Tanner & Tanner

[2021] FamCA 450

FAMILY COURT OF AUSTRALIA

Tanner & Tanner [2021] FamCA 450

File number(s):	PAC6053 of 2020
Judgment of:	HANNAM J
Date of judgment:	1 July 2021
Catchwords:	FAMILY LAW – PROPERTY – Interim Property – Where the wife seeks orders that she be appointed trustee for the sale of the family home – Where the wife seeks orders that the proceeds of sale be used to discharge two mortgages – Where the husband opposes such orders – Where the husband violently attacked the parties’ daughter – Where the husband is currently incarcerated – Where final separation occurred due to this incident - Where the husband seeks the home be sold at some later time – Where the husband seeks orders that proceeds of sale of investment properties be used to pay off credit card debts in his sole name – Where husbands application is dismissed – Where proper that the wife be appointed trustee for sale of the family home - Where orders made as to sale of family home
Legislation:	Family Law Act 1975 (Cth) s 114
Number of paragraphs:	54
Date of hearing:	17 December 2020
Place:	Parramatta
Solicitor for the Applicant:	Lewarne & Goldsmith
Solicitor for the Respondent:	Kalpaxis Legal Pty Ltd

ORDERS

PAC 6053 of 2020

BETWEEN:

MS TANNER

Applicant

AND:

MR TANNER

Respondent

ORDER MADE BY:	HANNAM J
DATE OF ORDER:	30 JUNE 2021

THE COURT ORDERS THAT:

1.The applicant wife be appointed as trustee for sale to sell at the best price reasonably available the property situate and known as B Street, C Town (“the former matrimonial home”) and for this purpose the said property shall vest in the wife.

2.For the purpose of the sale referred to in Order 1, the Applicant wife is to undertake any required rectification works to prepare the property for sale including repairs and rectification of fencing to the swimming pool to enable the pool to become compliant, removal of any rubbish or items left in the yard or garage after the husband has collected his cars, tools and parts, lawn mowing and garden maintenance including slashing.

3.For the purpose of the required work the cost of same to be paid from the Lewarne & Goldsmith Solicitors trust account from the sale of the investment properties.  If there are no funds or insufficient funds at the time of any invoice the wife is to pay the required cost at first instance and the wife to be reimbursed the cost of such work when funds become available in Lewarne & Goldsmith Solicitors trust account.

4.Upon settlement of the sale of the former matrimonial home the sale proceeds to be dispersed as follows:

(a)Payment of agent’s fees and legal fees of the sale.

(b)Payment of outstanding council and water rates.

(c)To discharge the following mortgages secured against the former matrimonial home being loan account numbers

(i)…72; and

(ii)…47

(d)The balance thereafter to be deposited into Lewarne & Goldsmith Solicitors trust account pending further order.

Note:   The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

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

REASONS FOR JUDGMENT

HANNAM J

INTRODUCTION

1. The parties (“the wife” and “the husband”) are engaged in proceedings for a settlement of their property interests following the breakdown of their 35 year marriage.

2. Final separation occurred in August 2020 after a dramatic incident in which it is alleged that the husband physically attacked the parties’ daughter, causing her to suffer serious injuries. The husband was charged following the incident and at the time of hearing this application was incarcerated, as a result of bail being refused.

3. In this application the wife seeks an order that she be appointed trustee for sale of the family home and for orders with respect to preparing that property for sale and in relation to distribution of the proceeds of sale. She had also sought other orders including that she be appointed as trustee for the sale of properties located in another state. Agreement was reached in relation to this matter on the date of the hearing and orders made with the consent of the parties to give effect to that agreement. Further orders for the sale of other properties had also initially been sought but were not pressed at the interim hearing.   

4. The husband opposes the only orders which were pressed by the wife at the hearing in relation to the sale of the family home and distribution of sale proceeds and seeks an order himself in relation to using the balance of proceeds of sale of the properties located in another state.  

5. The question for me to determine is whether it is proper to make the orders as sought by the wife.

   BACKGROUND

6. The husband who is 63 and the wife who is 60 were married in 1985 and so far as I understand it, began living together at that time. 

7. The only asset of any value that either party brought to the marriage was a block of land owned by the husband in his sole name subject to a mortgage, though the equity held in that land at the time is unknown.  The parties subsequently took out a loan together and built a house on that land and it became the family home for a period of about 20 years.  They subsequently purchased a neighbouring block of land and later sold both pieces of property to purchase the family home (“the family home”) in 2006.  The parties borrowed $500,000 for the purpose of that purchase most of which ($492,800 rounded) is still outstanding.

