Hogan and Lennard - [2008] FMCAfam 575

FEDERAL MAGISTRATES COURT OF AUSTRALIA

HOGAN & LENNARD

[2008] FMCAfam 575

FAMILY LAW – Enforcement of orders made by Judicial Registrar – husband seeks to vary those orders – whether his circumstances have changed.

Applicant:

MS HOGAN

Respondent:

MR LENNARD

File Number:

SYC 4472 of 2007

Judgment of:

Altobelli FM

Hearing date:

27 February 2008

Date of Last Submission:

27 February 2008

Delivered at:

Sydney

Delivered on:

27 February 2008

REPRESENTATION

Solicitor-Advocate for the Applicant:

Mr Gates

Solicitors for the Applicant:

Elias Gates & Associates

Solicitor-Advocate for the Respondent:

Mr Pertsoulis

Solicitors for the Respondent:

Pertsoulis Lawyers

ORDERS

The Respondent’s Solicitors forthwith cause to be paid from their trust account the sum of $3,404.37 towards the benefit of the parties in Wespace Home Loan account number [0] and/or the current Westpac mortgage secured agains the property at Property N.
That the Respondent husband forthwith cause to be paid to the Applicant wife’s solicitors trust account the sum of $60,000 such monies to be held and applied by the wife’s solicitors for past and future mortgage payments to Westpac Home Loan account number [0] and/or the current Westpac mortgage secured against the property at Property N.
Within fourteen days, the parties do all such acts and execute all such documents as may be required to list the property at Property S (hereinafter referred to as “the property”). The property to be sold by private treaty at a price agreed upon between the parties by no later than 26 March 2008 and failing such agreement to be determined by the President of the Australian Property Institute of New South Wales or his nominee. No later than 18 April 2008 the parties do all acts and things and execute all Deeds, documents, instruments and writings necessary to procure the sale of the property by private sale and in particular:-
(a)Place the property with an real estate agent nominated by the wife (hereinafter called “the agent”) for the sale of the property by private sale at the earliest possible date.
(b)Execute all documents requested by the agent for the sale of the property by auction.
(c)Pay to the agent any sums requested for advertising expenses in relation to the auction.
(d)Give such instructions to the Solicitor for the wife for the preparation of an appropriate contract and other documents as are necessary for the sale of the property by auction.
(e)Co-operate in every way with the agent in relation to the sale of the property including making a key available, allowing inspection of the property at times requested by the agent and ensuring that the property is in a neat and clean condition at the time of inspection by prospective purchasers.
(f)Execute the contract of sale.
(g)Execute all other documents necessary to complete the sale of the property.
In the event that the property is not sold by private treaty within three months from the date of this Order the parties within four months from the date of this Order do all acts and things and execute all Deeds, documents, instruments and writings necessary to procure the sale of the property by public auction and in particular:-
(a)Place the property with an auctioneer agent nominated by the wife (hereinafter called “the auctioneers”) for the sale of the property by public auction at the earliest possible date.
(b)Execute all documents requested by the auctioneers for the sale of the property by auction.
(c)Request the auctioneers to recommend a reserve price to be placed on the property for the purpose of the auction sale and accept such recommended reserve price.
(d)Pay to the auctioneers any sums requested for advertising expenses in relation to the auction.
(e)Give such instructions to the Solicitor for the wife for the preparation of an appropriate contract and other documents as are necessary for the sale of the property by auction.
(f)Co-operate in every way with the auctioneers in relation to the auction of the property including making a key available, allowing inspection of the property at times requested by the auctioneers and ensuring that the property is in a neat and clean condition at the time of inspection by prospective purchasers.
(g)Attend at the auction sale of the property and negotiate with the highest bidder in the event that the reserve price is not reached.
(h)Accept the advice of the auctioneers as to the acceptance of a price less than the reserve price.
(i)Execute the contract of sale.
(j)Execute all other documents necessary to complete the sale of the property.
Upon completion of the sale the proceeds shall be disbursed as follows:
(i)In payment of the mortgage currently secured against the property to Wespac Bank as at the date of settlement;
(ii)In payment of agent’s commissions on sale;
(iii)In reimbursement of any of costs of advertising, if any
(iv)In reimbursement of any of the costs of cleaning;
(v)In payment of legal costs of acting on the sale;
(vi)In reimbursement to the applicant wife of her costs for enforcement or otherwise referrable to carrying out this order, such costs to be agreed or taxed;
(vii)The amount required for normal conveyancing adjustments as to municipal and water rates on sale;
(viii)The remaining balance to be retained in the trust account of the Messr Elias Gates and Associates Pty Ltd pending final orders.
That in the event of either party neglecting or refusing to sign all or any necessary instruments to give effect to these Orders or any of them within three business days any relevant date stipulated in these Orders, either party is at liberty to apply, pursuant to Section 106A of the Family Law Act, to the Court to seek appointment of an Officer of the Court or other person to execute the deed or instrument in the name of the person to whom the direction was given and to do all acts and things necessary to give validity and operation to the said deed or instrument.
Costs are reserved.
The parties have liberty to apply on seven days notice.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYC 4472 of 2007

