TERZI & TERZI
[2019] FamCA 357
•31 May 2019
FAMILY COURT OF AUSTRALIA
| TERZI & TERZI | [2019] FamCA 357 |
| FAMILY LAW – PROPERTY – Undefended interim property – Where the wife filed an Application in a Case seeking urgent orders that the matrimonial home be sold – Where the husband had not made repayments on the mortgage for a period of four months – Where the husband had not filed any documents and had ceased engaging in court proceedings – Where orders were made as sought by the wife on an undefended basis. |
| Family Law Act 1975 (Cth) s 79 Family Law Rules 2004 (Cth) r 16.07 |
| Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 Harris & Harris (1993) FLC 92-378 Jarrah & Fadel [2014] FamCAFC 14 Strahan & Strahan [2009] FamCAFC 166 |
| APPLICANT: | Ms Terzi |
| RESPONDENT: | Mr Terzi |
| INDEPENDENT CHILDREN’S LAWYER: | Mr Macdiarmid |
| FILE NUMBER: | PAC | 2690 | of | 2016 |
| DATE DELIVERED: | 31 May 2019 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 15 April 2019 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Cairns |
| SOLICITOR FOR THE APPLICANT: | Auslawyers |
| RESPONDENT – SELF-REPRESENTED LITIGANT: | Mr Terzi |
| COUNSEL FOR THE INDEPENDENT CHILDREN’S LAWYER: | Mr Cairns, by consent |
| SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER: | Mark Macdiarmid Family Law Specialist |
ORDERS MADE ON 15 APRIL 2019
UPON NOTING THERE IS NO APPEARANCE BY OR ON BEHALF OF THE RESPONDENT HUSBAND IN THESE PROCEEDINGS AND UPON HEARING MR CAIRNS OF COUNSEL ON BEHALF OF THE WIFE
That the Application in a Case filed 7 March 2019 by the wife proceed to undefended hearing.
That the parties shall do all acts and sign all documents, deeds and instruments necessary to list property, B Street, Town C (Lot … in Deposited Plan … (‘the Town C property’) for sale by private treaty with Company J at Town C, or other such Real Estate Agent as nominated by the wife (‘the Real Estate Agent’).
That the Wife nominate and instruct a conveyancer or solicitor of her choice to act on the sale of the Town C property.
That in the event that the Town C property has not sold by 15 April 2019, the Wife is at liberty to list the property for auction with the same Real Estate Agent and agree to the following terms:
(a)Such auction take place within one month from the date of placing the property for sale by public auction or as soon as practicable thereafter.
(b)The reserve price for such auction shall be determined by as agreed between the Wife and the Real Estate Agent.
(c)Failing agreement of the reserve price within seven days of placing the property for sale by auction, the sale price shall be determined by a valuer appointed by the Real Estate Agent Institute of NSW whose direction shall be final and binding and the cost of such appointment and valuation to be met solely by the Husband, or as otherwise agreed between the parties.
(d)In the event that the bidding at the auction does not reach reserve price the Wife may negotiate with the highest bidders or any other interested person and effect a sale of the Town C property at a price that is not more than five per cent below the reserve price.
That upon completion of the sale of the Town C property the parties shall distribute the sale proceeds as follows:
(a)In discharge of the mortgage/s secured over the Town C property.
(b)In payment of the Real Estate Agent’s commission and expenses on the sale.
(c)In payment of conveyancer’s or solicitor’s fees, costs and disbursements.
(d)In payment of proper legal costs and disbursements of each of the parties of and incidental to the sale following production of genuine receipts.
(e)In adjustment of rates, levies and taxes on the Town C property.
(f)In payment to the Wife of the sum of $30,000.00.
(g)Pending further order, the balance is held in the Trust account of the Real Estate Agent appointed in accordance with these orders.
Pending the sale of the Town C property, the Husband shall:
(a)Keep the property in good order and repair.
(b)Co-operate in all reasonable ways with requests by Real Estate Agents and/or prospective purchasers including but not limited to:
(i) Providing keys to obtain access.
