Martin and Anor and Martin and Ors
[2015] FamCA 470
•22 June 2015
FAMILY COURT OF AUSTRALIA
| MARTIN & ANOR & MARTIN & ORS | [2015] FamCA 470 |
| FAMILY LAW – PRACTICE AND PROCEDURE – Final property orders made by another judicial officer in April 2015 – where applicant applies to compel removal of caveats over property contracted to be sold before settlement – s 114 (3) requirements for the grant of mandatory injunction not satisfied – application refused. FAMILY LAW – PRACTICE AND PROCEDURE – Application for a stay of final orders – no prejudice to the applicant – where application for leave to appeal and appeal pending – where the issues and history can be best ventilated before the judicial officer who made the final orders – adjourned. FAMILY LAW – PRACTICE AND PROCEDURE – Where parties seek to vacate and adjourn a listing with respect to costs before the judicial officer who made the final orders – where application for leave to appeal and appeal pending – where the issues and history can be best ventilated before the judicial officer who made the final orders – adjourned. |
Bankruptcy Act 1966 (Cth), s 60(3)
Family Law Act 1975 (Cth), s 92, 114(3)
Family Law Rules 2004 (Cth), r 1.13, 22.11(3)
| Adam P. Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170 Martin and Martin [2012] FamCA 869 |
| FIRST APPLICANT: | Mr Martin |
| SECOND APPLICANT: | Martin Pty Ltd |
| FIRST RESPONDENT: | Ms Martin |
| SECOND RESPONDENT: | Mr DD as Trustee for the Bankrupt Estate of Ms Martin |
| THIRD RESPONDENT: | X Firm |
| FOURTH RESPONDENT: | QF Pty Ltd |
| FIFTH RESPONDENT: | Cahill & Rowe Family Law |
| SIXTH RESPONDENT: | Taussig Cherrie Fildes |
| FILE NUMBER: | MLC | 9829 | of | 2007 |
| DATE JUDGMENT DELIVERED: | 22 June 2015 |
| PLACE DELIVERED: | Melbourne |
| DATE ORDERS MADE: | 4 & 22 June 2015 |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Thornton J |
| HEARING DATE: | 4 June 2015 |
REPRESENTATION
| COUNSEL FOR THE APPLICANTS: | Mr Kearney SC and Ms Vohra |
| SOLICITOR FOR THE APPLICANTS: | Stephen Farmer & Associates |
| THE FIRST RESPONDENT: | No appearance |
| SOLICITOR APPEARING AS ADVOCATE FOR THE SECOND RESPONDENT: | Mr Koroneous |
| SOLICTOR FOR THE SECOND RESPONDENT: | Koroneous Lawyers |
| COUNSEL FOR THE THIRD RESPONDENT: | Mr North SC and Dr Ingleby |
| SOLICTOR FOR THE THIRD RESPONDENT: | X Firm |
| THE FOURTH RESPONDENT: | No appearance |
| COUNSEL FOR THE FIFTH RESPONDENT: | Mr Tatarka |
| SOLICTOR FOR THE FIFTH RESPONDENT: | Colin Biggers & Paisley |
| SOLICITOR APPEARING AS ADVOCATE FOR THE SIXTH RESPONDENT: | Mr Rashleigh |
| SOLICITOR FOR THE SIXTH RESPONDENT: | DLA Piper Australia |
Orders made 4 June 2015
Paragraph 4 of the Application in a Case filed 22 May 2015, is adjourned for mention on 6 July 2015 before the Honourable Justice Cronin.
The parties’ costs in relation to paragraph 4 of the Application in a Case filed on 22 May 2015 be reserved.
The 2nd, 5th and 6th Respondents are excused from further participation in the proceedings today and it is noted that there was no appearance by the 4th Respondent.
The stay application, paragraph 2 of the Application in a Case filed 22 May 2015, is adjourned for directions before the Honourable Justice Cronin on 6 July 2015.
Judgment regarding paragraph 5 of the Applicant’s Application in a Case filed 22 May 2015, being the application for the withdrawal of caveats over the real property at Property E in the State of Victoria (“the E Town property”) be reserved to a date to be fixed.
Any proceeds from the sale of the E Town property paid to the 3rd Respondent are to be held in trust by the 3rd Respondent and not disbursed until the determination of the stay application.
Order made 22 June 2015
That paragraph 5 of the First Applicant’s Application in a Case filed 22 May 2015 be dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Martin & Anor & Martin & Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the of the Family Law Act 1975 (Cth).
