Geary and Groves

[2008] FamCA 584

FAMILY COURT OF AUSTRALIA

GEARY & GROVES [2008] FamCA 584

FAMILY LAW – REVIEW OF DECISION OF JUDICIAL REGISTRAR

Family Law Act 1975 (Cth)

Heath and Heath (1984) FLC 91-517
In the Marriage of Harris (1993) FLC 92-378

APPLICANT: Mr Geary

RESPONDENT: Ms Groves

INTERVENOR: National Australia Bank

FILE NUMBER: PAC 5828 of 2007

DATE DELIVERED: 21 July 2008

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Justice Fowler

HEARING DATE: 10 July 2008

REPRESENTATION

APPLICANT: In person

SOLICITOR FOR THE RESPONDENT: Ms More

SOLICITOR FOR THE INTERVENOR: Ms Kuti

Orders

1. The husband’s Application in a Case filed 30 June 2008 is dismissed.

2. The costs of the application are reserved to the hearing of the matter.

3. I discharge the Order for a stay made 10 July 2008 with respect to the Orders of Judicial Registrar Loughnan.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: PAC 5828  of 2007

MR GEARY

Applicant

And

MR GROVES

Respondent

REASONS FOR JUDGMENT

Introduction

1. Before the court is an Application in a Case seeking a review of the decision of Judicial Registrar Loughnan made on 23 June 2008 in which the learned Judicial Registrar ordered:

   “1.That within 14 days from today’s date the husband vacate and give vacant possession to the wife of the property at [A] in the State of New South Wales and that thereafter, unless the parties agree in writing, he remain away from that property.

   2.That the wife forthwith cause that property to be listed for sale by public auction and that she do all things and sign all documents to cause the completion of that sale and that the proceeds of sale, after the payment of any adjustments of sale, costs of sale including agent’s commission, any advertising fees and legal expenses, the discharge of any secured creditor and in particular the National Australia Bank, be held in a controlled monies account in the names of the parties with her solicitor or be held on trust in such other manner as the parties may agree in writing to abide further order of the Court.

   3.That the parties sign all documents and do all things necessary to cause the sale on or after 1 July 2008 of any shares in public companies held in their names and from the net proceeds of sale to meet the costs of any loan secured by the shares, and to meet the costs of the parties of and incidental to Dr [M] or any expert appointed in his stead, being the single expert in parenting proceedings between the parties, to meet any capital gains tax and thereafter to hold any net proceeds of sale in a controlled monies account in similar terms to the order in relation to the proceeds of sale of the property.

   4.Liberty to any party to restore the matter to the list on giving
   48 hours’ notice to the Court and to the other parties.

   5.The husband is to file and serve any Reply to the Response to an Application for Final Orders setting out any orders he seeks by way of settlement of property within 7 days from today’s date.”

2. In his Application, in lieu of the Orders made by the learned Judicial Registrar, relevantly the husband sought the following Orders:

   “1.That, pursuant to s.26C(3) Family Law Act 1975, leave be granted for a review by the Full Court of the Family Court of Australia of orders 1 (one) and 2 (two) made by Loughnan JR on 23 June 2008.

   1.1That, if the above order is refused, leave be granted for a review by a Judge of the Family Court of Australia of orders 1 (one) and 2 (two) made by Loughnan JR on 23 June 2008.

   1.2That orders 1 (one) and 2 (two) made by Loughnan JR on 23 June 2008 be stayed until further order.

   1.3That this application be expedited.

   2.That pursuant to Part VIIIAA of the Family Law Act 1975 the National Australia Bank Limited be restrained from repossessing or continuing to repossess [A property] NSW (“the property [A]”) until further order.

   2.1That pursuant to Part VIIIAA of the Family Law Act 1975 the National Australia Bank Limited be restrained from commencing or continuing legal proceedings against a party to the marriage until further order.

