Nass and Addens and Ors and Addens and Anor v Nass and Anor

[2018] FCCA 3880

FEDERAL CIRCUIT COURT OF AUSTRALIA

NASS & ADDENS & ORS and ADDENS & ANOR v NASS & ANOR [2018] FCCA 3880

Catchwords:
BANKRUPTCY – Undischarged bankrupt – objection to settlement as between trustees in bankruptcy and bankrupt’s wife – previously existing financial agreement between bankrupt and the wife – whether agreement founds a basis for the bankrupt to object to trustees’ settlement with the wife – agreement not enforceable subsequent to the appointment of trustees in bankruptcy – bankrupt asserting he was an amicus curiae – bankrupt not an amicus curiae – no grounds to deny operation of the Bankruptcy Act.

FAMILY LAW – Property – sixteen year relationship – final separation in 2008 – direct and indirect financial contributions – post separation contributions – wife homemaker and primary carer and husband primary income earner during parties’ cohabitation – parties’ eldest daughter sought to intervene – whether the daughter had an enforceable equitable interest in the former matrimonial home – daughter failed to notify her interest by lodging a caveat – she did not articulate her position as against trustees in bankruptcy – application to intervene refused – proposed settlement as between trustees in bankruptcy and the wife approved.

Legislation:

Bankruptcy Act 1966, ss.58, 116

Family Law Act 1975, ss.75(2), 79

Applicant: MS NASS

First Respondent: MR ADDENS

Second Respondent: MR REUTER

Third Respondent: MR NASS

Fourth Respondent: MR ABRAMI

Prospective Intervener: MS A NASS

File Number: MLC 10246 of 2018

First Applicant: MR ADDENS

Second Applicant: MR REUTER

First Respondent: MR NASS

Second Respondent: MS NASS

File Number: SYG 1902 of 2018

Judgment of: His Honour Judge Wilson

Hearing date: 14 December 2018

Date of Last Submission: 14 December 2018

Delivered at: Melbourne

Delivered on: 14 December 2018

REPRESENTATION

MLC 10246 of 2018

Counsel for the Applicant: Ms J Wald

Solicitors for the Applicant: Taylor Splatt & Partners

Counsel for the First Respondent:

Solicitors for the First Respondent: O’Neill Partners Commercial Lawyers

Counsel for the Second Respondent:

Solicitors for the Second Respondent: O’Neill Partners Commercial Lawyers

Third Respondent: In person

Solicitors for the Third Respondent: None

Counsel for the Fourth Respondent: No appearance

Solicitors for the Fourth Respondent: None

Prospective Intervener: In person

Solicitors for the Prospective Intervener None

SYG 1902 of 2018

Counsel for the First Applicant:

Solicitors for the First Applicant: O’Neill Partners Commercial Lawyers

Counsel for the Second Applicant:

Solicitors for the Second Applicant: O’Neill Partners Commercial Lawyers

First Respondent: In person

Solicitors for the First Respondent: None

Counsel for the Second Respondent: Ms J Wald

Solicitors for the Second Respondent: Taylor Splatt & Partners

MLC 10246 of 2018

ORDER

1. The prospective intervener’s application filed on 12 December 2018 for leave to intervene in this proceeding is refused.

ORDERS BY CONSENT

1. These orders will also give effect as a settlement, as between the first and second respondents (“respondent trustees”) and the applicant, of respondent trustees’ application in proceeding SYG 1902 of 2018, with respect to the vested bankruptcy property of the third respondent being his interest in Property A, registered to Mr Addens and Mr Reuter and Ms Nass as tenants in common in equal shares.

2. These orders finalise this proceeding and the respondent trustees’ proceeding in SYG 1902 of 2018 as between the respondent trustees and the applicant.

