Gateau & Gateau

[2008] FamCA 115

FAMILY COURT OF AUSTRALIA

GATEAU & GATEAU [2008] FamCA 115

FAMILY LAW – PROPERTY – Interim property and financial orders

Family Law Act 1975 (Cth)

APPLICANT: MR GATEAU

RESPONDENT: MRS GATEAU

FILE NUMBER: MLF 1603 of 2006

DATE DELIVERED: 25 FEBRUARY 2008

PLACE DELIVERED: MELBOURNE

PLACE HEARD: MELBOURNE

JUDGMENT OF: YOUNG J

HEARING DATE: 25 FEBRUARY 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: MR SALAMANCA

SOLICITOR FOR THE APPLICANT: BERGER KORDOS

COUNSEL FOR THE RESPONDENT: MRS PHELAN

SOLICITOR FOR THE RESPONDENT: PLAZA LEGAL

Orders

1. THAT the Wife forthwith provide a Withdrawal of Caveat with respect to the properties situate at and known as:

   a.… (“East Property”); and

   b.… (“West Property”).

2. THAT the husband and the wife forthwith do all such acts and things and sign all documents necessary to sell East Property and West Property and the proceeds of sale be applied as follows:

   a.first, to pay all costs and expenses associated with the sale;

   b.secondly, to discharge the mortgage to Sandhurst Trustees Limited and Perpetual Trustees Limited encumbering East Property and West Property respectively;

   c.thirdly, to pay all properly calculated Capital Gains Tax payable with respect to East Property and West Property;

   d.fourthly, the sum of $30,000 to each of the Husband and the Wife, such sums to be by way of part property settlement and to be taken into account at the Trial of the proceedings;

   e.fifthly, the sum of $36,000 to be placed in an interest-bearing account in the names of the parties to be applied towards the education costs of the parties’ children: J and E at H School, as and from 1 January 2008, as follows:

   i.school fees;

   ii.other education fees including uniforms, books and stationary expenses;

   iii.compulsory school excursions excluding interstate and international excursions;

   iv.as may otherwise be agreed in writing between the parties;

   v.including a refund to the wife for any such expenses paid and referrable to the 2008 school year.

   f.sixthly, the balance to be placed in an interest-bearing deposit account in the names of the parties to be held pending Order of the Court or agreement in writing between the parties.

3. THAT all Terms and Conditions of the sales referred to in paragraph 2 hereof be mutually agreed upon between the parties and in default of agreement be determined by the President for the time being of the Real Estate Institute of Victoria, save for the following matters which shall be applicable:

   a.that the reserve sale prices shall be $390,000 for East Property and $175,000 for West Property, unless otherwise agreed upon in writing between the parties, and in default of agreement to be determined by the WBP Property Group at the joint expense of the parties;

   b.the Husband have the conduct of the sales and he provide all relevant information and particulars of and incidental to the marketing and the sales to the Wife’s legal practitioners and authorise such agents to disclose all information and any offers to the solicitors for the Wife;

   c.the selling agents be W Partners or such other agent as agreed in writing between the parties or such Terms and Conditions as may be mutually agreed in writing between the parties;

   d.the conveyancing solicitor be Mr B who shall be retained upon such Terms and Conditions as the parties mutually agree upon in writing.

4. a.THAT until further Order, the Husband be restrained from further encumbering the real property referred to in the parties’ Affidavits filed herein;

   b.that the husband be at liberty to sell down shares to a value of up to $10,000 and apply such proceeds towards any shortfall between the rental income received by him and the mortgages and expenses paid with respect to the home and investment properties, and the Wife be given details of all sales, statements and the disposal of all funds;

   c.that until further Order the Husband continue to pay the mortgage instalments payable to Perpetual Trustees with respect to the former matrimonial home.

5. a.THAT each party make available for inspection any documents requested by the other party. 

   b.that within fourteen (14) days the husband provide to the Wife’s legal practitioners a summary of the liabilities encumbering the real properties referred to in the Affidavits filed herein.

6. THAT the wife file and serve an updated Form 13 Financial Statement by 12 March 2008.

7. THAT the further Hearing of all property Applications be adjourned to 13 March 2008 at 10.00 a.m. for Case Management.

8. THAT the Ex Tempore Reasons for Judgment be transcribed and placed on the Court file and made available to the solicitors for the husband and the wife.