(ii)Doing all things necessary to facilitate access to the property at all reasonable times and facilitating access for inspection without interference.
(c)Maintain the property in a presentable condition so as to facilitate the sale including but not limited to presenting the property in a neat and tidy condition at all times when the property is subject to inspection.
(d)Do all things necessary to facilitate a sale at the earliest possible time.
(e)Both parties shall refrain from doing or saying anything which has the effect of hindering or preventing an inspection or a sale of the property being effected.
(f)And give vacant possession not less than 14 days before settlement.
Pending sale of the Town C property the Husband shall be responsible for all mortgage payments, statutory rates and charges, other utilities, insurances, outgoings and expenses in relation to the property incurred prior to the date of the sale and shall make all such payments as and when they fall due.
That the parties shall sign all documents, deeds and instruments necessary to cause the transfer of the Wife’s share in the Husband’s business to the Husband.
That in the event that either party fails to execute any deed or instrument necessary to give effect to these orders within seven days of being requested to do so, the Registrar of the Family Court of Australia at Parramatta shall be appointed pursuant to section 106A of the Family Law Act 1975 to execute such deed or instrument in the name of such party and do all acts and things as may be necessary to give validity to the operation of the deed or instrument.
The wife’s costs of and incidental to the Application in a Case are reserved.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Terzi & Terzi has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
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 r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAC 2690 of 2016
| Ms Terzi |
Applicant
And
| Mr Terzi |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings relate to an Application in a Case filed by the wife on 7 March 2019. The application forms a part of final parenting and financial proceedings commenced by the husband in the Federal Circuit Court in June 2016 which were transferred to the Family Court on 8 December 2016.
The wife’s Application in a Case seeks urgent orders that a property listed in her sole name be sold and that the wife be paid $30,000.00 with the balance to be held on trust until the property proceedings are finalised.
The property is the former matrimonial home, situated in Town C. The property is in the wife’s sole name, however, the husband has lived in the property since the parties’ separated. The bottom floor of the property is a business in which both parties hold a one third share.
On 13 February 2019 the husband instructed his then solicitor to contact the wife’s legal representative and seek her position in relation to the property settlement. On the same day the wife’s legal representative wrote to the husband by letter and email and informed him that the mortgage on the Town C property had not been paid since 4 December 2018 and sought that he make the repayments to ensure there were no arrears on the mortgage. The husband was informed that if he did not make these repayments that the mother would serve an Application in a Case seeking urgent orders that the property be sold. The husband provided no response and made no attempt to make a repayment on the mortgage.
On 11 March 2019 the Application in a Case was listed before a Registrar in chambers who granted leave for short service of the application and listed the Application in a Case and substantive proceedings for 26 March 2019.
On 26 March 2019 there was no appearance for or by the husband and he had not filed a Response to the wife’s Application in a Case. On this occasion orders were made for the Application in a Case to be listed before a Registrar for a call over on 11 April 2019, with parties to attend in person if not legally represented. The wife’s solicitor was ordered to advise the husband of the orders made and of the possible consequences of his non-attendance on the next occasion.
On 11 April 2019 the husband appeared in person. He had not filed any documents in response to the wife’s application. The husband was ordered to file a Response to the Application in a Case and supporting affidavit by 12 April 2019, with a failure to comply resulting in the matter proceeding on an undefended basis. The wife was ordered to provide proof that the husband was served the Application in a Case dated 7 March 2019 by 15 April 2019.
On 15 April 2019, proceedings were before the Court for an undefended interim hearing. There was no appearance by or for the husband and he had not filed any documents in response to the wife’s interim application. The wife’s counsel tendered a bundle of documents, which became Exhibit “A” in the proceedings, which demonstrated that the husband had been served with the wife’s Application in a Case on 12 March 2019 by registered post and had been notified of the wife’s intentions to file the application on 13 February 2019. The Court was satisfied that the husband had been informed of orders made on 26 March and 11 April by the Registrar.
At the undefended hearing orders were made as sought by the wife and reasons for decisions were reserved. These are those reasons.