3. On or before 31 January 2020 the applicant pay to the respondent trustees the sum of $136 000.00 (“settlement sum”).

4. Upon payment of the settlement sum, in accordance with order 3, the respondent trustees will sign a transfer produced by the applicant for the transfer of their interest in the property to the applicant pursuant to these orders AND if the applicant pays the settlement sum any time after 31 January 2020, but prior to any sale of the property being effected, the respondent trustees shall only be required to provide the transfer to the applicant upon the payment of their reasonable costs and expenses incurred in relation to any steps taken to effect the sale of the property, as contemplated by order 5 hereof.

5. Should the applicant fail to pay to the respondent trustees the settlement sum by 31 January 2020, then the respondent trustees are at liberty to sell the property and the following orders shall apply –

   (a)the whole of the property, including the applicant’s interest in the property, vests in Mr Addens and Mr Reuter, (“trustees for sale”) subject to any encumbrances affecting the entirety thereof and free of any encumbrances affecting any undivided share therein be held upon the statutory trust for sale created pursuant to Pt IV of the Property Law Act (Vic) as applying under s 79 of the Judiciary Act (Cth);

   (b)the applicant and the trustees for sale shall use their best endeavours to appoint a mutually agreeable real estate agent for the sale of the property AND if, after 14 days, the applicant and the trustees for sale cannot agree to an agent being appointed, the president of the Real Estate Institute of Victoria shall appoint the selling agent;

   (c)the trustees for sale be empowered to offer the property for sale and to –

   (i)sell the property by public auction with power to fix a reserve price; or

   (ii)sell the property by private treaty at the best available price,

   subject to orders 6(d) and 6(e) and 6(f) below;

   (d)the reserve price for the sale of the property shall be fixed by way of a valuation of the property provided by a valuer appointed pursuant to order 6(e) hereof;

   (e)the trustees for sale be empowered and authorised to obtain a valuation of the property by employing a registered valuer for the purposes of determination of a fair and reasonable price of the property for the purposes of the performance of their duties as trustees for sale AND such valuer shall be appointed by the president of the Real Estate Institute of Victoria;

   (f)further to orders 6(b), 6(c), 6(d) and 6(e) hereof, if bidding at auction does not reach the reserve price, the trustees for sale are entitled to negotiate with the highest bidder at the auction, or any other interested party after the completion of the auction, to effect a sale of the property, PROVIDED THAT the property shall not be sold for a price which is less than 10% below the reserve price, unless the applicant and the trustees for sale agree in writing;

   (g)on and from the date of these orders and to no later than 31 January 2020, the applicant shall have the right to occupy the property and during such right of occupation, the applicant pay all mortgage payments, debts, rates and taxes associated with the property and keep it insured and provide evidence of these payments/insurances to the trustees for sale, within 14 days of written request being made;

   (h)after sale of the property at auction or by private treaty, the trustees for sale be empowered to deduct from the proceeds of sale –

   (i)the commission and other expenses of any real estate agent employed by the trustees for sale;

   (ii)insurance, mortgage payments and any other reasonable expenses for protection and maintenance of the Property that are not paid by the applicant at order 6(h)(vii) and such sum to be reimbursed from the applicant’s share of the net proceeds of sale;

   (iii)all necessary adjustments of rates and taxes on settlement of the sale;

   (iv)any taxes, including but not limited to capital gains tax, land tax and goods and services tax (“GST”);

   (v)the mortgagee’s debt secured over the property under registered mortgage ...6L to bank B;

   (vi)the trustees for sale shall not charge more than $250 per hour (excluding GST) in relation to their fees for exercising their rights as trustees for sale and such remuneration and expenses of the trustees for sale in respect of the sale of the property shall be capped at $15 000.00 (including GST and disbursements);

   (vii)the net proceeds of sale of the property be paid as follows and in the following priority –

   (A)the settlement sum to the respondent trustees; and

   (B)the balance to Taylor Splatt & Partners;

   (i)the remuneration, costs and expenses of the trustees for sale as set out in order 6(h) are charged over the property and to be paid as ordered in order 6(h); and

   (j)the respondent trustees be permitted to retire as statutory trustees for sale upon completion of the sale and distribution of money in respect of the property pursuant to these orders without further order of the court.

