Kellner and Kellner

[2020] FamCA 175

FAMILY COURT OF AUSTRALIA

KELLNER & KELLNER [2020] FamCA 175

FAMILY LAW – PROPERTY – WARRANTS – Warrant of possession – Final property orders were made – Where the de facto husband has failed to comply with the orders – Where the de facto husband has failed to pay the de facto wife the settlement sum and is resistive to making such payment– Where the default provisions of the orders require property to sold – Where the de facto husband has resisted the sale of the property and continues to reside in the property and is not intending to vacate the property – Where a warrant of seizure and sale is registered against the property by a third party – Where a contract for sale has been signed and settlement is imminent – Where the de facto wife seeks a warrant of possession to issue – Orders

Family Law Act 1975 (Cth) s 106A

APPLICANT: Ms Kellner

RESPONDENT: Mr Kellner

FILE NUMBER: DNC 4392 of 2012

DATE DELIVERED: 20 January 2020

PLACE DELIVERED: Darwin

PLACE HEARD: Darwin

JUDGMENT OF: Berman J

HEARING DATE: 20 January 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Farmer

SOLICITOR FOR THE APPLICANT: Withnalls Lawyers

COUNSEL FOR THE RESPONDENT: Litigant in person

SOLICITOR FOR THE RESPONDENT:

Orders

1. That in the event the de facto husband has failed to vacate the property situate at 2 U Street Suburb V NT by 4.00 pm 20 January 2020, a warrant of possession do issue without further notice and the Australian Federal Police be authorised and directed to attend, find and remove the de facto husband and any third parties who may be in occupation from the premises at 2 U Street Suburb V NT.

2. That forthwith Withnalls Lawyers do forward to the de facto husband the sum of $5,000 received by them from Ms SS on 21 May 2019.

3. That UPON NOTING that pursuant to order 10(g)(iv) of orders made 28 November 2018 the de facto husband is likely to receive the balance of the net proceeds of sale of the property at 2 U Street Suburb V NT in the sum of $364,978.73 IT IS ORDERED that from that sum the amount of $100,000 be made payable to Mr IJ, the sum of $268,740 be made payable to Withnalls Lawyers in respect of the wife’s costs arising generally in the course and conduct of the proceedings and the balance if any to be paid to the de facto husband.

4. That leave is given to Mr IJ solicitor to intervene and be heard in the proceedings.

5. That the wife’s costs be reserved in respect of paragraphs 4 and 8 of the wife’s Application in a Case filed 13 December 2019.

6. Otherwise as provided for in these orders the Application in a Case filed 13 December 2019 be dismissed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Kellner & Kellner has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT DARWIN

FILE NUMBER:  DNC 4392 of 2012

MS KELLNER

Applicant

And

MR KELLNER

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. The proceedings before the Court relate to the balance of issues arising between the parties in respect of proceedings for settlement of property that commenced in 2012. 

2. There is a long and complex history to the matter but, effectively, there were proceedings which reached a hearing before Justice Dawe in 2015.  Following orders made by her Honour, an appeal was filed by the husband which met with success.  The matter was then remitted for hearing, and on 27 October 2017 Ms Kellner (“the de facto wife”), filed an Amended Initiating Application setting out the orders that she sought.  On 8 December 2017 Mr Kellner (“the de facto husband”), filed a Response to Initiating Application setting out his orders.

3. As discussed, the matters are complex between the parties and originally came before her Honour Judge Harland in the Federal Circuit Court of Australia in March 2014.  They were subsequently transferred to the Family Court of Australia on 14 May 2014.

4. There is a second respondent to the proceedings, Ms King (“the second respondent”).  The second respondent was ordered to be joined as a party to the proceedings, and she is the daughter of the de facto husband and holds an interest in one of the properties.  The second respondent has sought to take no part in the proceedings at all, and it can be reasonably assumed that as far as her position is concerned she does not purport to pursue any orders but rather will be bound and will fall in with the orders made by the Court.

5. Consequent upon a long hearing before Justice Dawe, final orders for settlement of property were made on 8 April 2016. 

6. Upon the remission of the matter, it came before Justice Strickland and his Honour ultimately heard and determined the proceedings by orders made 28 November 2018.

7. The orders provided, with some significant level of clarity, that the applicant, being the de facto wife in the proceedings, would do all that is required and sign all documents necessary to effect a discharge of mortgage and a transfer of her interest in a property at I Street, Suburb K (“I Street property”) in favour of the de facto husband.  Contemporaneously with the de facto wife signing the necessary documents to effect the transfer, the obligation was then upon the de facto husband to discharge, at his cost and expense, the ANZ investment loan, thereby refinancing the property and removing any liability by the de facto wife in respect of that property.

