PANDELIS & PANDELIS

[2015] FCCA 1672

FEDERAL CIRCUIT COURT OF AUSTRALIA

PANDELIS & PANDELIS [2015] FCCA 1672

Catchwords:
FAMILY LAW – Property – enforcement of consent order – sale of house – where parties’ children’s school fees are in arrears.

COSTS – Order for costs – where one party unsuccessful – where one party failed to comply with previous Order of the Court – where the Court is of the opinion that the respondent should pay the applicant’s costs.

Legislation:

Family Law Act 1975 (Cth), ss.79, 106A, 117

Cases cited:
Colgate Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225; 118 ALR 248
Goode & Goode [2006] FamCA 1346; (2006) 36 Fam LR 422; FLC 93-286
Harris & Harris (1993) FLC 92-378
In the Marriage of Kohan (1992) 16 Fam LR 245; (1993) FLC 92-340
Prantage & Prantage [2013] FamCAFC 105; (2013) 49 Fam LR 197; FLC 93-544
Strahan & Strahan (Interim Property Orders) [2009] FamCAFC 166; (2009) 241 FLR 1; (2011) FLC 93-466

Applicant: MS PANDELIS

Respondent: MR PANDELIS

File Number: SYC 6905 of 2013

Judgment of: Judge Scarlett

Hearing date: 15 June 2015

Date of Last Submission: 15 June 2015

Delivered at: Sydney

Delivered on: 17 June 2015

REPRESENTATION

Counsel for the Applicant: Mr Schonell

Solicitors for the Applicant: Beilby Poulden Costello

Solicitor for the Respondent: Ms Monastiriotis

Solicitors for the Respondent: Slater & Gordon Lawyers

ORDERS

1. The Respondent Husband is to pay to (omitted) School the sum of $13,208.45 being arrears of school fees for the parties’ child X on or before Friday 3 July 2015.

2. The Respondent is to pay to (omitted) School at (omitted) the sum of $17,793.78 being arrears of school fees for the parties’ child Y on or before Friday 3 July 2015. 

3. Upon making the payments referred to in the immediately preceding Orders the Respondent must forward to the Applicant’s lawyers a copy of the receipt issued by (omitted) School and (omitted) School or other proof of payment forthwith.

4. Unless the Respondent provides to the Applicant’s lawyers copies of the documents referred to in the immediately preceding Order by close of business on Monday 6 July 2015 (hereinafter referred to as “the operative date”) then the following Orders will immediately apply.

5. The Respondent must do all acts and things necessary to sell the property situate at and known as Property C in the State of New South Wales being the whole of the land in Certificate of Title Folio Identifier (omitted) (hereinafter referred to as “the Property C property”) within twenty-one (21) days.

6. For the purposes of Order (5) above the following will apply:

   (a)The Respondent must engage a real estate agent to act as the real estate agent in respect of the sale of the Property C property using the following method:

   (i)The Applicant must, within three (3) days of the operative date, provide the Respondent with the names of three (3) real estate agents carrying on business in the Property C area;

   (ii)The Respondent must, within a further period of three (3) days, appoint as the real estate agent one of the real estate agents nominated by the Respondent in compliance with the above Order;

   (b)The Respondent must, within five (5) days of the operative date, do all acts and things necessary to engage a firm of solicitors agreed upon by the parties or, in default of agreement, Williams Roncolato Lawyers) to undertake the conveyancing associated with the sale of the Property C property;

   (c)The Respondent must do all acts and things necessary to ensure that the Property C property is placed on the market for sale within twenty-one (21) days of the operative date;

   (d)The Respondent is to do all acts and things necessary to ensure that the Applicant is kept advised of the progress of the sale of the Property C property and that she may make any reasonable enquiries in relation to the sale of the Property C property with the real estate agent appointed by the Respondent under Order (6)(a)(ii) and the firm of solicitors appointed under Order (6)(b);

   (e)The Applicant must approve the contract for the sale of the Property C property and, for the avoidance of doubt, if the parties fail to agree in relation to any aspect of the Contract for the Sale of the Property C property, then the Applicant may unilaterally settle the terms of the said Contract.