6. The trustees for sale are at liberty to apply to the court to seek any additional orders and/or to seek the advice of the court on any matter, arising from their appointment or these orders AND the applicant has liberty to apply to the court in relation to any matter arising from these orders.

7. That the third respondent and the applicant each give vacant possession of the property on 1 February 2020 if the settlement sum is unpaid pursuant to order 4.

8. A writ of possession be issued forthwith in favour of the trustees for sale with respect to the property but stayed up to and including 31 January 2020.

9. The trustees for sale provide an account of all remuneration and costs incurred in relation to the sale of the property, within seven days of a written request by the applicant.

10. Each party pay their own costs of this proceeding.

11. These orders may be entered in proceeding SYG 1902 of 2018 together with this proceeding.

12. Upon payment of the settlement sum in accordance with order 3 above and subject to order 4 above, the trustees for sale and the applicant –

    (a)release and forever discharge each other from all claims, causes of action, costs or costs orders or liability;

    (b)undertake neither to initiate, prosecute or pursue any claims whatever against each other; and

    (c)in relation to the subject matters of this proceeding.

ORDERS

1. Unless otherwise specified in these orders and save for the purposes of enforcing monies due under these or any subsequent orders –

   (a)each party is solely entitled to the exclusion of the other to all property (including choses‑in‑action) in the possession of such party as at the date of these orders (the furniture, personal possessions, and like chattels in the real property being deemed to be in the possession of the wife);

   (b)monies standing to the credit of the parties in any joint bank account are to be divided equally;

   (c)the wife foregoes any claims that she may have to the Husband’s Transport Accident Commission benefits;

   (d)insurance policies remain the sole property of the owner/beneficiary named therein; and

   (e)each party be solely liable for an indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.

2. All extant applications as between the husband and the wife are otherwise dismissed.

ORDER BY CONSENT

1. These terms may be pleaded as a full and complete defence to any claim or proceedings relating to the subject matter of the dispute, including the subject matter of the releases given.

CERTIFICATION

1. Pursuant to r 21.15 of the Federal Circuit Court Rules it was reasonable for the applicant to employ counsel.

DIRECTION

1. The property and maintenance issues are removed from the list of cases pending before the court.

SYG 1902 of 2018

ORDERS

Pursuant to s 79 of the Family Law Act and s 58 and s 116 of the Bankruptcy Act I ORDER BY CONSENT as follows –

1. These orders will also give effect as a settlement, as between the applicants and the second respondent, of an application by the second respondent under s 79 of the Family Law Act in related proceedings between the same parties instituted by the second respondent, being proceeding MLC 10246 of 2018, with respect to the vested bankruptcy property of the first respondent being his interest in Property A registered to Mr Addens and Mr Reuter and Ms Nass as tenants in common in equal shares.

2. These orders finalise this proceeding and the second respondent’s proceeding in MLC 10246 of 2018 as between the applicants and the second respondent.

3. On or before 31 January 2020, the second respondent pay to the applicants the sum of $136 000.00 (“settlement sum”).

4. Upon payment of the settlement sum in accordance with order 3, the applicants will sign a transfer produced by the second respondent for the transfer of their interest in the property to the second respondent pursuant to these orders AND if the second respondent pays the settlement sum any time after 31 January 2020, but prior to any sale of the property being effected, the applicants shall only be required to provide the transfer to the second respondent upon the payment of their reasonable costs and expenses incurred in relation to any steps taken to effect the sale of the property, as contemplated by order 5 hereof.

