READ & FRY

[2015] FamCA 525

FAMILY COURT OF AUSTRALIA

READ & FRY [2015] FamCA 525

FAMILY LAW – PROPERTY – Where during the trial it is established that further evidence needs to be brought before the Court including evidence in relation to a third party’s interest in real property that forms part of the property pool – trial adjourned part heard.

Family Law Act 1975 (Cth)

APPLICANT: Ms Read

RESPONDENT: Mr Fry

FILE NUMBER: BRC 2772 of 2011

DATE DELIVERED: 24 June 2015

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Forrest J

HEARING DATE: 24 June 2015

REPRESENTATION

THE APPLICANT: In Person

THE RESPONDENT: In Person

COUNSEL FOR THIRD PARTY:

Mr Guest of Counsel

appearing for Mr C

Orders

1. That the matter be adjourned part-heard for mention before his Honour Justice Forrest at 10.30am on Monday, 17 August 2015.

2. That until further order, the respondent shall continue to pay or cause to be paid the monthly principal and interest repayments with respect to the debt to Citibank described as the first mortgage debt secured by mortgage over the parties’ American property, such payments to be made as and when they fall due.

3. That until further order, the respondent shall continue to make payments against the debt described as a revolving line of credit owed to Citibank, also described as the second mortgage debt secured by second mortgage over the parties’ American property, so as to ensure that the revolving line of credit remains completely within its terms, and namely does not exceed its limit.

4. That on or before 7 August 2015 the respondent shall file and serve on the applicant an affidavit to which he annexes the following documents:

   (i)Statements from Citibank on the first mortgage loan account for the period from 1 January 2015 to the date of filing his affidavit;

   (ii)Statements from Citibank on the revolving line of credit second mortgage loan account for the period 1 January 2015 to the date of filing his affidavit;

   (iii)Statements from BBT Bank on the BBT bank loan that the respondent has personally guaranteed, that is listed as no. 24 on the Balance Sheet that he filed in these proceedings on 18 June 2015, for the period 1 January 2015 to the date of the filing of his affidavit;

   (iv)All credit card statements on all of his personal credit cards for the period 1 January 2015 to the date of the filing of his affidavit;

   (v)Statements from Fifth Third Bank on the loan described as the Reunion loan listed as no. 21 in the said Balance Sheet for the period 1 January 2015 to the date of the filing of his affidavit;

   (vi)Documents verifying the mortgagee sale of real property in Florida that was registered in the name of Reunion Ventures LLC that also reveal the amount realised on the sale and what happened to the sale proceeds.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Read & Fry 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 BRISBANE

FILE NUMBER: BRC 2772 of 2011

Ms Read

Applicant

And

Mr Fry

Respondent

EX TEMPORE

REASONS FOR JUDGMENT

1. Contested proceedings for property adjustment orders pursuant to s 79 of the Family Law Act 1975 (Cth) (“Family Law Act”) between the applicant, Ms Read, and the respondent, Mr Fry, who were once married, have been pending in the Courts that have jurisdiction under the Family Law Act since they were commenced by the applicant in 2011. At some stage, the exact date not now relevant, the matter was transferred by a Judge of the Federal Circuit Court (although I think at the time it may have been the Federal Magistrates Court) to this Court. 

2. In 2014, the matter was ready for trial and it was listed later in that year for hearing by Justice Bell (now retired) at the commencement of last year.  February 6^th I understand was the date it was listed for the first day of the trial.  On that day, Justice Bell was persuaded to adjourn the trial.  He was satisfied, apparently, that there were serious issues in respect of disclosure as between the parties that had not been complied with as previously ordered and directed. 

3. No doubt due to Justice Bell’s subsequent unfortunate illness and the absence from the list of trial judges available to hear trials through the rest of 2014, the matter was not again listed for trial until sometime this year, 2015. It was listed for trial before me over two days on 5 and 6 May 2015. Just prior to the listed hearing dates I undertook a pre-trial mention where I checked with the parties the readiness of the matter for trial. 