   (f)The Respondent must do all acts and things necessary to ensure that the Property C property is listed for sale by public auction to be held within six (6) weeks of the date that the Property C property is placed on the market for sale in accordance with Order (6)(c);

   (g)The auctioneer for the purposes of the sale of the Property C property is to be nominated by the real estate agent;

   (h)The reserve price for the sale of the Property C property is to be set at a price agreed upon by the parties or, if the parties fail to agree, the sum of $1,300,000.00;

   (i)The parties may agree to sell the Property C property by private treaty prior to the date of the auction;

   (j)In the event that the Property C property is not sold at the auction or by subsequent negotiation, unless the parties otherwise agree in writing, the Respondent is to do all acts and things necessary to authorise the real estate agent to hold another public auction to sell the Property C property within six (6) weeks of the auction with the same auctioneer as before at which subsequent auction the Property C property is to be sold to the highest bidder.

7. The parties are to pay the proceeds of the sale of the Property C property in the following order and priority:

   (a)in repayment of any amount owing under any mortgage secured over the title of the Property C property;

   (b)in payment of any amounts outstanding for water rates and council rates in respect of the Property C property;

   (c)in payment of the expenses of the sale, including the real estate agent’s commission, auctioneer’s commission and marketing expenses;

   (d)in payment of the legal costs of the sale including the fees due to the firm of solicitors appointed under Order (6)(b);

   (e)in payment of any land tax referrable to the Property C property;

   (f)in payment to (omitted) School for all amounts owing by way of school fees in respect of the attendance at the school of the parties’ son Y for the whole of the 2015 school year;

   (g)in payment to (omitted) School for all amounts owing by way of school in respect of the attendance at the school of the parties’ daughter X for the whole of the 2015 school year; and

   (h)in payment of any balance then remaining to the parties in equal shares by way of interim property settlement.

8. Pending the sale of the Property C property:

   (a)the Respondent must keep the Property C property in a good state of repair and well presented for sale;

   (b)the Respondent is to be responsible for the payment of all outgoings in respect of the Property C property including but not limited to water rates, council rates and electricity accounts;

   (c)the Respondent must keep the Property C property insured at replacement value; and

   (d)the Applicant and the Respondent are restrained from further encumbering the Balance property.

9. If the Respondent refuses or neglects to execute any deed or instrument or sign any document necessary to give effect to the above Orders within fourteen (14) days of having been requested to do so, then a Registrar of the Court is appointed under the provisions of section 106A of the Family Law Act 1975 to execute the deed or instrument or sign the document in the name of the Respondent and to do all acts and things necessary to give validity and operation to the deed or instrument or document.

10. The Respondent is to pay the Applicant’s costs of and incidental to this proceeding in an amount to be fixed by the Court upon written submissions from the parties as to the rate at which costs are to be assessed and the quantum of costs sought, which are to be filed and served as follows:

    (a)By the Applicant within fourteen (14) days of the date of these Orders; and

    (b)By the Respondent within a further period of fourteen (14) days.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYC 6905 of 2013

MS PANDELIS

Applicant

And

MR PANDELIS

Respondent

REASONS FOR JUDGMENT

Application in a Case

1. The Application before the Court is an application in a case. It is brought by the Wife and she seeks enforcement of an order that was made by consent as long ago as 11^th December 2013.  On that date, the parties agreed to orders providing that the Husband would place a property at Property C, which was an investment property, on the market for sale.  He did not do so. 

2. It turned out that the Respondent had formed a relationship with another person and in (omitted) 2014, after this relationship seemed to have come to an end, the Respondent advised the Applicant that he had moved out of accommodation where he had been living in (omitted) and moved into the property at Property C.  At the time, the Wife said that she did not object to the Husband retaining the Property C property if he could afford to do so and still meet the parties’ other expenses. 

3. The parties, I point out, have two children:  a son called Y who is in year 11, and a daughter called X who is in year 8. They attend (omitted) School and (omitted) School at (omitted) respectively. 

4. The progress of the property proceedings between the parties has been painfully and frustratingly slow.  They have attended two conciliation conferences before a Registrar of the Court, but no agreement between them has been reached.  The application is listed for final hearing on 19^th and 20^th November this year. 

5. The reason for the Applicant to bring this application, which she filed on 29^th April this year, was because of two urgent circumstances.  First of all, she deposed in her supporting affidavit of 28^th April 2015 – which was filed the following day – that the loans secured by the Property C property and the matrimonial home were in default, and she does not have any funds with which to make the overdue loan repayments.  As she stated in her affidavit, the Husband had asserted to her that he did not have the funds to make the overdue payments either.

