Stoney and Stoney

[2011] FamCA 620

FAMILY COURT OF AUSTRALIA

STONEY & STONEY [2011] FamCA 620

FAMILY LAW – Interim property and financial proceedings – Delivery up and sale of motor vehicles and other personal chattels – Order for payment of home mortgage

APPLICANT: Ms Stoney

RESPONDENT: Mr Stoney

FILE NUMBER: MLC 7569 of 2010

DATE DELIVERED: 28 July 2011

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Young J

HEARING DATE: 28 July 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: MR Wilson

SOLICITOR FOR THE APPLICANT: Clancy & Triado

COUNSEL FOR THE RESPONDENT: Mr Staindl

SOLICITOR FOR THE RESPONDENT: Adrian Abrahams Family Lawyers

ORDERS

IT IS ORDERED BY CONSENT

1. THAT within seven (7) days of this day the husband provide to the wife full and detailed descriptions of the following items and the accessories accompanying those items:

   (a)    the mini-digger;

   (b)    the motorcycle; and

   (c)    the truck.

2. THAT the husband sign all documents necessary to enable the agreed items to be sold forthwith upon a request in writing from the wife.

IT IS FURTHER ORDERED NOT BY CONSENT

1. THAT each party do all acts and things reasonably required to enable the wife to sell the motorcycle for as much as possible and not less than $2,700 gross selling price.

2. THAT the wife record, keep the husband advised of, and account to the husband for:

   (a)the sale of all assets of the company X Group and all other chattels agreed or ordered to be sold;

   (b)the monies received from such sales; and

   (c)the application or expenditure of such monies.

3. THAT the wife’s application in a case filed 15 June 2011 and the husband’s response filed 24 June 2011 and amended response filed 21 July 2011 be otherwise dismissed.

UPON THE FURTHER ORAL APPLICATIONS OF THE PARTIES

1. THAT each party do all acts and things reasonably required to sell the real property at Unit 2, F Street, E (“the sale property”) as soon as practicable (“the sale”):

   (a)at a reserve price of $480,000 or such other amount as the parties may agree in writing;

   (b)by a selling agent appointed as follows:

   (i)the husband nominate to the wife in writing within seven (7) days the names of three (3) selling agents;

   (ii)the wife within seven (7) days choose one of the selling agents nominated by the husband;

   and the selling agent chosen by the wife be appointed to act in the sale;

   (c)on a settlement term no longer than ninety (90) days from the date of sale; and

   (d)upon such other terms and conditions as may be agreed within fourteen (14) days of the making of this Order or in default of agreement within fourteen (14) days of the making of this Order upon the recommendation of the President for the time being of the Real Estate Institute of Victoria.

2. THAT the proceeds of the sale be applied in payment of the following items:

   (a)first, the costs and expenses of the sale;

   (b)secondly, the amount required to discharge the mortgage to the Y Bank in respect of the sale property;

   (c)thirdly, all of the debts of X Group (“the company”) as are then outstanding including money due to the wife’s parents by virtue of money advanced to meet debts of the company PROVIDED ALWAYS that:

   (i)no monies are to be paid to the wife’s parents until bank statements or other documentary proof of their advances are given to the husband; and

   (ii)the aggregate amount paid to the wife’s parents is not to exceed $10,000;

   (d)the balance then remaining be held in an interest-bearing deposit account in the names of the husband and the wife, or if they agree the Family Trust, pending further order of the court or agreement between the parties in writing.

3. THAT from the date of the settlement of the sale and until further order the net rental received in respect of Unit 1, F Street, E (“the rental property”) be paid and applied towards the mortgage payments due to the Z Bank in respect of the former matrimonial home at J Street, M.

4. THAT the hearing of the proceedings this day be transcribed and copies be placed upon the court file and be made available to each of the parties.

5. THAT this matter be listed for case management and further trial directions before Young J on 21 September 2011 at 10.00 a.m.

   IT IS CERTIFIED

6. 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 that publication of this judgment by this Court under the pseudonym Stoney & Stoney has been approved by the Chief Justice pursuant to s 121(9)(g) of the Act.