FAMILY COURT OF AUSTRALIA AT MELBOURNE
FILE NUMBER: MLC 9829 of 2007
| Mr Martin |
First Applicant
| Martin Pty Ltd |
Second Applicant
And
| Ms Martin |
First Respondent
| Mr DD as Trustee for the Bankrupt Estate of Ms Martin |
Second Respondent
| X Firm |
Third Respondent
| QF Pty Ltd |
Fourth Respondent
| Cahill & Rowe Family Law |
Fifth Respondent
| Taussig Cherrie Fildes |
Sixth Respondent
REASONS FOR JUDGMENT
Introduction
This proceeding concerns orders and reasons for judgment handed down by the Honourable Justice Cronin on 9 April 2015. The matter has had a long history of litigation and on 6 May 2015 the first applicant husband and the second applicant Martin Pty Ltd issued a Notice of Appeal seeking leave to appeal those orders.
Central to the proceedings are interim consent orders made on 12 September 2011 by Dessau J (“the 2011 consent orders”). The parties to those consent orders were the husband, the wife, the solicitors for the wife, X Firm (“XF”), and a commercial litigation funding company, QF Pty Ltd (“QF”). XF and QF were subsequently made interveners but were respectively referred to by the parties as the Third and Fourth Respondent in the application before me.
The First Applicant husband now brings an Application in a Case to stay the orders made by Cronin J and to compel XF and QF to withdraw caveats they have each lodged on the property at E Town (“the E Town property”). The E Town property is registered in the name of Martin Pty Ltd. According to the applicant husband, his interest in the business comprises “the [Martin Family Trust], which owns all the shares in [Martin Pty Ltd], which in turn owns [B Pty Ltd]”.
The caveats were lodged by XF and QF pursuant to the 2011 consent orders.
Counsel for XF advised that no appearance would be made by QF, because the company had assigned their interest in the costs to XF for the consideration of $1.00. This was not in issue between the parties.
There was no appearance for the wife, who is the first respondent.
At the commencement of the hearing before me, counsel for the applicant husband informed the Court that the purchaser of the E Town property was notified of these proceedings. The purchaser did not appear, and from this I infer that the purchaser is aware of the proceedings and has chosen not to intervene.
The hearing of the application was by way of submissions only and the evidence remains untested.
The applicant husband claims that his application is urgent because settlement of the sale of the E Town property is due on 9 July 2015 and the earliest available hearing date for mention of this matter before Cronin J (who is on leave) is 6 July 2015.
Background
The husband and wife have been litigating in this Court regarding their property under Part VIII of the Family Law Act1975 (Cth) (“the Act”) for about eight years. The detailed Reasons for Judgment of Cronin J set out the long history of the litigation between the husband and wife and the interveners.
For the purposes of this hearing, the relevant background is that in August 2012 the professional services of the solicitors for the wife were terminated and significant legal costs remained unpaid by the wife. When the husband and wife sought final property orders by consent in 2012 before Coleman J, his Honour refused to make the orders but did not dismiss their application.[1] As noted by Cronin J in his reasons for judgment, the reason Coleman J refused to make the proposed consent orders was that they would impact on the ability of the solicitors for the wife, XF (and at that time QF as the litigation funder), to recover money owed to them by the wife. Pursuant to s 92 of the Act, Coleman J granted leave for both XF and QF to intervene and the matter was adjourned to be heard “on the merits”.
[1] See Martin and Martin [2012] FamCA 869.
On 7 June 2013, XF entered into a deed of assignment with QF in relation to the debt owed by the wife in the sum of $399,241.94. Furthermore, proceedings in the Supreme Court of Victoria regarding the wife’s legal fees resulted in an agreement fixing the outstanding legal fees payable to XF at $450,000.
The wife voluntarily entered into a bankruptcy arrangement just days before the final listing of the hearing before Cronin J. The wife’s trustee in bankruptcy appeared before Cronin J and indicated that he neither opposed nor supported the continuation of proceedings. He maintained that any proceeding against the wife was stayed on the basis of s 60 (3) of the Bankruptcy Act 1966 (Cth).
Before Cronin J was the outstanding application by the husband and wife seeking final consent orders regarding their property. Cronin J ruled that to the extent the proceedings before Coleman J in 2012 were made jointly, the bankruptcy of the wife had severed that joint approach. Cronin J, in his Honour’s reasons for judgment at [11], found:
To the extent that the wife had any entitlement to pursue orders, any property interest to which she would have been entitled (save as to certain personalty and superannuation) would have vested in the trustee in bankruptcy (s 58 of the Bankruptcy Act). The trustee had, as I have indicated, adopted a neutral position to the preceding continuing saying that in his view, any proceedings were stayed but I interpreted that to mean only as against or by, the wife.
Ultimately before Cronin J, the husband withdrew his application for consent orders in the terms of the minutes proposed by both parties in 2012.
After the withdrawal of that application, the remaining application before Cronin J was an application by XF for enforcement of the 2011 consent orders. He concluded that XF was a secured creditor. Cronin J determined the matter and made orders for the enforcement of the 2011 consent orders in favour of XF.