Procedural fairness
Rule 16.07 of the Family Law Rules 2004 (Cth) (“the Rules”) relevantly provides:
Parties' participation
(1) Each party to an application set down for hearing on the first day before the Judge must attend in person and, if legally represented, with their legal representatives.
Note:The court may dispense with compliance with a rule (see rule 1.12).
(2) If a party does not attend on the first day before the Judge, the other party may seek the orders sought in that party's application by, if necessary, adducing evidence to establish an entitlement to those orders in a manner ordered by the court.
(3) …
In the event that the Court was not disposed to apply the provisions of Rule 16.07, an adjournment of the proceedings would have been necessitated. The future conduct of the proceedings would be problematic in relation to the husband’s failure to engage in the proceedings.
Considerations pertaining to an adjournment of proceedings, particularly in relation to parenting proceedings, were considered by the Full Court in Jarrah & Fadel [2014] FamCAFC 14. Ainslie-Wallace J referred to Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, in which the majority of the High Court said at [217]:
… delay and costs are undesirable and that delay has deleterious effect not only upon the party to the proceedings in question but to other litigants. … It would impact on other litigants seeking a resolution of their cases.
The wife’s Application in a Case is an urgent application which seeks that the parties’ matrimonial home be sold, as she deposes that the husband is failing to meet the mortgage repayments for the property, which is in her sole name. In the circumstances of this matter it was appropriate that the matter proceed to an undefended hearing in the absence of the husband.
Context
The wife relied upon the following documents:
a)Her Application in a Case filed 7 March 2019.
b)Her affidavit filed 7 March 2019.
c)Her Amended Response to Initiating Application filed 21 March 2018.
d)Balance sheet filed 30 April 2018.
In her Application in a Case filed 7 March 2019 the wife seeks orders:
(1)That the parties shall do all acts and sign all documents, deeds and instruments necessary to list property, B Street, Town C (Lot … in Deposited Plan … (‘the Town C property’) for sale by private treaty with Company J at Town C, or other such Real Estate Agent as nominated by the wife (‘the Real Estate Agent’).
(2)That the wife nominate and instruct a conveyancer or solicitor of her choice to act on the sale of the Town C property.
(3)That in the event that the Town C property has not sold by 15 April 2019, the wife is at liberty to list the property for auction with the same Real Estate Agent and agree to the following terms:
(a)Such auction take place within one month from the date of placing the property for sale by public auction or as soon as practicable thereafter.
(b)The reserve price for such auction shall be determined by as agreed between the wife and the Real Estate Agent.
(c)Failing agreement of the reserve price within seven days of placing the property for sale by auction, the sale price shall be determined by a valuer appointed by the Real Estate Agent Institute of NSW whose direction shall be final and binding and the cost of such appointment and valuation to be met solely by the husband, or as otherwise agreed between the parties.
(d)In the event that the bidding at the auction does not reach reserve price the Wife may negotiate with the highest bidders or any other interested person and effect a sale of the Town C property at a price that is not more than five per cent below the reserve price.
(4)That upon completion of the sale of the Town C property the parties shall distribute the sale proceeds as follows:
(a)In discharge of the mortgage/s secured over the Town C property.
(b)In payment of the Real Estate Agent’s commission and expenses on the sale.
(c)In payment of conveyancer’s or solicitor’s fees, costs and disbursements.
(d)In payment of proper legal costs and disbursements of each of the parties of and incidental to the sale following production of genuine receipts.
(e)In adjustment of rates, levies and taxes on the Town C property.
(f)In payment to the wife of the sum of $30,000.00.
(g)Pending further order, the balance is held in the Trust account of the Real Estate Agent appointed in accordance with these orders.
(5)Pending the sale of the Town C property, the husband shall:
(a)Keep the property in good order and repair.
(b)Co-operate in all reasonable ways with requests by Real Estate Agents and/or prospective purchasers including but not limited to:
(i)Providing keys to obtain access.
(ii)Doing all things necessary to facilitate access to the property at all reasonable times and facilitating access for inspection without interference.