   [no order 3]

   4.That, by way of partial or interim property settlement, the Respondent mother forthwith sign all documents and do all things necessary to cause the transfer, after conversion of Australian dollars, $19,288 (nineteen thousand two hundred and eighty eight dollars) from account number […] of [L Bank] in the names of [Mr and Mrs M] to a controlled monies account in the names of the parties with the Respondent mother’s solicitor or be held on trust in such other manner as the parties may agree in writing.

   4.1That, by way of partial or interim property settlement, the Respondent mother and Applicant father forthwith sign all documents and do all things necessary to cause the direct transfer, after exercise of order 4 (four), to the National Australia Bank Limited the amount of $19,288 (nineteen thousand two hundred and eighty eight dollars) from the account mentioned at order 4 (four) for the purpose of partially repaying the remaining debt (if any) owed over the property[A].

   5.That, by way of partial or interim property settlement, the Respondent mother forthwith cause the property situate unit [D in] New Zealand to be listed for sale by public auction and that she do all things and sign all documents to cause completion of that sale and that the proceeds of sale (if any), after the payment of any adjustments of sale, costs of sale including agent’s commission, any advertising fees and legal expenses, the discharge of any secured creditor and in particular Westpac New Zealand Limited, be held in a controlled monies account, after conversion to Australian dollars, in the names of the parties with her solicitor or be held on trust in such other manner as the parties may agree in writing.

   5.1That, by way of partial or interim property settlement, the Respondent mother and Applicant father sign all documents and do all things necessary to cause the direct transfer, after exercise of order 5 (five), to the National Australia Bank Limited the net monies (if any) from the account mentioned at order 5 (five) for the purpose of partially repaying the remaining debt (if any) owed over the property[A].

   6.That, after the exercise of order 3 (three) made by Loughnan JR on 23 June 2008, by way of partial or interim property settlement, the Respondent mother and Applicant father sign all documents and do al things necessary to cause the net proceeds mentioned at said order to be applied in the following manner and priority:

   (a)payment of any outstanding council rates and/or strata levies over property[A] and any associated interest and costs accrued as a result of non-payment of said council rates and/or strata levies;

   (b)to the National Australia Bank Limited for the purpose of partially repaying the remaining debt (if any) owed over the property[A].

   7.That if, after exercise of above orders 4 (four) to 6 (six) inclusive, or in any event that, there remains a debt to the National Australia Bank Limited no greater than $30,000 over the property[A] at the time of 6 (six) weeks from the date of the hearing of this application then 1 (one) of the following orders will take effect

   (a)That in accordance with s.90ae Family Law Act 1975, the National Australia Bank Limited and the Applicant father enter into an agreement, subject to the transfer by the Respondent mother of her interest in the property[A] to the Applicant father, refinancing the remaining mortgage over property[A] on 25 year terms at the prevailing rates of interest applicable, then the Respondent mother shall by way of partial or interim property settlement, sign all documents necessary to transfer and assign all of her right, title and interest in the property[A] to the Applicant father. The Applicant father to meet all regular mortgage repayments pursuant to said refinancing agreement. The Applicant father is to notify the Respondent mother through her solicitor forthwith upon the successful refinance of the property[A] and provide that solicitor with a copy of the singed finance agreement as soon as practicable thereafter. The Respondent mother to be indemnified against any further liability in relation to property[A]. A caveat in the name of the Respondent mother over property[A] to remain until further order.

   (b)(blank)

   (c)That within 48 hours of the Applicant father having produced to the solicitors for the Respondent mother evidence of approval of an intended financier whereby, subject to the transfer by the Respondent mother of her interest in the property[A] to the Applicant father, such financier will refinance the existing mortgage remaining then the Respondent mother shall by way of partial property settlement, sign all documents necessary to transfer an assign all of her right, title and interest in the property[A] to the Applicant father.  The Applicant father is to notify the Respondent mother through her solicitor forthwith upon the successful refinance of the property[A] and provide that solicitor with a copy of the signed finance agreement as soon as practicable thereafter.

