Pryor & Pryor
[2024] FedCFamC1F 800
•24 October 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Pryor & Pryor [2024] FedCFamC1F 800
File number(s): NCC 873 of 2023 Judgment of: SMITH J Date of judgment: 24 October 2024 Catchwords: FAMILY LAW – PROPERTY – ex tempore - Interim application sale of the matrimonial home – husband in arrears of the mortgage payments – husband has a history of non-compliance – husband’s true financial position unknown due to non compliance with orders – children live with mother – both parties seek interim distribution post sale - Orders appointing wife as trustee for sale – interim distribution to wife – no distribution to husband. Legislation: Family Law Act 1975 (Cth) Pts VIII, XI, XIII, XIVB, XV, ss 79, 80, 102NA, 106B, 114Q, 117 Cases cited: Strahan v Strahan (Interim Property Orders) (2011) FLC 93-466; [2009] FamCAFC 166
Weir v Weir (1993) FLC 92-338; [1992] FamCA 69
Division: Division 1 First Instance Number of paragraphs: 48 Date of hearing: 24 October 2024 Place: Newcastle Solicitor-Advocate for the Applicant: Mr Shearston Solicitor for the Applicant: Gillard Family Lawyers The Respondent: Litigant in person The Independent Children's Lawyer: Did not participate ORDERS
NCC 873 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS PRYOR
Applicant
AND: MR PRYOR
Respondent
INDEPENDENT CHILDREN'S LAWYER
ORDER MADE BY:
SMITH J
DATE OF ORDER:
24 OCTOBER 2024
THE COURT ORDERS THAT:
1.Ms Pryor (“the Trustee”) be appointed as sole trustee for the sale of C Street, Town D in the State of New South Wales, more particularly described in Certificate of Title Folio Identifier … (“the property”).
2.The Trustee shall be authorised to do all acts and sign all documents necessary to effect the sale of the property, subject only to these Orders.
3.A copy of these Orders be provided to any service provider appointed in relation to the sale of the property.
Real estate agent selection
4.The Trustee shall nominate in writing to the respondent Mr Pryor (“the Husband”) the names of 2 real estate agents who have consented to act on the sale of the property.
(a)The Husband may nominate one of those agents as the agent for sale by written reply within 7 days. If that occurs the Trustee is to appoint the agent nominated by the husband as the agent for sale.
(b)If the Husband does not make a nomination of one of the agents within 7 days then the Trustee may select one of those agents and appoint that agent as the agent for sale.
(c)The Trustee may authorise the expenditure of monies on advertising or related matters as recommended in writing by the appointed agent.
(d)The costs of the agent and advertising / marketing costs shall be paid out of the sale proceeds.
Conveyancing solicitors
5.The Trustee shall nominate in writing to the Husband names of 2 solicitors who have consented to act on the sale of the property.
(a)The Husband may nominate one of those solicitors by reply within 7 days. If that occurs the Trustee is to appoint that solicitor as the solicitor for the sale.
(b)If the Husband does not make a nomination of one of the solicitors within 7 days then the Trustee may select one of the solicitors and appoint that solicitor as the solicitor for sale.
(c)The costs of the solicitor shall be paid out of the sale proceeds.
Reserve price
6.The Trustee is to obtain a written statement of Reserve from the agent and that shall be the reserve at any auction, or in relation to any pre-auction offer.
Auction
7.The property is to be sold by public auction.
(a)The Property is to be offered for auction within six weeks from the date of placing the Property on the market, or as soon as practicable thereafter;
(b)In the event the Property fails to be sold at the auction referred to above the Property shall be resubmitted for auction at a reserve price 5% lower than at the previous auction, and shall continue to be resubmitted for auction every 4 weeks with a further 5% reduction in the reserve price until such time as the Property is sold.
Sale before auction
8.In the event a prospective purchaser makes an offer to purchase the Property prior to the proposed date for auction, the Trustee may agree on the price and to sell the Property to the prospective purchaser if the offer exceeds the written reserve, or if the agent advises in writing that the offer should be accepted.