MS HOGAN

Applicant

And

MR LENNARD

Respondent

REASONS FOR JUDGMENT

Ex tempore

The application I have before me is an application by the applicant wife that was filed on 22 February and came initially before Sexton FM in her duty list today.
In the wife's application she seeks a number of orders, particularly as to the payment of moneys that are currently controlled by the husband, to be paid for certain purposes including paying arrears on the mortgage and into a trust account to secure the future payment of the mortgage, and also by way of preservation of assets. In addition the wife seeks orders for the sale of the property at Property S. The wife's application in a case was supported by an affidavit that was filed on 22 February 2008.
The husband's response was filed in Court today. In the response he seeks basically a variation of orders that were made by Loughnan JR on 24 October 2007, in that certain orders be suspended and also that the property at Property N be sold. Now, this property, that is Property N, is currently occupied by the wife, and Property S that was referred to in the wife's application appears to be tenanted. I do not know what is the term of the lease, there is a dispute about it, I cannot make any findings about it, but it is tenanted. The rental appears in the husband's financial statement, so I presume he is collecting it.
By way of further background, this matter is listed for hearing on 18 August 2008 as a two day matter. It has been transferred from the Family Court. It has been to a conciliation conference.
Loughnan JR made interim orders on 24 October 2007. Those orders provide for the husband to pay interim spousal maintenance, that he pay health care insurance, that he pay the mortgages on the property at Property N and Property S, and that he be restrained from further encumbering the properties. The wife was also granted sole occupancy, and there are a number of other orders that are not directly relevant here.
The wife's application today is in effect seeking an order to implement or to enforce those orders made on 24 October. I do not think that there is any doubt that I have the jurisdiction to do so.
The husband's response is an application the effect of which is that I would vary the orders made by Loughnan JR on 24 October 2007. And again, I think there is no doubt that I have the jurisdiction to do so.
Now, dealing firstly with the applicant wife's case. Insofar as she seeks order 3 for the payment of a specific amount of $3404.37 currently held in the respondent solicitor's trust account to be paid into the Westpac home loan account, her evidence indicates that the mortgage is in arrears. That fact was not contested, in fact it is common ground. The purpose of that payment is simply to pay Westpac to in effect help get Westpac “off the parties' back”.
Order 4 refers to a payment of $60,000 to be held in a trust account, and that’s to be used for both past and future mortgage payments in relation to both properties. Now, I observe that the evidence indicates that even if $3404.37 were paid it would not cover the arrears. The amount that in fact is demanded by Westpac is significantly greater. Westpac in their notice .dated 26 January 2008 requires payment of total arrears of $10,138.54. So clearly the $60,000 is designed to cover the arrears, but is also expressed as future mortgage payments.
In his submissions, Mr Gates on behalf of the wife explained that the nature of the payment was also to preserve assets and to prevent them going into what he described as a “black hole”. He has signalled, and in fact I think the evidence that I have seen before me today foreshadows that there is an “add-back” issue in this case.
In relation to the order for the sale of Property S, the wife seeks an order that a trustee for sale be appointed, and that is justified on the basis that these parties do not seem to be able to agree to very much if anything at all. When pushed, Mr Pertsoulis, as I think he was required to do as an officer of this Court, conceded that really there was no reason not to sell Property S, even though his instructions were that Property S should not be sold unless the property at Property N were also sold. There is no sense in that position. In fact I think as there is no opposition or no realistic opposition to the sale of Property S.
I think it is an appropriate order to make, but not on the basis sought by the wife. What I intend to do is to make an order for sale in the usual manner, except that it will contain a tight time frame for certain things to be done. Now, those orders, other than being described in general terms in these reasons, will in fact be drafted by me in Chambers and sent out to the parties as soon as possible.
I am satisfied that the overall financial situation of the husband and the wife in this case is so parlous, is so tenuous, that the sale of Property S is warranted. It also seems to cause no inconvenience or hardship to either the husband and the wife, and accordingly it seems the commonsense action to take under the circumstances.
The only thing that troubles me about the wife's application is the claim for $60,000 in order 4. There is six months between now and the hearing, and lets assume another two months for a judgment, that makes it eight months. Lets assume that the total costs in relation to these properties including the mortgage is about $4,000, that means $32,000 would be required to secure payment of the mortgage plus the other expenses relating to the property. Lets assume that $10,000 is going to be used to meet the balance that is presently outstanding, that takes it to $42,000. And that means there is roughly $18,000 which would have to be categorised as basically preserving funds to prevent them going into a “black hole”.
For the reasons that I will set out shortly, I am satisfied that the evidence before me indicates there is a “black hole”, and I think it is in the interests of both, and I stress both, the husband and the wife that to the extent that the $60,000 cannot be justified by reference to anticipated expenditure on the mortgage, it is nonetheless appropriate to put that total sum aside on the basis that it preserves the assets for the benefit of both of them, and on the evidence before me creates no hardship for either of them.