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER:  MLC 7569 of 2010

Ms Stoney

Applicant

And

Mr Stoney

Respondent

REASONS FOR JUDGMENT

1. The matter of Stoney is listed before me on interim matters.  Mr Wilson of Counsel appears for the applicant wife, Mr Staindl of Counsel for the respondent husband.  Both parties are in Court.  Instructing solicitors are also present in Court.  I have had submissions on many and varied issues throughout the day and I am delivering these ex tempore reasons at approximately 3.30 p.m. and without rising from the Bench.  I have raised with both Counsel in the presence of their client whether extensive reasons are required, and each of them have responded that the reasons can be concise and limited to the specific matters in issue.  Thus, I have determined to deliver reasons on this ex tempore basis rather than reserving and delivering a more detailed judgment over a course of several weeks.

2. The matter was last before me on 1 July 2011 and, on that day all extant applications were adjourned to this day.  There were specific orders made by the Court that day and they are yet to be engrossed.  That obligation falls upon the solicitor for the wife and it must be attended to within the next five working days. 

3. The application in a case before me today was filed 15 June 2011 on behalf of the wife.  What was sought was authority to sell various personal chattels and items of business equipment, including a high-performance motor vehicle.  In that application there was no order sought for the sale of any real property.  The wife’s application of that day was supported by an affidavit and considerable annexures thereto filed that same day.  Subsequently the wife has filed a further substantial affidavit and annexures on 29 June of this year and more recently filed on 25 July of this year a further affidavit responding to matters raised by the husband.  I have also been referred to and have read her financial statement filed 16 June 2010, although the financial circumstances therein have been updated by her counsel this day.

4. The husband’s response was filed 24 June 2011.  Subsequently an amended response was filed 21 July 2011.  It was in that document that the husband put in issue the sale of the matrimonial home situate at J Street, M, and for the proceeds of sale to be used to discharge various debts or otherwise to be invested in accordance with the orders sought therein. 

5. In that response the husband sought also the transfer of these proceedings to the Melbourne Registry of the Federal Magistrates Court of Australia.  Whilst with hindsight I was and am tempted to transfer this matter, that application was opposed by the wife.

6. The protocols existing between this Court and the Federal Magistrates Court are such that matters should not easily be transferred and, in this case, I am certainly not satisfied that the matter would be heard any earlier in the Federal Magistrates Court or that it is a matter of such simplicity, given the attitude and disposition of both parties, that the matter could or should be transferred down to that Court.  I will not make such a transfer order and had made that clear to counsel and parties in the course of the lengthy submissions this day.

7. In support of his response the husband had filed a financial statement on 30 August 2010 to which I have been referred.  More particularly, he has filed two substantial affidavits and annexures thereto, they being filed on 24 June 2011 and 21 July 2011.  I have read each of the affidavits and I have perused the substantial annexures thereto. 

8. When the proceedings were first outlined at 10.00 a.m. this morning the central argument focused upon the sale of the high-performance motor vehicle or otherwise upon the sale as sought by the husband of the former matrimonial home, which sale the wife wholly opposed.  There are a number of corporate or business assets identified in paragraph 1 of the wife’s application in a case, including a motorbike.  They were sought to be sold.  I have read the husband’s affidavit and it is clear that apart from the high performance motor vehicle, he at all times has agreed to the sale of the assets of the corporate group known as X Group.  In particular, paragraphs 12 and 22 of his affidavit of 24 June 2011 enshrines that position.  Accordingly, all of those items other than the motor vehicle to which he is so attached are now to be sold.  I will permit the husband to retain possession of that high-performance motor vehicle pending the defended hearing, and it is then to be brought to account.

9. I record that there is some continuing issue as to the valuation of that motor vehicle between a low of $20,000 and a high of $28,000.  The husband is solely responsible for the maintenance and upkeep of that vehicle and it must be in good order and repair and undamaged at any further hearing, lest he otherwise be responsible therefor.  There are already orders of the Court for the delivery up to the wife of those items, and I now incorporate within that earlier delivery order the motorbike, which is to be delivered up to and then sold by the wife.  It should be sold for as much as possible, and its agreed estimate price is $4,000.  It does seem reasonable that it is not to be sold for less than $2,700, which is almost a third of a discount to its current estimated price, and thus, that is the caveat to the sale of that motorbike, that is, realising a gross sale price of $2,700.