Non-interference
9.Both the Trustee and the Husband parties are restrained by injunction from doing any act to interfere with or hinder the auction, and in particular neither party is to:
(a)rent or let or tenant the Property in any way;
(b)cause any agency agreement to be effected or binding on the parties other than in accordance with these orders;
(c)encumber or otherwise deal with the Property other than in accordance with these orders.
Proceeds of sale
10.The proceeds of sale of the property shall be paid in the following manner and priority:
(a)To discharge mortgage no. … to B Bank.
(b)Payment of all outstanding land tax, council rates, water rates relating to and running with the property required to convey the property.
(c)Payment of the agent’s commission and advertising or other expenses, if any, payable on the sale.
(d)Payment of the legal costs and outlays relating to the sale.
(e)Payment of one hundred and fifty thousand dollars only ($150,000) to the Trustee by way of interim distribution pursuant to s 79 Family Law Act 1975 (Cth);
(f)Payment of one thousand dollars only ($1,000) to the husband to be used only to pay costs associated with the transfer of all shares in E Pty Ltd to the name of the Husband;
(g)Pending further order, all remaining proceeds of sale held in the trust account of the solicitor with carriage of the sale.
Written advice
11.The Trustee is to provide to the Husband with a reasonable time copies of all written advice received pursuant to these orders, including in relation to the reserve price, any advertising or marketing expenditure and the acceptance of any pre-auction offer.
Transfer of shares
12.The Husband is to do all things necessary to obtain the transfer to his sole name of all of the shares in E Pty Ltd within 28 days of the distribution to him of $1,000 from the sale of the property and is to provide evidence to the Trustee of the same.
Documents
13.The Trustee is authorised to solely sign all and any documents necessary to effect the sale and conveyance of the property pursuant to the orders.
14.If either party refuses or neglects to sign or execute and return a document within 7 days of a written request to do so then the Registrar of the Newcastle Registry of the Federal Circuit and Family Court of Australia is hereby appointed under Section 106A of the Family Law Act 1975 to sign or execute such document on behalf of that party upon lodgement of such document and the filing of an affidavit of a solicitor on behalf of the requesting party as to the said neglect or refusal.
15.The requesting party be at liberty to apply for costs when submitting such an affidavit to the Registrar.
Future Court Event
16.The matter be listed for mention on Monday, 16 December 2024 at 2.00 pm by Microsoft Teams.
Section 102NA
17.The requirement of section 102NA(2) of the Family Law Act 1975 (Cth), will apply to any cross-examination occurring in these proceedings on or after the date of these Orders.
THE COURT NOTES THAT:
A.Section 114Q of the Family Law Act 1975 (Cth) provides that it is an offence punishable by imprisonment for up to one year to publish or disseminate to the public or a section of the public any account of family law proceedings which identifies the parties, witnesses or other people concerned with the proceedings, unless specifically authorised by the Court.
B.If in any proceedings there are allegations of family violence and the provisions of section 102NA of the Family Law Act 1975 (Cth) apply (see attached Family Violence Information Sheet), any unrepresented party will not be permitted to personally cross-examine the other party/parties.
C.Affected unrepresented parties may apply to the Commonwealth Family Violence and Cross-Examination of Parties Scheme (“the Scheme”) for representation but any such application must be made at least 12 weeks prior to the final hearing.
D.Further information about the legislation and the Scheme can be found at Part 4 of the attached Family Violence Information Sheet.
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 Pryor & Pryor has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
SMITH J:
These are oral reasons for decision in relation to an Application in a Proceeding filed by the applicant wife, Ms Pryor, on 20 September 2024, for orders for sale of the former matrimonial home at C Street, Town D, New South Wales (“the former matrimonial home”).
The respondent husband, Mr Pryor, does not object to the sale of the former matrimonial home.
The issues before me are how the former matrimonial home should be sold, the details of the process of sale, and whether either or both parties should receive an interim property distribution, pursuant to one of the powers to make such distribution, and in particular either ss 79 and 80(1)(h), or s 117 of the Family Law Act 1975 (Cth) (“the Act”), as discussed, for example, in Strahan v Strahan (Interim Property Orders) [2009] FamCAFC 166 (“Strahan”).