(c)Maintain the property in a presentable condition so as to facilitate the sale including but not limited to presenting the property in a neat and tidy condition at all times when the property is subject to inspection.
(d)Do all things necessary to facilitate a sale at the earliest possible time.
(e)Both parties shall refrain from doing or saying anything which has the effect of hindering or preventing an inspection or a sale of the property being effected.
(f)And give vacant possession not less than 14 days before settlement.
(6)Pending sale of the Town C property the husband shall be responsible for all mortgage payments, statutory rates and charges, other utilities, insurances, outgoings and expenses in relation to the property incurred prior to the date of the sale and shall make all such payments as and when they fall due.
(7)That the parties shall sign all documents, deeds and instruments necessary to cause the transfer of the wife’s share in the husband’s business to the husband.
(8)That in the event that either party fails to execute any deed or instrument necessary to give effect to these orders within seven days of being requested to do so, the Registrar of the Family Court of Australia at Parramatta shall be appointed pursuant to section 106A of the Family Law Act 1975 to execute such deed or instrument in the name of such party and do all acts and things as may be necessary to give validity to the operation of the deed or instrument.
(9)That the husband pay the costs of and incidental to this Application in a Case.
(10)That leave be granted for the wife to provide a copy of any orders made for the sale of the Town C property to the mortgagee.
The substantive proceedings concern both parenting and financial issues. In his Amended Initiating Application, the husband seeks an order that the Town C property be transferred into his sole name and that the wife transfer the remainder of the NAB trade account into his name and seeks an equal time order with respect to the child.
In her Amended Response, in summary, the wife seeks orders in relation to the child that she have sole parental responsibility, that the child lives with her and that she be allowed to relocate the child’s residence to Country N with any time the child spends with the father to be agreed between the parties.
In the substantive proceedings in relation to property the wife in her Amended Response, in summary, seeks the following orders:
(1)That the husband pay the wife $110,000.00.
(2)That the wife transfer to the husband her interest in the Town C Property, the parties’ Business Trust Co, her interest in K Company and F Company shares.
(3)That the wife and husband be declared the sole legal and beneficial owner of all furniture and household contents in their possession, all monies in bank accounts in their names, any superannuation entitlements to them.
Background
The wife is presently aged 36 and the husband is 42 years of age.
The parties were married in 2013 in Country N. The wife moved to Australia in 2014 and the parties commenced living together in the matrimonial home in Town C. The date of the parties’ separation is not clear on the evidence before me, and appears to be some time in 2016.
Prior to the marriage the husband purchased a property in Town C, now valued at $800,000.00. There is a mortgage on the property of $349,130.14. The mortgage is in the wife’s sole name and is $6,006.08 in arrears.
The husband owned a one third share in a business at the time that the mother moved to Australia and she commenced working full-time in that business with the father. The mother and father each hold a one third interest in the business, which the parties agree is worth $30,000.00.
The business is situated on the bottom floor of the Town C property.
The wife became pregnant in 2015 and the only child of the relationship a son, X (“the child”) was born in 2015.
In 2015 the husband began receiving letters threatening bankruptcy and at this time the husband caused the matrimonial home to be transferred to the sole name of the wife and the mortgage now stands in the wife’s sole name. The wife deposes that she signed documents relating to the Town C property without reading them, as her English skills were then not at a competent level and that she was very unwell at the time due to being pregnant with the child.
Throughout the course of their marriage the husband has had control of the money earned from the parties’ business. The wife was not paid a wage. The husband was responsible for ensuring the mortgage repayments and other bills were paid. The wife deposes in her affidavit that throughout her marriage to the husband he would direct her to sign blank cheques and she did not know what these cheques were used to pay for.
Following separation the father has had the responsibility for meeting those mortgage payments and outgoings.
Following separation the child has been in the primary care of the wife and has not spent time with the husband since February 2017.
The wife is currently unemployed and is in receipt of government benefits.
The husband has been assessed to pay Child Support but has not fulfilled his obligation to financially support the child.
The father has continued to operate the business since separation and resides in the Town C property.
