Rankin and Rankin

[2014] FamCA 1013

FAMILY COURT OF AUSTRALIA

RANKIN & RANKIN [2014] FamCA 1013

FAMILY LAW – PROPERTY – PARTIAL PROPERTY – Where the husband sought orders for the sale of the former matrimonial home – Where the wife and children of the parties reside in the home – Where the wife opposed orders for the sale of the former matrimonial home and sought orders for the sale of two investment properties in Western Australia and that the husband continue to meet the mortgages repayments and outgoings with respect to the property of the parties – Orders made for the sale of the investment properties and for payments in respect of  the mortgage and outgoings.

Family Law Act 1975 (Cth)

APPLICANT: Mr Rankin

RESPONDENT: Ms Rankin

FILE NUMBER: DGC 2859 of 2013

DATE DELIVERED: 31 October 2014

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Johns J

HEARING DATE: 3 September 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Salamanca

SOLICITOR FOR THE APPLICANT: Belleli King & Associates

COUNSEL FOR THE RESPONDENT: Dr Ingleby

SOLICITOR FOR THE RESPONDENT: DMWR Partners

Orders

1.That forthwith the husband and the wife do all such acts and things as may be required to sell the properties situate at and known as 9 Einstein Way, G Town, Western Australia and K Street,, H Town, Western Australia (“the WA properties”) and the proceeds of the sales be applied as follows:-

(a)First to pay any costs, commissions and expenses of the sales;

(b)Second, to discharge the mortgage and any encumbrances affecting the WA properties;

(c)Third, the balance then remaining, if any, to be held on trust for the parties in an interest-bearing account until further order.

2.That there be liberty to apply with respect to the terms and conditions of the sales referred to in order 1 hereof.

3.That until further order the husband pay or cause to be paid the monthly mortgage repayments and outgoings as and when they fall due with respect to:-

(a)   The WA properties;

(b)  The property at B Street, Suburb C.

4.That should any party seek costs arising from these orders, such application be made by written submission and filed no later than 7 November 2014 with such submission being endorsed with the fact that it has been served on the other party, and any recipient of such submission have until 14 November 2014 to file and serve any response and such response to be endorsed with the fact it has been so served upon the other party and upon receipt of any such application for costs it or they be determined in Chambers.

5.That the husband’s Application in a Case filed 21 July 2014 and the wife’s Response to an Application in a Case filed 28 August 2014 be otherwise dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Rankin & Rankin has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: DGC 2859  of 2013

Mr Rankin

Applicant

And

Ms Rankin

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. The husband and the wife agree that assets need to be realised in order to relieve them from financial pressures.  What is in dispute is which of their assets should be sold in order to reduce their debt.

2. The parties’ competing applications with respect to these issues were listed before me in a Judicial Duty List on 3 September 2014.  The husband, who is the applicant in the proceedings sought orders that the former matrimonial home at Suburb C be sold, and after discharge of mortgage liabilities secured over that property, the balance of the proceeds of sale be held upon trust pending a final determination of the parties’ competing property applications. 

3. The wife opposed the husband’s application.  In response, the wife sought that the parties’ two investment properties in Western Australia be sold and the proceeds of sale be applied to the discharge of the mortgage liabilities with respect to those properties.  In addition, the wife sought orders that the husband continue to meet the mortgage repayments and outgoings with respect to the properties in Western Australia and Suburb C until further order.

THE PARTIES

1. The husband is the applicant in the proceedings.  He is aged 46 years and is engaged in full-time employment as a general medical practitioner.

2. The wife is aged 44 years and is engaged in home duties.  She continues to live in the former matrimonial home at Suburb C with the three children of the parties’ marriage.

3. The parties commenced cohabitation in 2000 and married in 2000.  Final separation occurred in July 2013.

4. There are three children of the marriage, D, aged 11 years, E, aged 10 years and F, aged almost five years.

THE PROCEEDINGS

1. Proceedings with respect to both financial and parenting matters were commenced in the Federal Circuit Court at Dandenong in October 2013.  Those proceedings were transferred to this Court in February 2014. 

