Hanlon & Hanlon and Anor

[2008] FamCA 411

FAMILY COURT OF AUSTRALIA

HANLON & HANLON AND ANOR [2008] FamCA 411

FAMILY LAW – PROPERTY – Order that the wife vacate real property

Family Law Act 1975 (Cth)

APPLICANT: Mr Hanlon

RESPONDENT: Mrs Hanlon

INTERVENOR: Mr James (As Trustee in bankruptcy for the wife)

FILE NUMBER: MLF 3687 of 2005

DATE DELIVERED: 28 May 2008

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: YOUNG J

HEARING DATE: 28 May 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: MR SPICER

SOLICITOR FOR THE APPLICANT: CE FAMILY LAWYERS

COUNSEL FOR THE RESPONDENT: IN PERSON

SOLICITOR FOR THE RESPONDENT:

COUNSEL FOR THE INTERVENOR: MS REA

SOLICITOR FOR THE INTERVENOR: TAUSSIG CHERRIE & ASSOCIATES

ORDERS

IT IS ORDERED:

1. THAT on or before Monday 14 July 2008 the wife vacate the property at E in the State of Victoria and at the time of departure make available all keys to that property and any password, code or other requirement as may exist to the trustee or his nominee.

2. THAT all fixtures and fittings are to remain in that E property and not to be removed therefrom by the wife or any servant or agent of the wife.

3. THAT upon vacating the property the wife thereafter not re-enter the property unless with the signed written agreement of the trustee and the husband’s solicitors.

4. THAT on her departure the wife, to the best of her ability, leave the property and its surrounds in a clean and tidy condition.

5. THAT the application in a case filed 22 May 2008, and in particular as to paragraphs 2 and 4 thereof be otherwise adjourned to the Judicial Duty List on Wednesday 16 July 2008 at 10.00 a.m.

6. THAT if the further interim hearing is to proceed on that adjourned date then it is directed that the husband, the trustee in bankruptcy and the wife be all at court at that date and time.

7. THAT the extempore reasons for judgment be transcribed, be placed upon the Court file and be made available to all parties.

IT IS CERTIFIED

1. THAT pursuant to Rule 19.50 of the Family Law Rules this matter reasonably required the attendance of Counsel for the husband and solicitor appearing as counsel for the Trustee in Bankruptcy.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 3687 of 2005

MR HANLON

Applicant

And

MRS HANLON

Respondent

And

MR JAMES (AS TRUSTEE IN BANKRUPTCY FOR THE WIFE)
Intervenor

REASONS FOR JUDGMENT

1. The matter of Hanlon & Hanlon and the Trustee in bankruptcy for the wife is before me in the Judicial Duty List.  Ms Rea, solicitor, appears for the Trustee.  They are represented by Queensland solicitors who, for the purposes of the hearing today, have appointed Melbourne town agents, Taussig Cherrie.  Mr Spicer appears as counsel for the husband who has engaged CE Family Lawyers.  The wife appeared at court this morning. 

2. I have considered the provision of section 79(12) of the Family Law Act 1975 and I informed the wife at the outset of proceedings that she was not entitled to make a submission to the court in connection with any vested bankruptcy property without leave of the court. The circumstances in which leave can be give are highlighted in subsection (13) thereof and, simply put, only if there are exceptional circumstances can the court give leave.

3. In all of the circumstances of this case and without any objection from solicitor or counsel otherwise appearing, I determined that there were special circumstances.  In part that was because of the current domestic situation of the wife, she having at least part-time care and perhaps even a higher level of care of the only child of the marriage, a daughter born in April 1998 and now 10 years of age.  Otherwise, as part of the discretion to grant leave on special circumstances, I had regard to the issues raised in the affidavits which I have read, the statement of assets prepared by the trustee and the submissions of the wife. 

4. There are two primary issues before me today. The first is the pronouncement of consent orders pursuant to section 79 of the Family Law Act 1975 as between the husband and the trustee in bankruptcy. I was presented with consent orders which, I was advised, were negotiated on an arm's length basis between the previous counsel for the husband, Mr Strum, and the solicitor for the trustee in bankruptcy. The trustee has the obligation to negotiate orders that are just and equitable for the wife and the trustee stands "in the shoes of the wife" in all such negotiations.

