Northey and Claughton (No.2)

[2014] FCCA 1832

FEDERAL CIRCUIT COURT OF AUSTRALIA

NORTHEY & CLAUGHTON (No.2) [2014] FCCA 1832

Catchwords:
FAMILY LAW – Ruling on form of orders.

Legislation:  

Family Law Act 1975 (Cth)

Applicant: MS NORTHEY

Respondent: MR CLAUGHTON

File Number: MLC 8359 of 2012

Judgment of: Judge Burchardt

Hearing date: 17 July 2014

Date of Last Submission: 17 July 2014

Delivered at: Melbourne

Delivered on: 17 July 2014

REPRESENTATION

Counsel for the Applicant: Mr Serra

Solicitors for the Applicant: O’Farrell Robertson McMahon

Counsel for the Respondent: Ms Tulloch

Solicitors for the Respondent: J A Middlemis

ORDERS

(Amended pursuant to Rule 16.05(2)(e) of the Federal Circuit Court Rules 2001 on 14 August 2014).

THE COURT ORDERS THAT:

1. Interim property associated orders are made in accordance with orders 21-26 and Final property associated orders are made in accordance with orders 1-20 and 27-30 of the attached minutes of orders placed on the Court file.

2. The matter be adjourned to this Court for mention before Judge Burchardt on 21 August 2014 at 9.30 am.

THE COURT DIRECTS THAT:

1. The solicitors for the Applicant file by email the engrossed orders in this matter in Word format to the Court within 7 days. 

THE COURT NOTES THAT:

A.   Final property associated orders will be made in accordance with orders 21-26 of the minutes of orders placed on the Court file after procedural fairness has been afforded to the relevant superannuation funds.

MINUTE

1. That the Husband and the Wife forthwith do all such acts and things and sign all such documents necessary to effect a sale of the following real properties ("the sales"):

   (a)Situate at and known as Property M in the State of New South Wales ("(omitted)").

   (b)Situate at and known as Property N in the State of Victoria ("Property N") consisting of approximately 13 acres being the land more particularly described in Certificate of Title Volume (omitted) Folio (omitted). 

   (c)Situate Property C and Property N in the State of Victoria consisting of approximately 40 to 45 acres known as the "Property C" (“Property C”) being the land more particularly described in Certificate of Title Volume (omitted) Folio (omitted).

2. That the sales be conducted on the following terms:

   (a)By the following licensed real estate agents:

   (i)(omitted) Real Estate Agent for Property M; and

   (ii)  (omitted) for Property N and the Property C;

   or such other agents as may be agreed between the parties.

   (b)At the following advertised prices to be lowered only on the recommendation of the estate agents and with the agreement of the parties:

   (i)     Property M $170,000.

   (ii)    Property N $240,000.

   (iii)     Property C $60,000.

   (c)On an unconditional Real Estate Institute Contract of Sale or as determined by the estate agents with the agreement of the parties.

   (d)The parties do all such acts and things and sign all such documents necessary to give effect to the above sales including co-operating with any reasonable request of the estate agents including making keys available, allowing inspection of any dwelling at times requested by the agent ensuring that the dwelling and ensuring any garden is in neat and clean condition at the time of inspection and/or auction.

3. That in the event of any of the said real properties failing to sell by way of a binding Contract of Sale within 90 days from the date of these Orders, then the real properties be sold by way of a public auction within a further 30 days (being a total of 120 days) from the date of these Orders on terms and conditions as recommended by the estate agent, save that there shall be no reserve price for any of the real properties.

4. That upon settlement of the sale of each of the said real properties, the proceeds of sale be applied as follows:

   (a)Firstly to pay all costs, commissions and expenses of the sale including the estate agent's costs, conveyancing costs and any necessary disbursements.

   (b)Secondly to pay any council and water rates and maintenance levies outstanding in respect of the real properties.

   (c)Thirdly to discharge any mortgage that may be secured over the real properties.

   (d)Fourthly, the balance to the Wife.

5. That pending the settlement of the sale of each of the real properties:

   (a)The Husband have the sole right to occupy the real properties.  During such right of occupation the Husband pay all instalments pursuant to any mortgage and all rates, taxes and like apportionable outgoings of or with respect to each real property as they fall due save that for Property M, both parties have the equal right to occupy that property and be entitled to 50% of any rent or income generated from that property and contribute equally to the mortgage repayments. 

   (b)That the parties hold their respective interests in the real properties on trust pursuant to these Orders.

