KENT & MARSHALL

[2011] FamCA 232

FAMILY COURT OF AUSTRALIA

KENT & MARSHALL [2011] FamCA 232

FAMILY LAW – PROPERTY SETTLEMENT – Where wife seeks an interim distribution from the future sale of the former matrimonial home – Where no contract for sale currently exists – Wife seeks the appointment of a trustee for sale of the former matrimonial home – Where the husband resides overseas – Trustee for sale appointed – Husband to continue to make mortgage repayments – Wife to withdraw caveat once the trustee has been appointed – Upon settlement, wife to receive $75,000 – Costs reserved to trial judge

APPLICANT: Ms Kent

RESPONDENT: Mr Marshall

FILE NUMBER: BRC 9692 of 2010

DATE DELIVERED: 28 March 2011

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Barry J

HEARING DATE: 28 March 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Green of Counsel appearing for the Applicant Wife

SOLICITOR FOR THE APPLICANT: Little Lawyers

SOLICITOR FOR THE RESPONDENT: Mr Martin, Solicitor of David K Lawyers appearing for the Respondent Husband

Orders

IT IS ORDERED:

1. That the Husband, his agents and servants be restrained from dealing with the former matrimonial home at B Street, Brisbane Suburb 1, in the State of Queensland, and more particularly described as Lot … on Survey Plan …, title reference … (property) otherwise than in accordance with these Orders.

2. That the Husband shall continue to pay all amounts due under the mortgage number … held by the HSBC Bank Australia Limited and secured on the property (the mortgage) as those amounts fall due from time to time until settlement of any sale of the property and continue to maintain full homeowners insurance on the property and pay all premiums as and when they fall due and provide evidence of same to the Wife and the Trustee for Sale appointed under these Orders.

3. That the Wife do all things and sign all documents necessary to withdraw the Caveat number … registered against the property within seven (7) days of the Trustee for Sale being appointed pursuant to paragraph (4) hereof.

4. Mr S (hereafter “the Trustee”) be appointed pursuant to section 80(1)(e) and/or section 80(1)(k) of the Family Law Act 1975 as Trustee for Sale of the property and that the said property vest in the Trustee for the purposes of sale.

5. The Trustee is empowered to take possession of the property and require vacant possession in order to effect a sale of the said property.

6. Without limiting the Trustee’s powers under the terms of this Order, the Trustee is empowered to do all things, including signing all documents necessary to effect a sale of the said property including but not limited to:

   a.        determining whether the sale be by private treaty or auction;

   b.determining the Real Estate Agent or Agents with whom to list the property; and

   c.determining the listing price from time to time, or the reserve price in the event of sale by auction.

7. The Husband and the Wife be at liberty to purchase the property from the Trustee whether at auction or otherwise, and that in the event that the Trustee sells the property to either, it be a term of any sale contract for a sale by private treaty or conditions of auction that the successful party shall not be required to pay a deposit on the contract of sale.

8. Upon completion of the settlement of a sale, the Trustee shall file and serve an Affidavit giving an account to the Court of what has occurred in relation to the sale of the property, including the costs associated with that sale.

9. The Trustee and the parties have liberty to apply to the Court for the making of any orders or the giving of any directions in relation to the trust created by this Order.

10. On settlement of the sale of the property, the net proceeds of sale, after normal adjustments at settlement as defined in the standard REIQ contract of sale be paid in the following manner and priority:

    a.the amount required to discharge the mortgage registered mortgage number … held by the HSBC Bank Australia Limited (the mortgage);

    b.all costs and expenses of sale including legal costs and disbursements, agent’s commission and advertising fees, and auction expenses (including repayment of any such expenses as have been paid by either or both of the parties written agreement or incurred by the Trustee);

    c.the amounts required to pay or adjust all municipal and water rates outstanding with respect to the Real Property;

    d.        an amount sufficient to pay the Trustee his reasonable costs and      disbursements;

    e.        payment to the Wife of an amount of $75,000.00; and

    f.        the balance to be held in the parties’ joint names in the trust account of      the Trustee pending further Order or written agreement of the parties.

11. That pursuant to section 117 of the Family Law Act 1975, the costs of the Wife of and incidental to this application be reserved to the trial Judge.