   (d)That in accordance with s.90ae Family Law Act 1975, the National Australia Bank Limited and the Respondent mother enter into an agreement refinancing the remaining mortgage over property[A] on 24 year terms at the prevailing rates of interest applicable. The Respondent mother, by way of interim maintenance; meet all regular mortgage repayments pursuant to said refinancing agreement. Title over property[A] to remain with the Respondent mother until further order. Caveat in the name of the Applicant father over property[A] to remain until further order.

   (e)That in accordance with s.90ae Family Law Act 1975, the National Australia Bank Limited and the Respondent mother enter into an agreement refinancing the remaining mortgage over property[A] on 25 year terms at the prevailing rates of interest applicable. The Respondent mother, by way of interim maintenance, meet all regular mortgage repayments pursuant to said refinancing agreement, by way of garnishment of her salary. Title over property[A] to remain with the Respondent mother until further order. Caveat in the name of the Applicant father over property[A] to remain until further order.

   (f)That, pursuant to s.106B Family Law Act 1975, the transaction or instrument cancelling the mortgage facility dated June 1997 between the Respondent mother and the National Australia Bank Limited be set aside and the Respondent mother, by way of interim maintenance, meet all regular mortgage repayments pursuant to said agreement, by way of garnishment of her salary. Title over property[A] to remain with the Respondent mother until further order. Caveat in the name of the Applicant father over property[A] to remain until further order.

   8.That the parties to the marriage equally share liability for any reasonable administrative costs National Australia Bank Limited incurred in good faith as a result of this application.”

3. In response to a question asked by me the husband said that the only part of the Judicial Registrar’s Orders he wished to set aside were Orders 1 and 2.  The husband was content for the Orders for the sale of shares to remain in place and later indicated to the Court that that sale had taken place.

4. In submissions the husband asserted:

   a)That he desired to retain the home as a home for himself and his children;  and they presently live with him approximately 15 days per month.  He said it was unfair that the children should be removed from their home with him when the wife had a home with her relatives.

   b)That he otherwise would be without a home whereas the wife was living in “relative luxury” with relatives of hers, he asserted, rent-free.  The evidence before me, which I accept, is that she pays rental to the owners of the home that she occupies in the amount of $150.00 per week.

5. To achieve his stated purpose the husband sought either a provision for his occupancy of the property by way of a maintenance provision or the transfer of the property to him as a partial property settlement, and an order that the wife pay mortgage payments under a mortgage to be arranged over the home either from the existing mortgagee or a refinancing mortgagee.  It is noted that in his application the father sought in one order that he pay the payments under the mortgage and in another that the wife do so.  It seems likely that the suggestion that he might meet the mortgage payments was an error since before me it was made clear by the husband that he sought the wife’s repayment of that sum.

6. He sought in the alternative an order for an interim property settlement with a transfer of title to him, or alternatively an order that the wife procure the payment of a mortgage to be secured on the title to the home.  He asserted that whatever property settlement was made on an interim basis could be undone by a trial judge on the hearing of the matter.

7. The home was subject to an existing mortgage to the National Australia Bank which was in default.  The Bank has sought the repayment of its loan and says whilst it will allow the mortgagor (the wife in whose name the property is solely registered) until the end of the month to sell, it asserted that unless restrained from doing so would proceed to a sale thereafter.

8. The husband sought to argue that the Bank had acted malafides in calling in the loan or alternatively that it had acted in collusion with the wife who was a former employee of the Bank, in an attempt to defeat his claim.  He asserted they must have had constructive notice since he had lodged a caveat against the title to the property.  In this regard the husband informed the Court that he relied on the authority of Heath and Heath Westpac Banking Corporation Intervenor No 2 (1984) FLC ¶91-517. In that caveat the husband asserted a caveatable interest in the property which was an unquantified and unspecified “equitable interest by way of constructive trust”.

