Prendergast and Parsons and Anor (No. 11)

[2007] FamCA 1158

FAMILY COURT OF AUSTRALIA

PRENDERGAST & PARSONS AND ANOR (NO. 11) [2007] FamCA 1158

FAMILY LAW – PROPERTY – At the conclusion of a lengthy trial having dealt with the evidence relating to the welfare issue and the property issue being part-heard, interim orders were made for partial settlement of property – Husband failing to meet any mortgage payment and equity, if any, was marginal – Husband ordered to vacate the property to enable sale

Family Law Act 1975 (Cth)

Harris & Harris (1993) FLC 92-378

APPLICANT: Mr Prendergast

RESPONDENT: Ms Parsons

INTERVENOR: Perpetual Trustees Australia Ltd

FILE NUMBER: DGF 764 of 2004

DATE DELIVERED: 25 September 2007

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Guest J

HEARING DATE: 25 September 2007

REPRESENTATION

THE APPLICANT: In person

SOLICITOR FOR THE APPLICANT:

COUNSEL FOR THE RESPONDENT: Mr Eidelson

SOLICITOR FOR THE RESPONDENT: Berry Family Law

COUNSEL FOR THE INTERVENOR: Mr Manly

SOLICITOR FOR THE INTERVENOR: Russell Kennedy

Orders

1. That the husband provide vacant possession to the wife of the property known as the H property and situate at … (“the said property”) within 21 days of these Orders (“the due date”).

2. That the said property be forthwith sold altogether out of court AND THAT the husband and the wife forthwith do all acts and things and sign all necessary documents to effect the sale of the property and by way of consequential arrangements that shall be made for the purpose of effecting the sale:

   2.1the reserve price for the said property shall be as agreed between the parties and if there is no agreement, the reserve price shall be as advised by a valuer nominated by the President of the Real Estate Institute of Victoria;

   2.2the said property shall be forthwith sold by public auction by a real estate agent agreed between the parties, but failing agreement by an agent nominated by the President of the Real Estate Institute of Victoria AND THAT the conditions of the auction and the pre-auction sale period and procedures shall be as determined by the said agent.

3. That upon completion of the sale of the said property, the proceeds be applied as follows:

   3.1firstly to pay all reasonable costs, commissions and expenses of the sale and pay any water and council rates and charges outstanding in respect of the said property;

   3.2secondly, to discharge any mortgage affecting the said property; and

   3.3thirdly, the balance to be paid into an interest bearing trust account in the name of the husband and the wife, such fund to be managed by the solicitors for the wife pending further order of this court.

4. That all monies held by the Real Estate Agents pursuant to paragraphs 1 and 2 of the Orders made by the Honourable Justice Guest on 3 January 2007 be forthwith released to the wife’s solicitors for use by the wife AND THAT such monies be characterised as a partial distribution of property.

5. That the husband be otherwise restrained from further attending upon the said property after the due date or from interfering in any way with the expeditious sale of the said property pursuant to these orders.

6. That pursuant to s 106A of the Family Law Act 1975 (as amended), in the event that the husband refuses and/or neglects to comply within 14 days with any of the requirements imposed by paragraph 2 of the orders made this day, the Registrar or Deputy Registrar of the Family Court of Australia (Melbourne Registry) be appointed to execute all necessary Deeds and documents in the name of the husband and do all acts and things necessary to give validity and operation to all such Deeds and documents so as to effect the sale and transfer of his interest in the said property.

7. That the costs of all parties of this day be reserved.

IT IS CERTIFIED

(8) That pursuant to rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of Counsel.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: DGF 764 of 2004

MR PRENDERGAST  

Applicant

And

MS PARSONS  

Respondent

REASONS FOR JUDGMENT

1. These are my oral reasons for judgment arising from the orders made by me on 21 September 2007 concerning the interim property issue. 

2. Late in the afternoon of 20 September 2007, Mr Eidelson of counsel, who appears for the wife, tendered Minutes of a Proposed Order seeking a partial settlement of property (Exhibit “W12”).  Given that the orders affected the rights and interests of Perpetual Trustees Ltd (“Perpetual”), the mortgagee of the properties H (the “former matrimonial home”), N (the “[N] property”), and E (the “[E] property”), I directed that Messrs Russell Kennedy, solicitor's for Perpetual in respect of each of the said properties be given notice of the proposed orders.  In the result, notice was in fact given and Mr Manly of counsel appeared on behalf of Perpetual on 21 September 2007 on which day I heard argument on behalf of all parties. 

