Parsons & Prendergast

[2007] FamCA 31

FAMILY COURT OF AUSTRALIA

PARSONS & PRENDERGAST [2007] FamCA 31

FAMILY LAW - PROPERTY – Interim applications brought by wife for sale of former matrimonial home and two investment properties pending final determination -  The mortgagee of the properties had instituted proceedings in the Supreme Court of Victoria for sale of the properties which the husband had opposed and the parties to that action are awaiting determination of application by the mortgage for summary judgment - Wife’s application adjourned and orders made directing payout of rental of the investment properties be retained until further order by the real estate agents.

Family Law Act 1975

Waters v Jurek (1995) FLC 92-635

APPLICANT: Ms Parsons

RESPONDENT: Mr Prendergast

FILE NUMBER: DGF 764 of 2004

DATE DELIVERED: 3 January 2007

PLACE DELIVERED: Melbourne

JUDGMENT OF: Guest J

HEARING DATE: 3 January 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Wraith

SOLICITOR FOR THE APPLICANT: Berry Family Law

COUNSEL FOR THE RESPONDENT: Mr McDermott

SOLICITOR FOR THE RESPONDENT: James McDermott & Associates

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: DGF 764  of 2004

Ms Parsons

Applicant

And

Mr Prendergast

Respondent

REASONS FOR JUDGMENT

1. I have before me a Form 2 Application in a Case brought by the wife and filed on 4 December 2006.  That application is supported by an affidavit, quite detailed, and deposed to by her and also filed that day.  In addition, there is a further affidavit from the solicitor.

2. By that application the wife seeks an order, in summary, that two investment properties situated at E, and N, and the former matrimonial property at H, be sold out of court by auction on terms as ordered, details of which are set out in her application.  The wife sought further orders for dispersal of the net proceeds which I need not articulate in these short remarks.

3. Those proceedings were served upon the husband by post under cover of letter dated, so I am informed, 4 December 2006. The husband at that time acted in person. I might point out that he is subject to an order pursuant to the provisions of section 118(1) of the Family Law Act 1975 (as amended).  The husband contacted his solicitor Mr McDermott, who appears this day on his behalf.  I have been helpfully informed by Mr McDermott that he first saw the husband on 28 December 2006.  He then wrote to the wife's solicitor on 29 December 2006 and also to the mortgagees of the three investment properties, namely P Ltd, advising that the husband sought the wife’s application be adjourned.

4. The husband caused to be filed a Form 2A Response on 3 January 2007 in which he sought an order that the wife's Form 2A Application in a Case be dismissed and otherwise that the hearing listed this day be adjourned pending delivery of a reserved judgment in proceedings in the Supreme Court of Victoria between P Ltd as plaintiff, and himself, as defendant.  He sought a further order that the wife pay his costs.

5. The Response is supported by an affidavit sworn by the husband which, whilst providing some short narrative, does not in my view go on to explain the whole of the issues between himself and the mortgagee.  It does not, for example, detail the Defence that he lodged to the application by the mortgagee for summary judgment for the sale of the properties.  Accordingly, there are proceedings in the Supreme Court of Victoria for sale of the properties in respect of which the wife has brought collateral proceedings dealing with the same justiciable issue. 

6. Furthermore, and significantly however, the husband in opposition to the Application for Summary Judgment argued the matter in the Supreme Court and a judgment is to be delivered on this issue, so am I told, either sometime late this month or early February 2007.

7. There are a number of problems relating to the wife’s Application before me, none the least of which, in reality, is that even on the husband's version of the events there are three properties with a total value, so it has been suggested, of $500,000 and $550,000 and an overall indebtedness that would carry, on an estimated basis, a debt to equity ratio of 80 per cent to 20 per cent.

8. The husband is currently without employment.  I was informed by Mr Wraith that the husband had not paid child support for some two to three years and that the wife has received nothing other than the basic $20 per calendar month.

9. In addition to the proceedings in the Supreme Court there are also proceedings in VCAT which are detailed in paragraph 9 of the husband's affidavit.  One of the problems with the husband's affidavit material is that it fails to detail or explain his Defence in the Supreme Court proceedings and those instituted in VCAT.  Mr McDermott has explained the position in somewhat cryptic terms, and that is not a criticism by any measure, because there appear to be quite complex issues involved.

10. However, it appears appropriate in all of the circumstances that I adjourn these proceedings until such time as the Master of the Supreme Court has delivered his judgment in respect of the application for summary judgment brought by the mortgagee, which is opposed by the husband.