   (c)Neither party encumber any of the real properties without the consent in writing of the other party.

   (d)That liberty be reserved to each party to apply with respect to the terms and conditions of and execution of the sales.

6. That the Husband make payment to the Wife ("the payment") the following sum:

   (a)$600,361.40 less:

   (i)The proceeds received by the Wife pursuant to paragraph 4(d).

   (ii)50% of the sale costs of each property sold pursuant to paragraph 4(a).

   (iii)50% of the outstanding council and water rates and maintenance levies in respect of each of the real properties sold pursuant to paragraph 4(b) save that the Husband be responsible for any council and water rates and maintenance levies which should have been paid pursuant to notices prior to the sale.

   (iv)50% of any Capital Gains Tax liability of the Husband in respect of the sale of the real properties in his sole name.

   (v)35% of any deficiency between the sale price and the following sale prices:

   A.     Property M $200,000.

   B.     Property N $237,500.

   C.     Property C $60,000.

   D.     Property O $572,500 (in the event of default sales).

   E.Property H $309,500 (in the event of default sales).

   F.     Property F $247,000 (in the event of default sales).

   Plus:

   (i)35% of any increase between the sale price of the real properties and the following values:

   A.     Property M $200,000.

   B.     Property N $237,500.

   C.     Property C $60,000.

   D.Property O $572,500 (in the event of default sales).

   E.Property H $309,500 (in the event of default sales).

   F.     Property F $247,000 (in the event of default sales).

7. The payment to be made within 7 days of the date settlement of the last of the properties referred to in paragraph 1 of these Orders (“the first date”).

8. In the alternative to paragraph 7 of these orders and in the event that all or any of the properties referred to in paragraph 1 of these Orders fail to sell by unreserved public auction pursuant to paragraph 3 of these orders the husband to pay to the wife within a further 60 days (being a total of 180 days) from the date of these Orders (“the second date”) such of the payment which remains outstanding.

9. That if the payment has not been made in full by:

   (a)The first date, if paragraph 8 does not take effect, interest shall accrue at the rate prescribed by the Family Law Rules 2004 from the first date; or

   (b)The second date, if paragraph 8 does take effect, interest shall accrue at the rate prescribed by the Family Law Rules 2004 from the second date.

10. In the event of the Husband failing to make the payment referred to in paragraph 7 by the first date or the payment referred to in paragraph 8 by the second date, the Husband and the Wife shall do all things necessary including signing all necessary documents to forthwith sell the following real properties:

    (a)Property M;

    (b)Property N;

    (c)Property C;

    (d)Situate at and known as Property O known as the "Property O" (“Property O”) being the land more particularly described in Certificate of Title Volume (omitted) Folio (omitted);

    (e)Situate at Property O known as the "Property H" (“Property H”) being the land more particularly described in Certificates of Title Volume (omitted) Folio (omitted) , Volume (omitted) Folio (omitted) and Volume (omitted) Folio (omitted); and

    (f)Approximately 195 acres known as the "Property F" (“Property F”) being the land more particularly described in Certificates of Title Volume (omitted) Folio (omitted) and Volume (omitted) Folio (omitted).

11. That the properties referred to in paragraph 10 be sold ("the default sales") on the following terms:

    (a)By a licensed real estate agent agreed between the parties and in default of agreement to be appointed by the President of the Real Estate Institute of Victoria.

    (b)At an advertised price as agreed between the parties and in default of agreement to be determined by a valuer to be appointed by the President of the Real Estate Institute of Victoria.

    (c)The terms and condition of the sale to be as recommended by the real estate agent.

    (d)The Husband and the Wife shall do all such acts and sign all such documents necessary to effect the default sales including co-operating with any reasonable request of the estate agent including making keys available, allowing inspection of the properties at times requested by the agent ensuring the properties are in neat and clean condition at the time of inspection and/or auction.

12. Upon completion of the default sales, whichever property or properties sells first, the proceeds be applied as follows:

    (a)Firstly, to pay all costs, commissions and expenses of the sales including the estate agent's costs, the conveyancing costs and any necessary disbursements.

    (b)Secondly, to pay any council and water rates and maintenance levies outstanding in respect to the real properties.

    (c)Thirdly, to discharge any mortgage and any other encumbrances effecting the real properties.

    (d)Fourthly, to pay the Wife so much of the payment as is then outstanding including accrued interest.

    (e)Fifthly, the balance to the Husband.

