PANSHIN & FARMER
[2012] FMCAfam 1107
•8 October 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| PANSHIN & FARMER | [2012] FMCAfam 1107 |
| FAMILY LAW – Application for stay of orders pending appeal – declined – application for orders implementing previous interim orders – granted but stayed in part pending appeal – grounds of appeal raise no reasonable prospects of success – failure to grant stay does not render appeal nugatory. |
| Farmer & Panshin [2012] FMCAfam 691 |
| Applicant: | MS PANSHIN |
| Respondent: | MS FARMER |
| File Number: | SYC 2252 of 2011 |
| Judgment of: | Altobelli FM |
| Hearing date: | 21 September 2012 |
| Date of Last Submission: | 21 September 2012 |
| Delivered at: | Sydney |
| Delivered on: | 8 October 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr Batey |
| Solicitors for the Applicant: | Stidwill Solicitors |
| Counsel for the Respondent: | Ms Merkel |
| Solicitors for the Respondent: | Mark Gallego Solicitor |
ORDERS
THE COURT ORDERS THAT:
The Application in a Case filed 19 September 2012 be dismissed.
The costs of Ms Farmer in relation to the said application be reserved.
Ms Panshin be and is hereby restrained from attending at or within five hundred metres of [address omitted] (“the property”).
The Applicant be permitted to sell the property by either public auction or private treaty, at her sole discretion, provided such sale price is not less than $825,000.
Order 4 herein be stayed until 4pm on 17 October 2012.
Leave be granted to both parties to relist the matter on 72 hours notice.
Leave be granted to both parties to issue more than five (5) subpoenas.
IT IS NOTED that publication of this judgment under the pseudonym Panshin & Farmer is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 2252 of 2011
| MS PANSHIN |
Applicant
And
| MS FARMER |
Respondent
REASONS FOR JUDGMENT
I provide the following oral reasons. By way of an application in a case filed 19 September, supported by two affidavits also filed on that date, the respondent in substantive property proceedings in my docket, seeks a stay of the interim orders made by me on 10 July 2012. Moreover, the respondent asks to be allowed to re-enter and occupy the [omitted] property on terms that she makes the monthly interest payments to the mortgagee. As her counsel indicated I would also be invited to make it a condition of the stay of order and of the orders sought that if the respondent did not pay the said interest payments, she should forthwith vacate the property and my orders of 10 July would reapply.
The applicant in the substantive proceedings opposes the grant of the stay. She seeks two orders, the effect of which are to vary or implement by orders of 10 July, one excluding the respondent from the property and one authorising her to sell the same for $825,000. The respondent relies on an affidavit of 19 September.
Matters of background are adequately set out in my reasons for judgment delivered 10 July. The subject of appeal. I note that they are published as 2012 FMCAfam 691. The effect of my orders was to grant to the applicant sole and exclusive occupancy of the property and to make orders for sale, including if the respondent failed to cooperate, allowing the applicant to be trustee for sale.
On 6 August 2012 the respondent filed a Notice of Appeal. I will need to refer to the grounds of appeal as one of the significant issues raised by the applicant is whether these grounds disclose any reasonable prospects of success.
The applicable law governing these applications is well known. The principles include the following, firstly, that there is an onus on the respondent to establish a proper basis for the stay but there is certainly no need to establish special or exceptional circumstances. The next general principle is that the applicant, however, is entitled to the fruits of the judgment obtained in her favour on 10 July.
The next factor is that the respondent must be acting bona fide. The next principle is that if a stay is granted, it must be on conditions that are fair to all parties, in other words, there must be a balancing of convenience, rights and hardship. The next principle is that if the appeal would be nugatory by not granting the stay, this, in itself, is a strong reason to grant the stay. The next principle is that the appeal must be based on arguable grounds.
Counsel for the respondent submits that, on balance, these factors favour the respondent, and therefore the stay should be granted. Counsel for the applicant says that the factors favour that the applicant, and the stay should not be granted.
One of the significant background matters is whether there have been relevant changed circumstances. Clearly, the facts before me today are different from the facts before me on 10 July. For example, there was an auction sale of the property on 1 September which resulted in one bid only, a vendors bid of $800,000. The current market value of the property is, therefore, not what it was considered to be at the time of the orders on 10 July, that is, $925,000.
The next relevant changed circumstance is that the real estate agent believes that the property in its present condition would sell for between $800,000 and $820,000.
There is one current offer to purchase the property at $810,000 subject to the purchasers obtaining a structural engineers report to their satisfaction, and subject, of course, to contract.
The respondent has secured employment through her company for a period 10 September to 7 December 2012 at a rate of $71 per hour exclusive of GST.
The applicant has been paying the mortgage at the rate of $500 per week since 24 July 2012. The relevant changed circumstance here is that the mortgage has, in fact, been paid.
There are some relevant unchanged circumstances. For example, the applicant resolutely wants the property to be sold and the respondent resolutely wants to retain the property. Another unchanged circumstance is that the applicant and the respondent are clearly unable to cooperate on any aspect of the property.
There are a number of factual issues that need to be dealt with at the outset before considering the stay application, but, of course, within the context of that. The first relevant factual issue is whether there is a risk that the mortgagee will exercise its power of sale. This clearly was a significant factor in my original reasons. The applicant says the risk of this has unchanged, the respondent says there is no such risk. This risk is discussed at paragraphs 22, 28, 45 and 47 of my reasons for judgment of 10 July.
The respondent says that as a result of her complaint to the Financial Ombudsman Service, the mortgagee’s ability to take enforcement action is, in effect, stayed pending the outcome of the dispute resolution process. In support of this counsel for the respondent referred the court directly, if not indirectly, to paragraph 13 of the terms of reference of the Financial Ombudsman Service contractual arrangements with credit providers. I note that this was established under the National Consumer Credit Act 2009. Indeed, I’m satisfied on the evidence before me that the mortgagee, the Commonwealth Bank, is contractually bound by these arrangements and that a wilful breach of an obligation it incurs pursuant to these arrangements constitutes serious misconduct reportable to ASIC.
I’m satisfied that paragraph 13 has the effect submitted on behalf of the respondent, and that is that during the period that the dispute was being resolved, the mortgagee’s ability to enforce its security was very severely restricted. Where the court disagrees with the respondent is about the application of this information to the facts of the case. Bear in mind that the respondent bears the onus of proof to establish to the reasonable satisfaction of the court that paragraph 13 applies, and continues to apply, to a complaint lodged by the respondent. However, the only evidence that the respondent relies on in this regard is exhibit R9 which is correspondence between the mortgagee, the Commonwealth Bank and the respondent. This letter dated 5 July 2012 does refer to two complaints to the Financial Ombudsman Service, and it contains a resolution proposal. This was in evidence before the court on 10 July. Moreover, the evidence before the court on 10 July was that an offer was made which was acceptable for the respondent, but not acceptable to the applicant, and, therefore, which could never be capable of acceptance in a binding manner as both are co-owners of the property. Moreover, the offer contained was predicated on the respondent refinancing the mortgage on or before 5 October 2012.
The evidence before the court does not support the respondent’s contention that the complaint, in effect, operates as a stay of enforcement on the mortgagee. Indeed, exhibit R9 is evidence that the Financial Ombudsman process is exhausted. This must be the case. For one thing, there is no evidence at all that the respondent can comply with the terms of the resolution agreement, that is to say, repay the home loan on or before 5 October. It is abundantly clear that the respondent will never voluntarily surrender the property to the bank before 5 October. The stay on enforcement was only offered until 5 October.
The Financial Ombudsman Service dispute resolution scheme does not work on the basis that a credit provider’s rights are stayed until such time as the complaint is resolved to the satisfaction of the complainant. What it provides for is a reasonable opportunity for discussion, offer and compromise. That is what exhibit R9 evidences. The court does not accept that if the respondent simply keeps ignoring or rejecting offers of compromise made by the bank that she can indefinitely postpone enforcement.
There is no evidence before the court to satisfy it that by virtue of some provision under the Financial Ombudsman Scheme initiated by the respondent that there is any less risk of the mortgagee exercising its power of sale or enforcement in a situation where there are substantial arrears and where only the interest is being serviced. In this regard, the matters of risk identified by the court in its reasons of 10 July remain unchanged. The respondent now has had two opportunities to demonstrate that somehow the complaint to the Financial Ombudsman scheme removes the risk. She has failed twice.
There is another relevant factual issue. The second relevant factual issue asserted to be highly relevant by the respondent relates to the structural problems with the home. Whilst this is noted at paragraphs 31 and 34 of the reasons, the effect of the respondent’s contention is that the structural issues were a formidable barrier to a successful sale of the property, and, indeed, that this is evidenced by the failure to sell the home since 10 July, and I think there’s a suggestion that the reasons do not adequately consider this. I find it curious, indeed, that the respondent, who was in occupation of the property at all relevant times and who was aware of the structural defects at all relevant times, and who appears, if I were to accept what she says, to have had the financial capacity to do something about it at all relevant times but did not, now seems to be advancing this as a reason why she should somehow move back into the property and buy the applicant out, putting aside issues about refinancing the mortgage.
The respondent’s counsel explains the respondent’s enthusiasm to disclose the structural issues to perspective purchasers as merely discharging her obligation as a vendor. Her enthusiasm to disclose these problems is, inferentially, not that she would have a greater chance to buy the property out. Her enthusiasm to disclose is manifest in her emails to the real estate agent, for example, of 20 July 2012. Her counsel’s submissions referred to – indeed, tendered – paragraph 9.4 of the engineer’s report. This disclosure of all the problems relating to the property strangely omits disclosure of the structural repairs made in 2010 pursuant to the engineer’s reports and evidenced by exhibit A12.
One cannot, in all the circumstances, help but to draw the inference that the respondent is using the structural problems with the home to her own advantage, even if this means emphasising the problems but minimising the works done to address the problems. Clearly the respondent wishes to retain the property.
There is a third factual issue, and that relates to the respondent’s capacity to refinance the Commonwealth Bank debt. It is hard to see the point in ordering the stay if she cannot. The respondent could not satisfy the Court that she could refinance by 10 July, despite her assertions to that effect. Could she do so by 21 September, two months later, knowing of course that she bore the onus of proof and that it was a significant factor in her case. In short, the answer is no. There is no evidence of a loan application, let alone a loan approval. The Court can be no more satisfied today of her capacity to refinance than it could on 10 July.
Will the appeal be rendered nugatory if the orders are not stayed? Whether this factor will be established or not depends on an understanding of what the respondent wants to achieve in this case.
If, by denying the stay, this Court is depriving her of the opportunity to achieve what she wants to achieve in this case, then the stay must be granted, but if, by contrast, the respondent cannot demonstrate on any reasonable basis that she can achieve what she wants, then the stay deprives her of nothing, because she would never have achieved it in the first place.
On the facts of this case, the respondent cannot establish that she can refinance the existing debt on the property, let alone that she could also somehow pay the applicant out. She has had two opportunities to demonstrate this, even on a prima facie basis. She has not. Failure to grant a stay, therefore, deprives her of nothing.
On all the evidence before the Court, even if the respondent were to be awarded 100 per cent of the equity of the property, there is no evidence at all of her ability to refinance the debt into her own name. The respondent asserts she has the financial capacity to do so, as she did the last time. That financial capacity then and now is questionable. In any event, she bore the onus of proof in this regard that she has not discharged.
The applicant contends that the grounds of appeal disclose no reasonable prospects of success. Turning now to consider the grounds, Ground 1 goes to the issue of there being a real risk of the mortgagee exercising its power of sale. I have dealt with this above. If the respondent believes that there was insufficient evidence as at 10 July in this regard, she certainly failed to adduce that evidence on 21 September.
Ground 2 is more or less the same. Ground 3 is complaint about failure to give weight to evidence of the applicant’s financial capacity to service the mortgage. There was no such evidence.
All there was on 10 July was evidence of a track record of a failure to pay, even at the times when she did have financial capacity. The only new evidence as at 21 September was evidence of a contract of employment for up to three months, at a rate of $71 per hour. The respondent contends, through her counsel and from the Bar table, that she would be earning $3000-plus per week, but that is unsupported by the very document on which she relies.
Ground 4 is what I will describe as the balance sheet issue. I fail to understand how this is pertinent to the appeal against the orders made. In any event, the respondent’s failure in this regard is her fault. She has been represented as often as she has been unrepresented. The fact is that the history of this file indicates that she is constantly changing representation, reverts to self representation and then representation again. She created her own misfortune in this regard. She cannot assert, as she inferentially does in the presence context, that the Court cannot rely on her own balance sheet, even if it was a factor considered in making the orders that were made.
Ground 5 relates to hardship. It is apparent that these grounds of appeal were prepared, with respect, without reference to a transcript, and with great respect to the respondent, any hardship to her was deemed inconsequential compared to the hardship to both the applicant and the respondent if the bank exercised its power of sale and sold their property.
Ground 6 relates to a failure to grant an adjournment on the basis of
Mr B’s report. The report is manifestly inadequate for the stated purpose. Besides, the respondent cannot have it both ways. She cannot invoke psychological disability on one hand, but capacity to earn $3000 per week on another.
Ground 7 refers to Ms S’s affidavit, which is not a matter that informed the Court’s decision, and there is no apparent nexus between the affidavit and my reasons. Ground 8 relates to the correspondence with the real estate agent that I referred to in the reasons and speaks loudly for itself. In the context of all the evidence heard by the Court, the Court was well entitled to conclude that the respondent acted unreasonably.
Ground 9 relates to non-service of a subpoena to the Commonwealth Bank and something about not establishing the incomplete documents produced. There is nothing to suggest that this matter, in any way, informed the orders that were made. I accept Mr Batey’s submissions that the grounds of appeal disclose no reasonable prospects of success.
On the balance of convenience and hardship issue, pursuant to orders made on 10 July, the applicant has expended considerable funds preparing the property for sale, much of which would be wasted by granting the respondent’s application. In the circumstances, the balance of convenience favours the applicant. Having regard to those matters, and as I have previously indicated, I dismiss the application in a case filed 19 September, and I reserve Ms Farmer’s costs in this regard.
Now, the applicant, Ms Farmer, seeks orders restraining the respondent from approaching the property. The respondent says that she will not do so anyway. There is ample basis for the applicant’s past concerns.
The respondent did not seek to challenge the factual matters asserted by the applicant. In this regard if it is true that the respondent will not approach anyway, there is no hardship to her if I make the orders sought, and accordingly, I do so.
The applicant seeks directions about the sale of the property at $825,000. All the evidence before the court points to this, and accordingly, that is the order that I will make.
The respondent through her counsel indicated that she had instructions to amend the current notice of appeal to include an appeal against the order made in the preceding paragraph. A stay of this order was sought until 4.00pm on 17 October 2012. I granted the stay on the basis that it was for a short period and that to deny the respondent a stay would render her appeal on this issue nugatory.
I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of Altobelli FM
Associate:
Date: 24 October 2012
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