Pinho & Pinho (No 2)
[2022] FedCFamC1F 603
Federal Circuit and Family Court of Australia
(DIVISION 1)
Pinho & Pinho (No 2) [2022] FedCFamC1F 603
File number(s): SYC 3353 of 2020 Judgment of: CHRISTIE J Date of judgment: 22 August 2022 Catchwords: FAMILY LAW – INTERIM PROPERTY – SPOUSE MAINTENANCE – Where the wife seeks orders for the sale of two properties – Where the husband agrees to the sale of one of the properties – Where the wife will receive monies from the proceeds of sale – Where there is a question as to how those monies should be characterised – Where the wife is unable to support herself adequately by reference to income – Where the husband is unable to support himself adequately by reference to income – Interim or partial property orders Legislation: Family Law Act 1975 (Cth) ss 72, 75(2) and 79 Cases cited: Badir & Badir [2022] FedCFamC1A 109,
Kowaliw & Kowaliw (1981) FLC 91-092,
Rice & Rice [2020] FamCAFC 174,
Strahan & Strahan (2021) 64 Fam LR 89.
Division: Division 1 First Instance Number of paragraphs: 36 Date of hearing: 11 August 2022 Place: Sydney Solicitor for the Applicant: Mr Phair, Dettmann Phair Lawyers Respondent: Litigant in Person ORDERS
SYC 3353 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS PINHO
Applicant
AND: MR PINHO
Respondent
order made by:
CHRISTIE J
DATE OF ORDER:
22 AUGUST 2022
THE COURT ORDERS THAT:
1.Within 14 days of the date of these orders Mr Pinho (“the husband”) and Ms Pinho (“the wife”) do all acts and sign all necessary documents to place on the market for sale the property situated at and known as C Street, Suburb D, NSW (“the Suburb D property”). In that regard:
(a)The Suburb D property shall be listed for sale by private treaty with such agent as the parties may agree and in the absence of agreement within seven days thereafter, the wife will nominate three agents from which the husband shall within a further seven days select one and failing the husband making a selection, the wife will select one agent to act on the sale who will be the agent appointed (“the Suburb D agent”) at a list price agreed by the parties in writing and in the absence of agreement with seven days at a list price determined by the Suburb D agent and the parties are ordered to jointly instruct solicitors to act on their behalf of the sale and in the absence of agreement within seven days thereafter the wife will nominate three solicitors to act on the sale and within seven days thereafter, the husband will chose one and failing the husband making a selection, the wife will select one solicitor to act on the sale (“the Suburb D solicitor”).
(b)If the Suburb D property is not sold within four weeks of first listing then the Suburb D property is to be offered for sale by public auction through a licensed public auctioneer agreed by the parties or failing agreement to be appointed by the Suburb D agent (“the Suburb D auctioneer”).
(c)The reserve price of the Suburb D property is to be agreed between the parties and if there is no agreement within 14 days of the Suburb D auctioneer being appointed the reserve price is to be determined by the Suburb D auctioneer.
(d)Following any attempted sale of the Suburb D property by public auction; the Suburb D property does not reach the reserve price, and the parties are unable, within seven days of the date of the failed auction to agree as to the sale of the Suburb D property by private treaty at a reduced price; then the Suburb D property will be listed for sale by way of public auction and the terms and conditions set out in Order 1(b) shall apply save that any further auction shall not take place earlier than eight weeks after the first failed auction and at such public auction the parties shall, if the reserve is not reached, negotiate with the highest bidder and sell the Suburb D property.
(e)Subject to Order 1(d) both parties are ordered to attend an auction of the Suburb D property referred to in Order 1(b) and 1(d) and in the event that the Suburb D property does not reach the reserve price either agreed to by the parties or determined in accordance with these orders then the parties are ordered to enter into negotiations with the prospective purchaser through sale by private treaty at a price to be agreed by the parties in writing or 5 per cent below the reserve price if there is not agreement.
(f)In the event that either party is unable or unwilling to attend any auction for sale of the Suburb D property then that party is ordered to ensure they are either, represented at the auction sale by an attorney appointed under a general power of attorney authorised to do all things that may otherwise have done, and that they remain in direct communication by telephone or otherwise with the Suburb D agent and Suburb D auctioneer for the whole of the auction of sale.