The 2011 consent orders, amongst other things, provided for the sale of the E Town property.
The orders made by Cronin J do not entitle XF to withhold the withdrawal of caveats over the E Town property until receiving any shortfall from the husband into their trust account. It is only a question of timing for the husband to pay any shortfall, the date of which has been determined to be on the date of settlement under those orders. Therefore the orders of Cronin J do not impact upon the question of the withdrawal of the caveats.
Documents and evidence relied upon by the applicant
The applicant husband relied upon the following documents:
·Application in a Case filed 22 May 2015;
·Affidavit of the husband filed 22 May 2015; and
·Outline of Case filed 3 June 2015.
Documents and evidence relied upon by XF
XF relied upon the following documents:
·Response to an Application in a Case filed 27 May 2015;
·Affidavit of Ms X filed 12 January 2015;
·Affidavit of Mr O filed 13 January 2015;
·Affidavit of Ms X filed 22 January 2015; and
·Affidavit of Mr EE filed 1 June 2015.
Application for the Removal of Caveats
XF sought that the application to compel the removal of the caveats be adjourned to be heard by Cronin J because it was inextricably intertwined with the hearing before him which was the subject of the application for leave to appeal and appeal.
However I decided to proceed with the husband’s application to compel the withdrawal of the caveats because of the imminent settlement date for the sale of the E Town property and because the orders made by Cronin J did not impact upon this issue.
Central to this application to compel the removal of the caveats are the 2011 consent orders. These orders provide, amongst other things, for a regime for the payment of the proceeds of the sale of three properties which include the E Town property. Relevantly, the orders provide at paragraphs 3 and 8 as follows:
3.That the Husband and the Wife each forthwith do all things necessary and sign all such documents as may be required to sell the properties at:
(a)[E Property], [E Town] in the state of Victoria more particularly described as the whole of the land comprised in Certificate of Title Volume … Folio … (“[E Town]”);
(b)[Property N], [N Town] in the state of Victoria more particularly described as the whole of the land comprised in Certificate of Title Volume … Folio … (“[Property N]”); and
(c)[Property A], Geelong in the State of Victoria more particularly described as the whole of the land comprised in Certificate of Title Volume … Folio … (“[Property A]”),
(hereinafter collectively “Properties”) in accordance with the terms of these orders so that the total net proceeds of sale of all of the Properties after payment of the amounts prescribed by the terms of these orders in relation to each of the Properties respectively be disbursed such that the Wife receive the first one million dollars as and by way of partial property settlement (“Wife’s Million Dollar Entitlement”) such amount to be paid to [X Firm] and the parties share any remaining balance equally as and by way of partial property settlement respectively and the parties be equally responsible for the sale of the Properties.
…
8.That upon settlement of the sale of [E Town] the sale proceeds thereof including the deposit be disbursed as follows:
(a)first, in payment of the selling agent’s commission and advertising costs;
(b)secondly, in adjustment of rates and taxes;
(c)thirdly, in discharge of the mortgage dealing number … securing the loan facilities of ANZ Bank / Esanda Finance in accordance with the financiers’ requirements as more particularly set out in the letter from ANZ Bank dated 19 August 2011 marked as Annexure “A” to these Orders;
(d)fourthly, in payment of the costs of the conveyance;
(e)fifthly, in payment of outstanding costs (if any) in respect of the preparation for the sale of [E Town];
(f)sixthly, in payment of such amount as is required to reimburse the Husband for the amounts incurred or paid by him in accordance with the provisions of paragraphs 4(j) hereof and such other amounts paid by the Husband for the presentation for sale prior to the making of these orders;
(g)seventhly, there be disbursed to [X Firm] such of the Wife’s One Million Dollar Entitlement as shall then be outstanding (or such part thereof as shall be available after payment of the amounts referred to in paragraphs 8(a) to 8(f) inclusive) after deduction of all amounts as may have been paid to [X Firm] in respect of the Wife’s One Million Dollar Entitlement from the sale of [Property N] and/or [Property A].
(h)eighthly, the balance (if any) be divided equally between the Husband and the Wife by way of partial property settlement and paid to each of [X Firm] on behalf of the Wife and Taussig Cherrie Fildes on behalf of the Husband respectively.
Paragraph 13 of the 2011 consent orders provides:
…
(b)at or prior to settlement of the sale of [E Town], [Ms X] [XF] do all things necessary and sign all such documents as may be required to withdraw caveat which she will lodge hereafter over [E Town]; (my emphasis)
(c)[Ms X] pay QF Pty Ltd Pty Ltd from the Wife’s One Million Dollar Entitlement such sum as may be agreed between [Ms X] and [QF Pty Ltd].
The 2011 consent orders note the following:
AND THE COURT NOTES:
A.That the Husband has agreed not to seek to remove:
1. A caveat lodged by [Ms X], securing the fees of [X Firm]; and
2. A caveat lodged by [QF Pty Ltd]
over the Wife’s interest as provided by these Orders, in [E Town] (in addition to [Property N]) pending settlement of the sale save as may be necessary to ensure the continuation of financing for the [B Group] by the ANZ Bank/Esanda Finance and these Orders provide that such caveat be removed upon settlement of the sale of [E Town].
B.[Ms X] acknowledges that payment of such amount as shall be available from the Wife’s One Million Dollar Entitlement (and any such further amount to which the Wife is entitled from the sales of the Properties) in accordance with the provisions of these Orders, is accepted by her in substitution for the caveats over [Property N] and [E Town].
C.A copy of the ANZ letter dated 19 August 2011 referred (sic) in these orders is attached hereto.
The ANZ letter [referred to in Notation C of the 2011 consent orders] forms part of the orders by way of Annexure A.
It is common ground that the Property N and Property A properties have been sold.
Paragraph 5 of the applicant husband’s Application in a Case seeks that prior to settlement of the sale of the E Town property, XF and QF do all things necessary and sign all such documents as may be required to withdraw all caveats lodged by that firm or on its behalf.
The reasons advanced by the applicant husband to compel the withdrawal of the caveats in his Outline of Case are as follows:
·The removal of caveats to allow the settlement of sale of the E Town property ought hardly to be a matter of controversy. Unless this occurs the E Town property will not be sold and a failure of the sale cannot be said to assist XF. It prejudices the husband and the purchaser;
·In refusing to remove its caveats to allow a bona fide sale of the E Town property to be completed, XF ignores its own obligations under the 2011 consent orders because at paragraph 13(b) of the 2011 consent orders it provides:
at or prior to settlement of the sale of [E Town], [the principal of XF] do all things necessary and sign all such documents as may be required to withdraw caveat which she will lodge hereafter over [E Town];
·XF does not depose as to why its principal should be excused from this requirement and Mr EE (of K&L Gates), [solicitors for XF] deposes to having formed the view that the sale ought proceed to completion;
·QF assigned its debt owed by the wife of just over $399,000 to XF for one dollar. It has no interest to support its caveat and as such no basis for refusing to remove it to allow settlement of the sale. Paragraph 14 of the 2011 consent orders required it to remove its caveat lodged over E Town prior to the settlement of the sale of Property N (which was in December 2012). It has not done so;
·XF concedes the contract of sale is a bona fide one, for market value and to a genuine third-party purchaser. To seek to prevent the settlement of the sale unless the husband makes up a shortfall, which he deposes he cannot make, will only result in the loss of the sale;
·XF pursued the enforcement of the 2011 consent orders. These require the sale of three properties, two of which have sold. The E Town property is the last to sell. XF and QF are required by the 2011 consent orders to remove their respective caveats prior to the settlement of the sale of the E Town property. Both seem to be refusing to do so despite the 2011 consent orders otherwise being relied upon by them;
·The husband seeks orders for the removal of the caveats to allow the settlement of the sale.
Counsel for the applicant husband relied heavily on orders 3 and 8, of the 2011 consent orders, previously outlined. He interpreted these orders strictly and submitted that XF’s entitlement to the proceeds of sale of the E Town property flowed consequentially from the distribution by way of part property settlement made to the wife. He submitted that therefore, the interest of XF and QF could not be the subject of the caveats.
Counsel for XF quoted Cronin J’s reasons for judgment at [45]:
45.There can be little doubt that had the sales gone ahead even if the $1 million was the money of the wife, it would have been paid direct to [XF]. The wording of the orders of September 2011 cannot be read any other way.
This quote must be read in the context that the 2011 consent orders were not in issue before Cronin J.
Another matter which was referred to in submissions was an undertaking to which the husband consented on 21 January 2011 in the following terms:
AND UPON THE UNDERTAKING given to the Court by Senior Counsel upon instructions of his client provided to him by telephone this day, that he:
Will guarantee a market value of the property at [Property E, E Town], in the State of Victoria (“[E Town]”) of no less than $1,560,000; and
Will indemnify and keep indemnified the wife for any shortfall in the sale price of [E Town]...
Counsel for XF submitted that there is an undertaking which remains on foot and binding upon the husband. Counsel for the applicant husband submitted that this undertaking had been discharged by the subsequent 2011 consent orders. Relevantly, order 1 of those orders reads:
That … paragraphs 1 and 2 of the Orders made on 21 January 2011 be discharged.
Counsel for XF, argued that order 1 of the 2011 consent orders in fact discharges only paragraphs 1 and 2 and not the entirety of the orders made on 21 January 2011. It was argued that the applicant husband’s reliance on Adam P. Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170 was misplaced as the order of 21 January 2011 had only been partially discharged, which did not destroy the foundation of the undertaking.