Turning now to the husband's response. The husband's response I think has this fundamental problem. In order for it to succeed I would need to be satisfied that the husband's circumstances, or the parties' circumstances, have changed since the order was made on 24 October 2007. And not just changed, but changed in a material sense that would warrant revisiting the issues that were before Loughnan JR on that date.
Now, Mr Pertsoulis on behalf of the husband submits that the changes that have occurred are changes in the husband's financial circumstances that principally arise as a result of changes in his employment. The husband gives evidence in his affidavit that he works as a self employed consultant, has only been able to obtain part time and limited work and has no further work beyond the end of February 2008 and has applied for Job Search allowance through Centrelink. Whilst there appears to be an issue from the wife's side about the precise circumstances under which the employment was change, I cannot make findings about that.
Now, when one looks very carefully, as I think it is necessary in this case, at the husband's financial circumstances and how if at all they have changed, this is what becomes apparent as a result of comparing the two financial statements filed by the husband, one today's date, 27 February, and the other on 19 October 2007. The husband's income has declined from $3,731 to $1,505. His expenses have declined from $43,03 to $3,001, each of those figures on a weekly basis. The value of the total property has declined from $1,167.562 to $1,133,085. The liabilities have increased from $789,500 to $809,000. The rent he is paying has increased from $425 to $700.
His weekly living expenses have increased from $816 to $873. The cash that was available has decreased from $207,562 in September last year to $130,000 currently, a difference of $77,558, of which $43,581 is explicable by the purchase of a 2007 Mazda Sports Hatch. And the husband's superannuation has increased from $188,532 to $193,000.
In view of that evidence, and remember we are talking about the evidence of the husband here, the question I have to ask is have the changes in his financial circumstances been material enough to justify revisiting the orders that were made on 24 October. Another way to ask that question would be to say, has the husband's capacity to pay changed? Clearly Loughnan JR found that he had capacity to pay on 24 October, but has that changed?
Capacity to pay is determined by reference not just to income but also assets and resources. It is interesting that item 57 of the current financial statement refers to a gift of $18,000:
Item 57 gifted to mother and brother $18,000.
And I note that the word is gift there.
So that is a change in financial resources. Obviously the money was gifted during the course of these proceedings. The husband claims various liabilities, but is unable to establish these other than the bare assertion of the claim in the financial statement. For example he claims a total of $86,000 capital gains tax, which one would have thought could easily have been proved by producing appropriate documentary evidence.
From the Bar table Mr Pertsoulis indicated to me that the $66,000 relating to the Robina property was payable on 1 May 2008 for capital gains tax on a property sold in July 2007. I must say I am sceptical of this claim. It would be unusual indeed for the capital gains tax liability to have crystallised in the same year as the actual sale of the property. In any event a liability of this nature, which could easily have been established by some form of documentary evidence, is simply left on the basis of the bare assertion in a financial statement.
The husband claims that there is a shortfall in his income and expenditure. Again, I am left very dubious about this. An examination of the expense claimed by the husband leaves the impression that the expenses are exaggerated and inappropriate. I refer in this regard not just to part N of the husband's financial statement, but to the documents which he himself annexes to his affidavit, namely the annexure RL2 and 3 that refers to various expenses which I might suggest are indicative of a lifestyle that is well beyond the financial situation that the husband would have me believe in the context of this application.
So in terms of accepting the submission that his income is less than his expenses, one is left wondering indeed as to whether there is merit to this. The husband comes to this Court saying in February, “I cannot afford to meet the orders made against me on 24 October 2007”, but during this time he has gifted money, he has purchased himself a Mazda sports car (that is his terminology not mine), he has moved from rental accommodation of $425 a week to $700 a week. With respect, they are hardly actions that are consistent with somebody whose position in this Court is that “I cannot afford to pay”.
The fact is that his financial circumstances indicate that there are more than sufficient funds that could be used to, in effect, take the financial pressure off these parties. There is the various amounts of cash referred to at item 38, also the funds referred to in item 43. As I have indicated I simply do not accept that the liabilities referred to in item 53 and 54 are presently payable. And I think it is very important for the wife in this case to appreciate that even though I do not take into account these liabilities for present purposes, chances are these liabilities are not going to go away and they will have to be met by both the husband and the wife together.
Hence once again my informal comments to the husband and the wife that perhaps they should consider, even though I am not prepared to make the order, that the Property N property should be sold, that is a matter for them.
Taking into account all the evidence and the matters that I have refereed to above, it is appropriate to make the following orders.
I note that the matter is listed for hearing on 18 August and that directions have been made in this regard. I will make an order granting leave to the parties to relist the matter on seven days notice should there be any difficulties with implementing the orders that I have just made.

I certify that the preceding twenty-nine (29) paragraphs are a true copy of the reasons for judgment of Altobelli FM

Associate: Monique Robb

Date: 6 June 2008