Gaines & Cotton

Case [2021] FCCA 1586

FEDERAL CIRCUIT COURT OF AUSTRALIA

Gaines & Cotton [2021] FCCA 1586

File number(s): NCC 3092 of 2020
Judgment of: JUDGE COSTIGAN
Date of judgment: 13 July 2021
Catchwords: FAMILY LAW – interim property orders – whether the Court has jurisdiction to make property orders for an application proposedly filed out of time – whether to order the sale of the matrimonial property
Legislation: Family Law Act 1975 (Cth), ss 44(5), 44(6)
Cases cited: Strahan & Strahan [2009] FamCAFC 166; [2009] FLC 93-466; (2009) 241 FLR 1; (2009) 42 Fam LR 203
Osferatu & Osferatu [2012] FamCA 408
Number of paragraphs: 64
Date of last submission/s: 6 July 2021
Date of hearing: 6 July 2021
Place: Newcastle
Solicitor for the Applicant: Gillard Family Lawyers
Solicitor for the Respondent: Toronto Legal

ORDERS

NCC 3092 of 2020
BETWEEN:

MR GAINES

Applicant
AND:

MS COTTON

Respondent

ORDER MADE BY:

JUDGE COSTIGAN

DATE OF ORDER:

13 JULY 2021

THE COURT ORDERS PENDING FURTHER ORDERS THAT:

1.Insofar as it is necessary, time for the filing of the applicant’s Initiating Application is extended to 19 August 2020.

2.The parties must do all acts and things and sign all documents, writings and instruments necessary to sell the property at B Street, Suburb C in the State of New South Wales (‘the property’) and in doing so must do the following:

(a)Within 7 days of the date of these Orders, the applicant provide the respondent with a list of three (3) real estate agents nominated by the applicant for the purposes of effecting the sale and within a further 7 days, the respondent shall nominate one of the real estate agents to have conduct of the sale (‘the agent’);

(b)The list price of the property will be such list price as the parties mutually agree and in the absence of any agreement reached, the price nominated as market value by the agent;

(c)Instruct an agreed solicitor/conveyancer to prepare the Contract for Sale for the property;

(d)Sign all documents requested by the agent for the sale of the property; and

(e)Sign the Contract for Sale and any other necessary documents as requested by the solicitor/conveyancer.

3.The respondent must cooperate in every way with the agent including but not limited to:

(a)making house keys available to the agent;

(b)allowing the inspection of the property at all reasonable times requested by the agent;

(c)doing or saying nothing to hinder or prevent a sale being effected; and

(d)ensuring the property, including its grounds and dwellings are maintained and are in a neat and presentable condition at the time of inspection by the agent and prospective purchasers.

4.Pending the completion of the Sale:

(a)The respondent shall have the sole right to occupy the property; and

(b)The respondent shall pay all costs necessary to keep the property insured at its current level of cover.

5.If the purchaser of the property consents to the release of the deposit monies prior to the settlement of the sale (‘the settlement’) then:

(a)The balance of the deposit monies (net…

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Gaines & Cotton [2021] FCCA 1586
Case
[2021] FCCA 1586
Decision Date

CaseChat Overview and Summary

In the matter of *Gaines & Cotton*, heard by Justice Costigan in the Federal Circuit Court of Australia, the applicant, Mr Gaines, and the respondent, Ms Cotton, were in dispute regarding interim property orders. The proceedings concerned the jurisdiction of the Court to make property orders for an application filed out of time and whether the matrimonial property should be sold pending final determination.

The Court was required to determine whether it had jurisdiction to make property orders given the applicant's Initiating Application was filed after the prescribed time limit. Additionally, the Court had to consider whether to order the sale of the matrimonial property as an interim measure and, if so, what consequential orders were necessary to facilitate the re-accommodation of the respondent and the children.