3. The substantive proceedings between the husband and the wife concern both welfare and property issues.  In respect of the property aspect of the proceedings, I had the advantage of Mr Manly appearing on 27 March 2007 to protect the interests of Perpetual who had earlier instituted proceedings in the Supreme Court of Victoria seeking an order for possession of each of the three properties and for their sale with consequent recovery of the mortgage debt. 

4. The husband filed an affidavit in opposition to those proceedings.  It appears that he was not challenging the quantum of the debt on the two investment properties as the principle and interest had not been paid for some time.  He had other reasons.  The proceedings in respect to the former matrimonial home had found their way into VCAT under the hardship provisions which, as I understand it, has the power to rewrite the terms of the loans covered by the provisions of the Uniform Consumer Credit Code.  Those provisions only apply, so it seems, to the loan secured by the former matrimonial home and not in respect of the loans secured by the other two investment properties.  That matter currently remains in the hands of a member of VCAT awaiting decision, all submissions having been filed in or about early March 2007.  It concerns me that it has taken so long to deliver a timely judgment.

5. However, at that time the parties were also awaiting the decision of the Master of the Supreme Court in respect of the proceedings instituted by Perpetual by way of Writ of Possession.  Ultimately, on 23 July 2007 the Master ordered that Perpetual recover possession of each of the N property and the E property together with costs. 

6. By reason of the proceedings in the Supreme Court of Victoria and VCAT, the evidence relating to the property proceedings before me was somewhat sparse and remains incomplete.  The husband has now, for several years, not made any payments pursuant to the said loans which have been accumulating at the higher rate and inexorably subsuming any of the modest equity in each of those three properties. 

7. The husband apparently asserts that he was prevented from making repayment by Perpetual and, as he submitted on 27 March 2007, was "pushed" by it to "pay extra".  What is clear however is that no payments are being made, the debt is escalating, the husband is unemployed and is only paying the statutory minimum by way of child support for his daughter who is seven years of age.  He appears for himself and the wife, on the other hand, has engaged both solicitor and a barrister to conduct the proceedings on her behalf.  She does not have the benefit of legal aid and personally subsists on a government pension.  It is a very bleak situation in circumstances where it appears to me the husband has consigned both commonsense and reality to the bleachers. 

8. The situation now before me is urgent and requires an immediate interim decision to rectify, in some part, the deteriorating and fast worsening position.  There is currently owing to Perpetual the sum of $550,000 overall in respect of the three properties and which sum includes estimated legal fees of $70,000. 

9. The property aspect of the proceedings first came before me in the Judicial Duty List on 3 January 2007, when Mr Wraith appeared for the wife and Mr McDermott for the husband.  Having heard submissions from both counsel I ordered, in summary, that the real estate agents collecting the rent paid in respect of the two investment properties retain and hold those moneys in trust until further order.  I made further orders that the wife's then Form 2 Application for the sale of those properties be served upon Russell Kennedy, as solicitors for Perpetual, and that a further hearing be listed to complete the matter following delivery of judgment by the Master of the Supreme Court.  This has now occurred and Perpetual has, by order of the court, taken possession of the two investment properties. 

10. When the proceedings before me resumed on 21 September 2007, Mr Manly, helpfully I might add, sought leave to file and serve an affidavit sworn by Paul McCarthy, his instructing solicitor, which set out in narrative form a history of the proceedings in the alternate jurisdictions.  For the purpose of clarity I will narrate into this judgment those matters deposed to by him. 

11. Mr McCarthy is a member of the firm, Russell Kennedy who act on behalf of Perpetual.  He is authorised to make the affidavit on its behalf.  He deposed to the fact that he received a facsimile transmission from the wife's solicitors late in the afternoon of 20 September 2007 enclosing a copy of the interim orders sought by the wife in relation to the three properties which I have already defined.

