Prentice and Maheris (No. 3)

[2009] FamCA 744

FAMILY COURT OF AUSTRALIA

PRENTICE & MAHERIS (NO. 3) [2009] FamCA 744

FAMILY LAW – PROPERTY – Interim property and financial issues – Valuation of property required by Court – Case management and fixing of hearing for late November – Overseas Greek property to be valued – Further evidence to be file don property and ownership issues

Family Law Act 1975 (Cth)

APPLICANT: MR PRENTICE

RESPONDENT: MS MAHERIS

FILE NUMBER: MLC 11939 of 2007

DATE DELIVERED: 7 AUGUST 2009

PLACE DELIVERED: MELBOURNE

PLACE HEARD: MELBOURNE

JUDGMENT OF: YOUNG J

HEARING DATE: 7 AUGUST 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: MR THOMPSON

SOLICITOR FOR THE APPLICANT: GR CAMPBELL

COUNSEL FOR THE RESPONDENT: MR STRUM

SOLICITOR FOR THE RESPONDENT: TAUSSIG CHERRIE & ASSOCIATES

Orders

IT IS ORDERED:

1. THAT each of the extempore judgments delivered as to property, financial and valuation matters this day be transcribed, placed upon the court file and made available to the parties.

2. THAT paragraph 3 of the Order of Registrar Lethbridge made 22 April 2008 be varied by deleting therefrom the requirement for the parties to obtain a joint valuation of the property owned by the husband in Greece and for the parties to obtain a valuation of the property at E Street, P.

3. THAT the husband, within seven (7) days, execute an Authority to be prepared by the wife’s solicitors authorising them, and the wife from making all due and proper inquiries and receiving all information sought in respect of the property in Greece from the land surveyor/estate agent engaged by the husband and such Authority extend to facilitate information being provided by any State or Local Government or Council, or Municipality or Land Registry.

4. THAT any such further inquiry made by or on behalf of the wife in Greece as to value of that property be at her cost and expense, subject to any order of the trial Judge.

5. THAT the time for compliance with paragraph 8 of the Orders pronounced 2 June 2009 be extended to 4 September 2009 and both parties are to disclose and thereafter make available for inspection and copying all documents of and as are relevant to the financial, property, child and parenting issues before the Court, and which are not the subject of any proper objection.

6. THAT the time for compliance by the husband in paragraph 9 of the Orders dated 2 June 2009 be extended until (and no later than) 5 October 2009, inclusive of the filing of affidavits of all witnesses upon whom he intends to rely.

7. THAT the time for compliance with paragraph 10 of the Orders made 2 June 2009 be extended and the wife likewise make, file and serve her trial affidavit and financial statement, and the affidavits of all witnesses upon whom she intends to rely on or before 23 October 2009 (and no later).

8. THAT as applicant, the husband make, file and serve any amended application for orders sought on property, financial issues or child or parenting issues on or before Monday 28 September 2009.

9. THAT as respondent, the wife make, file and serve any amended response to property, financial issues, child or parenting orders on or before 16 October 2009.

10. THAT the further mention for case management of all aspects of this case be listed before Young J at 9.45 a.m. on Wednesday 28 October 2009.

11. RESERVE liberty to apply on written application to the associate for Young J upon any issue of enforcement of any aspect of these orders that fall into default.

IT IS NOTED:

A.THAT the updated estimate by counsel for the husband of the duration of the proceedings on all issues is now five (5) days and that estimate is not disputed by counsel for the wife.

B.THAT at the case management date of 28 October 2009 all affidavits of evidence in chief and other affidavits and all amended applications must be filed and if the matter is then approved for final hearing there will be further case management orders made that day as to the filing of a :

§Chronology;

§Summary of Argument;

§Balance Sheet of assets.

and counsel will be requested to provide an updated assessment of the duration of hearing and issues in dispute.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 11939 of 2007

MR PRENTICE

Applicant

And

MS MAHERIS

Respondent

REASONS FOR JUDGMENT

1. In this continuing matter before me for interim hearing and case management today, Mr Thompson of counsel continues to appear for the husband, Mr Strum of counsel for the wife. Ms Smith, who appeared as the Independent Children’s Lawyer has been excused from court as the child matter is no longer an interim issue this day.  The property and financial aspects of this case remain before the court for hearing at the same time as child and parenting issues.

