NEWER & ERNEST

[2010] FamCA 576

FAMILY COURT OF AUSTRALIA

NEWER & ERNEST [2010] FamCA 576

FAMILY LAW – PROPERTY – Interim

Family Law Act 1975 (Cth)

APPLICANT: Mr Newer

RESPONDENT: Ms Ernest

FILE NUMBER: MLC 1004 of 2010

DATE DELIVERED: 18 June 2010

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 18 June 2010

REPRESENTATION

THE APPLICANT: In person

COUNSEL FOR THE RESPONDENT: Mr Gates

SOLICITOR FOR THE RESPONDENT Aitken Partners Pty Ltd

Orders

1. That the applicant Mr Newer file and serve an amended application for final orders by 4.00pm on 1 July 2010.

2. That the applicant forthwith transfer to Ms Ernest as the respondent, all of his interest in the real property at Unit 1, A on trust for sale.

3. That the respondent have the right for the purposes of the sale to instruct:

   (a)    the estate agent including making all arrangements associated with the commission and expenses of the sale save that if there is not agreement with the applicant as to the reserve price, the respondent instruct an independent sworn valuer to advise of such value and the valuation shall then be the reserve price; and

   (b)    an independent solicitor to undertake the conveyancing in respect of the sale.

4. That the applicant give to the respondent vacant possession of the property at A no later than 48 hours prior to the auction date and at that time (if not before) leave the said property in a clean and tidy possession for the purposes of a sale.

5. That each party have liberty to apply in respect of the terms and conditions of the said sale.

6. That upon the settlement of the sale, the proceeds be applied as follows:

   (a)    first, to pay all costs, commissions and expenses of or with respect to the sale;

   (b)    second, to pay to the solicitors for the respondent the sum of $2800 by way of legal costs such sum to be adjusted against the interests of the application upon the final hearing;

   (c)    thirdly, to repay such amount owed to the National Australia Bank secured by the mortgages encumbering the said property at A together with the property at G; and

   (d)    fourthly, if there are any proceeds thereafter remaining, they be held in an interest-bearing account in the names of the parties jointly pending further order of the Court.

7. That until further order, the parties remain jointly responsible for making payments towards all mortgages in favour of the National Australia Bank encumbering both the A property and the G property together with the payment of all rates, taxes, insurances and like outgoings in respect of those properties and any adjustments as between the parties arising out of such payments be a matter for the final hearing.

8. After the settlement of the sale of the property at A, the applicant transfer to the respondent all of his interest in the property at G to be held on trust by the respondent pending further order of the Court she being at liberty to refinance in her name alone, the then outstanding balance to the National Australia Bank using the G property as security and she being solely responsible for the payments as they fall due under any such new mortgage including any costs of setting up that mortgage.

9. That pursuant to s 106A of the Family Law Act 1975 (Cth) a registrar of the Melbourne Registry of the Family Court of Australia is authorised to sign any instrument or document in the name of the applicant Mr Newer to give effect to these orders and for the purposes of establishing such entitlement, the registrar shall be satisfied by an affidavit sworn by the solicitor for the respondent of the need for such instrument or document to be executed.

10. That after the conciliation conference between the parties, each have liberty to apply to have the final hearing listed with priority subject to the registrar being satisfied that it is ready to proceed.

11. That the application pay to the respondent by way of costs the sum of $2800 which sum shall be paid as otherwise set out in these orders.

12. That the application in a case filed 4 June 2010 is otherwise dismissed.

13. That all matters otherwise await the conciliation conference at 9.15am on 29 July 2010.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER:   MLC 1004 of 2010

MR NEWER

Applicant

and

MS ERNEST

Respondent

REASONS FOR JUDGMENT

1. This is an application by Ms Ernest filed on 4 June 2010 seeking that the matter be dealt with on an urgent basis.  The matter comes to me by way of an order from the senior registrar.  It would appear that on 4 June the parties were before the senior registrar in respect of parenting issues and it became abundantly clear that they had urgent financial problems associated with the National Australia Bank as the mortgagee of one, if not both, of their real properties.  The senior registrar made an order that the matter be listed for this urgent hearing, but importantly ordered Mr Newer to file material.  He has not done so.  He has appeared today and articulately argued why orders should not be made and I shall deal with some of those matters in a moment. 

