Mayes & Brogan

[2021] FamCA 20

FAMILY COURT OF AUSTRALIA

Mayes & Brogan [2021] FamCA 20

File number(s):

BRC11249/2019

Judgment of:

CAREW J

Date of judgment:

25 January 2021

Catchwords:

FAMILY LAW – PROPERTY – Interim property distribution – Where the applicant entered into a contract to purchase real property but did not have the funds to complete the purchase – Where the applicant sought an order that the respondent advance to the applicant the funds required to complete the purchase – Whether there is a principled reason to make an interim property order – Whether it is just and equitable to make that order – Where it is found that this is a matter where it is just and equitable to alter the property interests – Where the respondent is to pay such sum as is required to facilitate the settlement – Where the applicant is restrained from encumbering or dealing with the property.  

Legislation:

 Family Law Act 1975 (Cth)

Cases cited:

Marchant & Marchant (2012) 49 Fam LR 1

Stanford & Stanford (2012) 247 CLR 108

Strahan & Strahan (interim property orders) (2011) FLC 93–466

Number of paragraphs:

24

Date of hearing:

25 January 2021

Place:

Brisbane

Counsel for the Applicant:

Dr J. Brasch QC

Solicitor for the Applicant:

Pullos Lawyers

Counsel for the Respondent:

Mr T. Kirk QC

Solicitor for the Respondent:

Damien Greer Lawyers

ORDERS

BRC11249/2019
BETWEEN:	MS MAYES Applicant
AND:	MR BROGAN Respondent

ORDER MADE BY:	CAREW J
DATE OF ORDER:	25 JANUARY 2021

THE COURT ORDERS THAT:

1.Subject to paragraphs 2 and 3 of this Order, the respondent pay or cause to be paid to the trust account of the applicant’s conveyancing lawyers, B Solicitors, the sum of $3,171,250.20 or such further sum as might be required (“the settlement funds”) to facilitate the settlement by the applicant of the purchase of the “C Town properties”, more particularly described as 1 & 2 H Street, C Town, New South Wales  pursuant to the contracts for sale and purchase dated 11 June 2020 (“the contracts”).

2.The applicant forthwith apply for a further extension of the settlement date of the Contracts and provide to the respondent a copy of all documents relevant to that request including but not limited to any response thereto.

3.The respondent forthwith notify the applicant how much time he will require to access the settlement funds with or without incurring a penalty and provide to the applicant a copy of all documents relevant thereto.

4.In the event of the completion of the contracts, the applicant be restrained and an injunction hereby issues restraining her from encumbering or dealing with the C Town properties without the prior written consent of the respondent or order of the Court.

Note:   The form of the order is subject to the entry in the Court’s records.

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 17.02 Family Law Rules 2004 (Cth).

IT IS NOTED that publication of this judgment by this Court under the pseudonym Mayes & Brogan has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

EX TEMPORE REASONS FOR JUDGMENT

Carew J

1. Ms Mayes (“the applicant”) and Mr Brogan (“the respondent”) were in a de facto relationship for at least 13 years (the applicant contends it was 15 ½ years).

2. The matter comes before me pursuant to an urgent application filed last Friday, 22 January 2021, in the following circumstances.

3. Unbeknown to the respondent until 18 January 2021, the applicant entered into contracts to purchase two properties in C Town, New South Wales (“the C Town properties”) on 11 June 2020. The contracts are due to settle on 27 January 2021 but the applicant does not have sufficient funds to complete the purchase unless the respondent pays her the sum of about $3.2 million (“the settlement funds”). 

4. The applicant has already obtained two extensions under the contracts and her conveyancing lawyers are not optimistic of her chances in obtaining a further extension. Surprisingly, given the circumstances, no further extension has been sought. It is a national public holiday tomorrow (26 January 2020) being Australia Day and the scheduled time for settlement on Wednesday is 11:00am (presumably AESDT). If the applicant is unable to settle, she will not only lose her deposit of $323,800 but may be sued for damages for breach of contracts. She has already incurred penalty interest charges of $77,534.64 under the contracts due to the delayed settlement and will incur approximately $4,527.44 in penalty interest charges due to having an overdue stamp duty liability.

5. The respondent opposes the order sought by the applicant that he advance the settlement funds to the applicant.

   THE APPLICANT’S SUBMISSIONS

6. The applicant primarily relies upon the Court’s powers to make an interim property alteration order pursuant to ss 90SM (property settlement proceedings) and 90SS (general powers of the Court) of the Family Law Act 1975 (Cth) (“the Act”).

7. Section 90SM empowers the Court, after the breakdown of a de facto relationship, in the case of proceedings with respect to property of the parties to the de facto relationship or either of them, to alter the interests of the parties in the property (s 90SM(1)(a)) but the Court must not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order (s90SM(4)).

8. The applicant argues that the Court will be comfortably satisfied that an order is just and equitable for the following reasons:

   (a)The concession made by the respondent that a s 90SM order is just and equitable as may be inferred in his Response to Initiating Application filed 30 March 2020 in which he seeks such an order which would see the applicant deprived of her current legal interest in the two properties she owns jointly with the respondent;

   (b)The fact that the parties lived together for 15 ½ years in a de facto relationship;

   (c)The applicant is entirely reliant upon the respondent for support;

   (d)The applicant currently resides in a property owned/controlled by the respondent;

   (e)The property pool available being either $326,516,831 (according to the respondent) or $427,683,076 (according to the applicant);

   (f)The applicant made financial contributions including:

   (i)Her initial contribution of about $75,000;

   (ii)Her wages from employment initially independent of the respondent for the period 2004 to 2009 at an annual income of approximately $72,000 increasing to $150,000 gross;

   (iii)Her wages from employment by entities owned by the respondent for the period 2009 to 2014 at an annual income of approximately $72,000 gross;

   (iv)The payment of rent for a unit in Sydney for the period 2006 to 2007 in which she and the respondent resided;

   (v)From 2007 the payment of maintenances costs, rates, utilities, cleaning costs and the purchase of white goods at various residences in which the parties lived;

   (vi)Purchase of groceries, gifts, and other personal expenses for both herself and the respondent;

   (vii)Borrowings from her mother in the sum of about $177,000 which was used for joint purposes;

   (viii)The purchase of a property at D Town with funds provided by her mother of $200,000 and additional borrowings;

   (ix)Payment of international airfares, removalists, insurances, installing new plumbing and purchasing furniture for a property jointly owned in The USA in 2013;

   (g)The applicant made contributions to the welfare of the family comprising herself and the respondent including the following:

   (i)Entertaining business associates of the respondent at home;

   (ii)Accepting a wage in the respondent’s entities that was allegedly lower than market rates;

   (iii)Providing advice and being a constant “sounding board and consultant” for the respondent in relation to business decisions;

   (iv)Overseeing various maintenance, building and rectification works;

   (v)Undergoing unsuccessful IVF treatments;

   (vi)Managing the household, meals and entertainment in accordance with the respondent’s desires;

   (vii)Cooking meals, arranging the respondent’s medical and dental appointments, caring for the respondent during periods of illness including after falls, a stoke and managing his diabetes;

   (viii)Providing emotional support during the respondent’s involvement in a high profile enquiry during the late 2000s in which the respondent gave evidence, the process of which was very stressful for the respondent and the applicant;

   (h)The various s 90SF factors which favour the applicant including:

   (i)Her age and caring responsibilities for her elderly mother who suffers from dementia;

   (ii)The fact that she has been out of the general workforce since 2009;

   (iii)The significant earning disparity between herself and the respondent; and

   (iv)The respondent’s vastly superior financial circumstances.

9. As an alternative to the payment being made to the applicant by way of interim property settlement, the applicant, perhaps half-heartedly, submits that the sum could be paid pursuant to the maintenance power. The applicant is currently supported by the respondent and there can be no serious issue about his capacity to pay.

   THE RESPONDENT’S SUBMISSIONS

10. The respondent resists any order for the payment of the settlement sum. He raises (it would seem for the first time) a Stanford[1] issue, namely, that it is not just and equitable to make any property alteration order. It is submitted that the order sought in his Response to the Initiating Application should not be taken as a concession and that he intends to amend his Response.

    [1] Stanford & Stanford (2012) 247 CLR 108 (“Stanford”).

11. The Response to the Initiating Application as it stands seeks that the property owned jointly by the parties in the USA be sold and the respondent retain the entire proceeds and that the jointly owned property in Suburb E, Sydney be transferred into his sole name. Further the respondent seeks that there be “an accounting of the net property and financial resources of the parties” and he be “at liberty to amend and further particularise the orders sought upon completion of full and frank disclosure”.

12. The respondent submits that there is insufficient evidence to satisfy the Court that it is just and equitable to make any order and as the matter was brought on urgently he has not had the opportunity to put before the Court evidence relating to the Stanford issue.  He did not however, seek an adjournment of the application.

13. The respondent submits that there are effectively two stages in determining an application for an interim property order. Firstly, whether or not the Court should exercise its discretion to entertain the application and secondly, whether it is in the interests of justice. Reliance is placed upon (Strahan & Strahan (Interim Property Orders) (2011) FLC 93–466; Marchant & Marchant (2012) 49 Fam LR 1). In particular, (quoting from Marchant at [25]):

    “... Recognising that in the context of s 79 proceedings, the interests of justice will usually be best served by one single and final determination of property orders, it will not be appropriate to exercise the power merely because, on such a final determination, the applicant would receive the interim property sought or in excess of that sought.”

14. It is nevertheless recognised that there may well be urgent circumstances justifying an interim property order.

15. In relation to the first stage of the enquiry, the respondent argues that the Court will not be satisfied that the Court should exercise the discretion in favour of the applicant for the following reasons:

    (a)The applicant secretly entered into a contract to acquire the property in question in the apparent expectation that these proceedings will be concluded and her entitlement would exceed $3.3million. Even when it was obvious back in October 2020 that settlement was unlikely, she says nothing about the contracts, nor does she disclose them;

    (b)The respondent would be put in an invidious position if required to fund $3,171,250 in a matter of days;

    (c)The asserted source of funds, being the Westpac account of F Trust/now G Pty Ltd is akin to a bank bond in respect of which the respondent says Westpac, understandably, requires 90 days’ notice for withdrawals;

    (d)There is some evidence that the applicant was seeking to obtain mortgage finance but the Court is not informed what occurred in that regard;

    (e)The applicant already holds assets having a value of $2.9million obviously acquired during the course of the relationship and for present purposes, it is not accepted that the applicant’s overall property settlement entitlement exceeds that sum. This is not a percentage case and there is a Stanford issue which needs to be considered. The respondent’s evidence is that he brought $247million to this relationship in 2004 and now has around $300million, such that in terms of the time value of money, would have less purchasing power than what he had in 2004;

    (f)The applicant took the risk and delayed disclosing the transaction until it was too late. In these circumstances, if she suffers a loss of $391,000 or more, so be it; and

    (g)That the applicant sustains a loss gives rise to no injustice by reason of these proceedings.

    DISCUSSION

16. The applicant is 61 and the respondent 65. The parties commenced cohabitation in 2004 and there is no dispute that they lived in a de facto relationship until at least 2017 on the respondent’s case and 2019 on the applicant’s case. There is also no dispute that the property pool is significant and that the financial contributions both initially and throughout the relationship significantly favour the respondent. I note that the parties have engaged in negotiations for some months (substantive proceedings having commenced on 18 September 2019) and that they participated in a mediation in July 2020. An agreement in principle is said to have been reached between the parties in November 2020. In that context, I note that when this matter was mentioned before a registrar on 12 November 2020 it was listed for further mention on 25 March 2021 with a notation that the parties are “continuing to resolve all issues in dispute”. 

17. While it is true that this matter has been brought on urgently, it does not appear from the respondent’s Response to Initiating Application that there was ever an issue prior to today on the Stanford point. Of course, whether or not any concession is made, I need to be satisfied that there is a principled reason to make an interim property order[2] and that in turn involves a finding that it is just and equitable to make an order.

    [2] Strahan & Strahan (interim property orders) (2011) FLC 93–466.

18. In this context, I note the observations made by the High Court in Stanford at paragraph 42:

    In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying 79(4).

19. In my view, this is one of those cases, as recognised by both parties by reference to the orders sought in the substantive proceedings. It is perhaps understandable given the concession made in the Response to Initiating Application that the applicant did not address in greater detail the just and equitable requirement identified in Stanford in her material filed to date.

20. I am satisfied that it is just and equitable to make an order pursuant to s 90SM of the Act in this case for the following reasons:

    (a)The relationship has come to an end;

    (b)There is no longer the common use of property by the applicant and respondent;

    (c)The explicit or implicit assumptions about the existing arrangements of marital property interests are no longer sufficient or appropriate having regard to the fact, for instance, that the applicant is living in a property owned or under the control of the respondent and the respondent seeks to sell or have transferred to him the jointly owned property;

    (d)The assumptions that any adjustments to their jointly held interests could be effected consensually is also brought to an end by their separation but also by the orders sought by the respondent in his Response to Initiating Application; and

    (e)In addition, I also take account of the applicant’s combined contributions being financial, non-financial and to the welfare of the family and the other factors considered pursuant to s 90SF(3) so far as relevant, although in doing so I note that the respondent has not as yet responded to those factual matters. 

21. In this case the applicant will, if she is able to complete the contracts, retain ownership of the C Town properties pending finalisation of the property settlement proceedings and, as envisaged on her behalf, she will be enjoined from encumbering that property in the interim.  In those circumstances, it will be possible, in the event the applicant’s entitlements are found not to exceed her existing legal and equitable interests in the property, for the respondent to recover the sum advanced.

22. The applicant should be required to forthwith apply for an extension of the settlement date to provide sufficient time for the respondent to access funds without incurring penalty, if possible. The cash funds previously available to the respondent from which the settlement funds could have been paid were apparently deposited into a term deposit in April 2020. Given the size of the property pool it is inconceivable that the respondent could not access the sum required at some point, but if there is no way to access sufficient funds without incurring penalty or cost then it will be difficult, I would have thought, for the applicant to resist an argument that she should bear responsibility for those losses. However, the extent to which losses will be incurred and who bears responsibility for them will be matters for determination at a final hearing.

23. The applicant raised as an alternative basis for the making of the order sought by her the spouse maintenance power. While it may well be arguable that the applicant is unable to support herself adequately, a fact seemingly accepted by the respondent who currently supports the applicant by providing accommodation and making a payment to her of $7,000 per month, the difficulty for the applicant is the quantum sought by way of a lump sum. It is not as if the applicant has nowhere to live and even if C Town is the preferred location (given the ability for the applicant and her brother to then share the caring responsibilities for their mother) it is difficult to sustain an argument that maintenance should be paid in a lump sum of $3.2million or thereabouts.  

1. Accordingly, I propose to order the respondent to pay such sum as is required to facilitate the settlement. The applicant will be required to seek a further extension and the respondent should make urgent enquiries about how he may best access the funds, hopefully without incurring a penalty. The applicant will also be enjoined from encumbering or dealing with the C Town properties pending further order or agreement.  

I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Carew.

Associate:

Dated:       25 January 2021