The overall proceedings on foot also deal with the parenting arrangements for the parties' two children, X and Y. However, the application which requires determination deals only with respect to property issues, and so the Independent Children’s Lawyer (“ICL”) was excused from attendance.
BACKGROUND
By way of brief background, the parties married in 2005 and separated in either January 2022 or June 2022, a relationship of approximately 17 years.
In 2020, the wife and the children returned to Australia from the United States of America where the husband remained. He was subject to a charge relating to a criminal offence.
The husband returned to Australia in 2021 and ultimately accepted a plea deal and was sentenced in respect of those charges to a non-custodial probation with conditions. That occurred in 2022. As I understand it, the husband will seek to contest the validity of his plea at final hearing.
The wife commenced these proceedings in March of 2023. The children live with the wife in the former matrimonial home.
APPLICATION IN A PROCEEDING
The application on foot arises from the arrears of the parties' joint mortgage over the former matrimonial home. The application was filed by the wife on 20 September 2024. It is predicated on a history of issues regarding the payment of the mortgage on the property.
On 24 April 2023, interim consent orders were made which stated that:
11.Within 14 days the husband shall pay sufficient funds to [B Bank] to ensure that the mortgage secured over the property at [C Street, Town D], NSW (“the property”) by way of loan accounts numbered […72] and […36] is no longer in arrears and thereafter shall make each periodic loan repayment as and when they fall due.
12.By way of partial property settlement, and within 14 days, the husband shall pay to the wife the sum of $40,000 into an account nominated by her in writing.
That was in the context of the wife's then interim financial application. The wife did not press her spouse maintenance application at that time in those circumstances where the husband agreed to those terms.
Further orders were made on 13 December 2023 for the husband to make full and frank disclosure and for the husband to pay all outstanding arrears owing on the mortgage secured against the property.
On 28 February 2024 by consent, the husband was restrained from departing the Commonwealth of Australia until further order.
It was further ordered by consent on 15 April 2024 that the husband:
1.…be restrained by injunction that, if he sells either or both of [Motor Vehicle 1] and / or [Motor Vehicle 2], that they are to be sold at fair market value, and the entirety of the received monies are to be paid forthwith to pay down the outstanding mortgage, and copies of all documents and evidence of transactions are to be provided as soon as possible to the Applicant’s legal representatives.
The most recent consent orders were made on 22 May 2024 which also related to a departure prohibition order until such time as sufficient payments were made to both mortgage accounts to assure there were no arrears.
There is no doubt that the mortgage is in arrears. The husband has not complied with the orders he consented to. He said he has not been able to.
Nevertheless, it is in those circumstances where both parties, very sensibly, agree that the property must be sold, and there can be no doubt that this property must be sold.
Given the extent of the arrears, if the property is not sold soon the bank will sell it, and one does not need much experience to know that a bank sale often, for a variety of reasons, attracts less of a sale price than a private sale.
INTERIM HEARING
At this hearing, the wife relied upon her:
(1)Case Outline filed 22 October 2024;
(2)Application in a Proceeding filed 20 September 2024; and
(3)Affidavit filed 20 September 2024.
She also provided a section 50 summary which was not contested by the husband, as well as some bank accounts from a company which I will refer to shortly.
The husband relied upon his:
(1)Case outline filed 23 October 2024, and
(2)Response to Application in a Proceeding and Affidavit of 7 April 2024, both of which are historical in nature.
The wife seeks orders she be appointed as trustee for the sale of the property, in circumstances where she says the property needs to be sold quickly, there is no reason to think that she will sell it under value, and there has been a significant failure by the husband across the entire course of proceedings to comply with orders, and so he may fail to comply with the orders for sale which may interfere in the needed quick sale.
The husband agrees to the sale of the property but says there is no reason why the wife should be trustee for sale.
The wife also submits she should get an interim distribution, and he should not.
