K and K
[2003] FMCAfam 111
•2 April 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| K & K | [2003] FMCAfam 111 |
| FAMILY LAW – Interim property order – sale of property before final hearing – dwelling incomplete – preferable to sell – not appropriate to delay sale pending completion of dwelling by husband – husband currently in prison. |
| Applicant Wife: | N K |
| Respondent Husband: | T K |
| File No: | MLM 5068 of 2002 |
| Delivered on: | 2 April 2003 |
| Delivered at: | Melbourne |
| Hearing Date: | 26 March 2003 |
| Judgment of: | McInnis FM |
REPRESENTATION
| Counsel for the Applicant Wife: | Ms Barker |
| Solicitors for the Applicant Wife: | Moore Legal |
| Counsel for the Respondent Husband: | Ms Moretti |
| Solicitors for the Respondent Husband: | Kempson & Co |
ORDERS
THAT the property at C S (“the C S property”) be sold for the sum of $120,000.00 forthwith to Mr C B of B forthwith (“the sale”).
THAT the terms and conditions of sale including the real estate agent to handle the sale and the conveyancer to prepare the sale documents be stipulated by the Applicant Wife.
THAT the conveyancer and real estate agent appointed by the Applicant Wife be pursuant to paragraph 2 herein, be permitted to act on the sole instructions of the Applicant Wife.
THAT the Applicant Wife be empowered to sign any documents relating to the sale of the C S property in place of the Respondent Husband as well as on her own behalf (including any Section 32 and Section 27 statements relating to the sale of the C S property).
THAT pending completion of the sale of the C S property the Applicant Wife have sole right to occupy and/or access the property.
THAT the Respondent Husband, his servants and agents be prohibited from being within 200 metres of the property unless through prior arrangement in writing with the Applicant Wife’s Solicitors.
THAT the proceeds of sale of the C S property be distributed as follows:
(a)Firstly to pay all costs, commissions and expenses of the sale;
(b)Secondly, to discharge the mortgage to the National Australia Bank encumbering the property;
(c)Thirdly, such sum as agreed between the parties be distributed to one or both of the parties in default of agreement the balance of proceeds of sale be held in an interest bearing trust account with the Applicant Wife’s Solicitors; and
(d)That the Applicant Wife shall advise the Respondent Husband’s Solicitors in writing no later than 14 days prior to settlement of the amounts to be deducted at settlement.
THAT liberty is granted to the parties to apply to the Court with respect to paragraph 7(c).
THAT the costs of the Applicant Wife’s Application filed on 19 August 2002 be reserved.
THAT pursuant to s.65DA(2) of the Family Law Act 1975 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.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLM 5068 of 2002
| N K |
Applicant Wife
And
| T K |
Respondent Husband
REASONS FOR JUDGMENT
(Revised from Transcript)
This is effectively an ex tempore decision delivered in relation to an interim property application by the Applicant Wife. The hearing of the interim application occurred on 26 March 2003. As a consequence of other duties I was unable to then deliver my decision. I do so now, but as indicated, it is effectively an ex tempore decision which requires me to announce the reasons in open court.
N K, (the Applicant Wife), by an application filed 10 May 2002 sought orders against T K, (the Respondent Husband), in relation to children's issues and property matters.
The parties were married on 12 July 1990. There are two children of the marriage, U N K born 29 December 1990 and N S K born 19 June 2000. The parties separated on 26 February 2002.
The application filed on 10 May 2002 was the subject of interim consent orders made by the court on 20 May 2002. The property issue between the parties involves a dispute over two principal properties as follows:
a)11 A G, G, (the Glenroy property);
b)Lot 4, W C, C S, (the C S property).
Part of the consent orders made on 20 May 2002 required the parties to arrange for sale of the G property at public auction which I understand is now due to occur in May 2003. Further orders were made on
19 August 2002 permitting the Applicant Wife to determine the terms and conditions of the sale of the G property and to occupy that property until sale. After payment of expenses the sum of $20,000 was to be paid to the Applicant Wife.
Significantly orders were also made on 19 August 2002 that the hearing of any further interim property application be adjourned to 7 October 2002 with the Respondent Husband to file and serve any material to be relied upon no less than 14 days prior to the adjourned hearing date. The Applicant Wife was ordered to serve a copy of an amended application upon the Respondent Husband.