10. As to the primary application of the husband for the sale of the matrimonial home, I will not order the sale of that property at this time.  The wife and the two children, aged 19 years and 17 years respectively, presently live with her in that home, though I well understand the husband’s statement to be that the youngest child has returned to the home only to attend the nearby M School.  He asserts that child will depart the wife’s home as soon as VCE year is completed, and that may or may not be the case, but it is unnecessary for me to make any further judgment on that factual issue.  Of course, time will tell.  I intend to dismiss on an interim basis that order sought by the husband in his response for the sale of the home, but of course, it does remain exclusively an issue for any defended hearing as to what can and should become of that property in the defended hearing. 

11. The other order sought by the husband was for an account to him of the details of sale of the X Group and its assets.  I will require generally the wife to disclose the moneys received from the sale of assets, the reasonable costs of sale, and record that it is a matter which might attract the future scrutiny of the Court, should all sales not be bona fide for the best market value obtainable, though that is to be balanced against the likely difficult circumstances in selling and disposing of such assets, particularly as the wife has that task alone on her shoulders and without the assistance of the husband.

12. There was earlier legal argument and submissions about the husband’s effort to obtain borrowings from banks to finance his purchase and removal from the pool of assets of that high-performance motor vehicle.  An email was marked as exhibit “W1” in the proceedings, and it can be retained upon the court file.  However, ultimately, as I have indicated, I do not propose at this stage of these proceedings to sell that motor vehicle. 

13. Mr Wilson had assiduously prepared a summary of argument which helpfully set out the various personal and corporate items to be sold, including the motorcycle and the estimated sale price, both gross and net of GST.  It may or may not be that $75,546 will be realised, but all moneys so realised are to be directed towards the repayment of corporate debt of the X Group or otherwise to reduce agreed debts and liabilities of the parties, and if there be any surplus, it be held in a joint investment account for and on behalf of the parties pending further order of the Court.

14. During the course of the morning the Court floated the concept of some level of commercial practicality and the parties looking to borrow against their substantial real estate property assets moneys to discharge immediate corporate debt and other debts and/or maintain some lifestyle, including the ability to pay increasing legal fees and disbursements.  That invitation was not taken up by the parties.  Subsequently an issue arose as to what orders could or should be made in respect of the various real estate parcels owned by or on behalf of the parties.  I have already identified the former matrimonial home in which the wife continues to reside.  Its value is $1.5 million, and its title is encumbered by a mortgage of approximately $250,000.  The wife currently meets those required monthly interest instalments on that mortgage.

15. Otherwise, the parties’ corporate entity owns two units known as Unit 1 and 2, F Street, E.  I will hereafter refer to them as “Suburb E”.  Those units are worth approximately $900,000 or thereabouts, with Unit 2 being valued at $480,000 and Unit 1 $420,000 or slightly less.  Those units are encumbered by a mortgage to the Y Bank at $340,000 or thereabouts.  I was advised that the mortgage debt was $360,000 by one party and $320,000 by the other party, and I have merely averaged the debt.  Additionally, the other real estate assets within this marriage are the two other units at S Street, Suburb E, to which I will refer to as the “S Street” units.  The husband lives in one of those units.  Those units are encumbered by a debt to Z Bank of approximately $213,000 or thereabouts.  Those units are valued collectively at approximately $780,000.  There is no application before the Court to sell or otherwise deal with the S Street units. 

16. The application now before the Court is to sell one or both of the Suburb E units.  Over the lunch recess, Mr Wilson, on behalf of the wife, has prepared a minute of order seeking the sale of Unit 2 in that Suburb E complex at a reserve price of $480,000 on terms and conditions to be agreed or as determined by the president for the time being of the Real Estate Institute of Victoria.  On behalf of his client he sought that the proceeds of sale of that one only unit be applied in meeting the costs and expenses of sale and discharging the entirety of the Y Bank mortgage debt and interest costs or any penalties owing thereunder and otherwise paying the debt of the X Group of approximately $52,000 or thereabouts.  Any moneys then remaining was sought to be invested in an interest-bearing account on behalf of the parties pending further agreement or order of the Court.  On his application, Unit 1 was not to be sold.  It is tenanted, and the current rental is approximately $350 per week gross, and that is to be directed towards the repayment of the Z Bank mortgage interest and repayment on the matrimonial home in Suburb M.

