Hajos and Hajos

[2018] FCCA 3093

FEDERAL CIRCUIT COURT OF AUSTRALIA

HAJOS & HAJOS [2018] FCCA 3093

Catchwords:
FAMILY LAW – Property application – husband seeks orders to permit sale of two properties – parties have not serviced mortgages – unexecuted loan to provide capital to respondent’s business – respondent desires to retain property for redevelopment – applicant modified position to seek sale of one property – interim orders made.

Applicant: MR HAJOS

Respondent: MS HAJOS

File Number: DGC 906 of 2015

Judgment of: Judge A Kelly

Hearing date: 19 October 2018

Date of Last Submission: 19 October 2018

Delivered at: Melbourne

Delivered on: 19 October 2018

REPRESENTATION

Counsel for the Applicant: Mr Stanley

Solicitors for the Applicant: Calley Rajah Family Lawyers

Counsel for the Respondent: Ms Miller

Solicitors for the Respondent: Genuine Legal

ORDERS

1. The matter be adjourned for Mention at 10.00am on 2 April 2019 in the Federal Circuit Court of Australia at Melbourne.

2. The matter be fixed for Final Hearing at 10.00am on 1 October 2019 in the Federal Circuit Court of Australia at Melbourne before Judge A Kelly with an estimated hearing time of 2 days.

3. The following directions are made respecting discovery and use of documents at trial:

   (a)no later than four months before the trial date, the parties are to confer and identify all documents upon which they propose to adduce in evidence at trial (Documents);

   (b)no later than two months before the trial date, the applicant shall prepare, serve and file an indexed paginated folder of the Documents arranged in chronological order;

   (c)no Documents (including any valuations, family report or other expert reports) are to be attached to any affidavit, but may only be referred to in an affidavit by page number and volume (if necessary), from the folder(s) of Documents;

   (d)save with leave of the Court, no document identified pursuant to paragraph 3(a) of this Order may be relied upon or adduced in evidence at trial.

4. Each party be permitted to rely upon only one affidavit of evidence in chief for any witness including the applicant and respondent (noting that affidavits relied upon for previous hearings cannot be relied upon as evidence in chief) and further:

   (a)the applicant electronically file and serve any affidavits to be relied upon at the final hearing not later than 28 days prior to the hearing;

   (b)the respondent electronically file and serve any affidavits to be relied upon at the final hearing not later than 21 days prior to the hearing.

5. Other than as provided in these orders, no party may file or rely upon any further evidence without leave of the court.

6. The evidence of each party and any witness be by way of affidavit as provided by paragraphs 4 to 5 of this order.

7. The following directions are made respecting the identity and quantum of all assets, liabilities and financial resources that are claimed to comprise the asset pool (Asset Pool):

   (a)no later than two months before the trial, the applicant shall prepare, and serve in electronic format, a table of each item which is contended to comprise the Asset Pool;

   (b)no later than one month before the trial, the respondent shall prepare, and serve in electronic format, an annotated version of such table indicating whether there is agreement or disagreement respecting each item which is contended to comprise the Asset Pool including any additional asset, liability or financial resource.

8. Not later than 4.00pm one month prior to the final hearing all parties do electronically file and serve an Outline of Case Document (not exceeding 12 pages) including the following:

   (a)a list of the material relied upon;

   (b)a brief chronology listing significant events;

   (c)a table listing all of the assets, liabilities and financial resources claimed to be part of the pool, with the values contended for by each party;

   (d)main contentions on disputes as to:

   (i)inclusion of items in the pool; and

   (ii)the value of items where the value is in dispute;

   (e)list of contributions claimed or contended for and the percentage assessment on contributions contended for;

   (f)list of other factors relied upon (s 75(2) factors) and percentage adjustment contended for;

   (g)other contentions relevant to determining a ‘just and equitable’ division of property; the actual orders sought.

9. In default of compliance with the obligations in any paragraph of this Order, either party may apply to the Chambers of Judge A Kelly for the matter to be listed for mention.

10. The parties and their lawyers attend upon a mediation convened by a member of the Victorian Bar agreed between parties or in the absence of any agreement the applicant’s solicitor’s nominate three mediators and the respondent selects one.