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

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 9692  of 2010

Ms Kent

Applicant

And

Mr Marshall

Respondent

REASONS FOR JUDGMENT

1. The applicant wife filed an application in a case seeking numerous orders covering some 23 paragraphs.  In summary, those orders seek a restraint on the respondent husband from dealing with the former matrimonial home, situated at Brisbane Suburb 1.  On 15 February 2011, the husband had entered into a contract for the sale of this property in an amount of $750,000.  The wife sought an order that the parties do all things to allow the contract to proceed to completion.  It was a conditional contract and the buyers ultimately terminated the contract.  The husband is the sole registered proprietor of the property.  No further contract has been entered into.

2. There was an order sought that the husband continue to pay the mortgage and an order relating to the deposit held in relation to the property.  By paragraphs five through to 14 specific directions were sought in relation to the conduct of the sale of the property, including the withdrawal of a particular caveat that the wife has lodged over the subject property.  In relation to paragraphs 15 to 20 there are various orders sought in the event the property remains unsold by private treaty and has to go to auction.  The proceeds of sale are to be disbursed in paying the costs of the sale, the discharge of the mortgage to the HSBC Bank, adjustments for rates and such like, and a payment of $75,000 to the wife and the balance to be held in the trust account of the applicant wife’s solicitors.  And there is a request for a registrar’s clause and an order for costs.  

RECORDED  :  NOT TRANSCRIBED

1. There is no response document at this point in time filed in relation to the original application in a case filed on 1 March 2011.  What has been handed up without objection are final orders sought by the respondent husband, which appear to be appended to a document faxed on 23 March 2011.  In that document the husband seeks final orders for the sale of the property, sale price of $750,000, and various other provisions.  Paragraph 3 is somewhat problematic I have to say, which is in the terms that in the event the wife receives any written offers in the form of a contract for the purchase of the real property, the wife shall forward a copy of such offer to the husband.

2. Simultaneously, with the submission of the offer to the husband, the wife will advise the husband whether the wife is of the opinion that the offer should be accepted.  Any offer within five per cent of the listed price will be deemed as automatically acceptable to both parties.  The proposal is the applicant and respondent will act reasonably in the interest of realising the higher sale price for the real property.

3. I note the observations and submissions made by counsel for the wife in relation to the terms of paragraph 3 and I accept the force of those submissions. In any contract for sale there can be numerous conditions imposed, and to have a blanket court order that, if it is within five per cent of the mark it will be accepted, regardless of what the other terms of the contract seems to me to be exposing the vendors to an unrealistic and an unacceptable risk.

4. There are various other provisions, but suffice to say, for present purposes in the order sought by the husband he provides that the mortgage be discharged, the costs and expenses of sale and the balance be held in the trust account of his solicitors with no distribution to the wife.  The parties are agreed the property should be sold, so essentially what I have to decide today is by what mechanism.  The second question is, in the event that it is sold, should there be a distribution to the wife as sought by her, and if so, on what terms and subject to what conditions.  The matter is somewhat further complicated by the fact that on Friday last an amended application in a case was filed and served. 

5. I accept that the husband is employed by an international company and is overseas, and this may have caused some difficulties, although I expect, with modern technology people are readily available by telephone, email, text message, and a variety of other means of communication, including fax.  I note that the husband is said to be residing in the Middle East.  The amended application in a case is not greatly dissimilar in terms, other than there is a restraint on the husband dealing with the former matrimonial home, the requirement the husband continue to pay the mortgage and provision for the removal of the caveat by the wife.  Importantly for present purposes, the wife, for the first time proposes that there be appointed a solicitor trustee for sale, and the person nominated is Mr S.  Mr S has filed an affidavit indicating his hourly charges, his charges for other services, and his preparedness to accept an appointment by the court.  The draft orders certainly give the trustee wide powers to ensure the property is sold.  The draft orders provide for the distribution to the wife as previously sought.

6. There is a considerable factual dispute between the parties as to what exactly the pool of assets consist of, and consequently what is the value of the property pool.  The wife contends the net assets are in the order of $1.4 million, the husband says a very modest $100,000.

