Peterson & Davis (No 6)
[2024] FedCFamC1F 409
•18 June 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Peterson & Davis (No 6) [2024] FedCFamC1F 409
File number(s): PAC 1208 of 2016 Judgment of: RIETHMULLER J Date of judgment: 18 June 2024 Catchwords: FAMILY LAW – ENFORCEMENT – Property – Where a trustee in bankruptcy was appointed as the trustee for sale of a property held by the applicant and trustee in bankruptcy as tenants in common in equal shares – Where the applicant is seeking payment from the respondent trustee of his share of the sale proceeds, in accordance with the trial judge’s orders – Where the respondent seeks to retain costs of effecting the sale beyond those provided for by the trial judge – Issue already determined by trial judge – Further adjustment for costs of sale not appropriate. Legislation: Family Law Act 1975 (Cth) s 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 10.17
Cases cited: Davis & Peterson [2023] FedCFamC1A 13
Matthews & Matthews (2006) FLC 93-304; [2006] FamCA 1250
Peterson & Davis (No 3) [2022] FedCFamC1F 650
Peterson & Davis (No 5) [2023] FedCFamC1F 587
Stewart v Atco Controls Pty Ltd (in liq) (2014) 252 CLR 307; [2014] HCA 15
Division: Division 1 First Instance Number of paragraphs: 27 Date of hearing: 3 May 2024 Place: Parramatta Counsel for the Applicant: Mr Alan Counsel for the Respondent: Mr Cook Solicitor for the Respondent: HNT Legal ORDERS
PAC 1208 of 2016 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR DAVIS
Applicant
AND: MR CUSSON
Respondent
ORDER MADE BY:
RIETHMULLER J
DATE OF ORDER:
18 JUNE 2024
THE COURT ORDERS THAT:
1.The respondent pay to the applicant the sum of $33,543.34.
2.The respondent pay the applicant’s costs fixed at $2,200.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Peterson & Davis (No 6) has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
RIETHMULLER J:
The applicant seeks enforcement of orders made by Campton J on 31 August 2022, which provides for him to receive 42.5 per cent of the proceeds of sale of a property located at Suburb B, NSW. The respondent to the enforcement application is the trustee in bankruptcy for the applicant’s former de facto partner. The respondent seeks payment of his expenses in effecting the sale of the property in priority to the payment to the applicant.
BACKGROUND
The claim arises out of property settlement proceedings between the applicant and his former de facto partner. In the property settlement proceedings, the applicant’s former de facto partner had sought property settlement orders against him, her trustee in bankruptcy (the respondent to this application), and the applicant’s parents: see Peterson & Davis (No 3) [2022] FedCFamC1F 650.
Justice Campton made final orders on 31 August 2022 following a trial. The orders provided that:
[Suburb B] proceeds of sale
6. The [applicant] and the [respondent] shall do all acts and things as are necessary within 28 days from the date of these orders to cause the balance of the proceeds of sale of the property known as [C Street Suburb B], NSW (“the Suburb B proceeds”) to be applied as to:
(a) 50 per cent to the [the respondent];
(b) 7.5 per cent to the [the applicant’s former de facto partner]; and
(c) 42.5 per cent to the [applicant].
The Suburb B property was the jointly owned home of the applicant and his former de facto partner, who were the registered proprietors as joint tenants. Upon his former de facto partner being made bankrupt, the joint tenancy was severed, becoming a tenancy in common, with her half share vesting in the respondent as part of the bankrupt estate. By the time the property settlement trial was heard, the former de facto partner had been discharged from bankruptcy.
In the property settlement proceedings, Campton J was required to determine whether the applicant or his former de facto partner could recover any moneys from the bankruptcy estate and whether there ought to be any property settlement orders as between the applicant and his former de facto partner.
