KERRY & KERRY

[2020] FamCA 1139

FAMILY COURT OF AUSTRALIA

KERRY & KERRY [2020] FamCA 1139

FAMILY LAW – INTERIM INJUNCTION – where Court has broad powers to grant injunctions in relation to the property of the parties or either of them including an injunction to preserve property – where an injunction is sought must be “proper” which means that it is reasonable and just in the circumstances of the case – where the Court must be satisfied that it is just or convenient to grant an injunction.

FAMILY LAW – INTERIM PROPERTY – where wife seeks sale of home before final alteration of property interests.

FAMILY LAW – COSTS – where costs are likely to be disproportionately high have regard to property that is to be altered as between the parties.

Family Law Act 1975 (Cth)

APPLICANT: Ms Kerry

RESPONDENT: Mr Kerry

INDEPENDENT CHILDREN’S LAWYER: Ms Lonergan

FILE NUMBER: MLC 4440 of 2020

DATE DELIVERED: 9 November 2020

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Bennett J

HEARING DATE: 9 November 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Lane

SOLICITOR FOR THE APPLICANT: Taussig Cherrie Fildes

COUNSEL FOR THE RESPONDENT: Ms Dellidis

SOLICITOR FOR THE RESPONDENT: Westminster Lawyers Pty Ltd

COUNSEL FOR THE INDEPENDENT CHILDREN’S LAWYER: Not Applicable

SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER: Victoria Legal Aid

Orders

1. The Husband and the Wife forthwith do all acts and things and sign all such documents as may be required to list the real property situate at and known as P Street Suburb Q in the State of Victoria, being the whole of the land more particularly described in Certificate of Title Volume … Folio … (P Street) for sale on the following terms and conditions: -

   1.1P Street be listed for sale with Mr B of H Real Estate (Selling Agent);

   1.2P Street be listed for sale on or around December 2020, unless otherwise by the selling agent;

   1.3if the Selling Agent recommends cleaning, gardening, removal of furniture and/or property styling for P Street in preparation for the sale, the Husband and the Wife follow such recommendations and cause all such recommended preparations to be made upon agreeing to same in writing, and the costs of such agreed preparations be paid from the parties' ANZ account, number …48;

   1.4the method of sale be by public auction to take place on or before 12 December 2020; and

   1.5P Street be listed with a reserve price of $1,750,000, or as may otherwise be recommended by the Selling Agent and agreed in writing by the Husband and the Wife.

2. Pending the sale of P Street:

   2.1all instalments with respect to the mortgage be paid from the ANZ account, number …48, as and when they fall due;

   2.2the Husband and the Wife hold their respective interests in the property upon trust pursuant to these Orders;

   2.3neither the Husband or the Wife encumber the property without the consent in writing of the other party;

   2.4the Husband maintain the home and garden to an appropriately clean, neat, tidy and saleable state;

   2.5the Husband pay for all outgoings of P Street including rates and taxes as and when they fall due.

   2.6Subject to further or other order, the Husband have sole use and occupation of P Street.

3. If the purchaser of P Street consents to the release of the deposit monies prior to the settlement of the sale (the settlement) the balance of the deposit monies (net of all costs, commissions and expenses of the sale) be divided equally between the Husband and the Wife upon the basis that the monies received by each of them shall be on account of their respective property settlement entitlement. If there is no early release of the deposit, the parties do all acts and things necessary to borrow on the $100,000 security of the home and divide such amount equally between them by way of part property settlement.

4. Within 60 days the husband notify the wife, via their solicitors, of the household contents he is agreeable to the wife having possession of from P Street.

5. Upon settlement of the sale of P Street the proceeds be applied in the following manner and priority:

   5.1first, in payment of all costs, commissions and expenses of the sale that are outstanding;

   5.2second, to discharge the mortgage in favour of Australia and New Zealand Banking Group Ltd (the mortgage) encumbering the property;

   5.3third, to pay the funds into trust with a controlled monies account with the husband’s solicitors on behalf of the husband and the wife pending further order or agreement of this Court.