7. No superannuation is disclosed by the husband in that documentation or in those calculations.  One of the major areas of dispute is the existence of real estate owned either jointly or individually by the parties in Southeast Asia.  The only asset of any significance the husband is prepared to recognise is the property at Brisbane Suburb 1, and as I have noted, there has been a previous contract signed for $750,000.  One assumes that that is a ball park figure of what the property would fetch in the current market.  The property itself is vacant.  There are still mortgage instalments to be paid.  I did not have a chance to look it up in the wife’s initiating material.  Do you know?  I expect they are not insignificant.  I proceed on the basis that the mortgage liability is being incurred, and there is no offset in rental income from the property.  The property is likely to deteriorate in value if it remains unoccupied for any length of time.

8. At first blush it would seem that the applicant is proposing what would seem like a Rolls Royce method of selling the property.  There are numerous costs involved in selling properties, the largest component normally being the real estate agent’s commission.  There are legal fees and other expenses on sale.  Here the wife is proposing that the solicitor have the conduct of the sale and his charges are $400 an hour.  These costs will be in addition to the usual costs of sale.

9. Other proposals which were canvassed in the course of submissions include leaving it to the husband with his full powers as registered proprietor, awarding such powers to the wife to sell expeditiously, or appointing a real estate agent with wide powers to dispose of the property.  There are difficulties inherent in each proposal.  With the solicitor as trustee, it is an expensive process and it may whittle away a relatively modest equity estimated somewhere between $100,000 and $200,000.  I am sure an experienced solicitor with the integrity of Mr S would be only too conscious of the limited equity and would act appropriately in that regard.  There is no challenge to the fact that Mr S has done this on many previous occasions, and no doubt would act expeditiously and competently once he has been so empowered by the court.

10. In objecting to the husband being given the power to sell the property, I accept that he has a vested interest in selling the property, and that he is the sole proprietor.  There are mortgage payments to be made, and there are suggestions it is a falling market.  Balanced against that is the criticism of the husband in that he has acted unilaterally and has not consulted the wife adequately in relation to various aspects of the previous failed contract.  I do not make that as a final determination of fact, I simply note that that is an assertion by the wife and it has to be taken at face value, that that evidence may, in the fullness of time, be found to be accurate. 

11. However, in the written submissions, at paragraph 8, counsel for the wife submits:

    “…

    (i)The husband has demonstrated his desire to act unilaterally in both financial and parenting matters.

    (ii)The husband is clearly not well disposed to the wife and “blames” her for the demise of their marriage.  It cannot be assumed that the husband will act in a matter (I think that might be manner) which will serve the interests of both parties and may act in a manner which doesn’t serve either of their financial interests, as part of reinforcing to the wife the consequences of her actions as he sees them;

    (iii) The husband’s actions in attempting the sale of the property to date have not proved successful.  While there is perhaps insufficient evidence to make any conclusion that the husband desired this result, his actions in granting extensions for conditions such as pest inspections have had the result of tying up the property…longer than was necessary at a time when the husband has twice intimidated (sic) he may stop paying the mortgage and indicated he will approach the mortgagee about payments.”

    That is a reference to the husband seeking a three-month honeymoon from the mortgagee.

    “(iv)Should the husband remain as registered proprietor, he will required (sic) to sign a number of documents and be readily contactable to provide instructions as the sale proceeds.  Insofar as the experience in these proceedings is any guide, there is a real concern that the husband will not be able to provide instructions at critical times which could endanger any genuine sale. …”

12. Counsel draws attention to particular items highlighted in yellow in the chronology which has been produced.  I accept the accuracy and the force of the submissions in those terms.  So far as the appointment of the wife is concerned, the difficulty in appointing her is:

    (a) she doesn’t seek it; and

    (b) she is concerned that she will be blamed in the event anything goes wrong in any fashion with the sale.

13. I accept the force of that position.  It was canvassed in submissions whether a real-estate agent could be appropriately appointed at far lesser cost. 

14. If a real-estate agent is given the power of sale in a personal capacity as well as acting as real-estate agent on the sale, he would have a real conflict of interest in that he would have the ability to sell for the lowest price as long as he or she gets the commission.  In the event that it was an independent real-estate agent there is no evidence before the court what type of charges such an agent would render, and nobody has put forward any names as to who would be prepared to act.  So in relation to the first issue as to how the property is to be sold, it is common ground that it be sold.  The conclusion that I have arrived is the best method is the appointment of Mr S as solicitor-trustee with wide powers of sale.