8. The de facto husband appears today, with the assistance of Madam Interpreter.  The de facto wife is represented by her solicitor, and joining the proceedings is Mr IJ who is a solicitor that represented the de facto husband between August 2012 and June 2015.  I will return to the position of Mr IJ later in these reasons.

9. The de facto husband, at first, disavowed any knowledge of orders (1) and (2) of the orders of 28 November 2018, or indeed that the de facto wife had complied with order (1) by providing the documents necessary to effect the transfer.  When challenged, the de facto husband’s position changed and it is now that he remembered that the documents had been provided but that he had initially done nothing with them, although it may well be that he has now been to the bank to seek the refinance.

10. It is to be noted, that in respect of the various applications to which I will get to, there is no effective response by the de facto husband in circumstances where I find that he has had sufficient and ample notice of these matters. 

11. The orders of his Honour provided that within 28 days of the date of the order, again noting that the order was delivered by his Honour on 28 November 2018, the de facto husband was to pay the de facto wife two amounts, the first being the sum of $361,234, and the second being an amount cumulative of various costs orders made between 2014 and 2016 which totalled the sum of $31,838. 

12. Paragraph 10 of his Honour’s orders is relevant to the proceedings today.  It provided a method by which the settlement sum, payable by the de facto husband to the de facto wife, could be enforced if the de facto husband refused or neglected to pay the settlement sum.  It is not controversial that the de facto husband did not pay the settlement sum and it is reasonable to find, from the presentation of the de facto husband, that he is resistive to the payment of the settlement sum.  In any event, and demonstrably, no payment and no attempt at payment of the settlement sum has been made as and from 28 days after the date of the order, namely, 28 November 2018.

13. Paragraph 10 of his Honour’s orders provides that if the de facto husband should default in the payment of the settlement sum, then the property at U Street, Suburb V, being described as the “U Street property”, shall forthwith be listed for sale with NN Real Estate as the nominated real estate agent, and it shall be sold.  Detailed orders are apparent from his Honour’s orders and it provides, in order (10)(g), as to how the proceeds of sale are to be disbursed upon the successful sale of the U Street property.

14. The first payment from the proceeds of sale is to satisfy the sales agent’s commission and conveyancing expenses.  The second is the payment of the MM Bank Business Maximiser account.  The third is the payment of the settlement sum to the applicant de facto wife, and if there shall be a loss, then that loss is to be the subject of indemnity.  Finally, the balance is to be paid to the respondent de facto husband.

15. I find that the de facto husband has resisted the sale of the U Street property.  He has been aware of the default provision that would apply if he did not pay the settlement sum, and that notice is now for a period of about 12 months.  It is apparent from the Court file and the various recent applications that were caused to be filed by the de facto wife, in order to effect the sale of the U Street property, that the de facto husband has resisted all efforts for that property to be sold and for the proceeds to be disbursed and determined in the manner as provided by Justice Strickland.

16. On 13 December 2019 an urgent Application in a Case was brought by the de facto wife which sought orders that would enable the de facto wife to sign certain collateral documents for and on behalf of the de facto husband which would enable the sale of that property to proceed.  The documents were benign documents, were not prejudicial to the de facto husband, and his refusal to sign was simply as a result of his refusal to cooperate rather than there being any substantive issue that would arise in respect of the sale of the property.

17. The further difficulty that has arisen in respect of the sale of the U Street property is the determination of the settlement date.  The de facto husband continues to remain in the property and on the last occasion, namely, 19 December 2019, he made it clear that he was not intending to vacate the property.  I am satisfied that he was aware not just of the original orders made in respect of the U Street property but also in respect of the various applications taken by the wife to advance the sale of the property. 

18. Orders were made on 19 December 2019 which enabled the contract to be advanced, with the matter coming back before me on 20 January 2020 for further consideration in respect of the balance of the de facto wife’s Application in a Case.  Various settlement dates have now come and gone and the issue is that the de facto husband continues to reside in the property. 

19. The de facto husband has acknowledged today that he was given an advice on the last occasion that the de facto wife was seeking an order for a warrant of possession to issue which would have the effect of removing him from the property if he did not take the necessary steps to do so.  The situation has now advanced to a critical stage.  Settlement has yet again been scheduled for 11.00 am on 21 January 2020 and the de facto husband continues to reside at the property. 

20. The de facto husband has indicated that, of late, he has either started to pack his belongings or has completed that exercise but neither he nor his belongings have any place to go.  It must be noted that these are matters that the de facto husband advises the Court of from the bar table.  There is no affidavit which sets out the efforts the de facto husband has made to find alternate accommodation and arrangements for the storage and/or collection of his goods and chattels.  He also makes it clear that an impediment to both his vacating the property upon finding other premises is that he does not have the money to be able to pay the bond or other expenses involved in both his removal but also of the removal of his possessions.