12. Mr McCarthy deposed that the mortgages encumbering the three properties given by the husband in favour of Perpetual secured various loans owed by the husband.  He said that Members Equity Bank Pty Ltd (“Members Equity”) is the mortgage manager of Perpetual and has responsibility, inter alia, for the enforcement of loans and mortgages in circumstances where the borrower or mortgagor was in default of its obligations to Perpetual. 

13. Mr McCarthy was informed by a service level consultant of Members Equity that the husband was in default of his obligations to Perpetual under the various loans and the mortgages over the three properties.  Following service of various default notices and demands, Perpetual issued proceedings in the Supreme Court against the husband by way of Writ for Possession of the properties, and which the husband contested.  

14. Mr McCarthy deposed that the husband filed defences in the three Supreme Court proceedings and that Perpetual had applied for summary judgment against the husband in relation to those proceedings.  He explained that in judgments handed down by Master Efthim on 23 July 2007, it was ordered that Perpetual recover possession of the two investment properties together with costs in each instance. 

15. It appears that Perpetual's application for Summary Judgment in the proceedings for possession of the former matrimonial home has been adjourned for the time being by the Supreme Court on the stated basis that the husband presently claimed before VCAT certain relief under the Uniform Consumer Credit Code to which I have earlier referred.  The husband's application to VCAT is presently adjourned at the request of VCAT and that an administrative mention took place on 12 September 2007 at which time Mr McCarthy reported progress with the Supreme Court proceedings for possession over the three properties.  He said that he had not received any further orders or directions from VCAT since the administrative mention that day. 

16. Mr McCarthy also deposed that there is no present impediment on the part of the Supreme Court or VCAT for Perpetual taking possession of the two investment properties as soon as possible and to promptly proceed to retain real estate agents to conduct mortgagee sales of both of them. 

17. Further steps have been taken on behalf of Perpetual to take possession of the two investment properties and to the extent necessary, which was not conceded, Perpetual have already served notice on the tenants or occupants of those properties requiring them to vacate on or before 28 September 2007.  The husband has been provided copies of those notices to vacate.  Mr McCarthy said that following receipt of the authenticated judgment of the Supreme Court for possession of the two investment properties, he has issued warrants for possession on 29 August 2007 which have been forwarded to the sheriff's office, Victoria for execution.  They are scheduled for execution by 5 October 2007. 

18. It was his evidence that as matters presently stand, Perpetual is committed to taking possession of the two investment properties and selling them as mortgagee at the earliest opportunity.  Further, that Perpetual seeks to continue with its enforcement action against those properties and contends that it will inevitably lead to sale and settlement at times earlier than is likely to be the case arising from the interim orders sought by the wife in the Family Court.  With that I agree.

19. Mr McCarthy deposed that in order to settle mortgagee sales of any of the three properties, Perpetual would require the wife to withdraw caveats she had lodged over them.  Given the cooperation between Russell Kennedy, solicitors for Perpetual and the solicitors for the wife I have no doubt that will be done.  He also said that in the event of any surplus proceeds of sale over and above that required to discharge the mortgages and sale expenses of the two investment properties, Perpetual would agree to pay the same into the Supreme Court in accordance with the provisions of the Transfer of Land Act (1958) pending a determination by me as to the respective entitlements by either the husband or the wife to those moneys.

20. Importantly, Mr McCarthy deposed that he had received instructions on behalf of Perpetual that it was not opposed to the interim orders sought by the wife being made in relation to the former matrimonial home, subject to some amendments that were argued by Mr Manly before me.  He at first also sought to oppose that the moneys held by the real estate agents pursuant to my orders of 3 January 2007, being accumulated rentals for the two investment properties be distributed to the wife.  However, following discussion with Mr Eidelson, Mr Manly and the husband, Mr Manly did not proceed further with that application.  Accordingly it was left contested only by the husband.

21. I heard submissions from and on behalf of all parties and in the result I propose to make no orders in respect of the N property or the E property.  The proceedings in respect to those properties are well entrenched in the Supreme Court and it is clear to me that, as deposed to by Mr McCarthy, the sale and distribution of net proceeds, if any, will be more rapidly achieved through that venue than any orders I may make pursuant to the wife's application.