Justice Costigan found that the Court had jurisdiction to extend the time for filing the Initiating Application and ordered the sale of the property. The Court reasoned that given the likely delays in obtaining a final hearing date, allowing the situation to remain unaddressed would lead to rising mortgage arrears and the evaporation of any equity. The orders stipulated a process for selecting a real estate agent, setting a list price, and instructing a solicitor for the sale. The respondent was granted sole occupancy of the property pending sale and was responsible for its upkeep and insurance. Provisions were made for the distribution of sale proceeds, including a sum to assist the respondent with alternative accommodation if necessary.

Orders

Orders of the court

NCC 3092 of 2020

BETWEEN:

MR GAINES

Applicant

AND:

MS COTTON

Respondent

ORDER MADE BY:

JUDGE COSTIGAN

DATE OF ORDER:

13 JULY 2021

THE COURT ORDERS PENDING FURTHER ORDERS THAT:

1. Insofar as it is necessary, time for the filing of the applicant’s Initiating Application is extended to 19 August 2020.

2. The parties must do all acts and things and sign all documents, writings and instruments necessary to sell the property at B Street, Suburb C in the State of New South Wales (‘the property’) and in doing so must do the following:

(a) Within 7 days of the date of these Orders, the applicant provide the respondent with a list of three (3) real estate agents nominated by the applicant for the purposes of effecting the sale and within a further 7 days, the respondent shall nominate one of the real estate agents to have conduct of the sale (‘the agent’);

(b) The list price of the property will be such list price as the parties mutually agree and in the absence of any agreement reached, the price nominated as market value by the agent;

(c) Instruct an agreed solicitor/conveyancer to prepare the Contract for Sale for the property;

(d) Sign all documents requested by the agent for the sale of the property; and

(e) Sign the Contract for Sale and any other necessary documents as requested by the solicitor/conveyancer.

3. The respondent must cooperate in every way with the agent including but not limited to:

(a) making house keys available to the agent;

(b) allowing the inspection of the property at all reasonable times requested by the agent;

(c) doing or saying nothing to hinder or prevent a sale being effected; and

(d) ensuring the property, including its grounds and dwellings are maintained and are in a neat and presentable condition at the time of inspection by the agent and prospective purchasers.

4. Pending the completion of the Sale:

(a) The respondent shall have the sole right to occupy the property; and

(b) The respondent shall pay all costs necessary to keep the property insured at its current level of cover.

5. If the purchaser of the property consents to the release of the deposit monies prior to the settlement of the sale (‘the settlement’) then:

(a) The balance of the deposit monies (net of any costs, commissions and expenses of the sale) be paid to the respondent upon the basis that the monies received by the respondent shall be on account of her property settlement entitlement; and

(b) The remaining 50% be placed in the trust account of the applicant’s solicitor pending further order.

6. After the sale of the property the parties must hold the proceeds of sale in trust and pay the proceeds in the following manner and priority:

(a) All legal costs, auction costs (if any), agent’s commission and all other expenses connected with the sale of the property;

(b) Rates adjustments;

(c) Sufficient monies to pay the outstanding mortgage to the Commonwealth Bank, home loan account number …40; and

(d) If the parties are unable to negotiate the early release of the deposit prior to the settlement referred to in Order 5 above then the sum of $20,000 is to be paid to the respondent.

(e) The Balance to be held on trust pending a final property settlement.

7. The applicant is at liberty to provide a copy of these Orders to the Commonwealth Bank.

8. The parties have leave to apply to the Court with respect to the sale of the property as may become necessary in order to give effect to these Orders.

9. The matter is adjourned to 30 August 2021 at 9.30 am for directions in the Federal Circuit Court of Australia sitting in Newcastle.