On 7 October 2002 the application was further adjourned to 19 November 2002 and again was adjourned then to 9 December 2002, though not listed until 13 December 2002.
On 13 December 2002 I made further orders that the Respondent Husband should file and serve affidavit material in relation to the interim property orders relating to the C S property. The hearing of the interim property application was then further adjourned to 13 March 2003. The application was otherwise fixed for final hearing on 11 June 2003.
On 13 March 2003 the interim application was adjourned to 26 March 2003 with again an order being made for the Respondent Husband to file and serve further material.
The amended application which was filed in court and which is dated 16 August 2002 relevantly seeks interim order and that the C S property be placed on the market for sale and sold forthwith. Other orders are sought in relation to the terms and conditions of sale and the conveyancer and the power to be given to the Applicant Wife to sign documents in place of the Respondent Husband as well as on her own behalf. Further orders are sought which are not directly relevant at the present time, save that that interim order, which I might add also applied to the G property, provides for proceeds of sale which cover the costs of sale, discharge of any mortgage or encumbrances and further seek then a distribution of a certain sum to the Applicant Wife. In the present application that matter needs some further clarification.
By an affidavit sworn 15 January 2003 the Applicant Wife states the following:
“The husband and I purchased a block of land in C S, the C S property, from D P G in August 2001 for $46,000.”
The Applicant Wife goes on in the affidavit to state:
"We took out a mortgage with the National Australia Bank for around $50,000 to purchase the land.”
The Applicant Wife annexes copies of relevant documents. At the time of purchasing the property the Applicant Wife states in her affidavit,
“….I had no reason not to trust my husband with our financial affairs. I was happy to leave him to negotiate the purchase. I just signed the necessary documentation. I have never actually seen the block of land.”
The Applicant Wife goes on to say in her affidavit:
“5.As the husband is a builder, it was our intention to build a house on the land, either to live in or to sell. The husband commenced building a house on the property shortly after we purchased it. The building work stopped when he went to jail in July 2002. My understanding is, although I have never seen the property, the house is at lock-up stage. Friends who have seen the property inform me that the brickwork is complete, however, the plaster work and internal finishing is incomplete. I believe the husband purchased materials to build the house from money he earned building other houses. I am unsure what expenses the husband has incurred in relation to the building and whether there is any money owed to suppliers or other contractors. I have had telephone calls from some people saying the husband owes them money. I am not sure if these relate to the C S property or other properties he was building for other people.
“ 7.Most of the records relating to the Caroline S property that we had at the former matrimonial home are gone. I can only assume that the husband has taken these when he went to jail. After we separated the husband was to pay the mortgage on the C S property. In fact paragraph 14 of the orders dated 20 May 2002 requires this. I am unsure as to whether he has made any payments. However, I am aware that the payments are overdue on the mortgage for C S account…”
The deponent annexes relevant copies of mortgage statements. She goes on to say:
“….I have contacted the bank and made them aware of the current situation regarding the husband and myself and the current legal proceedings dealing with the matter.
8.I believe a friend may be making the mortgage payments on behalf of the husband. I have heard that the husband signed an agreement with his friend. This concerns me greatly as I have not consented to any agreement relating to the property.
9.In or around September 2001 we listed the property for sale with D R E. At the time of listing our property with D R E it was agreed that D C would undertake the conveyancing work. In 2002, for a reason unknown to me, D C was no longer able to continue with the conveyancing work and our file was given to T S of S A.
10.In a letter from Mr S dated 14 August 2002 annexed to my affidavit sworn 15 August 2002 and marked “E” Mr S confirms that the section 32 documentation has been unable to be prepared due to the restrictive covenants and conditions of the original Contract of Sale. One of the conditions prevents the on-sale of the property without the house having been completed. I do not have any money to pay someone to finish the building.”
Further in the affidavit the Applicant Wife states:
“12. My solicitor has informed me, and I verily believe, that she contacted M from D G L at C S requesting information relating to the original purchase, the restrictions relating to the property and what they require to consent to the on-sale…
13.My solicitor has informed me, and I verily believe, that she has contacted D R E and spoken to Y K. He has advised me that there have been several purchasers interested in the C S property. One purchaser has had a builder inspect the property and has been advised that to complete the property it will cost approximately $82,000. Y K has informed my solicitor that to purchase a new home in the same area would cost around $210,000. For that reason the purchaser is prepared to offer $120,000. He is also prepared to meet the requirements of D P G. I am prepared to accept this offer.”