8. In the course of their marriage the parties also acquired four interstate investment properties (“the interstate investment properties”). At the time of the hearing these properties were heavily encumbered and the parties reached agreement that it was appropriate for them to be sold. Orders were made to reflect this agreement on the day of the hearing.

9. The parties’ have two daughters who are now adults (“the daughter” and “the younger daughter”). 

10. The wife worked fulltime throughout the entirety of the marriage, taking only short periods off work associated with the birth of the two children. 

11. During the course of the parties’ marriage the husband worked as a tradesman and later worked in various businesses and was unemployed for some time. He later conducted a business (“the business”) from around 2009 and for these purposes initially leased premises near the parties’ home.

12. In 2018 the parties established a self-managed superannuation fund (“the SMSF”) which purchased four shops, including the premises from which the husband conducted the business (“the SMSF shop complex”).  After this purchase the SMSF continued to lease one of the shops to the husband for the purposes of the business (“the business premises”). 

13. Significant debt was accrued by the husband in the conduct of the business including monies owed to suppliers, to staff for wages, to the Australian Taxation Office and on various credit cards.  The indebtedness in the business also caused significant discord in the parties’ marriage.

14. When the parties were on holidays overseas in August 2018 the daughter came from interstate where she was living at the request of the parties to assist the husband in the running of the business.

15. The husband suffered various difficulties with his physical and mental health at around this time and was hospitalised overseas for six days.

16. When the parties returned from overseas the daughter and the husband agreed that due to the indebtedness in the business and the husband’s poor health the daughter would take on the role of running the business, with a view to returning permanently in January 2019 to take over ownership of it after she had settled her home and business affairs interstate. The husband effectively played no further role in the business after this date.

17. The daughter and her partner moved to live with the parties in the family home in January 2019. There was an agreement that the daughter was to become the owner of the business and would pay for that purchase by assuming liability for the debts accrued by the business and through making all necessary payments for various loans. 

18. It is the wife’s contention that by the end of 2019 the daughter had made significant inroads in reducing the indebtedness of the business, including having paid half of the ATO debt and credit card debts.  Although it is not entirely clear, it appears from the husband’s affidavit that he may dispute the wife’s contentions in this regard. 

19. In December 2019 the husband made a complaint to police about the daughter’s involvement in the business, alleging that she had been fraudulent and had engaged in embezzlement.  The wife was aware in advance that the husband was to make these complaints about the daughter and attempted unsuccessfully to dissuade him from doing so.

20. During the Christmas/New Year period in 2019 to 2020 the husband also attempted to take over control of his business and apparently took some steps in this regard such as changing the password for the business bank accounts. 

21. In February 2020 the husband made contact with police again in relation to his allegations of fraudulent conduct by the daughter with respect to his business.  Given the tension that had developed between the husband and the daughter, which the wife describes as “volatile and toxic”, the daughter moved out of the family home in February 2020. 

22. Notwithstanding the husband’s attempts to regain control over his business and allegations made to police, on 1 March 2020 a lease was entered into between the daughter and the SMSF for the premises from which the business was conducted and it appears that the daughter continued to conduct this business on her own account without the involvement of the husband.

23. In about May 2020 the wife and the parties’ two daughters ceased being directors of the SMSF company, which is trustee for the SMSF, in circumstances that are in dispute. Since this time the husband has been the sole director of that company.

24. The family home is encumbered by two mortgages. The first mortgage secures a loan taken out to partially fund the purchase of the home (“the first mortgage”). The last repayment to the loan secured by the first mortgage was made in June 2020. Another loan was taken out by the parties and the funds obtained were lent to the SMSF for the purpose of purchasing the SMSF shop complex. This loan is also secured by a mortgage over the family home (“the second mortgage”) and has an outstanding balance of almost $250,000.

25. The SMSF also took out a loan for the purchase of the SMSF shop complex. Rental payments from the shops leased in that complex (including the business) are utilised for the purposes of servicing that loan.

26. On 8 August 2020 the husband received a letter from a workers compensation insurer claiming that his workers compensation premiums had not been paid.  The husband attended at the business premises to speak to the older daughter in relation to the letter but she was apparently not at the business at that time.  

27. The wife retired from her employment on the same day, 8 August 2020 and was paid out her accumulated leave entitlements.  She deposes to thereafter receiving “a pension” (defined benefit superannuation payment) as a result of her employment which is her only source of income. 

28. On 10 August 2020 the husband attended at the business premises again and spoke to the daughter about the workers’ compensation insurance payments and in relation to gaining access to shipping containers at the premises.  An argument ensued and the daughter advised the husband to speak to his solicitors in relation to the matter and the husband left the premises. 

29. The husband returned to the business premises a short time later and an incident occurred in which the daughter was seriously injured.  The husband who has been charged in relation to the event does not give an account of the incident for the purposes of these proceedings but the wife contends that events occurred as alleged by police and the police account is based upon a version of the event given by the daughter.

30. According to the daughter’s version of events given to police, when the husband attended at the business for the second time that day she told him he was not allowed behind the counter. He then pulled out a large knife (which he had obtained from his home) and lunged at her saying “I’ll fix this”.  The blade of the knife made a small cut in the daughter’s abdomen and she grabbed the blade.  As a result of the force employed by the husband her left wrist was broken and as she held onto the blade of the knife while she wrestled with the husband for a short time four of her fingers were lacerated.  The daughter called for assistance from an employee who removed the husband and she ran to a neighbouring business where ambulance and police were called. The daughter suffered significant injuries as a result of the assault by the husband which have required surgery on numerous occasions and it appears that she will have some permanent disability to her hand.

31. The husband was charged with assault occasioning actual bodily harm and wounding with intent to cause grievous bodily harm and at the time of the interim hearing was in custody, having been refused bail on these charges.  At that stage he intended making a further bail application at some stage.

32. The husband’s arrest caused the parties’ final separation.

33. The SMSF’s loan facility with the bank (for the loan secured by a mortgage over the SMSF shop complex) expired in September 2020. The balance of the loan was then $650,000 plus interest. Documents from the bank relied upon at the hearing indicate that the bank was prepared to consider an extension to that loan facility and the husband intended attending to arrangements in that regard when he was released from prison which he hoped would occur in the near future.

34. The wife deposes that the family home is worth approximately $1.1 million dollars and that almost $500,000 is owing on the first mortgage and almost $250,000 on the second mortgage secured over that property. 

35. At some point which has not been identified, the wife was able to negotiate with the bank for the loan repayments on the first mortgage over the family home to be placed on hold for some time (and possibly the second mortgage - though this is not clear). Subsequently, she has only been required to pay $1,000 per month in lieu of full payment ($2537) until 10 March 2021 when full payments were to be required to be paid again. In addition, the wife is required to make repayments on the second mortgage. She deposes that she will be unable to meet the combined loan repayments once they return to the full amount which could lead to default action and sale of the family home in any event.

36. The wife also deposes that as the husband is the sole director of the company that holds the SMSF shop complex she is unable to sell that property to pay various outstanding loans. She has no other source of income to make the loan repayments.

37. The husband deposes to having a number of motor vehicles stored at the family home, including vintage models which he considers have “some value”.  He also deposes to currently opposing the sale of the family home as he intends to obtain financial advice at a later date upon his release about the feasibility of refinancing the property (presumably for the purposes of retaining it himself).

    THE APPLICATION

    Orders sought by the wife

38. The wife seeks orders that she be appointed as trustee for the sale of the family home and ancillary orders including that she undertake any required rectification work to prepare the property for sale including arranging for the removal of rubbish and items left at the property after the husband has collected his vehicles, tools and parts.  It is noted in this regard that pursuant to the orders made at the interim hearing there is a regime provided for the valuation of the husband’s motor vehicles, tools and spare parts located at the family home and providing that after the valuation is completed that the husband may have an agent on his behalf remove those items from the property.

39. The wife also seeks an order that funding for the rectification work be sourced from monies held in her solicitor’s trust account from the sale of the interstate investment properties (also provided for in the orders made with the parties’ consent at the interim hearing).  She also seeks orders in relation to the dispersal of the proceeds of sale of the family home, which includes payment of the two loans secured by the mortgages over the family home and payment of any balance into her solicitor’s trust account.

40. The husband opposes the orders sought by the wife with respect to sale of the family home and seeks that her application be dismissed.

    The Law and discussion

41. The wife’s legal representative did not identify the source of power that she seeks be exercised in this application. The husband’s lawyer likewise made no reference to the source of power under consideration.

42. It can be assumed that the power sought to be exercised by the Court is the injunction power in s 114 of the Family Law Act 1975 (Cth) (“The Act”). That section provides that the Court may make such order or grant such injunction as it considers proper with respect to the matter to which the proceedings relate, including an injunction in relation to the property of a party to the marriage.