(g)In relation to the sale of the Suburb D property either by private treaty or public auction each party is ordered to execute any documents necessary to effect the conduct and completion of the sale and the wife is ordered to cooperate in all reasonable ways with the Suburb D agent, the Suburb D auctioneer, the Suburb D solicitor and prospective purchasers in relation to such sale including making available the key to the Suburb D property to allow for inspection at all reasonable times requested by the Suburb D agent, and ensuring that the Suburb D property is in a neat and clean condition at the time of inspection by prospective purchasers.
2.Upon completion of the sale of the Suburb D property pursuant to these orders, the parties are ordered to do all acts and things necessary to cause the proceeds of sale to be paid in the following manner and priority:
(a)In payment of the Suburb D agent’s commission, the Suburb D auctioneer’s fees and, legal costs and disbursements of the Suburb D solicitor incurred in relation to the said sale;
(b)In payment of adjustments including but not limited to rates, land tax and levies;
(c)In payment of the mortgage to S Bank secured against the title of the Suburb D property;
(d)In payment to V Services the sum of $2,035;
(e)In payment to U Company the sum of $1,864.50;
(f)In payment of the balance then remaining, to a controlled monies account held by the Suburb D solicitor in trust for the parties (“Suburb D solicitor account”).
3.From the Suburb D solicitor account the wife receive:
(a)$10,000 by way of spouse maintenance;
(b)$90,000 by way of partial property settlement.
4.The balance of funds in the Suburb D solicitor account be held pending court order or written agreement to the parties.
5.In the event that either party refuses or neglects to comply with any provision of these orders then a Registrar of the Federal Circuit and Family Court of Australia be appointed pursuant to s 106A(1) of the Family Law Act 1975 (Cth) to execute all deeds and documents in the name of the husband and or the wife and, do all acts and things necessary to give validity and operation to these orders.
6.That the husband provide to the wife’s lawyer by electronic copies of all mortgage statements for the loan secured against the Suburb F property together with any correspondence from the lender regarding the loan secured against the Suburb F property within seven days of receipt.
7.The parties are to attend a conciliation conference at 9.00 am on 24 August 2022.
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).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish 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 Pinho & Pinho has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CHRISTIE J:
This is an application by Ms Pinho (“the wife”) seeking orders for sale of real property and payment of spouse maintenance.
The respondent is Mr Pinho (“the husband”).
On 31 May 2022 an order was made adjourning the wife’s application for spouse maintenance for hearing to 11 August 2022. The wife was given the right to sole occupation of a property owned by the parties located at C Street, Suburb D, NSW (“the Suburb D property”) and the husband sole occupation of a property owned in his name located at E Street, Suburb F (“the Suburb F property”). An order was made requiring the husband to make all payments in respect of the Suburb F property. I also made parenting orders.
On 2 August 2022 the wife filed an Amended Application in a Proceeding seeking orders different from those in her original interim application. From the material before the Court it is plain that the application of the wife changed in circumstances where it was apparent (at least to me) on 31 May 2022 that the husband had a limited capacity (if any) to meet any order for spouse maintenance from his income.
Further discovery has taken place since that time and accordingly the wife seeks orders for the sale of both the Suburb F and Suburb D properties and for a lump sum to be paid to her and characterised as spouse maintenance. The wife relies on her application dated 2 August 2022 and an affidavit of 2 August 2022. She relies on a financial statement which was filed on 11 February 2022.
The husband relies on a financial statement filed 1 July 2022. The husband who acts for himself filed a Response and an updated affidavit on 11 August 2022, the morning the matter was listed for hearing. The husband tendered into evidence various documents dealing with the outgoings in respect of the Suburb F property. I note the wife did not object to the husband’s late filed affidavit.
BAckground
The background facts relevant to this application include the fact that the parties commenced cohabitation in mid-2008 at which time the wife owned an apartment in Suburb K (subject to a mortgage). After the parties commenced co-habitation the husband purchased the Suburb F property in his sole name with the assistance of a mortgage. In mid-2013 the parties sold the property at Suburb K and applied the proceeds of sale to purchase the Suburb D property in early 2014. As at the time of this hearing that is the residence of the wife and children.