9. The husband agreed that the Bank’s mortgage had been registered well before the lodgement of his caveat.  He however asserted that the calling in of the loan post dated the caveat which, for the purpose of these proceedings, I accept as probable.

10. The husband agreed that under the terms of its mortgage the Bank was entitled to call in the loan and exercise its powers, whether or not the loan was in default.

11. The husband, although accepting that interest only had been paid for a time, asserted that this could not be regarded as a default by reason of the redraw facility attached to the mortgage.  He however agreed that the Bank under the mortgage had a right to call in the loan whether it was in default or not.

12. Pursuant to the Orders of the Judicial Registrar, the shares the subject of that Order which had been jointly owned, had been sold and that sale had realised an amount of about $75,000.00.  On the calculation of the wife’s solicitor the capital gain tax would be in the order of $6,700.00 – and then $2,200.00;  a total of $8,900.00.

13. It was the husband’s claim that once the monies comprising the net balance of the proceeds of the sale of the shares had been applied to the outstanding loan, an amount of $30,000.00 would remain outstanding.  If the capital gains tax liability was paid, the amount might be more than that, but in any event having regard to the other matters requiring consideration in this case it matters not much whether the shortfall was greater and certainly I find it would be no less.

14. The husband proposed that that balance be refinanced by the National Australia Bank over 25 years at current rates of interest.

15. The National Australia Bank, by its representative, said it would not be interested in making such a loan to the husband or the wife and its position was that it required all of the advance made to it to be repaid in full.  The National Australia Bank’s representative indicated that unless the property is listed for sale pursuant to the Order of Judicial Registrar Loughnan and sold by 28 July 2008 it intends to exercise its powers.  The Bank has also indicated that it had already informed the husband that if prior to that date the husband can come forward with re-financing arrangements it will consider allowing more time.  Notwithstanding that prior offer he had to date not done so.

16. That then left the possible alternative, in relation to refinance, of procurement of an alternative source of finance or an order restraining the Bank from exercising its powers under the provisions of the mortgage, which absent any order of the Court setting aside its call up of the mortgage, it clearly is otherwise entitled to do under the terms of its mortgage.

17. It was asserted that the present value of the property the subject of these proceedings was approximately $155,000.00 and was subject to a mortgage securing an outstanding balance of $106,000.00.  It was asserted that that mortgage could be paid down by application of the proceeds of the sale of the shares to an amount of $30,000.00 and if that were done there would be a net equity in the property of about $125,000.00.

18. It was asserted by the wife that the total asset pool for division of the parties apparently comprises some $117,000.00 net of hard assets and superannuation, which is solely that of the wife, of $176,000.00.  Whilst the husband asserts that he has made contribution financially to the acquisition, conservation and improvement of those assets, he concedes that the former matrimonial home was that of the wife prior to cohabitation.  He concedes that he has not been in employment for a considerable period of time but points to contributions made by him aliunde to the increment in value of the shares held.  He has been a share trader apparently for some part of the marriage.  The wife asserts that the greater financial contribution to the acquisition, conservation and improvement of assets was hers, and that her contribution aliunde under section 79 was greater than that of the husband.  The husband asserts that latter contribution was at least equal.  The husband further asserts that the wife in 2005 transferred an amount of $19,000.00 approximately to the Philippines but there is no evidence that it is presently an asset of the wife or available to her.  The husband asserts that the wife is guilty of waste in that she withdrew money and gambled.  In support of this he shows evidence of withdrawals from teller machines located, he says, at or near places at which gambling occurs.  In my view these are matters which will be explored in the final hearing of the matter.  In the interim, they are in contention, and the Court cannot rely upon them as evidence of either undisclosed resources of the wife presently held or of waste.

19. The husband asserts that the wife has failed to disclose overtime earnings.  He makes this assertion on the basis it seems that prior to the separation of the parties the wife earned considerable overtime.  The husband says it is not realistic to assume that such overtime is not presently worked.