13. That pending the default sales referred to in paragraph 10:

    (a)The Husband have the sole right to occupy the real properties.  During such right of occupation the Husband pay all instalments pursuant to any mortgage and all rates, taxes and like apportionable outgoings of or with respect to each real property as they fall due save that for Property M, both parties have the equal right to occupy that property and be entitled to 50% of any rent or income generated from that property and contribute equally to the mortgage repayments.

    (b)The parties hold their respective interests in the real properties on trust pursuant to these Orders.

    (c)That neither party encumber any of the real properties without the consent in writing of the other party.

    (d)That there be liberty to apply to either party with respect to the terms and conditions of the sale of the real properties.

14. That on or before 60 days from the date of these Orders, the Husband and the Wife sign all documents and do all things necessary to transfer to the Husband, at the expense of the Husband, the following:

    (a)The parties’ joint timeshare interest in (omitted).

    (b)The 1000 (omitted) Ltd shares.

    (c)The 3200 (omitted) shares.

15. That Husband and the Wife’s partnership known as Mr Claughton & Ms Northey (“the partnership”) be dissolved as at 30 June 2013 (in the event that the partnership has not already been dissolved).

16. That the Wife do all such acts and things and sign all such documents as may be required to transfer her right, title and interest in the partnership to the Husband (“the partnership transfer”).

17. That pending the partnership transfer, the Husband shall be solely entitled to the exclusion of the Wife to all income of the said partnership.

18. That the Husband indemnify the Wife and hold her secure against all costs, claims, demands and liabilities of whatsoever nature and kind (inclusive of any taxation liabilities, fines, penalties or interest) past, present or future arising out of the Wife’s involvement in any capacity in the partnership.

19. That the Wife retain to the exclusion of the Husband the Mazda motor vehicle subject to the loan with Mazda Finance.

20. That the Husband retain to the exclusion of the Wife:

    (a)His (omitted) shareholdings.

    (b)His (omitted) shareholdings.

    (c)Livestock.

    (d)(Stock omitted).

    (e)Farm plant and equipment.

    (f)His (omitted) superannuation.

THE COURT NOTES THAT:

Final property associated orders will be made in accordance with orders 21-26 of the minutes of orders placed on the Court file after procedural fairness has been afforded to the relevant superannuation funds.

1. That unless otherwise specified in these Orders and except for the purposes of enforcing the payment of any money due under these or any subsequent Orders:

   (a)That the Husband and the Wife be entitled to be the sole legal and beneficial owners of all items of property including money, motor vehicles, shares, equities, superannuation entitlements and personal effects currently in the possession or control of each of them respectively.

   (b)That each of the Husband and the Wife retain absolutely any superannuation benefits, long service leave, sickness payments or other employment entitlements belonging to or earned by them.

   (c)Money standing to the credit of the parties in any joint bank account is to be divided equally between the Husband and the Wife.

   (d)All insurance policies to become the sole property of the life assured named thereon/in.

   (e)Each of the Husband and the Wife to be solely liable for and indemnify the other against any liability encumbering any item or property to which that party is entitled pursuant to these Orders.

   (f)Any joint tenancy of the Husband and the Wife in any real or personal estate is hereby expressly severed.

   (g)Each of the Husband and the Wife foregoes any claim they may have to any inheritances to which the other is entitled to either presently or in the future.

2. Reserve general liberty to apply and in particular in relation to the enforcement of these Orders.

3. That the Wife’s Application and the Husband’s Response for Property Orders be otherwise dismissed.

4. Certify for Advocacy.

IT IS NOTED that publication of this judgment under the pseudonym Northey & Claughton (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA

AT MELBOURNE

MLC 8359 of 2012

MS NORTHEY

Applicant

And

MR CLAUGHTON

Respondent

REASONS FOR JUDGMENT

(Revised from transcript)

1. On 25 June 2014, I issued judgment in this matter.  I decided, relevantly, that there should be a split of the parties’ property pool and their superannuation in the proportion of 65/35 in favour of the respondent husband.  I gave the parties the opportunity to fashion orders, given that I was not, at that stage and, indeed, now, fully aware of their capacity to, so to speak, buy each other out or facilitate the orders generally.  Perhaps not surprisingly, given the history of the matter, the parties were unable to agree and it has been left to me to decide the matter. 

2. There are some things that should be noted:  firstly, at paragraph 23 of the judgment, I found, as was asserted, that the husband was not able to pay spousal maintenance as he had no money to pay it.  Second, the figure required to give the wife 35 per cent of the property pool is $604,940; that is 35 per cent of $1,728,399 rounded off;  and a further $7,421.75 into superannuation. 