The Applicant Wife goes on to say in paragraph 15:
“15.It is important that the C S property be sold and the mortgage paid out so that when the G property sells the mortgage over that property can also be paid out and the money divided as this honourable court sees fit. If the C S property is not sold, the bank may not consent to the sale of the G property as I understand the loan for C S is secured by the G property.”
By way of further background material it is appropriate that I should refer to the affidavit of the Applicant Wife sworn 15 August 2002. In paragraph 12 of that affidavit she states:
“My solicitors have attempted to negotiate arrangements for the sale of the two properties with the husband's solicitors...They have advised that the husband does not consent to the sale of the property at C S and that he hopes to retain the property. I do not know how he proposes to keep the C S property as he has not put any offer to buy me out. My solicitors inform me, and I verily believe, that they have received any further correspondence from the husband's solicitors, other than a notice of ceasing to act served by facsimile on 13 August 2002…”
In the same affidavit the Applicant Wife deposes that:
“13. On 29 July 2002 the husband attended a plea hearing for criminal charges relating to the sexual assault of our eldest daughter. The husband pleaded guilty to the charges which included six counts of indecent assault on a child under 16 and one count of common assault. The husband has been sentenced to a total of three years imprisonment with a non-parole period of fifteen months.”
The Applicant Wife in support of this interim application in relation to the C S property has also relied upon an affidavit sworn by C C on
25 March 2003. Mr C states in his affidavit that he is a principal of the firm V C V and L E. He is a certified practising valuer and an associate of the Australian Property Institute. He deposes that he inspected and carried out a valuation of the C S property and that that valuation was carried out at the request of the applicant's solicitors.
The valuation which is annexed to the affidavit refers to the value of the property as follows: “Market Value $120,000”. That valuation, it should be indicated, is a valuation as at 24 March 2003 and it is a valuation which has been made on the basis that the title to the property is unencumbered, as detailed in the text of his report. It is not necessary for me to refer in detail to that report, save for the paragraph under the heading Summary which provides:
“A house that is partially built situated in a developing residential area of C S. The property has been in a partially-built stage for approximately 18 months and it has been somewhat open to the elements. The property provides someone to take a measured risk and complete the dwelling. It is understood that the frame and the lock-up inspections have not been completed.”
At the earlier hearing of this matter I also received into evidence and formally will mark as now exhibit A1 items of correspondence. First was a letter dated 22 January 2003 from Russell Kennedy solicitors to Moores Legal indicating that Russell Kennedy acted for L which is the developer of the C S property. The letter provides consent to an on-sale of the property upon certain conditions. They include that the new purchaser enters into a deed with the developer and that the costs will be borne by the vendor wishing to on-sell. It also indicates that that consent will lapse within three months from the date of the letter; that is, 22 April 2003.
A further letter received as part of the exhibit is a file copy letter dated 15 February 2003. It is a letter from a Mr B addressed to D R E submitting a formal offer to purchase the C S property for $120,000 on the condition that the vendor agrees to amend special conditions 1.6.1 of 1.6 to read that the purchaser must within a period of 180 days from the settlement date complete the construction of the dwelling house on the property.
There is then a further letter dated 26 February 2003 from Russell Kennedy to Moores Legal referring to earlier correspondence, which is not part of the exhibit, and indicating that their client is not agreeable and states:
“We have been instructed by our client that it is not agreeable to amending clause 1.6.1 of the resale deed. The dwelling must be completed within 90 days from the settlement date. Our client advises that all external works are completed, delays to weather are not an issue.”
There is further reference to clearing of the property. The final letter which is part of that exhibit is a letter dated 7 March 2003 which refers to a telephone conversation and again refers to the issue of the amendment to clause 1.6.1.
It is clear from the correspondence that there is at present a firm offer capable of being accepted consistent with the valuation provided by
Mr C for the sum of $120,000. It seems to me that on the material provided by the Applicant Wife that at least there is that firm offer of an amount of a kind described as being an appropriate valuation of the property.
