Minas and Castellanos

[2011] FamCA 143

FAMILY COURT OF AUSTRALIA

MINAS & CASTELLANOS [2011] FamCA 143

FAMILY LAW – PROPERTY – Orders to comply or properties to be sold

Family Law Act 1975 (Cth)

APPLICANT: Ms Minas

RESPONDENT: Mr Castellanos

FILE NUMBER: MLC 7416 of 2008

DATE DELIVERED: 28 March 2011

PLACE DELIVERED: Brisbane

PLACE HEARD: Melbourne by video to Brisbane

JUDGMENT OF: Murphy J

HEARING DATE: 28 March 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Kirkman QC and Mr Sweeney

SOLICITOR FOR THE APPLICANT: Nicholes Family Lawyers of Melbourne

COUNSEL FOR THE RESPONDENT: Mr Werner

SOLICITOR FOR THE RESPONDENT: Schetzer Constantinou of Melbourne

Orders

IT IS ORDERED BY CONSENT THAT

1. By 4.00pm on Monday 4 April 2011, the Husband shall pay $50,000 into the ANZ account no. …, all such amounts to be credited towards the periodic repayment of ANZ home loan … in the name of the Wife and secured by mortgage registered on the title to the property at M Street, (the “M Street Mortgage”).

2. The Husband do all acts and things and sign all documents necessary to:

   a.Effect registration of the plan of subdivision in respect of the property at P (the “Plan of Subdivision”) forthwith;

   b.Obtain a loan in such sum as is necessary to effect a discharge of the M Street Mortgage, and the other payments referred to in (d) such loan to be secured against the titles within the Plan of Subdivision which are issued to E Pty Ltd and D Pty Ltd as co-proprietors and retained by those entities pursuant to a joint venture agreement with G Pty Ltd (the “Retained Properties”).

   c.Keep the Wife informed as to the application and response from any lending institution approached to advance funds under sub-paragraph (b) hereof.

   d.On or before 30 June 2011, pay all amounts necessary to discharge the M Street Mortgage and to pay to the Wife the sum of $25,000 for the construction of the fence at the M Street property in accordance with the Orders of 10 February 2010 and to pay to the Wife any costs that he is Ordered to pay in respect to this application such costs to be taxed in default of agreement within 14 days.

3. The Husband advise the Wife via her lawyers within not less than 14 days of the proposed date for payment pursuant to Order 2(b) above and the Wife must do all acts and things and sign all documents necessary to enable the Husband to comply with that Order.  

4. Subject to Order 5, in the event that the Husband fails to comply with Order 1 or Order 2(d) hereof, the Properties registered in the names of the Husband personally or through any company controlled by him being the real properties at R and/or at the election of the Wife at C shall be sold as soon as practicable subject to the following:

   a.The property at R and the property at C shall not be sold if the Plan of Subdivision has been registered. In that event, only the Retained Properties shall be sold;

   AND IT IS ORDERED THAT

   b.The property or properties shall be sold by an agent appointed by the Wife and the Wife have sole conduct of any such sale;

   c.The mode of sale shall be auction in the first instance;

   AND IT IS FURTHER ORDERED BY CONSENT THAT

   d.The reserve price for each of the properties shall be as per the valuation prepared by Valuer 1 dated 2 March 2011; and

   e.Order 2 of the Orders made 10 February 2010 remains in full force and effect.

5. Nothing in these Orders prevents the Husband or his controlled entities, on or before 30 June 2011, from causing E Pty Ltd and D Pty Ltd to:

   a.Instruct agents to market either or both of the Retained Titles on the property at R or the property at C for sale at a reserve price as per the valuation prepared by Valuers 1 dated 2 March 2011; and

   b.Enter into a contract of sale for either or both of the Retained Titles on the property at R or the property at C on terms of settlement not more than 90 days.

6. If the retained titles on either the property at R or the property at C is sold, the proceeds of sale must be applied as follows:

   a.First, the costs of and incidental to the sale;

   b.Second, to discharge any registered encumbrance;

   c.Third, to discharge any CGT liability included as a result of the sale;

   d.Fourth, to discharge the M Street Mortgage;

   e.Fifth, to pay the sum of $25,000 to the Wife for the completion of the fence at M Street;

   f.Sixth, to pay any costs the husband is ordered to pay to the wife in respect of this application; and

   g.Seventh, the balance to be retained by the solicitors for the Husband in an interest bearing deposit on trust for both parties.

7. The Husband be and is hereby restrained from doing any act or thing to charge or otherwise encumber or further encumber the Retained Properties, the property at R and the property at C prior to any sale pursuant to Order 4 above or prior to the payment out in full of the M Street Mortgage and the other payments referred to in paragraph 2(d) hereof.

8. In the event that the Husband fails to sign all documents or instruments as required of him to give effect to the terms of these Orders then the Registrar of this Court is appointed pursuant to s 106A of the Family Law Act to sign such documents or instruments in his name.

9. Each party has liberty to apply for further Orders concerning the sale of either of the Retained Properties or the property at R or the property at C.

10.There be liberty to apply.

