GAIROLA & LAKMALI

[2020] FamCA 267

FAMILY COURT OF AUSTRALIA

GAIROLA & LAKMALI [2020] FamCA 267

FAMILY LAW – PROPERTY – interim orders – where Applicant sought orders restraining the Respondent from selling real property – where in the alternative Applicant sought net sale proceeds be held on trust for the parties – where the Respondent placed property on the market without Applicant’s knowledge or consent – Respondent entered into contract of sale for the property – Respondent sought release of proceeds of sale – orders made for proceeds of sale to be held in trust by Applicant’s lawyers on behalf of both parties. 

APPLICANT: Mr Gairola

RESPONDENT: Ms Lakmali

FILE NUMBER: DGC 774 of 2017

DATE DELIVERED: 23 April 2020

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Hartnett J

HEARING DATE: 7 April 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Boden

SOLICITOR FOR THE APPLICANT: Starnet Legal

THE RESPONDENT: In Person

Orders Made 7 April 2020

1. The parties attend an online mediation within 28 days of these orders, with arrangements for the mediation to be made by the lawyers for the Applicant, and the Applicant to pay the mediator’s fee in the first instance with the payment of those fees thereafter to be a matter for the Court to determine being as to allocation to the Respondent to as any or part.

2. All extant applications be adjourned to 13 August 2020 at 10.00am for final hearing before Justice Hartnett (with an estimated hearing time of two days).

3. Each party file and serve any affidavit material upon which they seek to rely at final hearing, at least 14 days before the commencement of the final hearing.

4. There is otherwise liberty to the parties to apply for further trial directions.

5. The sum of $72,000 is to be paid to L Pty Ltd (who have lodged a caveat against the real property situate at H Street, Suburb J in the State of Victoria [‘the Suburb J property’]) from monies held in an National Australia Bank joint account in the name of the parties, such account ending in #...03. The parties are to do all acts and things necessary to ensure payment of this sum to occur at least 24 hours prior to the settlement of the sale of the Suburb J property AND THE COURT NOTES that such account is approximately $93,000 in credit at the present time.

6. The proceeds of sale of the Suburb J property be applied as follows:-

   (a)       in payment of the National Australia Bank mortgage secured against the said property;

   (b)       in payment of sales commissions and sales expenses associated with the sale (including real estate commissions, advertising expenses and conveyancing); and

   (c)       in payment of $11,000 to the Respondent, being costs incurred in preparing the property for sale, provided receipts substantiating such expenses are provided by the Respondent to the Applicant.

7. Subject to order eight herein, the net proceeds of sale remaining (after the payments referred to in order six herein) be paid into the trust account of Starnet Legal (BSB … and Account …90), the Applicant’s lawyers, to be held in trust on behalf of the parties in an account in their joint names pending finalisation of the property proceedings.

8. The sum of $150,000 is to be paid to the Respondent from the net proceeds of sale, being the sum remaining after payment of those sums referred to in order six herein, as an advance on property settlement in her favour.

AND THE COURT NOTES THAT:

A.The parties are at liberty to forward final parenting orders as sought by consent to the Chambers of Justice Hartnett, for the making of such orders in their absence.

B.Settlement of the sale of the Suburb J property is due to occur on 21 April 2020. The net proceeds are estimated to be in the sum of approximately $641,585

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 Giarola & Lakmali 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: DGC 774 of 2017

Mr Gairola

Applicant

And

Ms Lakmali

Respondent

REASONS FOR JUDGMENT

Preliminary

1. This matter was before the Court on 7 April 2020 in a judicial duty list by telephone hearing from the courtroom. The Applicant husband (‘the Applicant’) appeared through his solicitor and the Respondent wife (‘the Respondent’) appeared in person.

2. The parties were last before the Court on 4 March 2020 before Registrar Moser. At that time there was discussion as to resolution of parenting matters by the signing of proposed consent orders to be made as final orders. The Independent Children’s Lawyer had instigated the preparation of minutes to be agreed between the parties. As a consequence Registrar Moser adjourned the proceedings to 18 March 2020 for the making of such orders. She otherwise placed the proceedings in the list of cases awaiting allocation to a judicial docket with priority from 4 March 2020.

3. As at 7 April 2020, there remained no final parenting consent orders made although the Respondent indicated at the hearing on 7 April 2020 that she anticipated such orders would come to fruition. This was an interesting submission of the Respondent in a context where the evidence disclosed that she conveyed to the Applicant on 14 March 2020, that she would not consent to any parenting orders unless the Applicant removed the caveat he had lodged on the hereafter referred to ‘Suburb J property’, was but one of her demands. Nevertheless, I indicated to the parties during the hearing that I would make a notation to any orders made that day, which would be to the effect that any proposed consent orders be provided to Chambers for the making of orders by the Court to finalise outstanding parenting applications between them.

4. The matter before the Court on 7 April 2020 went to the parties’ outstanding competing property applications only. 

This Application

1. The Applicant relied upon an Application in a Case filed by him on 20 March 2020 together with affidavits of evidence affirmed by him on 4 March 2020; 18 March 2020; 19 March 2020 and 20 March 2020. He was, at the time of filing his material, a litigant in person.

