Pitte and Pitte

[2008] FamCA 316

FAMILY COURT OF AUSTRALIA

PITTE & PITTE [2008] FamCA 316

FAMILY LAW – Urgent oral application for injunctions and partial property settlement – issue of urgency discussed where final hearing weeks away.

Family Law Act 1975 (Cth)

Australian Coarse Grain Pool Pty Ltd v Barley Marketing Board of Queensland (No 1) (1982) 46 ALR 398
Harris and Harris (1993) FLC 92-378

APPLICANT: Mr Pitte

RESPONDENT: Mrs Pitte

FILE NUMBER: MLF 1141 of 2006

DATE DELIVERED: 8 MAY 2008

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: THE HONOURABLE JUSTICE CRONIN

HEARING DATE: 5 MAY 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: MS DELLIDIS

SOLICITOR FOR THE APPLICANT: MARK SHENKEN

SOLICITOR FOR THE RESPONDENT: MR SCHETZER

SOLICITOR FOR THE RESPONDENT: PEARSONS SCHETZER & ASSOCIATES

Orders

1. That the oral application of the husband made on 5 May 2008 is dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Pitte & Pitte is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 1141  of 2006

MR PITTE

Applicant

And

MS PITTE

Respondent

REASONS FOR JUDGMENT

1. An oral application was made by the husband for interim orders on 5 May 2008.  The solicitor for the wife was put on notice by letter dated 30 April 2008 setting out with precision, the orders that the husband would seek.  At that particular time, the case was ready for trial but not reached.

2. Simply put, the husband seeks to facilitate the sale of a unit in a block of units and for the money to be used to pay a variety of debts.  It must be said that some of those debts are pressing and of serious concern. 

3. As the husband would have it, this is damage control.  As the wife would have it, to take this step would thwart her desire to take the whole of the property in the settlement dispute.  She adds however two important things.  The first is that the husband, albeit in control of the business pursuant to an order, is acting unilaterally and potentially to her detriment.  The second is that she has the creditors in hand or at least, under control. 

4. I propose to hear this case as a final hearing on 18 June 2008.  Unfortunately, this case has a history of being delayed. 

5. Briefly, the litigation history is as follows.  The husband is aged 71 years of age and retired.  The wife is aged 74 years and normally runs the business which is conducted from the premises which are in dispute.  This is a marriage of 37 years duration.  The parties separated as long ago as 1 August 2004. 

6. The husband filed his application for orders on 29 March 2006.  He sought the sale and division of the property at L.  The wife’s response was filed on 19 May 2006.  She sought effectively by transfer of shares in H Pty Ltd, control and absolute ownership of the units at L.

7. On 28 November 2007, Mushin J marked the case not reached and adjourned it to me in my capacity as case management judge. 

8. On 14 December 2007, I set it down for trial in May 2008 and made procedural orders.

9. On 15 February 2008, the matter came back before me on an urgent application by the husband.  I made a number of orders that day but the two of significance were paragraphs 1 and 6.  They read:

   1.That until further order the husband be solely responsible for the administration of the […] business at [L].

   …

   6.The wife do all things and sign all documents necessary to resign as director of [H] Pty Ltd until further order of the Court.

10. The matter was listed by me subsequently for hearing by Murphy J on the basis that it was finally ready for trial and I had a judge available earlier than I would have been able to list it.  Unfortunately, the case was again not reached although some time was made available by Murphy J and that did not suit the parties or one of them. 

11. This case therefore has a tragic history and the parties have waited a long time to have their dispute resolved.  That must be seen in the context of a marriage of 37 years and the parties’ personal circumstances.

12. In the context of all of those issues, the husband made this oral application. 

13. In the husband’s outline of argument for final hearing, he put the equity in the pool at between $735,000 and $1.6 million.  Of that, by far and away, the main equity lies in the L property.  The discrepancy between those two figures is huge however one explanation is that the property was valued by a single expert witness and subsequently, the husband has had offers of purchase.  None of that is relevant for the purposes of my determination.