4. On that occasion I was told by the husband who was appearing by telephone, that he was in Cambodia and, for reasons again not relevant to go into at this point, he was unable to be able to get to Brisbane for the commencement of the trial on the dates that were given. At the time he persuaded me that the matter should be adjourned because of his inability to get here and it was adjourned by me to be heard over two days on Monday 22 and Tuesday 23 June, yesterday and the day before. 

5. Both of the parties in the case are not legally represented. Earlier in the proceedings when they were commenced, each of the parties was represented by solicitors and at times as I understand the respondent was represented by counsel as well as solicitors. At some point in the past whilst the matter has been pending and awaiting trial, the legal representation of the parties ceased and each has found themself in a position of being without legal representation.  That of course is quite relevant to what has now transpired at the end of this hearing.

6. I commenced the trial on Monday morning at 10.00 am with each party representing himself and herself. I have to say the case each presents to the Court, with all due respect to each of them, in many respects has not been presented as well as it might have been had they been competently legally represented. Suffice to say that there is a substantial amount of dispute between the parties as to many of the relevant factual circumstances and what can best be described as insufficient or inappropriate attention has been provided to a number of matters in respect of each of them proving or disproving the various facts that they assert exist or did not exist that one could attribute to the lack of legal representation and their lack of legal training and experience. 

7. Included in the many areas of factual dispute is the difference between them as to the value of many of the items of property. After two days of trial, which included lengthy cross-examination of the applicant by the respondent and of the respondent by the applicant, such cross-examination that did not quite finish at the time at which I determined that the matter cannot now be concluded at this particular time, I became aware of an issue that bears critically upon the ultimate determination of property adjustment orders as between these two parties and in particular determination as required by statute of the Court’s satisfaction that any such orders that are made are in all the circumstances are just and equitable. 

8. It became critically clear to me that the only real properties in which the parties or either of them have interest in Australia are three pieces of real property in the town of B in south-east Queensland that are currently registered in the name of the respondent and that the respondent’s interest in those pieces of real property are encumbered and subject to registered mortgages in favour of a man who is a solicitor in Brisbane, Mr C. 

9. There was reference in affidavit material to Mr C and I have read his name and understood his involvement in relevant factual matters between these parties in past times. Indeed, a reading of the affidavit material, particularly of the applicant, includes evidence that Mr C at one point had mortgages over the three properties and that in 2011 he commenced proceedings in the Supreme Court of Queensland against the respondent in respect of those mortgages. What was not clear on the face of the affidavit evidence before me was exactly what has happened in respect of those proceedings and in the evidence in chief of the respondent, I could see nothing said by him in respect to the mortgages in favour of Mr C. 

10. At the end of day two of the trial, at my own determination, I called for the tender into evidence of any title searches that were available in respect of the three properties. No such title searches were in evidence at that particular time.  The applicant produced title searches undertaken by her some time last year which were about a year old which revealed at least at that stage Mr C still had mortgages registered over the three properties.

11. When I asked each of the parties and particularly the respondent about those mortgages and the liabilities that they secure and the proceedings in the Supreme Court commenced by Mr C against him the respondent was unable to offer much in the way of evidence of any assistance in determining exactly where those matters are at or as to what quantum of debt may exist in respect of those mortgages. 

12. In the evidence adduced in affidavit form and annexures attached thereto by the applicant, there was reference to the mortgage securing an original debt of some $170,000 said to be owed by the respondent to Mr C in respect to outstanding legal fees and also some reference to some $180,000 in interest thereon. 

13. Right at the end of day two when the trial was only set for two days, when it became clear that the matter would not conclude in two days and would have to be adjourned part heard over to this morning, I indicated to the parties that I was very troubled about the circumstances then presenting by the evidence in particular the evidence that suggested that Mr C still had a secured interest in the B Town properties. 

14. At the same time, my concerns were made more acute by the fact that each of the parties, although they do not agree exactly about this, says that the three properties at B Town are only worth something like $270,000 – $285,000 in total.  I took the unusual step of informing the parties that I considered that Mr C should be notified about the proceedings and asked to attend the Court this morning if he possibly could. I asked the applicant if she would take steps this morning to inform Mr C of that and pass on my request. 

