Field and Kingston (No 3)

[2021] FamCA 167

FAMILY COURT OF AUSTRALIA

FIELD & KINGSTON (NO. 3) [2021] FamCA 167

FAMILY LAW – TRUST FOR SALE – wife’s application for her appointment as trustee for the sale of real property of which the husband is registered proprietor.

FAMILY LAW – VENDOR BID AT AUCTION – wife’s application to restrain husband making a vendor’s bid – auction contract specifically permitting such a bid – both applications refused.

American Cyanamid v Ethicon Ltd [1975] AC 396
Australian Coarse Grain Pool Pty Ltd v Barley Marketing Board of Queensland (1982) 57 ALJR 425
Blueseas Investments Pty Ltd v Mitchell (1999) 25 Fam LR 65
Tableland Peanuts Pty Ltd v Peanut Marketing Board (1984) 58 ALJR 283

APPLICANT: Ms Field

RESPONDENT: Mr Kingston

FILE NUMBER: PAC 2095 of 2014

DATE DELIVERED: 25 March 2021

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Wilson J

HEARING DATE: 25 March 2021

REPRESENTATION

COUNSEL FOR THE APPLICANT: Not applicable

SOLICITOR FOR THE APPLICANT: Matthews Folbigg Pty Ltd

COUNSEL FOR THE RESPONDENT: Mr R. Schonell SC

SOLICITOR FOR THE RESPONDENT: Cathers Beaver & Kamiya

Orders

1. The applicant’s application in a case filed on 23 March 2021 is dismissed.

2. The respondent’s costs of and incidental to this application are reserved.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

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 r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: PAC 2095 of 2014

Ms Field

Applicant

And

Mr Kingston

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. On 21 November 2019 Foster J made orders that had the effect of altering the property interests of the parties.  His Honour’s reasons spanned 139 paragraphs.  Complications have arisen since the publication of the orders and his Honour’s reasons.  I am told by Mr Ridley, solicitor for the applicant, that many applications thereafter were made to appellate courts in relation to various aspects following his Honour’s determination.  I encountered this case when sitting in Sydney in February of this year. 

2. Over a collection of days in February the solicitors for the parties wrestled with the terms of steps to be undertaken in relation to the sale of the subject property in Suburb B.  Consent orders were made on 25 February 2021 setting out in some detail the steps that were to be undertaken to advance the sale of that property at public auction.  I was told today that the auction date has been fixed for ...2021 and that in pursuance of steps to ready the property for sale, the terms of an auction contract have been prepared and circulated, clauses 2 and 3 being relevant for one aspect of the application today.

3. Mr Ridley, who has stepped into the breach at the last moment to make the application sought by the wife, has done a commendable job in the circumstances given that his colleague who has had the conduct of this case absented herself at the last moment, for reasons which appear to be perfectly legitimate over which I make no criticism.  At all events an application has been brought on behalf of the wife for orders appointing the wife as trustee for the sale of the property in Suburb B.  The husband is the registered proprietor of the property and in accordance with customary conveyancing practice has the carriage of the sale of the property. 

4. The wife, for reasons which I will mention in a moment, apprehends that the sale will not be on the most favourable terms and will not thereby derive for the parties the best price obtainable in the circumstances.  To understand the context of the mechanics of the sale it is necessary to go to the consent orders that were agreed on 25 February 2021.  Relevantly, pursuant to paragraph 2 of those orders the parties agreed that the husband was required to do all things and sign all documents to appoint a listing agent for the listing of the sale by auction of the property by a date in April.  By agreement the date has been moved forward to ...2021.

5. Pursuant to paragraph 3 of those orders the husband and wife were to do all things and acts necessary to facilitate the sale of Suburb B property including following all reasonable directions of the listing agent and ensuring that the property was in a presentable state for sale.  Paragraph 4 of the orders required the husband and wife to follow the directions of the listing agent especially in relation to a notice to vacate to the tenant.  Then, importantly for present purposes, paragraph 5 of the orders specified a mechanism for the ascertainment of the reserve price.  It is necessary to refer to the content of paragraph 5 in terms –

   The reserve price or list price of the Suburb B Property must be as agreed between the husband and the wife but in default of agreement, then the average of the reserve prices or list prices as may be recommended in writing by the following agents –

   a)        NN Real Estate,

   b)       QQ Real Estate or as nominated by the wife; and

   c)        PP Real Estate or such agency as is nominated by the husband.

6. It will be immediately apparent that the date upon which the ascertainment of the agreed reserve price was to be struck is not specified.  The wife brings this application today, ahead of the auction, saying that the husband has not put in motion the mechanism for the ascertainment of the reserve price.  She advances that as a particular in support of her application for an order to be made appointing her as the trustee for the sale of property, the registered proprietor of which is the husband.

7. In terms of the factual matrix of circumstances underpinning this application, Mr Ridley advanced three principal contentions to support his client’s application. 

8. First, he submitted that evidence existed that the husband, who has been entreating with prospective purchasers, has indicated that he will not agree to a five per cent deposit. 