14. Having filed his summary of argument, the husband set out that he sought 60 per cent of the net sale proceeds of the units at L.  On a very rough calculation, that would mean that the wife would have to pay the husband something around $300,000.

15. Although the wife did not file a summary of argument document, she set out her trial affidavit not only the evidence upon which she relied but also an offer by way of proposed order that she pay the husband $150,000. 

16. These figures all leave aside other questions of adjustments but it is quite clear that the wife has to find some considerable amount of money just to pay out the husband.

17. Because of the delay in the matter now being heard, the husband says that the application he has made is urgent.  He has a potential buyer for one of the units in the premises.  The funds that would arise from that immediate sale would go to discharge debt.  Not only is there significant and climbing debt in this case but it is also pressing.  The husband submits in support of his argument that there are outstanding council rates, outstanding water rates and urgent works need to be done to satisfy the local council as a result of a pending prosecution in the Magistrates Court to which I referred in an earlier judgment this year.

18. In the meantime, the husband has signed a conditional contract of sale for one of the units.  The effect of that action according to the husband is to increase the value of the pool of assets because the proposed purchaser is willing to pay more than that which was the value determined by the single expert witness.

19. The wife’s submission on the other hand is that any order in this case is tantamount to determining the substantive issue.  She relied upon her trial affidavit in which she said that she has now made an agreement with the local council to pay the rates by instalments.  She acknowledges the arrears of water rates and in particular that caveats have been lodged by that authority over the titles.  She points to the fact that nothing much can happen about that issue.  She also acknowledges that there is the issue of the company being prosecuted in the Magistrates Court over breaches of various local regulations.  Those were canvassed in some details in my judgment earlier in the year as the basis upon which I gave control of the financial matters to the husband.  There is currently an offer on the table by the local council that if the parties pay the legal costs and rectify the works, the prosecution can cease.  It is just another issue which is a dilemma for the wife.

20. As for the contract of sale, the wife points to the fact that this was a unilateral action which I had certainly not contemplated in the orders that I made on 15 February 2008.  I refer back to the two orders that I made on that day to which I have earlier referred. 

21. The solicitor for the wife says that it is his client’s position that she wants to buy all of the units.  The proposed purchaser who is known to the wife is already in occupation of one of the units and conducting a business there so to that extent, any terms and conditions sought by that purchaser must be seen as negotiable because the business is not going to be moved elsewhere.  The success or otherwise of that purchase may have some impact on the value to be added to the pool for division.  That is a matter that I raised and no doubt the parties will have to contemplate. 

22. The solicitor for the wife also points to the fact that there is no evidence from the single expert witness of the impact (if any) on the value of the remaining units if this particular unit is sold in isolation.  It is clear from examining the affidavit by the single expert witness that he valued all of the units as separate entities saying that that was the most efficacious way of valuing the whole property.  The wife points to the fact that whilst that is so, there is still no evidence of what the impact upon those values would be if one unit was isolated out and sold. 

23. I questioned the solicitor for the wife about where she would obtain the funds to pay out the husband.  It can be seen that she has to borrow at least $150,000 to pay him out on her case and on my very rudimentary calculation, at least double that on his case.  That causes me great anxiety in circumstances where there are significant unpaid obligations such as rates but also unresolved rectification works pending a council prosecution.  The solicitor for the wife told me that the parties’ adult son who has filed an affidavit in the proceedings and who I note is an employee of the ANZ Bank, is willing to help the wife.

24. Counsel for the husband pointed to the fact that the debts have been compounded by the wife’s inactivity.  However, I note in her trial affidavit that she says she had borrowed monies from two different friends to pay out the arrears of mortgage.  That gives me little comfort either having regard to the fact that she was in receipt of significant rental funds from the tenants and not accounting to the husband for them.  In addition, in the February orders that I made, I specifically set out where those rental funds were to go but it appears that the wife had taken the money in advance.