15. Considering it further when I went back to my chambers at the end of the day, I took the further unusual step of directing my Associate to ring Mr C’s offices and pass onto him my request for him to appear or to have someone appear on his behalf at 10.00 o’clock this morning. Unable to speak directly to Mr C my Associate was then directed by me to send an email to Mr C’s email address that she was able to locate on the internet. I can confirm that I had absolutely no conversation myself or any direct email communication myself with Mr C. Indeed, my Associate informed me that she was not sure whether or not Mr C had received either the message that was sent by telephone through someone at his firm or the email that she sent to the email address that she located on the internet, because there had been no reply received from him to her indicating that he had received and understood the message and would be attending. 

16. At 10.00 o’clock this morning I reconvened the part-heard matter to receive at that time an appearance by Mr Guest of Counsel instructed by C Lawyers, representing Mr C. I outlined to Mr Guest my concerns and asked him whether he had instructions or was able to get instructions from Mr C in respect of the current status of his claim in respect of the mortgage and ultimately the current status of the proceedings that he commenced against the respondent in the Supreme Court of Queensland. 

17. The matter was stood down for some time to obtain instructions. Ultimately, the Court was informed by Mr Guest that Mr C maintains a claim that the respondent is indebted to him for an amount now in respect of the principal of legal fees owed and interest accrued thereon, of around $1 million and that he maintains that such debt is secured by the mortgages that he has over the three properties at B Town and he intends to seek to enforce it. 

18. Mr Guest confirmed that Mr C’s action in the Supreme Court commenced in 2011 was an action against the respondent to seek to exercise the power of sale in respect of those three mortgages to recover at least some of that debt that he is said to be owed from the sale of the properties. Mr Guest showed the Court a copy of an order by Justice Ann Lyons, a Judge of the Supreme Court, dated 30 August 2012, which Mr Guest told the court was the last order made in the Supreme Court proceedings. It was a procedural order setting out a number of steps that had to be taken by the parties in respect of progressing that matter further. 

19. There is however, evidence attached to the applicant’s affidavit material which is page 462 of her annexures AR-13 which is a copy of a Queensland Court’s file summary from the file 5648/2011 [C v Fry & Ors], which shows that a further application for directions was filed by Mr C on 10 October 2012. That suggests that Mr C went back to the court, at least on that occasion, seeking some further directions and Mr Guest was unable to enlighten me any further in respect to what happened. Similarly the respondent was unable to tell me anything more about the matter. 

20. Satisfied that I simply cannot proceed in these proceedings to determine property adjustment orders as between the applicant and the respondent that are just and equitable in circumstances where there is an outstanding issue of an alleged liability to a third party creditor, which is secured by mortgages over the only three real properties of the parties or either of them in Australia, I have determined that I cannot proceed to finish the trial or to make and determine just and equitable orders finalising property adjustment proceedings between the parties at this point in time without knowing more about the liability that Mr C claims is owed to him by one of the parties in this case. 

21. Mr Guest accepted that position that the Court had arrived at and argued nothing to the contrary. More importantly, the two parties in the case, the applicant and the respondent, did the same. I spoke at length, particularly bearing in mind that both parties in the case are unrepresented, about what their options in respect of the substantive law and procedural law might be, such as the respondent’s further involvement in the Supreme Court or otherwise, such as whether Mr C should be joined as a party in these proceedings or otherwise. 

22. Ultimately, I determined that the most appropriate course is to adjourn the matter part-heard for a further mention on a date in about four weeks’ time at which time both of the parties and Mr C will have had the advantage of taking legal advice, considering their position and then making submissions to the Court in respect of the appropriate way forward. 

23. As I said to Mr Guest, one of the matters that I am minded to consider on that further date is whether or not I determine to join Mr C to these proceedings, whether he likes it or not. Accordingly I made the order that it be adjourned to 10.30 am on Monday, 17 August 2015 for further mention on that day. 

24. Having made it clear to the parties that that is what I intended to do and excusing Mr Guest from remaining in court, whereupon he left, I then raised with the parties some other concerns I had and indeed directed the respondent to go back into the witness box and give some further evidence under oath.

