KUMARA & GAMAGE

[2020] FCCA 3289

FEDERAL CIRCUIT COURT OF AUSTRALIA

KUMARA & GAMAGE [2020] FCCA 3289

Catchwords:
FAMILY LAW – Application for property settlement – interlocutory order for sale of property – mortgage in arrears – equity at current rate will be wholly depleted in seven or eight months – foreclosure application discontinued due to COVID-19 pandemic – application for stay of order for sale of property – application dismissed.

Applicant: MS KUMARA

Respondent: MR GAMAGE

File Number: MLC 7657 of 2020

Judgment of: Judge Riley

Hearing date: 26 November 2020

Date of Last Submission: 26 November 2020

Delivered at: Melbourne

Delivered on: 26 November 2020

REPRESENTATION

Advocate for the Applicant: Ms Pathmaraj

Solicitors for the Applicant: Hartleys Lawyers

Advocate for the Respondent: In person

Solicitors for the Respondent: None

ORDERS

1. The respondent’s application for a stay of the orders made on 6 November 2020 be dismissed.

2. The parties’ costs of today be reserved.

NOTATIONS

(A)If in any proceedings there are allegations of family violence and the provisions of s.102NA of the Family Law Act 1975 apply (see attached Family Violence Information Sheet), any unrepresented party will not be permitted to personally cross-examine the other party/parties.

(B)Affected unrepresented parties may apply to the Commonwealth family Violence and Cross-Examination of Parties Scheme (“the Scheme) for representation, but any such application must be made at least 12 weeks prior to the final hearing.

(C)Further information about the legislation and the Scheme can be found at Part 4 of the attached Family Violence Information Sheet.

(D)If s.102NA of the Family Law Act 1975 applies and a party becomes unrepresented after trial directions have been made, that party is required to promptly advise the court.

(E)Section 121 of the Family Law Act 1975 provides that it is an offence punishable by imprisonment for up to one year to publish or disseminate to the public any account of family law proceedings which identifies the parties, witnesses or other people concerned with the proceedings, unless specifically authorised by the court.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 7657 of 2020

MS KUMARA

Applicant

And

MR GAMAGE

Respondent

REASONS FOR JUDGMENT

(revised from the transcript)

1. This is an application for a stay in respect of interlocutory orders that were previously made for the sale of a property in Suburb A. Those orders were made on the application of the wife and were resisted by the husband, who was represented at the time the orders were made.

2. Since the orders were made, the husband has filed an application for leave to appeal against those orders and has become unrepresented. He now comes to this court seeking a stay of the orders for the sale of the Suburb A property.

3. The property in question on the husband’s figures is worth $970,000. It currently has a mortgage outstanding of about $933,000, which leaves an equity of about $37,000. The mortgage includes about $75,000 in arrears. Mortgage repayments have not been made for a long time and the amount outstanding is increasing at the rate of about $5,000 per month.

4. The mortgagee, B Bank, instituted proceedings in the County Court for foreclosure. However, those proceedings were discontinued earlier this year due to restrictions connected with the COVID-19 pandemic.

5. Clearly, the pandemic was not the reason that the mortgage fell into arrears. The arrears had been accruing for some time prior to the commencement of the pandemic.   However, the general pandemic rules relating to foreclosure meant that foreclosure in this case was not permitted.

6. As mentioned, the arrears are increasing at the rate of $5,000 per month. On the husband’s case as to the value of the property, which is $970,000, the equity in the property will have disappeared entirely in about seven or eight months.

7. There is a substantial dispute between the parties about whether the wife has assets in Sri Lanka. The husband says that the wife has a number of properties in Sri Lanka. The wife concedes that she has a beneficial interest in a property which is subject to a life interest. She says that her interest is worth $220,000.  Otherwise, the wife says that she has no assets in Sri Lanka.

8. The wife says that the matrimonial assets include a number of vehicles which perhaps add up to about $100,000 and there are a few other items that perhaps add up to about another $80,000.

9. The wife has superannuation worth about $36,000 and the husband seems to have no superannuation.

10. As far as liabilities are concerned, apart from the mortgage on the Suburb A property, there is another loan of about $45,000 or $50,000.

11. The husband said that the wife has a lot of other properties in Sri Lanka and that her family is extremely wealthy. The husband has not proved that or, indeed, provided any evidence in support of it. The wife has provided titles in relation to the alleged property which do not show that she owns them.