2. A number of preliminary issues have arisen and I intend to deal with one specific issue in these extempore reasons for judgment, which are again delivered without leaving the bench and on the basis of documents read by the court and submissions of counsel. 

3. There is an order of this court made by consent on 22 April 2008.  The husband was represented by his then solicitor, Ms Leanne Cain.  The wife was then represented and remains represented by her current solicitors.

4. Consent orders that day were obtained for a joint valuation of real estate, and there were six properties identified to be valued including a property in Greece said to be owned by the husband.  A particular property was at K Road, K. 

5. That order further provided that the costs of the joint valuation was initially to be paid equally by the parties with the ultimate responsibility for cost thereof, that is, of the valuation of all properties, to be reserved pending further order of the court.  Those orders thereafter provided for a detailed exchange of documents and the commencement of the discovery and inspection process which remains incomplete.

6. For the purposes of this extempore judgment I concentrate upon the property at K Road.  The submission of the husband is that property should be excluded from any valuation requirement.  That position is wholly opposed by counsel for the wife. 

7. The matter was last before me on 2 June 2009 and I directed in paragraphs 6, 7 and 8 of that order compliance in full with earlier orders made by Registrar Lethbridge on 22 April 2008, and otherwise particularly made orders in respect of the Greece property. 

8. There was then no application before the court by counsel now appearing for the husband and his then solicitors, Kenna Teasdale (to whom he had changed after Ms Cain) to in any way vary the valuation requirement of the subject property under consideration in these reasons for judgment.

9. The husband himself (and by that it would seem he was then acting for himself) on 16 October 2008 filed a further affidavit, and I have been referred to paragraph 6(c) thereof, which reads as follows:

   “I say [K Road] was purchased by me and my brother, […], in 1994.  Six months before the marriage, and around the time of the engagement, in January 1997, I had verbally agreed with my brother to sell my share in that property to my brother on a vendors terms contract signed in the wife’s presence some 39 days into the marriage.  Produced and shown to me at the time of swearing my affidavit and marked LP2 is a true copy of the vendors terms contract signed by me on 17 July 1997. 

   I had stopped receiving rent from this property in January 1997 as indicated by my tax returns of that financial year ended 30 June 1998.  Produced and shown to me at the time of swearing my affidavit and marked LP3 is a true copy of my tax return for 30 June 1998.  I neither paid any outgoings nor received any income from that property from January 1997”.

10. Annexed to that affidavit is the contract.  I first observed that a firm of solicitors, Clements Hutchins, were engaged to act for the husband and his brother.  I infer that the husband and his brother were then the joint owners of the property and the husband was in effect selling his 50 per cent interest therein to his brother.  The purchase price was said to be $175,000, but the balance of payment, and there was no deposit paid, was not required until 1 July 2017, that is, a 20 year contract with no deposit or ongoing payment of interest or access to rental income of the property pending payment. 

11. There is a special condition to the contract identifying an existing mortgage to a bank and it is said that the payment of the purchase price as agreed of $175,000 was to be made by the brother assuming total responsibility for the payment of the whole of that joint mortgage. 

12. I have no evidence before me as to the dealings with that joint mortgage or the payment of any moneys or discharge thereof, and it may be in due course that such a mortgage, which was then to the State Bank of New South Wales, may or may not be available on subpoena or discovery.  I make no further comment thereupon. 

13. What is intriguing as to the contract is that there was no deposit paid and the husband did not require payment of any sum for 20 years. 

14. As best I understand the evidence with the earlier involvement of any practitioner in this matter, that affidavit prepared and filed by the husband himself was the first particular reference to the contract of sale of a half-interest in that property, though the caveat I place on that observation is I have not inspected the earlier files comprising the documents before the court, nor have I been referred to earlier documents in this matter.

15. I emphasise that the reasons I provide in this matter are interim and qualified to the limited issue before me.  I am not determining ownership of the property, nor where the proceeds were paid, nor how they were otherwise dealt with, or as to who owns that property this day.  All of those matters require more information in the fullness of time. 