2. The Respondent relied upon a Response to an Application in a Case filed by her on 3 April 2020 together with an affidavit of evidence sworn by her on 2 April 2020. She was a litigant in person.

3. The parties were last before me on 12 February 2020 in respect of property matters. On that occasion the Court made orders and delivered reasons in respect of third party (Second and Third Respondents) claims for legal fees owing by each of the Applicant husband and Respondent wife. Relevantly, the Applicant was ordered to pay to the Third Respondent the sum of $119,368.04 together with interest in respect of outstanding legal fees, and the Respondent was ordered to pay the Second Respondent the sum of $11,782.60 together with interest in respect of outstanding legal fees. Additionally, the Applicant was to pay the Third Respondent’s costs of the proceeding in the sum of $15,000 and the Respondent was to pay the Second Respondent’s costs of the proceeding in the sum of $8,200. Order six of the orders made was as follows:-

   6. The Applicant husband and First Respondent wife do all things and sign all necessary documents to cause the first payment and the second payment to be made to the Third Respondent and Second Respondent respectively from the Applicant husband and First Respondent wife’s joint account with the National Australia Bank BSB: … account number …03 within 7 days from the date of these orders.

4. The abovementioned order six was complied with by each of the parties. The funds needed to meet the payments ordered derived from the National Australia Bank joint account of the parties in unequal measure. The Applicant had the benefit of approximately $140,000 more than the Respondent in the application of joint funds to his greater legal costs debt and otherwise to child support arrears included of approximately $25,901. The parties are not in dispute as to this quantification. The effect of the payments being made as required to the Second and Third Respondents was the termination of the Second and Third Respondents participation in the proceedings, and the removal by them of their respective caveats lodged over the real property (in which the Respondent lives) as described in the following paragraph.

5. In his application filed 20 March 2020, the Applicant sought orders restraining the Respondent from selling the real property situate at H Street, Suburb J in the State of Victoria and more particularly described in Certificate of Title Volume … Folio … (‘the Suburb J property’). In the alternative he sought a sale of the Suburb J property with agreement as to the terms of such sale as between the Applicant and the Respondent. He sought essentially that the net sale proceeds, after payment out of selling expenses, the mortgage encumbrances and any other agreed expenses be held on trust for the parties in the joint names of the parties.

6. In her Response filed 3 March 2020 the Respondent sought orders as follows:-

   1.  Dismiss the order requested to stop the selling proceedings of the property H Street VIC. This property is now sold formally.

   2. An order to make all necessary arrangements and comply with sale proceedings of the property H Street VIC by both parties.

   2a. Remove the caveat by Mr Gairola

   2b. Sign NAB discharge of mortgage by both parties.

   2c. Payment of L Pty Ltd debt.

   3. An order to sign and release funds from NAB joint account to the third-party creditor for the marriage time joint debt with accruing interest to L Pty Ltd who has put a caveat to the property H Street, Suburb J VIC preventing sale proceedings.

   4. An order to use and release $650,000 from the sale funds of the property H Street, Suburb J VIC to purchase a new house as shelter to two children and myself. This newly purchasing house will be included to the marriage pool for the final financial settlement.

7. The Respondent was the sole registered proprietor of the Suburb J property. The Applicant lodged a caveat on the title to the property to protect his claimed interest in the property. He was willing to remove that caveat if the parties agreed on a resolution of their outstanding property applications dispute. The caveat was lodged by the Applicant on 17 March 2017 on the grounds of a claimed “implied, resulting or constructive trust.”[1]

   [1] Attachment to the Affidavit of Mr Gairola sworn 20 March 2020.

8. The Applicant had discovered, on 3 March 2020, that the Respondent, without his knowledge or consent had advertised the Suburb J property for sale and placed it on the market for a public auction to occur on 21 March 2020. His evidence was that the property was placed on the market for sale by the Respondent on 2 February 2020. The listing price was $1,370,000 to $1,470,000. The vendor’s reserve price was $1,470,000. A property valuation obtained by the parties in these proceedings, dated 24 January 2018, had provided a then market valuation of $1,660,000. At the hearing before me on 12 February 2020, the Respondent had submitted to the Court, amongst other things, that the mortgage sums secured over the Suburb J property were then approximately $750,000. On that same date the parties submitted to the Court that a sum of approximately $247,000 remained in the joint account they held with the National Australia Bank.

9. The Respondent lived, with the parties’ children, in the Suburb J property. She and the children had occupied the property since August 2017, as asserted by the Applicant, or since an earlier time as asserted by the Respondent. During that period of occupation, the Respondent has attended to repayment of the monthly mortgage loan account although in 2019 she fell into arrears; obtained a reduced repayment sum; and had an ongoing dialogue with the National Australia Bank. She was certainly experiencing difficulty in meeting her mortgage obligations. In early 2020, she advised the Applicant that the National Australia Bank required her to place the Suburb J property on the market for sale which resulted in the March 2020 auction of the property. The Applicant requested the Respondent provide him with proof as to her assertion, in particular, the relevant correspondence from the National Australia Bank. The Respondent failed to do so. On the Respondent’s own evidence, the National Australia Bank was in fact moving to a position wherein the bank was willing to have a “hardship moratorium”[2] apply to both of its loans which were secured by the Suburb J property with a three monthly review. There would be no expectation of payment within the hardship period. The National Australia Bank were not forcing the Respondent to sell the Suburb J property at the time at which she did.

