PAGANIS & PAGANIS

[2019] FCCA 3247

FEDERAL CIRCUIT COURT OF AUSTRALIA

PAGANIS & PAGANIS [2019] FCCA 3247

Catchwords:
FAMILY LAW – Property – trustee for sale.

Applicant: MS PAGANIS

Respondent: MR PAGANIS

File Number: PAC 4350 of 2018

Judgment of: Judge Obradovic

Hearing date: 18 September 2019

Date of Last Submission: 18 September 2019

Delivered at: Parramatta

Delivered on: 13 November 2019

REPRESENTATION

Appearing for the Applicant: Mr Dunn

Solicitors for the Applicant: Watts McCray Pty Ltd

Appearing for the Respondent: Ms Huppatz

Solicitors for the Respondent: Madison Marcus

ORDERS

1. No later than the 20^th day of each month, the respondent husband, Mr Paganis, is to confirm in writing to the applicant wife, Ms Paganis, by providing evidence of such payments being made, that he has paid to Bank B the monthly repayment of $5,122 being the payments in respect of loan account number ...00. 

2. The respondent husband is to notify the applicant wife forthwith upon receipt or service of an application for a sequestration order, a bankruptcy notice, any demand for payment, a statement of claim or similar in respect of the debt he owes to the Australian Taxation Office, presently in the amount of $302,198.69 and is to authorise the applicant wife to receive correspondence, from the date of this Order until final orders are made in these proceedings, from the Australian Taxation Office and/or his financial or taxation advisers in respect of such debt.

3. If the respondent:

   (a)Fails to make the monthly repayments of $5,122 due on or before the 19th day of each month to Bank B in respect of loan account number ...00 for a period of three consecutive months or longer;

   (b)Fails to comply with Order 1 herein;

   (c)Fails to comply with providing the authorities referred to in Order 2 herein; or

   (d)Receives or is served with an application for a sequestration order, a bankruptcy notice, any demand for payment, a statement of claim or similar in respect of the debt he owes to the Australian Taxation Office, presently in the amount of $302,198.69;

   then the applicant is appointed sole trustee (“Trustee”) for the sale of the property situate at and known as C Street, Suburb D (“property”).

4. The Trustee shall do all acts and things necessary to sign all documents (on behalf of the respondent husband) as may be necessary to cause the property to be listed by sale by private treaty.

5. The respondent husband is hereby restrained from interfering, disrupting or otherwise impeding the sale of the property and shall, within 14 days of the appointment of the Trustee, vacate the property.

6. In respect to the sale of the property, the Trustees shall appoint:

   (a)An independent solicitor to act on the sale; and

   (b)A licensed real estate agent to conduct the sale.

7. If the property remains unsold after two months from the date of the first listing for sale, then:-

   (a)The Trustee shall forthwith relist the property for sale by public auction on a date nominated by the Trustee;

   (b)The reserve price for the property shall be set by the Trustee otherwise determined by the President of the New South Wales Division of the Australian Property Institute or his/her nominee.

8. The net proceeds of sale of the property are to be distributed in the following manner and priority:

   (a)In payment of all outstanding council rates and charges, agents commission, advertising expenses, legal expenses and any other expenses associated with the sale of the property;

   (b)In payment of any amount of Capital Gains Tax in relation to the property assessed against either the applicant or respondent;

   (c)In payment of the discharge of all mortgages secured over the property;

   (d)The balance then remaining shall be paid into a controlled monies account to be held by Watts McCray Pty Ltd on behalf of both parties with such funds not be released except with the consent of both parties in writing or by further order of the Court.

9. Pending further order, the respondent husband shall be responsible for all mortgage payments, statutory rates and charges, other utilities, insurances, outgoings and expenses in relation to the property incurred prior to the date of transfer and shall make all such payments as and when they fall due and hereby indemnifies the other party in respect of all other liabilities incurred prior to the date of transfer.

10. Costs of this application be costs in the cause.

11. List the matter for directions at 11.30am on 27 March 2020.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT PARRAMATTA

PAC 4350 of 2018

MS PAGANIS

Applicant

And

MR PAGANIS

Respondent

REASONS FOR JUDGMENT

Introduction

1. The applicant moves the Court for orders that she be appointed the trustee for sale of a property located at C Street, Suburb D (“C Street, Suburb D property”), together with machinery provisions for such appointment and sale. The respondent opposes the orders.

2. The applicant relied on the following documents:

   a)Initiating Application filed 13 September 2018;

   b)Financial Statement filed 13 September 2018;

   c)Affidavit of Ms Paganis filed 13 September 2018;

   d)Affidavit of Mr E filed 18 September 2019;

   e)Affidavit of Mr F filed 18 September 2019;

   f)Financial Statement filed 18 September 2019; and

   g)Case outline document.

3. The respondent relied on the following documents:

   a)Financial Statement filed 12 September 2019;

   b)Response filed 12 September 2019;

   c)Affidavit of Mr Paganis filed 12 September 2019; and

   d)Case outline document.

4. On 17 May 2019, the respondent consented to an injunction preventing him from selling, mortgaging or in any way encumbering or otherwise dealing with the C Street, Suburb D property. That injunction remains and there is no application that it be presently discharged.

5. The C Street, Suburb D property was purchased by the parties in or around 2015. It is their former matrimonial home, and since separation in August 2017, the respondent has remained living at the property after the applicant moved out together with the parties’ children.

6. The applicant seeks an order for the sale of the C Street, Suburb D property in order to preserve the asset and to stop the respondent from further encumbering the home by way of non-payment of mortgage instalments.

