Samuel and Gray and Ors

[2012] FamCA 76

FAMILY COURT OF AUSTRALIA

SAMUEL & GRAY AND ORS [2012] FamCA 76

FAMILY LAW – PROPERTY - Interim property and financial hearing – Distribution of rental monies – Reservation of the characterisation of that payment – Leave to third respondent to withdraw from proceedings – Case management orders – Costs – Just for a costs order of and incidental of the hearing this day to be pronounced

APPLICANT: Ms Samuel

FIRST RESPONDENT: Mr J Gray and Another

SECOND RESPONDENT: Gray Investments Pty Ltd

FILE NUMBER: MLC 5770 of 2009

DATE DELIVERED: 8 February 2012

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Young J

HEARING DATE: 8 February 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Wilson

SOLICITOR FOR THE APPLICANT: Griffin Sweeney Lawyers

COUNSEL FOR THE FIRST RESPONDENT: Mr W Henwood

SOLICITOR FOR THE RESPONDENT: Zervos Lawyers

COUNSEL FOR THE SECOND

RESPONDENT:

SOLICITOR FOR THE SECOND RESPONDENT: In Person

Orders

IT IS ORDERED:

1. THAT leave be granted to the husband to make an oral application, by way of a response, that the orders sought by the wife in her application filed 6 February 2012 be dismissed.

2. THAT as a partial settlement of the property of the husband and wife paragraph 2 of the orders pronounced by consent by Cronin J on 20 October 2010 be varied so that the surplus of the rental income then remaining is to be divided:

   (a)         as to fifty per cent (50%) to Mr M Gray;

   (b)        as to twenty-five per cent (25%) to each of the husband and wife.

3. THAT Mr M Gray, in his capacity as trustee of the rental income received from the property at S, Victoria, Australia be requested to pay punctually to each of the husband and wife the sum of rental monies to which they are properly entitled to their nominated bank account or in the manner as requested by them, in writing, of him.

4. THAT within forty-five (45) days each of the husband and wife make, file and serve a detailed and updated Financial Statement.

5. THAT within thirty (30) days the wife’s solicitors make, file and serve an affidavit of the valuer jointly retained for the purposes of valuing the L Hotel in Greece.

6. THAT if the husband objects to the real property valuation then within a further thirty (30) days he file any application supported by proper affidavit and documentary evidence proposing any other adversarial valuation and the reasons for same, the cost and timetable thereof.

7. THAT otherwise the application in a case filed by the wife on 6 February 2012 be dismissed.

8. THAT the extempore reasons for judgment be transcribed, be placed upon the Court file and, when settled, be made available to all parties.

9. THAT all extant final applications be listed for case management and directions before Young J on Thursday 12 April 2012 at 10.00 a.m.

10. THAT the wife’s costs and disbursements of and incidental to the interim hearing this day be fixed in the sum of $3,300 and they be paid by the husband to the wife within sixty (60) days.

IT IS CERTIFIED

1. THAT pursuant to Rule 19.50 of the Family Law Rules this matter reasonably required the attendance of Counsel for each of the husband and wife.

IT IS NOTED

A.THAT the third respondent, now released from the proceedings, was in court throughout the hearing and the extempore judgment and he verbally indicated and demonstrated his acceptance to the court as to the form of the orders 2 and 3 hereof and communicated that he would act to apportion the rental payment due to the parties in accordance with these orders and that he does not require any other formal service of these orders upon him.

IT IS NOTED that publication of this judgment under the pseudonym Samuel & Gray and Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 5770 of 2009

Ms Samuel

Applicant

And

Mr J Gray

Respondent

And

Gray Investments Pty Ltd
Second Respondent

REASONS FOR JUDGMENT

1. The matter of Samuel & Gray and Ors is listed before me for an interim hearing.  Mr Wilson of Counsel appears for the wife who is applicant and Mr Henwood of Counsel appears for the husband who is not in Court but is a resident of Greece.  I have made orders earlier this day by consent giving leave to the third respondent, Mr M Gray the husband’s brother, to withdraw from the proceedings.  That order was made pursuant to an agreement by all parties which arose out of a mediation held late last year, which unsuccessfully sought to resolve all financial matters.