22. In the result Mr Eidelson agreed with this and it is my expectation that the solicitors for Perpetual will keep the wife's solicitors appraised of the action for remedy taken by them.  They shall of course dispose of the two properties at the best market price that can be achieved. 

23. With the consent of the solicitors for Perpetual, I propose to make interim order in the terms of paragraphs 1, 2 and 3 of Exhibit “W12”, but limited to the former matrimonial home and subject to some modifications urged upon me by Mr Manly. In so doing I am cognisant of the fact that there are proceedings in respect of this property at VCAT. However, those proceedings, even if successful, may have some financial consequences impacting upon the outstanding mortgage debt and any consequent adjustment can be made by me upon further submission at the completion of the property proceedings. Such matters, for example, may go to considerations under section 79(4) of the Family Law Act 1975 (Cth).

24. As matters presently stand, no payments due and payable under the mortgage over the former matrimonial home are being made and in my view, given the husband's current acknowledged position, are unlikely to be made.  He has no reserves to make up any arrears.  He is unemployed and his work history leaves me with little confidence that he will diligently apply himself to rectify this hopelessly urgent and tragic situation.  His reason for not working is that he has been busy with the proceedings before me.  That, in my view, is an unacceptable excuse.  He appears before me in person without the impost of legal fees.  Not so the wife.

25. The current position is such that I must act with urgent dispatch in order to secure what little equity may remain in the former matrimonial home.  If I do not do so, I have no doubt that the husband will permit the situation to drag on so that ultimately the order I propose to now make will inevitably be made, but it in an ever worsening financial climate. 

26. The final matter concerns paragraph 4 of Exhibit “W12”, namely, that the moneys currently held in the trust accounts of the two real estate agents be paid to the wife by way of partial settlement of property.  As matters presently stand, Mr F of A Real Estate hold $6851.21 by way of accumulated rent in respect of the N property and Mr G, real estate agent, holds $7605 accumulated rental in respect of the E property.  The total rental accumulated thus far amounts to $14,456.25 less, of course, any amount due and payable by way of GST and commission. 

27. I propose to make the order sought, and do so within the principles explained by the Full Court in Harris & Harris (1993) FLC 92 378 at 79 929-930. Firstly, there is clear power for me to make such an order. I do so in an urgent climate, the circumstances of which I have made quite clear in this judgment. The order falls within the general framework of section 79 of the Act and is, by necessity, a somewhat imprecise exercise. However, I make it clear that I have given this matter my careful consideration and I act conservatively in what I regard as an intolerable situation brought about by the husband's own actions.

28. He has failed to pay child support now for a considerable period of time save for the bare marginal amount of $20 per calendar month.  The onerous task for the financial nurture of their daughter falls upon the wife alone.  She does not have the benefit of Legal Aid and has, with respect to the husband, been placed in a situation where this trial has proceeded over many days, when in reality if properly managed could have been disposed of quite some time ago.  The wife is faced with a rapidly diminishing equity in the three properties for the reasons I have earlier set out.  Without these orders being made, the final position may well be one defined by disaster.  Principles of wastage may be argued by the wife when the property aspects of the proceedings are finally reached. 

29. Overall this is an exercise of my discretion.  I appreciate too that by ordering the husband to vacate the property it will have an impact upon his proposals in the welfare proceedings.  However, this is a necessary consequence of the orders I make at this stage and it is not outside his resources nor his capacity to seek employment and take up a rental property.  His brother lives at the former matrimonial home.  Has done so for quite some time now and as I recall the evidence has made minimal contribution towards his rent when averaged say, over the past 12 months.

30. Furthermore I propose to make an order sought pursuant to section 106A of the Act as given the history of the matter, the husband's attitude and my assessment of him over many days it is fair to contemplate that he will refuse and/or fail to sign any necessary deed or document, or delay in so doing. I can also expect that there may be an invocation of the appeal process too.

1. I make the orders sought in Exhibit “W12” as amended.  I direct that the extempore reasons for judgment be transcribed, they be placed on the court file and made available to the parties including Russell Kennedy.

I certify that the preceding thirty one (31) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Guest.

Associate 

Date:  1 October 2007.