5. The submissions were that the negotiations were full and proper and the interests of both parties were considered.  The general effect of the order is to pay all debts and otherwise divide any surplus asset fifty-fifty as between the husband and the wife.  Specifically what that would mean is that any balance of the home at E or any trust funds held by or on behalf of the parties and subject to any taxation or other liabilities would be distributed between the husband and the trustee, and any surplus from the trustee would then be available to the wife. 

6. Originally in the orders presented to me the Ford Explorer motor vehicle was to be sold and a similar division as between the parties.  As I have an obligation to determine a just and equitable order and as the husband has the use of another car, albeit 10 years old, and as the wife has the use of this Ford motor vehicle which is registered in the husband's sole name, and in part for the benefit of both the wife and the child, I raised with counsel and instructions have been sought and the position has now been explained to the court that this motor vehicle, the Ford Explorer, can remain in the possession of the wife.  She is to pay all costs, expenses and outgoings associated with its use and indemnify the husband for any financial outgoings, including fines, speeding tickets, registration, repairs and the like. At a future date and at the wife's expense and when she is cleared of her status as a bankrupt, then the car can be transferred to her name and, in that regard, the husband will of course sign documents so required.

7. The larger issue before the court on the consent orders is to determine whether they are just and equitable.  I have had regard to the document prepared by the trustee setting out the purported assets and liabilities of the estate.  It clearly is an issue as to the sale of the home at E, the process of sale and how much money will be realised on sale.  The National Bank has a substantial mortgage and they will be paid as a secured creditor.  There will be real estate and legal costs of sale.  It is unknown as to what will be the equity in that home when settlement finally occurs.  The estimate before me is that equity will be $70,000.

8. The other assets of the marriage are predominantly moneys held in a trust account with the husband's solicitors and a time share that might be of minimal value. The liabilities on the document produced to me total $73,000 approximately as to the wife's family law solicitors and taxation office.  Much of those debts remain, and ultimately there may well be an obligation to pay out those moneys by the trustee, though a proof of debt has seemingly not been filed.

9. Mr Spicer emphasised to the court that the husband has considerable costs and liabilities to pay to his lawyer, and from the moneys received by him, they will be paid. The expectation that he presented to the court was that the husband will receive a minimal sum, if any, from the proposed orders made pursuant to section 79 of the Family Law Act.  The debt of the wife to the Australian Taxation Office may increase because of notation 4 to the proof of debt document given to me today. I proceed on the basis there will be no distribution to shareholders from P Company.  I have emphasised to the wife, in her various submissions to the court, that I will not look behind the sequestration order which I know she unsuccessfully reviewed.  There are costs of that proceeding and I have had particular regard to notes 5, 6 and 7 accompanying the Trustee's statement which I will have marked as Exhibit “1” in these proceedings. 

10. The issue for the court on these minutes is, independently of the trustee and the husband, to determine whether they are just and equitable pursuant to section 79(2) of the Act. The trustee submits and the husband supports that is an appropriate outcome. Subject to the change in orders, so that the car remains with the wife and ultimately its ownership with the wife when she is able again to own this vehicle, I am of the opinion that the orders bring about as just and equitable an outcome as can be achieved at this time.

11. One of the factors that influences me is simply the limited assets that otherwise are available and the ongoing costs that will be incurred by the trustee, the solicitors in Brisbane or the town agents in Melbourne which ultimately will all collectively be a debt on the bankrupt estate of the wife and would come from any available return that was surplus to the discharged debts.  The reality therefore is that, financially, the prompt settlement of all court proceedings may be a "financial blessing" for both parties, and the sooner there is finality the better.  That is a significant matter in my determination, that these orders, as they are to be amended, are just and equitable. 