   [2] Affidavit of Ms Lakmali sworn 2 April 2020, Annexure ‘R03c’.

10. The Respondent determined however that she had to clear her debts, and do so fairly quickly. She proceeded, on 22 March 2020, to enter into a contract of sale of the Suburb J property.  

11. On page 15 of her affidavit sworn 2 April 2020 the Respondent deposed to the sale price of the Suburb J property having been $1,435,000. She provided no documentary and necessary evidence as to that figure. In fact, she attached one page only of the contract of sale as annexure ‘R06’ to her affidavit. She did not provide, which was clearly available to her, documentary evidence corroborating the sale price, nor did she provide the settlement date.

12. Despite this lack of evidence, the Applicant on the hearing, accepted the sale price as given by the Respondent, whilst stating that the Applicant was “not in a position to dispute that.”

13. The Applicant also accepted that a sale of the Suburb J property had occurred, and his application was directed to the application of the proceeds of such sale.

14. A further caveat lodged against the title to the Suburb J property related to a joint debt owed by the parties to L Pty Ltd. The parties borrowed the sum of $60,000 from L Pty Ltd in early 2016. Those funds were applied by them to mortgage reduction of the loans taken out by them with the National Australia Bank secured over the Suburb J property. The wife sought an order for repayment of this debt out of the parties’ joint National Australia Bank account. The Applicant consented to such an order on the hearing of the matter, the third party debt provider being prepared to accept an all-in sum of capital and interest owed of $72,000. Upon payment of such sum, that caveat would be withdrawn by L Pty Ltd, as submitted by the Respondent.

15. The Respondent sought release to her of a sum of $650,000 of the net proceeds of sale to enable her to purchase a further home for herself and the children. She indicated that she would include the property purchased by her, in her sole name, as an asset of the parties to be considered in the parties’ outstanding competing property applications. She was silent as to the approach to be taken with respect to stamp duty and other associated costs of purchase. She did not suggest a holding of the sale proceeds in a joint account on trust for the parties, but rather proffered the trust account of her conveyancer where the monies would be held on her behalf and able to be withdrawn by her to purchase a further property. The Respondent’s proposal, prior to any settlement of a property purchase, and possibly in any event, would not secure the net proceeds of sale of the Suburb J property and thus enable payment to the Applicant, should the Court determine a payment should be made.

16. There are other issues. The Respondent asserted the balance of sale funds available for distribution between the parties was $561,130.26.[3] She sought a payment to her of $650,000. This exceeded the net figure available to the parties, on her calculations, by $88,869.74. The Respondent deposed to having borrowed $80,454.82 from a friend in order to make a home loan repayment. She sought that sum be ‘added back’ and reimbursed to her. From where it was to derive, she did not canvas. She might have intended those monies be paid to her from the National Australia Bank joint account, but that was not clear. There is no evidence of any request from the National Australia Bank for a lump sum in such amount. There is no documentary evidence of a payment in such sum in reduction of any mortgage. The Respondent’s evidence as to this matter was confused and unsatisfactory. The Applicant did not know what the Respondent’s submissions, and evidence, “meant”. There can be no payment out to the Respondent of this sum, as now sought by her, until trial, when the Respondent will be required to identify the source and application of these monies with far greater precision than to date. She will need to file corroborating material. The payment of stamp duty and other costs could not be made on this scenario, nor the capital gains tax liability of the Respondent asserted by her to be in the sum of $120,000.

    [3] Affidavit of Ms Lakmali sworn 2 April 2020, [15].

17. The Applicant does not cavil with the other payments that shall come out of the Suburb J property sale proceeds by order of the Court, subject to the Respondent providing evidence of her $11,000 claimed expenses in getting the Suburb J property ready for sale.

18. The Respondent earns no income. On her evidence she has a $120,000 capital gains taxation liability. The Applicant’s submission that the Respondent would likely have to sell any property she purchases to pay out any entitlement of the Applicant is an apt one. As a result of the settlement of sale of the Suburb J property there will be money in trust available for division between the parties. That situation should remain until trial.

19. The Court is mindful that the Respondent will be required to re-house the parties’ children and that there was an earlier unequal distribution of monies to meet the parties’ obligations. The Court discussed with the parties the payment out to the Respondent by way of a partial property settlement in the sum of $150,000, to assist her in her relocation. The Applicant agreed such sum would not prejudice his further entitlements, if any. He did not oppose the making of an order in those terms.

20. Finally, the parties’ respective positions are that there should be a property adjustment as between them, with the Applicant submitting a 60 per cent/40 per cent division of the asset pool in favour of the Respondent and the Respondent submitting an 80 per cent/20 per cent division of the asset pool in her favour. There appears dispute about the pool as to its quantum and inclusions. These are matters for trial.

I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hartnett delivered on 23 April 2020.

Associate:

Date:  23 April 2020