IT IS FURTHER ORDERED THAT

11.The Husband pay the Wife's costs of and incidental to this Application including Friday 25 March 2011 and Monday 28 March 2011 in an amount to be agreed and in default of Agreement as determined by a Registrar of the Family Court of Australia.

12.Pursuant to Rule 19.50 of the Family Law Rules 2004 this matter is one proper for the attendance of Senior Counsel and Junior Counsel on Friday and is otherwise certified for Counsel.

13.The matter be adjourned to his Honour Justice Cronin at a time and on a date to be advised for the making of directions to facilitate the final hearing of the matter before his Honour Justice Murphy, which it is anticipated will be after 30 September 2011 and to require 7 days of hearing.

IT IS NOTED THAT:

a)Order 1 is made to effect compliance by the Husband with Order 2 made by Faulks DCJ on 10 February 2010, and in particular:

i.To remedy the arrears in payments which have accrued to date as a result of the Husband’s failure to comply with that Order; and

ii.To pay further monthly instalments in advance to 30 June 2011.

b)The Husband is the sole director and shareholder of E Pty Ltd and D Pty Ltd.

c)The Husband warrants that he will receive title to the Retained properties immediately the Plan of Subdivision referred to in paragraph 2(b) is registered.

d)Nothing herein is intended to prevent the Wife from seeking the sale of further properties in order to discharge the M Street Mortgage in the event that sales under these Orders do not provide sufficient funds to do so or if the properties provided for are unable to be sold or are not sold by 30 June 2011.

e)The Husband undertakes that he has a current equity of not less than $650,000 in the property at R and $825,000 in the property at C.

f)The Husband undertakes that he will pay all of the outstanding invoices to the valuer appointed by the parties in Europe within 7 days to enable those valuations to be completed and released to the parties, it being warranted to him by the Wife that she has already paid one half of the valuer’s costs.

g)Nothing herein is intended to be interpreted that the Wife forgoes the claim of $60,000 for penalty interest to be paid under previous agreements.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 7416 of 2008

Ms Minas

Applicant

And

Mr Castellanos

Respondent

EX TEMPORE

REASONS FOR JUDGMENT

1. On 23 March 2011, the wife filed an Amended Application in a Case.  That application related to what can conveniently be described as the enforcement of orders made on 10 February 2010.  The substance of the orders sought that the husband make payments associated with a mortgage liability in respect of a property at H, where the wife resides, (‘the M Street mortgage’). 

2. The context for the application can be seen as a fairly longstanding property dispute between the parties, which is ongoing.  With the agreement of counsel for each of the parties today, it is proposed that this matter be set for trial over seven days at a time to be advised, but likely to be in November this year, that is, in about eight months time.

3. I don’t propose to traverse this matter’s long history for the purpose of these short reasons, which relate only to a relatively minor issue arising from minutes of consent that have otherwise been reached between the parties in respect of the application. 

4. I should mention that this matter came before me as an interstate Judge by reason of the inability of any Melbourne Judge to hear the matter.  The matter was listed on what might be seen as an urgent basis, and a video link was effected so as to have me hear the matter on Friday.

5. At that time, Mr Werner, counsel for the husband, sought leave to introduce evidence on the husband’s behalf which he conceded, had not been made available to counsel for the wife until 10.30 that morning.  Senior Counsel for the wife made application at that time that the proceedings be heard and determined at that time, in the absence of the material sought to be filed by the husband. 

6. I determined that justice required that the material from the husband be received, particularly in circumstances where I was able to make available time to hear the application today which is the first working day after that former date.

7. The husband filed, pursuant to my direction last Friday, a response by which various orders sought, in effect, to provide a methodology for the payment of mortgage moneys; the subject of the application by the wife.  Pursuant to that same direction, an affidavit was also filed by the husband. Within it are a number of passages struck out as inadmissible by agreement between counsel as (comprising settlement discussions, a matter that was raised during argument before me last Friday).

8. Minutes of consent have now been agreed to between the parties. They make provision for the moneys owing to the mortgagee to be paid via a method set out within those minutes.  The remaining disagreement between the parties relates to paragraphs 4(b) and (c), which are, it is to be noted, a component of the provisions which are to apply in the event that the husband fails to comply with his primary obligations pursuant to those minutes of consent.  Paragraph 4 of the proposed orders provide for sale and a proposed method of sale, of specified property in the event that the husband does not make the payments that the orders otherwise provide for.

9. The disagreement is this. The wife seeks an order that the property or properties, as the case may be, “shall be sold by an agent appointed by the wife, with the wife to have sole conduct of the sale,” and that “The mode of sale shall be by auction in the first instance.”  The husband responds by saying that, in the event that sale is necessary, the sale should be via the appointment of an agent agreed between the parties and, in default of agreement, as appointed by the president of the Real Estate Institute of Victoria and, further, that in lieu of the proposed specification of auction as a mode of sale, that the mode of sale be in the discretion of the agent so nominated.

10. It is submitted by Mr Werner, for the husband, that such an order provides for “pure neutrality” in circumstances where there is no trust between the parties to this relationship and where the prospects of them reaching agreement might be seen, by reference to the history of these proceedings, to be slim. In addition to the disagreements just referred to, Mr Kirkham SC, who appears as counsel for the wife, also submits that the wife should have her costs of the proceedings before the Court on Friday and her costs of today. 