9. That the Form 2 filed by the husband on 25 January 2008 be dismissed.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 1603 of 2006

MR GATEAU

Applicant

And

MRS GATEAU

Respondent

REASONS FOR JUDGMENT

1. In the matter of Gateau, I have property and financial issues before the court on an interim basis.  Mr Salamanca of counsel appears for the husband, Mrs Phelan of counsel appears for the wife.  Both parties are in court.  This matter was assigned to me in the defended docket, and procedural orders had earlier been made on 30 October 2007 and 13 November 2007.

2. The children's issues that were before the court were of an interim nature, with final orders having been made in late December 2006.  I have made separate orders today removing the parenting and children's issues from the list of matters that are ongoing, and have also discharged the appointment of the Independent Children's Lawyer.

3. The original intention was that the property matters would be prepared by solicitors on instructions from clients and be in a position to be heard in January or February of this year.  That has not eventuated.  Indeed, a brief observation of the file shows that between 25 September 2007, and 25 January 2008, there were no documents filed.  I emphasise, no affidavits as to property or Form 13 financial statements, or amended applications fine tuning the final property and financial orders sought, were filed.

4. What was filed on 25 January by the husband was an application in a case seeking interim orders in relation to property and specifically for the wife to withdraw a caveat lodged against the title and for East Property to be sold, or its mortgage to be discharged and for consequential orders as identified in that application.  It is that issue that has occupied some of the time this day.  I have incorporated a wider understanding of the property owned by the parties, the mortgages encumbering those various properties, and generally of how the proceeds of any sale should be distributed or held as between the parties in this hearing.

5. I had today before the court, and I have read an affidavit and exhibits thereto, from the husband filed 25 January 2008, and subsequently, a further affidavit of the husband filed 21 February 2008.  He did update his financial statement, and that document was filed 25 January 2008.  From the wife's lawyers, I received a response to the application of 13 February 2008 seeking, simpliciter, a dismissal of the orders sought and a short affidavit as to each of the properties and other matters, which was filed 13 February 2008.  What would have been helpful was an updated financial affidavit in a Form 13 from the wife, but that was not prepared or filed.

6. With that background I have listened to and more particularly asked questions of counsel for both parties.  I now have a clear and updated understanding of their property assets, and of the husband's income circumstances.  The parties have used their skills throughout the marriage to acquire the various investment properties identified in paragraph 2 of the wife's most recent affidavit.

7. All property values are agreed and that was done for the purpose of an out of court mediation, which was wholly unsuccessful.  I have had confirmed to me by counsel, the updated valuation of those properties, which total approximately $2.2 million gross.  One property is unencumbered, that is S Property.  Otherwise, the remaining properties are encumbered by arms-length mortgages, and the total mortgage liability is approximately $1 million.  The particular mortgage over East Property is $238,000.  It may be that the properties, aside from the matrimonial home, have an exposure to capital gains tax.  There will, of course, be costs and expenses of sale associated with all properties.

8. By way of background, I clearly understand that the wife has the benefit of living in the former matrimonial home at T.  The wife pays the outgoings by way of rates, taxes, insurance, and all domestic accounts for living in that home, but the mortgage is in favour of perpetual trustees, and currently it is $426,000.  That mortgage liability has been previously serviced by the husband.  I observe that the original mortgage was said to be $410,000 and it has now been extended, in default or otherwise, to the current $426,000 liability.

9. The husband seeks only the sale of the East property.  For that to occur the wife would have to uplift the caveat.  I have taken somewhat of an overview of this case and have significantly put to counsel during submissions, a more proactive and wider response than that initially sought by the husband.  My understanding is that after taking further instructions, and with the clients in court at all time, there is a very real level of understanding and consensus to move forward with orders that will effect the sale of two properties, discharge those mortgages, and otherwise create an educational fund for the children, and direct to the parties by way of an interim property settlement, a sum of money, in equal amounts.

10. I have a background, generally, of understanding the parties income.  I certainly understand the substantial expenses that the husband has, and fundamental to his case, is the somewhat inferior accommodation he occupies.  That is a relevant issue because the children have a week-about relationship with their parents.  The parents live near to each other in T and that is somewhat convenient to the catholic school education that the children enjoy.

