PEADE & SAFFREE

[2013] FamCA 993

FAMILY COURT OF AUSTRALIA

PEADE & SAFFREE [2013] FamCA 993

FAMILY LAW – INTERIM PROPERTY ORDERS – Where there are concurrent proceedings commenced by the New South Wales Crime Commission against the husband in the Supreme Court which are yet to be finalised – Where the husband had successfully sought an adjournment of the hearing of the property proceedings due to the criminal charges against him – Where the New South Wales Crime Commission have been joined as a party to the proceedings – Where each of the parties sought interim orders – Where the husband made an application for a stay pending finalisation of the criminal charges and Supreme Court proceedings – Where it was contended, on behalf of the husband, that it would be impossible for the court to determine the assets, liabilities and financial resources of the parties until the Supreme Court proceedings are finalised and any debt of the husband quantified – Where it was contended, on behalf of the wife, that she had no involvement whatsoever in any criminal activity of the husband and she bears no responsibility for an liability which may arise pursuant to the Supreme Court proceedings – Where finalisation of the wife’s application for property orders has been delayed for three years with the last thirteen months of this period following the criminal charges made against the husband – Where the husband’s application for a stay is refused – Where interim orders are made.

Huber & Costa [2008] FMCAfam 1216

APPLICANT: Mr Peade

RESPONDENT: Ms Saffree

FILE NUMBER: SYC 6748 of 2009

DATE DELIVERED: 13 September 2013

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Stevenson J

HEARING DATE: 1 March 2013, 4 April 2013,
26 April 2013, 23 May 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Schonell SC

SOLICITOR FOR THE APPLICANT: Prior Tzannes & Wallis

COUNSEL FOR THE RESPONDENT: Mr Campton

SOLICITOR FOR THE RESPONDENT: Gayle Meredith & Associates

Orders pending further order

1. By consent that, pending further order:

   1.1within 42 days both parties shall do all things and execute all documents required to effect the transfer to the wife of the whole of the husband’s right title to and interest in the property situate at and known as B Street, C Town in the State of New South Wales (“the C Town property”)

   1.2simultaneously with the parties’ compliance with order 1.1, they shall do all things and execute all documents required to effect the discharge of the mortgage in the joint names of the parties which is secured on the title to the C Town property

   1.3the wife is at liberty to increase the mortgage encumbrance on the title to the C Town property by an additional sum of $50,000, which she shall take by way of interim or partial property settlement

   1.4the wife is otherwise restrained from selling, transferring, assigning, alienating or encumbering her interest in the C Town property.

2. That pending further order, the orders of 23 July 2012 are varied so as to provide that the husband is at liberty to increase the mortgage encumbrance on the title to the property situate at and known as D Street. Suburb E in the State of New South Wales (“the Suburb E property”) by an additional amount of $300,000 on condition that he apply such monies for the sole purpose of defending criminal charges pending against him and the application of the New South Wales Crime Commission in the Supreme Court and provided that he take this money by way of interim or partial property settlement.

3. That within 21 days of the date of these orders the husband provide to the wife’s solicitors by way of disclosure copies of the following documents:

   3.1husband’s taxation returns for financial years ended 30 June 2010, 30 June 2011 and 30 June 2012

   3.2husband’s Notice of Assessments for financial years ended 30 June 2011 and 30 June 2012

   3.3any receipt or other document relating to the sale of the husband’s Rolex watch as deposed to in paragraph 12 of his affidavit filed 7 February 2013

   3.4any receipt or other document relating to the sale of the husband’s neck chain and diamond ring

   3.5bank statements relating to the deposit of funds received by the husband for sale of the items referred to in orders 3.3 and 3.4 herein

   3.6last member statement in relation to the husband’s superannuation entitlements with Maritime Suprematism and Club Plus Superannuation

   3.7copies of all documents relating to any security or surety which has been provided for the husband’s bail and details of the quantum and form of any such security or surety.

4. That the husband’s application for a stay of these proceedings until the finalisation of criminal charges and the application of the New South Wales Crime Commission is refused.

5. That the costs of both parties of 1 March 2013 and 4 April 2013 are reserved.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Peade & Saffree has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 6748 of 2009

Mr Peade

Applicant

And

Ms Saffree

Respondent

REASONS FOR JUDGMENT

the proceedings  

1. On 18 October 2010 the wife filed an Application in the (then) Federal Magistrates Court by which she sought orders for alteration of property interests.  The husband filed a Response on 6 December 2010.  The proceedings were listed for final hearing on 8 and 9 September 2011 but were “not reached” and given fresh hearing dates of 23, 24, 25 July 2012.

2. On 13 July 2012 New South Wales police charged the husband with supply of a commercial quantity of a prohibited drug.  He has pleaded “not guilty” to all charges.On 18 July 2012 the New South Wales Crime Commission commenced proceedings against the husband in the Supreme Court pursuant to the Criminal Assets Recovery Act 1990.  These proceedings and the criminal charges against the husband are yet to be finalised.

3. On 23 July 2012 the husband successfully sought an adjournment of the hearing of the property proceedings, due to the criminal charges laid against him on 13 July 2012.  He was ordered to pay the wife’s costs assessed at a sum of $15,000.  The time for that payment was subject to further order, depending on the progress of the Crime Commission proceedings in the Supreme Court.  An order has yet to be made as to a time for payment of this sum to the wife.

4. On 18 September 2012 the proceedings were transferred to the Family Court of Australia and listed before a Registrar on 26 November 2012.  On that date, the Crime Commission appeared as second respondent and the Registrar directed expedition of the proceedings.  The first day of a Less Adversarial Trial was listed before me on 1 March 2013.  I adjourned the proceedings to 4 April 2013, so as to ascertain the status of the husband’s criminal charges and the application of the Crime Commission in the Supreme Court.

5. On 12 April 2013 the husband filed an Amended Application in a Case by which he sought the following orders: 

   1.        Liberty to serve short notice of this application.

   2.That the New South Wales Crime Commission be joined to these proceedings.

   3.That the orders dated 23 July 2012 be varied by inserting the following at the conclusion of the order:

   “SAVE that the Husband is permitted to mortgage, encumber or otherwise use the property to secure a loan or other facility such that the total encumbrances do not exceed the sum of $610,000.”

   4.That within 14 days the NSW Crime Commission do all acts and things necessary to give effect to these Orders.

   5.The wife pay the Husband’s costs of and incidental to this application.

   6.That otherwise these family law proceedings are stayed, noting the Court’s intention to continue the stay until the completion of the Supreme Court proceedings ….

   The Crime Commission in fact was joined as a respondent to the proceedings in November 2012, despite the insistence to the contrary of counsel for the husband on 1 March 2013 and 4 April 2013.

6. On 15 April 2013 the wife filed a Response to an Application in a Case by which she sought the following orders: 

   1.

   1.1That the husband’s Application in a Case filed 3 April 2013 be dismissed.

   1.2That pending further Order:

   1.2.1Within 42 days of the date of this Order, that the husband do all acts and execute all such documents as may be required to transfer to the wife all of his right title and interest in the property situated at and known as [B Street, C Town] in the State of New South Wales (“the [C Town] property”)

   1.2.2Simultaneous with the husband’s compliance with Order 1.2.1 herein, the wife do all acts and things to cause the mortgage secured over the [C Town] property in the joint names of the parties to be discharged.

   1.2.3The wife be restrained by injunction from selling, transferring, assigning, further encumbering or alienating her interest in the [C Town] property without providing the husband 21 days notice in writing.

   2.In the alternative to the relief sought by the husband to further encumber his interest in the property at [D Street Suburb E] (“[Suburb E] property”) in circumstances that husband’s application is not refused and dismissed:

   2.1That the husband do all things to sell the property at [D Street. Suburb E] (“[the Suburb E] property”) for the best price reasonably attainable but not less than $850,000 or such other price as agreed between the parties in writing.

   2.2That on completion of any sale of the [Suburb E] property the husband do all acts and execute all documents to cause the proceeds of sale to be paid in the following manner and priority:

   2.2.1all costs and expenses of sale including legal costs and disbursements, agents commission, auction expenses;

   2.2.2the amount required to pay all municipal and water rates outstanding with respect to the [Suburb E] property;

   2.2.3such sum as is required to discharge the mortgage currently secured on the [Suburb E] property;

   2.2.4$100,000 be paid to the wife by way of interim property settlement;

   2.2.5$200,000 be deposited in a controlled monies account with Gayle Meredith & Associates solicitors in the names of the husband and the wife and such sum remain in that account pending further Order;

   2.2.6The balance be paid to the husband by way of interim property settlement.

   3.In the third alternative to Orders 2 herein:

   3.1That Order 2 of Orders dated 23 July 2012 be varied to allow the husband to further encumber the [Suburb E] property, provided that the mortgage security and value of the loan does not exceed $510,000;  and the Husband does all acts and things necessary to cause the additional funds he borrows, to be paid as follows:

   3.1.1$100,000 to be paid to the wife by way of interim property settlement; 

   and

   3.1.2The balance to the husband by way of interim property settlement.

   3.2That the husband pay all mortgage repayments in respect of the mortgages secured on the [Suburb E] property and other outgoings relating to the [Suburb E] property including utilities, rates, land tax and home insurance when they become due and payable.

   3.3That the husband do all acts and things to cause and direct any mortgagee of the [Suburb E] property to provide to the wife:

   3.3.1Monthly statements in respect of any mortgage secured on the [Suburb E] Property;

   3.3.2Any notices as to default or non-compliance with the loan agreement or mortgage/security in respect of the [Suburb E] property.

   3.4That in the event the husband defaults on a mortgage instalment other outgoings relating to the [Suburb E] property including utilities, rates, land tax and home insurance premiums for a period of sixty (60) days then the wife forthwith shall be appointed as trustee on behalf of the husband to sell the [Suburb E] property for the best price reasonably attainable.

   3.5That if the [Suburb E] property is sold pursuant to Order 3.4 herein, the proceeds are to be paid as follows:

   3.5.1all costs and expenses of sale including legal costs and disbursements, agents commission, auction expenses;

   3.5.2the amount required to pay all municipal and water rates outstanding with respect to the [Suburb E] property;

   3.5.3such sum as is required to discharge the mortgage currently secured on the [Suburb E] property;

   3.5.4Reimbursement to the wife for all reasonable expenses incurred while acting as trustee for the sale of the [Suburb E] property pursuant to these Orders;

   3.5.5The balance be paid to the husband by way of interim property settlement.

   4.That within 7 days of the date of these Orders the husband provide to the wife’s solicitors by way of disclosure copies of the following documents:

   4.1Husband’s taxation returns for financial years ended 30 June 2010, 30 June 2011 and 30 June 2012.

   4.2Husband’s Notice of Assessments for financial years ended 30 June 2011 and 30 June 2012.

   4.3Any receipt or other document relating to the sale of the husband’s … watch as deposed to in paragraph 12 of his affidavit filed 7 February 2013;

   4.4Any receipt or other document relating to the sale of the husband’s neck chain and diamond ring;

   4.5Bank statements relating to the deposit of funds received by the husband for sale of the items referred to in Orders 4.3 and 4.4 herein;

   4.6Last member statement in relation to the Husband’s superannuation entitlements with Maritime Suprematism and Club Plus Superannuation;

   4.7The following documents in relation for the husbands proceedings with NSW Police for period of 1 July 2013 to date including but not limited to

   4.7.1All Charge Sheets;

   4.7.2All Facts Sheets; and

   4.7.3All Court Attendance Notices

   4.7.4Briefs of evidence

   4.8Copies of all documents granting bail to the husband including conditions of that Bail;

   4.9Copies of all documents relating to any security or surety that has been provided for the husband’s bail and details of the quantum and form of the security or surety provided.

   5.That from the date of these Orders the husband continue to disclose to the wife details in relation to his proceedings with the NSW Police and NSW Crime Commission including:

   5.1Details of any further charges made against the husband by the NSW Police

   5.2Details of each court event including the time and date, forum and details as to the purpose of that listing; and

   5.3Any pleas entered into by the husband.

   6.That the prosecution of the husbands for his substantive relief pursuant to s 79 (as contained as within his Amended Response filed 27 February 2013) be stayed pending compliance by the husband provision 4 and 5 herein.

   7.That the husband pay the wife’s costs:

   7.1Relating to court attendance on 1 March 2013 in the sum of $1,620; and

   7.2Relating to court attendance on 4 April 2013 in the sum of $2,998.

   8.That the husband pay the wife’s costs of this application.”

7. These competing interim applications were listed for hearing on 23 May 2013 over the objection of the husband, who sought a stay of proceedings on 4 April 2013.  The final hearing of the competing applications for alteration of property interests has been fixed for four days to commence on 17 December 2013, subject to the outcome of the husband’s application for a stay. 

8. The position of the Crime Commission was set out in the clearest possible terms in a letter to the wife’s solicitors dated 3 April 2013 (exhibit 1), which read as follows: 

   We refer to your letter of today’s date and confirm our previous advice (as contained in our letter of 15 November 2012 and indicated on the record to Registrar Chayna on 26 November 2012 and 15 February 2013) that the Commission does not wish to intervene, nor to be heard, in your client’s Family Court proceedings.

   We also confirm that should final property orders be made in the Family Court proceedings which require a variation to the restraining order made in the Commission’s Supreme Court proceedings, we will seek the necessary variation from the Supreme Court.

CONSIDERATION

The Husband’s Application to Increase the Encumbrance on the Suburb E Property

1. The husband is the sole registered property of a property at D Street. Suburb E, which he purchased in 1998.  The purchase money came from compensation which the husband received for a head injury which he suffered in 1988.

2. On 25 February 2013 the parties submitted a Joint Balance Sheet in these proceedings.  They agreed that the Suburb E property has a value of $850,000 and is subject to a mortgage liability of $311,323.  The husband thus holds a net equity of approximately $538,000 in this asset.

3. The parties are the joint owners of a property at B Street, C Town.  This property has an agreed value of $1,050,000 and is subject to a mortgage liability of $682,431.  The parties thus hold a net equity of approximately $367,000 in this asset.

4. The husband seeks to increase the mortgage liability on the Suburb E property to $610,000, in order to meet his costs of the criminal charges and the Supreme Court proceedings. Section 10B(3A)(b) of the Criminal Assets Recovery Act (New South Wales) 1990 permits the husband to make this application in relation to expenses “incurred in connection with an application for the restraining order or an application for a confiscation order, or incurred in defending a criminal charge”. 

5. On 4 April 2013 the legal representative for the Crime Commission indicated that “it does not propose to actively participate in these proceedings”.  It was noted that the Commission would file no material in these interlocutory proceedings.

6. The wife sought interim orders to the effect that the husband sell the Suburb E home forthwith and that she receive $100,000 from the proceeds by way of an interim property settlement.  The sum of $200,000 would be held by her solicitors in a controlled monies account, pending further order of the court.  The balance of around $230,000 would be paid to the husband by way of interim property settlement.

7. In my view, the wife offered no convincing reason why the husband should sell the Suburb E property at this point in the proceedings.  The property is presently leased and generates rental income.  The wife proposed an alternative whereby the husband would be permitted to increase the encumbrance on the Suburb E property to $510,000.  She would receive $100,000 and the husband the balance by way of interim property settlement.  He would thus have available an amount of approximately $100,000 with which to meet his legal costs.

8. The husband’s solicitors estimated his costs of defending the criminal charges at $275,000 and the Supreme Court proceedings at $30,000 to $180,000 plus counsel’s fees.  The husband deposed in his affidavit of 13 March 2013 that his father will lend him $300,000 to meet his legal costs, in the event that the Westpac Bank is not prepared to advance further funds.  The husband’s uncontradicted, but uncorroborated, evidence was that his father will advance this money only on condition that he takes a mortgage on the title to the Suburb E property.

9. On 12 March 2013 the wife’s solicitor advised her that she will require a further sum of $39,304 to complete the property settlement proceedings.  The wife gave no further evidence to support her contention that she has a present need for a lump sum of $100,000.

10. On 23 May 2013 counsel for the husband indicated that he consents to a transfer to the wife of the C Town property, on condition that she simultaneously cause the discharge of the mortgage in the joint names of the parties.  The husband was prepared to consent to the wife increasing the mortgage on that property by a further sum of $50,000, provided that this money is used solely to meet her legal costs.  On the husband’s proposal the wife would otherwise be restrained from dealing with this property.

1. I see no reason to place upon the wife a restriction that she may only apply such a sum of $50,000 to meet her legal costs.  It is clear that she will receive this payment by way of interim property settlement and this money will thus be brought to account in the final distribution of the parties’ net assets.

2. It seems to me that the husband has a pressing and obvious need for funds to meet his legal expenses, in relation particularly to the serious criminal charges which place his liberty in jeopardy.  I propose to make orders which permit him to increase the mortgage on the Suburb E property, such that he will receive a sum of $300,000.

3. In those circumstances, there would remain an equity of approximately $238,000 in the Suburb E property.  This equity could be applied to meet in part the wife’s claim for a lump sum payment of $300,000 from the husband, in the event that she succeeds in obtaining such an order.  The balance of approximately $62,000 could come from a mixture of chattels held by the husband, to which the wife attributes a value of $35,000, and his superannuation entitlements of $133,000.