25. I am going to hear this case in June so it is inappropriate for me to make any judgment which prejudges any issue or for that matter prejudices the position of either party.

26. In her trial affidavit, the wife says that the husband had little if any involvement in the L property project which began in 1985.  The L project which forms the basis of the pool of assets was a significant building undertaking.  However, it was clear from the wife’s own evidence that the parties jointly borrowed funds for the purposes of the project.  Subsequent to its building, the wife said that she worked 18 hours a day seven days per week in not only managing the business but involving herself personally in the menial tasks as well as those in the management.  She claimed that the husband did not provide any “meaningful assistance” but was involved in leisure activities or church activities.  The wife said that the husband became ill in 2004 after heart surgery and she cared for him whilst he convalesced.  When the husband retired, she said he received his superannuation and long service leave funds but she was unable to say what he had done with those funds.  She went on to say that subsequent to separation she has continued to work.

27. The husband’s affidavit does not substantially differ in terms of facts.  In a relationship of 37 years, I find it hard to see that the argument of the wife about her contribution will carry significant weight particularly as the property was significantly mortgaged but that is a matter that will need to be argued.  In this case, I have to start from the premise that there is an arguable case and therefore what I am being asked to do is both make an order for asset preservation but also partial distribution of property.

28. In any case where some sort of asset preservation order is sought, I still have to look at the power to make the order.  What the husband seeks here is a form of positive injunction and although it was not argued, the basis upon which an interlocutory injunction is granted was best described by Gibbs CJ in Australian Coarse Grain Pool Pty Ltd v Barley Marketing Board of Queensland (No 1) (1982) 46 ALR 398 where the test to be applied was:

    First to inquire whether there is a serious question to be tried, and then to determine the matter on the balance of convenience.

29. It seems to me here that I do not have evidence about the impact of the sale on the other values of the units nor any evidence about what would happen if the sale did not proceed.  It may be that the wife is correct that the tenant is “not going anywhere” but is still prepared to pay the price currently under offer.  It may have some impact upon the value of the pool of assets.  In addition, the question of the caveats seems to be irrelevant having regard to the fact that there is no suggestion that the water authority is going to sell up the parties’ interests at this stage.  In addition again, the wife seems to have negotiated some sort of deal with the local council and in so far as any penalty is imposed because the work rectification is not completed, it is hard to see how that issue can be ultimately directed at the husband having regard to the efforts that he has made to “steady the ship”.

30. In the circumstances, whilst there may be a serious issue to try here, this is not a matter in which I ought to grant injunctive relief as sought by the husband.

31. A second issue however of some concern is that the application is tantamount to an application for interim property settlement.  In Harris and Harris (1993) FLC 92-378 the Full Court acknowledged that there was a power in a proper case to use s 79 of the Family Law Act 1975 (Cth) (“the Act”) to make an interim order prior to a final hearing. However, the Court made the warning that the exercise of that power should be confined to cases where the circumstances at that particular time were compelling. Urgency can arise as the Full Court pointed out where an injustice was to be avoided. That was particularly so in cases such as that contemplated by the husband. However, the potential loss in this case can be ameliorated by an adjustment in favour of the husband on the basis that the wife is on notice about the husband’s concern to damage to the value of the parties’ pool of assets. That is particularly important in a case where the wife is clearly indicating in her trial affidavit that she has to pay the husband a set sum of money based upon the values as she sees them to be full well knowing now that the pool of assets may very well be higher and hence she may have to pay more. Despite the fact that the circumstances on their face appear compelling, I do not accept that an injustice will occur unless the orders are made. In those circumstances, I propose to take the cautious line as suggested by the Full Court in Harris and direct that the matter can await a full determination in June.

32. Accordingly, the husband’s oral application is dismissed.

I certify that the preceding Thirty Two (32) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate: 

Date:  8 May 2008