21. There may have been some consideration given if the de facto husband’s position was one of clarity, but it is not.  No evidence is presented as to an application or applications he has made to find alternate accommodation.  No draft tenancy agreement is available which would satisfy the Court that, but for the financial arrangements necessary in respect of the de facto husband taking up alternate accommodation, he is able to move.  And, in the absence of any assistance by the de facto husband, the reasonable assumption of the Court is that, in the same way that the de facto husband has prevaricated and obstructed the resolution of this matter and the implementation of the orders made by his Honour Justice Strickland now almost 12 months ago, so the same would continue.

22. The matter is exacerbated not just because there is a continuing dispute and conflict between the parties to these proceedings but because there now involves the interests of arms-length third parties, namely, the purchaser to the U Street property.  Signing of the contract as between the parties and the purchasers represents a transfer of the legal interest in the property to a third party.  There may well be a residual equitable interest but there are now other persons involved, and it cannot be that the orders made by his Honour can be thwarted for now and what will be a period of more than 12 months, because of the intransience exhibited by the de facto husband.

23. In those circumstances, I propose to make an order in terms of paragraph 5 of the wife’s Application in a Case with the amendment that would give the de facto husband until 4.00 pm on 20 January 2020 to vacate the premises.

24. I am unaware as to the mechanics of how the warrant of possession would thereafter be executed.  It may be that it would be executed sooner rather than later or it may be that there will be a delay.  That is, of course, a matter for the de facto wife’s solicitors and for the de facto husband as to how that happens but it seems to me the matter has now reached a point where a resolution is required for the benefit of all parties, including the de facto husband.  I propose to make such an order.

25. The next matter however, is the financial circumstances of the de facto husband, which may assist in his giving up vacant possession either voluntarily prior to the involvement of the authorities or upon, if necessary – regrettable as it might be – upon the involvement of the authorities who would forcibly remove the de facto husband from the property. 

26. Proposed order 6 of the de facto wife’s Application in a Case refers to the manner in which a sum of $5,000, returned to Withnalls Lawyers by Ms SS on 21 May 2019 should be dealt with.  I propose to not make the order that the de facto wife seeks but rather, to order that forthwith, those monies, that is, the sum of $5,000 be forwarded to the de facto husband.  That will at least give him some financial opportunity to, if necessary, pay for storage for his household belongings and effects and to assist in the payment of any bond. 

27. The sale of the property then brings to consideration how the proceeds of sale are to be dealt with.  In relation to that aspect, I have been assisted by the preparation of a submission document on behalf of the de facto wife which provides a helpful summary, not just of the applications that are before the Court but also the manner in which the proceeds of sale should be dealt with. 

28. At this stage, I now need to acknowledge and refer to the Application in a Case filed by Mr IJ on 15 January 2020.  The application is supported by an affidavit of the same date and it provides some history to the involvement by Mr IJ with the husband between August 2012 and June 2015.  Put simply, costs were incurred by Mr IJ in the representation of the de facto husband. 

29. It is to be noted that at 11.46 am the de facto husband left the courtroom with no indication that he proposes to return. 

30. The de facto husband did not pay the fees of Mr IJ and a Ms KL was appointed by the Northern Territory Law Society to conduct a costs assessment.  That was completed in July 2017 and the amount of $153,383.38, inclusive of GST, became the cost assessment.  That amount remained due and owing to Mr IJ.  That costs assessment was registered as an order of the Darwin Local Court later in July and in, August 2017, a warrant for seizure and sale was issued seeking the payment of that sum together with interest and fees accumulating.

31. A warrant of seizure and sale was registered against the properties at U Street Suburb V and I Street, Suburb K.  Whilst there have been some further considerations given as to the costs and the appropriateness of the costs, ultimately, a review was further completed and that has resulted in the total amount owing to Mr IJ’s firm, as at 13 January 2020, of $188,598.28. 

32. Whilst in the ordinary course, particularly in circumstances where the substantive proceedings are long concluded and what is now being undertaken is the resolution and enforcement of the terms and conditions of the orders, I would be less interested in seeking to assist the enforcement of a liability in respect of a third party.  That is not to in any way derogate from the conduct of Mr IJ or, indeed, in respect of the quantum of the costs.  I am entirely satisfied that those issues have been the subject of comprehensive resolution, and indeed, judicial determination. 

33. The issue of course, is the extent to which this Court should get involved in what might be considered an enforcement application by a third party, and not in circumstances where the issues are necessary to be determined for the final resolution of the proceedings.  This case however, is different and the substantial difference is obvious. 

34. At 11.49 am the de facto husband re-entered the courtroom.  He now resumes his place in the gallery, not at the bar table. 