5. Should the second respondent fail to pay to the applicants the settlement sum by 31 January 2020, then the applicants are ordered to sell the property and the following orders apply –

   (a)the whole of the property, including the second respondent’s interest in the property, vests in Mr Addens and Mr Reuter, (“trustees for sale”) subject to any encumbrances affecting the entirety thereof and free of any encumbrances affecting any undivided share therein be held upon the statutory trust for sale created pursuant to Pt IV of the Property Law Act (Vic) as applying under s 79 of the Judiciary Act (Cth);

   (b)the second respondent and the trustees for sale shall use their best endeavors to appoint a mutually agreeable real estate agent for the sale of the property AND if, after 14 days, the second respondent and the trustees for sale cannot agree to an agent being appointed, the president of the Real Estate Institute of Victoria shall appoint the selling agent;

   (c)the trustees for sale be empowered to offer the property for sale, and to –

   (i)sell the property by public auction with power to fix a reserve price; or

   (ii)sell the property by private treaty at the best available price,

   subject to orders 5(d) and 5(e) and 5(f) hereof;

   (d)the reserve price for the sale of the property shall be fixed by way of a valuation of the property provided by a valuer appointed pursuant to order 5(e) hereof;

   (e)the trustees for sale be empowered and authorised to obtain a valuation of the Property by employing a registered valuer for the purposes of determination of a fair and reasonable price of the Property for the purposes of the performance of their duties as trustees for sale AND Such valuer shall be appointed by the president of the Real Estate Institute of Victoria;

   (f)further to orders 5(b), 5(c), 5(d) and 5(e) above, if bidding at auction does not reach the reserve price, the trustees for sale are entitled to negotiate with the highest bidder at the auction, or any other interested party after the completion of the auction, to effect a sale of the property, provided that the property shall not be sold for a price which is less than 10% below the reserve price, unless the second respondent and the trustees for sale agree in writing;

   (g)on and from the date of these orders and to no later than 31 January 2020, the second respondent shall have the right to occupy the property and during such right of occupation, the second respondent pay all mortgage payments, debts, rates and taxes associated with the property and keep it insured and provide evidence of these payments/insurances to the trustees for sale, within 14 days of written request being made;

   (h)after sale of the property at auction or by private treaty, the trustees for sale be empowered to deduct from the proceeds of sale –

   (i)the commission and other expenses of any real estate agent employed by the trustees for sale;

   (ii)insurance, mortgage payments and any other reasonable expenses for protection and maintenance of the Property that are not paid by the Second Respondent at order 5(g) and such sum to be reimbursed from the second respondent’s share of the net proceeds of sale;

   (iii)all necessary adjustments of rates and taxes on settlement of the sale;

   (iv)any taxes, including but not limited to capital gains tax, land tax and goods and services tax (“GST”);

   (v)the mortgagee’s debt secured over the property under registered mortgage ...6L to Bank B;

   (vi)the trustees for sale shall not charge more than $250 per hour (excluding GST) in relation to their fees for exercising their rights as trustees for sale and such  remuneration and expenses of the Trustees for Sale in respect of the sale of the property shall be capped at $15 000.00 (including GST and disbursements);

   (vii)the net proceeds of sale of the Property be paid as follows and in the following priority –

   (A)the settlement sum to the applicants; and

   (B)the balance to Taylor Splatt & Partners;

   (i)the remuneration, costs and expenses of the trustees for sale as set out in order 5(h) hereof are charged over the property and to be paid as ordered in order 5(h); and

   (j)the applicants be permitted to retire as statutory trustees for sale upon completion of the sale and distribution of money in respect of the property pursuant to these orders without further order of the court.

6. The trustees for sale are at liberty to apply to the court to seek any additional orders and/or to seek the advice of the court on any matter, arising from their appointment or these orders AND the second respondent have liberty to apply to the court in relation to any matter arising from these orders

7. The first respondent and the second respondent each give vacant possession of the property on 1 February 2020 if the settlement sum is unpaid pursuant to order 3 hereof.

8. A writ of possession be issued forthwith in favour of the trustees for sale with respect to the property but stayed up to and including 31 January 2020.

9. The trustees for sale provide an account of all remuneration and costs incurred in relation to the sale of the property, within seven days of a written request by the second respondent.

10. Each party pay their own costs of this proceeding.

11. These orders may be entered in proceeding MLC 10246 of 2018 together with this proceeding.

12. Upon payment of the settlement sum in accordance with order 3 hereof and subject to order 4 hereof, the trustees for sale and the second respondent –

    (a)release and forever discharge each other from all claims, causes of action, costs or costs orders or liability; and

    (b)undertake neither to initiate, prosecute or pursue any claims whatever against each other,

    in relation to the subject matters of this proceeding.