In February 2018, the Region G Council took legal action against the wife for unpaid council rates and sought that she pay $2,061.00 in repayment of the debt and fees associated with the legal proceedings. The court documents were served upon the mother being left at the Town C property, where the father resided and as such the mother had not been aware of the debt or the legal proceedings at the time. She deposes that it was the father’s responsibility to ensure these rates and levies were paid.
In November 2018 the wife took the child to Country N for a holiday and returned in January 2019.
Soon after the wife returned from Country N she became aware that the father had not made any mortgage repayments since 4 December 2018.
The wife deposes that the husband’s drug use and mental health issues have affected his capacity to work in the business and therefore make the repayments on the mortgage. In January 2019 the mother became aware that the business had ceased operating for a few weeks following an incident in which the father had become angry and yelled at customers to leave premises.
On 6 March 2019 the wife received a notice from the bank that her mortgage repayments were in arrears in the sum of $6,006.08, and that failure to repay this amount would result in the bank taking possession of the property. As she is not in employment, she is unable to meet these repayments and has urgently sought orders that the Town C property be sold.
The wife sought an order that she be paid $30,000.00 from the sale and that she will transfer her one third interest in the business to the husband.
The matrimonial pool
The wife contends that the matrimonial pool, at least insofar as it is known to her, comprises the following:
Assets:
Wife Town C property $ 800,000.00
Joint Business $ 60,000.00
Wife CBA account $ 561.00
Wife NAB account $ 0.00
Wife K Company Shares $ 26,866.00E
Wife L Company Shares $ 6,601.40E
Wife R Company Shares $ 45.05
Wife Assets in Country N $ 2,500.00
Wife Vehicle 1 $ 3,000.00
Husband Vehicle 2 $ 5,100.00
Husband Vehicle 3 $ 400.00
Husband NAB account $ 1.45
Husband Share trading account $ 68,363.44E
Joint Household furniture $ 5,100.00
Liabilities:
Wife Mortgage Town C $ 352,339.00
Wife Legal fees $ 2,221.02
Husband NAB credit card $ 32,499.00
Husband NAB credit card business $ 8,982.00
Husband Business debt owing $ 83,200.00
Superannuation:
Husband Unknown funds $ 1,300.00E
Wife D Superfund $ 12,000.00
Interim property
The principles as to applications for interim property provision are well settled, (Strahan & Strahan [2009] FamCAFC 166) and require a two-step process.
In Strahan (supra), the Full Court said:
132.In relation to the first stage, in our view, when considering whether to exercise the power under s 79 and s 80(1)(h) of the Act to make an interim property order the “overarching consideration” is the interests of justice. It is not necessary to establish compelling circumstances. All that is required is that in the circumstances it is appropriate to exercise the power. In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.
Firstly, there must be circumstances enlivening the power to make an interim order. The test is not limited to “compelling circumstances” but whether it would be “appropriate” to make an interim order, with the “overarching consideration” being the interests of justice.
Secondly, the Court is to have regard to relevant matters in s 79 of the Family Law Act 1975 (Cth) (“the Act”). It needs to be kept in mind that the final outcome of property settlement should not be compromised by an interim property order. Either the remaining property needs to be adequate to meet the legitimate expectations of both parties at the final hearing or the order that is contemplated needs to be capable of being reversed or adjusted if it is subsequently considered necessary to do so.
A detailed inquiry is not required, but there must be some assessment of s 79 factors.
In Strahan the Full Court went on to say:
137. Once a court proceeds to exercise the power in s 79 of the Act, being in the substantive phase, a court is required to undertake consideration of the matters in s 79(4) including by reference to s 79(4)(e) the matters in s 75(2) so far as they are relevant. However consideration of such matters may be brief and if it is established that “it seems likely to the Court that ... the applicant ... will be likely receive by way of property settlement a sum sufficient to cover the advance, that would seem to be sufficient to enable the order sought to be made”: Zschokke; Polletti and Polletti per Nygh J and Wenz v Archer. As senior counsel for the Wife submitted, “provided scope can be found within the assets of the parties for an order of the size sought ... then that should be the end of the matter”. In other words, in such circumstances the applicant would only be receiving what he or she was entitled to receive when the power was exhausted.