7. Relevant to the present application, the parties agree as follows:

   a)The parties commenced cohabitation in or around mid-late 2015[1].

   b)At cohabitation, the applicant was the owner of a property at G Street, Suburb H which she inherited, and which was encumbered by a mortgage.

   c)The respondent was the owner of a property at J Street, Suburb D, which was sold in or around 2015.

   d)The C Street, Suburb D property was purchased in the respondent’s sole name in or around 2015 for $1,650,000. The purchase was funded by a mortgage secured over the applicant’s G Street, Suburb H property in the sum of $574,000 and the proceeds of sale of the respondent’s unit at C Street, Suburb D.[2]

   e)In 2015, the respondent reimbursed the applicant the amount of $400,000 being a part re-payment of the monies she drew down on when the C Street, Suburb D property was purchased.

   f)The respondent commenced extensive renovations to the C Street, Suburb D property shortly after purchase, which are not yet completed. The renovations have been funded by drawing down on the mortgage.

   g)In July 2017 the applicant sold the G Street, Suburb H home for $995,000. She retained the entire net proceeds of sale of some $540,000.

   h)The parties separated on 11 August 2017.

   [1] The actual date of cohabitation is in dispute, the respondent asserts it was October/November while the applicant asserts it was 2015.

   [2] The Court notes that there appears to be a discrepancy between the date of purchase of C Street, Suburb D property and the date of sale of the unit at C Street, Suburb D for the purposes of the sale proceeds of that property being used to purchase the C Street, Suburb D property. The parties however agreed that this was how the purchase was funded.

8. The respondent alleges other contributions during the relationship, including that he paid the G Street, Suburb H home mortgage for approximately 12 months in 2016 to 2017, and that he paid approximately $26,000 towards IVF treatment which resulted in the birth of the parties’ triplets in 2016.

9. The applicant alleges a number of contributions during the relationship, including that gave the respondent $10,000 in July 2017 in part to defend an apprehended domestic violence order application.

10. Applying basic calculations[3], it appears that the bulk financial contributions to the C Street, Suburb D property were as follows:

    a)By the applicant initially of $574,000 with a repayment of $400,000 thus being a net amount of $174,000.

    b)By the respondent initially of $1,076,000 and then the further $400,000 which was repaid to the applicant, thus being a net amount of $1,476,000.

    [3] these are just some preliminary calculations based on what seems to have been agreed by the parties and not findings of fact about the amount the parties contributed

11. In addition to retaining all of the assets which she currently holds, the applicant seeks a final order that after the C Street, Suburb D property is sold and expenses have been paid (which by virtue of the present application would already have been satisfied if the Court accedes to the applicant’s interim application), that the net proceeds of sale be divided equally between the parties. If the mortgage stands at approximately $900,000 this would mean that there may be very little, if any equity in the property at present, given the purchase price and the state of the unfinished renovations. It is also difficult to see how the property could be sold in its present state, and how a present sale would be to the benefit of the asset pool.

12. The respondent’s application is that he retain the C Street, Suburb D property as a final order.

13. As at June 2018, the respondent was some $60,200 in arrears in mortgage repayments. He had been in arrears since December 2017.

14. A Garnishee Notice was issued by the Australian Taxation Office to the National Australia Bank on 9 September 2019 in respect of a debt of $302,198.69 which remains unpaid. The NAB was served with a notice requiring it to deduct an amount from any money received by them or held on the respondent’s behalf. The notice to pay is up to the value of $303,198.69 or 30% of the available money, whichever is the lesser amount.

15. In his financial statement, filed on 1 February 2019, the respondent deposed that his average weekly income was $577 while his total personal expenditure was $1,758. At that point in time it appears that he was insolvent in that he could not have been able to meet his debts as and when they fell due. He deposed in that financial statement that his mortgage repayments were $1,269 per week. His non-superannuation assets comprised of real property, household contents, two motor vehicles, his business and $800 in a bank account. There was a liability to the Australian Taxation Office noted in the financial statement of just over $226,000.

16. The respondent filed an “Amended Financial Statement” on 12 September 2019. In that document he deposed that his weekly income was $1,875 while his weekly expenditure was $1,781. His mortgage repayments have increased to $1,375 per week. He had as at the date of the financial statement $10,000 in a bank account with the NAB and in this regard it is not clear whether or not the NAB had complied with the garnishee notice with which it had been issued in respect of the funds it held. The financial statement also discloses a liability for income tax assessed and unpaid of $6,364 and there is an Australian Taxation Office integrated client account liability of $295,834.66.

17. As at the time of the interim hearing, there were no arrears in mortgage repayments and indeed the account was in credit by over $11,000. The respondent’s evidence does not explain how he was able to not only catch up on the arrears but also, for practical purposes, keep up with mortgage payments (although it is noted that the payments are not being made as they fall due and not in the exact amount which is due). The Court notes that his debt to the Australian Taxation Office has increased between February and September by over $70,000.

18. There is no evidence that the mortgagee has taken any steps to obtain possession of the C Street, Suburb D property or that the mortgage is currently in default.

19. Whilst the Court accepts that there is a debt owing to the Australian Taxation Office in respect of an integrated client account and that a garnishee notice has been issued, there is no evidence that the Australian Taxation Office will presently issue a bankruptcy notice or apply for a sequestration order (whatever the alleged act of insolvency may be).

20. On balance, the applicant has not satisfied the Court that it ought to exercise its discretion in the manner she presses for. However, if the respondent fails to meet all mortgage repayments as and when they fall due for a period of three consecutive months or more, if the Australian Taxation Office takes any further steps to recover the debt to it, such as issuing a bankruptcy notice to the respondent, and if the respondent fails to comply with the Court orders which will be made that he keep the applicant fully informed of these matters, the applicant will by default then be appointed trustee for sale of the property without further order.

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Judge Obradovic

Date: 13 November 2019