2. There is a second respondent in these proceedings, that is, the corporate entity Gray Investments Pty Ltd, and that company is the registered owner of the real property at S, Melbourne, Australia.  That property, as I am informed, has an agreed market value of approximately $4.9 million.  Its title is encumbered by a mortgage of appropriate $2 million to Bank 1 and thus, the equity in the property is $2.9 million or thereabouts.  That property is owned as to 50 per cent by the husband’s brother, the former third respondent, and otherwise as to the remaining 50 per cent by or on behalf of the husband and wife.

3. In the proceedings now before me, the wife filed on 6 February 2012 an application in her case, wherein she sought orders for the husband and the second respondent to do all acts and things to cause the second respondent, that is, the corporate property‑owning entity, to divide the rental income of the husband and wife, which equates to 50 per cent of the rental income of the entire property, equally as between each of them.  She sought the characterisation of that payment as either a partial settlement of property or division of rental income be reserved to the trial judge.  In discussions with Mr Wilson today her application was perhaps more practically stated to be an equal division of the net rent of the property at S that is due to the parties in this litigation and without, in any way, impacting upon the other half share of moneys which is rightly to be paid to the husband’s brother.

4. What the wife seeks is an order that the husband’s brother, as the trustee and recipient of the whole of the rental payment, pay 25 per cent of that net rent to the husband and 25 per cent to the wife.  Those orders are strongly opposed by Mr Henwood on behalf of the husband.  First, he sought leave to make an oral application for the dismissal of the wife’s application and that is not opposed, and leave is therefore granted to the husband’s counsel to make such an application on behalf of his client. 

5. Secondly, Mr Henwood argued that there should be no distribution of moneys to the wife whatsoever and in the alternative, if there were to be any distribution of the rental moneys, then the husband should receive a majority of those moneys, and therefore the wife a lesser sum.  It is common ground between the parties that the proceedings be dealt with on submissions and the case has proceeded on that basis.

6. The wife’s affidavit is filed 6 February 2012 and I have read that affidavit and evaluated the evidence therein.  By way of background these parties married in 1982 or thereabouts and lived together as man and wife for 13 years.  There is one adult child of the marriage.  A significant conflict does surround the factual circumstances of whether or not they lived in a permanent de facto relationship for some seven years leading up to the marriage, and that is a matter upon which I have heard no evidence and I make no finding in these interlocutory proceedings. 

7. The wife is 58 years of age.  She is in receipt of a Centrelink benefit, being a Newstart allowance, of $231 a week.  She has filed on 7 October 2010 a financial statement and that discloses her limited income and touches upon her expenses and other assets.  That document will have to be updated in due course and in preparation for trial.

8. I record that the husband’s financial statement was filed long ago and likewise is both out of date and unhelpful to the court and must be likewise updated.  I take this opportunity to emphasise to the parties that the documents require being affirmed or sworn by each of them and they must carefully and fully include all income, assets and liabilities in those documents.  That is an obligation imposed upon them by law and it will be treated seriously by the court in subsequent proceedings. 

9. Returning to the wife’s affidavit filed 6 February 2012 there is annexed to that document and marked as annexure “MS2” a letter dated 31 January 2012.  That letter is important, as it was the first written notification given to the husband’s solicitors on the record of these proceedings some six days after, her interlocutory application was filed.  The letter fairly identifies the issues that the husband was given notice of, in terms of fresh proceedings in this Court.

10. For the purposes of my evaluation of the evidence I proceed on the basis that the husband’s solicitor knew in very early February of this pending application, albeit the time that might have been taken for him then to contact his client and to obtain appropriate instructions.  In any event there is no adjournment application before the court this day.  As will be seen the husband’s solicitor has prepared an affidavit and I have granted leave for the filing of that document today, and I have read and evaluated its contents.  The wife’s affidavit deposes generally to the asset position of the parties with their ownership of the property at S and the ownership of a hotel in Greece, that is, the L Hotel.

11. I have been given from the Bar Table, but without objection, an understanding that a valuation was obtained from C Valuers of both the business and capital value of that Greek hotel property.  This was a joint valuation, whilst now it may be foreshadowed that the husband, through his solicitor, objects to the valuation therefore.  Mr Wilson advised the court that the business valuation of the hotel was 820,000 Euro.  Its capital valuation was approximately 3,480,000 Euro, however, on some form of overview, current market value perhaps, allowing for the current economic circumstances in Greece and currency and economic issues generally, the actual valuation on market was said estimated now to be 2,682,000 Euro.  For the purposes of these proceedings I do not determine any valuation issue.

12. I will direct the wife’s solicitors to forthwith make, file and serve an affidavit of value of that Greek hotel property.  If it is that the husband, for good reason, does not accept the jointly obtained valuation, then he will need to file an appropriate application with the court disputing value and seeking an adversarial valuation.  If so he will need to set out all appropriate details of the proposed valuer and the cost of valuation and how it would be funded and the timetable for obtaining any such valuation.  I underline that the valuation issue and more particularly the issue of any alternate or subsequent valuation was not argued before me and I make no finding whatsoever upon those issues, other than to record the obvious, and that is that the initial valuation was obtained jointly by the parties for the purposes of being the valuation in these proceedings.

13. The wife owns a property that she describes as “a modest flat”, and I have read paragraphs 8 and 9 of her affidavit in that regard.  Again, that is not a matter of significant importance to the interlocutory issue before me this day.  Annexed to the wife’s affidavit are monthly reconciliation statements of the income received from the property at S, and for the months of September, October, November and December of last year.  What is evident is that the half‑share of the income paid to the husband for and on behalf of the husband and wife has been approximately $3500 per calendar month.  There is no challenge before me as to the accuracy of those reconciliation statements and in any event their author is in court, he formally being the third respondent.

14. I also understand from his presence in court and from what has been said and indicated in the proceedings, that he is prepared to continue to manage the income received from the property at S, apportion to himself 50 per cent therefore, and otherwise apportion the balance as between the husband and wife as may be so ordered this day. 

15. The further affidavit the wife relies upon is that of her solicitor, Ms Griffin and that affidavit was likewise filed 6 February 2012.  I have read the affidavit which deposes to past, present and future legal costs, disbursements and outgoings of the wife.  There is said to be $48,000 outstanding by the wife in legal costs and disbursements inclusive of $28,000 in counsel fees.  I have carefully read paragraphs 6, 7 and 8 of that affidavit.

16. In opposition to the orders sought by the wife, I have read the affidavit of Mr Zervos filed by leave this day.  Those instructions were received by Mr Zervos only yesterday and the affidavit has been prepared overnight.  There is no challenge to the property ownership of the parties, nor to the rent, as the husband has clearly accepted the reconciliation statements of his brother and the husband has had the benefit of retaining all of those payments since earlier orders of this Court made 20 October 2010.

17. The submission of Mr Wilson, not opposed on an arithmetical basis by Mr Henwood, is that the husband over the past 15 months has received approximately $52,000 in rental distributions and otherwise has received by Court order an additional sum of $10,500.  I have read, and understand, what the husband says of the difficult financial and economic circumstances in Greece, as highlighted in paragraph 7(e) of his affidavit.  I make no determination on a final basis of any of those issues.

18. I do further understand the fact that the wife received $75,000 pursuant to an earlier order of this Court, to which I will shortly refer.  Again, Mr Henwood has highlighted the differential in legal fees, with the husband’s costs so far amounting to $66,000 or thereabouts and the wife’s costs being more than double that sum, that is, a total of $155,000 or thereabouts.  It is implied, if not said, on behalf of the husband that the wife’s legal costs, fees and disbursements are excessive and the Court should be careful not to ensure that those excessive costs are either accepted, validated or paid from moneys which the husband claims for himself.