20. The wife says she has not worked overtime since separation.  She does not say that it is not available to her but she does say that she has chosen to spend more time caring for her children.

21. The husband’s invitation to make adverse credit findings against his wife is declined.  The fact is that proceedings of an interim nature conducted as these proceedings were, on the pleadings filed, do not give the Court the opportunity which is available to it, on hearing, to form a more reliable view as to the credit of each of the parties to be formed after cross examination has taken place.  I am not saying that it is impossible to form such a view on the papers but in this case I would not draw the inference which the husband proposes that I draw from the documentation before me.

1. The financial position of the wife was in the evidence before the Court, set out in a statement of her financial position as at October 2007.  In that financial statement the wife asserts that her income is $1,291.00 per week and her then expenditure was then $1,527.00 per week.  Her Counsel indicated that she was no longer paying the amount of $171.00 per week being payments under the National Australia Bank mortgage.  She was however paying rent now of the $150.00.  She asserted that she is paying rental to her relatives with whom she lives in the sum of $150.00 per week and although the husband denies this, there is no evidence in support of his denial and in the circumstances, given the limited nature of the enquiry of the making of that payment at this time, I accept that she is paying that amount.

2. That payment was in addition to the payments set forth in her financial statement.

3. Clearly the mother, on that evidence, has expenditure in excess of her income.

4. Given that the husband’s contribution to the financial support of his children is somewhat limited by the fact that he is unemployed and on social security payments, it seems to me that at this time there is no evidence before the Court of any current unreasonable expenditure of the wife.

5. Although, as set out, assertions are made by the husband in his affidavit material that the wife expended monies on gambling and transferred monies to the Philippines from where she had originally come, and that these should be taken into account as financial resources of hers, there is no evidence of her currently available resources which would mean that she had a capacity to provide maintenance to the husband.

6. The evidence in support of the gambling payments is not tested and, in my view, given the lack of financial contribution that the husband is able to make to the support of his children (and this is not to be critical of him but simply stating a fact) it does not seem to me that there exists evidence that the wife’s expenditure can be much redirected as presently it stands.

7. The total of her liabilities presently stand at $339,218.00 and apart from an interest in the subject property, the proceeds of the sale of the shares and superannuation (which is not presently available to her) the only other property owned by her which presently does not seem to be presently realisable is an interest in real estate located in New Zealand.

8. To the extent that the husband’s claim is a claim therefore based on a claim for maintenance, there is simply no capacity of the wife to meet such a claim.  Her reasonable expenditure exceeds her income, and her property is presently illiquid.

9. To the extent that the husband claims partial property settlement, I would have to be reasonably satisfied that the partial property settlement was within the likely ambit of a successful claim to be made by the applicant.  It appears that the net total pool of hard assets that is, property immediately available less liabilities, is (subject to determinations on a final hearing as to the sum sent to the Philippines) a total pool of assets of $117,000.00.

10. Given that the wife owned the property prior to the marriage, given that the superannuation which amounts to $176,000.00 is solely that of the wife and given that the husband has been unemployed since 1997 (on his evidence) it seems to me that there can be no comfortable conclusion that that would be the case.

11. To the extent that the husband seeks an interim property settlement on the basis that it can be readjusted on a hearing, I am not confident that the assets are such or that the form in which they are held is such, that that is an order which should be made.

12. The husband asserts that such an order should be made and falls within the definition of exceptional circumstances set forth in the case of In the Marriage of Harris (1993) FLC ¶92-378. He points to the effect of the order made on the children. That order simply will mean that they can no longer reside in that home. They will not be homeless. They will have a home with their mother and no doubt the father will procure alternate accommodation. Once the home is sold and there is a liquid fund available both from the proceeds of its sale and the sale of the shares there will be a fund available to the Court for disposition should an arguable case be made out for some interim disposition of it.