Counsel for XF argued moreover, that Cronin J’s reasons for judgment at [42] and [43] proceed on the basis of a finding that an undertaking existed. XF argued that not only was there an order for sale but the husband through his solicitor gave an undertaking in respect of a personal obligation if there was a shortfall.
He submitted that the undertaking by the husband’s former solicitor, Mr Taussig QC was given on 21 January 2011 that the husband would be responsible for any shortfall in respect of the E Town property sale if it did not make $1.56 million.
I make no finding in respect of the issue about any undertaking as this remains a matter of controversy between the parties and cannot be determined on the untested evidence, particularly in this interim hearing. This is more relevant to the application for a stay and I do not rely on any undertaking in arriving at my conclusion.
The validity of the 2011 consent orders were not directly challenged in the hearing before me. What counsel for the applicant husband sought to do, was effectively compel the removal of XF’s security before the debt owing to them was satisfied under the 2011 consent orders.
Relevant to my considerations is the fact, which appears to be uncontroversial, that the 2011 consent orders were made upon the application of the applicant husband to enable him to refinance his commercial entities by reaching agreement with XF and QF to relinquish existing securities held over various assets and provide a regime for payment of outstanding legal fees. The regime included the provision of new security over the E Town property. This security was registered by way of the two caveats over the E Town property by QF on 21 October 2011 and XF on 13 January 2012. The 2011 consent orders make this clear and there was no controversy between the parties about this aspect.
Conclusion about the application for the removal of caveats
The interesting feature of this application is that the applicant husband, XF and the solicitors for XF, all have an interest in the settlement of the sale of the E Town property proceeding. The husband’s application emphasised this but did not adequately address the indebtedness to XF and QF under the 2011 consent orders. The husband’s application overlooked the fact that the removal of the caveats is obviously dependent upon what arrangements are made to satisfy that debt.
In his affidavit filed in support of this application, the applicant husband deposes that he lacks funds to personally meet the outstanding liability. He refers to the orders made by Cronin J. He states that he is injuncted from making further borrowings from the B Group by orders of 3 May 2013, which were varied by consent on 3 June 2013 to permit some limited borrowings for specific purposes not extending to the eventual payment out of costs.
The applicant husband deposes to compensation to the value of $4,500,000 (gross) received from the State Government for compulsory acquisition of his business premises, but adds that there are tax liabilities outstanding against the B Group to the value of $571,000. He refers to the business repaying an ANZ facility of $700,000 and to the business spending more than $4 million on the costs of relocating the B Pty Ltd franchise. At [13] of his affidavit, the husband deposes:
I have asked the ANZ bank whether it is prepared to discharge its mortgage over the [E Town] property at settlement of its sale if it receives from the sale proceeds an amount of approximately $525,000 being the approximate balance of the business loan facility in the name of [Martin Pty Ltd] specifically secured over that property by the mortgage dealing numbered … (which is referred to in the orders as “the Payable Loan) - albeit that the property more generally secures all of the ANZ facilities provided to the Business. The ANZ bank indicated it would only consider my request upon being provided with:-
(a)Written advice as to what action I am taking in these proceedings;
(b)A copy of the letter from the ATO to [Martin Pty Ltd] setting out the payment plan in respect of its outstanding tax.
(c)Details of the cash flow of my business.
I will provide the information that the ANZ bank has requested to enable it to assess my request.
There is no clear information about the security of the ANZ bank over the E Town property. The husband goes on to explain why his financial circumstances do not allow him to pay the amount ordered to the paid by Cronin J. Without providing any updated information from the ANZ bank, he refers to Senior Counsel appearing on his behalf informing Justice Cronin on 16 March 2015 that:
...the ANZ had recently informed me that, at the settlement, they will be retaining all of the proceeds of sale of [E Town] which is subject to a first mortgage and otherwise used as security for the Business borrowings.[2]
[2] [16](b) of applicant husband’s affidavit filed 22 May 2015.
He then refers to an old letter from the ANZ dated 21 November 2012 which is Annexure E of his affidavit.
The applicant husband did not support any of these assertions with relevant recent financial evidence. Counsel for XF emphasised that no financial disclosure has been made regarding the compensation package from the State Government. The applicant husband has not filed a financial statement. Mr EE, who is the partner of the firm known as K & L Gates, solicitors for XF, deposes in an affidavit filed 1 June 2015, that as at the date of swearing his affidavit he had not received a substantive response from the ANZ to his request for information to determine which loans are secured by the mortgage registered against the title of the E Town property, which the bank will require to be repaid from the proceeds of sale.