13. These terms may be pleaded as a full and complete defence to any claim or proceedings relating to the subject matter of the dispute, including the subject matter of the releases given.

IT IS NOTED that publication of this judgment under the pseudonym Nass & Addens & Ors and Addens & Anor v Nass & Anor is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 10246 2018

MS NASS

Applicant

And

MR ADDENS

First Respondent

MR REUTER

Second Respondent

MR NASS

Third Respondent

MR ABRAMI

Fourth Respondent

MS A NASS

Prospective Intervener

SYG 1902 of 2018

MR ADDENS

First Applicant

MR REUTER

Second Applicant

And

MR NASS

First Respondent

MS NASS

Second Respondent

REASONS FOR JUDGMENT

(ex tempore)

Introduction

1. Two proceedings were before me today.  The first, a family law proceeding, involved an application by the wife for orders dividing property.  That proceeding was brought against the trustees in bankruptcy of the husband.  In the second proceeding, commenced under the Bankruptcy Act, the trustees in bankruptcy sought declaratory relief to the effect that the applicants were vested in 50% of the legal interest of the husband in Property A.  The trustees sought an order for the sale of that property.

2. In the family law proceeding, the parties resolved their differences, and sought consent orders.  As both cases proceeded in lockstep with the other, I heard the application for consent orders to be made in the family law proceeding along with aspects of the bankruptcy proceeding.  The details of each are addressed below.

3. The wife and the husband married in 1992 and finally separated in 2008.  The three children of the marriage, aged 24, 23 and 17, have lived with the wife in Property A.

4. The Property A property was owned by the wife and husband as tenants in common, each having an equal undivided share in that property.  It is subject to a mortgage in favour of bank B.  By reason of the appointment of the trustees in bankruptcy over the estate of the husband the trustees in bankruptcy of the husband are registered on title of Property A as the joint proprietors of one of the two equal undivided shares in the property.

5. On 31 December 2008 the husband and the wife entered into an agreement, described as a financial agreement, following separation.  In it they agreed that the husband would assume certain debts and the wife would assume others.  They agreed that the wife would be entitled to Property A and B, free of any claims from the husband.

6. On 19 March 2015 the husband presented his own petition in bankruptcy, which the official receiver accepted, on which petition the trustees were appointed on and from that date.  The effect of the appointment of the trustees in the bankruptcy of the husband was to sever the joint tenancy that existed between the husband with his wife in relation to Property A.  The trustees’ examination of affairs of the bankrupt revealed that Mr Nass did not reside at Property A.  In February 2018 the trustees served a notice to vacate on the wife in respect of Property A.  A similar notice was served on any other occupier.

7. In the family law proceeding the trustees have entered into terms of settlement with the wife.  In essence the terms involve the wife paying the trustees a particular sum, the consideration for which is the trustees executing a transfer of their interest in Property A, to the wife. 

8. In the family law proceeding the parties requested me to make consent orders today, substantially in terms of the settlement into which they entered.

9. Importantly for present purposes, the husband is and remains an undischarged bankrupt.  His financial affairs of relevance in this case are under the control of the trustees in bankruptcy.

10. The husband opposed my approving the terms of settlement and the consent orders in the family law litigation.  He said he had standing to participate in that proceeding.  He persisted in that submission contending that he was an amicus curiae.  He also said that despite the trustees having been appointed and his estate having been sequestrated he had a separate basis independent of the trustees to object to the arrangement into which the trustees and the wife had entered.  When I asked for his reason for that contention he said he had been performing an agreement entered into over 10 years ago and that his status as a party to that agreement gave him the requisite standing.