17. Needless to say, the husband instructed his counsel to oppose the sale of one only unit, and by carefully prepared orders, Mr Staindl has sought the sale of both Units 1 and 2 at Suburb E.  Likewise, he has initially sought to apply the proceeds of sale to the costs and expenses of and related to the sale and to discharge the Y Bank mortgage debt.  Thereafter, he has sought in his handwritten orders now proposed in paragraphs 1(c), (d), (e) and (f) the balance of moneys being used to meet the debts of the X group to pay out the $250,000 mortgage secured on the Suburb M home or further to discharge the S Street mortgage debt and then to invest any balance of moneys.

18. The consequential orders sought related to the application of moneys arising from the sale of X assets to meet the debts of that entity, and that does seem agreed between the parties, at least in principle rather than in the detail and execution thereof.  There was an alternate draft proposal submitted on behalf of the husband which reactivated the option of borrowing moneys against the title of the matrimonial home to pay out personal and corporate debts, but I do not intend to make those orders.  They have not been argued at length before me, and that opportunity passed by this morning.  Clearly, there is no agreement, and I will not impose upon the parties a need to co-operate and borrow more moneys and increase more debt when there is opposition and when it is a fallback (alternative) position of the husband.

19. I intend to have each of the documents submitted to the Court marked respectively as exhibit “W3” and exhibit “H1”, and they are to be retained upon the court file.  Insofar as the husband’s document is concerned, his solicitor is to type the document in the exact form submitted and the typed copy thereof is to be placed upon the court file.  I have received submissions from both counsel as to the appropriateness of the sale of only one or otherwise of both Suburb E units.  I have been told and I accept that there would be costs of sale, and clearly, the costs of selling two units by way of market advertising, real estate agent fees and the like would be greater but not double than the sale of one only unit.

20. There is capital gains tax likely to be assessed and applicable on the profit made by the parties on their commercial investment in each of these Suburb E units.  That is understood and the issue is only the additional capital gains tax on the proposed further sale of Unit 1, should that occur.  I balance the estimated capital gains tax which the Court was advised could be up to $90,000 in a gross amount for both units, but that is always dependent upon the sale price, the costs and expenses of sale and the holding costs of the property over their entirety.

21. Mr Wilson’s client seeks to preserve Unit 1 so that it is an asset before the Court.  That does mean that the mortgage remains on the matrimonial home, and that has to be met from the rental received from Unit 1 at Suburb E or otherwise from the wife’s own resources or from other sources of income available to the parties.  The husband’s instructions to his Counsel and his submissions to Court are clear-cut in that it would simplify the financial circumstances of the parties, it would reduce debt and liability and it would be a more clean-cut commercial approach to sell both properties at the same time, pay out debt, both to the Y Bank on the Suburb E units and to Z Bank on the matrimonial home and other debt as available.  There is an acknowledgement by him of capital gains tax and costs and expenses of sale, but the effect of his submission was to say that it would, in any event, be incurred at some point in time, and he does not seek the specific distribution in specie to him of that other Suburb E unit. 

22. I have had various submissions of and incidental to the cost to the parties of the current interest.  There is somewhat of an umbrella as to the current financial circumstances, the real estate market, costs of sale and other financial circumstances that really are more appropriate for the parties to consider in detail but which nevertheless I have balanced and evaluated in determining the appropriate orders.

23. Whilst I was inclined to encourage the sale of an asset but not the matrimonial home, the real issue is simply the sale of one or both units at Suburb E.  There may be, in the long term, commercial and financial commonsense in selling both units, but these are interlocutory proceedings.  Generally, the approach of the Court is to exercise some caution and act as and where required and not unnecessarily deprive the parties of an asset, particularly a parcel of real estate.  On balance and with an understanding that there will be ongoing financial investigations and accountability by both parties to each other and to the Court in terms of the pool of assets, I intend to order only the sale of Unit 2.

