ii)allowing inspection of the property at all reasonable times when requested to do so by the agent;
(iii)ensuring that the property, including the grounds, are in a neat and clean condition at the time of the inspection by the agent and prospective purchasers;
(iv)signing all documents requested by the agent in relation to listing the property, except a contract or agreement for sale which has not been authorised by the parties' solicitor or conveyancer; and
Upon completion of the sale of the property, the proceeds of the sale will be applied as follows:
(a)Firstly to pay all costs, commissions and expenses of the sale and to pay any council and water rates and maintenance levies outstanding in respect of any real property;
(b)Secondly, to discharge the mortgage secured against the property and any other encumbrances affecting the property;
(c)Thirdly, the balance then remaining shall be paid into a controlled monies trust account established by the solicitor for the Applicant in trust for both parties.
Pursuant to s.106A of the Family Law Act 1975, should either party fail to do anything, sign any documents or give any authority necessary to give effect to these Orders within seven (7) days of a written request to do so, then the Applicant, MS FARMER, is appointed as trustee for the Respondent in the marketing, executing sales agreements and executing any contract necessary to implement these Orders.
The Respondent, MS PANSHIN, is to vacate the property no later than 4.00pm on Tuesday 17 July 2012.
Leave be granted to parties to re-list before Federal Magistrate Altobelli as regards the implementation or enforcement of this Order on 48 hours’ notice.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

SYC 2252 of 2011

MS FARMER

Applicant

And

MS PANSHIN

Respondent

REASONS FOR JUDGMENT

Introduction and background

On Friday afternoon last, on the second day of property proceedings between the parties and in the context where this case will be part-heard to 15 February 2013, the applicant sought interim orders for sole occupation and sale of the property the subject of these proceedings. The applicant, once in possession, intends to cause the property to be prepared for sale and sold, with the net sale proceeds to be placed in a controlled moneys trust account, pending the final order of the Court.
The respondent is 41 years old, the applicant 34 years old. There is an issue as to whether their relationship commenced in 2006 or 2007, but nothing turns on that in the present context.
The relationship ended in 2010. It was, by any account, an intense relationship.
The substantive issues before the Court appear to be, firstly, the constitution of the asset pool, secondly, assessment of contribution, thirdly, assessment of any future needs.
The applicant seeks final orders for the sale of the property and the division of the net sale proceeds.
The respondent seeks final orders that leaves the property with her, and with the applicant retaining the assets in her possession or control.
The orders the applicant and respondent seek about alteration of property interests are polarised, as is much of the evidence.
The cross-examination of the applicant has not yet concluded.
The respondent has had a series of lawyers representing her at various times. At the hearing, Mr Ang of Counsel, appeared on a direct brief. He has conducted the case professionally and competently in difficult circumstances. The respondent’s documentary evidence is of poor quality, as is evidenced by the many objections that were made and upheld. The respondent, herself, appears to be both emotionally fragile and very assertive at times.
The evidence before the Court consisted of the affidavits filed on behalf of both parties, together with a very substantial quantity of documents that have been tendered, many of which I will shortly make reference to.
The applicant relied on the following affidavits:
a)Applicant’s Affidavit filed 13 April 2011;
b)Affidavit of Jayne Stidwill filed 18 May 2012;
c)Further Affidavit of Jayne Stidwill filed 4 July 2012.
The respondent relied on the following affidavits:
a)Respondent’s Affidavit filed 4 July 2011;
b)Respondent’s Affidavit filed 4 August 2011;
c)Respondent’s Updating Affidavit filed 2 July 2012.

The applicable law

The interim application raises two issues: firstly, exclusive occupancy, and secondly, interim property orders. In relation to exclusive occupancy the source of power is s.114 of the Family Law Act 1975. An order for exclusive occupancy should only be granted with caution: O’Dea and O’Dea (1980) FLC 90-896. In Davis & Davis (1976) FLC 90-062 at p.75309 the Full Court listed a number of criteria relevant to the exercise of power including the means and needs of the parties and any children, hardship, and conduct where relevant. The Full Court also said that the making of an order should not depend merely on balance of convenience issues.
The Full Court in Strahan (2011) FLC 93-466 has recently discussed the approach for an interim property order. The test is not confined to compelling circumstances, but the overarching consideration is the “interests of justice”. The question is whether the making of the order is appropriate in the circumstances. Moreover there must be some assessment of contribution and future needs matters, albeit not necessarily a detailed one. Either the remaining property needs to be adequate to meet the legitimate expectations of both parties at the final hearing, or the order that is contemplated needs to be capable of being reversed or adjusted if later necessary.
In relation to the interim property the source of power is, of course, ss.79 and 80 of the Family Law Act 1975 or the appropriate equivalent in a case like this, where the parties are not married.