11. It seems to me that all of the issues live between the parties can be dealt with together.

12. First, it seems to me that the agreement reached between the parties, provides for a sensible resolution of the issues previously live in the current proceedings. 

13. However, the evidence reveals plainly that these proceedings were only necessary as a result of the husband’s failure to make application to the Court and put before the Court evidence to the effect that compliance with the orders made in February 2010 could not be effected.

14. In that respect, it might be observed that the Court’s somewhat limited power to order costs (see s 117 of the Act) is one of the few methods which the Court can employ so as to ensure that its procedures are complied with, and in particular, that orders are complied with.

15. In circumstances where the husband asserts that he was experiencing financial difficulties of the type that are now deposed to in his affidavit, it was entirely open to him to not only make application to the Court, as his counsel, with respect properly, conceded he ought have done, but also, importantly, to set out in a transparent way each and all of the matters said by him to present difficulties in the performance of the orders. Importantly, insofar as the application for costs is concerned, the husband could have, and should have, set out a cogent and sensible proposed resolution of that difficulty via a means that is now the subject of consent.

16. On the face of the material before me, no such attempts were made by the husband. 

17. Counsel for the wife points to the fact that the assertions by the wife in her affidavit as to conversations with Bank 1 are not denied by the husband in his material. So much, as it seems to me, is true.  Further, correspondence which, it should be noted, relates directly to the husband’s obligation to perform in accordance with a court order, was not responded to, or, at least not, in my view, in a meaningful way. 

18. Again, it was entirely open to the husband to respond to the wife’s communication, (which, I again emphasise, related to his failure to comply with a court order) by:

    a)transparently indicating to the wife precisely what was said to be the difficulties involved in meeting those obligations; and

    b)proposing a methodology for meeting that difficulty similar, it might be thought, to what is now contained in the consent orders so as to avoid the necessity for court proceedings.

19. Neither of those things was done. On the evidence before me, it seems to me that, in those circumstances, the only reasonable option available to the wife was for her to bring the proceedings which she has.

20. That background can also be seen to be directly relevant to what the wife asserts to be a complete lack of trust on her part with respect to the husband’s prospective compliance with the minutes of consent agreed to between the parties.  A very significant factor in respect of the contested issue I need to determine is that the process of sale does not, in fact, need to take place unless the husband fails to comply with obligations which he himself agrees to. That is, there will be no sale unless and until he fails to meet obligations which he today says he will comply with.

21. Given the history of this matter outlined in the wife’s material, and noting that in very large proportion, none of that evidence is denied by the husband, it seems to me entirely appropriate that, if the husband defaults in the carrying out of the current consent orders, as indeed, it seems plain, he has been in default of orders made in February 2010, that the wife should have conduct of any sale which is designed to enforce the obligations that the husband otherwise says he is able to meet.

22. Those factors and the absence of trust and co-operation, points to the wife having the opportunity to dictate the mode of sale as her proposal contemplates.

23. It is true, as Mr Werner submits, that the usual order for sale where parties are unable to agree might be in a form as proposed by the husband, but it seems to me the sale in this case occurs in circumstances entirely different from that situation. 

24. To the extent that the husband asserts that the wife does not, or will not, seek to protect his interests in the conduct of any sale, two things might be said. 

25. First, any such concern that he might have (whether true or not as a matter of fact) might be seen to operate as an added incentive to him to comply with the obligations which he agrees to undertake. 

26. Secondly, it seems to me that, if the husband asserts that the wife has not carried out that sale in a bona fide and transparent way and/or that her conduct of the sale has resulted in any loss to him, that is a matter that can be examined at the trial, which will take place in approximately eight or nine months time.

27. By reference to section 117(2A) of the Act, there is nothing in the financial circumstances of the husband to suggest that he is not able to meet an order for costs, particularly in light of the terms of the order which contemplate the manner of its payment.  Secondly, there is nothing in the financial circumstances of the wife that suggest that she should not receive an order for costs. 

28. I consider that the conduct of the husband in the manner of his performance with the obligations pursuant to the orders of February 2010, and in and about his response to this application by the wife, point to an order for costs being made in the wife’s favour. 

29. Thirdly, I consider that these proceedings were necessitated by the failure of the husband to comply with previous orders, namely, orders made in 2009 and the subsequent orders made in 2010. 

30. Fourthly, it seems to me that the failure to make an offer in a manner and of a type to which I have earlier referred, in circumstances where the husband asserts there was good reason for his failure to comply with the orders of February 2010, also points to an order for costs being made in the wife’s favour. 

31. Mr Werner submits that neither party has been wholly successful or wholly unsuccessful in these proceedings because the parties have negotiated a consent arrangement.  I am not persuaded that any such consideration mitigates against an order for costs being made in favour of the wife.

32. I am persuaded that, in the circumstances of this case, it was appropriate for the wife to instruct senior counsel on the application.

33. I order accordingly.

I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy delivered on 28 March 2011.

Associate: 

Date:  15 April 2011