1. That property, that is, Unit 2, F Street, E is to be sold as soon as practicable.  The reserve price is to be $480,000, but commonsense must apply, and if there is an offer near thereto and no other offer, then the parties must consider the advice of their selling agent and be flexible.  However, I do not order flexibility whilst I recommend that approach.  The selling agent can be appointed by mutual agreement within 14 days, or otherwise what I propose is the solicitors for the husband provide the names of three firms of real estate agents and the wife select from those three names the agent to sell the property.

2. Other terms and conditions are to be agreed or in default determined by an independent person who may be the President for the time being of the Real Estate Institute of Victoria.  Hopefully, the parties can at least agree on terms and conditions that might be required.  The sale must be unconditional, and settlement should not be extended beyond 90 days.  The proceeds of sale must be applied first in payment of all costs, commission and expenses of sale;  secondly, in discharge of the mortgage to the Y Bank, including any charges of the bank and thirdly, the group debts of the X Group are to be paid, though the first provision of money for the payment of those debts are to come from the sale of the commercial equipment and machinery.

3. There are to be no moneys paid to the wife’s parents unless and until proper written evidence or bank statements are provided as to their contributions, and in any event, they are not to exceed $10,000, given that the wife’s estimate through her counsel are that the current contributions are approximately $9,000.  I emphasise that the wife is to be held to account for any payments made in respect of the X Group, and they must stand scrutiny of the husband’s solicitors or of the Court.  If there is any balance of moneys remaining from the sale of Unit 2, as there should be, the moneys are to be invested in a joint investment account in the names of the husband and wife pending further order of the Court.

4. The parties are each to provide their tax file number and appropriate authorities to facilitate that investment, and they are to be responsible for declaring as income 50 per cent of the interest thereon unless otherwise agreed between each of them.  It may, for example, be practical if the husband has no meaningful income that he carries the interest income if no tax is payable by him and that may offset tax paid by the wife.  The emphasis is that declarations must be made to the Australian Taxation Office of interest income thereon. 

5. As to Unit 1, F Street, Suburb E, the rental of that unit is to be directed to payment of Z Bank mortgage payments and the liability in respect of the matrimonial home.  That order is to be made only until further order, and that is a matter that can be, of course, revisited by the Court on further material and at the defended hearing.

6. If I have not already made clear, the wife is to record and to account in writing for the sale of the X Group assets and the payment of liabilities made by her in that regard.  There should be no delay in communicating sales and the price at which items sold to the husband, though I emphasise the only reserve price I have established is on the motorcycle of $2,700. 

7. I was asked to order, and by consent, Counsel can incorporate within the orders the following:

   (1)That within seven days of this day, the husband provide to the wife full and detailed descriptions of the following items and the accessories accompanying those items:

   (a)the mini digger;

   (b)the motorcycle;  and

   (c)the truck.

   (2)The husband sign all documents necessary to enable the agreed items to be sold forthwith upon a request in writing from the wife.

8. Strictly that second order, whilst consented to by the parties, is somewhat unnecessary, as I am requiring the sale of the items, and in that regard, any helpful input of the husband is both expected and required to assist in the sale and maximising the moneys received on sale.  In summary, therefore, on the application in a case filed by the wife on 15 June 2011, that will be otherwise dismissed.  As to both the response of the husband of 24 June 2011 and the amended response of 21 July 2011, the orders sought therein will be otherwise dismissed.

9. Both parties in their respective applications sought order for costs of and incidental to the hearing this day.  My inclination is to make no orders for costs, as each of them had a substantial position to put to the Court.  I will, if requested, reserve for written submissions on documents of no more than three pages – that submission, as I have indicated the dismissal without hearing from counsel, though it is now past 4.15 p.m.  I emphasise I almost certainly will apply the principle of section 117 of the Family Law Act (1975) (Cth)in that each party pay his or her own costs of the proceedings, and on what I have heard and listened attentively to counsel, I would not likely be persuaded that it is just that I vary that principle of each party paying their own legal costs of this day.

I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Young delivered on 28 July 2011.

Associate:

Date:              28 July 2011