6. The wife provide to the husband within 14 days:

   A. The documents sought in the husband’s solicitor’s letter dated 14 July 2020, namely:

   a.Documents evidencing the wife’s equity in the C Partnership (The Partnership) since 2010 to FYE 2020.

   b.Documents evidencing the nature and extent of the security provided to the ANZ to support the borrowings of The Partnership of $2,289,000.

   c.Documents evidencing the debt owed by the Partnership and the wife to the J Family Trust of $1,832,193 and its origin.

   d.Documents explaining why and how The Partnership repaid $212,746 during the 2019 financial year.

   B.The documents sought in the husband’s solicitor’s letter dated 1 October 2020 and annexed at page 14 of the husband’s Affidavit filed 4 November 2020, namely:

   a.Business Choice Rewards Platinum Mastercard …43 from 14 June 2020 to date

   b.L Business Statements from 5 October 2020 to date

   c.        ANZ Home Loan Statements from 8 July 2020 to date

   d.ANZ One Statements for account ending in …48 from 14 October 2020 to date

   e. M Bank for account ending in …84/…684 from 10 June 2020 to date

   f. copy of the trust ledger from S Solicitors, the wife’s current lawyers and from Mr N solicitor.

   C. Any written Agreement(s) between the partners in relation to The Partnership.

   D.Documents evidencing the liquidation of the wife’s shareholdings since 1 October 2020 and documents evidencing the application of the sale proceeds.

7. The Conciliation conference listed for 1 December 2020 be and is hereby vacated and in lieu thereof this matter be listed to a Conciliation Conference with a Registrar on 24 February 2021 at 9.15 am.

8. Otherwise all extant interim applications be and are hereby dismissed.

9. My reasons for decision this day be transcribed and when settled placed on the Court file and a copy be provided to the parties.

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 Kerry & Kerry 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 MELBOURNE

FILE NUMBER: MLC 4440 of 2020

Ms Kerry

Applicant

And

Mr Kerry

Respondent

And

INDEPENDENT CHILDREN’S LAWYER

EX TEMPORE REASONS FOR JUDGMENT

1. This matter comes before me as competing applications in relation to the former matrimonial home, being the property at P Street, Suburb Q.  The parties separated in approximately March this year, when the wife left and went to live with her parents in regional Victoria.  The husband remained in occupation of the property.  Coincidentally, he became unemployed for some period of time and he is currently unemployed, although it is said that he has only been unemployed for approximately 90 days.

2. During that time, he has not been making direct payments of the mortgage impacting the property and in respect of which there is approximately $517,000 owing.  Those payments have been taken from an offset account established by the parties during the marriage and in which they had accumulated about $80,000 to $90,000 before the husband became redundant from his employment. Upon the husband’s redundancy, a further $80,000 was paid into the offset account.

3. The husband continues to be in occupation of the home.  It appears, in spite of the parties’ statements of financial circumstances, that interest under the mortgage affecting the home is running at about $1200 per month.  That is a matter of concession today with each party having sworn higher figures in their financial statements.

4. The wife is now entered into Airbnb accommodation with the two dependent children of the marriage and relocated their schools to a fee paying school called C School.

5. At the outset, I sought to impress upon the parties the precarious position in which today they find themselves.  The assets in which they have legal or equitable interests are:

   a)The former matrimonial home, which has an agreed approximate value for today’s purposes of $1,750,000.  I think the wife says it’s $50,000 more than that.  The mortgage is $517,000, leaving an equity of about $1,230,000. 

   b)There was $80,000 worth of shares which the wife sold last week, from the proceeds of which she seems to have devoted about $48,000 to payment of legal costs and approximately $30,000 to the acquisition of items that she required, such as office goods, white goods, beds for the children, laptops, and paying back her credit card.  There is every indication that the wife’s unilateral appropriation of funds and her expenditures will be contentious.

   c)The parties had bank accounts at the time of separation, which no doubt will be reduced to nothing by the time we get to a final hearing. 

   d)Neither party has property in any motor vehicle, the husband apparently does not have a car at the moment, the wife is driving a car owned by her parents. 

   e)The husband has $160,000 in superannuation and the wife has $76,000.  One or other of them proposes an equalisation of superannuation interests.