12. The ancillary issue that is before the court also touches on cost and the way in which this matter has been responded to by the wife over the past year.  The wife is still in occupation of the E property.  There is considerable affidavit material highlighting the various endeavours to negotiate her departure from the home.  I have read carefully the affidavit of Mr Dullaway filed 22 May 2008.  I accept evidence of the various telephone discussions therein.  I have also read and am generally accepting of the evidence of the trustee in bankruptcy and the matters of and related to the bankruptcy application and hearing.

13. The reality is that the wife's review of the sequestration order was heard and finalised in August of last year.  Almost 12 months has passed and she remains in the home.  Perhaps the home has decreased in value with the interest rate rises that this country has seen and with a turn-down in the real estate market.  That observation is not central to my findings in this regard, but also the mortgage debt to the National Australia Bank is likely increasing and, with a stagnant or reducing sale price for the house, an increase in mortgage debt and costs and charges and fees and expenses continuing, then whatever available moneys are clearly decreasing.

14. The interim application before the court was filed 22 May 2008.  Whilst that is but six days ago, I do understand the substantial lead-up to that application being issued and all of the opportunity that the wife was given by telephone discussion in April to November of last year and of course for the first five months of this year.  It is time that she vacated the property.  The property has to be sold and it is difficult to imagine it being sold with the wife in occupation.  The husband is entitled to the property being prepared and presented so as to maximise his opportunity to receive any financial return from the sale.  Similarly, that is in the wife's best interests.  The wife must vacate the property by July 14 2008.  That is both a necessary and a proper order.

15. She should - and it financially is in her best interest and it may avoid any further legal proceedings - leave the home in a reasonable clean and tidy state.  That does not mean to undertake structural repair.  It means the generally acceptable community standard of tidiness, preparation and good order.  The keys must be delivered to the trustee on vacating, and it is an obligation of the wife to ensure a smooth changeover and to undertake actions to maximise the price of the property.

16. Once the wife vacates she must not re-enter.  I will list the matter for hearing, if need be, in a Judicial Duty List two days thereafter on 16 July 2008 so that any issues of or arising from the changeover or the state of the property or other issues can be in court.  I currently require the husband or his representative, the trustee in bankruptcy and, separately, the wife to be in court on that occasion if any issues are to be raised and unless the matter has been determined by the trustee not to proceed on that day and the court appropriately notified.

17. As part of the general discretion that I exercise in this case, I am mindful that there are substantial costs associated with bankruptcy.  Indeed, on Exhibit “1” they total $122,858 and one would hope that the future estimate of expenses are on the generous side and, indeed, a lesser sum is expended and therefore moneys are available for the parties.  I understand it is an assessment, and on that basis I have read the attached notes 5 to 9 inclusive.  I make no other comment in that regard.  

18. I am also aware that the wife's mother has paid various sums of money, as disclosed in Note 1.  That may further reduce any debt to be paid off.  In any event, those matters will be no doubt considered by earlier courts having the carriage of the bankruptcy issue.  I decline to make any order whereby the Australian Federal Police or the Victorian Police are authorised to physically enter and remove the wife from the property.  One of the reasons I have listed this matter on 16 July is to leave that application open and that order before the court.  I say to the wife and in her presence, that order can be activated were she not to properly vacate the home within the extended six-week period that I have now provided to her.  In any event, that six weeks is a substantial period, greater than that which the trustee urged upon me whereby they required the wife to be out of the property with all her possessions by 27 June of this year. 

19. Dealing then with the section 79 application, I do find that it is just and equitable that the orders be made in the amended form (as to paragraph 5 thereof) and that all issues be finalised this day. What I require is for the solicitors for the trustee to re-engross paragraph 5 and to forward same tomorrow by email transmission to my associate. I will need to have the orders tomorrow so I can sign them on Friday, because otherwise I am interstate for several weeks and will not be here to sign the orders. As to the Form 2 application, I propose to pronounce an order that is not by consent and I will shortly dictate that order.

20. I will have these extempore and brief reasons transcribed and placed upon the court file and made available to all parties. It would be appropriate if the trustee added a further notation to the order, to the effect that the court declare pursuant to section 79(2) the orders, and by that I mean in their amended form, as to paragraph 5 thereof, are just and equitable.

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

………………………………………………………..
Associate:                
Date: 17 June 2008