11. By way of child support, I intentionally do not intend to traverse these contentious issues, save to observe that what currently is paid is $123 a week, and formerly what was paid was $173 per week.  I do understand that there was, in the past, a dispute about the school to which the children would attend, but that is now agreed and the children are seemingly happy at their new school.  I am told that the school fees are $8,000 per annum, but this family has a subsidy, or gratuitous grant from the school, which otherwise has the effect of subsidising $3,000 of school fees.  If, in reality, the schools and uniforms are $12,000 per annum paid at the full rate, as this family would normally be expected to do, given their ownership of assets and property, I am allowing in the fund $12,000 a year for an initial term of three years.

12. What I propose to do, and it now is the subject of agreement from all parties, is to establish a fund in the joint name of the husband and wife to be operative from 1 January 2008, where $36,000 will be invested in an interest-bearing account.  That interest must be equally declared by the husband and wife for taxation purposes.  The husband and wife must authorise all withdrawals from that account, which is to include the school fees as rendered by the school, other accounts rendered by the school, inclusive of required books, stationery and expenses, uniforms and any compulsory expenditure by the school, but I specifically have indicated that interstate or international trips or excursions are left to the parents to otherwise agree.  If the wife has paid first term 2008, that is to be refunded to her from that account.  If the wife has paid 2007 or earlier expenses, school fees and the like, they are not to be refunded, and I emphasise this fund operates from 1 January 2008.

13. I have raised with counsel the ability to provide a partial property settlement.  It did seem to me that there are compelling reasons in this case, and in accordance with the requirements of the Full Court, both counsel agree, more importantly, both parties have agreed.  I have invited submissions as to the quantum and I propose to immediately direct on the settlement of the sale of East Property, that $30,000 be distributed to the husband and the wife, as a partial settlement of property.  Those matters can be reflected upon and adjustments to the larger pool of assets made, if necessary, in the final section 79 hearing.

14. I do intend to require two properties to be sold.  They are the East Property, and otherwise the West property.  The parties have agreed upon a firm of estate agents and an independent solicitor of the parties is to be agreed upon to do the conveyance on both properties at a rate to be negotiated by the parties.  The mortgages on both properties are to be discharged.  The reasonable costs and expenses of sale are to be paid.  The balance of the proceeds will then be used to pay any properly calculated and payable capital gains tax relative to those properties.  The calculation of capital gains tax is often an issue of some angst in this court between the parties, but I make it perfectly clear that it is to be the proper sum in the circumstances of what would be assessed to the owner of the property, in this case, the husband subject to full and complete financial disclosure of all relevant matters to the wife or her nominated solicitor or accountant.

15. The interim application of the husband then otherwise sought to deal with the balance of moneys after the mortgagees had been discharged and subject to an updated and final figure, $238,000 in respect of the East property, and approximately $120,000 in respect of the West Property.  Otherwise, and after establishment of the $36,000 in the school fund and $30,000 to each of the husband and wife, the balance of moneys are to be held in an interest-bearing account in the joint names of the parties.  Again, the parties are to be responsible for the declaration to the Australian Taxation Office of 50 per cent of interest earned thereon.  Those moneys are to be held pending further order of the court, or written agreement by the parties.  So that they are at liberty to call for any further distribution by agreement, or to pay any other urgent expense by prior written and informed agreement.

16. Insofar as the husband sought the mortgage of the matrimonial home, or the other two mortgages encumbering M property, and erroneously his application sought the mortgage against S property, which does not apply, but also other service, rates, taxes and the like.  I find that they are not to come from the balance of the account.  These issues can be reconsidered at another time, if necessary.

17. The husband is in some dispute with the owner of his current rental property, but that is a matter beyond this court.  The husband pays rent on that property.  If necessary that matter can be considered in the further hearing, and it may or may not be that any adjustment will be made, but the husband will continue to pay his own rent from his income.

18. In arriving at the outcome, I am generally aware of the income of the parties.  The negatively-geared properties and taxation benefits that may arise, and some of the expenses, though the failure of the wife to update her financial statement does make a complete overview a little more difficult to ascertain.

19. As to the further hearing of this matter, I have indicated that the orders will provide for the matter to be listed before me for case management on 13 March 2008 at 10 am.  I will endeavour to provide a defended hearing of the property matter, certainly before the end of this year, but my current intention is to try and fix a hearing of no more than three days mid-year, subject to listings.

20. I will have these reasons transcribed and placed on the court file, and made available to all parties.

I certify that the preceding paragraphs are
a true copy of the reasons for judgment herein
of The Honourable Justice Young

………………………………………………………..
Associate:          
Date: 29 February 2008