16. The preliminary issue before the court is whether that property should be valued in the proceedings, and, if so, at whose cost.

17. I turn now to the further affidavit of the husband filed by leave of the court this day, and in paragraph 5 and 6 thereof he seeks to exclude that property from valuation.  The husband says that he is not able to cause the property to be valued and he identifies paragraph 16 of his earlier affidavit.  He therein states (paragraph 5):

    “I have no interest in the property save for my entitlement under the contract of sale”.

18. That statement is, in itself, somewhat confusing, as in the alternative he remains on title and has an interest in the property as to 50 per cent, or otherwise he has sold the property and on his evidence, as I would understand it, the contract of sale has been now completed and moneys paid.  They are matters presumably for future evidence.

19. As to the affidavit of the wife filed this day, the issues of this property are dealt with in paragraphs 15, 16 and 17 thereof, and otherwise in annexure “RM9” thereto.  The wife comments in paragraph 17 upon the assertion of the husband that he has received payment of $175,000.  The wife says that despite requests to the husband’s previous lawyers at no time has the husband provided details of:

    a)the circumstances of the alleged contract with his brother;

    b)documentary proof of the consideration he has received;

    c)details, information and documentary proof of the application of the funds.

20. That affidavit of the wife was prepared prior to the filing by leave of the husband’s affidavit this day, but certainly there is matters either unresolved or unknown as to the payment of moneys, the timeframe of the payment of moneys, or where the moneys were expended pursuant to the contract of sale, as alleged.  True it may be that the discovery process will highlight these matters.

21. In a letter written by the previous solicitors for the husband on 17 July 2009, it is said therein in reference to this contract that:

    “The parties received the sale price and applied those funds for their own benefit during the course of the marriage.  Any rental income derived from that property has not been received by the husband and therefore not declared in his income tax returns from 30 June 1997 to date.  In effect, the owner of the property is the husband’s brother”.

22. The subsequent request in the letter was for the valuation, to be undertaken by the agreed firm, V Real Estate Valuers, be redrawn to exclude that property at K Road, K.  The submissions of Mr Thompson appearing on behalf of the husband this day are to the effect that, before the property is valued there should be established a prima facie case both of the husband’s ownership or interest in the property and/or of its relevance to the proceedings. 

23. As a further issue, the husband would instruct his counsel that there are tenants in the property and he doesn’t have access to the property for purposes of valuation.

24. Mr Strum on behalf of the wife would have it that there are issues to be investigated of and concerning the ownership of the property and the financial dealings therewith.  What is somewhat intriguing is the fact that the reference to the sale price of the properties and the application of those funds by the parties is only made in the last month. 

25. Curious it is, but perhaps other explanations will develop, as to how and when those moneys were received and why the husband had not identified that fact in his earlier substantial affidavit prepared by himself, or why his various other solicitors or counsel have not previously identified receipt and disposal of sale moneys at an earlier date.

26. On the material before me I have absolutely no hesitation in requiring a valuation of this property.  It remains registered in the husband’s name as to 50 per cent.  That is a matter of importance.  If indeed the sale was concluded and the moneys were paid, the court is asked to believe that all sale moneys could be paid but there were insufficient money to effect transfer and/or pay stamp duty on $175,000 sale price.  Given the financial implications and commercial risks, one most certainly would have expected the brother to act in his own interests and to have acquired the property and registered the property in his name.

27. It creates other significant capital gains tax issues potentially because of ownership which need to be more fully investigated, if not by this court then elsewhere, but they are not a matter that I deal with in any interim application.  I emphasise in these reasons for judgment that as a joint owner on title the husband can and must comply with a request for valuation, and thereby direct the real estate agents, or otherwise the tenants whom he may or may not know, to cooperate.  As to the valuation date, this property should be valued as at the alleged date of sale, as at the date of the parties’ separation in the year 2007, and as at this date.  Those three valuations may all be relevant, in the alternative.