After the interest in the Suburb B property vested in the respondent as the trustee in bankruptcy, he sought orders to enable him to realise the interest in the property. Whilst, as a general principle, a trustee for sale would be entitled to payment of their reasonable costs of bringing in the asset in priority to other claims (see Stewart v Atco Controls Pty Ltd (in liq) (2014) 252 CLR 307), the respondent conceded that this entitlement is subject to the particular terms of the appointment. The respondent accepted that the terms of his appointment for the purpose of selling the property was governed by the terms of the orders made by Foster J on 11 August 2020, authorising the respondent to sell the former home in the following terms:
1. The [Suburb B property] be sold.
2.The [respondent] be authorised and directed to sell the [Suburb B] Property.
3.The [respondent]’s powers for the purposes of the sale of the [Suburb B] Property are as follows:
…
(c)The power to engage a sales agent for the purposes of the sale of the [Suburb B] Property.
(d)The power to engage a solicitor to act on the conveyance of the [Suburb B] Property and, if necessary, to obtain vacant possession of it.
(e)The power to remove and store chattels contained on or in the [Suburb B] Property.
(f)The power to affect any necessary repairs to present the [Suburb B] Property for sale.
(g)The power to obtain an updated valuation of the [Suburb B] Property, if necessary.
(h)The power to set the sale price and a reserve price for auction if necessary, having regard to the valuation he holds.
4.In regards to any chattels removed from the [Suburb B] Property by the [respondent], the [respondent] shall be authorised to place those chattels in commercial storage for six (6) months, such storage fees to be paid from the proceeds of sale.
5.The [respondent] shall provide access to the Parties or any other person asserting ownership of those chattels for the purpose of inspecting the same and shall be authorised to release claimed chattels on reasonable proof of ownership, and otherwise shall be authorised to dispose of the remaining chattels after six (6) months.
6.The sale of the [Suburb B] Property by the [respondent] may be carried out by auction or private treaty as the [respondent] sees fit.
7.The proceeds of the sale of the [Suburb B] Property are to be paid as follows.
(a) To adjustments for rates and land tax.
(b) Sales agent’s commission and the cost of conveyance.
(c) The amount required to discharge the first registered mortgage.
(d)The legal costs, if any, involved in taking possession of the [Suburb B] Property.
(e)The cost of chattel storage for up to six (6) months and disposal of the chattels.
(f)The remuneration of the [respondent] for conducting the sale charged at his usual rates limited, until further order, to a maximum amount of $10,000.
(g)The balance to be held by the [respondent] in his trust account until further order.
In the proceedings, the parties compiled a joint balance sheet for the trial, which is set out in Peterson & Davis (No 3) at [423]. The joint balance sheet relevantly lists assets and liabilities as follows:
Ownership Description Value ($) ASSETS 1 [Applicant] & [respondent] Proceeds of sale of the Suburb B property 91,502 2 [Applicant] & [respondent] 1 N Street, Town D 1,375,000 3 [Applicant] & [respondent] 2 N Street, Town D 1,250,000 …
LIABILITIES 9 Respondent Unsecured Creditors of the bankruptcy 74,348 10 [Applicant] & [respondent] Loan for 1 & 2 N Street Town D 585,078 11 [Respondent] [Respondent]’s costs and expenses to 20/5/22 1,122,031 … 16 [Applicant] & [respondent] Equitable charge on 1 & 2 N Street Town D Not known
Notably, the agreed balance sheet lists liabilities related to the Town D properties separately but does not list any claim by the respondent with respect to the costs of selling the Suburb B property.
The costs of the respondent in effecting the sale were at issue in the original trial, and subject to findings by the trial judge, where his Honour said:
434The import of the amended relief as sought is as to the approval of his remuneration and payment of his expenses as claimed incurred on the disposal of the [Suburb B] property as provided for by the 11 August 2021 orders. I accept the [respondent]’s submission that there will be either little funds remaining or a loss from the [Suburb B] [property if the] proceeds are adjusted to meet the balance of his costs as claimed “off the top” before any adjustment between [the respondent], the [applicant’s former de facto partner] and [the applicant].