9. Second, it is said that the husband is not agreeing to the procedure set out in paragraph 5 of the consent orders made 25 February 2021 for the ascertainment of the reserve price. 

10. Third, Mr Ridley contends that the wife apprehends that the husband will submit his own vendor bid and thereby thwart the process of sale because the price will be unrealistically high, something in the order of $5 million.

11. Very little evidence exists in this case to support any of the contentions advanced by the wife and for the reasons that I will develop in a moment I dismiss the application for the appointment of the wife as trustee. 

12. It is necessary to go to the terms of the contract to identify whether there is any merit in the contentions of apprehension about the refusal to accept a five per cent deposit.  The contract says no such thing.  It is competent for the purchaser, if there be one on the day, to offer a deposit in such amount as the purchaser proposes and absent any prohibition on the specified deposit amount, for the vendor to accept that.  Mr Ridley was not able to demonstrate on the material that he had that the husband’s stance at the present time in not agreeing to a five per cent deposit was otherwise than in accordance with the contract.

13. To some extent there is a degree of anticipation of failure in the wife’s application.  She is apprehending that based on the husband’s past activities in the conduct of this litigation, the husband will engage in activity that will positively thwart the sale and procure a failure of the auction process.  That seems to be an unduly pessimistic approach.  At all events, the time for assessing the parties’ conduct and in particular that of the vendor has not yet arrived.  The relevant day is immediately prior to the auction.  Paragraph 5 does not identify a date by which the reserve price is to be ascertained.  It is conceivable that on the day of the auction, as happens frequently in auctions, the reserve is agreed.  And if it is not agreed, on the construction of paragraph 5 of the consent orders, then a default regime becomes operative.

14. Again, a great deal of speculation exists as to what price will be flushed out at the auction on the day of auction.  The parties may well have the benefit of an active, vibrant and participative auction.  That said, it cannot be assured that there will be vibrant market bidding for the purchase of the property.  Precisely what offers are extracted remains to be seen.  Mr Ridley put a great deal of store in the fact that the husband, as registered proprietor, has an unrealistically high expectation of the realisable value of the property.  As is revealed commonly in the decided cases on the point, the market will determine the price at which a willing purchaser is willing to buy.  Whether the vendor is agreeable to accepting that price remains to be seen.  The default mechanism provided by paragraph 5 of the consent orders will thereby become operative.

15. I have already covered the fact that no date is specified in paragraph 5 of the consent orders.  That tends to address Mr Ridley’s second point. 

16. The third point related to the fear that the wife holds that the husband will make a vendor bid and thereby drive away any prospective purchaser because the price is unrealistically high.  Clause 2 of the auction contract as well as clause 3 contain express provisions for the making of a vendor bid.  Clause 2(b) is subject to subclause (3).  Clause 2(b) provides that the auctioneer may make only one vendor bid.  That said, clause 3 provides that a vendor bid, if more than one, may be made but clause 3(c) provides the mechanics of how that is to be done.  When read in conjunction, each of those clauses of the auction contract specifically contemplate the making of a vendor bid.

17. I am unable to find a contractual basis upon which it might be said that the husband is enjoined from making a vendor bid.  To the contrary, the contract specifically contemplates one.  In debate with Mr Ridley I asked him what was the jurisprudential basis upon which he sought an order for the restraint of the husband making a vendor bid.  I raised with him the test propounded in Blueseas Investments Pty Ltd v Mitchell[1] which picks up the learning in such cases as American Cyanamid v Ethicon Ltd,[2] Australian Coarse Grain Pool Pty Ltd v Barley Marketing Board of Queensland[3] and Tableland Peanuts Pty Ltd v Peanut Marketing Board[4] and restates the conventional learning on the grant of an injunction  namely, that the applicant must demonstrate to the court the existence of a serious issue to be tried and that the balance of convenience favours the granting of the injunction.  I am not persuaded that the applicant has demonstrated anything remotely approximating such an entitlement and on that basis alone, aside from the express provisions of the contract, I rule against the wife on the third point. 

    [1] (1999) 25 Fam LR 65.

    [2] [1975] AC 396.

    [3] (1982) 57 ALJR 425.

    [4] (1984) 58 ALJR 283.

18. In all I am not persuaded that it is proper to appoint the wife as the trustee for the sale. 

19. In written submissions advanced on behalf of the husband Mr Schonell SC brought to my attention a proposition to the effect that it has long been held that a trustee must not put himself, herself or itself in a position where there might be a conflict between duty and interest.  Self-evidently, the risk of the emergence of such a conflict would arise (or I apprehend that there is a substantial risk to that effect) if the wife were appointed as a trustee because there is a substantial risk that she might agree to any price that is obtained at the auction.  In those circumstances I am not persuaded that the wife is entitled to the orders that she seeks.  I dismiss her application for the appointment of herself as a trustee for sale.

20. I will make an order for the costs of the respondent of and incidental to this application are reserved.

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 25 March 2021.

Associate:

Date:  26 March 2021