2. The application seeks the sale of one of two specific properties at A.  That is a property, it seems, which belonged to Mr Newer before the parties’ relationship began and there is some dispute as to the equity that he had at the time.  It seems the property is in his name.  The parties subsequently bought a second property which is the one at G.  On a best-guess basis, the totality of the property values is about $1.2 million and the parties owe about $880,000 to the National Australia Bank by way of a mortgage that encumbers both of the properties. 

3. The application before me today seeks a sale of the A property and also a variety of orders in relation to the conduct of the sale.  It is common ground that there is not sufficient equity in the A property for the parties to be debt free and this is where their respective positions vary.  The wife’s position is that she remain, at least in the temporary position, at G on the basis that she refinances whatever the debt is left after the sale of the A property and that ultimately the issue of the entitlement of the parties be determined at trial. 

4. Mr Newer, although having not filed any material and as such should normally probably not be heard on the subject, has indicated from the bar table that his preferred position would be that both properties be sold and therefore both parties would be in a position where they would have to start again.  In my view, that position is unrealistic for two reasons.  The first is that it means that there is a real risk that all parties would be on the street, including the wife with three children, one of whom is a 10-year-old and the only child of their relationship.  The other problem clearly is that there is a real risk that the forced sale, if that was what occurred, would ultimately prejudice the equity of the parties in the ultimate determination of their property entitlements. 

5. Counsel for the wife referred to the fact that on 8 June, his instructing solicitor warned Mr Newer by letter that he had to comply with the orders of the senior registrar about filing material, but he has not done so.  It is a little hard then to do any more, having regard to the urgency, than deal with the matter on the basis of the wife’s material. 

6. In her affidavit, the wife referred to the fact that the parties commenced their relationship in December 1998, separated for some months in 2006 and then finally separated on or about 15 December 2009.  The only child of their relationship is a daughter who was born in April 2000, so she has just turned 10 years of age.  There are existing parenting disputes between the parties.  Ironically enough, it was Mr Newer who commenced the proceedings in February this year by seeking parenting orders.  Ms Ernest, in reply, disputed his position in terms of parenting orders in that she said it was inappropriate for the orders he sought to be made.  He sought orders that the child live with the parties on a week-about basis. 

7. The court has had a number of hearings in this matter and in April was provided with a report of Mr L.  Mr L’s position was quite clear and it seems that what he recommended, to some extent, has been put into place.  What is clear is that Mr L was certainly not recommending that the child live with the parties on a week-about basis.  The difficulty obviously though is that the applicant, Mr Newer, has not filed an amended application so there is no property issue before the court from his perspective, yet the registrar previously decided that the parties should have a conciliation conference in July.  As I have expressed today, there is absolutely no point in a conciliation conference when there is no idea before the court, from Mr Newer’s perspective, just what orders he is seeking. 

8. In addition, there are problems because there is a dispute between the parties as to what has happened to significant sums of money.  Counsel for Ms Ernest complained at the start that Mr Newer had not explained what had happened with the money, but from the bar table Mr Newer very quickly reeled off where the money had gone.  Some of the money had been used for living expenses, others for legal expenses.  All of those matters are critical in determining the ultimate division of property between the parties and it behoves both sides to complete their obligations of disclosure under chapter 13 of the rules. 

9. I intend to make a specific order that Mr Newer put in an amended application by 1 July.  Mr Newer, a number of times this morning, has complained about the fact that he has not had legal representation because he could not afford it.  He has spent $40,000 in legal fees in respect of the firm of solicitors who filed the application on his behalf.  He said he has been to the free legal services and they will not deal with property matters and I have told him that I do not accept that is the position in relation to advice.  Be that as it may, he needs to get his house in order whether he is represented or not.  The court will otherwise have little input into the conciliation conference if he does not provide the material. 

10. What I do propose, however, is that because of the fact that it seems clear that there is a limited amount of equity between the parties, for the registrar to try and resolve the matter at the conciliation conference and – failing that being successful – the registrar, with the assistance of the parties, can make an application to me to expedite the final hearing.  That may be affected by what happens about the parenting dispute, but no doubt both parties can turn their mind to what orders they are seeking in relation to the child before the conciliation conference in July. 

11. In respect of the matter today, the material put by Ms Ernest is comprehensive.  What she points out is that the property at A is in Mr Newer’s sole name;  he is living there alone;  it was a property that had tenants in it until around the time of separation last year and he no doubt gave them notice and took occupation.  She complains about the fact that Mr Newer has not paid anything towards the mortgages and that she has been making the monthly payments.  Without evidence Mr Newer says that she has not been making the payments because the mortgage is not coming down. That is a discovery issue and no doubt the parties will sort that out by the conciliation conference in July. 

