Lintott Langer and Karathanassisklements

[2017] FCCA 3313

FEDERAL CIRCUIT COURT OF AUSTRALIA

LINTOTT LANGER & KARATHANASSISKLEMENTS [2017] FCCA 3313

Catchwords:
FAMILY LAW – Property proceedings – interim application – parties to enter into a loan application – sale of property if loan application refused – s.106A order.

Legislation:

Family Law Act 1975 (Cth), Pt VIII

Cases cited:

Chapman & Chapman (2014) FLC 93-529
Gabel & Yardley (2008) FLC 93-386
Harris & Harris (1993) FLC 92-378
Stanford & Stanford [(2012]) HCA 52; ([2012)] 247 CLR 108

Strahan & Strahan (2011) FLC 93-460

Applicant: MS LANGERCHERYL MAREE LINTOTT

Respondent: MR KLEMENTSLINDSAY GORDON KARATHANASSIS

File Number: NCC 1302 of 2017

Judgment of: Judge Middleton

Hearing date: 13 November 2017

Date of Last Submission: 13 November 2017

Delivered at: Newcastle

Delivered on: 1 December 2017

REPRESENTATION

Counsel for the Applicant: N/A

Solicitors for the Applicant: Mark Graham Solicitor

Counsel for the Respondent: N/A

Solicitors for the Respondent: Kim Monnox & Associates Solicitors

ORDERS

1. The Husband and Wife make a joint application to borrow $600,000.00 on the basis that the Property ACurry Street property is offered and accepted as security for the loan.

2. The Husband and Wife do all acts and things necessary and as reasonably required by the financial institution including signing all necessary documents to enter into a loan application listing the Property ACurry Street property as security, and to apply the loan moneys to the purchase of the Property BAdamstown property in the Wife’s sole name.

3. The Husband pay such additional funds as is necessary to enable the Wife to complete the purchase of the Property BAdamstown property and pay the stamp duty and all reasonable costs and disbursements for the purchase in the Wife’s sole name of the Property BAdamstown property provided that the Solicitor for the Wife gives the Solicitor for the Husband no less than seven (7) days’ notice of the funds necessary to settle the purchase of the Property BAdamstown property.

4. The matter is adjourned to 9.30am on 1 March 2018 at Newcastle for directions hearing.

5. Both parties are granted leave to restore the matter on the provision of seven (7) days’ notice in writing.

6. The costs of both parties are reserved in respect of the Interim Application.

7. In default of the parties being able to borrow sufficient funds to settle on the Property BAdamstown property, the parties within 48 hours of written notice that a loan will not be made available will do all acts and things necessary to cause the listing for sale in terms as agreed between the parties of the Property CMitchell Street property.

8. In the event the parties cannot agree as to the listing agent or listing price or method of sale, the Applicant will advise the Respondent of the listing agent, listing price and method of sale within 24 hours of no agreement being reached and to that end agreement must be reached within 48 hours of notice of a loan not being available.

9. Upon sale the proceeds of sale shall be applied as follows:

   (a)To pay costs, commission and expense of sale;

   (b)To pay sufficient monies to effect settlement of the Property BAdamstown property including stamp duty and reasonable disbursements;

   (c)The balance thereafter be retained in the Solicitor for the Applicant’s trust fund, such monies not to be disbursed until further agreement or as otherwise ordered by the Court.

10. In default of the parties or either of them doing all acts and things and executing all such documents as are necessary to give effect to those orders, a registrar of this court is appointed pursuant to section 106A of the Act to execute all such documents in the name of the party in default and do all such acts and things necessary to give validity and operation to the said orders.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT NEWCASTLE

NCC 1302 of 2017

MS LANGERCHERYL MAREE LINTOTT

Applicant

And

MR KLEMENTSLINDSAY GORDON KARATHANASSIS

Respondent

REASONS FOR JUDGMENT

Introduction

1. This is an interim application seeking interim property orders.

2. The applicant is Ms LangerMs Lintott and the respondent is Mr KlementsMr Karathanassis.

3. The parties commenced cohabitation in 1988. They married on 16 September(omitted) 1989 and separated on a final basis on 7 June 2013, although the respondent says this occurred on 10 September 2012. This, therefore, constitutes a relationship of 24 or 25 years.

4. In October 2015, the applicant wife informed the respondent husband that she had located a unit to buy and asked the respondent to pay the ten percent deposit of $65,000.00 on exchange of contracts.

5. On 27 October, the husband paid the ten percent deposit and on 11 November 2015, the applicant exchanged contracts for the off-plan purchase of 5/5 Wade Street, Property BAdamstown (“the Property BAdamstown property”).