3. The wife seeks that the property at Property M be sold, Property N be sold, and the Property C property be sold.  As I understand it, the Property C property has been sold and is subject to settlement in the near future.  She also seeks sale of the Property F property.  This would, subject to sale prices achieved and less sale commissions, produce a total of approximately $500,000 on the agreed values thus far put forward, leaving the husband to pay approximately $100,000 additionally in cash.  The husband on this proposal would retain the Property O property and the Property H property.  The wife proposes sale by auction if the properties are not sold by private sale within 60 days, and a default if the entire payment to the wife is not received within 70 days including the sale of the Property O property and the Property H property. 

4. I note that the wife seeks that the husband keep all his superannuation.  I had already determined that it should be divided, but if the parties agree that the husband should keep it then so be it. 

5. The husband’s position is that he wants the wife to have the Property M and Property N properties transferred to her absolutely.  It is conceded that the Property C property has been sold and I am informed that it will realise approximately $55,000 within 30 days.  Property M has already been on the market for a long time and it is asserted that Property N will take a long time to sell as well.  The husband does not want to sell the Property F property.  This is very understandable, as it has been in his family since settlement.  He asserts he will borrow to pay any other sums he is required to pay. 

6. On the figures as they stand, as I understand them, the husband’s proposal would give the wife $74,146 net sale of the Property M property, or $200,000 if it was mortgage free.  It is not quite clear which of those two positions the husband proposes, but I think it is the former.  She would obtain the Property N property which is $237,500 as an agreed value, and if applied wholly to the wife, there is $55,000 from the Property C property, being a total of $366,146. 

7. I note that it is agreed that the Property M property has been on the market for a considerable time with no takers.  Further, both the Property M and the Property N properties may prove impossible to sell at any price whatever for the foreseeable future.  Third, the husband cannot make any final payment to the wife if the Property M and the Property N properties are not sold or alternatively transferred to the wife, because the final pool will not otherwise be ascertained. 

8. Further, it is clearly implicit in both parties’ positions that the Property M and the Property N properties may be worth substantially less than the agreed values put to the Court.  I note also the husband’s overdraft is secured against all of the properties except the Property H property and the Property M property, the latter of which has its own mortgage.  

9. I note further that the husband’s counsel concedes that the wife’s proposed ultimate default orders would work, but naturally enough, opposes them. 

10. The practical problems that now arise do so because the parties adopted agreed valuations which it seems highly likely do not reflect the reality on the ground.  I do not put this in any way as a criticism of the parties.  It represented the only way in which the Court could be enabled to produce a decision as to the proportional distribution of the pool, but the question now arises what is to be done.  It is clearly inappropriate to order that the wife have transferred to her three properties, two of which may not be realisable at all.  The wife needs money.  She cannot work and has X to look after.

ORDERS DELIVERED

1. In these circumstances:

2. I will order that the wife is to receive the net proceeds of the Property C property.  This will give her immediate funds. 

3. I will order the sale of the Property M and Property N properties forthwith as the wife seeks:

   (a)If they are not sold within three months, they are to be sold at auction without reserve within a further month.

   (b)If, after these sales or their lack thereof, I would give the husband two further months to pay the wife $604,904 without superannuation or $612,361 if the husband is to retain all his superannuation. 

   (c)I repeat, I have already determined to split the superannuation, and it will be split unless the parties both agree otherwise. 

   (d)In the event that the husband is not able, within the further two months, then there will be a default sale of all properties, as the wife seeks. 

1. I readily understand the husband’s anguish at the possible break up of the family farm, which I note and accept he wants to leave to his son, but the fact is that I have decided the wife is to receive 35 per cent of the property pool.  I am giving the husband, in effect, six months to raise the funds, which is a lengthy period of time.  Obviously, if the Property M and/or the Property N properties realise less than the agreed value, the total value of the pool reduces, as does the wife’s 35 per cent.  Draft orders need to address this issue. 

2. That in my view is a workable resolution of the practical problem that arises.  Without in the faintest way being critical, because I emphasise I can readily understand the husband’s emotional attachment to the properties he wishes to keep, there is in his proposals something as I would apprehend it, of a lack of appreciation of the most unfortunate circumstance that has devolved from his perspective.  The reality is it may very well not be possible for him to keep the properties he would regard quite rightly as having been in his family for a very long time.  If the parties desire that I clarify any aspects of this ruling, I am happy to do so. 

I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of Judge Burchardt

Associate: 

Date:  19 August 2014