Gaines & Cotton
[2022] FedCFamC2F 284
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Gaines & Cotton [2022] FedCFamC2F 284
File number(s): NCC 3092 of 2020 Judgment of: JUDGE COSTIGAN Date of judgment: 9 February 2022 Catchwords: FAMILY LAW – Enforcement – whether the Orders made on 13 July 2021 should be set aside – whether the husband should be appointed trustee for sale of the property – orders made for husband to act as trustee for sale of property. Legislation: Family Law Act 1975 (Cth) s.106A Cases cited: Gaines & Cotton [2021] FCCA 1586
Ramsey and Ramsey (1983) FLC 91-301
Division: Division 2 Family Law Number of paragraphs: 37 Date of last submission/s: 9 February 2022 Date of hearing: 9 February 2022 Place: Newcastle Solicitor for the Applicant: Gillard Family Lawyers Solicitor for the Respondent: Toronto Legal ORDERS
NCC 3092 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR GAINES
Applicant
AND: MS COTTON
Respondent
ORDER MADE BY:
JUDGE COSTIGAN
DATE OF ORDER:
9 FEBRUARY 2022
THE COURT ORDERS THAT:
1.Mr Gaines (“the trustee”) be appointed as trustee for the sale of the property B Street, Suburb C (“the property”) in the State of New South Wales, pursuant to order 2 of the orders dated 13 July, 2021.
2.The trustee be authorised to do all acts and sign all documents necessary to effect the sale, including but not limited to:
(a)Selecting an agent to market the property and entering in an agency agreement with said agent;
(b)Setting the listing price and method of sale;
(c)Selecting a solicitor or conveyancer to prepare the contract of sale and undertake the conveyancing;
(d)Accept an offer of purchase;
(e)Sign any document on behalf of the parties required to undertake the above steps.
3.In the event that either party refuses or neglects to sign within fourteen (14) days after receipt of a written request to do so any documents necessary to put into effect the terms of these orders the Registrar of the Newcastle Registry of the Federal Circuit and Family Court of Australia or such other person appointed by the court is hereby appointed pursuant to Section 106A of the Family Law Act 1975 to execute all such deeds and documents in the name of the defaulting party and do all acts and things necessary to give validity and operation to the these orders.
4.I grant leave to the parties to re-list the matter in the event of non-compliance by any party with the interim orders made today or on 13 July 2021.
5.Any application for costs is reserved to the final hearing.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
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.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Gaines & Cotton has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE COSTIGAN
INTRODUCTION
This decision concerns the parties’ competing applications with respect to the implementation of the provisions of interim property orders made by this Court on 13 July 2021 following a contested hearing, and which provided for the sale of the former matrimonial home at B Street, Suburb C.
In summary those interim orders provided for the home to be sold by private treaty. There were a number of what might be characterised as machinery orders which made provision for the husband to provide the wife with a list of 3 qualified real estate agents, for her to elect one of them, and for an agreed solicitor/conveyancer to prepare the contract for sale.
The orders also provided for the wife to occupy the property to the exclusion of the husband until the completion of the sale and to keep the property insured.
There was also provision for the early release of the deposit monies, if possible, to assist the wife in securing alternative accommodation.
The asset pool consists almost exclusively of the former matrimonial home at B Street, Suburb C which, according to the parties, is worth somewhere between $400,000 and $500,000. There is a mortgage of $320,000 with the CBA so the net asset is somewhere between $80,000 and $180,000.
The wife appears to be seeking 100 per cent of the pool on a final basis, though her response filed on 22 February 2021 does not disclose any property orders.
The husband appears to be seeking 50% of the pool on a final basis.
On 26 October 2021 the husband filed a response and supporting affidavit seeking orders for his appointment as trustee for sale of the B Street, Suburb C property.
The wife opposes that application and in her response filed 14 December 2021 proposes that the interim order for sale made on 13 July 2021 be set aside. She asserts that the husband has failed to comply with his obligations for disclosure under the Rules and Practice Directions of this Court.