35. The proceedings now need to be resolved.  The wife is entitled to receive the fruits of the litigation as determined by his Honour Justice Strickland on 28 November 2018.  That cannot be done unless there is a resolution to some aspects of the dispute between the husband and Mr IJ.  Unless Mr IJ removes or assists in the sale of the U Street property, then the sale can’t proceed, the settlement can’t proceed and the third party purchasers will also continue to be disadvantaged, with the possibility of loss being incurred which will again be another aspect that might befall the parties.

36. By way of a convenient summary, it is anticipated that from the sale of the property, following the payment out of costs, charges and the MM Bank Business Maximiser mortgage, the net proceeds will be $726,212.73 or thereabouts.  That amount is obviously dependent upon the settlement date.  The payment to the de facto wife pursuant to order 10(g)(iii) of the orders made 28 November 2018 is $361,234 and that would see, under 10(g)(iv), the sum of $364,178.73 payable to the de facto husband.  The difficulty for the de facto husband though is there are extant orders for costs, in particular, an order for indemnity costs made 14 March 2019 that requires the de facto husband to pay the de facto wife $150,061,61 that is, whilst the larger of the items, by no means the only item.

37. There are costs orders payable pursuant to other orders made on 14 March 2019. There is the sum of $30,000, being the costs order for the unsuccessful appeal by the de facto husband on the second round of his appeal proceedings against the orders of Justice Strickland and there is $30,600 that is outstanding pursuant to an earlier costs order made by Judge Harland.  In any event, when those costs orders together with interest are calculated, there is then the outstanding amount of IJ Lawyers of $188,598.28.  That totals $510,794 and demonstrably the amount from which those monies can be satisfied, being the amount of $364,978.73, falls short by a substantial sum.

1. What is then proposed to enable this matter to proceed, namely, to enable Mr IJ to give his permission if you like, or consent or to assist in the sale of the U Street property to occur, is that from the net proceeds of sale that would be payable to the de facto husband, Mr IJ receive $100,000 and thereafter, that subject to a further sum of $10,000 proposed to be paid to the de facto husband, the de facto wife receive $268,734.  That of course, does not resolve all the outstanding costs and then there is unfortunately the further focus on the I Street property that is the subject of orders and also application by Mr IJ.

2. I can do nothing in respect of the I Street property at this stage.  There is no application in relation to that property in terms of an order or orders sought that would set out the terms and conditions upon which that property would be sold and that, of course, is a matter – I suspect now – for another day.  But I am satisfied that the orders being sought by the de facto wife and supported by Mr IJ are orders that are mechanical by their nature rather than substantive.  They do of course not resolve all outstanding issues between the parties in respect of matters relating to any outstanding costs between the de facto husband and the de facto wife.  Nor indeed, do they resolve the outstanding issue of the transfer of the I Street property to the de facto husband in circumstances where he would then refinance.  But again, as I have said, that will have to now be the subject of a further application and I am not satisfied that there is sufficient, or any, information before me which will enable me to deal with the I Street property as foreshadowed by the de facto wife’s solicitor in paragraphs 11 to 14 of the submission document. 

3. For those reasons then, I make the orders as appear at the commencement of these reasons.

4. By reference to the de facto wife’s Application in a Case of 13 December 2019, there remains outstanding proposed orders 4 and 8.  Proposed order 4 relates to the further costs incurred by the de facto wife consequent upon the application made to the Registrar pursuant to section 106A of the Family Law Act 1975 (Cth) in respect of the appointment of NN Real Estate, the execution of the contract of sale and the application for compliance with orders 4 and 6 that had been made. There is then also the further application for costs made by the de facto wife against the de facto husband in respect of this Application in a Case.

5. In circumstances where I am satisfied that, consequent upon the sale of the U Street property, there would be no further funds available to satisfy an order if I were to make it in relation to proposed orders 4 and 8 of the application, it seems to me that the proper course of action is to reserve the question of those costs, dismiss this Application in a Case and the de facto wife is then in the position of having the option of doing one of two things.  If the de facto husband resolves issues in respect of the transfer of the I Street property, namely, that he discharges or refinances the property thereby releasing the de facto wife from any further liability, then that will resolve that aspect.  But, there are still likely to be some further residual costs, both in respect of the outstanding amount to Withnalls Lawyers but also potentially in respect of Mr IJ. 

6. So the position is that, if both matters are resolved, there will need to be either a separate application in respect of the outstanding costs or in any application relating to the sale of the I Street property consequent upon any further default by the de facto husband, then those matters can be dealt with as part of that application.

7. For those reasons then, I make the following further orders.

I certify that the preceding forty-four (44) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 20 January 2020.

Associate: 

Date:  23 March 2020