13. In considering what order I should make on this application I have to balance a number of factors, particularly in this case not only the interests of the husband and wife, but of the National Australia Bank.

14. The discretion granted to the Court under the provisions of sections 90 AE and 90 AF are broad.  It is not the case that the making of the order sought by the husband is necessary to make a division of property between the parties.  Although it is likely that any order restraining the Bank from exercising its rights would leave it with a secured debt, I cannot say in the somewhat mercurial current real estate market that there is no doubt that their debt will be paid in full.  Neither the husband or the wife can presently pay any interest on any sum, and in my view the Bank ought not to be obliged to wait for the realisation of its security in order to procure outstanding interest.

15. I have to be satisfied that it is just and equitable to make the order and if I am to make an order under section 90AF the Court must be satisfied that it is just, convenient and proper to grant an injunction.  I have to take into account, inter alia, the provisions of section 90AE(4) and in the case of an injunction the matters set out under 90AF(4), including the capacity of a party to the marriage to repay the debt after the order is made.

16. The husband asserts that the National Australia Bank’s interests should not be valued highly because:

    a)They are acting in a way presumably in collusion with the wife to avoid an existing or anticipated order.  That is either presumably an order to give effect to the husband’s unquantified claim to the property or alternatively the order he seeks in his application which, on the evidence before me, I cannot say could be reasonably anticipated.

    b)That at the time they issued the cancellation and calling in of the loan they had constructive notice (by reason of a caveat lodged by him) of his claims.  They ought in those circumstances, he says, not have exercised the rights they have under the mortgage.  This is asserted by him notwithstanding that he accepts that his incipient claims are not yet determined and his rights (if any) remain inchoate, whereas the rights of the Bank are determined and their rights arise under a contract with the wife entered into prior to the making of those claims by the husband.

    c)Alternatively, that the Bank’s cancellation of the loan was ultimately with a view to preventing an order such as he seeks, namely the transfer of the property, being made to him.

    d)He refers the Court to section 106B and I observe:

    i)The rights of the Bank accrue under a mortgage granted prior to the current dispute arising out of a mortgage entered into between the wife and the Bank, to which mortgage the husband is not a party.

    ii)It is agreed by all parties that the Bank has a clear right under the terms of that mortgage to cancel the loan at any time and call for its repayment.

    iii)Although the wife was a former employee of the National Australia Bank and although the wife informed the Bank that she was no longer able to pay the mortgage and that she did not believe that her husband was able to do so (a fact which seems to be supported by the husband’s suggestion that she should pay it) and that possibly the only course available to them was to exercise their rights under the mortgage, I do not find that the Bank has acted in collusion with the wife in seeking to defeat an existing or anticipated order.

17. It seems to me that having regard to the relatively modest state of the finances of these parties and the small amount of money the subject of dispute, that the primary task of the Court at this time must be to preserve the value of assets, not necessarily in their current form.

18. There is no evidence that the husband has, in his own right, been able to procure any finance to refinance the property nor that he has any capacity to meet the payments on any such refinancing, even assuming the repayment of the proceeds of the sale of the shares are applied to reduce the mortgage.  No evidence has been put before the court of any application for approval of any such finance.  The Bank has taken the view that it will not accept partial payment of its loan and requires the whole of its loan to be repaid.

19. Given the mother’s incapacity to make payments and the father’s incapacity to make payments, refinancing the loan simply seems to be changing the deck chairs on the Titanic whilst it avoids one iceberg in the form of the National Australia Bank and hitting another in the form of an unnamed and unpayable financier.

20. In the circumstances, I can detect no appellable error in the learned Judicial Registrar’s decision nor do I, on a review of the evidence, come to any other conclusion other than one which would support the Order made by the learned Judicial Registrar.  Accordingly I dismiss the husband’s application.

21. I order that the costs of the application be reserved to the hearing of the matter.

I certify that the preceding forty-two (42) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Fowler.

Associate: 

Date:  21 July 2008