28. In due course one would expect the husband’s brother to make, file and swear an affidavit, or otherwise the wife might take some other action within the proceedings, but I do not further comment or make any requirement in that regard.  Certainly the relevance of the brother’s taxation returns showing all of the rental payments paid thereto will become a matter of importance on forensic investigation.  As to the costs of valuation, the husband has previously consented to an equal cost of all properties being valued by the agreed firm.

29. Whilst I reflected upon the wife paying the cost of this property, that would, on reflection, fly in the face of the earlier agreement as embodied in court orders.  I would not likely accept any suggestion that the orders were made “on the run” or were not known or understood by the husband who was then legally represented.  In any event, of even more force and effect is there has been no prior application to vary that order, and it has really only arisen in the stratum of this interim determination this afternoon.

30. For those brief reasons, which I will have transcribed and placed upon the court file and made available to the parties, I will be directing the immediate valuation of the properties the subject of earlier consent orders, as may be amended, however, in respect of the P property and for the firm V Valuers to complete the valuation and at the joint cost of the parties.  That letter of valuation will be signed by solicitors within seven days.  The onus is upon the solicitors for the wife to re-prepare and re-engross and send such a letter to the new solicitors for the husband. 

31. I will reserve liberty to the solicitors for both sides to mention this matter within the next 21 day period if that valuation is not on track and being undertaken, and I will otherwise then make, if any orders are required, further and appropriate orders in all of the circumstances.

32. As counsel continue to raise case management and interim property issues in this matter, I turn now to the valuation of the property in Greece.  Pursuant to the consent orders made in this court on 22 April 2008, the parties were to obtain a joint valuation of that particular property.  Annexed to the affidavit of the husband filed by leave this day, is a letter dated 20 July 2009 under the signature of Mr GN, land surveyor and real estate agent.  His business address and contact details are provided on his letter of plot evaluation.  His letter says:

    “The plot with area around 800 square metres, that is located in [Greece] – and evaluated at 60 Euro”.

33. Pursuant to paragraph 7 of my earlier order, the husband was to provide full and complete title particulars or identity of any land owned by him in Greece, or in which he holds an interest as owner himself or together with any other person or entity.  The submission that I have from the bar table is there is no title particulars in Greece of land similar to that which we in Australia are accustomed.  I make no finding on that issue.  Clear it is that the husband must have identified this particular plot so that the Greek estate agent could value same.  The wife does not accept, but has no grounds to particularly disagree with either the identity of the area of land or its valuation. 

34. What I propose to do for the purposes of moving this case forward is to delete the requirement from the consent order of 22 April 2008 of the joint valuation of that property in Greece.  In the interim and pending any further information coming to the court, the husband’s letter can stand as his evidence submitted on this issue.  I require him to provide within seven days a written authority, in his capacity as landowner of this plot, to the wife’s solicitors and addressed to that particular estate agent requesting his co-operation in all ways in identification of the land area and/or other land owned by or directly controlled by the husband and further as to its valuation.  The wife can, therefore, make such inquiries at her expense as are deemed reasonable in the circumstances, and the onus remains upon her then to provide any other contrary valuation.

35. It will be also necessary for solicitors to agree upon the exchange rate of euro to Australian dollar prior to trial.  The other issue upon which I have had submissions is generally as to the preparation of an affidavit of documents.  I will extend the time for the husband to make, file and serve a complete and updated affidavit of documents covering all issues by 21 days.  That was not opposed in the – for the reasons that the husband has recently experienced a death and has changed – a death in his family and has changed solicitors.  I take this opportunity to emphasise, and thus it is on transcript, that both sides’ affidavits are to be accurate, complete and wholesome and thereafter and immediately there is to be co-operation on the discovery and inspection process with the rights to solicitors to copy documents at the respective cost of their client.

1. I will therefore incorporate, within orders that I am soon to announce, the appropriate orders, both as to the land in Greece and as to the further procedures for discovery, inspection, disclosure and filing of documents and that will include the trial affidavits and updated financial statements to be filed, though I will give counsel the briefest of opportunity to address me on the timeline for the filing of those documents.  Those reasons can cease there and be transcribed and placed upon the court file. 

I certify that the preceding paragraphs are
a true copy of the reasons for judgment herein
of The Honourable Justice Young

………………………………………………………..
Associate: