KEDIS & KEDIS

[2013] FCCA 317

FEDERAL CIRCUIT COURT OF AUSTRALIA

KEDIS & KEDIS [2013] FCCA 317

Catchwords:
FAMILY LAW – Parenting orders sought – family violence – property orders sought – wife sought sale of investment property at an interim hearing – mortgage repayments in default – rectified in most part by borrowings of husband – no consent of wife – application of wife acceded to.

Legislation:  

Family Law Act 1975 (Cth)

Applicant: MS KEDIS

Respondent: MR KEDIS

File Number: MLC 2787 of 2013

Judgment of: Judge Hartnett

Hearing date: 10 May 2013

Delivered at: Melbourne

Delivered on: 10 May 2013

REPRESENTATION

Counsel for the Applicant: Ms Southey

Solicitors for the Applicant: Nicholes Family Lawyers

The Respondent: In person

THE COURT ORDERS UNTIL FURTHER ORDER THAT:

Parenting

1. The children [X] born [in] 2004 and [Y] born [in] 2008 (“the children”) live with the wife.

2. The children spend time with the husband each Saturday from 10.00am to 4.00pm with such time to be supervised by Mr K, the paternal grandfather, with Ms K to transport the children and effect changeover from the wife’s residence.

3. The children communicate with the husband by telephone each Tuesday and Thursday between 4.00pm and 5.00pm, the children to initiate the call.

4. The husband within 72 hours obtain and provide to the wife’s solicitors a supervised urine drug screen, and thereafter shall undertake random supervised urine drug screening within 48 hours of a request by the wife’s solicitors or in the event of an Independent Children’s Lawyer being appointed and from that time within 48 hours of a request by the Independent Children’s Lawyer, and shall provide a copy of the result of such screen within 24 hours of receipt of same.

5. The husband be restrained from consuming illicit substances for 48 hours prior to and during his time spent with the children.

6. The husband forthwith enrol in and complete a Men’s Behavioural Change program at an approved organisation and provide the wife’s solicitors with proof of his enrolment and a copy of the certificate of completion within seven days of receipt of same.

7. The parties forthwith enrol in and complete a Parenting Orders Program at an approved organisation.

8. Each party be and is hereby restrained by injunction from denigrating the other parent or a member of their immediate household, and from discussing theses proceedings, in the presence or hearing of the children or either of them.

Property

1. The wife have sole use and occupation of the real property situated at and known as Property M, in the State of Victoria (“the Property M property”) to the exclusion of the husband.

2. Within 14 days hereof the husband vacate the real property situated at and known as Property H (“the Property H property”).

3. Prior to the husband vacating the property as referred to in Order 10 herein, he do all such acts and things to clean the property.

4. The Property H property be sold on the following terms:-

   (a)the Property H property be, after 21 days from this date, listed for sale by private sale;

   (b)[omitted] be appointed as the selling agent who will have the conduct of the sale of the Property H property unless otherwise agreed in writing between the parties;

   (c)the reserve sale price, agent’s costs and terms of sale at which the Property H property be listed for sale, be determined by written agreement between the parties and in default of agreement the reserve price shall be determined by the President for the time being of the Real Estate Institute of Victoria. Otherwise terms of sale shall be determined by the Court if necessary;

   (d)the parties each cooperate with the selling agent including (without limiting the generality of the foregoing) the following:-

   (i)making the keys available to the selling agent;

   (ii)allowing an inspection of the Property H property at all reasonable times as requested by the selling agent;

   (iii)not saying or doing anything to hinder or prevent the sale being effected;

   (iv)ensuring the Property H property and the garden/lawn located on the property are in a neat and clean condition at the time of inspection by the selling agent and/or prospective purchaser;

   (v)signing all documents requested by the selling agent in relation to the listing for the sale of the Property H property, save and except for a contract or agreement for sale which was has not been authorised by either party;

   (e)a conveyancing lawyer be engaged to have the conduct and conveyancing of the sale as agreed in writing between the parties and failing agreement as determined by the President of the Real Estate Institute of Victoria or as recommended by that person and such conveyancing lawyer be situate in the general surrounds of [suburb omitted] if possible;

   (f)the proceeds of sale be distributed in the following manner:-

   (i)to discharge the ANZ Group loan account number [0];

   (ii)to pay the cost and commission of the selling agent as referred to in paragraph 12 (c);

   (iii)to pay out the sums owing to the husband’s former solicitors to effect a removal of the caveat secured on the property and to pay out to the wife an equal sum;

   (iv)the balance to be held in an interest bearing trust account on behalf of the parties with the solicitors for the Applicant.

5. Liberty to either party to apply on short notice.

THE COURT FURTHER ORDERS THAT:

1. Pursuant to s.68L(2) of the Family Law Act 1975 (Cth), the children [X] born [in] 2004 and [Y] born [in] 2008 be separately represented AND IT IS REQUESTED that Victoria Legal Aid arrange such separate representation.

2. Forthwith upon appointment by the said Victoria Legal Aid or otherwise the Independent Children’s Lawyer do file a Notice of Address for Service.

3. Within 48 hours of notification of such appointment the solicitors for the respective parties do provide to the Independent Children’s Lawyer copies of all relevant documents relied upon.

4. Otherwise all extant applications are adjourned to 12 August 2012 at 9.45am for further interim hearing as to parenting orders.   

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

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT MELBOURNE

MLC 2787 of 2013

MS KEDIS

Applicant

And

MR KEDIS

Respondent

REASONS FOR JUDGMENT

1. These proceedings commenced by the Applicant wife filing an Initiating Application on 12 April 2013.  That application has been amended by her and she relies upon her Amended Initiating Application filed 9 May 2013.  The matter was before the Court firstly on 24 April 2013, whereupon various orders were made and it was adjourned to this date.  The proceedings concern the parties’ two sons, [X] born [in] 2004 and [Y] born [in] 2008 (‘the children’).  Parenting orders are sought with respect to their living arrangements by both the husband and the wife.  The proceedings also involve property orders, as sought by the parties, and these reasons are directed to the proceedings this day in relation to the property orders sought, in particular by the wife. 

2. Various parenting orders were made by the Court in respect of the parties’ two children. The Court was assisted by the evidence contained in the Family Consultant’s Memorandum to the Court dated 26 April 2013 in respect of a child inclusive conference which the parents and the children, [X] who is eight years of age and [Y] who is five years of age, attended.

3. The recommendations made by that expert are for the most part adopted by the Court in the Orders which the Court has made this day.  The Court also had before it evidence as set out in the Affidavit of the wife sworn 8 May 2013.  That evidence of the wife and the contents of the Family Consultant’s Memorandum to the Court paint a disturbing picture of family violence by the Respondent husband directed toward the wife, which at times, was in the presence of the two children.

4. The children reported hearing the husband threaten to kill the wife and they found his behaviour “scary”.  There was also an issue about drug taking by the husband, with the children reporting that the husband used drugs which affected his behaviour.  Neither party sought the publication of reasons in respect of the interim parenting orders made.

5. In respect of the property proceedings, the wife sought this day orders that had been sought by her on 24 April 2013, which were not granted on that date, the husband being given an opportunity to present further evidence to the Court to establish, to the Court’s satisfaction, that he was able to meet the repayments due to the Australian and New Zealand Banking Group (‘the ANZ bank’) in respect of the mortgage secured by that bank over the parties’ investment property at Property H in the State of Victoria (‘the investment property’).  The investment property is registered in the husband’s sole name and both the husband and wife are liable with respect to the mortgage secured over the property.

6. The wife sought (amongst other orders, including sole use and occupation of the former matrimonial home) a sale of the investment property and the husband opposed the making of any such order and sought that he be permitted to occupy the property.  The Amended Initiating Application filed by the wife on 9 May 2013 sought the husband’s vacation of the investment property, an order that he clean and repair any damage to same, and that it be forthwith sold by public auction on the terms as set out in the wife’s amended application.  The proceeds of sale were to be distributed to discharge the liability of the parties to the ANZ bank, loan account number [0], to pay the costs associated with the sale, to pay a sum of $50,000 to the wife with a characterisation of such advance of funds to be determined by the trial judge and the balance to be held in an interest bearing trust account on behalf of the parties with the solicitors for the Applicant.

7. The Court acceded to the wife’s application to the extent that it granted her sole use and occupation of the former matrimonial home at Property M in the State of Victoria (‘the former matrimonial home’) which has remained vacant for a time and which is unencumbered.  It ordered a sale of the investment property but by private sale with a reserve to be agreed between the parties or, failing agreement, as determined by a third party, and with no monies payable from the net proceeds of sale to either party, save the amount required to discharge the caveat lodged on the title by the husband’s former solicitors, with an equal amount to be advanced to the wife before the remaining monies were placed in trust.

8. The wife’s financial position is that she is in receipt of Centrelink benefits in the sum of $555 each week.  She currently resides in the home of her parents and sought to return with the children to take up occupation of the former matrimonial home.  She receives no payment of child support from the husband and has not done so since the parties separated on 14 September 2012.  The husband ceased his occupation as a [omitted] at the time of separation and he continues to be in receipt of unemployment benefits in the sum of $243 each week.

9. The parties commenced living together at the time of their marriage on 1 March 1997.  Following their separation in September 2012, the wife and children took up residence with the maternal grandparents, an arrangement of which the husband disapproves.  He considers the maternal grandparents’ home to be unsuitable for the children.  He described it in his Affidavit sworn 22 April 2013 at paragraph 25 as:-

   “…a 3 bedroom house with a front and back yard that is full of junk collected by the Applicant’s father.  I knew about this because people can see the junk from the street and council have warned Applicant’s father a number of times.  I am worried that this junk is a dangerous mess and a hazard for the children.”

10. The husband has, since separation, been residing in the parties’ investment property which is in close proximity to the former matrimonial home.  The former matrimonial home is in the joint names of the parties and is unencumbered.  The investment property, in the sole name of the husband, is encumbered by a mortgage to the ANZ bank in the sum of approximately $231,000.

11. The husband and wife have had no recent capacity to repay this mortgage and that incapacity resulted in the wife filing her application in April this year.  The wife sought the investment property be sold without delay.  The former matrimonial home is also listed as a security for the ANZ mortgage over the investment property, and the wife gave evidence in her Affidavit sworn 12 April 2013, that the bank may as a consequence also seek to sell the former matrimonial home.

12. On 1 March 2013, the ANZ bank, through their solicitors, issued a default notice against the husband and wife seeking the sale of both the investment property and the former matrimonial home to pay out the mortgage which was then currently in arrears of approximately $4,000.  The wife was anxious to avoid the bank forcing the sale of one or both properties thereby denying the parties an opportunity to maximise the sale price.  Accordingly, she sought orders from the Court for the sale by the parties of the investment property.

13. The investment property was purchased by the parties in their joint names on 9 November 2004 for the sum of approximately $280,000.  To finance the purchase they obtained a loan from the ANZ bank in their joint names.  They also used the equity they had in the former matrimonial home to secure the mortgage encumbering the investment property, and thus the mortgage was registered against both properties.  In or around 31 March 2005, the wife’s interest in the investment property was transferred to the husband by endorsement. The mortgage encumbering both properties remained in both names.

14. At various times during the parties’ relationship the investment property was tenanted.  The rental income was applied to the mortgage.  The husband otherwise paid the balance of the mortgage throughout the marriage from his income.  Following separation, the wife sought the husband’s assurances that he would continue to pay the mortgage in respect of the investment property.  However he did not do so and in an email dated 16 January 2013 to the wife, the husband said in part:-

    “The house on Property M has been surrendered to the bank, and they are organising the sale of the property…”

15. Following receipt by the wife’s solicitors of the default notice from the ANZ bank in March 2013, the wife’s solicitors wrote to the husband seeking confirmation from him as to whether he would consent to the sale of the investment property to pay out the mortgage encumbering the property in circumstances where he was refusing to pay the mortgage and otherwise pay to the wife an amount of $50,000, with the balance to be held in trust.  The husband did not consent to that course.  The wife became further concerned to sell the investment property when she was advised by the children that the husband had commenced to renovate the bathroom. She feared that the property would not be in a sellable condition.

16. The husband swore an Affidavit in the proceedings on 22 April 2013, on which he relies.  He also gave some limited sworn evidence this day.  In his Affidavit at paragraphs 47 to 50 the husband said as follows:-

    “(47)     My current income is $487 which I receive from Centre link.

    (the Court notes that this is a fortnightly amount)

    (48)  I currently pay no child support.