138. The legislation does not prescribe what the Full Court in Zschokke at 83,218 described as “preconditions” and nor would we seek to exhaustively prescribe matters that may be relevant to take into account in the exercise of the discretion under s 80(1)(h) of the Act. As to the three “criteria” identified by the Full Court in Zschokke, we accept that an inability on the part of an applicant for an interim property order to defray the costs of litigation to meet his or her litigation costs would be a relevant matter to take into account at the procedural or first stage. Senior counsel for the Wife submitted that it may be relevant at the substantive or second phase in reviewing the “necessarily limited and impressionistic budget for costs” to ensure that the application is bona fide. We are of the view that it may be that any issue about the bona fides of an application is relevant at the procedural phase in the context of considering if in the interests of justice it is appropriate to make an order before the final hearing.
139. We also emphasise that in order to establish an appropriate case for an interim property settlement order more is required than the mere fact that upon a final hearing the applicant would receive the property being sought (or an amount in excess of the funds being sought) from the other party.
140. As to the other matters being a position of relative financial strength on the part of the respondent to an application and the capacity of the respondent to meet his or her own litigation costs, there is no doubt that the financial circumstances of both parties are relevant at the substantive stage and may also be relevant at the procedural stage. Senior counsel for the Wife submitted that all of the matters discussed by the Full Court in Zschokke are self-evident and we accept that this is so in relation to at least two of the matters being the need for funds and the financial circumstances of both parties.
141. As to the various matters discussed by Brereton J in Paris King Investments which we have discussed above, we do not propose to deal with all of what his Honour said, however we make the following observations about some of the matters. Obviously the applicant should have “at least an arguable case for substantive relief which deserves to be heard”. Further, in determining at the procedural stage whether to exercise the jurisdiction there may need to be evidence of the applicant’s “likely costs of the litigation” given that the need for funds to defray litigation costs and expenses is the circumstance propounded as to why it is appropriate that an order be made. We also accept that “it is not an essential precondition” that the applicant’s legal representatives will not continue to act unless the costs are paid or secured on an ongoing basis.
It is important to have regard to an overall caution. In Harris & Harris (1993) FLC 92-378, the Full Court said:
As a generality, the interests of the parties and the Court are better served by there being one final hearing of s 79 proceedings.
In Strahan (supra), the Full Court said at [132]:
… regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.
It is now well settled that in property cases the Court must identify the existing legal and equitable interests of the parties in the property, the liabilities and financial resources of the parties at the time of the hearing and then determine whether it is just and equitable to make a property settlement order. Such a consideration should not be guided by an assumption that the parties’ rights to, or interests in, property are, or should be, different from those that then exist. The question is whether those rights and interests should be altered.
The husband has chosen not to participate in these proceedings. The Town C property is in the sole name of the wife and she owns a one third interest in the business. Despite this the husband has solely occupied the Town C property since the parties separated and has not provided the wife with any income from the business.
The wife is unemployed and in receipt of Centrelink. She has been given no Child Support from the husband and the child is in her full time care. The husband ceased meeting the mortgage repayments in December 2018 and the wife is not in a financial position to meet them. They are currently in arrears of $6,006.08 and with no ability to meet these repayments the house needs to be sold.
The wife seeks an interim payment of $30,000.00 in exchange for her interest in the business. As the husband has not provided the wife with any income from the business, it is just and equitable that she be allowed to transfer her interest in the business for its agreed value of $30,000.00.
As the husband is seeking final orders that the Town C property be transferred to him, an order for the sale of the property will negate his final orders sought. However, as he has failed to maintain the mortgage repayments on the property, it is probable that the house would be sold by the bank if it was not sold pursuant to the wife’s current Application, and as such the husband’s final orders would likewise need to be revised.
It is just and equitable and appropriate to make the orders as sought by the wife.
I certify that the preceding fifty-two (52) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 31 May 2019.
Associate:
Date: 31 May 2019