The wife has a shortfall between her income and her expenses such that she has difficulty meeting the mortgage payments in respect of the Suburb D property.
The husband is residing in the Suburb F property and documents tendered in the proceedings suggest that he has not met all of the mortgage payments as and when they have fallen due but is currently up to date with all of the outgoings. He resists an order for sale of the Suburb F property.
the law
The parties are at liberty to approach the Court for interim property orders with the awareness that it is ordinarily best that there be one exercise of the s 79 power under the Family Law Act 1975 (Cth) (“the Act”). The wife seeks orders requiring the sale of the properties in order to free up capital to be paid to her to meet her expenses. The question which arises for the Court is how the payment to the wife should be characterised.
The wife in her application seeks such payment by way of spouse maintenance. It is therefore necessary to consider the provisions of ss 72 and 75(2) of the Act.
If, in considering the provisions of ss 72 and 75(2) of the Act, I find that the statutory requirements for characterisation of payments to the wife as spouse maintenance are not met, then it is necessary to consider the law as it relates to interim property adjustment pursuant to s 79 of the Act.
The wife does not have to demonstrate special circumstances in order to seek an interim order for partial property adjustment. However, it is necessary to demonstrate that:
(a)Such on order would be just and equitable;
(b)Such an order would not prejudice the relief of another party; and
(c)There are assets available to satisfy the order.
The principles which apply to an application for interim or partial property adjustment are well settled: Strahan & Strahan (2021) 64 Fam LR 89.
consideration
The parties each sought an order for sale of the Suburb D property.
The wife’s minute of order set out the method of sale. The husband’s minute of order was silent on these details but in his oral submissions he accepted that the machinery provisions for sale in the wife’s application were appropriate.
The wife seeks an order that she receive $100,000 from the proceeds of sale of the Suburb D property. The wife seeks the proceeds be characterised as spouse maintenance in circumstances where they will be applied to living expenses. The wife’s solicitor conceded in oral submissions that, in the alternative, the wife would be content for the payment to be characterised by the judge at final hearing. This approach – characterisation of the payment at final hearing is not without difficulty. Some matters resolve before final hearing. In other cases a judge of the Court at final hearing is required to consider facts and circumstances which are now historical in nature and have regard to the evidence filed at the time of the interim hearing. Where possible, it is preferable that the judicial officer hearing the interim application, characterise the payment at the time of hearing – that is particularly important because different considerations apply to the making of a spouse maintenance order as opposed to a property adjustment order: Badir & Badir [2022] FedCFamC1A 109.
The wife seeks sale of the Suburb F property on the basis that the husband did not apply the rent he received from tenants to the mortgage after separation at a time when he was seeking orders from the Court that obliged him to meet the payment of the mortgage. He says he had applied for and obtained a “hold” on the mortgage payments between December 2020 and September 2021.
The wife’s solicitor pointed to the mortgage statements which suggested the bank had charged an enforcement payment fee in respect of the husband’s non-payment. Certainly, the husband had fallen into arrears in respect of the strata levies and water rates since separation and I accept the bank had levied the enforcement fee.
The wife also pointed to documents which she said, through her lawyer, evidenced a concern that the husband may be at risk of losing his employment. The husband submitted that that concern was historical (March 2022).
I am concerned about the husband’s capacity to meet mortgage payments. The husband’s financial statement demonstrates that his expenses exceed his income. The wife argued that this fact should be persuasive when considering her application that the Suburb F property be sold.
The husband wishes to retain the Suburb F property as part of the final division of assets as between the parties. That is a significant consideration on this interim application. If I were to make an order requiring its sale that would have the effect of determining that he not be permitted to retain that property as part of the final adjustment. The order sought by the wife at this interim stage of proceedings prejudices the relief sought by the husband at trial. I accept that this is not necessarily determinative of the outcome of her interim application but it is an important consideration. Given the husband has not opposed the sale of the Suburb D property there is an alternate source of funds to meet the wife’s application for payment of a lump sum. In those circumstances I would need to be convinced that it was necessary to order the sale of the Suburb F property by way of asset preservation. I do not have enough evidence to reach that conclusion.
