Ferris and Ferris

[2007] FamCA 1584

FAMILY COURT OF AUSTRALIA

FERRIS & FERRIS [2007] FamCA 1584

FAMILY LAW – PROPERTY – Sale – Settlement in relation to marriage  

Family Law Act 1975 (Cth)

APPLICANT: Ms Ferris

RESPONDENT: Mr Ferris

INDEPENDENT CHILDREN’S LAWYER: Mr Walkden

FILE NUMBER: SYC 5978 of 2007

DATE DELIVERED: 30 November 2007

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Loughnan JR

HEARING DATE: 30 November 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Thomas

SOLICITOR FOR THE APPLICANT: Jo-Anna F.S. Moy

COUNSEL FOR THE RESPONDENT: Mr Lloyd

SOLICITOR FOR THE RESPONDENT: Slade Manwaring

SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER: Legal Aid Commission
New South Wales

Orders

1. The proceedings are adjourned in relation to parenting issues to the Judicial Registrar’s Call-over at 9:30 am on 6 February 2008 and Independent Children's Lawyer is excused further attendance today.

2. Orders are made in terms of the orders sought by the wife at paragraph 1, 1.3, 1.1.1, 1.1.2, 1.1.3, 1.1.4 and 1.1.8 of the wife’s Application in a Case filed 23 August 2007 as set out hereunder:

“1.That the applicant wife and the respondent husband forthwith do all acts and things so as to cause the property located at […, P] (the property) to be sold upon the following terms and conditions:

1.3that the following amounts be paid out and disbursed by the applicant wife from the proceeds of sale in the following priority:

1.1.1the costs, expenses, commissions, advertising fees and disbursements of the agent(s) and/or auctioneer(s) conducting the sale of the property

1.1.2the costs and fees of any lawyer acting for the parties in relation  to the sale of the property

1.1.3the monies necessary to discharge any mortgage, registered against the title of the property

1.1.4municipal and/or water rates including any arrears, if any

1.1.8the balance to be held in trust for the parties pending further order of the Court or by agreement in writing signed by the parties.”

1. Leave to the parties to apply on giving 48 hours’ notice to each other, to the Independent Children's Lawyer and to the Court.

2. By consent and pending further order, orders are made in terms of the document titled “Short Minutes of order” marked Exhibit A and attached hereto.

3. The costs of the parties of today are reserved AND leave is granted to re-list that matter before Judicial Registrar Loughnan by arrangement with his associate.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 5978 of 2007

MS FERRIS  

Applicant

And

MR FERRIS  

Respondent

REASONS FOR JUDGMENT

1. These are interlocutory financial proceedings. There are also parenting proceedings between the parties and they have been adjourned to a date in February.  The husband and wife are 48 and 43 years of age. They married in 1988. I think they might be English people, at least they were living in  England at that time. They came to Australia as a family in 2002.  The parties were separated for a period. The husband says, from 1 August 2004 until April 2006.  The wife says it was from March 2004 until July 2006.  Those dates make a bit of a difference for a reason that I will come to.

2. The final separation is agreed to be 28 February 2007.  The parties have three girls, C, S and F, 14, 13 and 8. They are in Years 9, 7 and 2 at P School and I understand that one of them will start at B School next year. 

3. The parties bought a property at W in July 2004 for $727,000 outright.  Now that is relevant because the husband says the parties were together then. The wife says they were separated.  It seems to be an agreed fact that the W property is in the wife's name.  During the separation the husband moved to rented accommodation at P. 

4. In July 2006 when they both say they were back together, they bought a property at P for $1.9 million. They borrowed $2 million to buy it and the plan was that the W property would be sold. Indeed that had that property on the market from November 2006 until May of this year.  I think it was on the market for about $679,000.

5. The matter before me is really a question of the proportions in which the parties should meet the current mortgage payments and whether either of them should contribute to the arrears of the current mortgage payments.  They agree that the P property needs to be sold because the mortgagee has issued a s 57(2)(b) notice.  The mortgagee is the Commonwealth Bank. The husband's case is:

   I am meeting half the mortgage and always have.  The wife was meeting half the mortgage and she stopped. I am not going to contribute to her half of the mortgage or the arrears caused by her not paying the mortgage because I might not get credit for that in the final proceedings for settlement of property.

6. The wife says the husband is better able to service the mortgage than she. It is her case that he agreed in March of this year to sell the property; it has been his recalcitrance in relation to this issue that has resulted in the property not being sold then or some time soon after that and therefore the entirety of the damage can be laid at his feet. It is her case that it would be unfair, if she was required to make a contribution and secondly she neither has the capital funds nor the surplus in her current weekly budget to provide the funds.

7. It is hard to express how childish and stupid these circumstances are. The fact that the parties have got to a point where they have come to a Superior Court of record to ask for orders to save them from a loss like this, beggars belief. It is not my job to save them from this sort of damage.  The parties are over 21 and if they want to behave in this way then it is their right. They are both senior professional people earning good incomes and presumably they make decisions like this all the time without the help from somebody in my position.