6. There are parallel proceedings for parenting orders currently in the Magellan List which is a judicially managed list of cases involving recent allegations of abusive behaviour in relation to children.  The parties will continue to run two streams of litigation in this Court, paying for both and duplicating hearings.  The Magellan matter is managed by the Senior Registrar, whereas the financial aspects of their proceedings may well be within the jurisdiction of a Judge in the judicial duty list and registrars from time to time

7. They have already spent a lot of money on legal fees.  In respect of these proceedings which commenced on 7 May, 2020 I am told by counsel:

   a)The wife has spent some $146,434. 

   b)The husband has spent some $49,500. 

   Not all of those funds have actually been paid, but this is an early stage in the proceedings, and that is how much the parties managed to incur.  The wife has changed legal representation.  She is in dispute with her former solicitors, S Solicitors, over costs.  The wife is now represented by Taussig Cherrie Fildes in this proceeding.  She has retained a further firm of solicitors to challenge S Solicitors’ costs.  These costs are incurred in the context of the parties’ legal and equitable interests in property being the equity in the home of about $1,230,000, disputed add backs and straightforward superannuation interest. 

8. I observe that in the six months of litigation, the parties have together incurred legal costs which equate to about 15% of their only non-superannuation asset and they are not yet within reach of a final hearing.

9. The wife now seeks an interim sale of the former matrimonial home, she says to preserve its value which has been eroded whilst the husband has been in occupation of the home and not making payments of interest under the mortgage or in reduction of principal.  The wife’s affidavit evidence states that $544 per week is the expense attributable to the mortgage. The husband’s financial statement includes $810 per week as mortgage expenditure. However, as indicated, through counsel today the parties agree that the mortgage is only $277 per week. 

10. The Court has broad powers to grant injunctions in relation to the property of the parties or either of them.  That includes an injunction to preserve property.  In order to be granted an injunction is sought must be “proper” which means that it is reasonable and just in the circumstances of the case.  In short, the Court must be satisfied that it is just or convenient to grant an injunction.

11. The wife does not want to occupy the property herself nor to retain it as part of the final alteration of property interests.

12. The husband asserts that he does not have the income to contribute to the mortgage at this time and that he can only pay instalments of interest, which he has negotiated with the mortgagor from the invested funds of the parties.  This is even though it was said in submissions on his behalf and absent any evidence whatsoever, that he has an opportunity or a resource at his disposal by his sister who lives overseas to buy out the wife’s interest in the property, and that he would pay the wife $650,000 cash by late January.

13. Otherwise, the husband seeks that the parties further borrow or take from the redraw facility $48,000 and that he receive that amount by way of partial property settlement.  He seeks a raft of discovery.  To the extent that they appear non-contentious, I will make the orders for discovery later on, and I don’t think I need to explain myself further in that respect.

14. The wife seeks that the property be sold and an equal division of any early released deposit moneys.  The deposit is likely to be 10 per cent of the value of the property and therefore the amount that was received by the husband if he received one half would be in excess of the amount that he seeks by way of a partial property settlement.  He has not said anything that would disentitle the wife to receive the other half.

15. I am satisfied that the husband is obtaining greater use than the wife in the home. He has eroded equity in the property during his unemployment.  I could order an adjustment out of the husband’s eventual entitlement interest and even some principal attributable to the time he has occupied the property.  However, it is not possible to be sure that the position of the parties can thereby be rendered fair.  In the scheme of things, I am satisfied that the balance of convenience in the current climate is in favour of a sale of the former matrimonial home providing that it can be done on a reasonably commercial basis, in that there are no  pandemic type restrictions that are more onerous than they are at the moment as to the numbers of people who can inspect the property and that the mode of sale which can include auction with a specified number of people attending augmented by others attending remotely if that is how one or other party wants to proceed.

16. So, whilst I acknowledge that there are restrictions in relation to the presentation of the property for inspection and on auction, the situation is much eased from what it was a few weeks ago.  I make these Orders on the basis that the restrictions are no more onerous than they are currently.

17. The husband’s case is that if, contrary to his application, the home has to be sold, that it be sold next year.  It seems to me that the sale can be conducted this year in which case settlement would occur this year.  The proceeds of any early release deposit can be divided equally between the parties and the parties should be required to seek an early release of the deposit.  If for some reason there is no early release deposit, the parties can take an equivalent amount each out of the mortgage.  But obviously it would be in their interest to secure an early release of the deposit.

18. So, there will be an order for the sale of the property, the parties share equally in any early release.  In the absence of any early release deposit, the parties are to do all acts and things necessary to borrow a further $100,000 against the security of the property and divide the proceeds of that loan equally.