    (49)  My current assets include the following:-

    (a)     Vehicle which is now worth approximately $500.

    (b)Superannuation which is now worth approximately $12,963.

    (c)Bank Savings in ANZ bank which now worth approximately $123.86

    (50)  I do have current liabilities.

    (a)     Magistrate Court:  $12,686.

    (b)     A number of unpaid bills approximately $10,000

    (c)     Legal fees:  $5225.

    (d)     Unpaid tax:  $1563

    (e)Mortgage taken out for the investment property in Property H and have approximately $230,903.94 left.”

17. In his evidence given this day, the husband deposed that the monies owing in unpaid tax may have reduced to the sum of approximately $800.  He also gave evidence that he was attending to repayment of the sum owed to the Magistrates’ Court by arrangement and being by monthly repayments in the sum of $50 a month.

18. The husband’s financial position is that he is in receipt of Centrelink payments and has debt approaching $38,000, with no immediate capacity to repay that debt out of income. The mortgage sum outstanding can be met, on the parties’ evidence, by the sale proceeds of the investment property.

19. The husband handed up documents to the Court this day, which indicated that he had made a lump sum payment of $9,500 to the ANZ bank on 7 May 2014 in payment of the arrears outstanding on the mortgage. On the following day, an interest amount was debited to the account in the sum of approximately $1,000 which remains unpaid.  The sum of $9,000 of the monies repaid to the bank by the husband was obtained by the husband from a third party by way of a loan. The husband’s evidence is that that third party has advanced the funds without interest and with no discussions having taken place yet between them as to the manner of instalment repayments. Such borrowings were obtained by the husband and applied to reduce the ANZ bank mortgage loan without the knowledge or consent of the wife.

20. The husband’s evidence is that he anticipates being employed by [omitted] on a part-time basis in the next week.  His evidence is that he anticipates he will commence working for two or three days a week and that his salary may be $550 or $650 once he obtains full-time employment.  He produced no contract of employment or any other documentation from the prospective employer as to whether he will be so gainfully employed, and the terms of such engagement. 

21. The husband also gave sworn evidence that he proposes to tenant the investment property and that he spoke to a person by the name of “Mr S” over the telephone.  He was unable to provide details as to Mr S’s surname.  His evidence was that this person would be paying rental payments to him in the sum of $350 or $400 per week but no tenancy agreement has been entered into between them.  His further evidence was that he would enquire of Mr S as to whether he could leave his various cars on the property; whether he might share occupation of the property with this complete stranger; and otherwise his evidence was that he may move into his parents’ home and take up residence there. 

22. The husband’s evidence as to his future financial security by means of employment and taking in a tenant was entirely unsatisfactory.  The Court could not rely upon that evidence to find on the balance of probabilities that the husband has a capacity, presently, to meet the mortgage repayments in the sum of $1,300 each month approximately, on the investment property.  The loan monies advanced to the husband, which he has applied in reduction of the loan arrears, now represent a liability which will diminish the asset pool between the parties ultimately available for division. 

23. The Court is not confident that the husband has any ongoing capacity to meet these mortgage repayments and notes the earlier default notice issued by the ANZ bank and the need for the husband to borrow funds to satisfy the ANZ bank to this point in time, if it has been so satisfied.  No evidence of that is before the Court. The wife, again, urges the Court this day to make an order selling the investment property so that the parties’ asset pool is maximised without further borrowings and so that the former matrimonial home is not affected by any ongoing mortgage default in respect to repayments of the borrowings secured over the investment property. 

1. The Court will accede to the application of the wife and order a sale of the investment property.  The matter is urgent given the parties’ precarious financial position where each of them are in receipt of Centrelink benefits and given the husband’s need to borrow a relatively large sum to stop the bank from immediately foreclosing on the properties.  This will not have that effect permanently unless the mortgage repayments are met. 

2. The Court notes that a caveat is secured over the investment property by the solicitors who formerly acted for the husband to secure payment of their outstanding fees.  That sum will have to be repaid at the time of settlement and the Court has determined that an equal sum should also be paid out to the wife to be characterised at trial.  Whether there needs to be, ultimately, a sale of the former matrimonial home is a matter that can be left for final hearing when the parties’ division of their assets will be determined.

I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of Judge Hartnett

Associate: 

Date: 20 May 2013