435The [applicant’s former de facto partner] and [the applicant] dispute the [respondent]’s claim for his remuneration, fees and disbursements incurred pursuant to the order made 11 August 2021 being greater than that provided for by the said orders [by Foster J]. [Albeit] that Order 7(f) was expressed to be pending further order, it was a consent order containing a quantum agreed to by the [respondent] and the [applicant’s former de facto partner] (but undefended as against the [applicant]). Implicitly, the [respondent] anticipated at that time of entering the order that the quantum of $10,000 was sufficient to satisfy his remuneration for the role of [respondent] on the sale of [Suburb B], and it was the events post the order that have inflated those expenses. This may be relevant to this claim. The orders made on 11 August 2020 have not been the subject of appeal. Responsibility as to the source of a portion of the significant quantum now claimed arises from the conduct of the [respondent] and the [applicant] as identified earlier in these reasons. This may be also be relevant to the claim.
436The [respondent] did not identify the source of power relied upon grounding his amended relief as sought, nor was I taken during the course of submissions to any legislation, applicable principle or specific evidence on this subject matter. In those circumstances I am unable to make any determinations as to the necessary preconditions and relevant considerations for the making of the orders as sought by the [respondent]. I dismiss that part of the relief of the [respondent]. This determination does not preclude the [respondent] from making such application as he is advised as to the costs of the interlocutory and contempt applications made subsequent 11 August 2020 orders.
(Emphasis added)
It is clear that the trial judge dismissed the respondent’s claims with respect to his costs of effecting the sale, to the extent that they exceeded the sum of $10,000 as originally allowed for in the orders of Foster J (set out above at [6]).
The orders made at trial were the subject of an appeal by the applicant’s parents. The Full Court allowed the applicant’s parents’ appeal, finding that the parents held the equitable interest in the Town D properties even though the legal title was then held by the applicant and the respondent: see Davis & Peterson [2023] FedCFamC1A 13. The respondent did not appeal the orders with respect to the distribution of the proceeds of sale of the Suburb B property, nor the refusal of the trial judge to make orders for greater remuneration than that provided by Foster J in the interim orders.
The respondent made submissions concerning the true effect of the second line of [434] of Peterson & Davis (No 3) [2022] FedCFamC1F 650. It appears clear that the trial judge was expressing the hypothesis as to whether the effect of all the respondent’s claims for his costs being met from the proceeds of the sale of the property, not expressing the proposition that that was what was intended to occur. This is apparent, as his Honour continues in the following two paragraphs to discuss the claims and make findings dismissing the relief of this notion that was sought by the respondent in [434]. I have added what appear to be the omitted words in bold in [434] of the quote above.
In an attempt to overcome this argument, counsel for the respondent said that the reasons could not have related to all of the expenses incurred by the respondent, because they had not been placed before his Honour, but rather were included in item 11 of the balance sheet which simply listed the overall debts of the bankruptcy estate as one lump sum total. Counsel argued that [435] deals only with respondent’s fees and not disbursements, arguing that the reference to disbursements in the paragraph should be read as limited to office expenses and the like, rather than the payment by the respondent of solicitor’s fees. This line of argument highlights that this detail of the issue was not raised before the trial judge: rather the matter was argued in more general terms before the trial judge by the respondent.
It is also apparent that the trial judge dealt with the totality of the claims as his Honour went on to consider the practical effect of the orders proposed, saying:
478The [applicant] will retain his motor vehicle valued at $500. The [applicant] will receive 42.5 per cent of the [Suburb B] proceeds, being approximately $38,888.35. He will receive 42.5 per cent of the proceeds of sale of the [Town D] properties after payment of the mortgage, selling costs, capital gains tax and satisfaction of the [applicant’s parents’] equitable charge.
479The [respondent] will retain for the benefit of the bankrupt estate his 50 per cent interest at law in the [Suburb B] proceeds, and 50 per cent of the proceeds of sale of the [Town D] properties after payment of the mortgage, selling costs, capital gains tax and satisfaction of the [applicant’s parents’] equitable charge.
I do not accept that simply because the trial judge expressed the division of this particular sum of money in percentage terms that his Honour intended that further amounts be deducted before disbursement was made. It seems to me that it was a convenient way of expressing the division, noting that there may have been some minor changes to the amount (for example, possible discrepancies due to interest earned).