2. In support of his application the husband relies upon the following material:-

   ·Application in a Case filed 21 July 2014;

   ·His affidavit 21 July 2014;

   ·His affidavit filed 2 September 2014; and

   ·His financial statement filed 8 October 2013.

10.The wife relies upon the following material in support of her application:-

·Response to an Application in a Case filed 28 August 2014; and

·Her affidavit filed 28 August 2014.

11.The orders sought by the husband were as follows:-

·That the property situate at Suburb C be forthwith sold by auction and the proceeds be applied as follows:-

(a)Firstly to pay the costs, commissions and expenses of the sale;

(b)Secondly to discharge the mortgage and any other encumbrances affecting the former matrimonial home; and

(c)Thirdly the balance to then be held on trust by the lawyers for the applicant husband pending finalisation of property matters between the parties.

·That the wife pay the husband’s cost of and incidental to this application. 

12.The orders sought by the wife were as follows:-

·That the husband’s application be dismissed;

·That the properties located at G Town, Western Australia and H Town, Western Australia (“the WA properties”) be sold at auction and the proceeds be applied as follows:-

(a)Firstly to pay any costs, commissions and expenses of the sale;

(b)Secondly to discharge the mortgage and any encumbrances affecting the WA properties;

(c)Thirdly, the balance to be held on trust for the parties pending finalisation of property matters between the parties.

·That the husband pay the mortgage repayments and outgoings in relation to the property located at Suburb C and the WA properties.

·That the husband pay the wife’s costs of and incidental to this response.

13.In addition to those orders, the wife in her response to application in a case also sought orders with respect to spousal maintenance.  However, the wife did not seek to agitate that part of her application at the interim hearing before me.

14.The matter was conducted on the papers.  Each party relied upon the material referred to above and their counsel’s oral submissions.  Given the nature of the hearing, contentious facts cannot be determined without the evidence being properly tested.  Accordingly, in determining the matter I have relied upon those facts which are agreed or not in issue. 

THE LAW

15.Section 80(1)(h) of the Family Law Act1975 (Cth) (“the Act”) empowers the Court to make orders pursuant to s 79 of the Act for partial property settlement. The Full Court stated in the decision of Gabel and Yardley (2008) FLC 93-386 that although there is only one exercise of power pursuant to s 79, that power may “be exercised by a succession of orders until the power … is exhausted”.

16.In Strahan and Strahan (interim property orders) (2011) FLC 93-466 (“Strahan”) the Full Court, whilst acknowledging that it is preferable that there be one final hearing in s 79 proceedings, considered the circumstances in which the Court might exercise its power to make orders for partial property settlement. At paragraph 132 the Full Court stated as follows:-

…In our view, when considering whether to exercise the power under s 79 and s 80(1)(h) of the Act to make an interim property order the “overarching consideration” is the interests of justice. It is not necessary to establish compelling circumstances. All that is required is that in the circumstances it is appropriate to exercise the power. In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.

BACKGROUND

17.Since the parties’ separation the husband has been meeting loan repayments with respect to the WA properties and the property at Suburb C.

18.The Suburb C property is estimated by the husband to be valued at approximately $1.5 million.  The mortgage liability with respect to the property is approximately $1.45 million and the monthly repayments in respect to that liability amount to approximately $7,692 per month. 

19.According to the wife’s affidavit filed 28 August 2014 to which she annexes property valuations for the WA properties those properties are valued at approximately $1,140,000.  Doing the best I can with the evidence before me, the mortgage liabilities with respect to those properties as put by counsel for the husband is approximately $874,000.  The properties are currently tenanted.  The husband’s evidence is that the shortfall on the mortgage repayments and rates with respect to those properties totals approximately $2,000 per month.

20.The wife does not challenge the parties’ monthly repayment obligations with respect to Suburb C and the WA properties.

21.The husband deposes at paragraph 25 of his affidavit filed 2 September 2014 that in addition to his commitment to meet the mortgage repayments with respect to those properties, he has a current child support liability of approximately $4,617 per month as well as a responsibility to meet other liabilities including housing insurance, car insurances and health insurances for the family. 

22.The basis for the husband’s application is that he alleges he has experienced a significant change in his financial circumstances due to his loss of his employment at Suburb I Medical Centre.  At paragraph 5 of his affidavit filed 21 July 2014 the husband deposes that on 8 July 2014 that employment was terminated.  Prior to the termination of his employment, the husband deposes that he was earning approximately $7,000 to $7,500 gross per week. 

23.On 22 July 2014, being the day after he filed his application and two weeks after his previous employment was terminated, the husband secured contract work at Suburb J Medical Clinic.  The husband alleges that his income from that employment has significantly reduced from that earned by him at his previous employment.  The husband deposes that his income has decreased to approximately $1,746 per week.  As a consequence, it is alleged by the husband that he can no longer afford to meet the mortgage repayments with respect to the Suburb C property.  Accordingly, the husband seeks orders for the sale of that property.

24.It was conceded by counsel for the husband that the income earned by him in his new employment was likely to increase once he is established in the new medical practice.  His income from that employment is calculated upon the number of patients seen by him. 

25.During the course of submissions by the husband’s counsel I enquired as to whether any approach had been made to the parties’ bank to seek a moratorium on monthly payments for a short period until such time as the husband has established himself with his new employer, or alternatively to seek a period of interest-only payments with respect to the loans for a short period.  I was informed by the husband’s counsel that there had been an approach to the bank in February 2014, prior to the termination of his employment with the Suburb I Clinic.  The wife’s counsel indicated that the wife had not been informed of such approach.  Further, there was no evidence of that approach before me nor any evidence as to the bank’s attitude to such an approach.

26.The difficulty with the position sought by the husband is that he does not address the issue of where the wife and the children are to live in the event of the sale of the Suburb C property.  Inevitably with the sale of that property, the parties would face a significant financial burden in securing appropriate rental accommodation for the wife and three children.  The only proposal made by the husband is that set out at paragraph 17 of his affidavit filed 2 September, 2014, that is that the wife be paid the sum of $5,000 from the sale proceeds to be applied to obtaining rental accommodation.  Otherwise, the husband asserts that the wife has the capacity for gainful employment.  The wife is engaged in home duties and that has been her position for a considerable period.  In circumstances where the evidence is untested I am not in a position to make any finding as to the wife’s income earning capacity.   

27.Counsel for the wife submitted that to order the sale of the Suburb C property would be premature, particularly in circumstances where the parties’ debt levels can be significantly reduced by the sale of the investment properties in Western Australia.  Further, it was submitted on behalf of the wife that the proceeds of sale after discharge of the mortgages secured on those properties would be available to the parties to be applied to the mortgage on Suburb C.  There is much to commend those proposals.

28.There is no evidence of any demand from the bank with respect to the mortgage liabilities.  Counsel for the wife submitted that the position asserted by the husband was one of “an unfounded atmosphere of urgency”.  Given that the husband secured employment the day after he filed this application, and he seeks a sale of the home in which the children and the wife reside rather than the investment properties, there is force in that submission. 

29.The wife complains that the husband has failed to disclose current bank statements which would establish the true state of the parties’ financial position.  Further, the wife is critical of the husband in failing to disclose his approaches to the bank.  Exhibit R2 is copies of statements from the Adelaide Bank with respect to the home loans.  Those statements confirm that the repayments with respect to the home loans are up-to-date.  In short, the husband is servicing the liabilities secured over the Suburb C property.  In light of those matters, it is submitted on behalf of the wife that it would be premature to order a sale of the Suburb C property. 