11. One of the central thrusts to Mr Wraith's arguments, and which has merit, is that the husband is not making any mortgage payments and which are accumulating at a substantial rate, with penalties.  He has not demonstrated in his affidavit material that he does not have the means to do so, or that he would make good the arrears of those payments.

12. There is no suggestion by Mr McDermott that the husband has funds available to make good the arrears.  It was suggested that the husband was in a position to “refinance” the properties.  That seems to me to be a pious hope, with respect, to what the husband's visions are of the future, given that the wife has a substantial entitlement to an equity share in these properties and that a major argument or component of her claim will be any prospective adjustment pursuant to section 75(2) of the Act.  She is wholly charged with the responsibility, which is an onerous one, for the support of the children, and it has been demonstrated by history for some two, maybe three years that the husband has contributed nothing to their support.

13. As was said by Fogarty J in Waters v Jurek (1995) FLC 92-635, the question of any prospective adjustments pursuant to s 75(2) is fast becoming the “centre of gravity” of most property disputes.  It seems to me that s 75 of the Act will be a central argument, particularly given that there is little, perhaps if any, equity in those properties.  In those circumstances, any financier seized with that information, and the information that I have before me, would be foolhardy indeed in offering finance.  That is my view on the limited appraisal I have before me.  It may well be that there are lenders in this community who would advance additional finance on properties that have a 20 per cent equity and in respect of which a party may have no interest. 

14. What concerns me is that “the reality” of the dispute between the husband and the wife has been lost.  It would be far better in the circumstances that the husband gather his resources to work out a strategy to minimise the outflow of funds and to preserve some form of capital equity in the three properties to which he may have some, (I stress "some") entitlement.  However, that is going to be a matter for another judge at another time at the final hearing of this matter.

15. Mr Wraith's submission that moneys are being squandered and the equity in the properties being rapidly eroded is a substantial one.  It seems to me, at least insofar as the two investment properties are concerned, that it would be appropriate in the circumstances to make orders until further order for the husband to direct, that each of the agents associated with the E and the N properties retain all rental moneys, less commission appropriately payable to them, until further order. 

16. That would mean the rental of some $802 per calendar month, less commission, payable in respect of the property at E, be retained in the trust account of the agent, G.  So too the rental of some $910 per calendar month in respect of the investment property at N, be retained in the trust account of F Pty Ltd, the agent being Mr F of A Real Estate, a business situated at B.

17. I have been informed by Mr McDermott that the rental is payable in advance on the first day of each month and there is a direction that the moneys be remitted, less commission, to the husband.  This will cease.  I propose to have counsel prepare draft minutes which will reflect that as and from 1 January 2007 all rental moneys in respect of those two properties be retained by the respective agents, as I have indicated.  If it transpires that in fact the monthly rental payable in advance for January 2007 has been remitted by the agents to the husband's account, then the husband forthwith return those moneys to the respective agents.  That is an order that I propose until further order.

18. There are other attractive arguments underpinning the orders I propose to make which include the fact that there is a Pre‑Trial Conference to be held in this matter on 17 January 2007.  The parties were placed in the Trial Notice List, so I am informed, in August 2006.  It would be expected that a trial of all issues would be heard in about March‑April 2007.  Accordingly, it is not that long in the future that this matter can be finally determined.  However, so far as the future direction is concerned, I propose to order that the further hearing of the wife's application be adjourned to a date to be advised following delivery of the judgment of the Master of the Supreme Court dealing with the application by the mortgagee for Summary Judgment.  The matter can then be brought to the Court’s attention and a time committed for mention to determine its future course.

19. In the meantime it would also be appropriate to further order that the wife do file and serve, if so advised, any affidavit or affidavits in response to the affidavit filed by the husband and, further, that the husband do file and serve any supplementary affidavit, annexing the documents relied upon in the Supreme Court proceedings and that all such documents be filed and served within 14 days of this date.

20. I would anticipate that each party would make an application for costs.  In the circumstances I would reserve both parties' costs of this date and certify for the attendance of both Mr Wraith and Mr McDermott in the usual terms.

21. I will further direct that the extempore judgment be transcribed and placed on the court file.

I certify that the preceding twenty one (21) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Guest.

Associate: 

Date:  2 February 2007

IT IS NOTED that this judgment for all publication and reporting purposes be referred to as Parsons & Prendergast