Narkis and Narkis - [2018] FamCA 1083

FAMILY COURT OF AUSTRALIA

NARKIS & NARKIS

[2018] FamCA 1083

FAMILY LAW – PROPERTY – enforcement where the wife has a pending s 79A application and wanted certain real property not sold on the basis that she hoped to keep it if she was successful in her application but also, she had an obligation to pay land tax – where the evidence establishing she paid the land tax but only at the last moment – where there is every chance that will recur in the future – order made for sale.

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

Narkis & Narkis [2017] FamCA 226
Narkis & Narkis and Anor (No 2) [2018] FamCA 1026

APPLICANT:

Mr Narkis

RESPONDENT:

Ms Narkis

FILE NUMBER:

MLC

210

2014

DATE DELIVERED:

18 December 2018

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Melbourne

JUDGMENT OF:

Cronin J

HEARING DATE:

05 December 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Strum QC

SOLICITOR FOR THE APPLICANT:

Cantwell Family Lawyers

COUNSEL FOR THE RESPONDENT:

Ms Matson

SOLICITOR FOR THE RESPONDENT:

Farrar Gesini Dunn

Orders

All existing orders precluding the husband selling the property at M Street, Suburb N (“the M Street Property”) are discharged.
The husband have the right to sell the said M Street property and after discharge of all sale costs, outstanding liabilities and encumbrances, the balance of funds be placed in an interest-bearing account in his name, to be held upon trust for both parties pending further order of the Court.
The application in a case filed on 9 November 2018, and the response thereto filed on 5 December 2018 are otherwise dismissed.

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

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

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 r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 210 of 2014