19. Again, I am not hearing any costs issue or taxing costs and I make no further comment upon and certainly make no finding upon those issues raised by the husband’s counsel, though they are matters that I have carefully reflected upon in this extempore judgment and which are evaluated in the final orders that I will pronounce.  Otherwise I record I have carefully read Mr Zervos’ affidavits and the matters and facts therein have been supported by counsel for the husband in submissions this day.

20. I need only briefly turn to past orders of this Court.  The matter was before me on 3 September 2009, when different counsel then appeared.  By consent, in paragraph 10 thereof, I ordered a payment of $75,000 to be made by the husband to the wife’s solicitors and reserved to the trial judge the characterisation thereof as to be either a partial property and/or maintenance and/or costs payment.  I have read the notations to the order, inclusive of notation B which highlights that any subsequent application for security for costs must have regard to the $75,000 sum earlier paid.  That I have done.

21. On 16 September 2010, the matter again came before me, and I have both read my orders and the extempore reasons for judgment delivered that day.  It was on that day, pursuant to order 5(i) that $10,500 was paid to the husband’s solicitors and other substantial expenses were paid as are identified thereafter in that paragraph.  Paragraph 6 of those orders dealt with certain payments of costs and valuation fees, and there were further costs of the proceedings that day that were all before the Court and subsequently were the subject of orders made, and I am advised this day that the husband has paid or caused to be paid all costs orders, totalling $12,445, made in favour of the wife.

22. Subsequently, the matter came before Cronin J on 20 October 2010.  Counsel highlighted that there is an error on the face of the order in that Mr Mort of Counsel, then appeared for the third respondent, that is, the husband’s brother, and Mr Clark of Counsel, had actually then appeared for the husband.  That error should be rectified and the parties are at liberty to reproduce orders pursuant to the slip rule and submit them to Cronin J if that matter is to be pursued.

23. The significance in the orders made by his Honour were that they were made by consent and they apportioned the income from the property at S net of all GST, land tax, rates and outgoing.  That surplus was, by Court order, to be divided between the husband and his brother equally as a distribution from the corporate trust which owns the property through its trustee.  It is, therefore, that particular order, paragraph 2, that is the subject of challenge by the wife’s application, and what effectively is sought is that the moneys then ordered to be paid to the husband be now equally paid to the husband and wife, but not in any way to touch upon the income of the husband’s brother.

24. Mr Wilson’s submission is simply that it is appropriate that these interlocutory proceedings be heard and dealt with on this preliminary point and not to await any final defended section 79 proceedings.  His submission is that it is just and equitable for the income of the husband and wife from the property at S to be equally divided from the month of February onwards and for the husband’s brother, as the effective trustee of that income, to be requested to follow the Court order in the payment of such moneys.

25. The husband’s Counsel, as I earlier identified, opposed that application, sought a retention of the existing order or otherwise sought an unequal distribution of moneys in favour of the husband.  They are the issues that I now consider.  I should add the additional submission of Mr Henwood focused upon the fact that his client lives in Greece and will have costs and expenses peculiar to him in the cost of travel to and from Australia for these proceedings.  It was asserted that that is an additional factor in support of the unequal distribution of moneys to the husband.

26. There has been no challenge before me as to the jurisdiction of the Court to make an interim property order.  I referred both parties to the decision of Strahan & Strahan (2011) FLC 93-466. I have not received any legal submissions from the parties, but I record that I have now re-read, as I sit on the Bench, the relevant portions of that Full Court judgment, and in particular, I highlight paragraphs 208-228 (inclusive) thereof.

27. I record the first step for the Court now must be to identify circumstances that make it appropriate to give consideration to its exercising of powers to make an interim order.  This I have done, and for all of the reasons identified, it is appropriate that I pronounce an interim order this day.  I have particularly had regard to the financial circumstances of the wife, her Centrelink income, her current form of accommodation, and the matters highlighted in her somewhat out-of-date financial statement.