6. On 20 October 2016, the respondent confirmed by email that the Property BAdamstown property would be purchased in the sole name of the wife and that a loan to enable completion of the purchase would be in the respondent’s sole name. The wife now seeks interim orders so that she may settle on the purchase of the Property BAdamstown property.

Issues

1. The issues I am asked to determine are:

   (1) whether an order be made for the sale of 18 Property ACurry Street, Merewether (“the Property ACurry Street property”) or in the alternative,

   (2) whether the applicant should transfer her interest in the Property ACurry Street property, and;

   (3) whether an order should be made for the parties to do all reasonable acts and things so as to secure sufficient borrowings in the respondent’s sole name to complete the purchase of the Property BAdamstown property.

Orders sought

1. The parties relied upon the documents filed to date in the proceedings and the orders sought are contained in those documents.

The evidence

1. The wife says neither she nor the husband had any assets at the time they commenced cohabitation. This is not in contest.

2. The wife’s evidence is that she received a lump sum payment of $22,456.81 in October 2001. That is also not in contest.

3. The wife’s evidence is that the husband received a lump sum trauma payment in September 2013 of $509,042.52. This payment was received after the husband was severely incapacitated after contracting (disease omitted)encephalitis. On any view, that payment was received shortly after the relationship ended on the wife’s case, but twelve months after the relationship ended on husband’s case.

4. The wife says the money received was paid into the mortgage over the Property ACurry Street property and also to reduce the mortgage over the property at Property C 59 Mitchell Street, Merewether, (“Property CMitchell Street property”).

5. The wife says she worked as a management consultant and the husband established an accountancy practice.

6. The wife says she was the primary carer of the parties’ two children who are now both adults.

7. The wife annexes a draft balance sheet at Annexure “A” to her affidavit. That balance sheet sets out that the parties have net assets inclusive of superannuation of approximately $3,923,605.00.

8. The wife’s evidence is that she informed the husband that she wished to purchase the Property BAdamstown property and that he said it was a good idea and agreed to pay the deposit. Her evidence is that he paid the deposit.

9. The wife’s evidence is that she never intended to borrow any money for the purchase of the Property BAdamstown property. Her expectation was that the husband would borrow sufficient monies to complete the purchase. Annexure “H” of the wife’s affidavit of 4 May 2017 is a series of emails setting out the discussions had between the parties on this issue.

10. On 20 October 2016, the wife informed the husband that she is not intending to borrow any money to purchase the Property BAdamstown property. On 20 October 2016, the husband responded by email stating:

    “I am borrowing the money in my name so settlement can be made in December.”

11. The wife gives further evidence by way of an affidavit filed 9 June 2017 that she has made inquiries of a finance broker and has been informed that she cannot afford to borrow funds or service a loan sufficient to purchase the Property BAdamstown property.

12. The husband provides evidence that the parties separated on 10 September 2012. His evidence is that at the time of cohabitation, the parties had no assets of value but that the wife had approximately $50,000.00 in debt.

13. He says that the Company ALinkara Group Proprietary Limited (the family business) began operation of a general accountancy practice and auditing practice(business omitted) in 1995.

14. The accountancy practice was sold in February 2002 and thereafter, the husband worked with Mr BBrad Ken until 2005. Thereafter, the husband then worked for the (employer omitted)Linkara Group again.

15. The husband’s evidence is that he contracted (disease omitted)encephalitis in September 2012. He says that whilst he was in the hospital suffering severe cognitive and physical impairment, the wife attended and informed him the marriage was over.

16. The husband says he suffered significant physical and cognitive impairment and Annexure “A” of his affidavit of 9 June 2017 is a report from his specialist that opines he will have a whole person impairment of not less than 25 percent for the rest of his life.

17. The husband’s evidence is that between 3 July 2015 and 8 January 2016, the wife withdrew a minimum of $1,275.00 per week from a joint account and between 8 January 2016 and 31 December 2016, a minimum of $1,075.00 per week. He maintains that from 1 January 2017 the wife withdrew an amount of $875.00 per week.

18. The husband’s evidence is that the wife has not made a contribution to that joint account since separation. His evidence is that he can borrow the sum of $600,000.00 only if it is by way of a joint loan or if the wife agrees to be a guarantor on the loan. The husband says he will fund any additional moneys required for settlement.

The Law

1. Since the decision of Stanford & Stanford[1], it has been settled law that a Court must consider whether it is just and equitable to make orders adjusting property interests before considering section 79(4) and section 75(2).

   [1] [(2012]) HCA 52; ([2012)] 247 CLR 108.

Section 79(2)

1. The High Court observed that the section 79(2) requirement is readily satisfied in many cases by the fact of separation. Both parties seek an order be made. By inference they concede that the section 79(2) requirement is satisfied. As the Full Court said in Chapman & Chapman[2], the Court is still required to address the issue although the process might be truncated.