The wife remains living in the B Street, Suburb C property. She says she paid $10,000 on 22 October 2021 and a further $6,750 on 25 October 2021 in order to clear the mortgage arrears. In my earlier judgment dated 13 July 2021 I wrote:
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.[1]
[1] Gaines & Cotton [2021] FCCA 1586 at [12]
The monies which the wife used to clear the arrears came from her son Mr N. She did not say whether the monies were a gift or a loan that has to be repaid. Exhibit C which is a copy of the Commonwealth Bank home loan statements for the period 1 July 2021 to 31 December 2021 and was tendered in the husband’s case show a closing balance of $317,393.18 which is down from a closing balance on 1 July 2021 of $336,668.29. The husband did not challenge the wife’s submission that the arrears have been cleared so for the purposes of today’s hearing I accept that must be the case.
The wife says that the mortgage repayments are $1,712 per month or $428 per week but she is currently paying $2,000 per month to ‘assist her loan application and show she can afford the repayments.’ Exhibit B tendered in the husband’s case are statements from the wife’s Commonwealth Bank account #ending …36. This appears to be her main transaction account into which her weekly salary is paid. Her salary as a cleaner working for the Employer D varies for example on 8 December 2021 she received $278 and the 22 December 2021 she received $687. However there are also regular deposits from her children X and in particular Mr N which suggests, as Mr Shearston submits, that the wife is dependent on the ‘largesse and support of family’ to meet the current repayments.
The parties participated in a Legal Aid Property Mediation and were provided with funding to obtain a joint valuation for the B Street, Suburb C property. A copy of the valuation appears at pages 27-48 of the wife’s affidavit filed 14 December 2021 and was prepared by Mr O of Employer P on 26 November 2021. In Mr O’s opinion the market value of the B Street, Suburb C property on an ‘as is’ basis is $500,000 of which $400,000 represents land value and $100,000 the value of improvements taking into account the repairs and renovation needed.
The wife does not accept the valuation and says the property is only worth around $400,000. She relies on an earlier appraisal by Company R and dated 16 July 2021, 4 months earlier than valuation, which valued the property at a lesser figure of $420,000 due to the extensive repairs and maintenance required.
The husband does not dispute that the property is in a poor condition but says that is because the wife has failed to properly maintain it. The parties separated in August 2018 and it is not disputed that he has had no access to the property since that date. The November 2021 valuation refers to a recent water leak in the bathroom that has damaged the fittings, sub-floor and the laundry which has clearly occurred during the wife’s occupancy.
The husband submits that the recent increase in value is only as a consequence of a very buoyant property market. He says that unless the property is sold now, its condition will continue to deteriorate and the good market conditions that been experienced to date will be insufficient to prevent an erosion in value.
The wife seeks to set aside the interim orders made on 13 July 2021 but articulates no basis for such an order other than an allegation the husband has failed to provide disclosure.
On 28 September 2021 the wife filed an application in proceedings and affidavit in support of orders to compel the husband and the husband’s solicitor to provide certain documents and do certain things in order to participate in the property mediation that the wife had initiated through Legal Aid NSW.
On 27 October 2021 when the matter came before the Judicial Registrar the wife withdrew her application. Presumably because she accepted that there had been satisfactory compliance on the part of the husband.
The wife’s case appears to be that the husband has assets including $7,000 of superannuation that he has failed to disclose. It is at this stage simply a bald assertion by the wife. The husband says he has provided all relevant information in his possession and control. He says he has no superannuation, is in receipt of a disability support pension and does not lodge tax returns.
If the wife says the husband has superannuation she can request information from the superannuation fund by way of a Form 6. In any event these matters are not relevant to the issue of the sale of the property or the wife’s financial capacity to retain the B Street, Suburb C property after consideration of all matters, including paying the husband what she would be required to pay on an alteration of property interests application.