What she wants the money to be used for is to discharge the mortgage; pay the agent; pay all outstanding land tax, council rates and water rates; pay the legal costs; pay her $150,000, and the remaining proceeds to be held in the trust account of the solicitor or conveyancer with carriage of the sale.
APPOINTMENT OF WIFE AS TRUSTEE FOR SALE
I am the docket judge and have had carriage of the matter. I have access to all the orders. A review of the record shows that the husband has a clear and consistent history of non‑compliance with the orders of this court. He says that there are good reasons for those non‑compliances. That may or may not ultimately be made out at trial. At the moment what I have is a significant history of non-compliance going back almost to the commencement of the proceedings and relating to all aspects of the proceedings.
The husband is in arrears, both in regard to the mortgage and his child support obligations. The non-compliance with court orders continues through this interim hearing where, in breach of orders made, the husband has failed to file an up-to-date financial statement by 16 October 2024, so that his current financial position is not known.
In the context of the husband's repeated failure to comply with court orders, I am satisfied that this case falls into that class of cases where it is not in the interests of justice to have a standard sale process which may be delayed, noting that if the bank decides to act, banks will often act very quickly, and that it will not be in either party's interest for there to be a bank sale.
I am satisfied that, given the history of the matter, there is a risk the husband will fail to comply with orders for the sale of the property, and delay, if not frustrate, the sale, particularly in circumstances where, I will indicate now, I propose to order a distribution to the wife and not to the husband.
I am satisfied that the wife has no motivation to sell the property for anything less than full market value, and that the orders I will make for the wife to provide the husband with the names of two agents and the names of two solicitors, and allowing him to select the agent and him to select the solicitor/conveyancer will address any reasonable concern the husband may have that the wife might seek to act with someone to get less than full value, although, as I have said, I can see no reason she would do that.
The wife ultimately agreed that it was appropriate to make these usual orders, i.e. that she puts forwards names, the husband gets to pick one, if he does not pick one within seven days, then she will get to pick. As I said that should deal with any concerns the husband has.
To that end, I appoint the wife sole trustee for sale and will make orders, to which I will come in a moment, that she provide the name of two agents and two solicitors to the husband.
KNOWN ASSETS
I come to the question of the known assets, as is required under the principles in Strahan. The parties basically agree that the likely value of the former matrimonial home post-sale, after payment of the mortgage and other costs, will be in the range of $650,000. That is not a significant sum. There is a significant uncertainty as to the husband's true financial position due to the husband's failure to file a financial statement, contrary to my orders, and arising from his operation of a business which appears to have substantial cashflows, but he says no profits.
It is in respect of that business E Pty Ltd that significant issues arise. It is common ground that the husband, as I understand it, holds 1 per cent of the shares in E Pty Ltd, and operates a business for that entity, and the bank statements show that there is reasonable cashflow, although the husband says no profits or wages.
The wife says, and the husband freely agreed in open court today, that he transferred 99 per cent of E Pty Ltd, which he then owned, to his mother the paternal grandmother. The husband denies that this had anything to do with the parties’ separation, and says, as I understand it, he wished to avoid having to negotiate with someone who wanted to merge the business. He has stated that the paternal grandmother paid $1 for 99 per cent of this company, which he continues to trade through.
That was clearly not an arm's length sale, and there is no evidence that it was a sale for fair market value. The husband, and the paternal grandmother who was in court, agreed that it would be appropriate for them to work together to transfer the asset back into his name, but at the moment, nothing is known about the value of this asset.
The husband submitted that since there is no identified profit, perhaps the business or entity is not worth much. However, noting the principles in Strahan, and given I have no idea what that company is worth, have no idea what the husband's true financial position is due to the husband’s failure to comply with orders, there is a real chance he will receive nothing from the known assets. In my view that is, effectively, fatal to his application to have moneys paid out of the very small sum of $650,000.
It is also common ground that, as at 30 May 2022, E Pty Ltd held $304,379.64 which was used and reduced down to $827.97 by 5 April 2023. No explanation for the distribution of $300,000, which is effectively half of the sum which is currently remaining in the property, was given.