30.The wife was critical of the husband insofar as he has continued to pay substantial sums to his lawyers to prosecute his applications before the Family Court.  In support of that submission she relied upon Exhibit R1 being copies of his Commonwealth Bank credit cards evidencing payments made by him to his lawyers for the period 24 November 2013 to 23 July 2014 inclusive.  In reply, counsel for the husband submitted that his client is entitled to conduct the litigation and there should not be criticism of the husband in engaging lawyers to represent him in these proceedings. 

31.The husband has been agitating for a sale of the Suburb C property since at least December 2013.  Annexed to his affidavit filed 21 July 2014 at annexure YR-01 to YR-07 is a chain of correspondence commencing on 16 December 2013 wherein the husband has sought the wife’s agreement to the sale of the Suburb C property.  It is evident from that correspondence that the husband has been asserting an inability to meet the mortgage repayments since that date.  Those assertions were made more than seven months prior to his recent change of employment.  Notwithstanding those assertions, the husband has continued to service the liabilities throughout that period.

32.During the submissions in reply made on behalf of the husband it was conceded through his counsel that the husband’s primary position would be for the sale of the Suburb C property and the investment properties.  An alternate position was put by the husband’s counsel, that being a sale of the investment properties in Western Australia.

33.In circumstances where:-

·There is significant uncertainty as to the husband’s income-earning capacity, given the recent change in his employment;

·There are no proposals as to where the wife and children are to be accommodated in the event of the sale of the Suburb C property and no evidence as to the costs of such accommodation;

·There is no evidence of any demand by the parties’ bank;

·It is conceded by the husband that the Western Australian properties may be sold and the sale of those properties will immediately reduce the parties’ debt and a pool of funds from which to service the remaining debts

I am satisfied that the husband’s application for the sale of the Suburb C property should be dismissed.

34.In dismissing that application I also have regard to the fact that the husband at a time when he says he is under significant financial pressure and is unable to service the parties’ liabilities has used funds which might otherwise have been applied to those liabilities to meet his legal fees. 

35.Given that the parties are united in their view that the investment properties in Western Australia should be sold I will make orders for the sale of those properties. 

36.Further, I am satisfied that it is appropriate that the husband continue to service the mortgage liabilities with respect to Suburb C and the WA properties.  There are already orders in place with respect to the WA properties.  Upon the sale of those properties pursuant to these orders the husband’s liabilities will be significantly reduced.  As noted herein, the reduction in the husband’s income is likely to be short-term and as his practice in Suburb J builds, his income will increase.  If required, the surplus from the sale proceeds of the WA properties may be applied to the mortgage on the Suburb C property.  The wife has conceded in her affidavit filed 28 August 2014 that this may occur. 

37.Accordingly, the orders I make are as follows:-

1.That forthwith the husband and the wife do all such acts and things as may be required to sell the properties situate at and known as 9 Einstein Way, G Town, Western Australia and K Street,, H Town, Western Australia (“the WA properties”) and the proceeds of the sales be applied as follows:-

(a)First to pay any costs, commissions and expenses of the sales;

(b)Second, to discharge the mortgage and any encumbrances affecting the WA properties;

(c)Third, the balance then remaining, if any, to be held on trust for the parties in an interest-bearing account until further order.

2.That there be liberty to apply with respect to the terms and conditions of the sales referred to in order 1 hereof.

3.That until further order the husband pay or cause to be paid the monthly mortgage repayments and outgoings as and when they fall due with respect to:-

(a)   The WA properties;

(b)  The property at B Street, Suburb C.

4.That should any party seek costs arising from these orders, such application be made by written submission and filed no later than 7 November 2014 with such submission being endorsed with the fact that it has been served on the other party, and any recipient of such submission have until 14 November 2014 to file and serve any response and such response to be endorsed with the fact it has been so served upon the other party and upon receipt of any such application for costs it or they be determined in Chambers.

5.That the husband’s Application in a Case filed 21 July 2014 and the wife’s Response to an Application in a Case filed 28 August 2014 be otherwise dismissed.

I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Johns delivered on 31 October 2014.

Associate:

Date:  31 October 2014