In lieu of the E Town property, the applicant husband offers a second property at T Street, Q Town (“the Q Town property”) to be caveated by XF. He deposes that its value is estimated at $2,400,000 but does not provide a valuation corroborating this claim. He also deposes that the ANZ Bank has a mortgage over the Q Town property to the sum of $1,940,000 and that the sixth respondent has lodged a caveat over that property. He provides no evidence as to the value of the interest of the sixth respondent and no evidence of the mortgage to the ANZ Bank in support of both assertions.
As counsel for XF pointed out, the applicant husband says nothing about whether he is insolvent, has not made full financial disclosure personally or in respect of his financial entities, and makes no serious proposal as to the security of XF, including any proposals as to how the net proceeds of sale of the E Town property are to be disbursed upon settlement.
The alternative security for XF proffered by the husband, being the property in Q Town, lacks any evidence of the equity available in the property and would leave XF in a position of ranking after two other secured creditors. It would compel XF to relinquish the 2012 security over the E Town property for a 2015 security of uncertain value. XF is not obliged to agree to this replacement security.
There is no dispute between the parties that the applicant as director of Martin Pty Ltd entered into the contract of sale for the E Town property in the full knowledge that there was a caveat lodged by each of XF and QF pursuant to the 2011 consent orders, which he did not challenge in the hearing before Cronin J. The Vendor’s Section 32 Statement annexed to the husband’s affidavit includes these caveats. There was indeed no issue between the parties that the contract of sale was signed prior to the hearing before Cronin J. (Although the Contract of Sale is dated 13 February 2015, the Vendor’s section 32 Statement is dated 12 March 2015, and the applicant husband has since clarified that the February date was an error.) That the contract of sale requires clear title, as submitted by the applicant husband, is therefore not a ground to disturb the caveats.
In circumstances where both parties to the contract of sale were aware of the caveats at the time of entering into the contract, I can see no reason why XF and QF should be ordered to withdraw those caveats prior to settlement. The orders of Cronin J have not altered the situation. The 2011 consent orders were not challenged in the hearing which is the subject of the leave to appeal and appeal.
The submission advanced by counsel for the husband to compel the withdrawal of the caveats relies upon the wording of the 2011 consent orders at paragraph 3. This refers to the payment of an amount to XF from the wife’s partial property settlement from the sale of the properties. It was argued that this cannot support the caveats, notwithstanding his concession that the applicant does not challenge the 2011 consent orders. On the face of those 2011 consent orders I cannot accept that argument.
An order to compel XF to withdraw the caveats prior to settlement without satisfying the debt, would result in significant prejudice to XF.
The 2011 consent orders provide for the caveats to be withdrawn “at or prior to settlement” of the E Town property. XF are not obliged to withdraw the caveats before settlement, only “at or prior” to settlement which is conditional on the debt being paid.
Paragraph 8 and Annexure A of the 2011 consent orders, anticipate the payment of $532,000 plus accrued fees and interest to discharge the ANZ Bank mortgage on the E Town property from the proceeds of sale and then a payment to XF from the net proceeds of sale which would then oblige XF to withdraw the caveats at settlement. On the face of the 2011 consent orders, which were not challenged before me, XF are required to withdraw the caveats upon receipt of the net proceeds of sale, which would be calculated as the amount remaining after payment of the costs relating to the sale and on the bank accepting $532,000 plus accrued interest and fees to discharge the mortgage.
The applicant’s argument regarding paragraph 14 of the 2011 consent orders is without merit. The caveat referred to there, is a different caveat from that which was lodged by QF after the making of the 2011 consent orders. But in any event the applicant husband accepts at paragraph 34 of his Outline of Case that QF signed its debt owed by the wife, of just over $399,000 to XF for $1. The interest of QF now vests in XF. It follows that on payment of the net proceeds to QF, on the premise for which the consent orders were made, XF would be required to procure a withdrawal of the QF caveat.
The caveats over the E Town property secure the interest of XF under the 2011 consent orders.
The 2011 consent orders remain in force and XF are not required to withdraw the caveats unless the consent orders are complied with and the net proceeds of sale of the property are paid to them at, or prior to, settlement in accordance with paragraph 8 of the 2011 consent orders.
The letter from the ANZ Bank in Annexure A of the 2011 consent orders makes it clear that if the other properties are sold first, which has already occurred, then after payment of the costs and expenses, the amount of $532,000 plus accrued interest and fees is to be paid to the ANZ Bank from the net proceeds of sale of the E Town property. The regime for the payment of the net proceeds of sale of the E Town property under those orders, then provides for the balance to be paid to XF in substitution for the caveats.
The applicant husband seeks that XF and QF be compelled to withdraw the caveats on the E Town property prior to settlement.
There is no basis for the assertion that the caveats should be withdrawn. There is no valid reason or merit in the application.
Presumably, the power I am being asked to exercise by counsel for the applicant husband for the orders he seeks is referable to s 114(3) of the Act. Inherent in the submissions of counsel for the applicant husband is an acceptance of uncorroborated and untested assertions of the husband with respect to matters which are not conceded by XF. The evidence remains untested. The applicant husband bears the onus of proof. To the extent that the application requires proof of the necessity for the orders to be made, the court is in no position to make such findings of fact and I am not satisfied that the applicant has proved on the balance of probabilities that there is any need for the making of the orders he seeks.
On the applicant’s material before me, there is no certainty as to what arrangements will be made for payment of the net proceeds from the sale of the E Town property. I am not in a position to make any findings as to what prejudice or damage will flow if the sale cannot proceed. There is no controversy between the parties that the settlement of the E Town property should proceed. However the arrangements for providing clear title at settlement on the untested evidence of the applicant remain opaque.
It may be that after further information is provided, and negotiations occur between the applicant husband and XF, that the caveats will be removed at, or prior to, settlement if conditions of payment are met.
The onus is on the applicant husband to satisfy me that it is just to make a mandatory injunction compelling XF and QF to remove the caveats on the E Town property.
Having regard to the paucity of the evidence as to the reasons for the husband’s application and the fact that I am not in a position to make findings on untested evidence, I am not satisfied that it is just or convenient to exercise my discretion pursuant to s 114(3) of the Act to compel XF and QF to remove the caveats over the E Town property.
Accordingly paragraph 5 of the applicant’s Application in a Case filed 22 May 2015 is dismissed.
Application for the Stay of Orders Made by Cronin j
I gave ex tempore reasons on 4 June 2015 and pronounced orders adjourning the stay application at the request of XF to the directions hearing listed before Cronin J on 6 July 2015. These written reasons encompass and expand upon the reasons I gave in Court at the hearing.
Under rule 22.11 (3) of the Family Law Rules 2004 (Cth) (‘the Rules”), an application for an order to stay the operation or enforcement of an order which has been appealed must be heard by the judge who made the order under appeal. During Cronin J’s leave of absence, the application was listed urgently before me under rule 1.13 of the Rules, which provides that another judicial officer who has jurisdiction to hear the application may hear the application where the particular judicial officer is unavailable.
Prejudice to the applicant husband
The impending settlement date and the prospect of the applicant being unable to settle the E Town property is not conclusive of the rights of the applicant to pursue his stay application.
To preserve the position of the applicant husband, XF agreed to an order that any proceeds from the sale of the E Town property paid to XF be held in trust by XF and not disbursed until determination of the stay application.
Taking the applicant husband’s case at its highest and even assuming a stay of Cronin J’s orders, nothing in the orders that are the subject of an application for leave to appeal and appeal, changes the 2011 consent orders – namely that from the proceeds of sale of the E Town property, XF are to be paid the net proceeds of sale predicated upon payment of the other costs detailed in orders 3 and 8 and the amount of $532,000 plus accrued interest and fees owing to the ANZ Bank under the mortgage.
Given there is no appeal of the 2011 consent orders and the making of those orders were not agitated before Cronin J, there cannot be any prejudice to the applicant husband due to a delay in the hearing of his application for a stay.
On the contrary, there would be significant prejudice to XF if I were to order a stay of the enforcement of the orders. In light of the state of the evidence, XF sought to cross-examine the applicant husband on the basis of subpoenae addressed to K Accountants, the accounting firm retained by the B Group; the ANZ Bank, the mortgagor of the E Town and Q Town properties; and FF Pty Ltd, the purchaser of the E Town property. The first two subpoenae were said to be returnable on 19 June 2015, and the return date of the last subpoena was extended to the same day after no response was received by the initial due date of 3 June 2015. Counsel for XF argued that without this evidence, XF would be significantly disadvantaged in putting its case against the application for a stay of enforcement as it would be uninformed by the subpoenaed material. In fairness to the parties, XF is entitled to pursue this information.
Counsel for the applicant husband emphasised that the hearing before Cronin J proceeded on the basis of submissions only. XF submitted in response that this was due to the fact that there was no evidence upon which the applicant husband could be cross-examined, as he had not filed a financial statement.
The applicant husband’s affidavit in support of his Application in a Case filed 22 May 2015 does not disclose more than assertions about the financial circumstances of the applicant husband and the group of entities he controls. The applicant husband has not filed a Financial Statement. In this respect, adjourning this part of the applicant’s Application in a Case to 6 July 2015 would allow time for such proper investigation as is reasonably sought by XF. The applicant husband’s evidence could not be challenged otherwise.
In any case, there can be no prejudice to the applicant in circumstances where the E Town property was already contracted for sale before the hearing conducted by Cronin J in March 2015 and in the knowledge that XF and QF had lodged caveats over the property which are contained in the Vendor’s Section 32 Statement.