The Husband’s Application for a Stay Pending Finalisation of the Criminal Charges and Supreme Court Proceedings

1. In essence, the husband’s case in support of a stay was based on two propositions.  Firstly, it was said that he faces a significant risk of self-incrimination when he is cross-examined in the property proceedings.  Secondly, it was contended that it would be impossible for the court to determine the assets, liabilities and financial resources of the parties until the Supreme Court proceedings are finalised and any debt of the husband is quantified.

2. On behalf of the wife it was contended that she had no involvement whatsoever in any criminal activity of the husband, hence she bears no responsibility for any liability which may arise pursuant to the Supreme Court proceedings.  It was submitted that any such findings and orders would create a personal debt of the husband, which should be borne solely by him.

3. The written submissions on behalf of the wife cited a passage from the decision of Federal Magistrate Brown (as his Honour then was) in Huber and Costa [2008] FMCAfam 1216. That case concerned property proceedings, where the husband was the respondent to an application by the Director of Public Prosecutions arising from alleged criminal activity on his part. This application was not finalised at the time of the trial of the property proceedings. The Director of Public Prosecutions wrote to the (then) Federal Magistrates Court and advised as follows:

   This is to confirm that the Director will abide with the distribution of monies as determined by the Family Court.  However, should His Honour determine that any of the monies referred to above be distributed to Mr Costa, given the existence of our restraining order under the Confiscation Act, that his share instead be paid into the Adelaide Magistrates’ Court Litigants Fund pending determination of the confiscation proceedings.

4. Federal Magistrate Brown (as his Honour then was) stated as follows:

   29.  As previously indicated, there is no suggestion that the wife was involved in any way at all in the husband’s criminal enterprise.  In fact, it is the husband’s evidence that information provided by the wife to the police resulted in the detection of his criminal activities in the first place.

   30.  In all these circumstances, I am concerned that, if I accede to the husband’s submissions, it will result in the wife being penalised in some way for the husband’s criminal activities, which occurred independently of her and without either her consent or knowledge.  I do not think that this would be fair to her.

5. In the present case, finalisation of the wife’s application for property orders has now been delayed for almost three years.  The last thirteen months of this period of delay have followed the criminal charges preferred against the husband.  On behalf of the wife, it was submitted that the interests of justice dictate that her case is not subject to further delay because of the alleged criminal conduct of the husband.

6. During one of the court events before me I enquired of counsel for the wife how the husband could be protected against the risk of self-incrimination, when he is cross-examined in the final hearing of the proceedings for property settlement.  Counsel replied with words to the effect “that will depend on my craft”. 

7. It seems to me that, at this point, the husband and his lawyers merely anticipate or assume that he will be exposed to a risk of self-incrimination during cross-examination in these proceedings.  It may be that the “craft” of the wife’s counsel is such that the husband is never placed in that situation.  It seems to me that this assumption is premature at this time.  It is always open to the husband to decline to answer particular questions at a point where he is in fact exposed to the risk of self-incrimination.

8. On balance, it seems to me that the preferable course is to leave in place the trial dates of December 2013.  The husband and those who advise him will have the opportunity at all stages during that hearing to invoke proper protections against self-incrimination.  In appropriate circumstances, a remedy of costs in his favour could be applied if it becomes necessary to abort or adjourn the property settlement trial.

The Wife’s Application That The Husband Provide Documents By Way Of Disclosure

1. The submissions on behalf of the husband appeared to take issue only with production to the wife of documents relating to his criminal charges.  It was contended that there is “no basis” upon which to request production of these documents.

2. Generally, I agree that the wife at this point has no valid basis for the request that the husband provide the documents identified n paragraphs 4.7 & 4.8 of her Response To An Application In A Case.  I take a different view in respect of documents relating to the husband’s bail money or security, which came from a source as yet unknown to the wife and the court.

The Wife’s Application That The Husband Pay Her Costs Of 1 March 2013 and 4 April 2013

1. At this stage, I am prepared only to reserve the costs of both parties of these two court events.  My recollection is that on 1 March 2013 I expressed an interest in the status of the criminal proceedings and the Supreme Court application and indicated support for an adjournment.  On 4 April 2013 the competing interim applications were fixed for hearing on 23 May 2013.

I certify that the preceding thirty two (32) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 13 September 2013

Associate:     

Date:              13 September 2013