I also note from the affidavit of the respondent filed 12 January 2024 that over $34,000 in solicitor’s fees had already been taken from the sale proceeds, setting out:
20.On or around 3 February 2021, the balance of $127,808.99 was paid into my previous solicitor’s trust account, where it was applied as follows:
(a) [AF Lawyers] costs: $34,958.98
(b) [AF Lawyers] disbursements: $527.59
(c) Balance paid to [AH Financial Services]: $92,322.42
The way in which the hearing was run before the trial judge becomes even clearer when considering the judgment in Peterson & Davis (No 5) [2023] FedCFamC1F 587. This judgment was given following the appeal (Davis & Peterson [2023] FedCFamC1A 13), when the matter was again before the trial judge for determination of applications with respect to costs, enforcement applications, and various other interlocutory applications. Relevantly, the respondent applied to discharge or vary Order 7(f) of the orders made by Foster J and Orders 6 made by the trial judge (both of which are set out above).
The basis upon which this issue was argued on that occasion is set out in Peterson & Davis (No 5):
13As between the [respondent] and the [applicant], it was generally accepted that the Court was bound to consider the [respondent]’s application for variation of his remuneration and its effect on the [applicant]’s share of the [Suburb B] proceeds before considering the [applicant]’s application for enforcement. I accept is therefore appropriate to determine first in sequence the Application in a Proceeding of the [respondent] filed 28 September 2022 and the Application in a Proceeding filed 28 December 2022 before turning to the determination of the [applicant]’s enforcement application filed 9 November 2022.
The respondent’s claim was dismissed for the following reasons:
21For the reasons identified and by operation of Order 15 made on 31 August 2022 dismissing all extant applications, the [respondent]’s claim for unpaid remuneration and expenses arising from the sale of the [Suburb B] property was determined in the first instance proceedings and dismissed. Order 15 was not disturbed on appeal. That issue cannot now be relitigated. The relief as sought in paragraph 1 of the [respondent]’s Application in a Proceeding filed 28 September 2022 will be refused. The Application in a Proceeding of the [respondent] filed 28 December 2022 will be dismissed.
Relevantly, for the present enforcement application, the trial judge recorded in Peterson & Davis (No 5) that:
22Subject to the determination of the [applicant] and the [respondent]’s respective costs applications, during the hearing on 9 June 2023, counsel for the [respondent] confirmed that upon publication of these reasons, in the event the [respondent] was unsuccessful in his relief to vary his remuneration payable pursuant to Order 7(f) made on 11 August 2022 or as to his application for costs payable by the [applicant], he would forthwith pay to the [applicant] his adjusted share of the [Suburb B] proceeds. I accept for the purposes of this determination that the [respondent] will do as he says he will do.
Thus, on 14 July 2023 the following order was made:
1.Within seven days of the date of these Orders, the [respondent] shall do all such acts and things to cause the amount payable to the [applicant] from the proceeds of sale of the property at [C Street, Suburb B], NSW (“the Suburb B proceeds”) pursuant to Order 6 made on 31 August 2022, to be deposited to an account as nominated in writing by the [applicant].
It is apparent that the issue concerning the expenses and remuneration of the respondent was a matter in issue before the trial judge. His Honour addressed the issue and made findings based on the material and arguments before him at that time. The effect of the current opposition to the enforcement application is to attempt to reopen issues that were before the trial judge and the subject of a determination, not only at the trial but again in judgment of 14 July 2023, despite neither of these judgments being the subject of appeal by the respondent. It is not the role of the court on an enforcement application to review final orders made after a trial: if such a review is sought it must be by way of appeal.
I am therefore persuaded that the applicant ought to have the enforcement orders that he seeks. At the hearing of the matter, the parties agreed that the sum payable is no different to the figure struck by the trial judge, however, a payment of a child support debt owed by the applicant has been met from the funds (around $9,000) since the orders at trial. As the moneys had not been paid as ordered, there should be post judgment interest calculated as prescribed under the Court rules (see r 10.17 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth). Since the order of Campton J provided that the money be paid “within 28 days”, interest will accrue after the 28 day period has lapsed: see: s 117B(1) of the Family Law Act 1975 (Cth) and Matthews & Matthews (2006) FLC 93-304. Rule 10.17(a) provides that the interest rate is 6 per cent more than the Reserve Bank’s cash rate.