Mr Narkis

Applicant

And

Ms Narkis

Respondent

REASONS FOR JUDGMENT

The application in the judicial duty list on 5 December 2018 was by Mr Narkis (“the husband”) seeking that interlocutory property orders made in December 2017 be set aside and that three properties at M Street, Suburb N (“M Street”) be sold.
Ms Narkis (“the wife”) opposed the orders.
The argument revolves around a modestly simple question. The wife was to pay land tax obligations in respect of M Street. That obligation arose from the orders of the Court. According to the title, the person responsible to the State Revenue Office for the payment of the land tax is the husband. His argument is that the failure of the wife to make the payments places his credit rating at risk and the State Revenue Office had been taking action against him. His application was filed on 9 November 2018 and returnable on 5 December 2018 and only a day or so prior to the return date, the wife made the payment.
The husband argues that it is too little too late. The wife’s evidence, which was presented after 10:00 am in the hearing (notwithstanding she had had the documents for almost a month), was that she had borrowed the money to make the payment. That led to the husband arguing that the ongoing obligation was likely to be troublesome again.
The substantive litigation is complicated. Final property orders[1] were made over a year ago which gave the husband the right to sell M Street. The wife had failed to participate in the proceedings and the husband proceeded on an undefended basis. The husband then placed M Street on the market and an auction was to take place in December 2017.
[1] [2017] FamCA 226
On 7 December 2017, the wife brought an urgent application to stay the auction which was imminent. At the time, the husband was living in the United States of America and in the midst of the wildfires. His involvement without the assistance of legal representation at that time was by telephone. The wife attended the hearing on 13 December 2017 by counsel as she had engaged solicitors.
The wife’s substantive application was under s 79A of the Family Law Act 1975 (Cth) (“the Act”) to set aside the property orders and the substance of her argument at the interlocutory level was that if the sale proceeded, she would have lost the opportunity to retain the M Street properties in what she anticipated would be her successful application.
The wife’s position in December 2017 was that she would live in one of the units and rent out the other two providing her with income. From her perspective, the properties were unique because of planning restrictions and their location.
Notwithstanding the difficult conditions under which the husband was participating in the hearing, he agreed to orders. He consented to the sale of M Street being stayed upon the wife giving an undertaking as to damages. The auction was imminent and costs have been incurred. The wife gave the undertaking.
On 13 December 2018, the following order was made:
[3]The Wife be responsible for costs properly and reasonably incurred by the Husband as a result of aborting the public auction of the [Suburb N] Properties, including real estate agent’s costs (if any), auctioneer’s costs (if any), conveyancing costs (if any), and any advertising costs of sale, subject to provision by the Husband of evidence in support of the proper and reasonable incurring of such costs, such costs to be paid by the Wife to the Husband within 30 days of receipt from the Husband of the evidence in support, subject to Order 4 hereof.
On 28 March 2018, the parties were back before the Court and after argument, the following orders were made:
[8]That in relation to the real property know as [M Street, Suburb N] the Wife shall pay the following expenses for the said property in addition to the monthly sum of $4,167 including but not limited to:
(a)      Land tax owing in the amount of $8,094;
(b)Land tax instalment due in March $5,772 and all further instalments of land tax as and when they fall due;
(c)      Building insurance premium $2,438; and
(d)      Accounts owing for repairs in the amount of $2,500.
[9]That within 14 days the Wife provide the names of 3 appropriately qualified tradespersons to the Husband to inspect the real properties as follows:
(a)With respect to the real property at [M Street, Suburb N in order to identify necessary repairs (if any) and provide a quotation as to the works to be done, with particular attention to water damage and the door lock system, with such attendance and report (if any) to be at the equal expense (if any) of the husband and the wife; and
(b)With respect the real property at [Q Street, Suburb R] in order to ascertain in general terms the nature and extent of works to be done, with the expense (if any) of such attendance and report (if any) to be at the Wife’s sole expense.
(c)With the Husband to make his election of tradespeople within a further 7 days and notify the Wife of his election.
(d)The Wife’s solicitors to contact the tradespeople to facilitate the inspections of the properties; and
(e)The Wife is not permitted to attend either of the properties for the purposes of any inspection.
The reasons for judgment of 28 March 2018 are published as Narkis & Narkis and Anor (No 2) [2018] FamCA 1026. There were a number of unresolved issues identified including what to do about the outstanding land tax but also issues associated with repair work that needed to be done on the rented properties.
In respect of the land tax, senior counsel for the wife argued that there was nothing pressing at that time and the payment could be delayed, but the husband through his counsel pointed to the order and maintained that the expenses (for which the wife was responsible) included land tax. He argued that non-payment could affect his credit rating. I observed that I saw no reason why the repairs to the property did not fit into the same category as land tax. The wife had wanted to be present when any trades quotations were obtained and I considered at the time that there would be no reason for that and nothing cogent had been offered as to why it was so necessary. The orders were then made.
In his affidavit in support of the orders pursued in March 2018, the husband asserted that he provided the relevant invoices for marketing and advertising of M Street in December 2017 and they totalled $13,572. He did not get those monies until 19 February 2018 in circumstances where he had paid the advertising costs out of his own pocket of $8,535. The delay in payment to him was therefore almost 3 months. The husband now points to those sort of facts as indicative of the wife’s approach to ordered obligations.
The amount of money that the wife was paying him was said to be insufficient to cover expenses. He deposed to the fact that as at March 2018, he had an outstanding land tax bill of $8,094 and there was a further instalment due in that month of $5,772. He attached a copy of the land tax bill.
By July 2018, problems had again arisen. The husband acknowledged that he had received land tax of $13,662 being the two sums just mentioned, but that there was a further $15,000 then outstanding and he anticipated further instalments would soon become due and payable.
On 28 May 2018, the husband solicitors wrote to the wife’s solicitors seeking the payment of the sum then outstanding. Time went by and no payment was made. Disconcertingly, no response was received to the husband’s requests. The husband then said that he risked significant penalties, as well as damage to his credit rating and that he could not afford to maintain the expenses. He explained that that was the reason why he had always thought that M Street had to be sold. It is important to note that his application in July was for the sale of M Street as a consequence of the position adopted by the wife.
The same affidavit in July also made mention of the problems associated with engaging tradespeople to identify the repairs needed for M Street and the provision of quotations.
The matter was back before the Court on 4 September 2018 before Johns J, where the proceedings were adjourned to a directions list on 10 October 2018. The significance of the adjournment lies in a notation to the order which reads as follows:
AND THE COURT NOTES:-
A.The matter has been adjourned to enable the parties to confirm the liability to the State Revenue Office in respect of the property at [M Street, Suburb N].
