Hunter and Hunter

[2011] FamCA 336

FAMILY COURT OF AUSTRALIA

HUNTER & HUNTER [2011] FamCA 336

FAMILY LAW – PROPERTY – Mortgage repayments

APPLICANT:  Ms Hunter

RESPONDENT:  Mr Hunter

FILE NUMBER: SYC 1218 of 2010

DATE DELIVERED: 24 March 2011

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Stevenson J

HEARING DATE: 15 March 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Connor

SOLICITOR FOR THE APPLICANT: Argyle Lawyers Pty Limited

COUNSEL FOR THE RESPONDENT: Mr Richards

SOLICITOR FOR THE RESPONDENT: Robertson Saxton Primrose Dunn

Orders

Pending further order:

1. That the husband is restrained from withdrawing or otherwise dealing with the money lodged in the Homeside offset account number … (“the offset account”), other than for the purposes of compliance with order 2.

2. That the husband do all things necessary to ensure that the mortgage repayments, as required by NAB/Homeside Lending from time to time, are met from the offset account.

It is noted that publication of this judgment under the pseudonym Hunter & Hunter is approved pursuant to s 121 (9) (g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 1218 of 2010

Ms Hunter

Applicant

And

Mr Hunter

Respondent

REASONS FOR JUDGMENT

1. On 17 August 2010 the parties consented to orders which provided for the sale of their former matrimonial home at T Street, Sydney Suburb 1 and distribution of the proceeds.  These orders provided inter alia:

   “10.  Order that the husband and the wife do all acts and things, sign all documents and give all instructions necessary to cause the home to be sold by auction at the reserve price (as referred to in Schedule 1) on 11 September 2010 and failing sale on that date otherwise in accordance with Schedule 1 hereto and the sale proceeds to be applied as follows:

   10.1.1in payment of all legal fees, agent’s commission and other costs associated with the sale;

   10.1.2in payment of the superannuation fund monies to be paid by bank cheque direction to the superannuation fund;

   10.1.3the wife’s credit card debt to a total of $140,000 provided that the wife agrees to this “capping” of the credit card debt but without prejudice to her right to pursue her/ an interim application that any further amounts of credit card debt accrued over the $140,000 is also paid from the proceeds of sale of the home but on the further basis that the wife do all acts and things upon payment of the credit card debt to cause the said cards to be surrendered and cancelled – pending further order the wife will not do any act or thing to apply for or obtain any further credit cards;

   10.1.4in discharge of the NAB/Homeside mortgage secured against the property and collaterally secured against the property and the [Sydney Suburb 2] apartment provided that should there be insufficient monies derived from the sale of the said property to repay the NAB/Homeside mortgage in full, then the husband and the wife shall do all acts and things, sign all documents and give all instructions necessary to obtain the approval of the National Australia Bank to the [Sydney Suburb 2] apartment remaining as security for the NAB/Homeside mortgage.”

2. The property was sold for $1,850,000, with settlement taking place on 17 November 2010.  The mortgage payout figure was $1,906,522.85, which included unpaid interest of about $10,000 per month for the period June 2010 to November 2010.

3. It seems that the husband arranged with the National Australia Bank (“NAB”) a “payment amnesty due to financial hardship”, which meant that interest from June 2010 until the settlement of the sale was added to the principal sum.  He was able to take this step without input from the wife because he was the sole mortgagor and registered proprietor of the former matrimonial home.  There was no evidence that he informed the wife of this arrangement prior to 18 February 2011.

4. On settlement of the sale $1,595,325 was paid to NAB.  Accordingly, there was a shortfall of approximately $311,000. 

5. To cover this shortfall the husband arranged for a loan of $424,000 from NAB, on security of a home unit …/… P Street, Sydney Suburb 2.  Approximately $311,000 was paid into the mortgage account and $112,000 deposited into an offset account.

6. The husband has since made mortgage repayments from the funds in this offset account.  As appears from the bank statements in exhibit 1, historically the parties used an offset account to service their mortgages.

7. The wife now seeks orders that the husband immediately deposit a total of $169,238.88 into the mortgage account.  She calculates this figure as follow:

   ·$112,801.76 as “the difference between the total proceeds of sale payable to NAB/Homeside Lending ($1,595,324.61) as required under 10.1.4 of the orders of 17 August 2010 less the amount paid to NAB/Homeside Lending ($1,482,522.85)

   ·$56,437.12 being “the total of mortgage payments missed by the husband”, which she particularises as  $42,522.85 “interest only payments for the period 1 May 2010 to 17 November 2010 and $7,830.20 for the month of November 2010, together with $6,084 ‘being $468 per week from 1 December 2010 to the present date”.