While the child support sum of $8,951.24 was paid on 27 February 2024, the respondent says that he would have been paid this earlier, but for the applicant objecting to the payment being made pending the applicant appealing the child support decision. The respondent’s affidavit filed 12 January 2024 sets out that the respondent received notice on 17 July 2023 to pay $8,951.24 directly to the Child Support Registrar. On 18 July 2023, the applicant emailed the respondent’s solicitors advising them that he lodged an appeal application with respect to the notice from the Child Support Registrar. On 21 July 2023, the respondent’s solicitors were served with an interlocutory application seeking that the respondent not comply with the child support notice. Whilst the respondent did not pay the sum to the Child Support Registrar until 27 February 2024, it is apparent from the respondent’s evidence that the delayed payment was a result of the applicant’s appeal to the garnishee order. The respondent was in the position of not making a claim over this part of the monies, but unable to determine which of the competing claimants (the applicant or the Child Support Registrar) had priority. In this situation the respondent could have brought interim proceedings and paid the sum into court, the result of which is that interest would not have accrued. I am not critical of the respondent not taking such a course as the costs would have been out of all proportion to the dispute. However, I am persuaded that in these circumstances interest should not accrue on this sum after the date the applicant objected to the payment in accordance with the Child Support Registrar’s notice.
The total sum payable is appropriately calculated as follows:
(a)On 31 August 2022, the trial judge ordered the amount of $38,888.35 to be paid to the applicant within 28 days.
(b)Interest began accruing on 29 September 2022. The interest payable from 29 September 2022 to 17 July 2023 is $2,623.84:
Start Date End Date Days Rate Daily amount ($) Total 29-Sep-22 31-Dec-22 94 6.85% 7.2982 $686.03 1-Jan-23 30-Jun-23 181 9.10% 9.6955 $1,754.88 1-Jul-23 17-Jul-23 17 10.10% 10.7609 $182.94 $2,623.85 (c)On 18 July 2023, the applicant informed the respondent’s solicitors that he was appealing the child support garnishee order and as a result, the respondent did not pay the amount of $8,951.24 to the Child Support Registrar. While the sum was not paid until 27 February 2024, interest should not be calculated on this amount from 18 July 2023. The child support sum of $8,951.24 should be subtracted from the judgment debt amount of $38,888.35 reducing it to $29,937.11 for the purpose of calculating interest. The interest from 18 July 2023 to 27 July 2023 on the amount of $29,937.11 is $82.84:
Start Date End Date Days Rate Daily amount ($) Total 18-Jul-23 27-Jul-23 10 10.10% 8.284 $82.84 (d)On 28 July 2023, a partial payment of $1,685.94 was paid to the applicant, reducing the amount owed from $29,937.11 to $28,251.17. The interest payable from 28 July 2023 to 18 June 2024 on the amount of $28,251.17 is $2,585.48.
Start Date End Date Days Rate Daily amount ($) Total 28-Jul-23 31-Dec-23 157 10.10% 7.8174 $1,227.34 1-Jan-24 18-Jun-24 170 10.35% 7.9891 $1,358.14 $2,585.48
(e)The total interest payable is $5,292.17. Added to the outstanding amount of $28,251.17, the total sum owing is $33,543.34.
I therefore order that the respondent pay the applicant the sum of $33,543.34.
COSTS
The enforcement application solely concerns a dispute as to the amount of money due and owing. The applicant has been entirely successful. It is appropriate that the applicant have his costs pursuant to s 117 of the Family Law Act 1975 (Cth). In this case, the applicant seeks only $2,200 as he conducted much of the enforcement proceedings unrepresented. The amount sought is clearly reasonable and less than what party and party costs would have been for such an application had he been legally represented. The cost of having the costs assessed is out of proportion to the issues. It is therefore appropriate that a lump sum costs orders be made in this matter. I will order that the respondent pay the applicant’s costs of the application fixed in the sum of $2,200.
I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Riethmuller. Associate:
Dated: 18 June 2024
0
4
2