The evidence

I summarise the evidence before the Court that I regard as relevant to the interim application for exclusive occupancy and sale of the property.
Firstly, the hearing was extensively delayed as a result of necessary objections to the affidavits prepared by, or on behalf of the respondent.
Secondly, the hearing was then further extensively delayed as a result of the non-attendance of the respondent herself during the course of the hearing.
Thirdly, Exhibit A11 suggests that the respondent has had a falling out with the real estate agent who had previously been appointed to sell the property. There remains a dispute about payment of marketing expenses. That evidence suggests that an offer appears to have been made by a purchaser in March 2011 to purchase the property at one million dollars. The evidence before the Court, in the form of a valuation from [K], suggests the current market value of the property today is $925,000.
Fourthly, Exhibit A8 suggests that the respondent’s financial circumstances are parlous. Just under $660,000 is owed to the mortgagee. $22,600 is owed on a Mastercard and there are negligible funds in credit. Exhibit A5 suggests that the respondent has a personal loan to the Commonwealth Bank of $11,663.
Fifthly, Exhibits A7 and A9 and the very nature of these proceedings, as well as the way in which the case had been conducted, demonstrates that the applicant and the respondent are not able to work together in relation to the sale of the property.
Sixthly, Exhibit A6 indicates that as at 18 January 2012 the mortgage to the Commonwealth Bank was $18,534.72 in arrears, and that on that date a s.57(2)(b) notice was issued threatening enforcement proceedings, including repossession and sale of the home.
Seventhly, Exhibit A3 reveals that as recently as 28 May 2012, the respondent was receiving into her Commonwealth Bank account, $450 which is described as rent, and being deposited into this account every 14 days. These bank statements give some insight into the respondent’s financial affairs in circumstances where her most current financial statement is sworn a year ago. For example, during the period, 1 April to 30 June 2011, deposits totalled $45,880. 1 July to 30 September 2011: $13,125. 1 October 2011 to 31 March 2012: $78,694. 2 April to 31 May 2012: $11,145. The total deposits, therefore, in the period 1 April 2011 to 31 May 2012 is $148,853. Despite this cash flow into the respondent’s bank account, the mortgage of the property that she now seeks possession of, and that she derives income from, was unpaid.
Eighthly, Exhibit A4 is a Notice to Produce dated 4 July 2012, and the respondent’s email of the same date. The email is unresponsive. It does not deny the receipt of rental. Exhibit A4 raises the possibility that the respondent is being uncooperative in terms of disclosure.
Ninthly, Exhibit A2 is a letter from the applicant’s solicitor to the respondent clearly putting her on notice, as at 25 June 2012, that interim orders would be sought for exclusive occupation and that the property be sold.
Tenthly, Exhibit A1 is a valuation by [K], the single joint expert, valuing the property at $925,000. Other relevant evidence is the rental value of the property as at December 2010, which is $675 per week, and December 2011 of $700 per week.
Eleventhly, Exhibit R12 and some other photos suggest that there are some issues relating to the presentation of the property that might need to be addressed in order to optimise its presentation for sale.
Twelfthly, Exhibit R9 is a letter dated 5 July 2012 from the Commonwealth Bank to the respondent, referring to an agreement to stay recovery action for three months to enable the respondent to refinance the home loan, but also clearly stating that if it is not repaid by 5 October, the respondent will voluntarily surrender the property to the bank. The evidence from the applicant is that she was not a party to this purported agreement, nor does she agree.
Finally, the Exhibit R8, which was admitted solely for the purpose of interim issues, is a report from psychologist, Mr B dated 5 July 2012. He believes that the respondent suffers from chronic adjustment disorder with mixed anxiety and depressed mood, with post traumatic stress features.
Both parties gave oral evidence in relation to the interim issues. The applicant gave evidence that she can resume occupation of the property immediately if so ordered, and can do all things necessary to prepare and list the property for sale. She also undertook to contribute $500 per week towards the mortgage.
The respondent gave evidence that she too would be ready, willing and able to prepare and list the property for sale, but she is clearly concerned about structural issues and implied it would be an impediment. This evidence stands in somewhat stark inconsistency with her proposal to the Court that she actually retain the property.
The respondent gave evidence in chief that she was not currently working, other than in charity roles, but was, in fact, confident of being able to obtain work in a role that would pay a salary of $150,000 per annum. Further in chief, she gave an indication that she was working on a $280,000 consultancy of sorts with [omitted].
In cross-examination the respondent, in fact, asserted that she was owed $280,000, and had been for about six months. This does not appear on the balance sheet that was prepared for the purposes of this case.
In cross-examination the respondent conceded she was aware of the reappearance of structural defects since April 2011, that they remain, and that she was in occupation of the property for the period since then.
In cross-examination the respondent gave evidence that she sold some shares that in the course of the last few days had caused her bank balance to increase. Indeed, a close examination of the respondent’s bank statements with the Commonwealth Bank does raise some issues about share dealings. No shares are disclosed on the balance sheet prepared for the purposes of this hearing.
In cross-examination the respondent said she had two possible loan approvals for re-finance from RAMS and the Commonwealth Bank, but when given the opportunity to produce documentary evidence to support that, could not.
The respondent, in cross-examination, agreed that she is still seeing

Mr B and is taking medication that relaxes her.
The respondent agreed that she could live with her mother who apparently lives in Sydney.