The husband sold $122,478 of cryptocurrency during the proceedings. He used part of this, as I understand, to pay the wife's interim distribution of $40,000, leaving him with about $82,000. It is not known what happened to that money.
As I have said, the husband conceded in court today that he is the true beneficial owner of E Pty Ltd. No-one knows the true financial position. Further, it appears also common ground, as disclosed in the businesses the financial statements, that from June 2023 there were significant funds in the range of about up to $500,000 spent by that entity in what appears to be fit-out costs for this business.
It would be very peculiar, one would think, to spend $500,000 fitting out a property to operate a business, if that business otherwise has no real value. That would be very, very strange indeed.
As I have said, the paternal grandmother was in court. The husband agreed that the court could make orders that he do all things necessary to transfer the shares in this company back to his name, and the paternal grandmother in open court said that she was willing to do this, noting she paid no good consideration for the shares. I will make orders by consent, for that to occur. If that does not occur, the court will entertain an application pursuant to s 106B in relation to this entity and its business.
The husband said he needs to pay $600 to ASIC (Australian Securities and Investments Commission), as a fee for the share transfer to occur. I will order $1000 be paid out of the net proceeds in order that, within 28 days of receipt of that money he do all things necessary to transfer the shares in E Pty Ltd back into his name. The wife consents to that distribution. I say $1000 just so that we do not find some situation where it is actually, e.g. a $680 fee, and it gets caught up.
The husband says that all these things can be explained. He says he is not making money out of the business. One does not know at an interim hearing what the final position will be, but what I can say is that I am comfortably satisfied that I have no proper understanding of the husband's true financial position or assets, that there is more than $400,000 that may end up being treated as being used by the husband that should be added back, and it is possible that, as the true beneficial owner of E Pty Ltd, that business is worth a lot of money, and certainly the fact that $500,000 has been spent on the business in a short period of time suggests that it is not worth nothing, otherwise it would be very strange as to why that sum was spent rather than being retained.
The simple fact is, that given the uncertainty I have today, if the evidence at a final hearing was no better than this, the principles in Weir v Weir (1993) FLC 92-338 would, if this was the only evidence, weigh very heavily against the husband. The principles there state that where one party has not fully disclosed their position and where there is a small sum it may be that the other party should get 100 per cent of all the known assets. In these circumstances, as was put for the wife, there is a real possibility that she will ultimately get all of $650,000 from the property, and in those circumstances, applying the principles which bind me as set out by the Full Court in Strahan, it would not be appropriate, indeed it would be contrary to law, for the husband to be allocated any of the net proceeds of the property on the material before me.
The husband says, in respect of the wife's application, that the court equally cannot be sure what her true financial position is. However, I have her recent up-to-date financial statement. She is in receipt of approximately $780 per week in Centrelink payments. She has no other substantial assets, including about $30,000 in superannuation as set out in her financial statement. He says he has got proof that there is $11,000 in cash. Even accepting that, unlike him, she was not a businessperson, there is no evidence that she runs a business, there is no evidence that would give rise to a suspicion that she has large sums of money hidden somewhere else. In those circumstances, I am not satisfied there is relevantly, on an interim basis, a basis for taking into account any uncertainties of the wife's financial position.
DISTRIBUTION TO WIFE
The wife seeks an interim distribution of $150,000 on the basis of a 17-year relationship and two children, her contributions to homemaking over that period, and the need to house herself and the parties' two children who continue to reside with her. The husband concedes in his pleading that the wife would be entitled to half the net value of the identified asset, which is to say, the former matrimonial home, so that the $150,000 sought is comfortably within the amount she is likely to receive, therefore no issue of reversibility arises.
The wife's primary application is that this is an interim property distribution under s 79, noting my power to do so under s 80(1)(h). As it was rightly put for her, she does not need to establish a compelling circumstance. The reality, however, is that I find her circumstances are compelling, and it is entirely appropriate, applying the principles in Strahan, that after the property be sold, she should receive $150,000.
Those are my reasons.
I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Ex tempore Reasons for Judgment of the Honourable Justice Smith. Associate:
Dated: 25 November 2024
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