8. I assume that the parties know that there could be a significant loss incurred if there is a mortgagee sale. It might not be quite as bad in this case because at least insofar as the P property is concerned the bank might not be content with the outcome of a fire sale. It has security over both properties and it is owed over $2.1 million. Together the properties might be worth less than three million.  Certainly the net proceeds are likely to be less than three million. So I guess there is a risk at the end of the day that the officers of the bank might be willing to embark on a sale program for both properties thinking that they will comfortably recover their money. It is trite to say that they will have no interest in achieving a profit for either of the parties.

9. I had a solicitor for the Commonwealth Bank in my Court some time this year and he was affronted by that proposition and very, very hurt that I would suggest that the Bank would not want to maximise the outcome of a mortgagee sale. Nevertheless, it does seem to be something that happens and you can understand why they would not be vigilant about it, why would the bank want to commit to a proper marketing campaign and so on just to maximise an investment return for two stubborn people.

10. I think the answer is I make an order for the sale.  There is a device included in the wife's application, although she does not press two aspects of it, whereby she have exclusive conduct of the sale and that some of the school fees be paid for next year. There must be some doubt about there being a surplus but just to keep the peace any surplus should be preserved unless the parties agree to the contrary.

11. We are talking about something that will only arise on Mr Thomas's expert knowledge of the real estate market, some time towards April or so of next year. There is plenty of time for the parties to think about the problem of a surplus, if one is achieved.  The argument on behalf of the husband is to the effect:

    The wife wants me to get half of that on a final basis so I could have it now.

    And the argument for the wife is:

    Well I have changed my mind about that order and will now seek orders that address the issue of damage.

12. In my view the weaker argument is the one on behalf of the husband.  It is unusual in a contested situation for the Court to say that some party can have some aspect of the final orders sought on the part of the other party.  There are a whole lot of authorities about the Court being careful about making interim property decisions and there is a bit of law about whether, if you make an interim decision like that, the Court then exhausted its discretion in relation to those moneys. Thus the discussion in In the Marriage of Hickey about orders under s 79 having different components, but there being only one coherent order.

13. I have suggested that it might be sensible if one of the parties tried to square the bank away; in other words have a conversation with the Bank and see whether they will hold off on taking up their security. There is an email from the bank from yesterday where the bank huffs and puffs about it moving on its security over both properties, without all of the loans being brought up to day and a commitment being made to resume recurrent payments from now until the end of an ordered program for sale. It might be that the bank would be willing to look at something less than that, but I should not be the one more interested in that issue than the parties. They are free to have those discussions.

14. I will give the parties leave to bring it back, although it is a busy time of year in the Court focusing on more important things than two stubborn professionals and their money problems.  So if there is anything else of merit in the list on the day that the matter comes back it might not get much time that is a risk.  The lists are very busy.  So unless the parties want to be heard further I will make the orders sought by the wife.

15. The document titled Short Minutes of Order is exhibit A and by consent and pending further order I make orders in terms of that document.

16. I think the costs should be reserved.  No doubt this has been a waste of time but as to who is more responsible for it, it is hard to get to the bottom of that. There was an agreement to sell the W property and it was the wife who took it of the market unilaterally in May.  I have not done the parties the indignity of going through the detail of their financial statement and made given my views about whether they should be spending $100 a week each of them on cleaners or anything else because I think that is demeaning to them and that is not a practical issue.

17. I suspect that each of the parties could have done something to mitigate the loss so I do not think anybody has the high moral ground in relation to the stupidity of a loss being incurred through the year. People who are separating take leave of their senses for a period, sometimes it is only a short period and no doubt the parties will get back on track. However, at the moment I cannot say, by virtue of the matters I am required to take into account under s 117 that it is clear who should be responsible for the current situation. It is true, as Mr Thomas says on behalf of the wife, that often the issues of adjustment for losses caused by one of the parties are lost at the time of a final hearing. Nevertheless the only time you can make a real judgment about those things is when you have a testing of the evidence, so I cannot fairly adjudicate that issue now.

18. It is likely that this it has been a waste of time and so that raises the spectre of cost. Again as Mr Thomas said, this is not the case where each of the parties was an applicant. However, I cannot make a sensible decision as to culpability today.  The parties are in similar financial circumstances.  There has not been much that I have been told about by way of written offers of settlement under s 117C or otherwise. Neither party has been wholly unsuccessful. The proceedings have not been brought about by reason of a failure to comply with Court orders and there is nothing about the conduct of the proceedings (except that they are a disgrace and the taxpayer, if he or she was here, would be unhappy) that comes to comment.  So I think for those reasons the costs of the parties of today should be reserved.

19. I am happy, if whoever hears the matter thinks that it would be better that I deal with the issue of costs that that issue be restored before me by arrangement with my Associate.

I certify that the preceding nineteen (19) paragraphs are a true copy of the reasons for judgment of Judicial Registrar Loughnan

Associate

Date:  17 January 2008