25. Not only is there real property of the parties or either of them in Australia, but there is a residential property situated in the United States of America that is registered in the joint names of the applicant and the respondent that was purchased in 2004 after they married. 

26. That property is again the subject of some disagreement as to its value but ultimately there was evidence before me that a registered valuer/appraiser in America has valued the property at something around USD$290,000 without a permit in its current state where it is needing a permit from the local county in respect of some work that has been done or if the works done and the permit obtained, something like USD$320,000. 

27. There is some disagreement between the parties as to how much the cost of obtaining such a permit might actually be. That remains a matter I have to determine. However the evidence is that there is a first mortgage in favour of Citibank or City Mortgage for a sum of around USD$21,600 which is being repaid on a monthly principal and interest instalment basis of $1,845.45. 

28. As I pointed out to the parties during the course of hearing that evidence, if the principal debt is only USD$21,600 the interest on that is likely to only be a few hundred dollars a month and the repayment of principal and interest at $1,845 per month is likely to see that mortgage debt discharged in the relatively not too distant future. The evidence is clear that the respondent is paying or at least causing that mortgage to be paid by the business entity that he is involved with that is also a central aspect of the factual dispute in this case. 

29. There is a second mortgage over that property as well which is for a higher amount. The evidence is that the parties obtained a revolving line of credit from Citibank, secured by a second mortgage with a limit of USD$80,000 on it.  The respondent tells the Court that debt was as at 18 June 2015, USD$80,120 and, as a revolving line of credit, interest is simply capitalised on the amount owing each month and where the amount exceeds the debt of USD$80,000 a payment would be required to be made by the debtor that would bring it back below USD$80,000. It seems that it is slightly over the limit at the moment but the respondent told the Court under oath that he, despite it being difficult, has been keeping it at around the limit until now. 

30. Concerned that on a property worth something like USD$300,000 that secures debt of around USD$100,000 that the equity is therefore limited to around USD$200,000, and bearing in mind the prospect that having regard to Mr C’s interest in the mortgage registered on the B Town properties, that the only real property that might be left at the end of the proceedings to be adjusted between the parties is this American house and the equity in it, and being concerned on an interim basis that that equity be preserved for the determination at the end of the day as between the parties of what their just and equitable property adjustment should be, I raised of my own volition with the parties, particularly because they are both unrepresented, the prospect of an interim order being made requiring the respondent to meet those repayments as and when they fall due until further order. 

31. I am very pleased to say and acknowledge in these reasons that the respondent indicated straight out to the Court that he is quite prepared to keep making payments as and when they fall due as he must. I understood that to mean that he understands his obligations to the bank and does not want to lose that property as that would be what happened if he stopped. 

32. In those circumstances, although he did not indicate to me that he consented to such orders, I am quite satisfied that for property preservation purposes in a case where at the end of the day there might be no other property in any real form against which property adjustment orders can be made in favour of the applicant if she is able to persuade the Court that just and equitable property orders in her favour should be made, that an injunction or an order requiring the respondent to make the repayments until further order is necessary. 

33. I indicated briefly early in these reasons that disclosure between these parties has been a serious point of contention. Both parties came to this trial with the view and remain of the view that the other party has not properly disclosed throughout the proceedings. I am really not in a position to make any findings at this stage in respect of that save to say that I have seen no documents put into evidence before me about the mortgages on the American property to show exactly how much is owing on that property on those mortgage liabilities or anything at all about how much is being paid on them in recent times or where that money might have come from, etc. 

1. There is also some concern about the existence or otherwise of another debt that the husband asserts is owed by the parties in respect of a company that was called Reunion and the concern arises because again no documents have been adduced into evidence or produced by the respondent to the Court at least that corroborate or support his assertions about the extent of debt in respect of that loan.  Similarly there is a BBT Bank loan but I see no evidence of it. 

2. I intend to make some orders in respect of that matter. I will not simply order that the respondent disclose to the wife those things, but rather I will be ordering that he file an affidavit in these proceedings to which he attaches such documents and that he does that before the matter comes back before me in August.

3. I make these Orders.

I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Forrest delivered on 24 June 2015.

Associate:

Date:  8 July 2015