15. As I have previously indicated, Mr S is well known as a respected practitioner and he could be relied on to make decisions based on his experience.  I am absolutely confident he would be totally neutral in acting in any capacity in the sale.  So I will accede to the application to appoint Mr S with the wide powers of sale.  Now, once sold, the issue arises as to whether there should be any distribution to the wife.  She seeks a distribution of $75,000.  The husband opposes that.  The wife says that she has a very modest income compared to the income of the husband, which is said to be about $145,000 a year.  I would comment that that income would appear to be on the low side compared to salaries of others in his vocation that I have seen in the past.

16. The wife’s vehicle was removed, presumably by someone acting on the husband’s instructions.  I note that some of the money required would be used in payment of legal fees.  There is no challenge to the quantum of the distribution sought, save in the sense that it may exceed the entitlement of the wife to property settlement, and I can canvas that aspect briefly.  I note that the legal representative for the husband submitted that once settlement was completed a distribution to the wife in the amount sought was not assented to but, “I don’t have a whole lot to say.”  Insofar as the amount of $75,000 exceeding the wife’s overall entitlement, the husband – this is reliant on the proposition that the total assets are only $100,000.

17. I find such a future scenario highly unlikely.  However, even if that was the case I accept the force of the submission by the wife’s counsel that if the assets are only $100,000, where the husband earns $145,000 and the wife is earning a very modest amount indeed, it would not be unreasonable to expect that she may well receive 75 per cent of the available assets.  She sought – I think she seeks a 70 per cent distribution on the basis that she would have the care of the children in the future.  All of this is speculative until we know all the available assets, what is the determination of children’s issues and such like.  However, I am prepared to take the risk that $75,000 would be only a share or a portion of the amount the wife is likely to receive in the ultimate determination of this matter.

18. I note in the submissions reference was made to the 2009 decision of the Full Court in the matter of Strahan v Strahan [2009] FamCAFC 166, decision of the Full Court of Boland, Thackray and O’Ryan JJ. In the majority judgment of Boland and O’Ryan JJ, it was held when reviewing the authorities on this question:

    “118.We agree with the submissions of senior counsel for the Wife in relation to the approach to be taken to the hearing of an application for an interim property settlement order.  There are two stages to the hearing of such an application where the power is to be exercised pursuant to s 80(1)(h) of the Act.  This is recognised by the fact that although the power under s 79 should ordinarily be exercised on a once only basis, “circumstances may arise before there can be a final hearing” where the power is exercised.  Thus the first step is to resolve whether to exercise the power before a final hearing and if it is resolved to do so then the second step involves the exercise of that power.”

19. Paragraph 132 of the judgment their Honours observed:

    “132.In relation to the first stage, in our view, when considering whether to exercise the power under s 79 and s 80(1)(h) of the Act to make an interim property order the “overarching consideration” is the interests of justice.  It is not necessary to establish compelling circumstances.  All that is required is that in the circumstances it is appropriate to exercise the power.  In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.”

1. I bear in mind the fact that the assets appear to be scattered in that there are claims of property in Southeast Asia, there may be assets in the Middle East, it is not known.  The only asset in Australia appears to be the property at Brisbane Suburb 1, with an equity of somewhere between $100,000 and $200,000 seemingly.  I am satisfied the wife would have need of a vehicle, particularly where she is now working.  The amount claimed for legal fees to date is relatively modest.  There is no justification for her being supported by the taxpayer, as has been to date, and would be the case unless she was pursuing further work efforts.  So regardless of whether the net assets are $1.5 million as the wife says, or the far more modest figure claimed by the husband, I view the amount of $75,000 distribution from the sale of proceeds as perfectly reasonable and I will so order.  In the circumstances orders will issue in terms of the amended application.  Anything further?

RECORDED  :  NOT TRANSCRIBED

1. I am going to reserve that to the trial judge, I think that is far more appropriate.  It is too cloudy, the husband is overseas and there was a late change of tack in the presentation of your material.  We will see what happens, so I do not need to hear from you, Mr Martin, on that issue.

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Barry delivered on 28 March 2011.

Associate: 

Date:  28 March 2011