8. The wife adduced no evidence to support her calculation of this figure of $56,437.12.  Further, she pointed to no fund from which the husband could make an immediate payment of $169,238 into the mortgage account.

9. In his Financial Statement of 14 March 2011, the husband deposed that the current balance of the offset account is $88,405 and that he had savings of approximately $4,500.  The wife offered no submission as to any source from which he might find the additional sum of approximately $76,000, which she requires him to pay immediately into the mortgage account.

10. According to the husband, the orders of 17 August 2010 were crafted in the expectation that there would be a shortfall between the net proceeds of sale of the former matrimonial home and the mortgage payout figure.  The orders thus included a provision that both parties do all things necessary to arrange for the home unit to be substituted as security for the mortgage facility.

11. The orders of 17 August 2010 contain no provision for payment of periodic instalments in respect of the mortgage debt remaining after the sale of the former matrimonial home.  Certainly, there was no order which required the husband to make these payments.

12. The husband claims that he is unable to afford to make the mortgage repayments, in light of his present financial commitments.  The wife denies this assertion and seeks an order that the husband make all mortgage repayments from his income.

13. The only evidence of the husband’s position is that contained in his Financial Statement sworn on 14 March 2011.  The wife tendered no document to suggest that this information is inaccurate or incorrect.  As the contents of the husband’s Financial Statement do not appear to be inherently unreliable or incredible, I will rely on its contents to assess whether or not he can afford to pay monthly mortgage instalments. 

14. It should be noted that the wife has lived in the Sydney Suburb 2 home unit since March 2010 and made no contribution to the mortgage or rates.  The parties’ ten year old daughter, O, lives in the unit with the wife. 

15. It should also be noted that the orders of 17 August 2010 provided for the discharge of twelve credit card debts of the wife, from the proceeds of sale of the former matrimonial home.  By letter dated 11 November 2010 her solicitor informed the husband’s lawyer that these creditors agreed to accept $128,892 in full satisfaction of the debts.  Of course, there was no evidence in these proceedings as to the purposes for which these liabilities were incurred.  The fact is, however, that a portion of the proceeds of sale of the property was applied to the extinguishment of liabilities in the name of the wife.

16. According to his Financial Statement sworn on 14 March 2011 the husband earns $2,055 gross per week.  He has the following recurrent and necessary weekly expenses:

    Income tax:  $658

    Rent:  $580

    Child support:  $192

    Payment to the wife:  $290

    Total:  $1,720

    There is thus a surplus of $335 per week before any allowance is made for reasonable expenses such as insurance, motor vehicle costs, superannuation and general day to day living. 

17. The only evidence of the current level of mortgage repayments came from the bank statements in relation to the offset account (exhibit 1).  These statements show debits of $2,016 on 31 December 2010, $2,028 on 31 January 2011 and $1,843 on 28 February 2011.  It can thus be inferred that the monthly repayment figure is around $2,000 per month or roughly $460 per week. 

18. It is difficult to see how the husband can afford to pay this amount, together with recurrent and necessary expenses plus reasonable living costs.  It seems to me that he took reasonable steps to ensure that the wife can remain in the home unit, without incurring mortgage or rental costs for her accommodation. 

19. The husband offered to consent to an injunction, requiring him to use the money in the offset account only for the purpose of making mortgage repayments.  It seems to me that this use of the money can be regarded as a step taken to preserve an asset of the parties and to provide accommodation for the wife and the parties’ daughter.

20. In these circumstances I had some difficulty in understanding how the wife could be said to have suffered prejudice by the husband’s actions.  In my view a full consideration of the husband’s treatment of this money can well await a final hearing.

21. For these reasons, the only orders which I will make are the injunction proposed by the husband and a requirement that he continue to pay the mortgage from the offset account.  It is unnecessary that I determine whether the husband’s actions comply with the orders of 17 August 2010.  I am not persuaded that the money lodged in the offset account should be redirected to the mortgage facility.  I am not satisfied that the husband can afford to make the lump sum payment sought by the wife, or the monthly mortgage instalments, from his own resources.

I certify that the preceding twenty one (21) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 24 March 2011.

Associate:                 

Date:              24 March 2011