XF has also foreshadowed a potential argument about estoppel which was not ventilated before me but which might be more appropriately considered by Cronin J who heard the arguments advanced by the parties. This is, given the availability of his Honour before the settlement date and the short timeframe of the delay.
In accordance with the authorities, I consider that one of the considerations for the stay application will be a preliminary assessment as to the merits of the appeal and that Cronin J, being the Judge who made the orders, is the most appropriate person to do that. This is particularly so in a matter which has had a complex history and where Cronin J has made a number of interim financial orders.
I accept the argument of counsel for XF that the stay application would occupy considerable time and resources in order for the issues to be properly ventilated before me. In circumstances where Cronin J will again sit at this Registry in a matter of weeks, I do not propose to put the parties to a further duplication of time and expense.
I am also satisfied that it would be a more efficient use of Court resources for his Honour to hear the application, because he may determine that submissions only are appropriate having regard to evidence or submissions he has already heard. This is a matter for the discretion of Cronin J. As a matter of fairness, the delay will also provide XF the opportunity to be informed by any relevant material which might be obtained through the subpoenae which have been issued and the applicant to obtain the information he deposes to seeking from the ANZ bank.
Paragraph 2 of the applicant’s Application in a Case is accordingly adjourned for directions before Cronin J on 6 July 2015, where the related Application in a Case by XF is already listed.
Paragraph 4 of the husband’s Application in a Case filed 22 May 2015
XF filed an Application in a Case on 15 April 2015 in relation to costs, which is listed for a directions hearing before Cronin J on 6 July 2015. Paragraph 4 of the applicant husband’s Application in a Case filed 22 May 2015 sought that the directions hearing listed before Cronin J be adjourned pending the hearing, determination and delivery of the reasons for judgment and orders by the Full Court of the Family Court of Australia in respect of the applicant husband’s application for leave to appeal and appeal.
Counsel for each of the second, fifth and sixth respondents attended court in response to paragraph 4 of the applicant husband’s Application in a Case. The fifth and sixth respondents were not participants for the purposes of the hearing regarding other aspects of the Application in a Case. The fifth respondent is the former solicitor on record for the respondent wife, and the sixth respondent is the former solicitor on record for the applicant husband.
XF’s Application in a Case relates to an application for costs regarding the March 2015 hearing before Cronin J. Counsel for the applicant husband did not press his paragraph 4 before me, having regard to the opposition of XF and my view expressed at the outset, that the XF costs application appeared to be a matter for the consideration of Cronin J and connected to the hearing before him which is the subject of the application for leave to appeal and appeal.
However, counsel for each of the fifth and sixth respondents both took the opportunity to make an oral application that XF’s Application in a Case already listed for directions before Cronin J on 6 July 2015 should be vacated and adjourned to a date to be heard after the determination of any appeal. Counsel for the second respondent, the trustee for the Bankrupt Estate of the wife, neither consented nor opposed paragraph 4 of the applicant’s Application in a Case.
The fifth respondent, while not having filed any written material, made an oral application to have the hearing of 6 July 2015 vacated based on the fact that an appeal was pending as to the very events giving rise to the costs liability. The applicant husband deposed to making enquiries with the Appeals Registrar of this Registry and being advised that appeal dates were available towards October 2015. On this basis, the fifth respondent argued, any decision as to costs was premature pending the appeal.
Counsel for XF submitted that the oral application should not be heard as there was nothing filed. He submitted that any costs application regarding the March 2015 hearing should remain listed before Cronin J for directions on 6 July 2015 and that there may be utility in having the costs determined before any appeal so that any costs orders might be considered by the Full Court at the same time.
The fifth respondent submitted in response, that any appellate decision could not make orders as to the quantum of any costs in this matter, as they had only been joined after the conclusion of the main proceedings and therefore the Full Court would have no material on which to base findings and subsequent orders.
The sixth respondent similarly had not filed any written material but supported the fifth respondent’s oral application.
There is no reason or any matter of urgency to vacate XF’s Application in a Case already listed before Cronin J regarding the question of costs. This is a matter for the trial judge who is already seized of the case to be determined as listed for directions on 6 July 2015 and it might well be a case that requires determination before any appeal so that any order made, if appealed, might be heard at the same time as any appeal. This is a matter to be determined by Cronin J at his discretion. Accordingly paragraph 4 of the applicant husband’s Application in a Case was adjourned for directions before Cronin J on 6 July 2015 where XF’s Application in a Case is already listed.
The question of costs of the hearing before me regarding paragraph 4 of the applicant’s Application in a Case was reserved by agreement between the parties.
I certify that the preceding ninety-two (92) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Thornton delivered on 22 June 2015.
Associate:
Date: 22 June 2015
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