DISCUSSION
The power of enforcement is a discretionary one, but in most circumstances should be exercised to give efficacy to the orders made by the Court as appropriate.[2]
[2] Ramsey and Ramsey (1983) FLC 91-301
The interim orders were made on 13 July 2021. As the husband’s solicitor points out the wife did not lodge an appeal. The parties agreed to engage in mediation but that does not operate to stay the orders and the mediation has not seen a resolution to the dispute.
The solicitor for the wife purports to have made an oral application for a stay of the orders at some stage. I have no recollection of that and certainly no formal application was filed. If I did refuse the stay application (though the wife’s solicitor does not say what the outcome of his oral application was) that decision was not appealed.
The 13 July 2021 orders provided for the selection of a real estate agent and the wife nominated Company R. The husband says that two listing agreements were sent to the wife for her signature. The solicitor for the wife says he received the agreement sent on 26 October 2021 but it had not, for some reason, been sent on to his client for her instructions or signature.
In any event the sale process has stalled. The husband says that it is because the wife is opposed to the sale and wishes to retain the property herself. In my earlier decision I said:
The respondent provided no evidence of her capacity to refinance the mortgage or to buy out the applicant’s interest. This seems to be because she maintains a position that the applicant has no financial interest in the property.[3]
[3] Gaines & Cotton [2021] FCCA 1586 at [45]
Seven months down the track that continues to be the position. She provides no evidence of a loan offer, conditional or otherwise. Her best evidence is at paragraph 21 of her affidavit where she says that an ‘application to refinance the home loan has been made through a mortgage broker I have provided all the necessary documentation and understand from the broker that the new loan will have an interest of 1.89% fixed or 2.29% variable.’
The wife does not say how much she is seeking to borrow and whether that amount makes any provision for the purchase of the husband’s interest or whether she is simply seeking to refinance the existing mortgage. If the property achieved the valuation figure on sale of $500,000, after repayment of the mortgage and costs of sale that would leave something in the region of $160,000 for distribution.
I agree with the solicitor for the husband that it seems ‘untenable’ that the husband would get nothing from the sale even accepting the fact that the property was purchased towards the end of the relationship and in the post-separation period he has made no financial contribution to the mortgage or outgoings.
Also of relevance is the wife’s evidence at paragraph 22 of her affidavit that ‘To secure the loan, I have needed to include my sister Ms S and give her a 10% equity in the property’. In those circumstances I would have expected to see some evidence of that requirement from the mortgage broker or incoming mortgagee and evidence from Ms S as to her preparedness to take on the loan and her capacity to meet any financial obligations under it. The wife provides no evidence to that effect.
I am satisfied that the wife has caused delay in the sale of property. Fortunately, it does not appear that the husband has suffered prejudice in the sense that the property market has seen a significant increase in the value of the B Street, Suburb C property in the meantime and the arrears have been cleared. However, there can be no guarantee that the market will continue to rise and the husband remains jointly liable for the mortgage secured over the property.
I am not satisfied that the wife has advanced a valid reason for setting aside the interim orders made in July last year.
The husband is entitled to the benefit of those orders and the property should be sold.
In my view, an occasion for the appointment of a trustee to carry out the sale has been established. The parties have demonstrated that they are unable to do that together and the property needs to be sold to carry into effect the terms of the orders.
I note that this is a very small pool and it would be an unreasonable expense to appoint a professional trustee. I am satisfied that I should appoint the husband as the trustee for sale of the property noting that the parties substantive applications continue and they remain under the scrutiny of the Court.
I will make orders 1-3 of the husband’s application filed 26 October 2021. I decline at this stage to make order 4 which provides for the husband to have exclusive occupancy of the property in the event of the wife’s non-compliance with the sale process. There is no cogent evidence to suggest that the wife would seek to undermine the process. She did nominate a listing agent and the failure to sign the listing agreement may lie with her solicitor rather than the wife herself. I will give her the benefit of the doubt in those circumstances but grant leave to the husband to re-list the matter in the event of such non-compliance.
I will reserve the question of costs.
I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Costigan. Associate:
Dated: 17 March 2022
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