11. As to both arguments, I disagree.

12. He was not an amicus curiae.  He was not a friend of the court.  That rule is generally confined to persons who have a legitimate interest in putting before the court propositions of law that no other party before the court is likely to advance with a view to permitting the party who appears as amicus to complete the legal position and better inform the court.  That was not the case here.  The trustees have taken over the rights and liabilities of the husband.  He is not entitled at law to separately advance an issue without leave or as otherwise permitted by law.  This is not a case of that category. 

13. To the extent that the husband asserted his performance under the financial agreement made after separation, that agreement is not enforceable by him or against him since the appointment of the trustees.

14. In the bankruptcy proceeding, the respondents’ daughter sought to intervene.  She said she maintained some equitable interest Property A.  It was impossible to assess the basis on which she claimed any interest.  She had not attempted to notify her interest by lodging a caveat, nor to articulate the position she sought to advance with the trustees.  On the balance of probabilities, I was not persuaded that she had any enforceable equitable interest in Property A.

15. Leave to intervene to the daughter is therefore refused.  I so order because the daughter’s affidavit said little beyond herself and her siblings being adversely affected by the breakdown of their parents’ marriage.  That did not give rise to an equity nor to an equitable interest in the land.

16. In the daughter’s affidavit she deposed to alleged misconduct by the mother’s solicitor.  That also did not give rise to an equitable interest in Property A.

17. The daughter and the husband repeated a mantra that they must protect the home.  The Bankruptcy Act sets out detailed provisions for the consequences of a sequestration order.  A bankrupt’s subjective wishes about protecting his former matrimonial home is not a ground to deny the operation of the Bankruptcy Act.

18. In support of her contentions in relation to the family law proceeding, Ms Wald of counsel for the wife advanced a collection of propositions, some formal, some legally founded.  As to the background, she identified that the wife is aged 54, engaged in home duties.  She said the husband is aged 56, currently unemployed.  She pointed out that the commencement of cohabitation was in 1991 and the parties’ marriage was in 1992 and that the parties separated in 2008 following a 16‑year relationship.

19. So far as the asset pool of the parties was concerned for the purposes of s 79 of the Family Law Act, she pointed out that Property A, carried a net agreed value of $420 000, being the approximate value of the property less the liability under the current mortgage.  She identified direct financial and indirect financial contributions, along with nonfinancial contributions, and she also addressed the welfare of the family.

20. On that latter point, Ms Wald submitted that the husband and wife made a conscious decision to adopt traditional roles whereby the wife would be a stay-at-home parent and the husband would be the primary source of the family’s income.  The wife was primarily responsible for domestic duties.

21. Ms Wald focused on certain post-separation contributions as a result of events following the parties’ separation in 2008.  Of those, one of the children moved out although, by reason of her own financial circumstances, that child has since returned.

22. As to the s 75(2) factors under the Family Law Act, Ms Wald pointed to the wife’s agreed role as homemaker, the wife’s time spent assisting the husband with bookkeeping and she identified the difficulty associated with a middle-aged, relatively unskilled person seeking to obtain alternative employment.

23. In addition, Ms Wald focused on the mother’s physical and health issues, including anxiety, depression, insomnia, type two diabetes, high blood pressure, and poor eyesight.  She said that a significant number of family violence incidents punctuated the marriage between the two.

24. So far as the bankrupt’s estate was concerned, Ms Wald identified in written submissions that the trustees in bankruptcy have indicated that proofs of debts have been lodged, said to be in the vicinity of an amount greater than $200 000, and that the trustees’ remuneration and disbursement stands in the order of $125 000.  All parties agree that there will be no surplus for division.

25. Against that backdrop, Ms Wald contended that it was just and equitable in the circumstances to divide assets in terms of those recorded in the minutes of consent orders to which the parties agreed.  In this case, the net asset pool is modest and there will be no necessary end to the litigation between the husband and wife because certain assets stand outside of the pool for distribution.  Whether any orders are ultimately made or agreed in respect of them is yet to be seen.

26. In other respects, it seemed to me that it was just and equitable, in the circumstances, to make orders in accordance with the trustees’ and wife’s proposal with the consequence that that brings the proceedings to an end.

I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of his Honour Judge Wilson

Date:     30 January 2019