In the affidavit material which was ultimately received from the Respondent Husband it is noted that the Respondent Husband on
20 March 2003 deposed that he has not been able to meet previous court deadlines fixed in relation to the filing and serving of affidavit material. He refers to the fact that he had been suffering from depression and has been receiving psychological counselling, but has now instructed solicitors to act on his behalf.
I should interpolate here that all due allowance is made in relation to the delay in this matter which is clearly evident from the detailed chronology to which I have just referred. It is appropriate, however, that I now consider the precise proposals advanced by the Respondent Husband in his affidavit to which I have referred. In paragraph 3 of the affidavit he states:
“The C S property (“C S”) has a market value well over $150,000.00 even in its uncompleted state. The wife has never seen the property and I believe that she simply wants to return to T as quickly as possible and that any purchaser will take financial advantage of her eagerness to depart Australia. I do not believe that the C S property has ever been advertised for sale let alone auctioned. Even in its present state, it would bring a much higher price if properly marketed. I have built a substantial home on the land at C S that still requires some internal work before it is completed. The current value of the property is at least $160,000.00 and on today's prices it would be worth $230,000.00 on completion.”
The Respondent Husband goes on to say:
“I have been in prison since 1st July 2002 and I am due for release on 24th October 2003. After my release I will immediately obtain employment as a bricklayer. I then intend to forthwith recommence part time work on the C Ss property. I refer to paragraph 13 of the Wife's Affidavit sworn on the 15th January 2003. I am advised that the evidence in the said paragraph 13 is hearsay. In any event, the figures are wrong. From my experience from actually building C S, I know that I can complete the project for less than $82,000.00 using my own labour and income. I will have the property completed within four months from recommencing work. CS will then be ready for sale as a completed home. As such, it will significantly add to the asset pool for distribution.”
The Respondent Husband goes on to say:
“The G property is due for auction in May, 2003. The mortgage and arrears in relation to C S can be paid out of the proceeds of that sale.”
He states that the asset pool is simply not large enough to advance a sum of $100,000 to the Applicant Wife.
“She can get through her immediate difficulties with an advance substantially less than that sum. I anticipate that the G property will sell at auction for approximately $260,000.00. The two mortgages amount to a total of $152,000.00.”
He refers then to his form 17 statement of financial circumstances. He says he owes the Australian Taxation Office approximately $40,000.
“I also owe $19,000.00 on an overdue loan to one S S. Some time ago I gave a Charge Agreement to S S over my interest in the C S property and I believe he lodged a Caveat on the title to the property to protect his Charge. There are also miscellaneous debts to Visa and others amounting approximately to a further sum of $26,000.00. These debts are incurring interest and accordingly I seek to pay them from the proceeds of the sale of the Glenroy property.”
The Respondent Husband further relied upon an affidavit sworn by
N D M. In her affidavit sworn on 24 March 2003 Ms M deposes that she is the solicitor acting for the Respondent Husband in the matter and states that on 19 March 2003 she contacted B P in D P requesting an appraisal on the C S property. She requested the agent to provide an appraisal that included the value of the property in its current and unfinished state, as well as an estimation of the value of the property on completion.
On 24 March 2003 Ms M received a letter from B P D containing the information requested. A letter from the agent which is exhibited to that affidavit states the following:
After careful consideration of available sale prices in the area, it is our opinion that under current market conditions, your property should appeal to buyers looking in the $140,000 - $150,000 at its present state. Once the property is completed should achieve $210,000 - $220,000 price range.
Obviously, under ideal conditions, this figure could be exceeded. The end result will depend on the mood of the market and availability of similar properties at any particular point in time.
We stress, this appraisal is our opinion only and has been prepared solely for your information. It is not to be relied upon by any third party and is not to be treated as a valuation.”
Relying upon the material to which I have referred, it has been submitted for and on behalf of the Applicant Wife that the appropriate order to make in this matter is that the C S property be sold forthwith and orders are otherwise sought in relation to procedural matters set out in the amended application.
The Respondent Husband has indicated through counsel that in the present case it would be inappropriate to consider forcing a sale at this interim stage and that the court should wait until the scheduled hearing date of the application which is now listed for 11 June 2003. The Respondent Husband otherwise relies upon his affidavit material.