43. As I understand it, the wife contends that it is just and reasonable, and thus proper, to make the orders under consideration as such orders will in effect preserve the parties’ assets, in that the wife has insufficient income to service the various loan obligations and for so long as she is required to do so then her limited assets are being diminished. The husband does not propose any means for the parties to reduce their ongoing accumulating liabilities. He proposes nothing more than an intention or hope to make new refinancing arrangements in relation to the family home (and in relation to the SMSF liabilities) at some time in the future.

44. It is the wife’s case that the orders she seeks are proper for the following reasons:

    ·According the wife’s affidavit she will not feel safe living at the family home if the husband is granted bail in relation to his criminal charges.  She deposes that she has experienced anxiety as a result of the events of August 2018 and maintains that she does not have the “capacity” to live at the family home if the husband is released from custody for this reason.

    ·The family home is situated on a five acre property which I understand has not been well maintained and which continues to cause difficulties and ongoing expense for the wife in relation to ongoing maintenance. 

    ·There is significant indebtedness from the two loans secured by mortgages over the family home (almost $750,000).  The wife does not have the capacity to make repayments from her sole source of income being a “pension” from her superannuation fund.

    ·The husband has not made any financial contributions to the outstanding loans on the family home since at least June 2020.

    ·The tenor of the husband’s application is that he wishes to explore the feasibility of retaining the family home but there is no likelihood that he will have the capacity to do this.

    ·Having regard to the indebtedness in relation to all of the parties’ property there will be little left to distribute between them and neither of them will have the capacity to buy out the other party’s interest in the family home.

    ·Any concern that the husband has about the vehicles and other items located at the family home are addressed by the orders made at the interim hearing for their valuation and removal. 

    ·The wife seeks to be appointed as trustee for the purposes of the sale because of the practical difficulties involved due to the husband’s incarceration.  In this regard it is noted that the husband himself deposes to difficulties in arranging conferences with his lawyer and preparing the necessary paperwork for the hearing. The wife also wishes to have no further contact of any kind with the husband as a result of the events of August 2020.

1. Very little was submitted on behalf of the husband other than that he opposed the sale of the family home at this stage. He did not make any proposal as to how the wife could fund the ongoing liabilities over the family home from her limited income.

   Orders sought by the husband

2. The husband also seeks an order that the balance of proceeds from the sale of the interstate investment properties be utilised to pay around $60,000 for outstanding balances on credit cards in his name. 

3. Pursuant to orders made with the parties’ consent at the interim hearing in relation to the sale of the interstate investment properties, any net balance from those sales are to be deposited into the trust account of the wife’s solicitors.

4. The wife opposes this order sought by the husband. It is submitted on her behalf that she does not necessarily agree that the credit card liabilities would be regarded as matrimonial liabilities for the purposes any property settlement, so joint funds should not be utilised for this purpose.  It was also submitted on the wife’s behalf that there may be less than $60,000 in net proceeds from the sale of the interstate investment properties and some of the proceeds may be needed for payment of rectification and other costs associated with the sale of the family home and to meet any anticipated costs in relation to the collection and storage of the husband’s vehicles and goods.

   CONCLUSION

5. The wife has demonstrated that there is an urgent need to meet the parties’ ongoing liabilities.  The wife has insufficient resources to meet them and the husband is not making any financial contributions himself. I am satisfied that there is a requirement to sell assets to fund these ongoing liabilities.

6. Ultimately, the husband’s opposition to the sale of the family home, amounts to little more than an assertion that he wishes to consider selling it at some time in the future. He also talks generally of exploring the possibility of purchasing it himself in the future.

7. It appears that even on a brief assessment of the parties’ property interests and their liabilities as agreed, there is no prospect that the husband would have the capacity to purchase this property at some time in the future.  In the meantime, the wife continues to be burdened with the high cost of servicing the mortgage loans in relation to that property which are well beyond her income and the husband is making no financial contribution and cannot be assured of being released from custody at any particular time in the future.

8. In these circumstances I consider it proper to make the orders sought by the wife.

9. So far as the husband’s application for an order that the proceeds of the interstate investment properties be applied to various credit card debts totalling around $60,000 is concerned, I dismiss such application as I am not satisfied that these debts will necessarily be found to be matrimonial debts and that there may be insufficient funds which are required for other purposes, especially associated with the sale of the former family home to be available for this purpose. 

10. Accordingly I make the orders as sought by the wife as set out in Exhibit 2 in the proceedings and dismiss the application for an order sought by the husband in his Response.

I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Hannam.

Associate:

Dated:       1 July 2021