Submissions

With those factual matters in the background, Mr Batey submitted on behalf of the applicant that the evidence would satisfy the Court that given the mortgage arrears and the 57(2)(b) notice, there is an imminent threat of mortgagee sale.
Mr Batey submitted that the Court could have no reasonable confidence that the respondent would pay the mortgage in circumstances where she has been in possession for so long, but has not done so, and is arguably in financial circumstances where she could have done so but did not.
It was further submitted that the Court could have no reasonable confidence that if the respondent remained in occupation she would facilitate a sale. Indeed, it is clearly not what she wants. Further, the submission is that she had burnt bridges with a previous real estate agent.
It was submitted that in the circumstances the only way to preserve this asset is, in fact, to sell it after putting the applicant in possession and ordering its sale.
The respondent’s health and her behaviour in the proceedings raises concerns about her ability to either pay the mortgage or, in fact, sell the property.
Mr Ang submitted on behalf of the respondent that, firstly, the respondent’s behaviour in Court should not reflect on her credit, but simply demonstrates how much she is struggling to cope with this litigation. He submitted that if given the opportunity, the respondent would re-finance the debt in three months, that she could find work quickly, that there is no risk of loss of the property, and that indeed the respondent’s mother may be able to give her money to pay the mortgage.

Discussion

I now consider and discuss the matters aforementioned. The delay in the finalisation of this case is not due to anything the applicant did. Responsibility rests entirely with the respondent. It is this fact that leads to an interim application. The evidence satisfies me that there is a real risk that the mortgagee, the Commonwealth Bank of Australia, will exercise its powers, the powers it clearly has, to sell the property given the arrears that have accumulated, much of which, though not all, coincides with the respondent’s occupation of the home and non-payment of the mortgage - all at a time when she clearly was in receipt of money that could have been used for this purpose.
The respondent’s position remains that she wishes to retain the property and re-finance the debt. She cannot do that without agreement from the applicant or Order of the Court. Her position in this litigation is that the applicant should retain what she has - that is, that the respondent would pay her nothing. The respondent therefore has no motivation to sell this property. Given the urgency that I perceive, I could not safely entrust to her the responsibility for sale.
There appears to be no reasonable alternative to sale, given the section 57(2)(b) notice and the lack of confidence I have in the respondent. Her proposal is not one the applicant will accept.
On the evidence before the Court, the orders the respondent seeks in her response are unworkable and not realistic. Whilst I fully accept that the evidence is not complete, it is hard to see how the respondent can make out a case that her contribution is so much greater than the applicant’s that the applicant should simply retain the increase in the value of her superannuation, and nothing from the sale of the property. Thus, leaving her in the property is not realistic, will not address the concerns that I have expressed above, and this means that ordering the sale of the property really is the only alternative.
The evidence of the respondent is that she could live with her mother. She thus has alternative accommodation and will suffer no hardship. She is also clearly confident about her prospects of getting work and of recovering a substantial sum from ASIC.
I acknowledge that leaving the property will be an emotional wrench for the respondent, but this is not the kind of hardship that I am prepared to give weight to in the context of this application. The applicant would avoid hardship if I make the orders proposed.
The evidence is that there was an offer for one million dollars in March 2011 that was rejected by the respondent. The value today is $925,000. A mortgagee sale could prejudice that value. On the applicant’s contended pool of assets, it is, in fact, a modest pool of assets. The liabilities contended for by the respondent, whilst appearing somewhat vague at this point in the evidence, nonetheless increases the risk that the tangible pool of assets available for distribution is modest indeed. This strengthens the case for making the orders proposed.
Nothing would be gained, on the facts of this case, by compelling or facilitating the re-cohabitation of the applicant and respondent in the home. By any objective measure, this is a high conflict, low trust, no communication relationship and it would be disastrous for them to share responsibility in the context of selling a home.
Any protestation or offer by the respondent that comes at the very last minute, to do things such as pay the mortgage, does not address the substantive concern that in a case where the respondent wants to retain the property she will not be motivated to sell it.
The scope of the orders proposed on behalf of the applicant are reasonable, proportionate and measured. However, I have some concerns that the wording may not achieve what the Court intends as a result of these reasons for judgment.

I want to make it very clear that in the circumstances of this case, the applicant has the control of the sale, not the respondent. The respondent will be consulted about the reserve price, but if the parties cannot agree about the reserve price, it will be $925,000 - the value appointed by [K]. Accordingly, in the Orders I have made some minor changes.
I hand down to the parties copies of the Orders that I now make.

I certify that the preceding fifty-six (56) paragraphs are a true copy of the reasons for judgment of Altobelli FM

Date: 13 July 2012