In my view, the valuation which has been provided by the Applicant Wife is the only valuation that can be relied upon in this application.
I am satisfied and find that the property in its current state has a valuation of $120,000. It is clear that what might be described as the kerbside valuation of the agents engaged for and on behalf of the Respondent Husband is not to be regarded as a valuation. Although I had expressed some reservations about the valuation of Mr C being exactly the same as the amount which is now said to be the subject of the firm offer, I am satisfied nevertheless that it is a valuation upon which the court can rely.
Even if that were not the case, it seems to me that taking the lower end of the valuation provided by the Respondent Husband there is only approximately $20,000 difference between the valuations proposed by both parties. Even if one were to conclude that the amount of $82,000 required to complete the property is excessive, it is still, in my view, open for this court to conclude that there will be at least a significant sum required to complete the property.
I am further satisfied that it is not appropriate in a matter of this kind where it is in the interests of the parties to proceed to dispose of an asset to delay the matter based upon what I regard as vague and uncertain speculation. First, it is not necessarily the case that this matter will be heard and determined on 11 June 2003. It is listed for hearing on that date along with other matters. However, even if it were to be heard and determined on that day, by that time I am satisfied that the developer is unlikely to have extended the indulgence in relation to the on-sale presently provided to the parties, that the current purchaser is unlikely to still be willing to necessarily make an offer to purchase the property at $120,000 and that there is a real risk that in the circumstances the property will be exposed to further deterioration and the risk of damage and not therefore be as attractive as a selling proposition than it is at present.
I am further satisfied on the affidavit material of the Respondent Husband whilst he may have sincere and genuine intentions to complete the property and may indeed strongly believe that he has the capacity to complete the property, it is my view that his timetable at the very least will involve a delay after he is released from prison of something in the order of four to six months before the property is either ready for sale and thereafter a further delay of up to another six months for the property to be sold. That is all assuming he is able to devote time and energy to complete the property in a cost-efficient and timely manner. It further assumes that he is able to obtain, as he asserts, immediate employment upon release from prison as a bricklayer.
All of those matters, in my view, asserted by the Respondent Husband whilst perhaps being views sincerely held by him are nevertheless unrealistic and even on the time frame suggested by the Respondent Husband would involve considerable and unjustified delay in circumstances where at the very least the difference between the valuation and offer obtained by the Applicant Wife is approximately $20,000 to that of the lower end of the scale of the valuation obtained by the Respondent Husband.
In any event, the cost, expense and inconvenience of preparing and presenting the property for final sale as a complete property would, in my view, be so significant as to not justify in economic terms further delay in this matter.
It is clear, in my view, that in this matter the appropriate order of the court on an interim basis should be the order sought in the amended application; that is, that the CS property be sold and be sold on the terms that are currently proposed by the Applicant Wife; that is, sold for the sum of $120,000 to the current proposed purchaser upon the conditions acceptable to the developer.
It is also clear that I should make consequential orders in relation to the deduction from the proceeds of sale of the expenses associated with that sale and any other encumbrances required to be discharged upon that sale. It is not clear to me that at present the court is sufficiently apprised of information which would enable it to determine the net proceeds that may be available for distribution to the parties. To that extent I am prepared to grant liberty to apply to the parties in relation to the final form of the orders.
I had some reservations about making interim orders in circumstances where I have scheduled a final hearing in June 2003. It did concern me that it may be presumptuous of this court in April to make interim orders for a matter which is subject to a final hearing in June. Nevertheless for the reasons that I have given and based upon my assessment of the material to which I have just referred, I am satisfied that it is in the interests of the parties that this property be sold to the appropriate purchaser as soon as possible and that the proceeds of sale then be dealt with by the trial court as it sees fit.
In the interim, however, as I have indicated, I will hear the parties in relation to the final form of the orders and I will consider whether or not part of the proceeds of the sale of that property should immediately be released to the Applicant Wife. I will direct that the reasons for the decision that I have just given be transcribed and upon review shall constitute my reasons for judgment.
I certify that the preceding forty-six (46) paragraphs are a true copy of the reasons for judgment of McInnis FM
Associate:
Date: 2 April 2003
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