12. The problem in this case is that the bank is now fed up with waiting for its money. Unlike some cases I see in this list on a daily basis, the National Australia Bank is quite proactive. They have indicated that in May they wanted their money and that unless some action was taken, they would foreclose.  Subsequently, they have been proactive again and have written two letters indicating what their position is.  The evidence indicates that if one of the properties, namely the A property, is sold, then they would accept the proceeds of that sale to reduce the totality of the mortgage and then would be prepared to refinance G property in the name of the wife on the basis that she was solely responsible for that mortgage.

13. That seems to me to be an eminently sensible solution on an interim basis because it will at least protect the equity of the parties to some extent.  Clearly, if I make orders that implement that arrangement, it would mean that the G property was in the name of Ms Ernest alone.  I do not intend to make an order that there is an absolute transfer of the property to her, but rather that it be transferred to her on trust pending final determination so there is no argument that Mr Newer’s equitable interest in the G property is protected. 

14. The evidence is clear that the bank is willing to back away from a sale of both properties and if they did not, then there would be a severe financial consequence to both parties. I am very conscious in this case that the relationship is of 12 years’ duration.  There are significant arguments in the affidavit that I have read of Ms Ernest, about contribution.  The parties do not agree, for example, on what the equity in the A property was when the parties got together.  That, however, is a matter that is easily resolvable by some evidence.  It seems to me therefore that what I am being asked to do is to make an order that protects the interests of the parties.

15. Mr Newer complains, however, that the more sensible solution would be to sell both properties.  To do so would effectively mean that everybody would be out on the street, not to mention that there are children involved.  That may ultimately be the end result if Ms Erneest cannot afford to pay out not only the obligations to the National Australia Bank in respect of the mortgage on the G property, but also whatever sum is due to Mr Newer, bearing in mind his contribution arguments. 

16. It seems to me therefore that the power I am being asked to exercise is that set out in s 114 of the Act.  The overriding consideration in an application under s 114 is that the court should only make an order if it is proper to do so.  Part of that “proper” consideration is the question of the protection of the equity of the assets of the parties.  It seems to me in the circumstances that it is proper that I should make the order along the general lines sought by Ms Ernest, although I intend not to make the same sort of orders as they have been drafted.

17. The problem does not stop there. Counsel quite properly has indicated, as a result of the position adopted by Mr Newer in not filing the material – not to mention some of the other matters that I will refer to in a moment – I should take a cautious approach and make an order under s 106A of the Act which enables the court to direct that a document that is required to implement its orders can be signed by a registrar of the court in the name of a particular party in the event that the order might otherwise be frustrated. It is a draconian step to make such an order because it takes away not only the dignity and the rights of someone to comply with orders, but it also puts them in a position where they have no control over anything.

18. What I propose to do is to give Mr Newer an opportunity to comply with orders in an efficient manner. And by that I mean immediately upon being required to do something, if he does not do it, then the provisions of s 106A will commence and, upon production of an affidavit by the solicitor for Ms Ernest to a registrar of the court, any necessary document to implement the orders will be executed. That effectively will remove any problem in the event that Mr Newer takes the view that he does not need to comply with the orders or does not like the way the matters are being done.

19. The basis upon which I can make the order under s 106A is as follows: first, Mr Newer has not filed material and I do not accept that he did not understand what the situation was of the requirements, having regard to the letter written to him on 8 June; secondly, there is an intervention order between the parties. That in itself indicates that there is little prospect of communication between the parties even if one party might take the view that it is unnecessary. Intervention orders are made by state courts exercising state laws. State laws in respect of family violence have authorised the state to interfere and intervene in parties’ lives for their protection. I take the view that if the state court has made that order, it did so for a specific purpose.

20. The third reason is that there has been an allegation by Ms Ernest against Mr Newer that he has taken some unilateral action in respect of moneys and not explained exactly what has occurred. It is inappropriate in this court for parties not to be clear about the disclosure obligations, and certainly inappropriate for them not to provide information which would assist the court, let alone the other party, in determining what to do. The fourth reason is that Mr Newer has taken the approach that all properties should be sold and that everybody should be effectively out on the street. That seems to me to suggest an approach which is unrealistic in the circumstances, having regard to the fact that I am being asked to make urgent abridging-type orders rather than final orders. For that reason, I propose to make the s 106A order.

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate:

Date:  8 July 2010