12. The husband said that he has filed massive amounts of evidence. He has not filed it on the Commonwealth Courts Portal (“the portal”). He has sent it by email to my associate via a Google Drive or some such thing which my associate has been unable to open. The husband has been told repeatedly that he needs to file the documents on the portal. He was also invited to simply send by email his affidavits to my associate. That does not appear to have happened.

13. One way or another, the basic position is that, if the mortgage repayments on the Suburb A property are not paid as they fall due, all of the equity in the Suburb A property will be dissipated within seven or eight months.

14. Looking at what the wife might be able to recover as her share of the joint assets, it is not entirely clear at this point what the wife’s claim would be. However, there are two children of the relationship, both of whom are living with her. It is probably fair to assume that she would get at least 60% of the pool.

15. If all of the equity in the Suburb A property is consumed by the failure to pay the mortgage, there is a reasonable prospect that the wife will be unable to recover her proper entitlement from the matrimonial pool. That is particularly the case because, as is well known, when banks foreclose on real estate, they recover not only their arrears, but also a substantial amount of money for their costs involved in achieving the foreclosure.  While the foreclosure is presently in abeyance, it could be revived in the near future.

16. When considering whether to grant a stay, there are some well-known principles. The first is that a successful party in litigation is ordinarily entitled to the fruits of their judgment. The second is that a stay is discretionary and is only ordered in special circumstances. The third is that a stay is often appropriate where it is necessary to preserve the subject matter of the litigation.

17. In the present case, the subject matter concerned is the house in Suburb A. The husband says that it is his principal place of residence and he wishes to continue to live in it.  However, he has not lived in it since about February this year. He has been in Sri Lanka. He is an Australian citizen and has a right to return to Australia. However, he has not availed himself of that right. He says that he would have to go into quarantine for two weeks if he were to return. That is so. However, that circumstance seems to me to be neither here nor there. He also said that he would have to pay for quarantine. I am not aware that that is the case.  However, even if the husband did have to pay $3,000 for quarantine, as he claims, in the overall scheme of things, that would not be an excessive burden.

18. The husband would prefer to live in the house when he returns and I take that into account. However, the reality is that he has not indicated in any way that he is now or will in the foreseeable future be able to meet the existing arrears or meet the regular monthly payments on the house.

19. What that means is that, as I have said, the equity in the house will have completely disappeared in about seven or eight months, on the husband’s own figures. The wife is very concerned not only that her just and equitable share of the asset pool will be dissipated, but also that her credit rating will be seriously damaged if the bank does proceed with foreclosure.

20. It seems to me that, in this case, the principle that a stay in an appropriate case will be granted to preserve the subject matter of the litigation does not really apply. Although, the house itself will be sold, the proceeds of sale will be preserved on trust pending the resolution of the litigation.

21. If the property is sold, the husband will not be able to live in the particular house that he claims to want to live in.  However, the commercial value, such as there is, of that property will be preserved. In these circumstances, it is not entirely correct to say that, if the stay is not granted, the subject matter of the litigation will not be preserved.

22. The husband says that he wants to live in the house, but he has not lived in it since about February this year. He could have returned to Australia, but has not.  He has a vague plan to return to Australia at an unspecified time in the future.  In these circumstances, the court has significant doubt about the genuineness of the husband’s claim that he wants to live in the house. It is presently vacant. The wife is living elsewhere and is not in a position to pay the mortgage on the Suburb A property. It is not viable for matters in relation to the property to continue as they are.

23. I am mindful that the husband has not lodged an appeal as such. He has lodged an application for leave to appeal, in circumstances where the order that he wishes to appeal from is an interlocutory order.  He does not have an appeal as of right. For the application to proceed, the husband needs to file an appeal book index, I am told, by 17 December 2020. If he does not do that, the application for leave will be deemed abandoned.

24. I am also conscious that, if it is considered appropriate, the Family Court could conduct an expedited hearing to consider the question of leave. Indeed, if there is appropriate evidence put before the court, the Family Court could also grant a stay of the orders that were previously made for the sale of the property.

25. All in all, it seems to me that it is not appropriate at this stage to stay the orders that were previously made for the sale of the property and I do not grant that order.

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

Associate: 

Date: 4 December 2020