11. For the purposes of paragraph 10 herein, the parties equally share the cost of the mediator.

12. Within 7 days each party provide the other party’s solicitors a copy of the following documents:

    (a)individual tax returns from the past 3 years;

    (b)statements for the past 5 years from any bank account or credit card held by the party either individually, jointly, on trust for the individual or under their control;

    (c)their 3 most recent superannuation statements; and

    (d)any valuations they seek to rely upon.

13. Within 7 days the applicant provide to the respondent’s solicitors the following documentation:

    (a)evidence of any alleged gift or loan paid to the parties by the applicant father, including:

    (i)any loan documentation;

    (ii)evidence of repayments; and

    (iii)evidence of how any such funds were applied to matrimonial assets;

    (b)documentation of any trust or company in which the applicant is a shareholder or beneficiary of, including:

    (i)any trust deed;

    (ii)any company constitution; and

    (iii)any evidence or shareholding and the rights such holding has.

14. There be no order as to costs.

15. The applicant and respondent do all such acts and things as may be required to list the real property situate and known as Property A in the State of Victoria otherwise described in Certificate of Title volume (the Property A property) for sale with such agent, conveyancer and on such terms and conditions as are nominated by the applicant (the Property A sale).

16. Upon the settlement of the sale of the Property A property the proceeds of the sale be applied in the following manner and priority:

    (a)firstly, to pay the costs, commissions and expenses of the Property A sale;

    (b)secondly, to pay any rates and tax adjustments;

    (c)thirdly, to discharge the first registered mortgage in favour of Bank 1 (the Property A mortgage);

    (d)fourthly, to discharge any further encumbrance secured over the Property A property; and

    (e)fifthly, the remaining balance to be held in an interest bearing trust account administered by the solicitors acting on behalf of the applicant pending the disbursement of those funds by the mutual agreement of the parties in writing or an order of this Honourable Court.

17. Pending the sale of the Property A property:

    (a)the respondent pay all instalments pursuant to the Property A mortgage, rates, taxes and outgoings as and when they fall due;

    (b)the parties hold their respective interest in the Property A property upon trust pursuant to these Orders;

    (c)neither party shall encumber the Property A property without the written consent of the other; and

    (d)the respondent will maintain the Property A property in a neat and reasonable state and will comply with all directions of the selling agent.

18. Until further order, the respondent have sole use and occupation of the property known as Property B in the State of Victoria otherwise described in Certificate of Title (the Property B property).

19. During such right of occupation of the Property B property the respondent;

    (a)within 14 days make any payment necessary to bring Bank 2 Portfolio Loan account number (the Line of Credit) secured by mortgage over the Property B property at or below $184,000;

    (b)continue to make any payments to Line of Credit necessary to maintain the balance owing to Bank 2 at or below $184,000;

    (c)pay all municipal and rates, taxes, body corporate fees and outgoings associated with the Property B property; and

    (d)not encumber, or further encumber, the Property B property without the written consent of the applicant.

AND THE COURT NOTES THAT:

A.Pursuant to ss 65DA(2) and 62B of the Family Law Act1975 (Cth) the particulars of the obligations these orders create and the particulars of the consequences that may follow if a person contravenes these orders are set out in Annexure A and these particulars are included in these orders.

B.The party responsible for the payment of any fee including a setting down or hearing fee do pay or cause to be paid such of the Fees as shall be payable by that party in accordance with, and within the time specified in, the Family Law (Fees) Regulations 2012 (Cth).

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

DGC 906 of 2015

MR HAJOS

Applicant

And

MS HAJOS

Respondent

REASONS FOR JUDGMENT

(Revised from ex tempore reasons)

1. The present interim application arises in circumstances where the husband seeks orders so as to permit the sale of two properties.  The first property is located at Property A, in the State of Victoria, being the land described in Certificate of Title, (Property A property).  The second property is located at Property B, in the State of Victoria, the land more particularly described in Certificate of Title, Volume (Property B property).

2. The application for interim relief to permit the sale of these properties arises in the context that the parties have not, for a significant period, serviced or been able to service their liabilities to their mortgagees, Bank 2 and Bank 3. 

3. While the parties’ assets are considered by the wife to be in the order of approximately $2.1 million, there are further liabilities which, on her own case, would be in the order of about $900,000.

4. In the result, the parties’ likely asset pool will be $1.2 million, which sum will further be eroded by the legal costs of this litigation if it is unable to be resolved. 