6. The Wife went on to depose that she had been advised by a representative of the mortgagee that the parties would receive a letter of demand in approximately 38 days (which seems to be an oddly specific time) which would give them four weeks to bring the loan repayments up to date or the mortgagee would seek to take possession of both the matrimonial home and the Property C property.  The other concern raised by the Wife is that the children’s school fees are overdue and their schools are threatening to terminate the children’s enrolment.  It was for those reasons that the wife commenced these proceedings by way of an application in a case. 

7. The Application and supporting affidavit were filed on 29^th April. I am informed it was served on the Respondent at his address for service the following day.  However, the Respondent did not file a response to an application in a case or an affidavit until 15^th June, the day of the hearing.  His solicitor explained that there were various reasons for this quite remarkable delay, including the fact that she had been ill and apparently the matter had remained in the care of some other person at her firm.  Nevertheless, it is regrettable the Husband did not get his Response and his affidavit on until the morning that the matter was listed for hearing. 

8. In his Response to an Application in a Case, the Husband seeks three orders: 

   (1) that the Wife’s application in a case filed 29^th April 2015 be and is hereby dismissed;  

   (2) that order 6 of the orders dated 11^th December 2013 be and is hereby discharged; 

   (3) that the Wife pay the husband’s costs of and incidental to these proceedings on an indemnity basis. 

9. I might comment at this stage that a proposed order for costs on an indemnity basis is curious to say the least as the authority in this court for proceedings under the Family Law Act is that the usual order is for costs to be paid on a party and party basis rather than an indemnity or solicitor-client basis. There needs to be shown some unusual or special circumstances that would warrant a departure from the general rule. There are a number of authorities that set this out including In the Marriage of Kohan[1], and a comprehensive decision of the Honourable Sheppard J in the Federal Court, Colgate Palmolive Co v Cussons Pty Limited[2], in which his Honour examined the authorities up to that date which was 1993 and set out various examples of extraordinary or special circumstances that would warrant departure from the usual rule about costs.  More recently, the Full Court of the Family Court in the decision of Prantage & Prantage[3] has covered the question of indemnity costs as opposed to party and party costs in some detail and reaffirmed the view that the usual practice is for costs to be awarded on a party and party basis.  It is difficult to see anything in the Husband’s supporting affidavit of 15 June which would warrant an order being made for indemnity costs. 

   [1] (1992) 16 Fam LR 245; (1993) FLC 92-340

   [2] [1993] FCA 536; (1993) 46 FCR 225; 118 ALR 248

   [3] [2013] FamCAFC 105; (2013) 49 Fam LR 197; FLC 93-544

10. One of the points raised by Mr Schonell of counsel in submissions before the court was that the Husband’s affidavit rather misses the point in seeking to meet the Wife’s claim.  In the affidavit, the Respondent sets out that he had been residing in a property at (omitted) with a former partner and moved out of that property and into Property C, in (omitted) 2014.  That would appear to coincide with the date that the Respondent’s relationship with the former partner came to an end.  In his affidavit, the Respondent sets out details of mortgage repayments and amounts that he had paid to the applicant to assist her with living expenses and those of the children.

11. He sets out the amounts that he has paid to the (omitted) School for the parties’ daughter X, and at (omitted) School for the parties’ son Y. Those total school fees that have been paid amount to $73,339.06.  He also refers to the fact that the property at Property C and the former matrimonial home at (omitted) are cross collateralised in respect of three loans with (omitted) Bank.  He refers to the fact that a court expert was appointed to value the property at Property C for the purpose of the substantive proceedings.  And the expert valued the property at $1,050,000.  By his calculation, if the property were sold, that would still leave a shortfall in the amounts owing to the bank under the mortgages of over $300,000.  He goes on to say at paragraph 19: 

    I seek to retain the Property C property as part of our final proceedings. 

12. Apparently, he has changed his mind since he agreed in December 2013 that the property would be sold.  The Respondent went on to depose that as he was aware that he was experiencing financial difficulties he telephoned the bank and that the bank had given him a moratorium on making any mortgage payments until the end of this month.  He sets out in his affidavit amounts of money that are due at the end of the month.