19. The parties were at loggerheads in relation to a selection of estate agents.  The wife sought a certain estate agent, Mr D of K Company, and the husband sought Mr F of G Company.  Neither had any direct evidence of the terms and conditions of their retainer.  Notably, the husband did not deny that K Company, and Mr D, does not offer a cheaper package than is offered by the agent of the husband’s choice. 

20. I do not know how the parties’ solicitors thought I would reconcile the competition between estate agents today.  Neither put on direct evidence from the agents.  Through counsel, each party then suggested that, after today, one party prepare a list from which the other must choose.  In the scheme of things, I am satisfied that would be productive of more legal costs for each party than the difference in agents’ costs and commissions.  Ultimately, each party selected alternative estate agents and from that second tier they have managed to agree on Mr B from H Real Estate.  I will order accordingly.

21. The husband sought sole use and occupation of the home at P Street.  He sought that relief on an interim basis as an alternative to the wife’s application for an immediate sale (which I have granted).  He sought to remain in the property and swore that he has a resource available to him to allow him to do so.  That is his sister, who is overseas.  There is no evidence from her today, but for the avoidance of doubt I make it clear that the husband is able to bid at the auction when the auction occurs, and may in that sense buy out the wife’s interest in the property, although he will necessary be incurring his fair share of the auction fees and selling expenses.  In determining above that it is just and convenient for the property to be sold now, I have taken into account the husband’s entitlement to bid at the auction.

22. As between now and settlement of the sale the husband will have use and occupation of the home pending further order.  The circumstances in which I would likely reverse the husband’s entitlement to occupy the home include me being satisfied that he is obstructing the sale.  Ordinarily, one may assume that a sole use and occupation order is not necessary where the other party, here the wife, is firmly ensconced in another residence with the children.  However, the wife has engaged in conduct which included having security men attend the home and break locks on the front gate to gain access to the home to remove further chattels over the objection of the husband.  As best I recall, the husband’s solicitor described the conduct as “inflammatory”.  I consider that description to be an understatement.  The husband should have the security of an order for sole use of the property pending settlement of the sale.  I am satisfied that it is just and convenient for me to make that order.

23. I return briefly to the issue of the costs of litigation. If the wife was to receive, say, 55% of the potentially achievable equity in the home, her legal costs to date would account for about 20% of her entitlement, without allowance for the costs she will incur in readying the case for trial, replete with add back issues, and being represented for three or so days of hearing. This is not a difficult case on the evidence before me. There are only minor issues in relation to contribution and those issues might not even be contentious. It appears that the wife had a modest sum of about $16,300 when the parties commenced their relationship which monies she put towards the deposit on a real property which became their home. The wife received a gift of shares from her father, some $5000 during the marriage. She has had what appears to be some involvement in her father’s trust, but that is as an object of the trust and I did not hear anything about a material recurrent benefit such as could be characterised as a financial resource or sound under s 75(2) of the Family Law Act 1975 (“the Act”).  The wife is self-employed.  If the husband was employed he would be earning about $120,000 or $130,000 thousand dollars a year, but I don’t know whether he still maintains that income earning capacity considering the impact that the end of the marriage has had upon him emotionally, having lost the marriage and at this point not seeing his children at all.  The children have refused to see him and there is no communication or face to face time.

1. The proportional entitlement referred to by me is purely hypothetical.  I am not indicating that is what I would order as the wife’s entitlement on the facts before me.  However, I do seek to have the parties understand that the value of the property to be divided between them will remain pretty constant whereas their legal costs will double or triple from what they are now if this matter proceeds to a final hearing on issues of property and parenting.  I am not suggesting that the lawyers will over-charge the parties but that the parties need to take advice on the legal costs which he/she will incur in these proceedings and to then calculate whether he/she would be in a better financial situation to settle now than he/she will be by continuing with the litigation and incurring further, very significant, legal costs in doing so.

2. The real question is not how much better or worse will the wife’s award be than the $650,000 now offered by the husband but how much of her entitlement will she be left with after paying her legal costs.  In the final analysis, neither party may be able to afford to lose, or even win, this litigation.   

I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Bennett delivered on 9 November 2020

Associate:   

Date:  30 November 2020