28. In contrast, the husband’s income paid from the property at S is significant, though he likely has also considerable expenses.  His financial statement is wholly out of date and somewhat unhelpful in that regard.  Both parties have substantial legal expenses, the wife, far greater than the husband.  If necessary, all of these matters can be adjusted in the final defended hearing to which this matter is somewhat crawling towards one day. 

29. The interests of justice determine that this matter be heard separately from any final hearing and that is a just and equitable outcome.  The issue then is what is an appropriate order to make with the available rental moneys, the financial needs of each of the husband and wife, the costs of the proceedings, the matters raised by the husband in his affidavit, and generally the moneys already received by each of them.

1. I intend to divide equally the rental income from the property at S that is properly payable to the husband and wife, so that each of them receive a half of that sum.  That is, the husband and wife will each receive 25 per cent of the net rental income of the property at S, and I will order on the basis of requesting the husband’s brother to forthwith, and inclusive of the month of February, make that adjustment.  I emphasise that such a decision is interlocutory and in no way will it impact the division of property in the section 79 proceedings.  That was a matter highlighted by Mr Henwood in his submissions and I very carefully separate this interim division of rental moneys from any final property proceedings. 

2. I will have these ex tempore reasons for judgment transcribed, placed upon the court file, and when they are settled, they will then be released to all parties. 

costs

1. Subsequent to the delivery of the ex tempore reasons for judgment, I have now a costs application made by Mr Wilson of counsel on behalf of the wife.  What was sought was a sum of $4000 or alternatively, a sum of $3300 which came about as being the quantum of the costs order last ordered by Cronin J when the matter was before him.  All orders for costs were strongly opposed by counsel for the husband. 

2. Section 117 of the Family Law Act 1975 (Cth) records that each party pay his or her own costs, save in circumstances where, pursuant to sub-paragraph (2) thereof, the Court determines that it is just for a costs order to be made. How that determination is made is pursuant to an evaluation of the factors prescribed in subsection (2A) thereof.

3. Neither party is legally aided.  I am generally aware of the financial circumstances of the parties from their somewhat out of date financial statements as updated by their affidavits this day.  The conduct of the proceedings was well‑managed by counsel for both parties and notwithstanding the short notice, Mr Zervos was able to obtain instructions and file an affidavit himself.  There was no adjournment application.  I will not repeat the many and varied matters and facts that I have covered in my ex tempore judgment, but ultimately, the wife was wholly successful.  It is upon a combination of that fact, the available financial circumstances of the parties, generally the conduct of the proceedings and doing what is just that I have determined that a costs order be made.  I find that it is just for a costs order to be pronounced.

4. I have fixed the quantum of costs at $3300 and will provide a stay for a period of 60 days for the payment to be satisfied in full.  I have otherwise adjourned these proceedings for case management before me and they will come back before me shortly after the deadline for the payment of costs, so I will be well and truly able to ascertain the husband’s compliance with this order.  If necessary, the costs can be paid by way of the husband’s brother withholding that sum from each of the two forthcoming rental payments and paying those moneys to the wife’s solicitor in discharge of this order.  That, however, is not a matter that I have specifically ordered.  It is more a practical way of dealing with the issues.

5. These additional ex tempore reasons can also be transcribed, placed upon the Court file and will be consolidated with and at the conclusion of the earlier ex tempore judgment. 

6. The third respondent, now released from the proceedings, was in court throughout the hearing and the ex tempore judgment, and he verbally indicated and demonstrated his acceptance to the Court of the form of the orders and that he would act to apportion the rental payment due to the parties in accordance with these orders, and does not require any other formal service of these orders upon him. 

I certify that the preceding Thirty Seven
(37 ) paragraphs are a true copy of the reasons
for judgment of the Honourable Justice Young
delivered on 8 February 2012.

Associate: ……………………………………………………………

Date:  …………………………………………………………………