13. He also goes on to set out the amount owing by way of the children’s school fees, which are presently in arrears.  He states that X’s school fees are in arrears in the sum of approximately $13,208.45 and Y’s school fees are in arrears in the sum of $17,793.78.  He annexes copies of tax invoices received from the school.  The Respondent goes on to refer to the sale of another property owned by the parties back in November of 2013 and goes on to set out his personal tax liabilities to the Australian Taxation Office. 

14. He also refers to the question of child support and notes that he has received a child support account statement stating that he owes the sum of $3580.89 in arrears of child support.  However, he says:

    I am of the view that my child support payments have been miscalculated as the assessment is based on the taxable income in excess of $170,000 per annum.

15. He goes on to say that he has had discussions with officers from the Department of Human Services and is in the process of lodging the appropriate documentation to have the child support assessment reviewed.  As to his employment, he sets out that he has his own (omitted) business which trades under the name of (omitted) Pty Ltd.  Due to the nature of the business as a consultancy company he states the process of engaging clients can take between six to 12 months from the time of initial engagement of the business.

16. He says that his last contract was completed in November 2014 and since that time he had been unable to secure engagements until very recently.  He is now in receipt of a further contract which he estimates will net him approximately $22,000.  The Respondent goes on to talk about the applicant’s employment, nothing that she ceased employment in October 2000.  He points out that in March 2015 his line of credit was exhausted, could not access any further funds. 

17. In May 2015, he secured an engagement for (omitted) Pty Ltd that has resulted in the payment of $11,770, which runs for a period of four to five weeks, and he secured another engagement on 9^th June 2015 that has resulted in a further payment of $11,770.  That also runs for four or five weeks.  The Wife, as he said, ceased employment in October 2000.  She had sought employment on a part-time basis.  He annexes copies of correspondence between the parties’ solicitors.  He refers to the fact that he inherited a property in (country omitted) in (country omitted) from his late parents.  He has an interest in that.

18. He last visited (country omitted) about 13 years or more ago and has no real idea as to the value of the property.  He annexes to his affidavit copies of title searches, correspondence with that bank, invoices from the children’s schools and correspondence relating to employment.  But as Mr Schonell of counsel for the Mother submitted, nowhere in his affidavit material does he do anything to meet the Wife’s claims that in the not too distant future the bank is going to seek to take possession of the Property C property as a result of the arrears under the mortgage and her concern that the children will not be allowed to recommence school at the commencement of the next school term due to the significant amounts of fees that are owing.

19. Counsel for the Applicant tendered a minute of orders sought, which largely, but not entirely, corresponds with the orders sought in the Application in a Case.  The Respondent’s solicitor, Ms Monastiriotis, raises concerns about some of the amounts sought to be paid out in proposed order 4 of the minute of orders relating to the way in which the proceeds from the sale of the Property C property should be paid.  She points out that if the loan payments are paid out not only would that, in her client’s view, exhaust the net proceeds of sale, but would leave him with no financial accommodation to continue his business.

20. She raises concerns about a proposed order for point 9, providing that funds should be used in repayment to Ms M in an amount of $115,320 in repayment of a loan.  Ms Monastiriotis pointed out that the existence of the loan and the terms of the loan and the parties’ obligation to pay money under that purported loan was very much in issue and was a matter that would really be the subject of evidence at a final hearing.  In effect, it would be prejudging the matter if the court were to make an order relating to any payment to Ms M.

1. The Respondent’s solicitor referred to the fact that it was conceded that some $33,000 worth of school fees were outstanding and I note that the contracts which the respondent claims to have in respect to the payment that he has received show that he has received a little over $22,000.  It would seem to be unlikely that unless his income improves dramatically he would be able to meet the arrears owing in respect of the children’s school fees. 

2. In submissions in the late afternoon, Ms Monastiriotis put that the Respondent had contacted the schools and made arrangements with them.  This was objected to by Mr Schonell of counsel for the Applicant Wife, because there is no evidence of it.  Indeed, there is not.  It was a submission from the bar table based on instructions that she had received from her client during the afternoon.  In the light of the objection, she sought leave to call oral evidence from her client.

3. I refused that application.  This was an interim hearing, and as is well-known from decisions in Goode & Goode[4] and others, interim hearings are, essentially, a truncated process conducted by means of submissions on written evidence. The fact is that the respondent’s material was filed extremely late on the morning of the hearing in respect of an application which I am told was served on him on 30^th April, approximately six weeks ago.