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

The following interim issues are in dispute between the parties:·Whether the Court has jurisdiction to determine financial matters in respect of this de facto relationship;·Whether the property should be sold pending the final hearing of these proceedings; and ·If the Court ordered the interim sale of the property what, if any, orders should be made to facilitate the re-accommodation of the respondent and children.BACKGROUND The parties to these proceedings were both born in Australia. The applicant is 48 years old and the respondent is 45 years old. The parties commenced cohabitation in or around 1995 according to the applicant, and in 1998 according to the respondent. There are two children of the relationship X aged 16 and Y aged 13. In December 2016 the applicant and the respondent purchased the property for $350,000. It was purchased with a joint loan of $322,000 (and mortgage insurance of $9,443)[1] from the Commonwealth Bank.[1] Applicant’s affidavit filed 28 June 2021 at [14] In her affidavit of 2 July 2021 (an affidavit which her solicitor did not seek to rely on at the interim hearing) the respondent said she paid a deposit of $35,000. The property was registered in the joint names of the parties as tenants in common. The parties separated on 19 August 2019 at which time an apprehended violence order was made for the protection of the respondent. The applicant did not return to the property.[2] Nor has he made any payments on the mortgage or towards the outgoings on the property since separation.[2] This may be a matter to which the provisions of section 102NA of the Act applies. The respondent remains living at the property with the children. She deposed to being ‘responsible for the repayment of the mortgage bills, feeding and clothing of our two children, school fees, sporting fees, the children’s mobile phones so that Mr Gaines can call them and all other household expenses’[3]. [3] Respondent’s affidavit filed 19 April 2021 at [21] The respondent deposed that she was twice forced to defer the mortgage repayments during Covid-19 as she lost her two casual jobs as a cleaner with Employer D and Administration Officer for the Employer E. The respondent also deposed that, ‘Even though the mortgage payments had been deferred, I paid approximately $12,620 since January 2020 in 17 payments.’[4][4] Respondent’s affidavit filed 2 July 2021 at [38] It is the applicant’s case that towards the end of 2020 he became aware that the mortgage was in arrears and obtained a further deferral from the Commonwealth Bank which was in place until 22 June 2021. As at the 9 June 2021 the applicant says the balance owing on the mortgage was $336,968.29 and the arrears or overdue payments totalled $16,610. There was no evidence that the Commonwealth Bank has issued a Default Notice.PROCEDURAL HISTORY The applicant commenced these proceedings by way of an Initiating Application filed on 19 August 2020 seeking final parenting and property orders. When the applicant filed the Initiating Application he was self-represented. He sought orders for:(1)Equal shared parental responsibility;(2)The children to reside with me for half the time;(3)Financial Settlement of 50% of the equity in house, car, contents, bank accounts and all other assets.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

I also note the respondent’s own evidence that the house is in a state of disrepair and the repair costs needed in order to prepare the property for sale would likely exhaust the net proceeds of sale.[13][13] Respondent’s affidavit file 2 July 2021 at [28]CONCLUSION There seems no other alternative for the Court but to order the sale of the property. Given the delays in this Registry it is unlikely that any final hearing would be allocated before 2023. If the situation remains unaddressed the arrears are likely to rise and any equity which would otherwise be available for division will evaporate. There was no evidence before the Court that the Commonwealth Bank had commenced enforcement proceedings or that such proceedings were imminent which may afford the parties some time to prepare the property for sale. As the children live with the respondent and she receives very limited financial support from the applicant, the respondent will be able to remain living at the property until settlement of the sale. Following completion, the proceeds of sale will be held in trust on behalf of the parties. If the respondent cannot negotiate with any prospective purchaser to remain in possession of the property for limited period after settlement or an early release of the deposit, then there will be an order that the sum of $20,000 be released from the sale proceeds to assist her in accessing alternative accommodation. There will be orders that the respondent ensures the property is kept in a neat and clean condition at the time of inspection by the selling agent and prospective purchasers. The applicant proposed that Real Estate Agent Suburb G & Suburb C be appointed as the selling agents. In her affidavit the respondent asserted that the director Mr M is a ‘personal friend’[14] of the applicant. The inference appears to be that Mr M may not act in the best interests of both parties.[14] Respondent’s affidavit filed 2 July 2021 at [31] I intend to order that the applicant shall provide to the respondent within seven days a list of three estate agents and from that list the respondent is to nominate one estate agent within 7 days. I will adjourn the matter to 30 August 2021 at which time consideration will be given to the allocation of a Conciliation Conference.

Ratio Decidendi

Legal Principle Established

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