   [2] (2014) FLC 93-529.

2. It is very clear on any view of the evidence that as a result of the parties’ separation, their use of jointly owned property has been affected.

3. In those circumstances, I am satisfied that it is just and equitable to make an order affecting the parties’ jointly owned property.

Section 79(4)

1. The wife set out a draft balance sheet and the husband did not.

2. Annexed to the wife’s affidavit were valuations in relation to the real properties of 59 Property CMitchell Street , Merewether (“the Property CMitchell Street property”),  18 Property ACurry Street, Merewether; and Property D3/91 Frederick Street, Merewether (“the Property DFrederick Street property”) by (omitted property consultants)Knight Frank.

3. The parties agreed that there is a joint loan in the sum of $850,000.00. Other items are still in dispute.

4. The Property ACurry Street property is jointly owned by the parties.

5. The Property CMitchell Street property and Property DFrederick Street property are owned by Company ALinkara Proprietary Limited.

6. Company ALinkara Proprietary Limited is owned on a 50/50 basis between the parties. In those circumstances, I accept the values of the real property.

7. This was a relationship of between 24 and 25 years. The parties agree that they both had minimal assets of value at commencement of the relationship.

8. The husband asserts, however, that the wife had $50,000.00 in debt. A finding cannot be made on that point at this interim stage as none of the evidence has been tested.

9. The parties agree that the husband earned more money through his work in the jointly owned company. The wife says she was the primary carer for the two children who are now adults.

10. The husband and wife both agree that the husband contributed approximately $597,042.00 towards the parties’ joint indebtedness. The husband has been responsible for maintaining the jointly owned property since separation. He has had the duty of meeting the loan repayments for the property and in doing so, has had access to the rental income from the property owned by Company ALinkara Proprietary Limited.

11. The husband has been paying moneys to the wife since separation, or on another view, the wife has been drawing down those moneys from the bank account.

12. The husband seeks an order that he retain the Property ACurry Street property by way of final order. The wife says by way of submission that he will not be able to do so.

13. Both parties set out some evidence in support of their individual contentions. That evidence has not been tested. I am unable make a finding at this interim stage one way or the other. Amongst other things, I am unable to determine each of the parties’ entitlements to the property until all of the evidence has been tested at final hearing.

14. Indeed, I am unable to make findings as to the value of the asset pool until the evidence has been tested.

Case law

1. The wife seeks a partial property order. The Court has the power to make partial property orders[3]. It is an exercise of the Section 79 power.

   [3] Harris & Harris (1993) FLC 92-378.

2. The Full Court in Strahan & Strahan[4] held that it is not necessary to establish compelling circumstances. All that is required is that in the circumstances, it is appropriate to exercise the power.

   [4] (2011) FLC 93-460.

3. It is very important, however, to remember that the Full Court in Strahan & Strahan[5] agreed with the Full Court in Gabel & Yardley[6] that:

   “…the interim order must be capable of variation or reversal without resort to s 79A of the Act or appeal.”

   [5] Ibid.

   [6] (2008) FLC 93-386.

4. They also said:

   “We also emphasise that in order to establish an appropriate case for an interim property settlement order more is required than the mere fact that upon a final hearing the applicant would receive the property being sought (or an amount in excess of the funds being sought) from the other party.”

5. The wife’s submissions were indeed to that extent. That is, that she would receive the property being sought at a minimum.

6. The wife seeks the sale of the Property ACurry Street property. If I was to make that order and the property was sold this cannot be varied or reversed at final hearing. Such an order, in the circumstances, is contrary to well established principles.

7. The order sought by the husband can be varied or reversed at final hearing if it is ultimately proven that the husband cannot afford to service sufficient borrowings to pay out the wife her determined entitlement.

8. Property or properties could be sold to bring about a just and equitable division of the property. If no order is made, and the wife cannot settle on the Property BAdamstown property, the vendor could retain the full deposit and seek damages. This would place even more financial pressure on the parties.

9. Section 80 of the Family Law Act 1975 allows me to make any order which I think is necessary to do justice. It is just, in my view, to make orders that will protect the parties from financial loss. The making of orders would allow for the property to be purchased.

10. The husband provides evidence that he cannot borrow the money alone. He would need a joint application by the wife. He says that if he entered into a loan in his name he would, upon settlement, cease making payments to the wife for rent. By inference, he would pay the interest component of the loan.

11. Ultimately, the responsibility for the liability will be determined at final hearing. The husband says he will pay the costs necessary over and above $600,000.00 to ensure settlement of the Property BAdamstown property.

12. In those circumstances, I am satisfied that the orders I have made are just and equitable on an interim basis.

I certify that the preceding fifty-six (56) paragraphs are a true copy of the reasons for judgment of Judge Middleton

Associate: 

Date: 30 January 2018