B.In the event that payments by the wife to the State Revenue Office pursuant to Order 9 of the Orders dated 28 March 2018 are outstanding at the date of the Directions Hearing the husband may seek to have the matter relisted in the Judicial Duty List on the next available date.
The first of those notations was interpreted by counsel for the wife as meaning that both parties wanted to clarify what was outstanding to the State Revenue Office. The husband strongly refutes that and having regard to the documents that have been provided in evidence, I accept the husband’s position. The husband provided the wife with documents from the State Revenue Office which have annotations said to be written by the husband. The wife’s position seems to be that she wanted to clarify that the amount that she was being requested to pay related specifically to M Street, but even a cursory examination of the document will show that the only other property listed was the party’s former home property at O Street, Suburb P. The amount received in respect of that Suburb P property was minimal by comparison to the amounts struck in respect of the M Street properties. It remains unclear why the wife adopted the position she had but more importantly, counsel was unable to give any explanation as to why nothing had been done for months. No explanation was given as to the lack of response by the wife’s solicitors to the requests earlier mentioned.
By an affidavit sworn on 5 December 2018, the wife gave no explanation for the delay. Her affidavit filed at the hearing, said that she instructed her solicitors on 27 August 2018 to ask for the documents relating to the land tax. As can be seen, this was some days prior to the September hearing.
For reasons that remain unclear, whatever correspondence was provided between solicitors, the wife’s solicitor was not satisfied. Subpoenae was then sought to be issued to the State Revenue Office to provide the land tax assessments from 2012 to date and various pieces of correspondence between the husband and that office. The State Revenue Office quite correctly pointed to the fact that they were not to be so subpoenaed, and the solicitor then sought an alternative method of obtaining the information. The wife said that in October 2018, the husband’s solicitor provided to her solicitor 228 pages of documents that had been provided by the State Revenue Office. To the extent that the wife intended I draw an inference that this was an overwhelming amount of material, I do not do so. In my view, the document that was provided earlier in the year by the husband is quite clear and her obligations could have easily been ascertained with some cooperation which was not sought. No plausible explanation has therefore been given for the delays.
To the extent that the wife was asserting that she did not have to pursue what her obligations to pay the land tax were because the husband was the debtor, I reject any such suggestion. Whilst that was not specifically put by counsel for the wife, the wife’s position had that strong flavour. The orders of the Court were clear. The wife had the obligation to pay as and when the payments fell due. The evidence of the husband, which seems to me to be uncontested, is that he provided the accounts as they were received. The silence of the wife and her solicitors remains unexplained.
The husband issued the application in a case on 9 November 2018 seeking the sale of the property. He supported that with an affidavit which set out the history of the matter and he expressed his frustration because of the impact upon his financial position. The husband deposed to the fact that in October he received further correspondence from the State Revenue Office demanding immediate payment by which time, the outstanding sum was $26,364.27. Importantly, that included $1,000 of penalty interest, but of course it was in the name of the husband. The husband deposed to a conversation between the respective solicitors wherein the wife’s solicitor said they would have a response by the end of the week. That would have been 2 November 2018. No such response followed.
With the stand-off, State Revenue Office referred its claim to a solicitor to commence legal proceedings against the husband. The wife’s solicitor was advised of that. The husband requested payment by 2 November 2018, failing which he would seek to have the property sold. No response was received. More importantly, no payment was made.
When the husband issued the proceedings on 9 November 2018, the land tax bill had been outstanding for seven months. The wife has given no explanation for her non-compliance.
In her affidavit filed at the hearing, the wife deposed to the fact that on 3 December 2018, she borrowed $26,600 from friends and paid it into her solicitors trust account from which the debt of $26,502.47 was paid to the State Revenue Office.
The absence of an explanation for the non-payment and the concerns of the husband about what may happen again shortly, bearing in mind the wife is borrowing money to pay these amounts, is very concerning. The history of this case gives me little comfort in circumstances where the very final orders were made on the basis that the wife had not cooperated. Twice, I asked counsel for the wife for an explanation as to why her instructors had not responded and she said she was unable to provide an explanation. I must therefore presume that the wife did not or would not, give instructions. It is timely to remember that in respect of obligations under Court orders, Rule 1.08 of the Family Law Rules 2004 (Cth) is also directed to lawyers.
I make no criticism of the lawyers in this case because as I have just observed, they act on instructions.
The absence of explanation, the likelihood of a repetition and the continuation of the lack of response places the husband in the situation where the sorts of demands by the State Revenue Office may continue.
In my view, the wife has had ample opportunity to do what she was obliged to do (and more importantly consented to do) under the orders that can be traced to her request for an indulgence in December 2017. In my view, to avoid further litigation in respect of these issues, which unfortunately use up extraordinary amounts of court time, the only appropriate orders that the properties now be sold. The money will be retained in a controlled monies account bearing interest so to that extent, the wife’s s 79A application is partly prejudiced.
Counsel for the wife submitted that the balance of convenience favoured the wife because once the property was gone, it could not be retrieved. In reality, that submission only has merit if it is accepted that the M Street property was “unique”. No doubt other people will also see this property as unique and be prepared to pay for it and the wife would then have ample access to cash to obtain the benefit of other property if she was ultimately successful under the s 79A application.
It cannot be assumed that the wife will be successful. Senior counsel for the husband submitted that it is likely that there will be an application for summary dismissal in the foreseeable future. I am not in any way pre-empting that determination but it is another factor that I ought to take into account in the balance of convenience argument. The wife cannot continue to argue that the uniqueness of the M Street property is such that it ought not to be sold because her rights would be prejudiced as a similar argument applies to the husband. She cannot, in the circumstances where the husband is entitled to the benefit of the judgment, argue that she should have her rights protected to the prejudice of his. On balance, the balance of convenience favours the husband. He has the benefit of the judgment.
It is important to acknowledge that the wife has paid sums of money but her indication that she has had to borrow points to the fact that she does not have the resources to keep this property unless she is ultimately successful on the s 79A application. That is not an easy bar to jump. If she has the capacity to borrow significant sums of money, no doubt she can make an offer to buy the property without it having to be sold on the public auction market.
In all the circumstances, it is just and equitable to make an order to sell M Street on the basis of the wife has failed to satisfy me that there will not be repetition of what has gone on over 2018.

I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 18 December 2018.

Acting Associate:

Date: 18 December 2018