The wife’s argument for the sale of the Suburb F property was premised on the fact that the husband’s financial circumstances and history of payment of outgoings was such that there was a risk that (absent an order for sale) the husband may be forced into a sale by the lender. I accept this is possible.
The husband is the only person on title to the Suburb F property and I was not told that the wife had provided a guarantee or that there was any issue of cross-collateralisation. As such I do not have to be concerned that a sale by the lender would impact on the wife’s credit rating.
The husband submitted that a sale of the Suburb F property would be a Capital Gains Tax (“CGT”) event. I do not understand that to be controversial as between the parties. Accordingly, if I order a sale, that will have the effect of crystallising a liability. Whereas, if the husband retains the property as his residence (as is the case at present) different issues will arise in respect of CGT.
I am conscious that it is an agreed fact in these proceedings that the husband has had a long standing issue with alcohol dependence. This is a central issue in the parties’ parenting proceedings and has the capacity to impact on the husband’s workforce participation.
I am not persuaded that I should make an order for sale of the Suburb F property at this stage in the proceedings. If the husband does default in his obligations, he is on notice of the fact that any financial impact of the sale is likely, on submission by the wife, to be treated as him having “recklessly, negligently or wantonly” dealt with the assets available for adjustment (see Kowaliw & Kowaliw (1981) FLC 91-092 at 76, 644) and an adjustment made to take into account his actions in diminishing the assets available for adjustment.
The wife also submitted that the cost of the husband renting was marginally less expensive than the mortgage and outgoings on the Suburb F property. This is true. However, the small difference would be considerably outweighed by the costs of sale.
I do however need to put in place some safeguards to ensure that the husband does meet his obligations to pay the mortgage. In that regard he should be required to provide the wife with bank statements for the mortgage on a regular basis so that she is aware of any failure by him to meet the mortgage.
Turning then to the question of the payment to the wife and how it should be characterised.
There is no dispute that the wife has a shortfall between her income and her expenses. This is not assisted by the fact that the husband is in arrears of child support but I am conscious that in calculating spouse maintenance I must disregard the costs of the children: Rice & Rice [2020] FamCAFC 174. The wife will be required to meet living expenses including the costs of moving from the Suburb D property after it is sold. The wife estimates those costs in her evidence in the approximate sum of $10,000.
In order to characterise the payment of funds to the wife as spouse maintenance it requires not just that she be unable to support herself adequately but also a finding that the husband is in a position to meet that need from his income, property or resources. The Act says that the husband’s liability to pay spouse maintenance exists only to the extent that he is “reasonably able to do so”. The husband’s income is not available to meet any shortfall. Accordingly, the question that remains is whether the payment of money to the wife from the assets of the parties should be characterised as spouse maintenance paid to the wife from the husband.
If I make an order for sale of the Suburb D property the wife will have to move house – a situation not faced by the husband. That will necessitate removal costs and the payment of a bond.
I otherwise find that where both parties are working and both have a shortfall in income over expenses the use of their joint funds to meet such a shortfall is not properly characterised as a payment of spouse maintenance from one to the other. In reaching that decision I have had regard to the fact that each party is working and earning income which is not sufficient to meet their expenses and the wife has some modest savings which are not available to the husband. I am also conscious that if the parenting orders are complied with, there will be costs involved in such compliance not otherwise taken into account in the parties’ financial statements.
Accordingly doing the best I can, the wife shall receive from the proceeds of sale a payment of $10,000 characterised as spouse maintenance and a payment of $90,000 characterised as partial property adjustment.
Both parties indicated a preparedness to engage in mediation notwithstanding previous unsuccessful attempts. The sale of the Suburb D property will resolve the outstanding dispute between the parties about the value of that asset. The parties have a unique opportunity at the conciliation conference to resolve the dispute for themselves with the assistance of a Registrar and make final consent orders for resolution of their property dispute. In the event that they are unsuccessful the matter should be relisted for case management with a view to final hearing dates being allocated. At this stage it would not be anticipated that the matter would be heard until the second half of 2023.
I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Christie. Associate:
Dated: 22 August 2022
0
2
0