   [4] [2006] FamCA 1346; (2006) 36 Fam LR 422; FLC 93-286

4. The affidavit which is large because of the large number of annexures, which largely appear to me to be irrelevant, was also filed on the morning of the hearing and, essentially, does not contain any evidence going towards either refuting the Applicant’s claims or supporting his claim that the consent order of 11^th December 2013 should be discharged.  There is no evidence to show that.  The fact that the Wife has been slow in seeking to enforce that order does not deny her relief completely and the fact is that it is a court order that should have been complied with.

5. The Husband has not come up with any concrete proposal as to how he is going to meet the children’s school fees and it appears on the evidence that there is a real fear that the children will not be permitted to recommence school at the beginning of the next school term.  This would be disruptive for both of them, but particularly disruptive for the parties’ son, Y, who is in Year 11 and heading towards the higher school certificate. 

6. All the Husband seems to be doing in his Response to an Application in a Case, in his affidavit and in his solicitor’s submission, is attempting to delay the matters contained and the relief sought in the Applicant’s application.  He does not put up any proposal other than, “Give me more time”, as to how this financial situation can be resolved.  He does not come up with any concrete proposal as to how he can pay the arrears of children’s school fees, let alone their ongoing fees, or at least pay sufficient amounts of money to permit them to remain at their current schools.

7. The fact that the Husband was apparently out on the telephone seeking to make arrangements with the schools during the late afternoon, after the hearing had commenced, gives an indication of the gross lack of preparedness shown by the Husband and his legal advisors in this case.

8. In my view, the Applicant Wife, based on the material in her affidavit, has clearly raised the concern about the parties’ deteriorating financial situation in respect of the moneys owed to (omitted) Bank and the various mortgages, and to the precarious situation in which the children find themselves when the fees for term 1 and term 2 at their respective private schools have not been paid and there is now a real fear, based on communications from the school, that the children will not be allowed to re-enter the school and recommence tuition at the beginning of the third school term.  The Husband puts up no evidence that would support his claim that he has the means and the ability to meet these urgent issues.

9. I have considered the orders sought, and I have proposed to allow the Husband a short period of time in order to prove the contentions that he has made, through his solicitor, that he does have a way of resolving the difficulties involving the arrears of the children’s school fees.  In my view, it should be a short period, prior to the commencement of the school term, in order to pay the school fees owing to (omitted) School, (omitted), and (omitted) School, at (omitted).  The amount that he should pay to (omitted) appears to be $13,208.45 being the arrears.  And the amount it would appear that he is to pay to (omitted) School would be the sum of $17,793.78 again, being arrears of school fees.

10. If he is able to organise that money from whatever source he can, and he provides no evidence of it, then he should pay the fees, prove that he has paid the fees, and, whilst that is being done, the application to enforce the order to which the Husband consented that property at Property C should be sold will remain in abeyance.  However, if he is not able to do so and show that he is able to do so by 6 June, then, quite clearly, the only thing that would appear to be possible to be done is to put in train the process of selling the house. 

11. I do not propose to go into the intricacies of the financial arrangements with the banks, only to order that amount owing to mortgagee secured over the Property C property should be paid on settlement, as is the normal procedure.  If there is any money left over, it can be paid to the parties in equal shares.  And, in my view, it should be regarded as an interim property distribution.

12. I take the point that the sum of $115,320.00 said to be owed to Ms M, is a matter that is in issue.  In my view, that should be left to a final hearing.

13. In an interim hearing, where the Court does not take oral evidence, in spite of the blandishments of the Respondent solicitor, it is just not possible to make a finding of fact in respect of factual issues that are heavily in dispute.

14. The fact is that unless the husband can come up with the money to pay the children’s school fees, the sale of the Property C property should go ahead.  I have chosen to regard Monday, 6 July as the operative date.  The husband will have until Friday, 3 July to pay the amounts owing to the children’s schools and to obtain a receipt, or receipts, and provide proof of those payments to the wife’s solicitors by Monday, 6 July.  If he can do that, and if he has done that, well and good.  However, if he has not done that, or is unable to do that, it would seem to me that there is no reason why the sale of the property, to which the husband consented in December 2013, should not proceed.

I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of Judge Scarlett

Associate: 

Date:  18 June 2015