5. The parties have had a long marriage.  They are in dispute as to a number of matters including their contributions and whether the applicant’s father made a loan or advance in the order of $300,000 to assist the parties with the acquisition of their property.  While the applicant’s counsel gave an indicative assessment that the likely range of relief that would be available to the parties fell within the range of 60%/40%, the wife’s affidavit contends for an entitlement of 80%/20%.

6. When the matter came before me in the duty list on 17 October 2018, Ms Miller, solicitor, entered an appearance on the respondent’s behalf.  It became apparent that Ms Miller had been retained quite late the previous evening and was relatively short of instructions.  In those circumstances, I afforded the respondent an opportunity to file any answering affidavit so as to address her proposal that she be able to refinance outstanding liabilities and to enable her to continue to reside in the Property A property. 

7. The matter was adjourned to Friday, 19 October 2018.

8. Notwithstanding the respondent’s failure to comply with the order for the filing and service of a response and affidavit addressing this application, Ms Miller obtained further time in which to have an affidavit which she had prepared sworn by her client.

9. Ms Miller had taken the commendable precaution of having had the affidavit provided to the applicant’s lawyers, albeit in unsworn form, so that they might be appraised of the nature of the evidence which would be relied upon.  I have considered that affidavit. 

10. Relevantly, the respondent exhibits an unexecuted loan approval for a sum of $1.2 million.  The type of loan which has been offered to the respondent is described as a “business booster” loan for the purpose of working capital.  The rate of interest is 8.95% per annum where the loan is not in default.  Monthly instalments on the loan are payable in advance.  The full term of the loan is a period of 12 months.  The associated fees which are payable to the proposed lender upon execution of the loan exceed a sum of $57,000 including an application fee of $3,672.  These considerations well explain why the loan ‘approval’ has not been executed. 

11. It is readily apparent that the proposed loan is not for the purpose of refinancing the current home loan applicable to the property, but is instead for the express purpose of providing working capital to the respondent’s business. 

12. In particular, a term of the loan proposal is that a registered first mortgage is granted over the Property A property as an “all moneys” loan.  I accept the submission of counsel for the applicant that a very real question exists whether the court should, in any circumstances, make an order which requires a party to enter into a contract.  Indeed, Mr Stanley put it that the court has no such power. 

13. At its highest, the matters relied upon by the respondent would bear upon the court’s consideration of the balance of convenience whether or not to grant relief in a context where the parties face the immediate prospect that existing registered mortgagees will exercise their secured rights.  I am not at all persuaded that it would be an appropriate exercise of power to make orders which in effect compelled a result whereby the applicant was required to enter into and execute a mortgage in favour of a proposed lender of working capital for the benefit of the respondent.

14. I am fortified in the conclusion that I should not do so by reason of the respondent’s stated intention that she desires to retain the Property A property for the purposes of redevelopment once the current proceedings are finally determined.  As I understood the submission, it was that the respondent with other co-venturers will seek to redevelop the Property A property once the present proceeding is finalised.  Those factors do not militate in favour of a conclusion that the balance of convenience favours an order permitting the course proposed by the respondent.

15. While the applicant had initially sought an order for the sale of each property, his position was modified between the first return in the duty list on 17 October 2018 and the return of the application this day. 

16. In substance, the applicant’s modified position would permit the sale of the Property A property but not require the immediate sale of the Property B property which, on the applicant’s case, could be retained by the wife for her sole use and occupation upon condition that she make all necessary payments respecting the secured mortgage, associated lines of credit, statutory and other charges, and that she not encumber or further encumber the Property B property without the written consent of the husband.

17. While the modified approach proposed by the applicant may be seen as an attempt by him to facilitate an orderly resolution of the matter, the wife’s evidence indicates that she has now tenanted that property.  It is perhaps unnecessary to say anything further at this stage respecting that tenancy.  Ms Miller, solicitor for the respondent, very helpfully put forward a series of proposals respecting alternative dispute resolution, disclosure and further procedural steps that might facilitate its progress to determine a final determination. 

18. Each of the parties have put forward proposals respecting discovery and mediation.  I propose to make orders in those terms.  I note that the applicant sought an order that the respondent should pay his costs of and incidental to this application.  I further note that he proposed those costs be fixed in the sum of $5,000.  I consider that the costs put forward at that quantum to be entirely reasonable.  I will not, however, finally decide the question of costs on an interim basis.  It may well be an issue which is brought forward for further consideration at trial.

I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of Judge A Kelly

Date: 31 October 2018